Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all partnessing the power of Business
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Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on the Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. So we just heard from
Speaker 1: the President detailing the latest upbeat on what the US
Speaker 1: wants to do in terms of really combating this latest
Speaker 1: variant when it comes to COVID nineteen. In the meantime,
Speaker 1: we do have our second reporter case in the US
Speaker 1: fires are expecting its vaccine to hold up against the
Speaker 1: omicron variant uh and executive coming out with that. Germany
Speaker 1: imposing stringent nationwide restrictions on people who are not vaccinated.
Speaker 1: So that's a little bit of our world snapshot. We're
Speaker 1: also seeing that even though Amy Cron is stealing a
Speaker 1: lot of the attention. The delta variant is still pressuring
Speaker 1: the U S health care system. So it comes to
Speaker 1: the time where hospitalizations are rising in at thirty nine states. Carol,
Speaker 1: all right, so let's get to our guest, Dr Emily Gurley,
Speaker 1: Associate scientist at Johns Hopkins University, Bloomberg School of Public Health,
Speaker 1: which is of course supported by Michael R. Bloomberg, Founder,
Speaker 1: Bloomberg LP and Bloomberg Philanthropies. She joins us on the
Speaker 1: phone from Baltimore. Great to have you here with us,
Speaker 1: Dr Gurley. The latest amicron variant. What are some of
Speaker 1: the conversations you guys are having at John's Hopkins about this? Well, Um,
Speaker 1: there are conversations about the scientific UH questions around where
Speaker 1: the this variant came from, UM and what the mutations
Speaker 1: that that we observe in this variant might mean. And
Speaker 1: then there are conversations about the public health impact which
Speaker 1: are related to the scientific questions but but are a
Speaker 1: bit different. And and in in terms of public health impact,
Speaker 1: we're really in a way and see mode because um,
Speaker 1: we we don't know UH answers to key questions like
Speaker 1: is this virus more transmissible? Is it able to evade
Speaker 1: our our immune responses. Um, could it lead to more
Speaker 1: severe disease? And it may be weeks actually before we
Speaker 1: have good answers to this question. Let's ask the question
Speaker 1: a different way. What do we know? Well, we know that, uh,
Speaker 1: the omicron variant has many more mutations then we would
Speaker 1: expect to see from a virus that evolved from one
Speaker 1: of the existing more common variants. So, UM, we expect
Speaker 1: viruses to change over time. That's that's normal. UM. But
Speaker 1: this virus has many more mutations. So it's it looks
Speaker 1: a lot different than the other variants that are currently circulating. UM.
Speaker 1: And so we don't we don't know how it came
Speaker 1: to be, but we do know that it looks different.
Speaker 1: So many more mutations? Is that worries some like? Give
Speaker 1: us some idea for those of us who are not
Speaker 1: as smart as you. Oh, well, I mean but that
Speaker 1: but that's I mean, that's the question. What does it mean?
Speaker 1: I don't think we fully understand what it means from
Speaker 1: a public health perspective. We generally are not smart enough
Speaker 1: to be able to look at genetic mutations and say, uh,
Speaker 1: if a virus has this, this, and this, it is
Speaker 1: going to do this we know, UH, we can't say
Speaker 1: because of where the mutations are on the virus. There
Speaker 1: there are many around the spike protein, and the spike
Speaker 1: is what connects to our UH cells, so the virus
Speaker 1: can replicate, and the spike is what are antibodies target, right,
Speaker 1: So if we have antibodies two to a spike protein
Speaker 1: of previous variants, they may not bind as well to
Speaker 1: this virus because it has some mutations there. It looks
Speaker 1: a little bit different to our immune systems. Yeah, I
Speaker 1: think for our audience, a question that I've been talking
Speaker 1: about with friends is what should we be doing? How
Speaker 1: should we change your behavior? If at all? I think that.
Speaker 1: I mean, first of all the variants that the variant
Speaker 1: that's transmitted most commonly in the US right now and
Speaker 1: that's causing all these hospitalizations and deaths is the Delta variant.
Speaker 1: So don't forget about delta. UM. We expect that all
Speaker 1: of our interventions UH that we use now for UM
Speaker 1: for delta are the same. They're the still the best
Speaker 1: tools that will have for O macron as well. So
Speaker 1: get vaccinated, get a booster UH. If you're eligi a
Speaker 1: bowl UM, be aware of what's happening around you. So
Speaker 1: if there's a lot of transmission happening in your community,
Speaker 1: you know, get the mask out. Um Uh, you've got
Speaker 1: to be aware of what's happening around you. If you've
Speaker 1: been exposed, test yourself. Um, even if you've been vaccinated,
Speaker 1: because we know that if you are infected, even after vaccination,
Speaker 1: you can transmit to other people. Well, I have a
Speaker 1: question for you. So, um, sure Tim got his booster.
