WEBVTT - The Latest On Inflation, Omicron, and Fed Tapering 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.000 at Bloomberg dot com slash podcast. Matt and I are 0:00:23.040 --> 0:00:25.320 safely Wisconsin our radio studios. We do not have to 0:00:25.360 --> 0:00:27.880 trade this market, but somebody who does are more likely 0:00:28.520 --> 0:00:31.040 invests in this market is a professional by the name 0:00:31.040 --> 0:00:34.240 of Phil Orlando, chief equity market strategist ahead of client 0:00:34.280 --> 0:00:38.520 portfolio management at Federated Hermes of They've got a couple 0:00:38.560 --> 0:00:41.600 of shekels under management there. I can attest to that. So, Phil, 0:00:41.600 --> 0:00:43.720 when you see kind of this volatility here, and I 0:00:43.720 --> 0:00:47.640 guess it's understandable given all the macro cross winds out there, 0:00:48.360 --> 0:00:53.880 what's your two view on let's just on these equity markets. So, 0:00:54.560 --> 0:00:58.640 you know, starting with the volatility issue over the last fortnite, 0:00:59.000 --> 0:01:03.640 I guess from thanks th week through you know last night, Uh, 0:01:03.680 --> 0:01:06.839 the S and P five was down about five and 0:01:06.840 --> 0:01:11.039 and other indicries like the NASDAC composit, you know, down 0:01:11.080 --> 0:01:15.200 even more and and to some degree, um the stock 0:01:15.240 --> 0:01:17.720 market has done really really well. You know, we're up 0:01:17.720 --> 0:01:20.160 a hundred and sixteen percent since the bottom of the 0:01:20.200 --> 0:01:26.119 market March a year ago. And this omikron variant has 0:01:26.120 --> 0:01:30.520 really captured everyone's imagination over the last couple of weeks. 0:01:30.560 --> 0:01:36.680 But what I think is sparking the rally here is that, Okay, 0:01:36.680 --> 0:01:40.040 a macron has now been identified in seventeen states and 0:01:40.160 --> 0:01:46.520 forty countries. It's moving or transmitting faster than Delta was, 0:01:47.200 --> 0:01:53.040 but the conditions appear to be more mild, and I 0:01:53.080 --> 0:01:56.960 think the market is taking some confidence in that that 0:01:57.720 --> 0:02:02.120 the you know, the mortality rates haven't materially increased, and 0:02:02.280 --> 0:02:05.680 maybe Fiser and Maderna we'll be able to figure out 0:02:05.760 --> 0:02:11.840 a tweak um that that will allow their existing vaccines 0:02:12.440 --> 0:02:15.480 to continue to be efficacious. So as we look out 0:02:15.480 --> 0:02:18.799 the calendar twenty two, I think we've got to start 0:02:18.840 --> 0:02:22.280 with sort of that foundation. Where are we going with 0:02:22.400 --> 0:02:27.440 covid um and and our view. So let's let's say, 0:02:27.440 --> 0:02:31.280 phil Um, everything's taken care of that, oh macron, isn't. 0:02:31.520 --> 0:02:33.680 I mean, I know that there's a lot still to 0:02:33.760 --> 0:02:37.240 be discovered. But let's let's just say, oh, macron isn't 0:02:37.280 --> 0:02:42.560 more fatal than um other other variants, and um, we 0:02:42.639 --> 0:02:47.280 have useful vaccines. What about the Fed? Why our investors 0:02:47.360 --> 0:02:53.359 piling in too treasuries? When Jerome Powell takes a hawkish 0:02:53.360 --> 0:02:57.840 pivot and we start to expect them to raise rates earlier, Well, 0:02:57.880 --> 0:03:01.160 there must be a concern that at the Fed is 0:03:01.200 --> 0:03:03.720 going to get a bit more aggressive, And that's certainly 0:03:03.720 --> 0:03:07.080 our view. We think they're going to double the pace 0:03:07.160 --> 0:03:09.760 of tapering starting in the first quarter and have the 0:03:09.760 --> 0:03:13.399 taper completed by the end of