1 00:00:05,120 --> 00:00:09,320 Speaker 1: Welcome to the Bloomberg Surveillance Podcast Downtown Keene. Along with 2 00:00:09,440 --> 00:00:13,080 Speaker 1: Jonathan Ferrell and Lisa A. Brownwitz jay Leie, we bring 3 00:00:13,119 --> 00:00:17,119 Speaker 1: you insight from the best and economics, finance, investment and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg 5 00:00:23,360 --> 00:00:30,200 Speaker 1: dot Com and of course, on the Bloomberg terminal. Let's 6 00:00:30,200 --> 00:00:33,400 Speaker 1: talk about inflation. Mike Holland, Chairman and Chairman of Holland 7 00:00:33,440 --> 00:00:35,760 Speaker 1: and Company, joins us at this morning to do just 8 00:00:35,960 --> 00:00:38,920 Speaker 1: that and to expand the conversation from there. Mike, good 9 00:00:39,040 --> 00:00:40,440 Speaker 1: to speak to you. Thanks for joining us here on 10 00:00:40,440 --> 00:00:43,760 Speaker 1: Bloomberg TV. What do you think a central bank policy 11 00:00:43,760 --> 00:00:46,600 Speaker 1: can do against inflation right now? Because you say ahead 12 00:00:46,600 --> 00:00:48,400 Speaker 1: of our conversation in your notes, you say there's too 13 00:00:48,440 --> 00:00:50,680 Speaker 1: much money chasing too few goods, and so that makes 14 00:00:50,680 --> 00:00:53,000 Speaker 1: me realize that the taper can't do much about the 15 00:00:53,000 --> 00:00:54,960 Speaker 1: two few goods, but it can do something about the 16 00:00:55,160 --> 00:00:58,120 Speaker 1: too much money. So what kind of downward pressure can 17 00:00:58,200 --> 00:01:00,640 Speaker 1: the FED bring to bear on inflation, given some of 18 00:01:00,640 --> 00:01:04,880 Speaker 1: it is driven by those supply chain issues and such 19 00:01:04,920 --> 00:01:08,360 Speaker 1: an an important question, and I'm not sure that Jerome 20 00:01:08,440 --> 00:01:10,959 Speaker 1: Paul if he were sitting with you right now could 21 00:01:11,000 --> 00:01:13,600 Speaker 1: answer that because he has all of these tools, which 22 00:01:13,600 --> 00:01:18,840 Speaker 1: he employed brilliantly uh fifteen eighteen twenty months ago, UH 23 00:01:18,880 --> 00:01:22,880 Speaker 1: and as as Uh started out one of the epic 24 00:01:23,680 --> 00:01:27,759 Speaker 1: salvage of the U. S economy missions um that any 25 00:01:27,800 --> 00:01:30,600 Speaker 1: FED president has ever done, FED had has ever done. 26 00:01:31,200 --> 00:01:34,360 Speaker 1: Right now, they are in a in a period where 27 00:01:34,400 --> 00:01:38,120 Speaker 1: they are losing a little bit of confidence. In addition 28 00:01:38,200 --> 00:01:42,400 Speaker 1: to their persistence with that word transitory and inflation. A 29 00:01:42,400 --> 00:01:46,160 Speaker 1: couple of the FED presidents regional presidents have had to 30 00:01:46,200 --> 00:01:50,400 Speaker 1: resign because of claims of some insight or whatever. But 31 00:01:50,640 --> 00:01:53,440 Speaker 1: I think the luster is a little bit off the FED. 32 00:01:53,640 --> 00:01:56,120 Speaker 1: I think that Paul has has shown that he can 33 00:01:56,160 --> 00:02:00,600 Speaker 1: do well in trying circumstances. Right now. I think it's 34 00:02:00,640 --> 00:02:04,520 Speaker 1: pretty well in bred in the population. As Kayley was 35 00:02:04,560 --> 00:02:08,960 Speaker 1: just saying, that we have inflation, particularly the wage price 36 00:02:09,080 --> 00:02:12,160 Speaker 1: spiral kind of inflation from the seventies that is so 37 00:02:12,720 --> 00:02:16,560 Speaker 1: inimical to to to a good economy. So he's got 38 00:02:16,600 --> 00:02:18,200 Speaker 1: his job cut out for him. I don't think he 39 00:02:18,240 --> 00:02:20,160 Speaker 1: would be able to answer the question is what will 40 00:02:20,200 --> 00:02:22,000 Speaker 1: he do? Because they have lots of tools, some of 41 00:02:22,040 --> 00:02:25,200 Speaker 1: which are can work well and depending on what tools 42 00:02:25,240 --> 00:02:27,840 Speaker 1: they use. How how would you put the odds of 43 00:02:27,880 --> 00:02:32,359 Speaker 1: a policy mistake Mike, Oh, Kayley, that's a I don't 44 00:02:32,400 --> 00:02:35,040 Speaker 1: even want to talk about it because with with the 45 00:02:35,160 --> 00:02:38,040 Speaker 1: rates where they are now, which are at historic levels, 46 00:02:38,480 --> 00:02:41,840 Speaker 1: historically bad levels for the Fed, they don't have much 47 00:02:41,919 --> 00:02:45,120 Speaker 1: room to do anything with them. The supply of money, however, 48 00:02:45,120 --> 00:02:47,320 Speaker 1: which is really talked about by the people come out 49 00:02:47,360 --> 00:02:49,480 Speaker 1: of the show and talk about what the Fed can do, 50 00:02:49,560 --> 00:02:52,480 Speaker 1: and they're talking about rate heights and so on. I 51 00:02:52,520 --> 00:02:55,320 Speaker 1: think it's the supply of money, which has been it's 52 00:02:55,760 --> 00:02:58,400 Speaker 1: to to to a few goods chased by a lot 53 00:02:58,440 --> 00:03:01,200 Speaker 1: of money is what causing this in the wage price 54 00:03:01,280 --> 00:03:04,480 Speaker 1: BIRO is going to persist long after the services and 55 00:03:04,480 --> 00:03:08,239 Speaker 1: and uh other kinds of inflation. Commodity inflation is already 56 00:03:08,240 --> 00:03:13,079 Speaker 1: looking better. I think that the the viruses as of 57 00:03:13,160 --> 00:03:16,919 Speaker 1: this morning officially being retired by the markets. I think 58 00:03:17,080 --> 00:03:20,320 Speaker 1: inflation is the is the big bogey over the next 59 00:03:20,760 --> 00:03:23,480 Speaker 1: six to twelve eighteen months. Mike, what do you think 60 00:03:23,520 --> 00:03:26,840 Speaker 1: would be the bigger event for the markets when the 61 00:03:26,840 --> 00:03:29,320 Speaker 1: Fed ultimately does lift off and we get that first 62 00:03:29,400 --> 00:03:31,560 Speaker 1: rate hike, or when q T begins and we actually 63 00:03:31,600 --> 00:03:35,280 Speaker 1: start rolling off that balance sheet. Well, between the two, 64 00:03:36,040 --> 00:03:38,520 Speaker 1: the balance sheet is it's it's the key. It's it's 65 00:03:38,560 --> 00:03:40,680 Speaker 1: the amount of money going into the system. But they're 66 00:03:40,720 --> 00:03:44,040 Speaker 1: both important because the market is is determined into a 67 00:03:44,040 --> 00:03:48,120 Speaker 1: great deal by psychology. Psychology has been waning recently with 68 00:03:48,160 --> 00:03:50,800 Speaker 1: regard to the favoritism toward the Fed. So I think 69 00:03:50,800 --> 00:03:53,040 Speaker 1: that they have to do smart things. But I think 70 00:03:53,080 --> 00:03:55,080 Speaker 1: that in the end of the day, it's it's the 71 00:03:55,080 --> 00:03:58,000 Speaker 1: supply of money which will be the key, the proverbial 72 00:03:58,000 --> 00:03:59,800 Speaker 1: punch ball as it was Mike. I mean, for me, 73 00:04:00,000 --> 00:04:02,120 Speaker 1: I have one question for you. Our bonds dead. I mean, 74 00:04:02,120 --> 00:04:04,400 Speaker 1: if one more person tells me to get short duration, 75 00:04:04,600 --> 00:04:07,840 Speaker 1: move up in quality, uh, you know, maintain ample liquidity, 76 00:04:07,880 --> 00:04:09,880 Speaker 1: I may just blow my brains out. You know. For me, 77 00:04:10,120 --> 00:04:12,880 Speaker 1: what serves the store as a store of value in 78 00:04:12,920 --> 00:04:18,000 Speaker 1: this environment? Well, Damian, I think beware, beware the bottom market. 