Speaker 1: I hope I can say that I'm a vast get
Speaker 1: my booster. I'm about to get my booster. So what
Speaker 1: if then all of a sudden they come out in
Speaker 1: a couple of weeks and they're like, Okay, that booster
Speaker 1: is gonna do nothing for you, And then I don't
Speaker 1: know what does that mean for our safety and our health. Again,
Speaker 1: I guess it depends on how lethal it is, right
Speaker 1: and how contagious is it it is. I guess we
Speaker 1: have to answer those questions. But then if they come
Speaker 1: out with another booster in three months that does deal
Speaker 1: with this new variant, we'll be safe to go ahead
Speaker 1: and get that again. Like we can just continue to
Speaker 1: keep getting boosters and the stuff being you know, basically
Speaker 1: being shot again. UM. So there are a lot there's
Speaker 1: a lot of speculation there, questions. But you know what
Speaker 1: I'm getting at, Like this idea of getting multiple vaccines
Speaker 1: over and over and maybe getting them closer and closer
Speaker 1: to one another. Um, do we need to be concerned
Speaker 1: about that? I really doubt it. I UM and so
Speaker 1: and but let's be clear about what the vaccines really
Speaker 1: are meant to do. UM And I think because I
Speaker 1: think this message does get confused. What we're trying to
Speaker 1: do is prevent hospitalizations and death. That's the primary goal
Speaker 1: for COVID control, UM and to end the pandemic because
Speaker 1: you know, imagine, imagine we were having a pandemic that
Speaker 1: only caused mild disease. Right do you get an infection,
Speaker 1: you don't feel well for a few days, but then
Speaker 1: you recover and your fine. Uh, no rush to the hospital,
Speaker 1: no increase in risk of death. We would not offend
Speaker 1: our world for a pandemic like that, right. So what
Speaker 1: we have to try to do as much as we
Speaker 1: can is get COVID to look like that, right. So,
Speaker 1: so then we're reducing at every stage. Uh, you know,
Speaker 1: risk of hospitalization, risk of death. Vaccines are the very
Speaker 1: best way to do that. Even in studies that show, um,
Speaker 1: you know that vaccines can wane over time and their
Speaker 1: ability to prevent infection. Um, they still are retain their
Speaker 1: ability to prevent hospitalization and death. And that's really what
Speaker 1: we have to keep our eyes on here, I think. UM. So,
Speaker 1: so those vaccines are the are the best way to
Speaker 1: do that. Um. There's no reason to believe that, Oh,
Speaker 1: macron Is is going to change that calculation. Um. And
Speaker 1: we also have to you know, think about um, you know, treatment.
Speaker 1: If you're at high risk, you need to be you know,
Speaker 1: you need to be watching yourself. UM. Get some home
Speaker 1: rapid tests. Yes, Okay, that's what I want to talk
Speaker 1: about with you. I want to talk about the home
Speaker 1: rapid test because we just heard from President Biden that
Speaker 1: he wants private insurers to pay for these at home
Speaker 1: rapid tests. These are antigen tests. They're not PCR test. Correct,
Speaker 1: That's correct. Okay. What is the accuracy of an at
Speaker 1: home rapid test versus a PCR test? Um? So they
Speaker 1: can't be less accurate, But it depends on the situation, right. UM.
Speaker 1: So Let's imagine that you know you've been exposed, and
Speaker 1: you have symptoms and your rapid test is positive, you
Speaker 1: probably have COVID. The chances that you don't have COVID
Speaker 1: are very low. Okay, Um, Let's imagine that you haven't
Speaker 1: been exposed, you don't have symptoms, and you get a
Speaker 1: positive test. Well maybe yes, maybe no, right, maybe you
Speaker 1: take a second test to to to figure that out
Speaker 1: or to get in, you know, to get another data point. Right.
Speaker 1: Um So, I think when we say these tests aren't
Speaker 1: is accurate, we're selling them short because there are many
Speaker 1: situations where they are definitely accurate enough to take action.
Speaker 1: My question is because as we get closer and closer
Speaker 1: to the holidays, and I saw this certainly with friends
Speaker 1: and family before the Thanksgiving holiday, people go and they
Speaker 1: get a bunch of bay Nacks now tests from the
Speaker 1: drug store. They all take them, they are all negative,
Speaker 1: and they go and have Thanksgiving or Christmas or Hanukah
Speaker 1: with one another. Is that okay to do? Because these
Speaker 1: tests are are accurate enough to tell us if we
Speaker 1: don't have symptoms, and we we that we don't have COVID,
Speaker 1: they are great for that reason. Um so yeah, so
Speaker 1: we we we should be using them. We should be
Speaker 1: using them all the time. The test result, that's difficult
Speaker 1: to figure out. If you don't have symptoms and it's positive,
Speaker 1: it may be a false positive. That's possible. But you know,
Speaker 1: if you're gonna air on the conservative side, maybe you
Speaker 1: just set that, you know, don't go into that party
Speaker 1: until you can get a PCR test and get it confirmed.
Speaker 1: But if you're symptomatic and it's positive, you should stay away. Um.
Speaker 1: So so you know, I again, I think these these
Speaker 1: tests gets get a bad rap um for for no
Speaker 1: good reason. Remember what they're trying to do. So a
Speaker 1: PCR test is better in the sense that it can
Speaker 1: pick up the virus sooner in your system. So so
Speaker 1: that's an advantage. But the anagen tests are much better
Speaker 1: at telling us whether or not you're infectious, whether or
Speaker 1: not you have a lot of virus in your nose
Speaker 1: and are likely to infect someone else. So um, from
Speaker 1: a from a public health perspective, from a transmission perspective,
Speaker 1: those anagin tests are great because that's really what you
Speaker 1: want to know. If I go somewhere, is there a
Speaker 1: chance that I can inspect somebody else? Right? And the
Speaker 1: antigine tests are great for that. Um, they're in they're fast, right,
Speaker 1: that's we we speed means so much in terms of transmission.