March, and then probably 0:03:13.440 --> 0:03:17.840 execute We think three quarter point rate hikes over the 0:03:17.840 --> 0:03:22.240 course of calendar two and then four more over the 0:03:22.280 --> 0:03:25.880 course of calendar twenty three. And so I think investors 0:03:25.880 --> 0:03:29.079 are saying, well, if the Fed has found religion on inflation, 0:03:29.680 --> 0:03:33.160 and and you know, Powell's thrown in the towel on transitory, 0:03:33.400 --> 0:03:37.000 you know, which he announced last week, then then potentially 0:03:37.120 --> 0:03:40.960 that at the margin is going to slow economic growth, 0:03:41.000 --> 0:03:44.440 maybe corporate earnings growth, and therefore we ought to be 0:03:44.840 --> 0:03:49.880 buying treasuries rather than selling treasuries here to anticipate, you know, 0:03:49.960 --> 0:03:54.480 a weaker economic backdrop alright, Phil, I mean you talk 0:03:54.520 --> 0:03:58.200 about those rate increases three potentially and then followed up 0:03:58.200 --> 0:04:01.720 by four, and that's an ironment that not many investors 0:04:01.880 --> 0:04:05.920 have experienced before. Where do you want to be in 0:04:05.960 --> 0:04:09.360 that type of rate environment from an equity perspective, Well, 0:04:09.760 --> 0:04:12.680 you want to be in stocks that are more attractively valued, 0:04:13.360 --> 0:04:16.280 number one. And that would suggest the value trade rather 0:04:16.320 --> 0:04:19.279 than the growth trade. Value stocks right now are trading 0:04:19.920 --> 0:04:22.440 in the mid teens. Growth stocks are trading in the 0:04:22.440 --> 0:04:26.279 mid thirties. So that's a pretty significant difference. And then second, 0:04:26.839 --> 0:04:31.680 because of the issues that we're dealing with UH in 0:04:31.800 --> 0:04:35.640 terms of inflation and in terms of FED policy, question 0:04:35.760 --> 0:04:40.479 is which companies have the ability to execute some pricing 0:04:40.480 --> 0:04:44.240 power that that we know wages are going up, commodity 0:04:44.279 --> 0:04:47.320 costs going up, shipping costs are going up. Which companies 0:04:47.360 --> 0:04:51.960 are able to price those increases in and and actually 0:04:52.440 --> 0:04:56.400 continue to maintain healthy margins or maybe even expand margins. 0:04:56.720 --> 0:04:59.440 And for the most part, what we saw in with 0:04:59.520 --> 0:05:02.480 the third order earnings is that it's the economically sensitive 0:05:02.520 --> 0:05:09.000 categories you know, financials, materials, energy, consumer discretionary industrials that 0:05:09.000 --> 0:05:11.040 that you know, by and large are able to do that. 0:05:11.240 --> 0:05:14.960 So from an asset allocation standpoint, I think the value 0:05:15.000 --> 0:05:17.480 trade rather than the growth trade, is still the way 0:05:17.520 --> 0:05:20.680 You've got to look at what's happening in or what 0:05:20.720 --> 0:05:23.680 we think is going to happen in kelendar twenty two. Hey, Phil, 0:05:23.760 --> 0:05:25.920 thanks so much for joining us. We always appreciate getting 0:05:26.080 --> 0:05:29.400 your perspective and the benefit of your experience here. Uh. 0:05:29.400 --> 0:05:33.280 Phil Orlando, chief equity market strategist, and he's also ahead 0:05:33.279 --> 0:05:37.040 of the client portfolio management team at Federated Hermes six 0:05:37.160 --> 0:05:40.080 hundred billion dollars in assets on their management. I knew 0:05:40.120 --> 0:05:42.640 Federated was big. I didn't know they were that big. 0:05:43.320 --> 0:05:50.000 That's Federated Phil Orlando. We've got an equity outlook with 0:05:50.000 --> 0:05:53.600 Phil Orlando from Federated Hermes. Earlier lists turn around and 0:05:53.720 --> 0:05:56.279 take a look at the fixed income biz. We do 0:05:56.360 --> 0:05:59.479 that with Kevin Nuckelson, Global Fixed Income co c i 0:05:59.640 --> 0:06:03.760 O and co head of Investment Committee at Riverfront Investment Group. Kevin, 0:06:03.760 --> 0:06:07.000 I'm looking at the ten year treasury yielding one point 0:06:07.120 --> 0:06:10.560 three eight five today, it's something about four basis points. 