79 00:04:18,200 --> 00:04:22,240 Speaker 1: It's almost uh baked into the cake, the Christmas cake 80 00:04:22,279 --> 00:04:25,159 Speaker 1: here that you can lose money in a meaningful way 81 00:04:25,160 --> 00:04:28,400 Speaker 1: over the next twelve months. In terms of interest rates 82 00:04:28,440 --> 00:04:31,120 Speaker 1: move up. I should say when interest rates move up, 83 00:04:31,600 --> 00:04:34,320 Speaker 1: the Fed has to move interest rates up the bond 84 00:04:34,360 --> 00:04:37,640 Speaker 1: market unless we go into a series recession caused by 85 00:04:37,839 --> 00:04:41,080 Speaker 1: in part rates going up. The bond market is going 86 00:04:41,160 --> 00:04:45,359 Speaker 1: to have a very negative reaction. So you're gonna lose money, 87 00:04:45,640 --> 00:04:48,040 Speaker 1: just a question of how much, and and and so. 88 00:04:48,080 --> 00:04:50,000 Speaker 1: Then what about the risk of a policy ira, Mike, 89 00:04:50,080 --> 00:04:51,440 Speaker 1: I mean, you know, I mean, do you think the 90 00:04:51,480 --> 00:04:54,200 Speaker 1: Fed can actually taper without causing a tantrum this time around? 91 00:04:55,040 --> 00:04:58,760 Speaker 1: I think, damon that the that Jerome Polo is very savvy. 92 00:04:58,920 --> 00:05:01,000 Speaker 1: I think he watched the market. I think he'll do 93 00:05:01,080 --> 00:05:04,479 Speaker 1: his best to avoid that. But I think unfortunately for 94 00:05:04,640 --> 00:05:08,640 Speaker 1: us as investors and as citizens, uh, the possibility of 95 00:05:08,720 --> 00:05:13,320 Speaker 1: a mistake is relatively high. All right, thank you so 96 00:05:13,400 --> 00:05:17,479 Speaker 1: much for joining us, my Collin, appreciate your Yes. Happy 97 00:05:17,520 --> 00:05:19,480 Speaker 1: holidays to you, and thank you for joining us on 98 00:05:19,520 --> 00:05:21,560 Speaker 1: a holiday week. Your time is even more valuable for 99 00:05:21,600 --> 00:05:30,560 Speaker 1: that reason. Thank you for the insight. Matt Lizette, chief 100 00:05:30,640 --> 00:05:33,000 Speaker 1: US economist at Deutsche Bank joining us now, he's gonna 101 00:05:33,040 --> 00:05:35,080 Speaker 1: have smart things to say about all of this. What 102 00:05:35,120 --> 00:05:37,440 Speaker 1: do you read into these numbers, Matt? What can you 103 00:05:37,520 --> 00:05:39,760 Speaker 1: take away from them that it's going to be useful 104 00:05:39,800 --> 00:05:43,440 Speaker 1: as we think about the trajectory we're on into next year, 105 00:05:43,480 --> 00:05:45,840 Speaker 1: it's the consumer gonna hold up? Is this going to 106 00:05:45,920 --> 00:05:50,839 Speaker 1: be an industrial story next year? Give us your take, sure, 107 00:05:50,839 --> 00:05:52,520 Speaker 1: thanks so much for having me. I guess I focus 108 00:05:52,560 --> 00:05:55,640 Speaker 1: on two things from this morning's data. One has the inflation. 109 00:05:55,680 --> 00:05:58,440 Speaker 1: It's been the story of it will remain the story 110 00:05:58,440 --> 00:06:02,520 Speaker 1: of that core PC data up point five percent month 111 00:06:02,560 --> 00:06:04,680 Speaker 1: on month was was run in line with our expectations, 112 00:06:04,680 --> 00:06:06,240 Speaker 1: but we see that the highest year of a year 113 00:06:06,320 --> 00:06:09,000 Speaker 1: race since the late nineteen eighties. Uh. So that is 114 00:06:09,080 --> 00:06:11,440 Speaker 1: in line with expectations, but just putting it into context 115 00:06:11,440 --> 00:06:14,039 Speaker 1: how high inflation is at the moment and why the 116 00:06:14,040 --> 00:06:16,919 Speaker 1: Fed will be tightening policy next year. The second I 117 00:06:16,920 --> 00:06:19,440 Speaker 1: think is consumer spending, and and there we saw real 118 00:06:19,480 --> 00:06:23,600 Speaker 1: consumer spending flat month of month, below expectations. And really 119 00:06:23,640 --> 00:06:26,919 Speaker 1: this is before omicron hits. It's before the child tax 120 00:06:26,960 --> 00:06:30,160 Speaker 1: credit may may hit incomes uh in January if that's 121 00:06:30,200 --> 00:06:32,800 Speaker 1: not renewed. And so we do see a consumer that 122 00:06:32,800 --> 00:06:36,160 Speaker 1: that has looked a little bit more fragile. Fragile consumer 123 00:06:36,200 --> 00:06:38,680 Speaker 1: sentiment has dipped late in the year, and so I 124 00:06:38,720 --> 00:06:40,920 Speaker 1: think from a growth perspective, that does raise at least 125 00:06:40,920 --> 00:06:43,680 Speaker 1: some of the downside risks on the consumer. Yeah, I 126 00:06:43,720 --> 00:06:45,680 Speaker 1: mean my god. I mean, look at the core rate 127 00:06:45,760 --> 00:06:47,719 Speaker 1: four point seven. That's a bit of a surprise. I 128 00:06:47,760 --> 00:06:50,039 Speaker 1: mean for me, you know, that's the high since two 129 00:06:50,520 --> 00:06:52,799 Speaker 1: I mean, Matt, you know, what's your position on inflation 130 00:06:52,800 --> 00:06:54,359 Speaker 1: as we get into the new year. I mean, should 131 00:06:54,360 --> 00:06:56,440 Speaker 1: we expect you know, inflation as many are calling for, 132 00:06:56,520 --> 00:06:58,919 Speaker 1: and certainly as the markets are pricing in to accelerate 133 00:06:58,960 --> 00:07:00,680 Speaker 1: a little bit and then come often the second half 134 00:07:00,720 --> 00:07:03,480 Speaker 1: of the year. What do you think they're sure? So 135 00:07:03,520 --> 00:07:05,840 Speaker 1: I think in the near term it is gonna get worse. Um, 136 00:07:05,880 --> 00:07:08,200 Speaker 1: we do have we know some from some core goods 137 00:07:08,200 --> 00:07:10,560 Speaker 1: items use cars, new vehicles, We're probably going to see 138 00:07:10,560 --> 00:07:12,800 Speaker 1: some upward pressure there in the near term. I think 139 00:07:12,800 --> 00:07:16,360 Speaker 1: in addition to that, housing costs in terms of rent 140 00:07:16,360 --> 00:07:18,080 Speaker 1: and o E are are going to be continue to 141 00:07:18,080 --> 00:07:20,120 Speaker 1: pick up. So the near term it does get worse. 142 00:07:20,160 --> 00:07:23,160 Speaker 1: I think we are of a perspective that it will 143 00:07:23,200 --> 00:07:26,920 Speaker 1: come down later next year, but that will remain very elevated. 