Speaker 1: So just for an example, UM, if you've got a
Speaker 1: swap collected today and you've got your PCR results back tomorrow,
Speaker 1: that's very quick. But that PCR result tells you about
Speaker 1: your infection status yesterday, not today. And to be able
Speaker 1: to act on data you need you know you need
Speaker 1: rapid tests and the aningine tests are great for for
Speaker 1: helping you determine whether or not you're infectious. Covered a
Speaker 1: lot of ground, good stuff. Uh, Dr Emily Gurley, thank
Speaker 1: you so much. Epidemiologist over at Johns Hopkins University, Bloomberg
Speaker 1: School of Public House, supported by Michael R. Bloomberg, founder
Speaker 1: of Bloomberg ALP and Bloomberg Philanthropy. She's joining us on
Speaker 1: the phone from Baltimore. Really good questions. I know you've
Speaker 1: been thinking a lot about the testing. Really helpful clarification
Speaker 1: with these tests because there's so a lot of people
Speaker 1: have a lot of confusion around how accurate they are.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. We have been
Speaker 1: watching shares of Apple, seeing some selling earlier on definitely
Speaker 1: bouncing off their lows, but still a bit lower. What
Speaker 1: the concern seems to be is we know that there's
Speaker 1: been supply chain issues, but now we're looking at maybe
Speaker 1: some demand issues. To him, yeah, well, fortunately Mark German
Speaker 1: is the guy to talk to when it comes to
Speaker 1: all things Apple. He's technology reporter for Bloomberg News. He
Speaker 1: joins us right now from the Los Angeles bureau, so
Speaker 1: you folks on YouTube who are watching and listening right
Speaker 1: now can see him as well. Mark, What is what
Speaker 1: is going on with the demand story here? Because this
Speaker 1: is part of a much larger narrative that um, we've
Speaker 1: heard about over the last few weeks thanks to your
Speaker 1: reporting in our colleagues as well as you know, the
Speaker 1: iPhone thirteen is really a modest upgrade over the iPhone twelve,
Speaker 1: and that was ignored for the first several weeks of
Speaker 1: this product's launch because there was such supply chain problems
Speaker 1: with this device alongside every thing else because of the
Speaker 1: chip shot, which we saw one month delays, right and
Speaker 1: those one month delays sort of indicated really strong demand.
Speaker 1: But we know that that is starting to sort of ease,
Speaker 1: and we know that people are not looking to buy
Speaker 1: the iPhone thirteen in quantities that they were wanting to
Speaker 1: buy the iPhone thirteen weeks ago, probably because it's a
Speaker 1: modest upgrade. The other thing I should know is that
Speaker 1: the carrier is an Apple head. Extraordinarily aggressive rebate offers
Speaker 1: for the iPhone teen out of the gate. The amount
Speaker 1: of how lucrative those deals are have now subsided now
Speaker 1: that the phone has been out for several months as well.
Speaker 1: Now right, so that all indicates why would be weakening?
Speaker 1: People are waiting for the iPhone fourteen. They're waiting for
Speaker 1: bigger changes next year, and I'd be waiting for a
Speaker 1: new iPhone I seen next year. Can I just tell you? Alright, alright,
Speaker 1: I'm not gonna say who it is, but there's been
Speaker 1: a carrier, my carrier sorry, has been bombarding me saying like,
Speaker 1: if you get a new phone. I just bought a
Speaker 1: new phone in the last year, Like, if you buy
Speaker 1: a new phone, we're gonna give you this an amount
Speaker 1: of money. I mean, it has been NonStop. Mark. Well,
Speaker 1: they're doing that because they need They know that they
Speaker 1: need rebates and discounts in these special deals in order
Speaker 1: to move these devices. Right, if you bought an iPhone
Speaker 1: twelve last year. There's basically no reason to upgrade to
Speaker 1: the iPhone thirteen, So why did I do it? Right?
Speaker 1: I have the iPhone third Team Promax here, I had
Speaker 1: the twelve Promacs lost year white. I got it for free. Really,
Speaker 1: I swear I got it for free. That's how aggressive
Speaker 1: the deals were at the early off thing of these
Speaker 1: new iPhones. They gave yous basically for a twelve Promax
Speaker 1: last year. Other devices got big discounts too, right, That's
Speaker 1: why these phones were flying off the shelves because of
Speaker 1: those carrier deals. There are some cool nifty features, the
Speaker 1: new camera technology, the portrait mode, cinema mode for video,
Speaker 1: the new Cerra blue color, which I think is kind
Speaker 1: of cool. But other than that, yeah, that's the one.
Speaker 1: But other than that, these are not significant upgrades. But
Speaker 1: there's also people with older phones. Markets is already because
Speaker 1: one great thing about working with Markerrman is you can
Speaker 1: email him and say, hey, Mark, what phone should I get?
Speaker 1: And he'll email you back. And I'm so grateful he
Speaker 1: because there's nobody else who knows more about phones than Mark.
Speaker 1: Day Uh Mark. So here's the thing. I upgraded from
Speaker 1: an iPhone tad. So there was a huge reason for
Speaker 1: me to buy this, this thirteen pro that I just got.
Speaker 1: And it's so it's a it's night and day, especially
Speaker 1: with with the apps that I use. Um, isn't that
Speaker 1: who this phone is geared toward, not necessarily to people
Speaker 1: who have the twelve like Carol? That's right. Apple doesn't
Speaker 1: design and develop new products to be released on an
Speaker 1: annual basis to get the people from last year to upgrade. Right.
Speaker 1: It's about people new to the ecosystem. It's about people new,
Speaker 1: uh to the iPhone. It's about people who are all
Speaker 1: upgrading from older phones like yourself. Right. But at the
Speaker 1: same time, we've seen consumer spending, right, decreases. Consumer prices
Speaker 1: have gone up, gas prices are going up. People are
Speaker 1: concerned about you know, food prices and potential food shortages.