0:06:10.560 --> 0:06:13.200 But I've got a FED that's talking about tapering. I've 0:06:13.240 --> 0:06:17.080 got a FED that's talking about raising rates. What do 0:06:17.160 --> 0:06:19.919 I do in the fixing income market in two? Given 0:06:20.600 --> 0:06:23.039 again we're I think the FED is going to take 0:06:23.080 --> 0:06:26.239 this market. Well, I think that when you think about 0:06:27.400 --> 0:06:30.800 um fixing income in two, you have to think about 0:06:31.240 --> 0:06:34.600 yields are actually going to move higher. Our our base 0:06:34.680 --> 0:06:37.680 case for two is that you're going to have the 0:06:37.720 --> 0:06:41.600 tenure in the year at UM. Now, when we think 0:06:41.680 --> 0:06:45.359 about investing in fixing income next year, we don't see 0:06:45.480 --> 0:06:47.960 that there's going to be a lot of price appreciation. 0:06:48.080 --> 0:06:50.080 It's really going to come from income. So you're gonna 0:06:50.080 --> 0:06:53.479 be looking at place like high yale bank loans on 0:06:53.560 --> 0:06:55.920 things that that nature that are going to be able 0:06:55.960 --> 0:06:57.880 to give you a little bit more yield um and 0:06:58.040 --> 0:07:02.640 not extreme you out on the duration curb. We did 0:07:02.680 --> 0:07:06.279 see last week traders pull money from the I shares 0:07:06.360 --> 0:07:09.520 I box, high Yield Corporate Bond et F h y 0:07:09.640 --> 0:07:12.400 G as it's popularly known, for a third week in 0:07:12.440 --> 0:07:17.560 a row. The short interest on UM I shares, I 0:07:17.800 --> 0:07:21.160 box and investment grade corporate bond e t F is 0:07:21.200 --> 0:07:25.640 also near an all time high. Why are investors right 0:07:25.640 --> 0:07:29.840 now at least souring on corporate debt? Well, I think 0:07:29.840 --> 0:07:32.640 the investors are staring on corporate debt right now because 0:07:32.720 --> 0:07:34.760 there is a risk off trade in the market. If 0:07:34.800 --> 0:07:38.200 you look at what happened in the bond market last week, 0:07:38.320 --> 0:07:41.920 you basically had an overreaction, in my opinion, to the 0:07:41.920 --> 0:07:47.200 FED talking about moving tapering up. Let's remember capery is 0:07:47.360 --> 0:07:52.160 not raising rates, and that's the big thing that I 0:07:52.200 --> 0:07:56.160 think that is missing here. Um. We when you look 0:07:56.200 --> 0:07:58.680 at the Yok curve and what happened over the last 0:07:58.760 --> 0:08:02.400 a few days, the UH bond market would be arguing that, 0:08:02.680 --> 0:08:06.160 you know, the Fed is going to make a policy mistake. However, 0:08:06.240 --> 0:08:09.160 I believe that what the Fed has done is that 0:08:09.440 --> 0:08:12.680 they bought themselves more time. And in the sense that 0:08:13.040 --> 0:08:16.280 we know that Chairman Pal is very data dependent, and 0:08:16.320 --> 0:08:19.600 so by moving up the taper, what he's effectively done 0:08:19.680 --> 0:08:22.960 is he's given himself more time to look at the data, 0:08:23.040 --> 0:08:25.440 the incoming data. And we believe that you know, interest 0:08:25.560 --> 0:08:27.480 rates are going or excuse me, inflation is going to 0:08:27.640 --> 0:08:30.600 peak after the you know, in the first half of 