144 00:07:26,920 --> 00:07:29,120 Speaker 1: So we have core PC inflation at around two point 145 00:07:29,120 --> 00:07:31,680 Speaker 1: seven two point eight percent at the end of next year, 146 00:07:31,720 --> 00:07:34,280 Speaker 1: that's still seventy eight basis points above the FEDS target. 147 00:07:34,680 --> 00:07:36,400 Speaker 1: And it's exactly the reason that we expect them to 148 00:07:36,480 --> 00:07:39,040 Speaker 1: raise rates at least three times next year. Yeah, Matthew, 149 00:07:39,040 --> 00:07:40,600 Speaker 1: And I heard you hint at it. You know, housing 150 00:07:40,600 --> 00:07:42,960 Speaker 1: prices and rents, you know that, and the supply bottlenext 151 00:07:43,000 --> 00:07:45,240 Speaker 1: due to the do the om con variant. I mean, like, 152 00:07:45,280 --> 00:07:47,040 Speaker 1: what are your thoughts on those? I mean, like, you know, 153 00:07:47,080 --> 00:07:49,200 Speaker 1: those are the obviously the two big factors that are 154 00:07:49,240 --> 00:07:51,200 Speaker 1: going to drive inflation in the US come the new year. 155 00:07:51,480 --> 00:07:55,000 Speaker 1: You know, where do you think? Sure? I think the 156 00:07:55,120 --> 00:07:59,000 Speaker 1: key story, and as I saw you mentioned earlier is 157 00:07:59,040 --> 00:08:02,360 Speaker 1: about the labor market and how COVID tends to impact that. 158 00:08:03,360 --> 00:08:05,880 Speaker 1: What we've seen during the delta wave in previous waves 159 00:08:06,600 --> 00:08:09,040 Speaker 1: is it tends to shrink the labor force. You tend 160 00:08:09,080 --> 00:08:11,880 Speaker 1: to see labor force participation decline. It tends to do that, 161 00:08:11,960 --> 00:08:15,200 Speaker 1: particularly for those that are impacted by childcare, whether it's 162 00:08:15,200 --> 00:08:18,680 Speaker 1: schooling or childcare and needs for for younger children. And 163 00:08:18,680 --> 00:08:20,680 Speaker 1: so I think in the next few months, probably probably 164 00:08:20,680 --> 00:08:22,680 Speaker 1: for the first half of this year, the labor force 165 00:08:22,680 --> 00:08:26,000 Speaker 1: remains constrained. That means the labor market tends it will 166 00:08:26,000 --> 00:08:29,400 Speaker 1: tend to look tight. Wages will continue to accelerate, uh, 167 00:08:29,480 --> 00:08:31,560 Speaker 1: and that'll be a tight labor market that that is 168 00:08:31,640 --> 00:08:34,760 Speaker 1: feeding into inflationary pressures. I think as we get further out, 169 00:08:35,120 --> 00:08:37,240 Speaker 1: I'm optimistic that labor force will come back. If you 170 00:08:37,240 --> 00:08:41,120 Speaker 1: look at primate participation, it rose ninety basis points this year, 171 00:08:41,440 --> 00:08:44,800 Speaker 1: and actually relative to last cycle, looks relatively good compared 172 00:08:44,840 --> 00:08:48,000 Speaker 1: to where it was last cycle given the unemployment rate. 173 00:08:48,440 --> 00:08:51,440 Speaker 1: So I'm optimistic that labor force will rise in the 174 00:08:51,440 --> 00:08:54,160 Speaker 1: second half of next year and further out. But in 175 00:08:54,200 --> 00:08:56,960 Speaker 1: the near term it's likely to remain constrained given omacrom 176 00:08:57,120 --> 00:08:59,240 Speaker 1: and the and the pandemic well and not. I wonder 177 00:08:59,280 --> 00:09:01,480 Speaker 1: how the build up of savings plays in here as well, 178 00:09:01,520 --> 00:09:04,040 Speaker 1: because obviously the fact that the consumer has a pretty 179 00:09:04,040 --> 00:09:07,520 Speaker 1: strong balance sheet has allowed spending to continue to keep 180 00:09:07,559 --> 00:09:10,680 Speaker 1: pace even as incomes don't necessarily with inflation, and that 181 00:09:10,720 --> 00:09:13,320 Speaker 1: wage growth is still when adjusted for inflation, uh not 182 00:09:13,440 --> 00:09:15,800 Speaker 1: where you know it might need to be in order 183 00:09:15,880 --> 00:09:18,600 Speaker 1: for consumption to be that strong. Otherwise, ask the consumer 184 00:09:18,679 --> 00:09:20,760 Speaker 1: starts to draw it down on those savings, which we're 185 00:09:20,760 --> 00:09:24,040 Speaker 1: already seeing. Is it going to take a complete removal 186 00:09:24,120 --> 00:09:28,839 Speaker 1: of that buffer to drive people back into the labor force. Sure, 187 00:09:29,360 --> 00:09:31,920 Speaker 1: So I think it's a very key question we have 188 00:09:32,080 --> 00:09:35,280 Speaker 1: excess savings at around two point four trillion dollars. That's 189 00:09:35,280 --> 00:09:38,560 Speaker 1: how much has been built up accumulated since the pandemic hit. 190 00:09:38,920 --> 00:09:41,600 Speaker 1: But I think the key point there is that that 191 00:09:41,679 --> 00:09:43,560 Speaker 1: is heavily skewed towards the upper part of the income 192 00:09:43,600 --> 00:09:47,679 Speaker 1: distribution UH and older, older age households, and so you 193 00:09:47,760 --> 00:09:50,800 Speaker 1: have a large portion of the population of the income 194 00:09:50,840 --> 00:09:53,520 Speaker 1: distribution that does not have excess savings that have been 195 00:09:53,840 --> 00:09:56,000 Speaker 1: built up, and therefore I don't think that that is 196 00:09:56,040 --> 00:09:58,280 Speaker 1: a key constraining force on them coming back into the 197 00:09:58,360 --> 00:10:01,480 Speaker 1: labor force. I think what it does tell us is 198 00:10:01,520 --> 00:10:03,600 Speaker 1: there are a number of factors that do tell you 199 00:10:03,640 --> 00:10:06,040 Speaker 1: that the consumer does have a strong balance sheet. Excess 200 00:10:06,080 --> 00:10:08,800 Speaker 1: savings is one of them. That income ratios have fallen, 201 00:10:08,840 --> 00:10:11,000 Speaker 1: debt service ratios are are quite low, and net worth 202 00:10:11,080 --> 00:10:14,560 Speaker 1: is really elevated, but households are dealing with a number 203 00:10:14,559 --> 00:10:17,800 Speaker 1: of shocks in the near term. Obviously, is one UH 204 00:10:17,960 --> 00:10:20,319 Speaker 1: sentiment has been hit on that an income will be 205 00:10:20,400 --> 00:10:22,840 Speaker 1: hit if we don't have the child tax credit renewed 206 00:10:22,880 --> 00:10:25,040 Speaker 1: next year. And I'm so glad you brought that up, because, 207 00:10:25,080 --> 00:10:26,679 Speaker 1: of course, the reason we talk about such a high 208 00:10:26,679 --> 00:10:29,640 Speaker 1: saving story is because we saw unprecedented fiscal stimulus that 209 00:10:29,679 --> 00:10:33,000 Speaker 1: padded consumers wallets. When we think about build back better 210 00:10:33,000 --> 00:10:35,320 Speaker 1: and that child tax credit specifically, is that if that 211 00:10:35,400 --> 00:10:40,000 Speaker 1: doesn't happen, what are the growth implications of that? Sure, 212 00:10:40,040 --> 00:10:42,120 Speaker 1: So we assume that it will be renewed next year, 213 00:10:42,480 --> 00:10:44,720 Speaker 1: uh and if we're not renewed, that that would reduce 214 00:10:44,720 --> 00:10:47,120 Speaker 1: our growth forecast by thirty to fifty basis points. So 215 00:10:47,160 --> 00:10:49,800 Speaker 1: we would go from thick three point six percent growth 216 00:10:49,800 --> 00:10:53,120 Speaker 1: next year to something closer to three percent growth. It's material, 217 00:10:53,360 --> 00:10:56,160 Speaker 1: is particularly material for the consumer, but in my mind, 218 00:10:56,160 --> 00:10:59,120 Speaker 1: it's not something that moves us from you know, very 219 00:10:59,400 --> 00:11:02,280 Speaker 1: very high, well above trend to something that sees the 220 00:11:02,360 --> 00:11:04,320 Speaker 1: labor market begin to contract. So I don't think it 221 00:11:04,360 --> 00:11:07,840 Speaker 1: has as big of implications for the Fed FED policy. 