Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Tim Stanevik. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, clus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
Speaker 1: not to mention our journalists and analyst in more than
Speaker 1: one and twenty countries. You can download Bloomberg Business Week
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com. You can also
Speaker 1: listen to our radio show at two pm Eastern Time
Speaker 1: on Bloomberg Radio or stream us live on YouTube and
Speaker 1: Bloomberg dot com. We know it was tough for public markets,
Speaker 1: but what about the private markets, Tim, Yeah, those high
Speaker 1: flying private companies such as Discord, Stripe, Instacart, Chime and more.
Speaker 1: Something that hedge funds really gorged on big time last year.
Speaker 1: How much value did those companies created? In two The
Speaker 1: story a most read on the Bloomberg Today with more
Speaker 1: We've got Bloomberg News hedge fund reporter Hemma Parmer with
Speaker 1: isn't our Bloomberg Interactive Broker's studio with more love this story?
Speaker 1: How much you did some exclusive analysis for this story
Speaker 1: today Among the most route on the Blueberg terminal. Just
Speaker 1: how bad was it for for hedge funds? And also
Speaker 1: how did you do it? Because these private market valuations, UM,
Speaker 1: they don't get revised very frequently, right, UM, So hedge funds, generally,
Speaker 1: that the crossover funds, those that do both public and
Speaker 1: private investing UM had a very difficult year. We've reported
Speaker 1: about this extensively down double digits UM. And on the
Speaker 1: private side, you know, the story really talks about how
Speaker 1: obscure these markets really are and nobody really knows exactly
Speaker 1: how much of these companies are worth. It's not like
Speaker 1: the stock market where everyone knows every every single second
Speaker 1: one a company is worth. And so UM, Well we
Speaker 1: did is we looked at, well, what companies private companies
Speaker 1: are mutual funds invested in that hedge funds are also
Speaker 1: invested in. Because mutual funds have to disclose publicly how
Speaker 1: the marks for their companies over time, hedge funds don't
Speaker 1: have to disclose that publicly. UM. And so we looked
Speaker 1: at an array of companies, forty six of them, and
Speaker 1: we said, okay, well are through our analysis with our
Speaker 1: data team, these mutual funds marked down about seventy of
Speaker 1: the forty six companies UM with average a decline of
Speaker 1: with some down as much as that's pretty intense. So
Speaker 1: it shows really just the extent of these markdowns UM
Speaker 1: and and how bad it could be for for some
Speaker 1: of these funds. So then talk to us about the
Speaker 1: hedge fund environment. I mean they were all in, yes,
Speaker 1: a lot of them perspaciously into privates last year the
Speaker 1: year before UM. Now, the the interesting thing is that
Speaker 1: every firm can mark their private companies differently. And it
Speaker 1: could be because of their structure, maybe they asked for
Speaker 1: special terms in their investment. It could be because of
Speaker 1: their size of their investment, it could be when they
Speaker 1: got in, but that just makes all the harder to
Speaker 1: figure out, like what is it worth? But companies like
Speaker 1: tro Price and Fidelity want to make sure that they're
Speaker 1: accurate because they actually have these invested as parts of
Speaker 1: mutual funds that people can invest in. Right. So the
Speaker 1: liquidity yes, So because mutual funds are so liquid, they
Speaker 1: have to mark these things a lot more frequently, and
Speaker 1: because UM people will may want to a deem more often,
Speaker 1: they will be maybe even overly cautious about marking things
Speaker 1: down aggressively, so so that people are not overpaid when
Speaker 1: they are redeeming or when people are getting in, they're
Speaker 1: not buying into expensive So you do you could see
Speaker 1: more aggressive markdowns and the mutual funds than anywhere else. Um.
Speaker 1: And if you look at our story, we even show
Speaker 1: dispersion amongst mutual funds. So in some cases the mutual
Speaker 1: funds generally agree on a company, and in some cases
Speaker 1: they really don't. If you look at Byte Dance, the
Speaker 1: dot plot that we have here shows mutual funds generally
Speaker 1: did not agree on how much bike Dance was worth
Speaker 1: at any points in the past year, and the spread
Speaker 1: is pretty significant well for someone who follows the hedge
Speaker 1: funny industry, like, so, how do you think about it
Speaker 1: and potentially the stories we might see play out? Yes,
Speaker 1: so I think as we look through the rest of
Speaker 1: this year, UM, we've been already seeing some some struggling
Speaker 1: news of startups, startup companies firing, a lot more people
Speaker 1: struggling with the revenue. If that continues, companies, firms are
Speaker 1: going to have to either mark their underlying companies down
Speaker 1: or you might see companies mark themselves down increasingly. And
Speaker 1: so if that continues, it's basically bodes more pain. One
Speaker 1: thing I have to ask you because I feel like
Speaker 1: whenever there's even a bad hedge fund year, there's still
Speaker 1: a ton of money that comes into the hedge fund industry.
Speaker 1: Where were assets last year compared to the year before.
Speaker 1: I think about on pace. I think last time we
Speaker 1: talked they were fortullion UM. Generally speaking, the money is
Speaker 1: flowing into the bigger firms, um into the bigger I
Speaker 1: think it's still coming in and generally we have seen
Speaker 1: some redemptions this year, but I wouldn't say so much
Speaker 1: so that it makes a huge dent into the four
Speaker 1: trillion dollar number. Okay, so here's my question. Um, it's
Speaker 1: about it wasn't all bad news. There were some companies
Speaker 1: that were actually marked up last year, and there's a
Speaker 1: great graphic in this. So read it on the Blomberg
Speaker 1: Tournament on YouTube. Maybe we can back up. I wasn't
Speaker 1: watching you, And what it shows is that there are
Speaker 1: companies in here like Bite Dance, SpaceX, and a couple
Speaker 1: others that actually did pretty well a small minority in
Speaker 1: twenty seconds. What was unique about these companies or how
Speaker 1: they were valued. Yes, so some companies are doing fine.
Speaker 1: Some companies are able to raise money. I'm are able
Speaker 1: to raise money at a premium, may have enough money,
Speaker 1: have maybe raised enough in the past that they can
Speaker 1: keep going without needing to go back to the market. Um.