0:08:30.720 --> 0:08:33.640 next year, um and then you know start to moderate, 0:08:33.679 --> 0:08:35.680 and so I think that you won't see as many 0:08:35.760 --> 0:08:38.960 hypes um and and so I think that you know, 0:08:39.040 --> 0:08:42.040 you will see interest rates move higher, but not too 0:08:42.080 --> 0:08:45.679 much higher. All right, Kevin, given that that interest rate outlook, 0:08:45.840 --> 0:08:48.760 given the inflation environment that we do see ourselves, and 0:08:48.760 --> 0:08:52.040 at least here for the short intermediate term in the 0:08:52.160 --> 0:08:55.840 corporate bond market. For two, what sectors are you guys 0:08:56.280 --> 0:09:01.480 looking at? When I turned to corporates, I'm you know, 0:09:01.520 --> 0:09:05.440 I'm going to continue to look at industrials, UH. Specifically 0:09:06.200 --> 0:09:11.000 you know, like we like machinery uh and anything that 0:09:11.120 --> 0:09:14.200 has to do with any type of infrastructure. UM. We 0:09:14.280 --> 0:09:18.040 believe that you know, they're going to do pretty well, 0:09:18.520 --> 0:09:22.480 um if if you're getting down into the subsectors here um, 0:09:22.520 --> 0:09:26.480 But specifically when I'm thinking about fixed income um, you know, 0:09:26.520 --> 0:09:31.800 in the corporate investing I also like financials because as 0:09:32.040 --> 0:09:34.760 interest rates move up, you know, financial should do better 0:09:34.800 --> 0:09:39.040 as they hopefully their loan growth improves. UM. And so 0:09:39.160 --> 0:09:41.160 I think that you'll be able to pick up some 0:09:41.240 --> 0:09:44.200 extra YEO in the investment grade space when you're focusing 0:09:44.240 --> 0:09:49.880 on financials. All right. So we saw Goldman Sachs uh 0:09:50.000 --> 0:09:54.360 cut us GDP forecast yesterday because of an Omicon drag need. 0:09:54.360 --> 0:09:56.440 A lot of other banks are saying, oh, Omicron isn't 0:09:56.440 --> 0:09:58.920 gonna be a big deal. How much does this how 0:09:59.000 --> 0:10:02.120 much taking a view on this um make a difference 0:10:02.160 --> 0:10:05.760 in your strategy. Well, I think that the view that 0:10:05.840 --> 0:10:08.520 we're taking is that Omicron is not going to be 0:10:08.679 --> 0:10:11.959 any worse off than the delta variants. And what we're 0:10:12.000 --> 0:10:15.280 seeing so far coming out of South Africa, they're reporting 0:10:15.360 --> 0:10:18.719 that people are getting not getting as sick as they 0:10:18.800 --> 0:10:23.600 did with the other variants. So therefore, we're not changing 0:10:23.679 --> 0:10:28.280 our forecast for two at this point because we don't 0:10:28.320 --> 0:10:31.600 believe that, you know, it's going to have a huge effect. 0:10:31.880 --> 0:10:34.360 We've come to the realization that we're going to have 0:10:34.520 --> 0:10:39.240 to live with these various variants, uh, you know, for 0:10:39.360 --> 0:10:43.199 the foreseeable future, and it may be the new norm. Hey, Kevin, 0:10:43.280 --> 0:10:46.240 thanks so much for joining us. Really appreciate getting your thoughts. 0:10:46.360 --> 0:10:48.800 Kevin Nicholson. He's Global fixed Income co c i O, 0:10:49.480 --> 0:10:56.280 CO head of Investment Committee at Riverfront Investment Group. I'm 0:10:56.320 --> 0:10:58.360 looking at the marketer. I'm going to quote the down 0:10:58.440 --> 0:11:00.439 Matt even though it's a John for oh no, no, 0:11:00.640 --> 0:11:03.160 but he's not here. It's up six twenty points. That 0:11:03.200 --> 0:11:06.680 gets my attention. One eight percent here. I know NASAC 0:11:06.840 --> 0:11:08.840 is not following suit. There but it's interesting to see 0:11:08.880 --> 0:11:11.839 that kind of rebound in the marketplace, and that's a 0:11:11.960 --> 0:11:16.960 wall of worry that this market continues to successfully climb. 