222 00:11:07,920 --> 00:11:10,480 Speaker 1: The Fed story. They will still be tightening policy, the 223 00:11:10,520 --> 00:11:12,840 Speaker 1: labor markets should continue to improve, But it is a 224 00:11:12,880 --> 00:11:17,320 Speaker 1: material impact on the growth outlet for next year. Matt. 225 00:11:17,400 --> 00:11:20,560 Speaker 1: You're talking about three, possibly four rate hikes next year 226 00:11:20,760 --> 00:11:25,040 Speaker 1: from the FED. Recessions are normally caused by the Fed 227 00:11:25,600 --> 00:11:29,400 Speaker 1: raising rates. It's either higher rates or higher energy prices. 228 00:11:29,880 --> 00:11:31,960 Speaker 1: To a certain extent, we could have both next year, 229 00:11:32,360 --> 00:11:34,840 Speaker 1: how would you handicap the risk of a recession in 230 00:11:34,880 --> 00:11:42,840 Speaker 1: the United States? So, I think you have very interesting 231 00:11:42,880 --> 00:11:46,080 Speaker 1: divergences right now between recession indicators. There's there's a few 232 00:11:46,080 --> 00:11:49,400 Speaker 1: consumer indicators that we focus on closely. The look at 233 00:11:49,400 --> 00:11:52,120 Speaker 1: either at the gaps between expectations and current conditions or 234 00:11:52,520 --> 00:11:55,240 Speaker 1: the gaps between current conditions in the different surveys, and 235 00:11:55,280 --> 00:11:59,199 Speaker 1: those look like recessions are very elevated call it over 236 00:11:59,240 --> 00:12:01,840 Speaker 1: the next year. On the on the other hand, if 237 00:12:01,840 --> 00:12:04,080 Speaker 1: you look at YELD curve metrics, yes they have flattened, 238 00:12:04,120 --> 00:12:07,360 Speaker 1: but they remained pretty steep and are suggesting recession risks 239 00:12:07,360 --> 00:12:11,600 Speaker 1: are pretty muted around. I think you nailed it that 240 00:12:11,679 --> 00:12:14,560 Speaker 1: the biggest risk here is the FED. That the FED 241 00:12:14,600 --> 00:12:18,199 Speaker 1: has to respond more aggressively to inflation, uh, and that 242 00:12:18,200 --> 00:12:21,000 Speaker 1: that does trigger the next downturn. That is not our 243 00:12:21,000 --> 00:12:22,920 Speaker 1: base case. We think that they raise rates as you 244 00:12:22,920 --> 00:12:24,920 Speaker 1: mentioned three to four times, that they begin donewind the 245 00:12:24,960 --> 00:12:28,400 Speaker 1: balance sheet, and that inflation comes down to supply bottlenecks 246 00:12:28,440 --> 00:12:31,080 Speaker 1: begin to work themselves out. But the key risk here 247 00:12:31,200 --> 00:12:33,480 Speaker 1: is UH, maybe their supply bottle necks do not work 248 00:12:33,520 --> 00:12:36,960 Speaker 1: themselves out, or inflation expectations pick up or a wage 249 00:12:36,960 --> 00:12:40,280 Speaker 1: price spiral begins to uh an anchor inflation, and that 250 00:12:40,320 --> 00:12:42,840 Speaker 1: becomes self fulfilling in many ways, and that the FED 251 00:12:42,880 --> 00:12:45,720 Speaker 1: has to move more aggressively. It's a very difficult different 252 00:12:45,760 --> 00:12:47,920 Speaker 1: environment than where we were pre COVID, where inflation was 253 00:12:48,000 --> 00:12:50,280 Speaker 1: quite low when the FED started to raise rates and 254 00:12:50,280 --> 00:12:53,320 Speaker 1: the labor market still had some room to tighten. Today, 255 00:12:53,360 --> 00:12:56,200 Speaker 1: inflation is well above target, the unemployment rate is almost 256 00:12:56,200 --> 00:12:58,280 Speaker 1: at the Fed's view of neighbor of the long run level, 257 00:12:58,760 --> 00:13:00,439 Speaker 1: and so there is a great risk I think that 258 00:13:00,480 --> 00:13:02,200 Speaker 1: they have to move more aggressively and that that does 259 00:13:02,320 --> 00:13:05,400 Speaker 1: raise recession risks. Probably not two, but as we look 260 00:13:05,400 --> 00:13:08,760 Speaker 1: out into four man, I just have to pick up 261 00:13:08,760 --> 00:13:10,760 Speaker 1: a little bit on what Kailey was alluding to earlier. 262 00:13:10,800 --> 00:13:13,600 Speaker 1: You know, we had City Global Chief Economists Nathan Sheets 263 00:13:13,640 --> 00:13:16,760 Speaker 1: on yesterday and he talked about the immense fiscal hurdle 264 00:13:16,840 --> 00:13:19,160 Speaker 1: that the US is facing in the first half of 265 00:13:19,200 --> 00:13:22,199 Speaker 1: this year. I mean two point seven trillion of fiscal 266 00:13:22,679 --> 00:13:25,640 Speaker 1: stimulus last year. You know, how is this economy going 267 00:13:25,679 --> 00:13:27,840 Speaker 1: to manage through without any of that? That's equivalent by 268 00:13:27,880 --> 00:13:30,920 Speaker 1: the way, as you well are aware of GDP. So 269 00:13:31,000 --> 00:13:33,680 Speaker 1: that's a pretty big number that's not coming anytime soon, 270 00:13:35,080 --> 00:13:38,120 Speaker 1: absolutely so. So I think what these traditional fiscal impulse 271 00:13:38,160 --> 00:13:41,360 Speaker 1: measures miss is that a lot of the stimus that 272 00:13:41,400 --> 00:13:43,520 Speaker 1: we had last year was saved. We noted about the 273 00:13:43,520 --> 00:13:46,080 Speaker 1: two point four trillion dollars of excess savings that households have. 274 00:13:46,400 --> 00:13:48,160 Speaker 1: There's a couple of hundred billion dollars of state and 275 00:13:48,200 --> 00:13:50,760 Speaker 1: local governments have not spent yet. And so I think 276 00:13:50,800 --> 00:13:55,440 Speaker 1: those typical physical impulse measures of very elevated last year 277 00:13:55,760 --> 00:13:59,080 Speaker 1: UH and very negative over the next year do overstate 278 00:13:59,120 --> 00:14:00,640 Speaker 1: the case. I do think there's gonna be a lot 279 00:14:00,640 --> 00:14:02,800 Speaker 1: more smoothing and the fiscal impulse given that a lot 280 00:14:02,800 --> 00:14:05,240 Speaker 1: of it was saved. But it does highlight the challenge 281 00:14:05,280 --> 00:14:08,200 Speaker 1: we We've had an economy UH since COVID hit that 282 00:14:08,280 --> 00:14:11,960 Speaker 1: has been you know, very significantly supported by massive fiscal 283 00:14:11,960 --> 00:14:15,839 Speaker 1: stimulus and a FED policy that has been incredibly accommodative. 