Speaker 1: And so it's not paying across the board by any means.
Speaker 1: There's a lot of pain, but it certainly doesn't mean
Speaker 1: that there's that the companies can't do an upground um
Speaker 1: or be okay or be marked up even if it
Speaker 1: gets to be tough for economic environment. Just a few
Speaker 1: seconds left potentially, I mean, I think I think so
Speaker 1: much as yet to be seen, and this is such
Speaker 1: a tricky obscure space. Um. I think we'll see a
Speaker 1: lot of pain ahead, but I think we'll also see
Speaker 1: some successes. So which is the howag fun world? Right?
Speaker 1: That world which is always why it's fascinating? Recover it
Speaker 1: so well? Like him a Parmer does. She's Bloomberg News
Speaker 1: Hedgephune reporter here in our interactive broker studio. Please sees
Speaker 1: Bloomberg Business Week with Carol Messer and Tim Stenavic on
Speaker 1: Bloomberg Radio. This week is Bloomberg Business Week. Cover stories
Speaker 1: on newsstands, the issue online at Bloomberg dot com, slash
Speaker 1: Business This Week and always on the Bloomberg terminal. The
Speaker 1: cover story centers on a man who looks poised to
Speaker 1: run for the highest office in the land come and
Speaker 1: how his rhetoric is finding traction within the Republican grassroots circles.
Speaker 1: The story also Today's Bloomberg Big Take. With this story,
Speaker 1: we turned to Bloomberg Business Week national correspondent Josh Creen,
Speaker 1: who joins us on the phone from Washington. Also with
Speaker 1: us in the Bloomberg Interactive Broker studio is the editor
Speaker 1: of the magazine, Joe Webber. Joel, Um, we're talking about
Speaker 1: Florida Governor Rhn de Santis. Yeah, obviously there's uh sort
Speaker 1: of a been a mess in d C this week. Um,
Speaker 1: but I think almost the bigger political story that is
Speaker 1: going to perhaps have a longer trajectory is the Ruhn
Speaker 1: de Santist narrative. And we've been obsessed with this one
Speaker 1: for a while, especially coming out of mid terms, because
Speaker 1: what midterms really showed was how much of Florida has
Speaker 1: been galvanized behind Ron de Santis. And now the question becomes,
Speaker 1: can Ron de Santis actually take that narrative and make
Speaker 1: it be a national one? And to do that, Josh
Speaker 1: pointed out something that I thought was just incredible, which is,
Speaker 1: unlike many Republican predecessors, De Santis has managed to put
Speaker 1: a target on business in a way that no one
Speaker 1: else has ever done before, and that has really galvanized
Speaker 1: UM grassroots support behind De Santis. Um. So, Josh, turn
Speaker 1: it over to you. Where did you learn about Ron
Speaker 1: De Santis? Said, you are working on the story. Well,
Speaker 1: I mean, the interesting thing to me when I set
Speaker 1: out to do this story in the fall was that
Speaker 1: here was a guy who's clearly talented, clearly wants to
Speaker 1: run for president, and yet faces the same big impediment
Speaker 1: that every other Republican who wants to run for president does.
Speaker 1: And that's Donald Trump, who's like the eight pound guerilla
Speaker 1: and has managed to kind of sideline all comers. What's
Speaker 1: so interesting about the Santus and what sets him apart
Speaker 1: from other Republicans like Mike Pence or Mike Pompeo. UM,
Speaker 1: you know secondary Trump figures who are known to kind
Speaker 1: of want to run for president. Is that these crack
Speaker 1: the code of how do you build a profile for
Speaker 1: yourself among grassroots Republicans that isn't contingent on your standing
Speaker 1: with Donald Trump, and the way that the Santus has
Speaker 1: managed to do that is by starting the big kind
Speaker 1: of culture war grievances that Republicans love, that the Fox
Speaker 1: News audiences love only Unlike Trump, which makes everything about him,
Speaker 1: the Santus has made it about business in corporate America
Speaker 1: and companies like Disney, and they're alleged woke ism. And
Speaker 1: that's really struck a chord with a lot of grassroots
Speaker 1: conservative followers who are now lining up behind the Santis,
Speaker 1: and it turned him into a viable threat, I think
Speaker 1: to win the nomination in how is it that business friend,
Speaker 1: former friend at the GOP, all of a sudden has
Speaker 1: been a great enemy that the Santis has been able
Speaker 1: to leverage. You know, it's it's a great question. Happened gradually.
Speaker 1: You know, this business has always been the great ally
Speaker 1: of the traditional Republican establishment. They've been sympatico on policy,
Speaker 1: They've helped fund a lot of these guys. But the
Speaker 1: Santus is an interesting case and that he's always been
Speaker 1: a bit of an outsider. He when he first ran
Speaker 1: for governor in twenty eighteen, uh he was like languishing
Speaker 1: in third place and was not the choice of the
Speaker 1: business community. In fact, the big businesses in Florida, like
Speaker 1: sugar and construction attacked the Santus because they had another
Speaker 1: candidate mind. But the sand is very cleverly warmed up
Speaker 1: to Donald Trump, got Trump's endorsement that vaulted him into
Speaker 1: the governor's mansion. Uh. And I think the standis feels like, hey,
Speaker 1: he really doesn't know anything to big business. Um. You know,
Speaker 1: he hasn't any problems raising money. Um. But be more
Speaker 1: and more people I think in our culture view big
Speaker 1: business as an enemy or a player in the culture
Speaker 1: wars in a way that maybe they did in a
Speaker 1: generation ago. So you've got the George Floyd protests, you
Speaker 1: have Colin Kaepernick protests on least violence with Nike. Corporate
Speaker 1: America has become politicized, and what the Santus has done
Speaker 1: is really leveraged that for his own political needs. Actually,
Speaker 1: you know, you mentioned, um, some big industry there. One
Speaker 1: of the one of the things that I thought was
Speaker 1: so interesting in the story that I learned was his
Speaker 1: willingness to take on big sugar. And you briefly mentioned that.