0:11:17.360 --> 0:11:20.040 Let's see if that's an issue for our next guest, 0:11:20.080 --> 0:11:22.920 Lisa Erickson, Senior vice president and co had a public 0:11:23.040 --> 0:11:30.120 markets group at US Bank. Lisa, what's your outlook for two? Well, 0:11:30.440 --> 0:11:33.920 we are still positive on the outlook for two and 0:11:34.000 --> 0:11:36.200 the reason why is if you look at the underlying 0:11:36.280 --> 0:11:39.800 economic indicators, we see some really nice action. While there's 0:11:39.840 --> 0:11:43.280 been a slight slowdown in some of the macro variables, overall, 0:11:43.360 --> 0:11:46.559 if you just measure across the broad way indicators, what 0:11:46.679 --> 0:11:49.959 we see is definitely readings that still remain in the 0:11:50.080 --> 0:11:53.079 expansion phase. And on top of that, you see companies 0:11:53.160 --> 0:11:57.560 being able to really translate that information into positive sales 0:11:57.600 --> 0:12:01.520 and earnings growth. And people are generally expecting that positive 0:12:01.559 --> 0:12:05.440 trend to continue because what we're seeing is the earning 0:12:05.520 --> 0:12:08.280 system of revisions continue to go up. I think the 0:12:08.360 --> 0:12:10.840 final thing that really gives us some confidence going into 0:12:10.880 --> 0:12:14.360 the new year is the fact that while obviously there's 0:12:15.240 --> 0:12:18.480 moves to continue to look at tapering as well as 0:12:18.800 --> 0:12:22.839 when liftoff might occur, overall the level of interest rates 0:12:23.280 --> 0:12:27.520 and inflation are still at moderate or low levels, and 0:12:27.640 --> 0:12:30.080 so all of those kinds of things do give us 0:12:30.120 --> 0:12:33.440 some confidence. That was just about to ask you about inflation, 0:12:33.520 --> 0:12:37.559 because we're looking for Bloomberg Intelligence forecasts a number for 0:12:37.679 --> 0:12:41.480 CPI at six point seven percent on Friday. That's the 0:12:41.559 --> 0:12:45.280 highest we've seen it since Olivia Newton, John charted with 0:12:45.480 --> 0:12:49.840 physical Um back back when we knew John mellencamp as 0:12:49.960 --> 0:12:53.920 John Cougar, when Et came out in the theaters. It's 0:12:53.960 --> 0:12:57.640 been a long time since. Are we gonna Are we 0:12:57.679 --> 0:13:00.360 gonna come back down? Do you think, Um, this is 0:13:00.440 --> 0:13:03.360 I don't want to say transitory, but um, do you 0:13:03.440 --> 0:13:05.480 think that we're going to get over this and next 0:13:05.600 --> 0:13:09.080 year we're gonna start getting back to lower numbers? Yeah, 0:13:09.200 --> 0:13:11.840 that's a great question. So our hope in our base 0:13:11.960 --> 0:13:14.439 cases that we start to see some moderation in the 0:13:14.520 --> 0:13:17.160 inflation numbers next year, and there's a few reasons for that. 0:13:17.360 --> 0:13:19.920 So the first really is that if you think about 0:13:19.960 --> 0:13:22.800 what's happened this year, obviously we have had a tougher 0:13:22.880 --> 0:13:26.079 time with price increases, but that honestly makes a year 0:13:26.120 --> 0:13:29.199 over year comparisons going into next year tougher. So in 0:13:29.320 --> 0:13:31.760 other words, it's going to be hard harder for prices 0:13:31.880 --> 0:13:36.600 to maintain that level of upward trajectory. And in addition 0:13:36.679 --> 0:13:38.520 to that, you know, if you just monitor the news 0:13:38.600 --> 0:13:42.040 flow that's been coming along here over the last few weeks, 0:13:42.160 --> 0:13:44.679 what