284 00:14:17,000 --> 00:14:19,160 Speaker 1: Two we'll see a reversal of both of those things. 285 00:14:19,600 --> 00:14:21,960 Speaker 1: We think that the economy can you know, weather that 286 00:14:22,000 --> 00:14:24,320 Speaker 1: and still see growth well above trend, But it is 287 00:14:24,360 --> 00:14:26,360 Speaker 1: an open question. And and just to go back to 288 00:14:26,360 --> 00:14:28,640 Speaker 1: the last point, the key question I think for for 289 00:14:28,680 --> 00:14:32,440 Speaker 1: growth in the outlook remains. Can the Fed actually land 290 00:14:32,520 --> 00:14:36,000 Speaker 1: this this uh you know, land this plane in a 291 00:14:36,040 --> 00:14:39,480 Speaker 1: soft landing way and environment where inflation is as we 292 00:14:39,520 --> 00:14:41,720 Speaker 1: saw this morning, at the highest level since the nineties. 293 00:14:42,200 --> 00:14:44,320 Speaker 1: Great stuff, Matt Lozzettie of Deutsche Bank, thank you so 294 00:14:44,400 --> 00:14:47,280 Speaker 1: much for your insight. Appreciate it. Thank you for joining us, 295 00:14:47,280 --> 00:14:54,360 Speaker 1: and Jane Fowley joining a Snatches, the head of effect 296 00:14:54,360 --> 00:14:57,280 Speaker 1: Strategy of Rabbi Bank, got to ask the big question, Jane, 297 00:14:57,680 --> 00:15:01,120 Speaker 1: as we come out of one into me too, does 298 00:15:01,160 --> 00:15:03,480 Speaker 1: this incredible tail when that we've seen for the dollar 299 00:15:04,080 --> 00:15:07,560 Speaker 1: this year continue into next year? I think it can 300 00:15:07,560 --> 00:15:10,040 Speaker 1: certainly continue into the the initial few months and maybe 301 00:15:10,040 --> 00:15:12,640 Speaker 1: wait until the Fed gets going with that interest rate 302 00:15:12,720 --> 00:15:15,520 Speaker 1: hiking net cycle. But you know, we've got to remember 303 00:15:15,520 --> 00:15:17,280 Speaker 1: that there's an awful lot of good news priced into 304 00:15:17,280 --> 00:15:19,800 Speaker 1: the US dollar, and the market has been becoming longer 305 00:15:19,800 --> 00:15:21,440 Speaker 1: and longer of the the U S dollar, and in 306 00:15:21,440 --> 00:15:23,920 Speaker 1: the last few months and since that, that trend really 307 00:15:23,960 --> 00:15:26,440 Speaker 1: did get underway in June, and of course June was 308 00:15:26,680 --> 00:15:30,560 Speaker 1: FOMC where the prospect of an interest rate hiking two 309 00:15:30,640 --> 00:15:33,480 Speaker 1: was initially put on the table, and since then the 310 00:15:33,520 --> 00:15:36,280 Speaker 1: market has become more and more optimistic about the possibilities 311 00:15:36,320 --> 00:15:39,000 Speaker 1: of interest rate hiking, and so there is a lot 312 00:15:39,040 --> 00:15:40,520 Speaker 1: of good news in the price. I think that's why 313 00:15:40,560 --> 00:15:43,280 Speaker 1: we're sort of glued to that one thirteen handling in 314 00:15:43,320 --> 00:15:46,040 Speaker 1: eury dollar right now. I think we need this consolidation. 315 00:15:46,080 --> 00:15:49,960 Speaker 1: I think perhaps we need some pullbacks before the market 316 00:15:50,000 --> 00:15:52,040 Speaker 1: can can really make a decision about you know, don't 317 00:15:52,200 --> 00:15:54,840 Speaker 1: we don't want to build on those long dollar positions more. 318 00:15:55,080 --> 00:15:57,840 Speaker 1: You know what on earth can happen in order to 319 00:15:57,840 --> 00:15:59,760 Speaker 1: to make me do that? So um, I think we 320 00:16:00,000 --> 00:16:02,040 Speaker 1: and have further to go. I'm not so sure if 321 00:16:02,240 --> 00:16:04,920 Speaker 1: if the the the movement up in the dollar can 322 00:16:05,080 --> 00:16:08,200 Speaker 1: can last a full year, though, so we understand the 323 00:16:08,280 --> 00:16:11,640 Speaker 1: risks around European growth at this stage. One of the 324 00:16:11,680 --> 00:16:14,080 Speaker 1: big stories that I think has kind of flown under 325 00:16:14,080 --> 00:16:16,560 Speaker 1: the radar a little bit as we've watched what has 326 00:16:16,600 --> 00:16:20,520 Speaker 1: happened with the FED, what's been happening with the fiscal 327 00:16:20,520 --> 00:16:22,800 Speaker 1: programs in the United States, and of course O Macron 328 00:16:23,000 --> 00:16:26,280 Speaker 1: has been this gas crisis in Europe. Energy prices are 329 00:16:26,360 --> 00:16:28,400 Speaker 1: super high all the way across the continent. They're coming 330 00:16:28,440 --> 00:16:30,360 Speaker 1: down a little bit as we see the arrival of 331 00:16:30,440 --> 00:16:33,360 Speaker 1: some lergy tankers from the United States. But nevertheless they 332 00:16:33,400 --> 00:16:37,560 Speaker 1: remain very very high. We've got very little storage. We 333 00:16:37,600 --> 00:16:40,120 Speaker 1: could potentially be in the same situation next year. And 334 00:16:40,240 --> 00:16:42,680 Speaker 1: rather than this being an inflation threat, Jane, could this 335 00:16:42,760 --> 00:16:45,600 Speaker 1: be a growth threat for Europe? And we underestimating the 336 00:16:45,600 --> 00:16:48,680 Speaker 1: impact that this could have. Yeah, I think you said it. 337 00:16:48,840 --> 00:16:51,640 Speaker 1: I think this is a growth threat and in many 338 00:16:51,960 --> 00:16:54,680 Speaker 1: respects it really doesn't endorse that the very cautious stance 339 00:16:54,760 --> 00:16:57,000 Speaker 1: of of Leguard at the ECB. You know, she has 340 00:16:57,400 --> 00:17:01,320 Speaker 1: continuing to remain davish, continuing with this very supportive monetary 341 00:17:01,520 --> 00:17:04,040 Speaker 1: policies and and I think this is one reason, you 342 00:17:04,080 --> 00:17:06,679 Speaker 1: know why she's you know, justified in doing this. And 343 00:17:06,720 --> 00:17:10,119 Speaker 1: I think, um, you know, we've already heard reports um 344 00:17:10,280 --> 00:17:14,120 Speaker 1: small businesses, bigger businesses really having to to shut her 345 00:17:14,160 --> 00:17:17,880 Speaker 1: because of the additional costs that these energy prices brain. 346 00:17:17,920 --> 00:17:20,080 Speaker 1: But also it's going to be a significant headwind to 347 00:17:20,200 --> 00:17:22,800 Speaker 1: two consumers too, and I think that risk is only 348 00:17:22,800 --> 00:17:25,159 Speaker 1: going to be highlighted, you know during the winter months there. 