Speaker 1: But just slow that down for a second. I mean,
Speaker 1: you cannot imagine a bigger industry in Florida than sugar.
Speaker 1: And the first thing that Roun de Santis does is
Speaker 1: take on big sugar. What did he learn from that
Speaker 1: and what did others learn about him in the process. Well,
Speaker 1: what's the interesting with the historical content? I mean, sugar
Speaker 1: is one of the big industries there, has a ton
Speaker 1: of money, is very actively involved in politics, and in
Speaker 1: eighteen they were supporting the state Agriculture commissioner who was
Speaker 1: who was who was their guy? And they ran a
Speaker 1: lot of negative ads on the Santus. If you step
Speaker 1: back through and think about what sugar needs and the
Speaker 1: context of modern Republican politics, they need cheap immigrant labor um,
Speaker 1: you know, and they want to open markets. Well, what's
Speaker 1: been the big change in Republican politics since Donald Trump
Speaker 1: came in? He's turned the party very anti immigrant and
Speaker 1: very anti trade, and so that helped drive a wedge
Speaker 1: I think between traditional Republicans and kind of Trump to
Speaker 1: Santas style Republicans. So it's much easier for De Santis
Speaker 1: to go out, uh and attack sugar um, you know,
Speaker 1: not based on kind of state economic grounds, but but
Speaker 1: more on on on culture and on issues of you know,
Speaker 1: should they be able to use immigrant labor. Well, I
Speaker 1: know from being at tons of Trump rallies to Santus
Speaker 1: campaign events that Republicans still really care about immigration. And so, uh,
Speaker 1: you know, while while Sugar has a lot of powerful
Speaker 1: lobbyist still has a lot of political sway in Florida,
Speaker 1: they don't have nearly this way that they did, you know,
Speaker 1: ten fifteen years ago and Jeff Bush was president, and
Speaker 1: you know, you have this kind of uh populist uprising
Speaker 1: that certainly saw in Steen round Donald Trump and a
Speaker 1: lot of other candidates that now at least Florida has
Speaker 1: gravitated very strongly to Rohnd De Santas. And it's worth
Speaker 1: pointing out this isn't just Republicans and Trump supporters. He
Speaker 1: all so one a lot of independence and a lot
Speaker 1: of Democratic voters too. So he's really come up with
Speaker 1: a formula that has worked well in Florida and could
Speaker 1: conceivably work on the national level. Two, but can he
Speaker 1: take on Donald Trump? Can he go head to head
Speaker 1: with with Donald Trump? Uh? As we've learned in the
Speaker 1: mid terms, De Santis was very popular, Trump not so much.
Speaker 1: But as you write, people have made the mistake of
Speaker 1: counting out Trump before, Yeah, and De Santis strategy And know,
Speaker 1: when I was down there, Trump was still considered this big,
Speaker 1: imposing figure, and the Santa's strategy has been to ignore
Speaker 1: him entirely, to put off that fight to another day,
Speaker 1: Santis or to sanctimonious. Yeah, even when Trump called him,
Speaker 1: you know, Ron to sanctimonious and tried to start a
Speaker 1: fight with him, to Santus just ignored it. And uh,
Speaker 1: you know, even in the weeks since I was down
Speaker 1: in Florida, there's been kind of a vibe shift in
Speaker 1: Republican politics where siddy Donald Trump doesn't seem quite as
Speaker 1: big and scary as he wants did. Part of that
Speaker 1: is it Republicans fared so poorly actually Trump's candidates in
Speaker 1: the mid from elections. Um, but he just seems to
Speaker 1: be a shrunken figure compared to what he was six
Speaker 1: months or a year ago. So at least for the
Speaker 1: time being, you know, De Sandus is the hot brand
Speaker 1: among Republican donors and a lot of Republican voters. But
Speaker 1: as you said, at some point, if he wants the
Speaker 1: Republican nomination, he's gonna have to get up on a
Speaker 1: debate stage and challenge Donald Trump, and so far nobody
Speaker 1: has done that and survived, so maybe he'll be the first.
Speaker 1: So he's taken on this corporate wokeness. Um, where does
Speaker 1: he go from here as a candidate, if he's going
Speaker 1: to actually go to this national stage. What's working for him?
Speaker 1: I mean, he started out with with Disney and criticizing
Speaker 1: a lot, you know, a lot of the companies UM
Speaker 1: that were openly supporting black Lives matters after after George
Speaker 1: Floyd's murder in Minneapolis. Um, what's happened since then is
Speaker 1: that I think he'd recognize that this really resonates, and
Speaker 1: he'd broadened out the fight on corporate wokeness to focus
Speaker 1: on big Wall Street banks UH and big asset managers,
Speaker 1: companies like Black Rock, people like Black Rocks CEO Larry Fink.
Speaker 1: He's kind of turned them into the new villains for
Speaker 1: Republicans because you know, there's never going to be a
Speaker 1: lot of grassroots support for Wall Street firms, but he's
Speaker 1: claiming that there woke that they're diverting traditional capitalist goals
Speaker 1: of building shareholder value in order to pursue liberal social
Speaker 1: justice goals like curving global arming and so on. There's
Speaker 1: a degree of truth in what he's in what he's saying.
Speaker 1: But everything I've seen is that this really does resonate
Speaker 1: with Republican voters. If you watch Fox News prime Time.
Speaker 1: Maybe not this week with with the chaos we have
Speaker 1: going on down here in Washington, but any other any
Speaker 1: other week, and this is something that Republicans care about.