we are starting to see is some signs that 0:13:44.840 --> 0:13:48.960 the supply constraints are coming off. And we really did 0:13:49.080 --> 0:13:51.719 have a very nice November report, and while it's just 0:13:51.920 --> 0:13:55.360 one month, it was encouraging to see that labor participation 0:13:55.480 --> 0:13:57.959 rate go up, and so we are very hopeful. But 0:13:58.080 --> 0:13:59.800 you know, really to your point, that is going to 0:13:59.880 --> 0:14:03.720 be a key variable to continue the SS. We are 0:14:03.760 --> 0:14:06.000 going to have a more elevated reading this month, but 0:14:06.120 --> 0:14:09.400 hopefully again as we transverse into the new year, we 0:14:09.520 --> 0:14:14.360 get some readings that start to show some signs of deceleration. Lisa, 0:14:14.480 --> 0:14:17.199 just real quick twenty seconds here. Are you comfortable with 0:14:17.240 --> 0:14:21.200 where the Fed is guiding this market in terms of rates? Well, 0:14:21.400 --> 0:14:25.280 certainly the Fed really has a tough road to ho 0:14:25.520 --> 0:14:29.360 here going forward. Um, certainly they need to be attended 0:14:29.440 --> 0:14:31.920 to what happens on the price side while still trying 0:14:31.960 --> 0:14:36.480 to be supportive of the economic recovery that's going Uh, forward, 0:14:36.560 --> 0:14:38.880 and so what they've done so far is a fairly 0:14:39.000 --> 0:14:42.880 nice job in terms of communication, in terms of yeah, 0:14:43.240 --> 0:14:46.680 and that's and that's for this marketplace. All right, Lisa, 0:14:46.720 --> 0:14:48.200 thanks so much for joining us too short of a time. 0:14:48.200 --> 0:14:50.320 We're gonna get you back soon. Lisa Erickson, Senior Vice 0:14:50.360 --> 0:14:53.040 president and COHD of the Public Markets Group at US Bank. 0:14:57.320 --> 0:15:01.640 All right, So we have the omicron variant out there, 0:15:01.680 --> 0:15:05.840 and the question is how effective well the existing vaccines 0:15:05.960 --> 0:15:09.080 that we have in dealing with that. Let's bring in someone, 0:15:09.120 --> 0:15:10.840 I think as a thought or two them that Dave Herring, 0:15:11.320 --> 0:15:15.240 chief operating officer of Adagio Therapeutics. Previously he led Fiser's 0:15:15.320 --> 0:15:18.240 vaccine program from North America. Dave, thanks so much for 0:15:18.480 --> 0:15:20.520 joining us. We we know your time is precious here. 0:15:21.120 --> 0:15:24.440 What do you know about the therapeutics, whether it's fightsers 0:15:24.520 --> 0:15:31.160 or moderners as it relates to this new omicron variant. Yeah, no, 0:15:31.360 --> 0:15:34.280 thanks for having me. Um. Uh, it's a it's an 0:15:34.320 --> 0:15:37.560 interesting question, right, A lot to still be known. I've 0:15:37.600 --> 0:15:41.080 seen what has been said publicly, which is there's a 0:15:41.160 --> 0:15:44.760 lot of concern about whether the current vaccines will be 0:15:45.800 --> 0:15:50.120 effective against this variant. Uh, and really, to me, this 0:15:50.280 --> 0:15:52.440 is a wake up call both for the country in 0:15:52.480 --> 0:15:55.760 the world. We always suspected that there could be variants 0:15:55.840 --> 0:15:59.480 that would escape both the current vaccines as well as 0:15:59.520 --> 0:16:02.600 some of the bodies. And you know, so far knock 0:16:02.680 --> 0:16:05.000 on what it looks like. It's not as severe as 0:16:05.240 --> 0:16:08.080 as people had feared. But we also know that this 0:16:08.280 --> 0:16:12.400 virus will continue to mutate. So this is my concern. Um, 0:16:13.080 --> 0:16:16.120 although I've heard opposing views, I was thinking, if this 0:16:17.160 --> 0:16:24.320 variant is more transmissible