349 00:17:25,320 --> 00:17:28,080 Speaker 1: Some country Spain comes to mind, have taken some action 350 00:17:28,280 --> 00:17:32,560 Speaker 1: to reduce the the the the bills on for for consumers, 351 00:17:32,800 --> 00:17:36,280 Speaker 1: not coal, cert for industry and that will help, but 352 00:17:36,600 --> 00:17:40,439 Speaker 1: this is certainly a significant headwind for for for business, 353 00:17:40,440 --> 00:17:43,959 Speaker 1: business and consumers in the region. Good morning, Jane. I 354 00:17:44,040 --> 00:17:46,639 Speaker 1: had a lovely chat with your colleague Christian Lawrence and 355 00:17:46,680 --> 00:17:50,520 Speaker 1: Cross assid Strategy yesterday and one area of disconnect was China, 356 00:17:50,680 --> 00:17:53,680 Speaker 1: an area that he tends to avoid at all costs. 357 00:17:53,720 --> 00:17:56,840 Speaker 1: What are your views on the REMIMBI in two. Well, 358 00:17:56,880 --> 00:17:58,560 Speaker 1: you know, if you look at the Chinese economy, we 359 00:17:58,600 --> 00:18:00,680 Speaker 1: know it's slowing, we know that are there are head 360 00:18:00,680 --> 00:18:03,240 Speaker 1: winds there, and it's it's fairly normal. And if we 361 00:18:03,280 --> 00:18:07,680 Speaker 1: had a floating exchange rate to see a currency weekend now. 362 00:18:07,960 --> 00:18:10,159 Speaker 1: I think one of the constraints for for China and 363 00:18:10,320 --> 00:18:13,720 Speaker 1: in terms of the exchange rate was that the very 364 00:18:13,800 --> 00:18:17,280 Speaker 1: very strong PPI inflation numbers that we were getting at 365 00:18:17,320 --> 00:18:19,840 Speaker 1: but they've appeared to started to moderate, and I think 366 00:18:20,000 --> 00:18:21,920 Speaker 1: this is really the key because if we do get 367 00:18:22,119 --> 00:18:26,639 Speaker 1: you know, some indication that inflationary pressures are moderating in China, 368 00:18:26,880 --> 00:18:28,959 Speaker 1: I think at that point the authorities could be more 369 00:18:29,040 --> 00:18:32,600 Speaker 1: comfortable in allowing the exchange rate or the Chinese remember 370 00:18:33,080 --> 00:18:36,720 Speaker 1: to weekend. So I think we are probably gonna see 371 00:18:36,720 --> 00:18:39,040 Speaker 1: certainly more talk of interest rate cuts if we don't 372 00:18:39,040 --> 00:18:41,920 Speaker 1: see more interest rate cuts and in the next few months, 373 00:18:41,960 --> 00:18:45,000 Speaker 1: and I think that too could be associated more with 374 00:18:45,040 --> 00:18:48,399 Speaker 1: more expectation that they will allow the remember to slip 375 00:18:48,680 --> 00:18:51,000 Speaker 1: against the U. S. Dollar. Well, in one area that 376 00:18:51,080 --> 00:18:53,400 Speaker 1: is the void of surprise is Turkey. The lira, which 377 00:18:53,400 --> 00:18:55,800 Speaker 1: had plummeted through eleventh to ten or earlier today, is 378 00:18:55,840 --> 00:18:57,679 Speaker 1: now back through eleven. I mean, these are big figure 379 00:18:57,680 --> 00:19:00,879 Speaker 1: moves in the Turkish lirror. Clearly it's not owners participating, 380 00:19:00,880 --> 00:19:03,159 Speaker 1: it's all driven by locals. What are your thoughts on 381 00:19:03,160 --> 00:19:05,480 Speaker 1: the lyric from the new year? You know, there was 382 00:19:05,520 --> 00:19:07,960 Speaker 1: a very interesting report in the FT that this morning 383 00:19:08,040 --> 00:19:12,639 Speaker 1: making calculations about the level of foreign exchange reserves UM 384 00:19:12,720 --> 00:19:15,760 Speaker 1: and their calculation was that these had dropped by billions 385 00:19:15,800 --> 00:19:17,720 Speaker 1: in a couple of days at the start of this week, 386 00:19:18,080 --> 00:19:20,760 Speaker 1: and and and and the implication was was that we 387 00:19:20,840 --> 00:19:24,360 Speaker 1: had the speech from President argon Um in the course 388 00:19:24,400 --> 00:19:25,760 Speaker 1: of the week, we had this if you like this 389 00:19:25,880 --> 00:19:29,399 Speaker 1: back door interest rate hike as far as retail investors 390 00:19:29,440 --> 00:19:32,320 Speaker 1: that were concerned, and the implication was is that we 391 00:19:32,359 --> 00:19:36,040 Speaker 1: had intervention or they made intervention to to really exaggerate 392 00:19:36,160 --> 00:19:38,480 Speaker 1: at the move. Of course, liquidity conditions are very very 393 00:19:38,480 --> 00:19:41,160 Speaker 1: thin because of the Christmas period too, And and so 394 00:19:41,680 --> 00:19:43,320 Speaker 1: you know that the takeaway from that is that the 395 00:19:43,320 --> 00:19:45,879 Speaker 1: intervention was done at a time which could make her 396 00:19:46,000 --> 00:19:48,280 Speaker 1: can look good, make his measures look good. And actually, 397 00:19:48,520 --> 00:19:52,360 Speaker 1: you know that takeaway really does undermine the credibility of 398 00:19:52,400 --> 00:19:56,240 Speaker 1: the Turkish authorities even further. And I you know, do 399 00:19:56,280 --> 00:19:58,920 Speaker 1: you think that unless we do get an interest rate hike, 400 00:19:59,320 --> 00:20:03,680 Speaker 1: that the majority of investors, institutional investors at least in speculators, 401 00:20:03,720 --> 00:20:07,400 Speaker 1: will continue to think that the Turkish lira remains very vulnerable. 402 00:20:09,160 --> 00:20:13,320 Speaker 1: Jane M Vladimir Putin this morning in his press conference 403 00:20:13,359 --> 00:20:17,200 Speaker 1: talking about Turkey, talking about the impact that policy there 404 00:20:17,280 --> 00:20:19,959 Speaker 1: is having, saying he doesn't want to repeat it in Russia, 405 00:20:20,040 --> 00:20:22,760 Speaker 1: talking about the need therefore for rate hikes um that 406 00:20:22,920 --> 00:20:26,439 Speaker 1: largely seems priced at the moment that nobilianur is going 407 00:20:26,440 --> 00:20:29,200 Speaker 1: to potentially how to do more. But the real threat, 408 00:20:29,240 --> 00:20:32,200 Speaker 1: it strikes me, for the ruble is is actually geopolitical 409 00:20:32,240 --> 00:20:35,439 Speaker 1: and what is happening around sanctions, what's happening on the 410 00:20:35,520 --> 00:20:39,080 Speaker 1: Ukrainian border, what's currently price there? Do you think in 411 00:20:39,200 --> 00:20:42,560 Speaker 1: terms of that geopolitical risk? Well, you know, there's there's 412 00:20:42,560 --> 00:20:44,600 Speaker 1: a lot of interesting topics that you just brought up guying, 413 00:20:44,680 --> 00:20:46,080 Speaker 1: and I think the first thing to say is that 414 00:20:46,119 --> 00:20:48,960 Speaker 1: the credibility of the Russian Central Bank, you know, cannot 415 00:20:49,000 --> 00:20:51,560 Speaker 1: in any way be compared to to Turkey, and the 416 00:20:51,640 --> 00:20:54,920 Speaker 1: Russian Central Bank has a huge amount of credibility, So 417 00:20:55,240 --> 00:20:57,440 Speaker 1: you know, that is one thing, and she's done an 418 00:20:57,440 --> 00:21:00,720 Speaker 1: extremely good job there in these last few years. But 419 00:21:00,760 --> 00:21:02,720 Speaker 1: the other thing I think that's you know, worth pointing 420 00:21:02,720 --> 00:21:06,040 Speaker 1: out with respect to the Russian ruble is that although 