Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
Speaker 1: and of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts and more than a
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Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern on Bloomberg Radio every weekday, or watch us on
Speaker 1: YouTube by searching Bloomberg Global News. It's gonna be a
Speaker 1: big week. It's gonna be a big week in the markets.
Speaker 1: It's gonna be a big week for earnings. Let's understand
Speaker 1: where we are on this Monday by setting the Business
Speaker 1: Week agenda with Gina Martin Adams, chief Equity Strategies for
Speaker 1: Bloombery Intelligence on the phone from New Jersey, along with
Speaker 1: Dave Wilson, Stocks Editor, author of the Chart and Stock
Speaker 1: of the Day. He also joins us from New Jersey. Gina,
Speaker 1: I want to start with, you set the table. This
Speaker 1: is a big week. It is. As a matter of fact,
Speaker 1: it's the second biggest week of earnings. The biggest week
Speaker 1: of earnings will be next week, but this is the
Speaker 1: second biggest week of earnings. We've got roughly of the
Speaker 1: market cap of the SMPI set to report Microsoft, Intel,
Speaker 1: and Verizon, or some of the headliners this week. You know,
Speaker 1: I think that there's a lot of making up to
Speaker 1: do for somewhat disappointing financials reports. A financials beat generally
Speaker 1: beat second quarter earnings last week. Of the companies that
Speaker 1: have reported earnings so far, I've actually beat expectations, but
Speaker 1: that wasn't really enough for a market especially sensitive to
Speaker 1: what's happening with the outlook as estimates moved down. So
Speaker 1: what I think we need to see this week is
Speaker 1: some of these big tech names confirmed the optimism embedded
Speaker 1: in prices and at least confirmed that the outlook for
Speaker 1: one is pretty strong for stocks to continue to move higher. Right,
Speaker 1: we need, Gina, like, give me something, right, Yeah, something
Speaker 1: other than a modest beat to a horrible second quarter
Speaker 1: expectation is definitely what the market means. I have to say,
Speaker 1: because I've had a bunch of conversations every weekend with
Speaker 1: people in different industries, and there's a lot of pessimism
Speaker 1: out there, real concerns about what the economic backdrop is.
Speaker 1: Dave Coman in on our conversation talked to us a
Speaker 1: little bit about the trade today because it really is
Speaker 1: tech driven absolutely. I mean, if you talk about let's
Speaker 1: say the fanmag stocks or the big six however you
Speaker 1: want to refer to them, and we're talking Amazon, Apple, Google,
Speaker 1: their owner, uh, Alphabet, you know, Microsoft, Netflix, Facebook, It's
Speaker 1: probably out of order, but that's okay. I mean that
Speaker 1: basically that's it. That's the entire game in those six stocks.
Speaker 1: In fact, it really comes down to uh, you know, Amazon, Microsoft, Apple,
Speaker 1: and Alphabet pretty much. I mean it just goes to
Speaker 1: show you, you know, there's been so much a focus
Speaker 1: on these larger tech companies and they really are carrying
Speaker 1: the day at this point. You know, anticipation that they're
Speaker 1: already are gonna look better than what we're going to
Speaker 1: see from a whole lot of other companies, for doably,
Speaker 1: is part of that. I Mean you'll look at you know,
Speaker 1: stock indexes and you see, you know, the consumer discretionary
Speaker 1: group is leading the way, and that's the retailers, but
Speaker 1: it's all Amazon, you know, That's how it is. And
Speaker 1: right behind behind them of the tech stocks and you know,
Speaker 1: communications services, which is Facebook and Alphabet and everything elseide
Speaker 1: the eleven main industry groups is lower. So it just
Speaker 1: goes to show you, you know, how things are are
Speaker 1: setting up at this point as we await the second
Speaker 1: quarter results. Yeah, Gina, I don't know. You've seen so
Speaker 1: many market cycles, you know, you have, you have such
Speaker 1: great insight. I know. One of the things that everybody's
Speaker 1: reading on the trammel today's about ned Davis Research kind
Speaker 1: of changing their tune when it comes uh to the
Speaker 1: market outlook and thinking more like changing. I think it
Speaker 1: was their their bullish really just abandoning their bullish call
Speaker 1: in US equities. What do you look for? Who do
Speaker 1: you also like to follow that gives you a good
Speaker 1: idea of kind of where we go from here? Yeah,
Speaker 1: I mean so, I think you do. Look for the
Speaker 1: rate of change in economic momentum is one of the
Speaker 1: bigger drivers of potential optimism emerging for stocks going forward,
Speaker 1: and the fact that really the economic the perception is
Speaker 1: that the economic momentum is going to stall over the
Speaker 1: next couple of months, as we have had a renewed
Speaker 1: spike in infection rate, and that's that's one of the
Speaker 1: things that certainly is holding back a lot of confidence,
Speaker 1: a lot of sentiment toward the outlook, and we probably
Speaker 1: need to see that remove to get people coming back
Speaker 1: to equities and mass. But I do think the other
Speaker 1: side of the story is the FED has reinflated tremendously.
Speaker 1: There's a pretty reasonable prospect that we're going to get
Speaker 1: another fiscal policy package out of Europe. We may get
Speaker 1: another fiscal policy package supporting the U S economy as
Speaker 1: well in the next couple of weeks, and that's most
Speaker 1: likely going to surprise these really sort of grim expectations
Speaker 1: to the upside because it is liquidity. It is money,
Speaker 1: um that's going to help support the economies directly in
Speaker 1: some way, shape or form. Maybe it's not the most
Speaker 1: efficient money, but it is money, uh, And I think
Speaker 1: you do need to price that in. I mean, I
Speaker 1: take the point that Fang is driving a lot of gains.