but less dangerous, that's still um, 0:16:24.480 --> 0:16:28.680 that's that's still leaves room to be cautious because what 0:16:28.760 --> 0:16:31.360 if it then mutates as it spreads to so many 0:16:31.440 --> 0:16:36.840 people into something that is more fatal. I totally agree 0:16:36.880 --> 0:16:39.800 with you, right, And we don't know yet what's going 0:16:39.880 --> 0:16:43.000 to happen when even this variant reaches some of the 0:16:43.200 --> 0:16:49.240 more vulnerable populations, whether that's you know, older adults, people 0:16:49.360 --> 0:16:52.720 in nursing homes, et cetera. And uh, what we do 0:16:52.880 --> 0:16:55.920 know is every time people get infected, the virus has 0:16:56.000 --> 0:17:00.440 this opportunity to mutate. And we've said all along there's 0:17:00.520 --> 0:17:02.640 likely going to be more variants than there are group 0:17:03.560 --> 0:17:07.160 letters in the alphabet. So I think your your fear 0:17:07.240 --> 0:17:10.600 is grounded. I mean that the opposing view I read 0:17:11.200 --> 0:17:13.240 and it was somebody on Wall Street this morning, So 0:17:13.359 --> 0:17:17.160 it wasn't a virologist who said this is great news, 0:17:17.200 --> 0:17:19.959 because it means that the variant is that the virus 0:17:20.280 --> 0:17:23.240 is mutating into something more like the flu, which is 0:17:23.280 --> 0:17:25.000 kind of like what happened with the Spanish flu. At 0:17:25.040 --> 0:17:26.399 least that's what we all think. I don't know the 0:17:26.480 --> 0:17:30.440 history exactly, um that eventually this becomes sort of a 0:17:30.480 --> 0:17:33.199 common cold or something that everyone can get but very 0:17:33.280 --> 0:17:37.480 few people die from. Is that how viruses typically do 0:17:37.720 --> 0:17:42.760 mutate into less fatal diseases. Well, I mean, I think 0:17:43.119 --> 0:17:45.800 you're going a little bit outside of my comfort zone here, 0:17:45.880 --> 0:17:48.480 but I mean what we do see is is, of course, 0:17:48.720 --> 0:17:50.920 you know, as people get affected, you do start to 0:17:51.320 --> 0:17:55.120 develop different immunities. Although I would argue influenza is still 0:17:55.800 --> 0:17:59.600 quite a deadly disease, you know, one that we haven't 0:17:59.640 --> 0:18:02.480 come up with a good solution to. Uh and it's 0:18:02.520 --> 0:18:06.840 certainly one that needs more attention, and people are continually 0:18:06.960 --> 0:18:12.000 worried about influenza, pandemics coming along and new ones that 0:18:12.680 --> 0:18:15.840 are you know there I think for for currently, for 0:18:16.080 --> 0:18:19.320 for COVID, we're not there yet, and even as an endemic, 0:18:19.440 --> 0:18:22.280 we're talking about a lot of people who are at risk, 0:18:22.840 --> 0:18:26.880 haven't been vaccinated, don't have treatments. UM. And so from 0:18:27.160 --> 0:18:30.840 from our perspective, we really feel around the world United 0:18:30.840 --> 0:18:33.440 States in particular, we should be putting more effort to 0:18:33.600 --> 0:18:37.200 finding more products to make it so, as you say, UM, 0:18:37.400 --> 0:18:39.480 we could make it more like the common cold, and 0:18:39.520 --> 0:18:41.119 at least if we're going to have to live with it, 0:18:41.640 --> 0:18:44.360 make it h something we can do in a much 0:18:44.480 --> 0:18:48.399 less deadly and impactful way. So, Davis, as these variants 0:18:48.440 --> 0:18:51.320 continue to come along, what can you tell us about 0:18:51.359 --> 0:18:56.320 the ability of folks like visor Moderna too tweak their 0:18:56.440 --> 0:19:00.400 existing vaccines to kind of meet the demand into these 0:19:00.520 --> 0:19:02.840 