Speaker 1: It looks like it's resonating, and that's all good for
Speaker 1: Rhode Santas political future. Josh, I'm stealing your words here,
Speaker 1: but you know, you kind of asking your story, you know, Ken,
Speaker 1: though de Santis replaced Trump's rages. For example, you write,
Speaker 1: you know, can De Santis's attacks on s G and
Speaker 1: Larry Fink eclipse, Trump's crusade of cricket, Hillary and Lion
Speaker 1: ted in the pantheon of Maga villa villains. It's a
Speaker 1: great question, like Kennet and kenn resonate nationally? Yeah, and
Speaker 1: I don't. I don't think we have any answer to
Speaker 1: that yet. I mean, I'll be honest, like I was
Speaker 1: a little skeptical going into this piece, but I went
Speaker 1: down and you know, I traveled around Florida, talked to
Speaker 1: a lot of politicians, including Democrats, you know, talk to
Speaker 1: some Fox News producers people like that, and it really
Speaker 1: does register. And it's not just run De Santis saying this,
Speaker 1: and you have other candidates like Mike Pence who are
Speaker 1: now trying to hop on the wokeness bandwagon. It's just
Speaker 1: something that that seems to resonate with Republicans. So at
Speaker 1: least so far, it's working for De Santis. But again,
Speaker 1: at some point you're gonna have to control confront Donald Trump,
Speaker 1: and that's that's a showdown we haven't seen yet. Last question,
Speaker 1: it's a quickie. What's it like to try and coverage
Speaker 1: the Santis It isn't easy. He doesn't you know. Part
Speaker 1: part of his stick is he hates the press and
Speaker 1: he keeps them penned up in rallies. So uh, he
Speaker 1: won't talk to non right wing reporters, but a lot
Speaker 1: of a lot of people's rallies very forthcoming, very eager
Speaker 1: to talk to him. And you know, not just Trump
Speaker 1: people in Conservatives, but I ran in lots of independence
Speaker 1: Democrats too, So um, he's certainly somebody I think that
Speaker 1: a lot of political experts at bullish on them. Josh, yes,
Speaker 1: so no, if they both are on the debate, stage,
Speaker 1: will they both be throwing baseball caps into the audience?
Speaker 1: I guarantee it guarantee Josh Green, the cover story of
Speaker 1: Bloomberg Business Week, thank you so much. In our thanks
Speaker 1: to Joel Bebber as well. You're listening to Bloomberg Business
Speaker 1: Week with kirol Messer and Tim Stenovik on Bloomberg Radio
Speaker 1: Bloomberg Quick take Out. Today. They are noting that there
Speaker 1: is a new COVID variant, it's nicknamed the Kraken variant,
Speaker 1: that was detected last year and has become the dominant
Speaker 1: strain here in the United States, identified in twenty eight
Speaker 1: countries according to the w h O, and there have
Speaker 1: not been any reported significant differences in severity, which makes
Speaker 1: me happy. But what do we need to know about it?
Speaker 1: We've got a great guest with us this afternoon. Carry
Speaker 1: All Tof is Associate professor of epidemiology at the Johns
Speaker 1: Hopkins Bloomberg School of Public Health. It is supported by
Speaker 1: Michael R. Bloomberg, founder of Bloomberg LP and at Bloomberg Philanthropies.
Speaker 1: She joins us on the phone from Baltimore. Dr Altof.
Speaker 1: It's good to have you back with us. It has
Speaker 1: been a while since we last spoken, and perhaps it's
Speaker 1: a sign that things are concerning when it comes to
Speaker 1: this new variant, that you are back with us and
Speaker 1: speaking about this so called crack in variant. What does
Speaker 1: our audience need to know? So this variant, we believe
Speaker 1: is pretty transmissible. What we saw happen in December was
Speaker 1: that it went from the circulating variant to really growing
Speaker 1: in the proportion of sessments that we that we look
Speaker 1: at to see what variants are circulating. It's now up
Speaker 1: to about of those sessments that we're capturing um, which
Speaker 1: was about a templed increase from four percent about in
Speaker 1: the month of December. So we do know this is
Speaker 1: highly transmissible, and therefore we start asking these additional questions
Speaker 1: life severity, we are seeing just light increases and hastilizations
Speaker 1: the way we expect after the holiday gatherings, what we
Speaker 1: were kind of anticipating after the holiday gatherings. And we
Speaker 1: also note that x bb B one five, which is
Speaker 1: the scientific term, it's really dominant in the northeast of
Speaker 1: the United States, but we're not seeing differential hospitalizations there.
Speaker 1: So so we're hoping that this early and yet still
Speaker 1: inconclusive evidence that this is not a more severe strain
Speaker 1: causing more severe disease is true. We're also looking at
Speaker 1: that vaccine. The bivalent vaccine does have omicron variants in it,
Speaker 1: and XBB one five is a sub variant of the
Speaker 1: omicron virus, So so really having that vivulent vaccine is important.
Speaker 1: And right now we see only of adults over sixty
Speaker 1: five who are at highest risk per severe disease are
Speaker 1: actually vaccinated with the vivalent booster. So to protect yourself
Speaker 1: from severe disease from this BBB one five vivalent boosters
Speaker 1: are the way to go dr altof UM. What worries
Speaker 1: you more right now? These COVID variants and covid case
Speaker 1: is still out in our communities, or the flu, which
Speaker 1: I know a lot of folks in my family I've
Speaker 1: seen it and others where they're like, man, the flu
Speaker 1: knocked me out for two weeks. What is it that
Speaker 1: worries you a bit more? And that might be more
Speaker 1: problematic to our health right now? You know what? I
Speaker 1: think it's the combination. Right, So, we've seen RFV start
Speaker 1: to come down, which is great because that was differentially
Speaker 1: impacting or very old and or very young. We are
Speaker 1: seeing influenza and particularly the A strings are really still
Speaker 1: going strong. And just as you said, people are getting
Speaker 1: pretty ill, getting down and out for for days, if
Speaker 1: not weeks done and it's taking a while for some
Speaker 1: folks to recover. End it again is affecting our oldest
Speaker 1: and our youngest. So we are trying to make sure
Speaker 1: that this combination is not resulting in a higher capacity
Speaker 1: or i'm sorry, reaching capacity at hospitals, right, because that's
Speaker 1: really our biggest concern. And so what that means is
Speaker 1: that again, you know, vaccines, we have flu vaccines just
Speaker 1: not necessarily going to protect you from the infection, but
Speaker 1: we'll keep you out of the hospit it will definitely
Speaker 1: reduce your risk of hospitalization, particularly among young and the old,
Speaker 1: who we see are at greatest risk for that severe
Speaker 1: disease from influenza. But yees flew ripped through my house too.