Speaker 1: There are some concerns obviously on the Crowning and COVID
Speaker 1: as well, right, And those are reasons why demand could
Speaker 1: could be weakening. The one thing I'll note is I
Speaker 1: think this is, you know, a blit, not a trend
Speaker 1: for Apple. I think you'll see stronger sales next year.
Speaker 1: I think the iPhone fourteen is going to be obviously
Speaker 1: a smash hit. And the one thing I will say
Speaker 1: is that Apple has said that it's quarter revenue for
Speaker 1: Q one is going to be a grand slam. Basically,
Speaker 1: they're going to top a hundred and twelve billion, which
Speaker 1: was with a you know, reported last year in the
Speaker 1: first quarter. So regardless of this demand weekending, it's going
Speaker 1: to be an extraordinarily strong quarter, perhaps just not as
Speaker 1: strong as some had been anticipating or Apple would have liked,
Speaker 1: because not only because of supplied but a combination of
Speaker 1: supplying demand. I mean, I always feel like when we're
Speaker 1: talking Apple, it's like the law of large numbers. I mean,
Speaker 1: it's just it blows my mind. Hey, Mark German, thank
Speaker 1: you so much. Mark is technology reporter join in us
Speaker 1: and you can have seen him on YouTube from our
Speaker 1: l A bureau. I love talking with Mike. You to
Speaker 1: get him back again. What color is your phone? I
Speaker 1: got the C blue one that market. That's cool, I'll
Speaker 1: show it's here. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: All Right. At one time, Enron was a prominent energy supplier,
Speaker 1: a rating powerhouse named financial vehicles after Star Wars characters
Speaker 1: and themes. We all followed it. We wanted to talk
Speaker 1: to its top executives, and it had a stock that
Speaker 1: went from a high of ninety in August of two
Speaker 1: thousands to below a buck in November of two thousand
Speaker 1: one as it all unraveled in a massive fraud. Today,
Speaker 1: Tim is the twenty year anniversary of the end Ron bankruptcy.
Speaker 1: Greg Farrell is an investigative reporter for a legal enforcement
Speaker 1: team here at Bloomberg News. He's with us in the
Speaker 1: Bloomberg Interactive Broker's Studio. Greg story is featured in the
Speaker 1: new issue of Bloomberg Business Week Magazines. It's available on
Speaker 1: newsstands and at Bloomberg dot com slash of Business Week.
Speaker 1: So take us back twenty years ago where you were,
Speaker 1: Greg Um, you were a reporter at USA today, just
Speaker 1: following it right. Yes, I was at USA today, and
Speaker 1: in fact, because of nine eleven, I had been over
Speaker 1: in Europe for a while spelling some of our foreign correspondence,
Speaker 1: just in Germany and in England. So I remember the
Speaker 1: day to the bankruptcy, having a drink in a bar
Speaker 1: in Frankfort with an ex Golden Sax guy who was
Speaker 1: just starting his own fund and like, I wasn't following
Speaker 1: anyone because I was over there for something else, the
Speaker 1: Afghan pea stocks or something. But this guy was like,
Speaker 1: you know, I can't believe this happened. This was just
Speaker 1: such a stunning event that Enron, which was such a
Speaker 1: high flyer for so many years and like crashed and
Speaker 1: burned and like record time. So as soon as I
Speaker 1: got back, you know, I was put on this and uh,
Speaker 1: you know, it started with congressional hearings and then of
Speaker 1: course the almost you know, the very quick charge criminal
Speaker 1: charge that the Justice Department leveled against Arthur Anderson. Um. Well,
Speaker 1: speaking of crashing and burning, right, these were the the
Speaker 1: accounting firms and Arthur Anderson in particular. What came what
Speaker 1: came to be known as a result of the investigations, Well,
Speaker 1: first of all, it came out very quickly that Anderson
Speaker 1: had engaged in like a frenzy of paper shredding. You know,
Speaker 1: when at the time in October of two thousand one,
Speaker 1: that it was clear that a massive loss was going
Speaker 1: to be reported, and it was clear that there was
Speaker 1: going to be at least an sec investigation, if not worse. Um. So,
Speaker 1: you know that was a very bad fact than Joe Berardino,
Speaker 1: the current the CEO at the time and the last
Speaker 1: CEO of Arthur Anderson Um, he testified Congress in December
Speaker 1: that he thought that they've been you know, our Arthur
Speaker 1: had been lied to. At least that was the defense
Speaker 1: he put forward, right and ron Um that Enron had
Speaker 1: lied to Arthur and he was trying to protect the
Speaker 1: auditing firm. Um. Well, that's what's interesting about the stories.
Speaker 1: It really gets to the relationship between a firm and
Speaker 1: it's accounting firm, and you you really get into, you know,
Speaker 1: what are the responsibilities or the relationships because those accounting firms,
Speaker 1: which seems so dry and boring, they'd also become consultants, right,
Speaker 1: so they're really woven in with these companies. Yes, would
Speaker 1: potential that was a big problem at that time. Was
Speaker 1: such a big deal that the then chairman of the
Speaker 1: sec Arthur Levitt Um had proposed rule in the believe
Speaker 1: yes absolutely, and he had proposed rule in the year
Speaker 1: two thousand that auditing firms should keep there, you know,
Speaker 1: should should not serve also as business consultants to their
Speaker 1: clients because that could you know, basically expose them to leverage.