newer variants. How does that tongs that take? Can it 0:19:02.920 --> 0:19:05.760 be done? How hard is it to get done? Yeah? 0:19:05.840 --> 0:19:08.480 I mean the good news is uh, with the m 0:19:08.520 --> 0:19:11.160 R and A technology, it can be done. I did 0:19:11.280 --> 0:19:15.080 read recently though, the FDA thinks the soonest that those 0:19:15.119 --> 0:19:18.639 products could be tweaked and available as April. Which is 0:19:18.720 --> 0:19:21.720 why you know, from from our perspective at Adagio and 0:19:21.960 --> 0:19:25.240 the product that that we're working on for an antibody, UM, 0:19:25.640 --> 0:19:28.080 we think we need more shots on goal. We need 0:19:28.200 --> 0:19:31.240 more products. We need you know, warp speed two point oh, 0:19:31.320 --> 0:19:34.440 if you will to make sure that if something like 0:19:34.600 --> 0:19:37.440 O Macron comes along and is more deadly, we're prepared 0:19:37.520 --> 0:19:39.719 and that we don't have to wait three or four months. Uh. 0:19:40.080 --> 0:19:44.040 You know, our our product was designed to be useful 0:19:44.040 --> 0:19:46.320 against all the variants. We're waiting to see if that 0:19:46.560 --> 0:19:49.359 proves to be true. Um, and if that's the case, 0:19:49.760 --> 0:19:53.880 we want the governments around the world to be accelerating 0:19:53.920 --> 0:19:57.520 and expediting these these tools so that we have solutions 0:19:57.600 --> 0:20:00.919 to to this variant and future one. We only got 0:20:00.960 --> 0:20:04.080 a minute left. But are these um kinds of virus 0:20:04.240 --> 0:20:06.000 is going to pop up more and more often? I 0:20:06.080 --> 0:20:09.840 know you have worked at Novartists and Fightser, you've dealt 0:20:09.880 --> 0:20:13.680 with H one and one and other pandemics. Is this 0:20:14.080 --> 0:20:15.359 is this kind of thing going to happen more and 0:20:15.440 --> 0:20:19.679 more often? I mean unfortunately, right? I mean I started 0:20:19.720 --> 0:20:22.480 working on pandemics and two thousand nine, I've worked on 0:20:22.720 --> 0:20:25.560 a bowl, I've worked on mirrors, Stars and a few 0:20:25.600 --> 0:20:29.200 other ones. I mean, I sure hope not. I would 0:20:29.240 --> 0:20:31.119 like this to be the last pandemic than any of 0:20:31.200 --> 0:20:33.720 us see for a while, but I think probably the 0:20:33.840 --> 0:20:36.080 reality of the situation is we need to be more 0:20:36.160 --> 0:20:39.680 prepared UM and be ready for these things, whether it's 0:20:39.920 --> 0:20:42.680 something that mother Nature throws at us or or even 0:20:42.800 --> 0:20:46.200 the threat of some sort of bioterrorism and UH, and 0:20:46.359 --> 0:20:48.480 that to me is is what we should be we're 0:20:48.520 --> 0:20:50.879 working towards. Hey, Dave, thanks so much for joining us. 0:20:50.920 --> 0:20:55.200 Really appreciate getting your UM perspective. Chief offerating officer for 0:20:55.359 --> 0:21:00.159 Adagio Therapeutics previously led Fiser's vaccine program for North America. UH, 0:21:00.640 --> 0:21:02.919 trying to get a better handle on how this omicron 0:21:03.359 --> 0:21:07.359 variant will stack up against the existing vaccine. Thanks for 0:21:07.400 --> 0:21:10.840 listening to the Bloomberg Markets podcast. You can subscribe and 0:21:10.960 --> 0:21:15.000 listen to interviews with Apple Podcasts or whatever podcast platform 0:21:15.080 --> 0:21:18.680 you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. 0:21:19.600 --> 0:21:22.719 Ye put on fall Sweeney. I'm on Twitter at pt Sweeney. 0:21:22.840 --> 0:21:25.479 Before the podcast. You can always catch us worldwide at 0:21:25.480 --> 0:21:26.240 Bloomberg Radio.