Speaker 1: It is no joke. What about when it comes to
Speaker 1: an rs V vaccine? How close are we to one
Speaker 1: of those, especially for kids who are the most vulnerable.
Speaker 1: You know, there have been trials of RSV vaccines that
Speaker 1: have gone on for many, many years. There is one
Speaker 1: we are getting excited about it is coming down the pike, um,
Speaker 1: and we are hopeful that we will be able to
Speaker 1: share that good news that there is an rs V
Speaker 1: vaccine that is safe and effective relatively soon. Are you
Speaker 1: involved in the study. No, no, no, no, no, no,
Speaker 1: not me. We we as a scientific but I think
Speaker 1: I think the thing that is most important to recognize
Speaker 1: about that is for parents of young kids right now,
Speaker 1: and for people who regularly interact with older adults and
Speaker 1: care for older adults, particularly in residential settings. That vaccine
Speaker 1: is out here now in RSV is It's very real.
Speaker 1: It's starting to come down, which is good news, but
Speaker 1: you know, we're we're still very cautious because it could
Speaker 1: go back up. We're still watching. Hey, I am curious
Speaker 1: to how much you're keeping an eye on what's going
Speaker 1: on in China specifically right I feel like, you know,
Speaker 1: going back to the early days where we were seeing
Speaker 1: you know, high deaths, high hospitalizations, you know, bodies piling up. Unfortunately,
Speaker 1: we're seeing that play out in China right now. Are
Speaker 1: you at all concerned that what's happening to China could
Speaker 1: ultimately lead to some kind of spike or new variant
Speaker 1: coming into the United States. So, first, of all, what
Speaker 1: what we're hearing coming out of China. It is devastating.
Speaker 1: It's devastating for the people of China. And you know,
Speaker 1: it's important to note that they do not have a
Speaker 1: very high vaccination rate among older adults, who we know
Speaker 1: are greatest risk of severe illness and death from COVID,
Speaker 1: and so that's really where where my concern lays is
Speaker 1: that these these older adults are are pretty unprotected and
Speaker 1: that is going to impact how that this wave of
Speaker 1: illness that they are seeing plays out in terms of
Speaker 1: the impact on that country's health. I think overall, as
Speaker 1: a global community, absolutely we are concerned because anytime you
Speaker 1: have this much replicating virus, replications lead to mutations, and
Speaker 1: mutations lead to new variants. And so absolutely this is
Speaker 1: not just a really hard moment for the for the
Speaker 1: people of China as they kind of attempt to get
Speaker 1: through this way, but it is also a very concerning
Speaker 1: moment globally. Dr Altoff just in the last minute we
Speaker 1: have I want to end on somewhat of an optimistic note.
Speaker 1: I hope it is because your specialty is studying HIV
Speaker 1: and if I think about my lifetime the way that
Speaker 1: an HIV diagnosis when I was a kid was like
Speaker 1: a death sentence to the change as it is now
Speaker 1: when there are so many people who are living healthy
Speaker 1: with the virus. What does let's say about how quickly
Speaker 1: we can overcome you know, the next virus that we
Speaker 1: find or different variants of COVID, and how quickly medical
Speaker 1: science is able to change really just one generation. I mean,
Speaker 1: I think what we've seen in terms of scientific advancement
Speaker 1: under COVID is is really it's a moment that if
Speaker 1: I ever see anything like this again in my career,
Speaker 1: I will be just as surprised as I am right
Speaker 1: now with the advancements that we've made. I'm also very
Speaker 1: hopeful that the advancements that we've made in COVID will
Speaker 1: start to translate to other settings, including a potential HIV vaccine.
Speaker 1: And so these are the pieces of this terrible pandemic
Speaker 1: that are the silver lining for us and and hopefully
Speaker 1: we will continue to see this with with good funded
Speaker 1: research from from our government. Well, we always appreciate checking
Speaker 1: in with you and the Johns Hopkins team. Dr carry
Speaker 1: alt Off, a CSI Professor of epidemiology at Johns Hopkins
Speaker 1: Bloomberg School of Public Health, which is imparted by Michael R. Bloomberg, founder,
Speaker 1: Bloomberg Alp and Bloomberg Philanthropies. These two is Bloomberg Business
Speaker 1: Week with Carol Messer and Tim Stenavik on Bloomberg Radio.
Speaker 1: Wouldn't ust be a nice story that we could start
Speaker 1: talking about? Three? And that is peace between Russia and
Speaker 1: Ukraine because, surprise, surprise, earlier today, Russian President Vladimir Putin
Speaker 1: ordered his forces to cease fighting in Ukraine for thirty
Speaker 1: six hours starting tomorrow Friday at noon Moscow time. So, Tim,
Speaker 1: is it a change of heart or as Kiev quickly dismissed,
Speaker 1: a ploy by President Putin. We've got a great voice
Speaker 1: to address exactly that question back with us here on
Speaker 1: Bloomberg We've got Angela stant Senior Adviser to the Center
Speaker 1: for Eurasian, Russian and East European Studies. She also served
Speaker 1: as National Intelligence Officer for Russia and Eurasia at the
Speaker 1: National Intelligence Council and before that served at the U.
Speaker 1: S Department of State. Her latest book is on Vladimir Putin.
Speaker 1: It's called Putin's World, Russia against the West and with
Speaker 1: the rest. She's with us right now on the phone
Speaker 1: from Washington, d C. It's really good to have you
Speaker 1: back with us, Angela, thanks so much for joining us.
Speaker 1: So how did you read into that news today? Was
Speaker 1: it a change of heart or as Kiev quickly dismissed,
Speaker 1: a ploy by Putin, Well, this isn't a change of heart.
Speaker 1: I mean Putin was first of all making, you know,
Speaker 1: deferring to the Russian Orthodox Church. That patriarch asked him
Speaker 1: for the seasfire, so he wants to show that he
Speaker 1: respects the church. Since this patriarch is an enthusiastic supporter
Speaker 1: of this war against Ukraine. It was for domestic purposes
Speaker 1: to show his people that, you know, he respected the
Speaker 1: Authox Christmas, and I think to the outside world to
Speaker 1: make it look as if well he is interested, you know,
Speaker 1: in at least for thirty six hours um a ceasefire.