Speaker 1: And this is what we saw, you know, classically with
Speaker 1: Enron and Arthur Anderson. Uh, Anderson, like it was, it
Speaker 1: was the most profitable client. They got fifty more than
Speaker 1: fifty million dollars a year in two thousands, and they
Speaker 1: passed the fifty million mark just to October of two
Speaker 1: thousand one, before you know, Enron went down and it
Speaker 1: was clear that that amount of money had clouded, you know,
Speaker 1: and basically they had co opted the Houston office of
Speaker 1: Arthur Anderson. Okay, but you and you do. Right in
Speaker 1: the wake of this, three of the big four accounting
Speaker 1: from sold off their consulting units. But that was then.
Speaker 1: This is now in over the last decade, firms have
Speaker 1: reverse course acquiring consulting firms to expand their revenue sources,
Speaker 1: once again building conflicts of interest into the system a
Speaker 1: short term, right, yes, exactly. And that's that's one of
Speaker 1: the problems is that, you know, the passage of time
Speaker 1: went by. I think there was a real feeling after
Speaker 1: the conviction of Arthur Anderson was overturned by the Supreme
Speaker 1: Court unanimously that uh, you know, and we went from
Speaker 1: the you know, the Fabulous five or whatever you call them,
Speaker 1: to the Big four, the final four that you know,
Speaker 1: you can't put another accounting fir amount of business. Um. So,
Speaker 1: once the rest of the four sort of understood that
Speaker 1: it's not that they felt they had a license to
Speaker 1: do wrong as much as they didn't have that you know,
Speaker 1: fear of God that they had for a year or
Speaker 1: two after Anderson was put out of business, that we've
Speaker 1: got to watch our step. It kind of reminds me
Speaker 1: like coming off of the financial crisis or not the
Speaker 1: financial crisis, excuse me, the tech boom, right, and and
Speaker 1: you're having the analysts and the underwriters and it's just
Speaker 1: like it feels like things got obviously very messy. We
Speaker 1: know it did right in terms of conflicts of interest.
Speaker 1: I guess the question is, at this point, so memories
Speaker 1: are short, could we are investors better protected? Because I mean,
Speaker 1: investors lost the money a lot of money on and
Speaker 1: Ron and even more I think I'm world calm. A
Speaker 1: few months later, good point Sarbanes Oxley would not have
Speaker 1: been passed was starting to bog down in the summer
Speaker 1: of two thousand one two thousand two. But then when
Speaker 1: World Calm came and that was like, you know, isist
Speaker 1: a size? Is that the golden umbrellas? Is that that?
Speaker 1: Do you remember like the decorating Well, I'll look the
Speaker 1: World Calm, um was much bigger than that. Really created
Speaker 1: the momentum to pass a controversial law like Sarbanes Oxley
Speaker 1: because the you know, the c p A firms, you
Speaker 1: know they have they have a lot of strength, a
Speaker 1: lot of juice in Washington. So could could Enron happen again?
Speaker 1: So we haven't seen it. We haven't seen anything on
Speaker 1: the scale of Enron or World Calm. And that's for
Speaker 1: a number of reasons. Um. So there's a certain point
Speaker 1: you can you know, the auditing firms can be congratulated
Speaker 1: for that and the work of their overseas. The p
Speaker 1: c a o B, you know, the Public Company Accounting
Speaker 1: Oversight Board, which was set up by Sarbanes Oxley. However,
Speaker 1: um one of the biggest factors and then I didn't
Speaker 1: have the room to go into this. That has helped
Speaker 1: investors is a component of Sarbanes Oxley that was strengthened
Speaker 1: in Dodd Frank that basically protects whistleblowers. So there's been
Speaker 1: a shift in the last twenty years in the attitude
Speaker 1: towards whistleblowers, who I think used to be can it
Speaker 1: are traded traders, rats, you know, in grades whatever, um.
Speaker 1: In general, it was not something you wanted to be
Speaker 1: identified as twenty years ago. It's not like people want
Speaker 1: to now. However, look at the way Francis Haggan of
Speaker 1: Facebook has been celebrated in sixty minutes. It's it's very
Speaker 1: much you know, and and you know, the SEC's program,
Speaker 1: the whistleblower reward program, I think past the billion dollar
Speaker 1: mark last year. In fact, this current year is like
Speaker 1: the best year they've had that even more so, that's
Speaker 1: probably done a better job than the big four auditing
Speaker 1: firms at alerting the SEC to accounting problems, which is
Speaker 1: so interesting, right, like you know, basically reaching out to
Speaker 1: the people like to be responsible and really you know,
Speaker 1: oversight into our governance. Yes, yes, exactly, And so they're
Speaker 1: protected and it's been a phenomenally successful program for the SEC.
Speaker 1: I think it's really helped um prevent frauds from mushrooming.
Speaker 1: I spoke to Sharon Watkins, the mud whistleblower, just yesterday.