421 00:21:06,280 --> 00:21:09,719 Speaker 1: we were talking so much over in the West about Ukraine, 422 00:21:09,760 --> 00:21:13,280 Speaker 1: about the geo political risks, about the tensions between Russia 423 00:21:13,720 --> 00:21:17,159 Speaker 1: and the US, and Russia and NATO, Russia and Europe 424 00:21:17,200 --> 00:21:19,639 Speaker 1: for instance, actually if we look at the ruble, it 425 00:21:19,680 --> 00:21:22,200 Speaker 1: does seem to be retty more driven by the oil 426 00:21:22,280 --> 00:21:24,639 Speaker 1: price and so from from that point of view, we 427 00:21:24,680 --> 00:21:29,959 Speaker 1: haven't had an awful lot of geopolitical impact in there yet. Now. Clearly, 428 00:21:30,080 --> 00:21:31,879 Speaker 1: I think if we were to have, you know, an 429 00:21:31,920 --> 00:21:35,040 Speaker 1: increase in the tensions over Ukraine, that might change, but 430 00:21:35,119 --> 00:21:37,639 Speaker 1: for the time being that's not being nor that is 431 00:21:37,680 --> 00:21:41,240 Speaker 1: not a driving factor or right. Jane Folly of Rabble 432 00:21:41,240 --> 00:21:43,280 Speaker 1: Bank always great to get your insight. Thank you so 433 00:21:43,359 --> 00:21:46,200 Speaker 1: much for joining us. Happy holidays to you and yours. 434 00:21:51,720 --> 00:21:54,160 Speaker 1: Let's bring in Jody Guests, vice chair at Emory University, 435 00:21:54,240 --> 00:21:58,080 Speaker 1: Rowlands School of Public Health, Department of Epidemiology. Jody, as 436 00:21:58,119 --> 00:22:00,440 Speaker 1: we talked about all of these different forces at work, 437 00:22:00,520 --> 00:22:02,719 Speaker 1: what in your mind is the most critical to focus 438 00:22:02,760 --> 00:22:06,360 Speaker 1: on right now? Well, I think getting everyone boosted and 439 00:22:06,440 --> 00:22:09,399 Speaker 1: if you've not yet gotten vaccinated, we certainly want everyone 440 00:22:09,440 --> 00:22:11,440 Speaker 1: to get to vaccine, and we want you to get 441 00:22:11,480 --> 00:22:14,000 Speaker 1: one with an m R and a series and then 442 00:22:14,240 --> 00:22:17,200 Speaker 1: if you've been vaccinated in your six months after that vaccination, 443 00:22:17,240 --> 00:22:20,080 Speaker 1: we really do want to see people get boosted. We 444 00:22:20,160 --> 00:22:22,400 Speaker 1: also want a layer a few other things on that though, 445 00:22:22,400 --> 00:22:26,520 Speaker 1: because O macron is so incredibly transmissible, wearing a mask, 446 00:22:26,680 --> 00:22:29,199 Speaker 1: a very good mask, when you're out in public is 447 00:22:29,240 --> 00:22:33,240 Speaker 1: incredibly important, as is making sure that you're in ventilated spaces. 448 00:22:33,480 --> 00:22:35,640 Speaker 1: And I don't think we've been talking enough about testing, 449 00:22:35,720 --> 00:22:38,480 Speaker 1: although I do think that that conversation has been increasing, 450 00:22:38,640 --> 00:22:41,320 Speaker 1: But knowing when to test, in which kind of tests 451 00:22:41,359 --> 00:22:45,200 Speaker 1: to use is very important. Okay, so let's just talk 452 00:22:45,200 --> 00:22:47,200 Speaker 1: a little bit about that. Packs Lavia is this new 453 00:22:47,280 --> 00:22:49,720 Speaker 1: drug that we have this new anti viral that we 454 00:22:49,760 --> 00:22:53,240 Speaker 1: have from UH from FISA. You need to take it early. Therefore, 455 00:22:53,280 --> 00:22:55,840 Speaker 1: you need to test in order to know when to 456 00:22:55,920 --> 00:22:59,000 Speaker 1: take it. How should we be sequencing testing? Over here 457 00:22:59,040 --> 00:23:03,119 Speaker 1: in the UK? We have a many, many, many lateral 458 00:23:03,160 --> 00:23:05,000 Speaker 1: flow tests. I think I've got a box at home 459 00:23:05,200 --> 00:23:06,920 Speaker 1: of kind of twenty or thirty of them. They give 460 00:23:06,920 --> 00:23:09,480 Speaker 1: them out at schools. So you use the lateral flow 461 00:23:09,760 --> 00:23:12,200 Speaker 1: if you get a positive, then you go and get 462 00:23:12,680 --> 00:23:15,880 Speaker 1: a PCR test which allows the government as well to sequence. 463 00:23:15,920 --> 00:23:18,840 Speaker 1: It allows reporting around that. So how should we be 464 00:23:18,880 --> 00:23:22,560 Speaker 1: thinking about testing and how that fits in with using 465 00:23:22,600 --> 00:23:26,000 Speaker 1: these anti virals. Well, I think right now, with omer 466 00:23:26,040 --> 00:23:28,680 Speaker 1: crime spread across the United States and everyone getting ready 467 00:23:28,720 --> 00:23:31,040 Speaker 1: to gather for holidays, we really want to be talking 468 00:23:31,080 --> 00:23:33,480 Speaker 1: about how to use a rapid anergen test at home 469 00:23:34,040 --> 00:23:36,600 Speaker 1: and recognize what it does and what it doesn't do. 470 00:23:36,800 --> 00:23:39,600 Speaker 1: It does not give you free rein for a week 471 00:23:39,720 --> 00:23:43,280 Speaker 1: if you've had one negative rapid anigin, but it does 472 00:23:43,760 --> 00:23:46,240 Speaker 1: make you feel comfortable that you're not going to be 473 00:23:46,280 --> 00:23:49,199 Speaker 1: infectious if you're getting together with dinner with someone in 474 00:23:49,240 --> 00:23:52,400 Speaker 1: their home, and so you know that window of time 475 00:23:52,440 --> 00:23:54,919 Speaker 1: that you can use in a rapid anigin is appropriate 476 00:23:54,960 --> 00:23:58,359 Speaker 1: for holiday gatherings if you test before you go, but 477 00:23:58,400 --> 00:24:00,720 Speaker 1: if you're going to get together with friends the next day, 478 00:24:00,760 --> 00:24:04,600 Speaker 1: you need another test. And so access to rapid and 479 00:24:04,680 --> 00:24:08,080 Speaker 1: engines and using them at home appropriately it's not something 480 00:24:08,119 --> 00:24:10,119 Speaker 1: we've done very well in the United States, and we 481 00:24:10,160 --> 00:24:16,080 Speaker 1: need to work on that. In terms of using anti virals, 482 00:24:16,119 --> 00:24:20,160 Speaker 1: Then how did they slot in this this new drug 483 00:24:20,240 --> 00:24:22,040 Speaker 1: packs of it? You need to take it within the 484 00:24:22,080 --> 00:24:24,960 Speaker 1: first I don't know, two, three, four or five days 485 00:24:25,160 --> 00:24:28,240 Speaker 1: of being of being hit with a macron. So, so 486 00:24:28,320 --> 00:24:31,280 Speaker 1: how how do we make sure that we use this properly? 