Speaker 1: But I think it could also be because on Monday
Speaker 1: there was a major Ukrainian attack on an army barracks
Speaker 1: in Makievka, where hundreds of Russians apparently died, and the
Speaker 1: army has been heavily criticized for being probably responsible for this,
Speaker 1: for allowing the soldiers to have their cell phones working,
Speaker 1: so the Ukrainians knew where they were, et cetera. And
Speaker 1: it may be that Putin wanted to avoid any you know,
Speaker 1: subsequent attack on Russian troops during our Orthodox Christmas. So
Speaker 1: this is I think more or less a ploy. Um.
Speaker 1: The Ukrainians clearly don't take it seriously, and we really
Speaker 1: see no signs that Putin's interested in serious negotiation with
Speaker 1: the Ukrainians. Angela, I feel like nobody can tell Vladimir
Speaker 1: Putin what to do. You would know this or understand
Speaker 1: him certainly more than I would. But I mean, why
Speaker 1: would he do this? Does it make sense at all?
Speaker 1: Even if it's why do this ploy? If that's what
Speaker 1: it ultimately is, well, because he again for it's for
Speaker 1: probably for pr purposes globally to show that he's reasonable,
Speaker 1: but also, as I said, to kind of show that
Speaker 1: he supports the Russian Orthodox Church and and show his
Speaker 1: people that he's willing to get them a rest spite
Speaker 1: for thirty six hours. Now, some Ukrainians think, you know,
Speaker 1: the Russians are going to use this to regroup. It
Speaker 1: doesn't really give them that long, uh to regroup, But
Speaker 1: that's why he did it, um. And and so that
Speaker 1: you know, to reinforce those voices in the outside world
Speaker 1: and the West to say, well, you know, maybe he
Speaker 1: is serious about negotiation. Well, that's that's my question. It's
Speaker 1: about negotiation, but also about just troop morale. As this
Speaker 1: this war, Russia's invasion of Ukraine enters what could be
Speaker 1: a very brutal winter, and of course the the the
Speaker 1: you know, second year in just a month or so, Angela,
Speaker 1: So what does it what does it mean for four
Speaker 1: more ale right now? And what do we know about morale? Well,
Speaker 1: I think morale among the Ukrainian soldiers is pretty high.
Speaker 1: They're highly motivated their fighting for their country. But morale
Speaker 1: among Russian soldiers isn't so high. I mean, we've had
Speaker 1: hundreds of thousands actually of Russians trying to avoid the
Speaker 1: last mobilization. There are now rumors that there's going to
Speaker 1: be an mobilization coming very soon, and so people again
Speaker 1: are concerned about that, and there are increasingly but you know,
Speaker 1: Russians who go and fight there and they don't understand
Speaker 1: what the point of it is um and why they're
Speaker 1: being all of these casualties. So I do not believe
Speaker 1: that morale is that high among the Russian soldiers, and
Speaker 1: you know, they're not even given the equipment they need
Speaker 1: when they're mobilized. They have to provide everything themselves. Um
Speaker 1: So it's you know, it doesn't make them look We're
Speaker 1: in a very favorable way on the Russian military. You know.
Speaker 1: The other thing we talked about Angela today here at
Speaker 1: Bloomberg is how the US and Germany or specifically sending
Speaker 1: armored vehicles to Ukraine. President Joe Biden and Chancellor I'll
Speaker 1: have sold saying that in a joint statement. So that's
Speaker 1: a pretty significant upgrade in firepower that was sought by
Speaker 1: the Ukrainian president. Germany is also going to follow us
Speaker 1: and providing a Patriot missile defense system to Ukraine. I mean,
Speaker 1: this stuff is getting pretty serious in terms of the
Speaker 1: types of equipment that continue that goes to the Ukraine.
Speaker 1: How are you thinking about three in terms of this war? Well,
Speaker 1: I mean the war suddenly going to continue, and the
Speaker 1: Ukrainians can only continue to push back against the Russians
Speaker 1: if they have the Western equipment. And I think it's
Speaker 1: it's very good that the US and Germany, and by
Speaker 1: the way, France announced yesterday it too was gonna provide uh,
Speaker 1: you know, modern Western tanks to Ukraine. So so far
Speaker 1: the Poles and others um formal warsap PAK members have
Speaker 1: supplied Ukraine with Soviet era tanks. But now they're going
Speaker 1: to get the modern Western stuff and this will help
Speaker 1: them to keep pushing back against the Russians, because without
Speaker 1: that they would be in a much worse situation. Angela,
Speaker 1: We've been talking about you, and gratefully we've really relied
Speaker 1: on you to weigh in on this. This is somebody
Speaker 1: you've written about. You know, I'm talking about Ladimir Putin,
Speaker 1: and you understand, as the longer disc goes on, how
Speaker 1: do you think about the stability of this leader? So
Speaker 1: there are I mean, I think at the moment you
Speaker 1: can say he is still in charge because he's created
Speaker 1: a system where there's there really is no uh success
Speaker 1: that's been named, and there are no kind of opponents
Speaker 1: that we know of high up in the ranks that
Speaker 1: could do something about, you know, persuading him to to retire.
Speaker 1: But I think that the longer this war goes on
Speaker 1: and that the and the Russian army doesn't do well
Speaker 1: on the battlefield, I think in the end that does
Speaker 1: begin to erode his position so far. There are a
Speaker 1: lot of critics, the more hawkers critics, but they're blaming
Speaker 1: the military for all the problems. They're not blaming Putin himself.
Speaker 1: That could change, and if that were to changed, and
Speaker 1: I think his hold on power might be somewhat weaker. Um.