Speaker 1: I mean, we look at the Big five and column
Speaker 1: Fang of FAMIG sorry, and you do see that those
Speaker 1: valuations relative to the rest of the SMP are extremely high. However,
Speaker 1: this is not just the U S story. This is
Speaker 1: something we wrote about last week too. If you look
Speaker 1: at that the big tech ducts in China, the gap
Speaker 1: they're in valuations is even bigger than the big tech
Speaker 1: gap here in the US. So this is a global phenomenon.
Speaker 1: This is a global tech concentration that I do think
Speaker 1: is somewhat at risk, but nonetheless it keeps defying every
Speaker 1: but every skeptics expectations that continue to continue to go. Yeah,
Speaker 1: and just to clarify, bat we're talking about bay Do
Speaker 1: Ali Baba and ten cent. Correct, that's correct. Yeah, there
Speaker 1: you go an exactly. Thank you so much, Gina Martin Adams,
Speaker 1: Chief Equity Strategies for Bluework Intelligence from New Jersey, as
Speaker 1: was Dave Wilson, Stock editor for Bluework Well. The cet
Speaker 1: Athlete stands for COVID nineteen Early Treatment and FUN. Founded
Speaker 1: by entrepreneur and philanthropist Steve Kirsch this year mid the pandemic.
Speaker 1: The FUN recruits physicians, scientists, epidemiologists to work on repurposing
Speaker 1: drugs to treat the virus. So interesting, especially on a
Speaker 1: day when we got some more news about a vaccine specifically,
Speaker 1: let's bring in Dr Lisa Danzig. She's focused on infectious disease.
Speaker 1: She spent over eighteen years at Novards Vaccines and Diagnostics.
Speaker 1: She's the chief medical Advisor at c et F and
Speaker 1: she's on the phone from San Francisco. Dr Danzig, it
Speaker 1: is so great to have you here on Bloomberg Radio
Speaker 1: with Jason and myself. Tell us a little bit more
Speaker 1: about this fun it's a new thing, right, but tell
Speaker 1: us about the group that are involved and the pursuit
Speaker 1: that you are all after. Well, Carol and Jason, thank
Speaker 1: you so much for having me on and and thank
Speaker 1: you for your coverage of this really important outbreak. The
Speaker 1: COVID nineteen Early Treatment Fund was created to address the
Speaker 1: critical gap in our global COVID response, and that is
Speaker 1: to fund clinical trials of repurpose drugs that could lead
Speaker 1: to effect of early treatments for COVID. And so how
Speaker 1: do you identify those We have a scientific advisory board UM.
Speaker 1: One of the things that UM, Steve Kersh, who founded
Speaker 1: this organization, is a tech entrepreneur and he's very fast moving,
Speaker 1: results oriented, but he's not a stranger to philanthropy in
Speaker 1: the healthcare area, and the first thing he did was
Speaker 1: assembled really a world class scientific advisory board and got
Speaker 1: the word out for funding requests. So he has over
Speaker 1: forty proposals. They've all been qualified, they've all been reviewed,
Speaker 1: they've all been prioritized, and all we need now is
Speaker 1: another twenty million dollars to get the most promising nine
Speaker 1: trials up and off the ground too rapidly get information
Speaker 1: on which of these may be most promising. Dr Denson,
Speaker 1: where does this fit within the grand pursuit of a
Speaker 1: vaccine and treatments overall? Because I do think, Jason, I've
Speaker 1: had a lot of conversations that we all understand that
Speaker 1: right now there needs to be global coordinations. So your
Speaker 1: efforts certainly sounds interesting and promising, But how does it
Speaker 1: fit into that global pursuit to make sure that you're
Speaker 1: not kind of repeating something that somebody else is going after. Yeah,
Speaker 1: this is a highly coordinated effort. There's there's some mad rush.
Speaker 1: There were three important papers on the list of repurposing.
Speaker 1: You need a little bit of duplication and science, but
Speaker 1: certainly not a lot of redundancy. Many look to a
Speaker 1: vaccine is the best hope for recovery, but we need tools,
Speaker 1: we need we need treatments and tools. And this disease
Speaker 1: is so unique because we don't just need anti virals.
Speaker 1: We also need immune modulators, and we also need rescue
Speaker 1: agents and strategies when when people are in advanced stages
Speaker 1: of this disease. So you know, because of the three
Speaker 1: different types of therapeutic modalities that we need for early, moderate,
Speaker 1: and late disease, we need mousive parallel efforts. And so
Speaker 1: what are some of the early findings in terms of
Speaker 1: either identifying some promising potentials or how should we as
Speaker 1: candidly like regular people be thinking about this in terms
Speaker 1: of what the because we're all looking for some optimism,
Speaker 1: some ray of hope here, Um, give us some if
Speaker 1: you can. Yeah, well, we're looking for the early yes,
Speaker 1: in the early no. But the four c ETSD funded
Speaker 1: a hydroxy clorquine study that gave an early no. We're
Speaker 1: looking for the early yes. There a number of interfer
Speaker 1: on LAMBA studies and rolling right now. There's one at Stanford.