Speaker 1: Other piece that we did today, and as we were chatting,
Speaker 1: and I told her about this piece about Arthur Anderson
Speaker 1: because she was an accounting expert and warned that Enron
Speaker 1: would go down in a wave of accounting scandals, which
Speaker 1: in fact it did. Um But she also pointed out,
Speaker 1: you know, as she wasn't technically a whistleblower, but she
Speaker 1: sort of adopted that profile, that it is different today,
Speaker 1: and that whistle blowers have played a tremendous role probably
Speaker 1: in preventing you know, a lot of the SEC busts,
Speaker 1: a lot of frauds at small to MidCap companies, and
Speaker 1: you know, if it weren't the whistleblowers, these things could
Speaker 1: have mushroomed into something much bigger. That's what happened with
Speaker 1: Enron and World Colom. It's amazing great reporting. As always,
Speaker 1: Thank you so much, Greig Farrell. He's investigative reporter for
Speaker 1: Legal Enforcement Team here at Bloomberg News. And that story
Speaker 1: in the current issue of Bloomberg Business Week magazine. It's
Speaker 1: on newstands, online and on the Bloomberg This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio well. According to the American Christmas
Speaker 1: Tree Association, last year, ninety four million US households celebrated
Speaker 1: Christmas by displaying a Christmas tree in their home. Of
Speaker 1: those trees were artificial, were alive, tim and similar. Consumer
Speaker 1: demand is pretty much excited. I didn't either official trees,
Speaker 1: although it's interesting. I look in my family because of
Speaker 1: travel and some and things that we were mostly are
Speaker 1: a real Christmas tree family. And I have a brother's
Speaker 1: like you know what, because we go travel and we
Speaker 1: eat the tree. You know, they bought it like artificial
Speaker 1: tree last year. So I was, well, let's talk about
Speaker 1: it with Marcia Gray, executive director of the Christmas Tree
Speaker 1: Promotion Board, joins us on the phone from Howell, Michigan.
Speaker 1: Great to have you on the show of Marcia. Thanks
Speaker 1: for joining us. How are you. I'm doing great, and
Speaker 1: thanks for letting me join you, because we definitely want
Speaker 1: to talk about those real Christmas trees. And I love
Speaker 1: it real because I actually have two real Christmas. There's
Speaker 1: nothing like the smell home. You know what's great about
Speaker 1: about New York City And you don't realize this until
Speaker 1: you till you live here. Come here during the holidays,
Speaker 1: but the way they sell Christmas trees here is on
Speaker 1: the sidewalk. Sweet, isn't it. It's very sweet. So you're
Speaker 1: walking down the sidewalk and you have to walk through
Speaker 1: these you know, cell like Christmas tree sales, so you're
Speaker 1: just getting that great pine smell when you're walking through
Speaker 1: it is it's one of my favorite things. So tell
Speaker 1: us how things are going Marsha this year and what
Speaker 1: are your expectations and and you know what we're gonna
Speaker 1: ask you about are there going to be enough trees
Speaker 1: for everybody? Well, I'm really glad we have a chance
Speaker 1: to talk because the Christmas Tree Promotion Board, like the
Speaker 1: National Christmas Tree Association, we represent the real Christmas tree
Speaker 1: growers in the US. We don't we don't work with
Speaker 1: artificial That would be the American Christmas Tree Association. So
Speaker 1: a few different, two different groups at work here. Um,
Speaker 1: we're expecting a really strong season. Last year was a
Speaker 1: very good year for real Christmas trees, and it's it's
Speaker 1: kind of interesting. This question has been popping up about
Speaker 1: availability and shortage, and I definitely want to get to that.
Speaker 1: But I'm glad we're asking the question, and I think
Speaker 1: it's happening because we are seeing more interest in the
Speaker 1: real thing, in the real Christmas tree, and consumers want
Speaker 1: to make sure that they can get one. In fact,
Speaker 1: last year, we we always do consumer testing. We talked
Speaker 1: to people last year who had purchased a real tree
Speaker 1: for the first time during the pandemic. In those said
Speaker 1: they wish they'd started sooner. So we know we're going
Speaker 1: to have strong sales this year. Wow. Hey, So what
Speaker 1: about when it comes to costs of Christmas trees? Again?
Speaker 1: My you know, idea of a prices is changed by
Speaker 1: living in New York City where they're incredibly expensive. But
Speaker 1: how have you seen prices fluctuated at a time where
Speaker 1: we are talking a lot about rising prices for consumers. Sure,
Speaker 1: Christmas trees will probably be the same as almost every
Speaker 1: other thing that we're seeing. The cost of the tree
Speaker 1: production goes up just simply because labor, fuel, fertilizer. Our
Speaker 1: growers have some increased costs. But again, the wholesale price
Speaker 1: the tree is not you know, it does not encompass
Speaker 1: you know, the entire retail price. Retail prices are said individually,
Speaker 1: and you're right, you will see something very different, for
Speaker 1: example in New York City. Then you might see and
Speaker 1: let's say de Moine, Iowa. But those retail prices are
Speaker 1: impacted again by that selling area, so their overhead, their
Speaker 1: their costs that they have to hire people to run
Speaker 1: that tree lot or to um the real estate that
Speaker 1: they're paying for. We expect that the prices for the
Speaker 1: trees are up slightly this year, but I don't think
Speaker 1: anyone should be expecting some You know, we've heard some
Speaker 1: crazy reports about doubling of prices and and that's just
Speaker 1: simply not going to be happening. What about the logistics
Speaker 1: and in terms of transportation, I think it's just such
Speaker 1: a big cost are a big part of the cost
Speaker 1: equation when it comes to Christmas trees. Um, what are
Speaker 1: we knowing about that? We all know filling up at
Speaker 1: the at the pump, that those prices have gone up.
Speaker 1: It's got to be the same obviously for some of
Speaker 1: those truckers. What do we know about that front? And
Speaker 1: also do they have enough labor on truckers. We did
Speaker 1: a story earlier about now teenagers eighteen year olds being
Speaker 1: allowed to maybe become truck is because of the shortage
Speaker 1: of demand. Um, so what are we seeing on that front? Yeah?
Speaker 1: So trucking obviously was one of our biggest worries. Um,
Speaker 1: the cost is up from the trucking. The exciting thing
Speaker 1: is worth talking here. On December two, most of the
Speaker 1: Christmas trees have been delivered. It's done, it's over and done.
Speaker 1: They are in market. They're not sitting waiting. You know.