Speaker 1: On the other hand, he probably you know, will will
Speaker 1: remain in power for this year and he'll run for
Speaker 1: president again. In The question comes up and has really
Speaker 1: come up over the last few months, as about a
Speaker 1: potential off ramp for Vladimir Putin if the U S
Speaker 1: and the Western world continues to fight Ukraine with this aid,
Speaker 1: and Ukraine indeed continues to surpass at least the earliest
Speaker 1: expectations of being able to defend itself and fend off Russia,
Speaker 1: what is an off ramp for Putin? Yeah? Does it
Speaker 1: come via Turkish President Urdawan? I'm not sure that there
Speaker 1: isn't off ramp. I mean putent that the Russians are
Speaker 1: still insisting in the minimum that the Ukrainians recognize the
Speaker 1: annexation of four territories, none of which Russia fully controlled
Speaker 1: Um and two of which, you know, until this war began,
Speaker 1: were firmly under Ukrainian control. You know, why would the
Speaker 1: Ukrainians make those kind of territorial concessions when they're doing
Speaker 1: better on the battlefield. Uh. And it's not clere that
Speaker 1: Putin would accept any less than this recognition, at least
Speaker 1: of the annexation of these four territories. So I'm not
Speaker 1: seeing any off ramp. I know that countries like Turkey
Speaker 1: are trying to mediate. People have asked the Chinese what
Speaker 1: they like to mediate, But I don't think any of
Speaker 1: those countries, and even China necessarily has the will or
Speaker 1: really has the power to persuade Putin to do something
Speaker 1: that he doesn't want to do. Do you think in
Speaker 1: terms that we talked to the equipment right US Germany,
Speaker 1: you mentioned France, Uh, the amount of equipment that is
Speaker 1: going to Ukraine to help it in its fight against Russia.
Speaker 1: Is the right kind of support being shown? In your view,
Speaker 1: if you were a policy advisor at this point, you
Speaker 1: understand this world. Is there something else on that policy
Speaker 1: document that you would be sharing with the President of
Speaker 1: the United States or other leaders? Well? I think the
Speaker 1: Biden administration has done a lot for Ukraine, but it
Speaker 1: has its own red lines worked out. I think with
Speaker 1: its NATO allies, which is not getting into a situation
Speaker 1: where there might be a direct conflict between NATO troops
Speaker 1: and Russia. And therefore, you know, if we'd had a
Speaker 1: no fly zone at the beginning of this war, the
Speaker 1: Ukraines wouldn't have been subject to all these bombardments. That
Speaker 1: wasn't done because of the concern about that. Um. I
Speaker 1: think you know, when this is all over, there will
Speaker 1: clearly be discussions about were we all too concerned about escalation? Again,
Speaker 1: you get the nuclear rhetoric from Putin, how silly says that, well,
Speaker 1: we all too concerned about that to do what was
Speaker 1: really needed to help Ukraine push the Russians out of
Speaker 1: the territories at least that they've taken. But at the
Speaker 1: moment um, you know that that is the administration's policy,
Speaker 1: and I don't see that changing. Hey, Angela, just about
Speaker 1: a minute left here. Um, what would surprise you here
Speaker 1: as this continues to go on, Well, um, I would
Speaker 1: be surprised, in fact, if the Russians suddenly said, Okay, well,
Speaker 1: we're willing to sit down and talk to the Ukrainians,
Speaker 1: but not on the basis that they have to accept
Speaker 1: all the annexation of the churches. That would surprise me.
Speaker 1: I would be very pleasantly surprised by that. But I'm
Speaker 1: not sure that we're going to see that. All right,
Speaker 1: Gonna leave it on that note. Happy New Year, Angela,
Speaker 1: and thank you so much. As always. Angela's stant senior
Speaker 1: fellow at the Brookings Institution. She is author of Putin's World,
Speaker 1: Russia Against the West and with the Rest. Joining us
Speaker 1: on the phone from Washington, d C. As we mentioned,
Speaker 1: she served as National Intelligence Officer for Russia and Eurasia
Speaker 1: at the National Intelligence Council. Before that, she was at
Speaker 1: the U. S. Department of State. I mean understands what's
Speaker 1: going on, you know, in these kinds of situations behind
Speaker 1: closed doors. A little concerning that there's still no off
Speaker 1: ramp for Putin. So what is this a stalemate? I
Speaker 1: I don't know. I mean it's stale made in the
Speaker 1: sense of, like, you know, this is what keeps happening, right,
Speaker 1: the fighting just continues. Well, it certainly feels that way,
Speaker 1: you know, I think about saving face as a world leader,
Speaker 1: like how do you get out of this? I don't know.
Speaker 1: I really don't know at this time, but it's something
Speaker 1: that we know investors, you know, top of the list,
Speaker 1: those geopolitical concerns as they drag on a You are
Speaker 1: listening in watching Bloomberg Business Week, Carol Master, Tim Stanevik.
Speaker 1: We're back in just a moment right here on Bloomberg Radio.
Speaker 1: I'm a journal now, but you let me drive. Oh no,
Speaker 1: no, no no, no, who's homes right? I want to drive.
Speaker 1: It's a good question. Good drive to the clothes on
Speaker 1: Bloomberg Radio. All right, everyvetty, it is time for the
Speaker 1: drive to the clothes. We've got about seventeen minutes left
Speaker 1: in today's trading session. Were you going to say something
Speaker 1: to you? It wasn't. I was just like thinking about
Speaker 1: our next guest. I'm excited to hear from Sam. I
Speaker 1: love talking to Sam. Talked to him so much over
Speaker 1: the past few years and throughout so many different cycles
Speaker 1: in the markets, and he's someone who really looks at
Speaker 1: trends and what goes on historically when it comes to
Speaker 1: the financial markets. We're talking about Sam Stovall, chief investment
Speaker 1: strategist at c fire A. He joins us this afternoon
Speaker 1: via zoom from New York City. Sam, good to have
Speaker 1: you with us this afternoon. Okay, we've been talking a
Speaker 1: lot about two, but we've been talking more about three
Speaker 1: and what it has in store because the start of
Speaker 1: the year, unless you're you know, a share of a
Speaker 1: Chinese company traded here in the US, things are not
Speaker 1: looking good. What's your read? Hey, Carolin, Tim, Good to
Speaker 1: talk to you again. Uh, well, it's same is if
Speaker 1: we are heading into three the way a lot of
Speaker 1: strategists have been predicting where it's going to be a
Speaker 1: tale of two halves, where the first half is likely
Speaker 1: to be challenging with high volatility, retest of the October low,
Speaker 1: maybe even a new low set, but then investors look
Speaker 1: across the valley and we start to see a recovery
Speaker 1: in the second half. It sounds really logical, right, It
Speaker 1: makes sense, right if we think about and I'm guessing
Speaker 1: to some extense, Sam, a lot of it is because
Speaker 1: of the FED coming to at least it's the end
Speaker 1: of the cycle when it comes to rate increases. It
Speaker 1: may not start to cut rates, as they continue to
Speaker 1: remind us, but they may come to an end when
Speaker 1: it comes to higher rates. That's right, Carol. Our expectation
Speaker 1: is at the FED will raise rates by fifty basis
Speaker 1: points in February in March and then hit the pause button.