Speaker 1: It's more than halfway through the DSMB. Halfway Um said,
Speaker 1: safety looks good, you should continue. If it didn't look good,
Speaker 1: we would have not continued. So so that's encouraging. We
Speaker 1: got to get these trials enrolled well. And what's well,
Speaker 1: what's interesting too is and this is I think you know,
Speaker 1: Jason and I have talked to a lot of individuals,
Speaker 1: um including just last week we're talking to the CEO
Speaker 1: of a NOVA and we've all been talking to the
Speaker 1: folks at Maderna. You know, UM about the pursuit of
Speaker 1: a vaccine. But it's a vaccine, but as you said,
Speaker 1: we're gonna need treatments, not just the anti virals. We're
Speaker 1: gonna need treatments that can take care of people at
Speaker 1: different stages of the virus to prevent them from dying. Ultimately.
Speaker 1: That's what this is about. It's about both. So you know,
Speaker 1: the idea of an early anti viral, if you can
Speaker 1: prevent the second I get a positive test early symptoms,
Speaker 1: then you know, maybe we can prevent with an anti
Speaker 1: viral the late stage immunological complications that that wind up
Speaker 1: causing all the severe morbidity and um and require different
Speaker 1: kinds of therapies. So there are a lot of approaches
Speaker 1: and anti viral there are a lot of approaches and
Speaker 1: immune modulators, things like interfere on things like I L
Speaker 1: six inhibitors. There are immune signaling pathways that are being
Speaker 1: evaluated for which there's encouraging results. People are looking at
Speaker 1: repurposing screens to see if some drugs on the shelf
Speaker 1: somehow inhibit the pathway, like dux dass and the alpha
Speaker 1: blocker is is um has uh reducis catacholamy. So there's
Speaker 1: all sorts of really good work. The problem is there's um.
Speaker 1: There's nine two potential agents that we could look at,
Speaker 1: and so we're not going to get the data. We
Speaker 1: need a rapid screen of yes or no to help
Speaker 1: our ecosystem of drug manufacturers and accelerators in our network
Speaker 1: of larger trials to know which drugs are promising, which
Speaker 1: ones to accelerate, and which ones don't have a signal
Speaker 1: that maybe we need to rotate out of them. Let's
Speaker 1: get back to our conversation with Lisa Danzigg. She is
Speaker 1: the Chief Medical Advisor for the COVID nineteen Early Treatment
Speaker 1: Fund c et F. Joinning is on the phone from
Speaker 1: San Francisco. So Lisa, I want to jump ahead a
Speaker 1: little bit just because I want to make sure that
Speaker 1: Carol and I understand there's at least I understand. I'm
Speaker 1: sure Carol already gets it. But you know this all
Speaker 1: this work, what happens next? You know, quick yesses, quick nos.
Speaker 1: You find something that works or a combination of things
Speaker 1: that work, how does it sort of get out to
Speaker 1: the public. What's the means of distribution here? Right? That's
Speaker 1: a great question, especially for it shows the beauty of
Speaker 1: the approach for repurpose drugs. In drug development, you've got
Speaker 1: to manufacturer in vaccine, were massively um uh, proceeding with
Speaker 1: this perile effort to manufacture the vaccine before we even
Speaker 1: know it works. The beauty of the repurpose drugs is
Speaker 1: many of the things that we're testing are already in manufacturing,
Speaker 1: are already able to be used. So the barrier to
Speaker 1: scale up and distribution are really limited by the information
Speaker 1: does it work or not? Uh. There are a lot
Speaker 1: of groups. There's the NIH, there's a number of global
Speaker 1: adaptive trials where additional follow up or confirmatory testing can
Speaker 1: be So the first thing would be getting into broader trials,
Speaker 1: and then the second would be working with the generic
Speaker 1: manufacturers on their supply chain and their distribution. But it's
Speaker 1: a much faster process. Lisa, how why is it so
Speaker 1: important to focus on this kind of research that you
Speaker 1: guys are doing, I guess treatment research right as opposed
Speaker 1: to just working on a vaccine. And I do wonder
Speaker 1: what role the federal government, which has given money to
Speaker 1: teams that are working specifically on a vaccine, what role
Speaker 1: the government needs to have in this, because I think
Speaker 1: we as a society need to understand, you know, like
Speaker 1: you said, we need a vaccine, but we also need
Speaker 1: these treatments, Like how important this component is to really
Speaker 1: get in control here? Well, this is a critical component.
Speaker 1: I asked myself the same question in January as I
Speaker 1: saw this unrolling. I'm a vaccine developer and sitting on
Speaker 1: the sidelines saying, you know, how do I follow this?
Speaker 1: I'm following what I know, which is drugs diagnostics and
Speaker 1: um vaccine development. And I didn't see the response. This
Speaker 1: should there should this should be part of a coordinated
Speaker 1: global and a coordinated federal response, and I didn't see
Speaker 1: it happening. And you know, we don't have time to wait.