Speaker 1: The interesting thing, real Christmas trees, all real Christmas trees
Speaker 1: sold in the US are growing here in the United
Speaker 1: States or with our partner Canada. So we're not worrying
Speaker 1: about things being stuck in a cargo ship somewhere. We
Speaker 1: are really talking about that domestic shipping or trucking issue. Um,
Speaker 1: but we have the trees are there, they're in market.
Speaker 1: Took a little bit longer maybe for some locations to
Speaker 1: get all of the trees delivered, but pretty much the
Speaker 1: job has been done. Okay, I gotta ask, because this
Speaker 1: is very controversial. After Christmas, when is the right time
Speaker 1: to dispose of the Christmas tree? Well, Number one, we
Speaker 1: do encourage you to if your tree is drying out,
Speaker 1: we who want you to get it out of the
Speaker 1: house because it's it can be messy, and you're you're
Speaker 1: kind of done with it. Whenever you like to take
Speaker 1: it is fine. What's really interesting when you dispose of
Speaker 1: a real Christmas tree, it is biodegradable. Most trees are
Speaker 1: picked up your your local municipalities will announce dates that
Speaker 1: they're going to be picking up the trees. Most of
Speaker 1: those trees go to get chipped into mulch. Uh. So
Speaker 1: you really want to make sure you have your tree
Speaker 1: out there for that pickup program. So the trees are
Speaker 1: going to the right place and it disposed it properly
Speaker 1: at the end. Hey, real quick question, just got about
Speaker 1: twenty seconds. Here. Are we doing enough to to replenish
Speaker 1: and make sure we have trees for the environment, which
Speaker 1: we know we need so much? H You know this
Speaker 1: is really important. Real Christmas trees are a farm grown product.
Speaker 1: We do not take them out of force, so farmers
Speaker 1: are constantly replanting. You can feel really good about that choice. Alright,
Speaker 1: Happy holidays, Merry Christmas, have a great holiday season. Great
Speaker 1: to catch up with Marcia Gray, executive director at the
Speaker 1: Christmas Tree Promotion Board, joining us via zoom from how
Speaker 1: long can I'm yeah, I bet you let me drive?
Speaker 1: Oh no, no, no, no, this is not a toy.
Speaker 1: All right, please, I'll do the l I want to try.
Speaker 1: It's good question. This is the drive to the close
Speaker 1: up on Bluebird Radio. All right, is just about ten
Speaker 1: minutes away from the closing bell on this Thursday. We
Speaker 1: are definitely getting ready to wrap up the trading session,
Speaker 1: and as Charlie mentioned, we definitely have seen a rally today.
Speaker 1: We're covering near our best levels of the session on
Speaker 1: the SMP, Dow and the NAZAC. Let's get to it
Speaker 1: with Brian Jacobson. This. Brian Jacobson is senior investment strategist
Speaker 1: at all Spring Global Investments. They have seven billion dollars
Speaker 1: in assets under management. Brian, how are you. It's good
Speaker 1: to have you back. Yeah, thank you so much for
Speaker 1: having me here. It's a beautiful day here in Wisconsin,
Speaker 1: fifty and sunny. Well, what do you make of today's trade?
Speaker 1: I should say, put it in the context of what
Speaker 1: we've seen this week, which is a lot of volatility.
Speaker 1: In fact, the last few days or the worst back
Speaker 1: to back days that we've seen since October, and today
Speaker 1: the we're seeing this rally. So, so what do you
Speaker 1: make of the dip Buyers continue to come back in
Speaker 1: after big declines. Yeah, it just seems like people can't
Speaker 1: make up their minds is this good or is it bad? Uh?
Speaker 1: And I think that it's actually just emblematic of the
Speaker 1: type of uncertainty that people are really trying to wrestle
Speaker 1: with here, right. I Mean a lot of people like
Speaker 1: to say markets don't like uncertainty, but the fact is,
Speaker 1: we deal with uncertainty all the time, right, we have
Speaker 1: to manage it. It actually creates opportunities. I mean, the
Speaker 1: last year and a half has been all about uncertainty,
Speaker 1: one day after another, right, and we we see the
Speaker 1: different swings. I am curious, Brian, that are you able
Speaker 1: to start thinking about, all right, what is especially for uh,
Speaker 1: your clients and your investors. You know, what is the
Speaker 1: longer term strategy that makes sense? And I'm gonna say
Speaker 1: six to twelve months, which really is a long term.
Speaker 1: But do you feel like you have some confidence to
Speaker 1: kind of have a feel of what the environment will
Speaker 1: be in the next year? We think we do, uh.
Speaker 1: And that's the thing that I think that where there's
Speaker 1: the disagreement where we viewed the opportunity to say, on
Speaker 1: Friday with the sell off, and then you had the
Speaker 1: Monday rally, but then the Tuesday sell off those sell
Speaker 1: offs we viewed as an opportunity to load up a
Speaker 1: little bit more on those areas that we like the most,
Speaker 1: like for example, we do like say energy, We like
Speaker 1: more cyclical areas, so smaller cap, more value names, uh,
Speaker 1: emerging markets, credit on the fixed income side as opposed
Speaker 1: to the super safe treasury securities. And it's mainly because
Speaker 1: over the six to twelve month horizon here, we think
Speaker 1: that a lot of these problems that are plaguing the
Speaker 1: markets right now are really supply chain driven. Will probably
Speaker 1: see that improve in accelerating the way. Wait are you
Speaker 1: saying it's transitory anymore? Did you not list this week? Yeah,
Speaker 1: apparently he told us that we shouldn't use that term
Speaker 1: any well, but I think the problem is is that
Speaker 1: they didn't operationally define that term when they first loved it. Well,
Speaker 1: you know, isn't that the point? Like we really don't
Speaker 1: like six months, right, we don't really know what transitory meant.
Speaker 1: And that was the problem. And I think I am
Speaker 1: I almost took from what he did this week, is like,
Speaker 1: let's just stop talking about it, because here's our predicament.
Speaker 1: We're dealing with it. We don't know how long it's
Speaker 1: gonna last, but I would it's safe to say doesn't
Speaker 1: think that this is going to go on forever. But
Speaker 1: let's just get rid of the word because it's just
Speaker 1: messing everybody out, that's right. Yeah, it was kind of distracting,
Speaker 1: I think, from the fact that they were stuck between
Speaker 1: a rock and a hard place, right, I mean, you had,
Speaker 1: and that's what happens when there's a supply chain shock.
Speaker 1: Monetary policy really can't do much about that because they
Speaker 1: can't create more growth in the short term, and then
Speaker 1: you have the higher inflation that's supply chain driven. They
Speaker 1: can deal with more demand side issues, but not supply
Speaker 1: side issues. And for us, we actually put out a
Speaker 1: note back in March of last year saying transitory you
Speaker 1: should think of it as being twelve to sixteen months.
Speaker 1: And I think that's kind of playing out here because
Speaker 1: if it is supply chain driven, we'll likely see some
Speaker 1: improvements at an accelerating pace, in which case we could
Speaker 1: get stronger growth in the fourth quarter, stronger growth in
Speaker 1: the first quarter of two thousand twenty two, and also
Speaker 1: decline in this inflation impulse. And so that actually creates
Speaker 1: a bit of a sweet spot for the FED because
Speaker 1: they can taper the asset purchases, maybe wind that up
Speaker 1: because the crisis is effectively over. But then they don't
Speaker 1: have to be in a hurry to hike, right, so
Speaker 1: you can actually have they've been stuck in a predicament,
Speaker 1: but then they can be stuck in a sweet spot
Speaker 1: for two two when it shifts towards stronger growth and
Speaker 1: lower inflation prosures. Okay, so help us understand, because we
Speaker 1: did hear from from j. Powell several days this week,
Speaker 1: what do you expect from the Federal Reserve in THEO
Speaker 1: when it comes to UH monetary policy. Yeah, well, our
Speaker 1: base case scenario is that they'll probably ramp up the
Speaker 1: tapering program in March. Right, so at the meeting on
Speaker 1: December fifteenth, they can announce an acceleration of that taper,
Speaker 1: and then it puts. It gives them optionality, It gives
Speaker 1: them the ability that if inflation is falling, as we
Speaker 1: think that it will, going from you know, these high
Speaker 1: single digits towards something closer to we think the run
Speaker 1: rate by the end of the two thousand two is
Speaker 1: going to be closer to two point five or three percent.
Speaker 1: If that's the trajectory. That means that they can wrap
Speaker 1: up the taper sooner, but that doesn't mean that they
Speaker 1: have to hike earlier, right. It means that they could
Speaker 1: still probably wait until June. It gives them the flexibility
Speaker 1: that if prices aren't coming towards closer to their target
Speaker 1: uh comes say May, that they are able to hike then.
Speaker 1: But our base cases they're still going to likely wait
Speaker 1: until June or July and then try it again in December.
Speaker 1: And hiking into strength isn't a bad way to be hiking.
Speaker 1: It's the same thing that happened in two thousand, fifteen
Speaker 1: to eighteen. The market did pretty darned well during that
Speaker 1: period of time. Brian, your team there at all Spring,
Speaker 1: you know, they do their Monday meeting. They're like, all right, Brian,
Speaker 1: what do we really have to be worried about? Because
Speaker 1: man is last week was wacko, especially as we got
Speaker 1: freaked out once again about a new variant. We're still
Speaker 1: trying to assess it. Everybody says it's going to take
Speaker 1: maybe two to four weeks before we really understand maybe
Speaker 1: the significance of it. Um, what do you say to them? Yeah,
Speaker 1: I think that's the biggest risk. The one that we
Speaker 1: talked about is that we tend to reduce, reuse and
Speaker 1: recycle fears of the past, right, So we try to
Speaker 1: reduce everything, so one main thing, one main topic, and
Speaker 1: then we reuse and recycle the previous fears. And I
Speaker 1: think the one for two two is going to be
Speaker 1: a big debate about whether or not the FETE is
Speaker 1: going to be making a mistake. Are they going to
Speaker 1: start hiking a little bit too aggressively, And so as
Speaker 1: a result of the way that we're positioning portfolios, it's
Speaker 1: still wipen up on the duration of the fixed income
Speaker 1: portion of the portfolios, just in case, not that we
Speaker 1: get a taper tantrum or hiking hissy fits or something
Speaker 1: like that, but that we could see those longer term
Speaker 1: yields kind of swing a little bit more wildly than
Speaker 1: what people are accustomed to with their fixed in comeportion
Speaker 1: of their portfolio. But it's all too then be biased
Speaker 1: towards equities, all right, Gonna leave it on that note, Brian,
Speaker 1: Thank you so much. Brian Jacobsen, Senior investment Strategies at
Speaker 1: all Spring Global Investments. Thanks for listening to Bloomberg Business Week.
Speaker 1: Download the podcast on iTunes, SoundCloud, or Bloomberg dot com,
Speaker 1: and you can also listen to our radio show at
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Speaker 1: Search to Bloomberg Global News