Speaker 1: But the FED, even though they keep saying, you know,
Speaker 1: don't anticipate or rate cut, they do remind us that
Speaker 1: they are data dependent and it was the data that
Speaker 1: cause them not to start to raise rates and then
Speaker 1: to play catchup. And since the FED typically ends up
Speaker 1: cutting rates less than nine months after the last rate hike,
Speaker 1: that would squarely put it into December for the first
Speaker 1: rate cut of the next cycle. Hey, I gotta go
Speaker 1: challenge a little bit here, Sam, because I feel like
Speaker 1: this is a market cycle we really don't completely understand,
Speaker 1: right We never most of us have not gone through
Speaker 1: a pandemic before, where the market shut down, the economy shutdown,
Speaker 1: and then it kicked right back up thanks to lots
Speaker 1: of UH stimulus from governments as well as from central
Speaker 1: banks global central banks. So we're still trying to figure
Speaker 1: out what the normal is. Is the normal what we
Speaker 1: saw pre pandemic or is it something different as a
Speaker 1: result of all of the stimulus and so on. Well,
Speaker 1: I think that the normal was pre pandemic. We then
Speaker 1: got the abnormal in terms of the pandemic. We got
Speaker 1: the abnormal in terms of response to the pandemic, and
Speaker 1: now I think we're sort of getting back a little
Speaker 1: by little to the pre pandemic cycle nature, et cetera. Obviously,
Speaker 1: one big difference is that the UH forty years secular
Speaker 1: bullmarket for bonds or bear market for interest rates has
Speaker 1: certainly changed. Were bouncing along the bottom, if you will,
Speaker 1: because the average ten year note since ninety three was
Speaker 1: about five and a half percent, and we're obviously nowhere
Speaker 1: near that, but certainly we're a lot higher than the
Speaker 1: one to two percent that we had been experiencing just
Speaker 1: a couple of years ago. So it brings me to
Speaker 1: where you recommend our investing audience allocate their capital for
Speaker 1: the year. Let's say somebody has some capital to deploy.
Speaker 1: What are you suggesting based on your analysis at c
Speaker 1: f r A. Well, the right answer to most financial
Speaker 1: questions is that depends time horizon, well even time horizon,
Speaker 1: just in terms of this year, UM, a very simple
Speaker 1: model which looks at a rolling two d day UH
Speaker 1: performance for the eleven sectors in the S and P
Speaker 1: would continue to recommend a defensive approach in terms of healthcare,
Speaker 1: consumer stables, utilities at the expense of consumer discretionary industrials, materials,
Speaker 1: non industrial, but materials technology, UM and so because you know,
Speaker 1: one would say, we're not really sure what the Fed's
Speaker 1: going to do and when maybe we want to stay
Speaker 1: defensive at least for now. However, what is the longer
Speaker 1: term opportunity I would tend to say is almost the
Speaker 1: complete opposite. I've had people ask me, Sam, do I
Speaker 1: hold them or do I fold them? Meaning do I
Speaker 1: stick with last year's winners as I head into or
Speaker 1: do I go from first to worst meaning get rid
Speaker 1: of those groups that did the best and look to
Speaker 1: those that did the worst. And the right answer is,
Speaker 1: following a down year, more times than not, you are
Speaker 1: actually better off buying last year's losers than the last
Speaker 1: year's winners. Kind Of that dogs the Dowth theory right
Speaker 1: to some extent, but it's more broadened out exactly because
Speaker 1: basically those companies or industries that were priced to go
Speaker 1: out of business or at least be challenged are the
Speaker 1: ones that now experience a vacuum of valuations. As I
Speaker 1: like to say very carefully, uh, and therefore represents the
Speaker 1: greatest opportunity twelve months down the road. What about something
Speaker 1: that you know, we've talked a lot sam about how
Speaker 1: things though fundamentally there's some stuff going on that maybe
Speaker 1: is going to impact certain sectors, whether it's energy, you know,
Speaker 1: whether it's geopolitics, whether it's the pushback on globalization. Is
Speaker 1: there anything out there though that you know, kind of
Speaker 1: exkews your thinking in terms of what will be the
Speaker 1: smart investment plays this year. Yes, And I think you
Speaker 1: hit the sector on the nose in terms of energy,
Speaker 1: because energy has done very well over the past two years,
Speaker 1: although it had been doing horribly over the prior five years.
Speaker 1: Uh and so now that we're rolling back into it,
Speaker 1: now that energy was up more than fifty in two
Speaker 1: thousand and twenty two, the question is do I take
Speaker 1: my profits and run well If earnings are expected to
Speaker 1: be pretty good next in two thousand and twenty three,
Speaker 1: If the sector is trading it a near fifty percent
Speaker 1: discount on a relative basis over the last twenty years
Speaker 1: and a discount on an absolute pe basis, the group
Speaker 1: is still very inexpensive. And from a geopolitical perspective, if
Speaker 1: we continue to have supplied disruptions from the energy area
Speaker 1: and we don't get a recession as deep as some
Speaker 1: are worried about energy could continue to do well well,
Speaker 1: so great to check in with you as always. Happy
Speaker 1: New Year. Sam Stovall, chief investment Strategist at cf are
Speaker 1: A joining us via zoom right here in New York City.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com. You can also
Speaker 1: listen to our radio show at t p M Eastern
Speaker 1: I'm blue Berg Radio, or stream us live on YouTube
Speaker 1: and Blueberg dot com