Speaker 1: And this grassroots effort um that people like me are
Speaker 1: self activating, we're joining, we're teeming all of the investigators
Speaker 1: that are submitting trials don't have a bias to the
Speaker 1: product that they're submitting. They want to work together. So
Speaker 1: we're really creating a global collaborative network to deal with
Speaker 1: the disease that we've never seen before, and we're just
Speaker 1: beginning to understand. But how does something like ramdesvie or
Speaker 1: hydro hydroxy chloroquine kind of get attention, right, that's a
Speaker 1: treatment modality. How do they get attention versus some of
Speaker 1: the other things that you guys are working on that
Speaker 1: maybe or not there. That's a good question. I'm gonna
Speaker 1: I'm not a media person. Obviously, they were there first
Speaker 1: and they're they're they they got amplified. And I think
Speaker 1: the point that I'm bringing is there are a lot
Speaker 1: of other places to look hydroxy chloroquine. The datas and
Speaker 1: the data is mixed at best. We've got a bunch
Speaker 1: of negative data, We've got some safety concerns. Let's bring
Speaker 1: some other things in Q. Let's get as excited. There's
Speaker 1: two and some clinical try else for hypodroxy chloroquine. Let's
Speaker 1: convert some of them and if somebody wants to look
Speaker 1: at our trials, we've got treat early dot org. There
Speaker 1: are three ways people can get involved, they can donate,
Speaker 1: participate UM, which means find a trial that's running in
Speaker 1: case you want to enroll, are able to enroll, or
Speaker 1: apply for funding. Is it just lastly, just thirty seconds?
Speaker 1: Are there any any treatments out there that you think
Speaker 1: should be on our radar? UM watching Uh the pig
Speaker 1: ladd interfere in Lambda trial which is running at a
Speaker 1: number of sites. We're watching Favo pier of here, which
Speaker 1: is nanti influimsa drug licensed in Japan that's being used
Speaker 1: in China and Russia for UM UH for COVID camistat
Speaker 1: is um an anti. It's a drug licensed in Japan
Speaker 1: for pancreatitis and it's thought to inhibit an enzyme that's
Speaker 1: required to activate the spike protein to enter the cell.
Speaker 1: And uh, you know, we're looking at monoclon al antibodies.
Speaker 1: There's there's a there's a long list go to treat
Speaker 1: treat early dot org. All right, well, we really appreciate
Speaker 1: it to let us know how stuff is going. Yeah,
Speaker 1: keep us posted. UM, we really appreciate your work. Chief
Speaker 1: Medical adviser for the COVID nineteen Early Treatment Fund, joining
Speaker 1: us on the phone from San Francisco, I have to say.
Speaker 1: I mean, when I get sort of despondent about everything
Speaker 1: that's going on, I do think about all the scientists
Speaker 1: who are mobilizing around this. I think it's arguably, inarguably
Speaker 1: in a way that they've never mobilized on anything before.
Speaker 1: And we're all gonna have to play a role because
Speaker 1: they do have to do testing. There's going to have
Speaker 1: to be human trials in order to get it up
Speaker 1: and running. You are listening to Bloomberg Business Week, Jason
Speaker 1: Kelly and Carol Master here with you on a Monday afternoon.
Speaker 1: Got a word for you, Yes, awkward Yeah Oko taco.
Speaker 1: As the kids would say, Um, this is a fantastic story.
Speaker 1: I couldn't get enough of it as I was reading
Speaker 1: it this morning. Sherena Rajan wrote it a great quarter
Speaker 1: for Wall Street comes at a very awkward time, as
Speaker 1: Carol just said. He joins us on the phone from
Speaker 1: New York City. Bloombergs Week editor Joel Webber. He joins
Speaker 1: this from Massachusetts. Joel talked to me about this. I
Speaker 1: mean this, I feel like they're there are these times
Speaker 1: that said this on this program before we're like Bloomberg Markets.
Speaker 1: Joel and Bloomberg Business Week, Joel sort of collide and
Speaker 1: it shows up in the magazine and I love it. Well.
Speaker 1: I've been, uh, I think we've been We've been begging
Speaker 1: three uh to write stuff for the magazine, uh for
Speaker 1: for years and and uh, you know, I finally got
Speaker 1: him his attention. UM. No, I'm joking, UM, but it
Speaker 1: was I think in really interesting week last week UM
Speaker 1: on Wall Street, UM, as all the banks reported their earnings,
Speaker 1: and you know, basically it was just like one day,
Speaker 1: one day, one day, next day, next day, next day,
Speaker 1: and we just saw this you know, constant trickle of news.
Speaker 1: And by the end of the week, I was just like,
Speaker 1: I I just kind of want something to step back
Speaker 1: and and write about the this moment, because you know,
Speaker 1: you guys did at the top. It's like it's been.
Speaker 1: It's sort of an awkward one where the trading revenue,
Speaker 1: which is something that had just basically disappeared, uh, came
Speaker 1: back big time. But it was also a really awkward
Speaker 1: time for that to happen while everyone else has to
Speaker 1: sort of look on and and is not maybe having
Speaker 1: as good of a life right now. UM. So three
Speaker 1: where did you Where did you guys take that story?
Speaker 1: I mean, it really takes from your point, Joe, you
Speaker 1: have to think about the side that trading revenue truly
Speaker 1: had disappeared over the last ten years, to the extent
Speaker 1: that it wasn't the same engine driving wall streets power
Speaker 1: presence and their revenues and their profit numbers. Because volatility
Speaker 1: had gone away, the markets were sort of hoh home
Speaker 1: and and you were sort of along for the ride
Speaker 1: but not really making a killing. That changed, and that changed,
Speaker 1: and remember all these trading death bosses, all these trading
Speaker 1: that streets have been begging you, praying to have bad
Speaker 1: a bout of volatility returned to the market so that
Speaker 1: they can show when there's heightened level of risk. When
Speaker 1: there's volumes link surned our left, right and center, you
Speaker 1: can make big money. Especially if you take some risk,
Speaker 1: you you stand to re big gains. But the problem
Speaker 1: is when this number has come through Goldman SAX second
Speaker 1: best revenue ever in its history, JP Morgan highest revenue ever,
Speaker 1: Morgan Stanley highest revenue and the highest profitability ever. But
Speaker 1: can you imagine a worse time to be able to
Speaker 1: talk about it, because you're talking about the broader economy
Speaker 1: where a lot of people are struggling. So this perception
Speaker 1: of world streets biggest investment bank making a killing, that
Speaker 1: perception at a time when everyone else is writing a
Speaker 1: tough economy makes it. I mean, that's the main reason
Speaker 1: we're really calling it a knock one. And the number
Speaker 1: show at forty five billion for the top five investment
Speaker 1: numbers we've never heard of in quite a while, and
Speaker 1: yet for it to come right now, it does make
Speaker 1: every one a little back both on Wall Street right, sree,
Speaker 1: thank god they didn't cause the crisis, right, they didn't
Speaker 1: cause the pandemic. That's at least one thing on their side.
Speaker 1: And that's and that's the whole weird part here, right,
Speaker 1: And when it comes across when you talk to a
Speaker 1: lot of the Wall Street executives, I mean, we pointed
Speaker 1: out as soon as their earnings came out, there were
Speaker 1: some analysts who came out, the one analysts who came
Speaker 1: out and said the government numbers of frankly indecent, force
Speaker 1: more political action to come down the pike. And the
Speaker 1: people we spoke to said, that's unsaid, because perhaps you
Speaker 1: could make an argument for the two thousand eights global
Speaker 1: financial crisis that banks did play an integral part in
Speaker 1: bringing them the global economy. But you really can't make
Speaker 1: the case here the virus was not birth and the
Speaker 1: bank trading people they are they have just benefited from
Speaker 1: the actions taken by the thread to probably economy from
Speaker 1: from the massive surgeon voluces the massive surgeon volume. Uh.
Speaker 1: And they have been able to write that way perfectly. Well, however,
Speaker 1: that is not consolation enough for those on the outside.
Speaker 1: And you can truly understand why those on the outside
Speaker 1: of frustrators because for them, whether it's a recession or not,
Speaker 1: wal Street always wins. When they see the narrative Walter
Speaker 1: Street winning, they see it as wal Trade winning again.
Speaker 1: And that's the problem that Well, I think one thing
Speaker 1: that's interesting those three and and this is certainly true
Speaker 1: and the earnings calls uh. And something that you bring
Speaker 1: in this story too is that, yeah, well, while this
Speaker 1: was maybe a pretty good quarter by the numbers, uh,
Speaker 1: there's no there's no indication that this can they can
Speaker 1: keep it up either, right, And even the CEOs and
Speaker 1: whatnot have indicated as much. Um, So what is what
Speaker 1: is it? What is the future potentially look like here?
Speaker 1: For for the banks? Jamie dimond is Jamie Diamond is
Speaker 1: much better position than any of us. I get sort
Speaker 1: of give us a set of what it could look like.
Speaker 1: He's actually saying, we could see trading revenues dropped by back,
Speaker 1: or at least the volume and walacility and everything that
Speaker 1: could lead to business and activity dropped by about for
Speaker 1: the second half of the year. That is doing extent
Speaker 1: on sendable the crazy levels that we saw in March
Speaker 1: April May. It is incredibly hard to imagine how that's sustainable. However,
Speaker 1: take a step back and think about the second half
Speaker 1: of twenty twenty that we're walking into. Think about the
Speaker 1: American elections, think about you know, the various directions that
Speaker 1: pandemic and still they think about all the geo political
Speaker 1: flash points across the world. It's hard to imagine that
Speaker 1: you're going into a second half of twenty that will
Speaker 1: be for Did it will? I don't think anyone can
Speaker 1: call it a hump. And if it's not going to
Speaker 1: be whole hump, you can still expect the trading death
Speaker 1: to make a killing and tree. So is this mostly
Speaker 1: about raised eyebrows or is there something more? Is this
Speaker 1: catching the attention of Washington? You quote one member of
Speaker 1: Congress making a comment about it. But is this the
Speaker 1: sort of thing that could catch fire during the campaign
Speaker 1: as specially if Joe Biden continues to gain steam here.
Speaker 1: That's that's that's the unknown here, right, which is you're
Speaker 1: you're going your your hundred and five days away from
Speaker 1: another pivotal election in the United States. When you see
Speaker 1: numbers like this is coming out of World Street, and
Speaker 1: when you see the struggles in on main Street on
Speaker 1: the broader economy, I cannot imagine any politician not wanting
Speaker 1: to jump on the band and go go to the
Speaker 1: match and say, hey, look, this system is fact. This
Speaker 1: system is rigged. It is not helping ordinary people. It
Speaker 1: isn't helping those who are already comfortable. So you have
Speaker 1: it would be a safe bet to think that people
Speaker 1: will capitalize on it and make it a talking point. Yeah,
Speaker 1: I feel like it doesn't help that these guys are
Speaker 1: still considered banks when they really aren't traditional banks. I
Speaker 1: feel like, you know what I mean, because I think
Speaker 1: banks are meant to help more of their communities and
Speaker 1: help but they're but they're really Wall Street and that's
Speaker 1: why they get to play, you know, and volatility helps
Speaker 1: them on the trading desks. It's a great story. Check
Speaker 1: it out that story on the Bloomberg and at Bloomberg
Speaker 1: dot com. She Nataraje and financial porter at Bloomberg News,
Speaker 1: jointing us on the phone in New York City. Jill Webber,
Speaker 1: editor Bloomberg Business Week, on the phone from Massachusetts. But
Speaker 1: you're listening to Bloomberg Business Week. In his latest Economy
Speaker 1: In his latest column, excuse me, Bloomberg New Economy Editorial
Speaker 1: director Andy Brown points out something that was written recently
Speaker 1: in a Financial Times column. It's about how to be
Speaker 1: in Washington is to sense a nation sliding into open
Speaker 1: ended conflict against China with early little debate. I'm quoting
Speaker 1: from Andy's story. So we've got a few things to
Speaker 1: unpack here. And joining us as he does every week,
Speaker 1: Andy Brown on the phone in New Hampshire. There is
Speaker 1: a lot going on when it and whenever you talk
Speaker 1: about us in China. Tell us, though, Andy, why you
Speaker 1: highlighted UM specifically h this Financial Times column. Yeah, it
Speaker 1: just it just means that UM, both parties and both
Speaker 1: candidates in the election, uh, sort of in the in
Speaker 1: the in the absence of anything that looks like a
Speaker 1: nuanced balanced approach towards China, are just trying to outcompete
Speaker 1: each other on being tough. And you know the latest
Speaker 1: example of this is this idea that the White House
Speaker 1: has floated this trial balloon to ban all ninety million
Speaker 1: members of Communist Party from traveling to the United States
Speaker 1: and their families. So we're talking about you know, three
Speaker 1: hundred million people, potentially quarter of the population of China. UM.
Speaker 1: And you know, in the this kind of this kind
Speaker 1: of escalation UM is really incredibly dangerous. I mean, the
Speaker 1: only impact of a directive like that, were it ever
Speaker 1: to be implemented, would essentially be the halt all interchange
Speaker 1: between the United States and China. I mean, number one,
Speaker 1: it would prevent Ji Jim paying the Chinese president from
Speaker 1: ever traveling to China. You couldn't have trade talks because
Speaker 1: pretty much all of the members the Chinese trade negotiating
Speaker 1: team are also members of the Chinese Communist Party, as
Speaker 1: are many academics UM. And the question is, you know,
Speaker 1: they're the practical questions. I mean, since the Chinese Communist
Speaker 1: body doesn't actually publish a list of its members, it's
Speaker 1: hard to know how how on earth you would implement it.
Speaker 1: I mean it's about as broad and sweeping as sort
Speaker 1: of a ban on all Muslims or something like that,
Speaker 1: which were ideas floated very very early on. And so
Speaker 1: the columnist is sort of saying, look, you know, we
Speaker 1: we need to have an intelligent conversation about where we're
Speaker 1: going in all this. Is this what we really want?
Speaker 1: Do we want an open ended confrontation with China which
Speaker 1: could ultimately lead to war? If that's where we're going,
Speaker 1: that we should have that. We should tell the American
Speaker 1: public what this is going to mean. This is going
Speaker 1: to mean big national you know, uh uh sacrifice, It's
Speaker 1: gonna it's gonna have a massive cost on the economy.
Speaker 1: Are you ready for all this? So? Andy, I do
Speaker 1: want to ask you, because you're so good at giving
Speaker 1: this perspective to us, flip this around. If you're sitting
Speaker 1: in China and as a Chinese national, how are you
Speaker 1: viewing what's going on here at this moment? Well? I
Speaker 1: think what's just what? What The view from Beijing is
Speaker 1: very much that, um, the West is out to uncertainly,
Speaker 1: the United States is out to throttle us. Um Uh,
Speaker 1: They're not interested in engagement anymore. They look at these
Speaker 1: increasingly hostile UM policy initiatives or trial balloons coming out
Speaker 1: of Washington. UM. And they're asking themselves, they're they're hunkering
Speaker 1: down for a long, long term Uh. They think of
Speaker 1: the worst UM Cold war engagement with the United States.
Speaker 1: And you're and basically they're saying, we've got to be
Speaker 1: We've got to be self reliant. Uh. And so you're
Speaker 1: exhilarating precisely the trends which ostensibly you're trying to prevent
Speaker 1: UM I e. You know, if if we're serious about
Speaker 1: doing trade with China, we want to open their markets,
Speaker 1: we want greater engagement, we want we want American businesses
Speaker 1: going over there. We want bankers able to operate freely,
Speaker 1: brokerages and and and so on. And in fact, what
Speaker 1: you're doing is driving the Chinese to a position where
Speaker 1: they say, actually, this isn't what they want. We just
Speaker 1: have to we just have to we just have to
Speaker 1: to go go for autaki. We have to be self reliant.
Speaker 1: This is this is this is essentially economic war. Well
Speaker 1: and what's interesting too, as you write in your column, Andy,
Speaker 1: is you know, voters need to be aware that there
Speaker 1: are alternative approaches to how we interact with China, and
Speaker 1: I think it's an interesting time. I heard somebody over
Speaker 1: the weekend say to meet Romas romans burning and describing
Speaker 1: America specifically, and that you know, we're in cry sis.
Speaker 1: Were preoccupied maybe with some of the wrong things. Meantime,
Speaker 1: the rest of the world is kind of laying out
Speaker 1: their big broad strategies, and I do wonder if the
Speaker 1: American public kind of really understands the gravity of kind
Speaker 1: of what's going on right now as a result of
Speaker 1: the administration. Yeah, I mean, you know, the the the
Speaker 1: alternative approach that you talk about is pretty simple. If
Speaker 1: you can't change Chinese behavior, and I think it's very
Speaker 1: unlikely that you are going to change the drift of
Speaker 1: Chinese industrial policy. Jumping has concluded that a state let
Speaker 1: economy such as the one that he's building now in
Speaker 1: China um is is a necessary political support for the
Speaker 1: Chinese Communist Party. I don't think you're going to change
Speaker 1: that behavior. You do what you can do, which has
Speaker 1: changed your own behavior. So you get back to this.
Speaker 1: You know, America needs a policy of national renewal, investment
Speaker 1: in science and technology, and education and healthcare, all the
Speaker 1: areas that have been a exposed now by this, by
Speaker 1: this coronavirus um. So you know what I'm saying in
Speaker 1: my column is the Chinese look at this, these these
Speaker 1: these threats from the Trump administration. They probably they probably
Speaker 1: dismissed them as as unworkable. They're gonna be looking at,
Speaker 1: you know, Joe Biden's two trillion dollar stimulus and taking
Speaker 1: that more seriously. So my point is, why don't we
Speaker 1: have a competition with China to reinvent the global economy,
Speaker 1: a sustainable global economy. Right, Let's compete with him on
Speaker 1: a green initiative. Let's compete with him on tech to
Speaker 1: create the technologies that will drive innovation, you know, drive
Speaker 1: sustainable growth in the twenty one cent Right. It's great,
Speaker 1: it's a great idea. Um, and everybody should check out
Speaker 1: Andy's Economy Bloomberg, his column Bloomberg New Economy Director Andy Brown, Colonel. Now,
Speaker 1: but you let me drive. Oh no, no, no no, no, please,
Speaker 1: I'll do the right drivel. I want to drive all
Speaker 1: just drive, baby, good questions trying. This is the drive
Speaker 1: to the Globe Commune. Thanks, we'll run on Bloomberg Radio.
Speaker 1: All right, let's hit the Drive to the clothes on
Speaker 1: this accelerating day. I feel like of Green Carol's I
Speaker 1: did see very nicely. But it's pretty remarkable right the
Speaker 1: momentum it is. Uh So, who better to talk to
Speaker 1: us about it than j J. Canahan, chief market strategists
Speaker 1: for TV and Merri Trede joining us on the phone.
Speaker 1: J J. How the heck are you? It's been a while. Ah, yeah,
Speaker 1: you're luck ran out. It's so far, so good. How
Speaker 1: about you, guys? Hope everyone's healthy and happy. We're doing okay,
Speaker 1: We're doing okay week nineteen, I think from broadcasting from
Speaker 1: Marver Sspective homes here in New York and New Jersey.
Speaker 1: So it's obviously a different world. I think. I think
Speaker 1: we've talked to you since the pandemic set in, but
Speaker 1: uh it, I don't think anybody expected it would be
Speaker 1: this long. And meanwhile, we've got a market that seems
Speaker 1: to be, by some accounts, kind of defining gravity here,
Speaker 1: especially when it comes to tech stocks. What are you saying, Well,
Speaker 1: it's really amazing. You know you guys talk it, talked
Speaker 1: about it news flash. Just right there. You see Microsoft,
Speaker 1: you see Amazon, And what I really find amazing is
Speaker 1: going into earnings to have h the analysts updates, you know,
Speaker 1: having upgrades on the stocks right before we go into them.
Speaker 1: It's it's it's a risky move on their part. You
Speaker 1: normally don't see that. But what then concerns me is,
Speaker 1: even if these are amazing earnings, which obviously everyone expects
Speaker 1: them to be, can that sort of carry the day
Speaker 1: after earnings or is it going to be a sort
Speaker 1: of by the rumor sell the news because the expectations
Speaker 1: are so high heading into these tech earnings After banks
Speaker 1: did okay but kind of did what we expected, and
Speaker 1: that trading revenues were good and everything else. Uh, you know,
Speaker 1: when your net interest margin gets squeezed, it was just
Speaker 1: so so well, what would you do if they're disappointing?
Speaker 1: Considering the run up, especially some of those big check names.
Speaker 1: I think it really changes the momentum, Carroll, to be
Speaker 1: honest with you, um, you know right now, even though
Speaker 1: as we just got untalked about being to stay at home, trade, etcetera.
Speaker 1: The I think we have sort of positive momentum that
Speaker 1: at some point here will come out of it. Things
Speaker 1: will resume. I don't want to say as they were,
Speaker 1: because I don't think they're ever going to be exactly
Speaker 1: as they were, but in a good way or better way.
Speaker 1: With that said, if these stocks which we're all relying
Speaker 1: on to be the leaders, and to their credit they
Speaker 1: have been, don't meet these expectations, you know, it gives
Speaker 1: you a little bit of a head scratcher. It's in
Speaker 1: a weird way. It's like the technology and the mature
Speaker 1: technology stocks have become a little bit of the safety
Speaker 1: play during this whole time. Why is that, Well, is
Speaker 1: it just because they're not so kind of? I mean,
Speaker 1: they have become such a part of our our lives personally, professionally, absolutely,
Speaker 1: And you know when you see these analysts talking about
Speaker 1: the fact that like Microsoft or from Platform I'm sorry,
Speaker 1: had to uh exponentially start performing and all of a sudden,
Speaker 1: twelve months of development cycles came flying to really quickly,
Speaker 1: and with that they didn't have many problems. I think
Speaker 1: that that really gives people some excitement as to the
Speaker 1: opportunity there and how quickly other things that really sort
Speaker 1: of change our lives, if you will, can come up.
Speaker 1: The other thing is, and we can't forget about the
Speaker 1: fact that you have a sixty two basis point ten
Speaker 1: year yield and it just doesn't excite anybody. So I
Speaker 1: think people are also saying, Okay, if I'm heading to
Speaker 1: retimement or whatever it may be, do I want to
Speaker 1: put a lot of money there, or do I want
Speaker 1: to try and get capital appreciation from stocks? I trust,
Speaker 1: you know, some have yields, some don't, but overall they've
Speaker 1: been solid and that capital appreciation has certainly been much
Speaker 1: better than the youth play. Right now, I still am
Speaker 1: sort of puzzled that and maybe I shouldn't be j
Speaker 1: j around all things transport here, um, you know, especially
Speaker 1: as we're talking about business travel Carroll, you know, just
Speaker 1: basically never coming back to the levels that it was
Speaker 1: as an investor, How should we be thinking about either
Speaker 1: the big airline names or even more broadly the hospitality
Speaker 1: and travel business. Yeah, you know, it's interesting our our
Speaker 1: clients really took to them in March and April. I
Speaker 1: think last time we talked because there was sort of
Speaker 1: a government's you know, uh nettings there if you will
Speaker 1: or deck stop. Now that they've they've rarely debate and
Speaker 1: haven't really perhaps had to take up to the level
Speaker 1: maybe we thought they would, you know, particularly with what
Speaker 1: we've heard out of United in American recently. I think
Speaker 1: that this is a little bit of a riskier investment
Speaker 1: at this point. And as we see you know, some
Speaker 1: restrictions being loosened then put back, Uh, you know, you're
Speaker 1: really betting on a recovery. What I would say is,
Speaker 1: if you're if you're investing there right now, I would
Speaker 1: really think about a longer time frame. A lot of
Speaker 1: this investment depends upon what's your time frame. If you're
Speaker 1: doing it for a quick hit, you're taking quite a risk.
Speaker 1: If you're saying, you know what, I think in two
Speaker 1: three years will be back to a level where you know,
Speaker 1: even international business travel was going again, then that investment
Speaker 1: makes more sense to me. And I think too often
Speaker 1: retail traders don't take their time frames that they say
Speaker 1: it's a long term investment without defining that for short
Speaker 1: from I think, and particularly now, you have to define
Speaker 1: that more than ever still when it comes to some
Speaker 1: of these specific names, um, whether it's a Netflix, whether
Speaker 1: it's a Microsoft, whether it's Tesla. Are there any though
Speaker 1: that really stand out for you that you think should
Speaker 1: be kind of part of an investor's portfolio at this point?
Speaker 1: J J. Well, I do think Microsoft is one that
Speaker 1: you could probably trust, uh if you will, because it's
Speaker 1: a more mature company, and I think that that's what
Speaker 1: we're seeing out of our clients, etcetera. Is that with
Speaker 1: that it's it's a company that you're like, Okay, you
Speaker 1: know this makes sense when it comes to a stock
Speaker 1: like Tesla. Not to woo hoo it, but you know,
Speaker 1: I like to look at the options market a lot,
Speaker 1: even if you don't trade options. They give you an
Speaker 1: idea of what people are pricing in. If you look
Speaker 1: at Tesla and if you're going to hold it for
Speaker 1: thirty two calendar days, the implied move right now is
Speaker 1: almost four hundred and eighty dollars. So when I asked people,
Speaker 1: if you're gonna buy Tesla, do you have the stomach
Speaker 1: forward to move? An expected move could be four d
Speaker 1: eight dollars against you as well as for you. Do
Speaker 1: you have the look for that? And I don't think
Speaker 1: people consider that enough when they go with these types
Speaker 1: of the US I'll take that as a no. That
Speaker 1: should not be a standard in your portfolio. It's might
Speaker 1: be a little bit about j. J. Kennah had great
Speaker 1: to spend some time with you. Thank you so much,
Speaker 1: Chief Market strategies for TD. Merrig Tree joining us on
Speaker 1: the phone from Chicago. Love when he gets specific and uh,
Speaker 1: you know, just talks about some of both the trends
Speaker 1: but also some of the individual names that we all
Speaker 1: think about all the time. We talk about them all
Speaker 1: the time on this show, Carol. Yeah, totally, you know.
Speaker 1: And not all tech should be necessarily grouped together, right,
Speaker 1: not all tech company are the same, I think, you know.
Speaker 1: So it's it's a good way, especially when he says,
Speaker 1: like look at the options market. That gives you a
Speaker 1: really good indication of what investors are thinking. Thanks so
Speaker 1: much for listening to Bloomberg Business Week. Download the podcast
Speaker 1: on iTunes, Southcloud, Bloomberg dot com, but wherever you get
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