487 00:24:31,320 --> 00:24:33,840 Speaker 1: It's an expensive it's an expensive drug. What is it 488 00:24:33,920 --> 00:24:36,879 Speaker 1: six seven hundred dollars for? For of course, how do 489 00:24:36,920 --> 00:24:40,000 Speaker 1: we make sure that we're spending that money effectively? I 490 00:24:40,040 --> 00:24:41,720 Speaker 1: think I saw that it's going to be maybe five 491 00:24:42,200 --> 00:24:44,639 Speaker 1: thirty dollars in the United States. But it's got a 492 00:24:44,680 --> 00:24:47,840 Speaker 1: window as well. And you're right, you need to know 493 00:24:48,000 --> 00:24:51,200 Speaker 1: that you have COVID in order to get this, and 494 00:24:51,280 --> 00:24:54,800 Speaker 1: so you the best use of this new drug series 495 00:24:54,920 --> 00:24:56,639 Speaker 1: is going to be to use it in the first 496 00:24:56,640 --> 00:25:00,320 Speaker 1: three to five days of testing positive or on set 497 00:25:00,359 --> 00:25:03,320 Speaker 1: of symptoms, and so um we also want to be 498 00:25:03,440 --> 00:25:06,480 Speaker 1: using it. It works the best for people who are 499 00:25:06,560 --> 00:25:10,040 Speaker 1: at at risk for severe complications for COVID nineteen. So 500 00:25:10,080 --> 00:25:12,480 Speaker 1: that's a group that are I hope would have a 501 00:25:12,560 --> 00:25:15,840 Speaker 1: high sensitivity to wanting to test that folks who are 502 00:25:15,880 --> 00:25:20,040 Speaker 1: living with underlying conditions, or our older age, or have 503 00:25:20,560 --> 00:25:23,919 Speaker 1: things like diabetes and obesity and things that we know 504 00:25:24,080 --> 00:25:27,359 Speaker 1: complicate the course of COVID nineteen. That's really where're gonna 505 00:25:27,400 --> 00:25:29,800 Speaker 1: see plex i woid work the best and where we 506 00:25:29,840 --> 00:25:32,720 Speaker 1: see the best data so far, Jody, we spend so 507 00:25:32,800 --> 00:25:36,320 Speaker 1: much time harping on the bad news related to the coronavirus, 508 00:25:36,359 --> 00:25:39,000 Speaker 1: but there has been some incredible progress on the medical front. 509 00:25:39,040 --> 00:25:41,199 Speaker 1: I mean both specifically we you know we mentioned the 510 00:25:41,200 --> 00:25:43,040 Speaker 1: fiser oral pill, but also you in the U. S. 511 00:25:43,119 --> 00:25:45,840 Speaker 1: Army Walter Read Institute also announced yesterday that you know, 512 00:25:45,880 --> 00:25:47,840 Speaker 1: they've made some progress in terms of a virus that 513 00:25:48,000 --> 00:25:51,040 Speaker 1: not only affects you know, uh COVID, but also any 514 00:25:51,040 --> 00:25:54,639 Speaker 1: stars sort of related UM disease. My question for you 515 00:25:54,760 --> 00:25:57,800 Speaker 1: is what has you what advancements in epidemiology have you 516 00:25:57,880 --> 00:26:02,360 Speaker 1: most excited? As we turned to two Well, I think, um, 517 00:26:02,400 --> 00:26:04,680 Speaker 1: you know, he's been a long two years. But what 518 00:26:04,720 --> 00:26:08,399 Speaker 1: we've seen is people are paying attention to public health, 519 00:26:08,560 --> 00:26:11,879 Speaker 1: and um, we don't normally lead with a lot of 520 00:26:11,920 --> 00:26:15,480 Speaker 1: conversations about people even knowing what epidemiologists are. So that 521 00:26:15,560 --> 00:26:19,280 Speaker 1: has definitely changed. But the passion of our students and 522 00:26:19,320 --> 00:26:22,800 Speaker 1: what they're seeing as they as they learn about public 523 00:26:22,800 --> 00:26:25,320 Speaker 1: health during this pandemic, I think it's really going to 524 00:26:25,480 --> 00:26:28,879 Speaker 1: change the way public health moves forward. We're really focusing 525 00:26:28,920 --> 00:26:34,400 Speaker 1: on good science, communication and talking about inequities. COVID nineteen 526 00:26:34,440 --> 00:26:39,680 Speaker 1: has consistently taken advantage of inequities and healthcare and access 527 00:26:39,800 --> 00:26:42,040 Speaker 1: and and we need to be talking about that in 528 00:26:42,160 --> 00:26:44,080 Speaker 1: order to be willing to do something about it. And 529 00:26:44,119 --> 00:26:46,040 Speaker 1: so I think that that is one of the silver 530 00:26:46,160 --> 00:26:49,879 Speaker 1: linings of COVID nineteen, is making us talk about it 531 00:26:49,960 --> 00:26:53,040 Speaker 1: and making us face it. Jody, you know, I've also 532 00:26:53,080 --> 00:26:55,840 Speaker 1: heard that oh Macon doubles the risk of being infected 533 00:26:55,880 --> 00:26:57,399 Speaker 1: on a plane. You know, a lot of people are 534 00:26:57,400 --> 00:26:59,720 Speaker 1: traveling this holiday season. On myself, I mean, well, Tom 535 00:26:59,760 --> 00:27:01,560 Speaker 1: King's not sending the private jet to come pick me up, 536 00:27:01,560 --> 00:27:03,000 Speaker 1: so I'll be on a plane, um with a lot 537 00:27:03,040 --> 00:27:05,520 Speaker 1: of other people on on Saturday. You know, for me, 538 00:27:05,720 --> 00:27:09,800 Speaker 1: you know, how concerned should travelers be this holiday season? Well, 539 00:27:09,800 --> 00:27:12,639 Speaker 1: omer crowd is much more transmissible than we saw with Delta, 540 00:27:12,680 --> 00:27:17,520 Speaker 1: and we thought Delta was awammy um omercron when when 541 00:27:17,560 --> 00:27:20,400 Speaker 1: it is in a space, everyone there is much more 542 00:27:20,440 --> 00:27:22,719 Speaker 1: likely to get it than we've seen with other variants. 543 00:27:22,760 --> 00:27:26,919 Speaker 1: And airplanes have been very safe way to travel based 544 00:27:26,960 --> 00:27:29,480 Speaker 1: on the way that air circulates, and in airplanes, we've 545 00:27:29,480 --> 00:27:32,160 Speaker 1: not seen a lot of transmission from the actual airplane. 546 00:27:32,520 --> 00:27:35,600 Speaker 1: It's more what you're doing to get onto that plane 547 00:27:35,600 --> 00:27:38,840 Speaker 1: that has been a risk for people. And so you know, 548 00:27:38,920 --> 00:27:41,560 Speaker 1: we're just working with something that's so much more transmissible. 549 00:27:41,560 --> 00:27:43,920 Speaker 1: Now every place that you are with other other people 550 00:27:44,200 --> 00:27:46,680 Speaker 1: is a bigger risk than it was even with Delta. 551 00:27:46,920 --> 00:27:49,600 Speaker 1: A lot of factors that people are calculating into the 552 00:27:49,640 --> 00:27:51,920 Speaker 1: equation when deciding what to do this holiday season. Thank 553 00:27:51,960 --> 00:27:54,440 Speaker 1: you so much to Dr Jody Guest of Emory University, 554 00:27:54,440 --> 00:27:57,919 Speaker 1: and happy holidays to you and your zone. This is 555 00:27:57,920 --> 00:28:01,920 Speaker 1: the Bloomberg Surveillance Podcast. Thanks for listening. Join us live 556 00:28:02,080 --> 00:28:05,840 Speaker 1: weekdays from seven to ten am Eastern on Bloomberg Radio 557 00:28:06,040 --> 00:28:09,640 Speaker 1: and on Bloomberg Television each day from six to nine 558 00:28:09,720 --> 00:28:14,119 Speaker 1: am for insight from the best in economics, finance, investment, 559 00:28:14,280 --> 00:28:19,280 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 560 00:28:19,400 --> 00:28:23,200 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course, on 561 00:28:23,320 --> 00:28:27,440 Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg.