WEBVTT - Surveillance: Investors Rethink Growth 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot com, 0:00:23.920 --> 0:00:29.479 and of course on the Bloomberg terminal. If you have 0:00:29.560 --> 0:00:32.760 concerns about the global economy about slowdown, This is the 0:00:32.800 --> 0:00:35.440 interview of the day. Carl Weinberg with us with High 0:00:35.520 --> 0:00:38.840 Frequency Economics are chief economists with a tour to force. 0:00:38.960 --> 0:00:42.280 Note this afternoon, Carl. One of the fundamental things you 0:00:42.360 --> 0:00:47.000 do is partition the United States in China from everyone else. 0:00:47.240 --> 0:00:50.280 Why do you do that? Well, the U S And 0:00:50.360 --> 0:00:52.959 China are growing right now and growth is far from 0:00:53.120 --> 0:00:56.200 short and most other places of the world we're looking at, 0:00:56.720 --> 0:01:00.520 you know, industrial production GDP figures that are pretty weak. 0:01:00.520 --> 0:01:03.319 Consumer spending is good in a number of countries, but 0:01:03.880 --> 0:01:07.480 overall growth has been disappointing, and forecasts is really not 0:01:07.640 --> 0:01:09.640 that great if you look at it from coming from 0:01:09.640 --> 0:01:12.560 the central banks and from the official agencies. I'm just 0:01:12.640 --> 0:01:15.679 afraid that the world economy has now done it's it's 0:01:15.760 --> 0:01:18.280 v shaped recovery. It's now more of a reverse j 0:01:18.440 --> 0:01:23.839 shape record than we started. Carl Jerome, Polo's central banker 0:01:23.920 --> 0:01:26.960 to the world, will the global slowdown you write about? 0:01:27.000 --> 0:01:30.920 And frankly George Saravellis at Deutsche Bank touches on this warning. 0:01:31.319 --> 0:01:36.400 Is that enough to affect Powell's domestic policy? Oh? Absolutely, 0:01:36.440 --> 0:01:39.560 And in fact, I think among central bankers right now today, 0:01:39.840 --> 0:01:42.800 the thing that worries them the most is not inflation, 0:01:42.920 --> 0:01:46.440 which all of them have clearly said is transient in 0:01:46.560 --> 0:01:48.160 terms of the things that are going up, just a 0:01:48.200 --> 0:01:50.440 small number of prices going up for a short period 0:01:50.440 --> 0:01:52.640 of time. But they're worried that the world is going 0:01:52.680 --> 0:01:55.680 to fall back into a recession or into a period 0:01:55.720 --> 0:01:59.720 of subpart growth. With the unemployment rate elevated and with 0:01:59.760 --> 0:02:03.280 both fiscal and monetary policy tapped out. That's a nightmare 0:02:03.320 --> 0:02:07.320 scenario for central banks, and their job is to minimize 0:02:07.360 --> 0:02:11.080 the chances of the worst possible outcome, and that is 0:02:11.120 --> 0:02:14.639 the worst possible outcome. That's why all central bankers, I believe, 0:02:14.680 --> 0:02:17.600 are reluctant to talk about tapering or interest rate heights 0:02:17.760 --> 0:02:20.360 and say the conversation is weigh in the future, because 0:02:20.400 --> 0:02:22.880 it is this line that comes from you, the winds 0:02:22.880 --> 0:02:25.960 of global recession already in the data. A lot of 0:02:25.960 --> 0:02:28.359 people might be listening to this saying, which data where, 0:02:28.360 --> 0:02:30.400 Because I'm looking at economic data right now. It looks 0:02:30.440 --> 0:02:33.880 really strong. Still no sign of insufficient demand anywhere. What's 0:02:33.919 --> 0:02:35.960 the leading in the cadifor you cal but in terms 0:02:36.000 --> 0:02:37.320 of the region of the kind of data that you 0:02:37.320 --> 0:02:39.720 would look for. Yeah, Well, a lot of people are 0:02:39.760 --> 0:02:41.359 looking at p m I s and they're saying, well, 0:02:41.400 --> 0:02:43.720 the p m I s are up, and that means 0:02:43.760 --> 0:02:46.600 that the economies are booming. But we have to remember 0:02:46.720 --> 0:02:49.000 that it's the economy that causes the p m I 0:02:49.080 --> 0:02:51.000 to move and not the p m I to cause 0:02:51.040 --> 0:02:54.280 the economy too. When I look at industrial production, I 0:02:54.280 --> 0:02:56.680 mean starting from the view that everything that matters in 0:02:56.720 --> 0:03:00.720 this planet is either grown, hammered to get or dug 0:03:00.720 --> 0:03:03.519 out of the ground. All right, Well, hammering things together 0:03:03.639 --> 0:03:06.280 is very important because it drives all of services. And 0:03:06.320 --> 0:03:08.600 I look, as I do in my global note this morning, 0:03:08.639 --> 0:03:12.200 at industrial production charts from a dozen countries, and all 0:03:12.240 --> 0:03:14.720 of them are pointing downward, and all of them are 0:03:14.760 --> 0:03:18.920 furthermore continuing downward trends that started as long ago as 0:03:18.960 --> 0:03:22.600 the end of twenty seventeen early eighteen. So it makes 0:03:22.600 --> 0:03:25.120 me think that we're in the process, in a longer 0:03:25.240 --> 0:03:29.040 term process of industrial decline that has both a cyplical 0:03:29.080 --> 0:03:31.960 as well as a secular component. I'll also point out 0:03:32.040 --> 0:03:34.800 that industrial production almost every place I look in the 0:03:34.840 --> 0:03:37.760 world except for China, is lower now than it was 0:03:37.800 --> 0:03:40.520 in March of two thousand and eight. Well, it reaches 0:03:40.560 --> 0:03:42.720 a point where we may want to start connecting the 0:03:42.760 --> 0:03:45.080 dots between what happened in two thousand and eight and 0:03:45.120 --> 0:03:48.840 what's happening now and viewing it is one longer term episode, 0:03:49.000 --> 0:03:51.400 but we still have to fix what's wrong. Let me 0:03:51.440 --> 0:03:53.560 just sort of summarize as follows them before I get 0:03:53.640 --> 0:03:55.480 to the big kill. Can you just help me understand 0:03:55.480 --> 0:03:57.800 the timeframe for this code. When you talk about this 0:03:57.880 --> 0:03:59.840 cyclical down to and in the future somewhere, what's the 0:03:59.880 --> 0:04:02.760 time and frame for that. Let's just start off with 0:04:02.880 --> 0:04:05.600 right now with the immediate problem. The immediate problem is 0:04:05.640 --> 0:04:08.560 that we're lower now on industrial production than we were 0:04:08.560 --> 0:04:12.480 in February before the pandemic, and we're not getting closer 0:04:12.560 --> 0:04:15.000 back to those levels, We're moving further away from it. 0:04:15.240 --> 0:04:18.240 That's the immediate problem. The longer term problem is that 0:04:18.279 --> 0:04:20.920 we're also lower than where we were in two thousand 0:04:20.920 --> 0:04:24.000 and eight, and while we may have briefly rebounded from that, 0:04:24.200 --> 0:04:26.560 if you connect the dots and run the regression line 0:04:26.600 --> 0:04:29.960 from two thousand and eight to today, it's pointing downward. 0:04:30.160 --> 0:04:34.000 And that's a longer term problem that involves infrastructure investment, spending, 0:04:34.040 --> 0:04:37.320 and demographic trends. Can we talk about the fiscal part 0:04:37.320 --> 0:04:39.320 of this equation. We were just discussing with our Amrie 0:04:39.360 --> 0:04:42.840 horderned down in Washington, the debate over the bipartisan infrastructure 0:04:42.839 --> 0:04:44.839 package and then of course the trillions of dollars that 0:04:45.160 --> 0:04:48.400 they're going to attempt to push through through budget reconciliation. 0:04:48.520 --> 0:04:52.719 How do you factor in that long term spending. That's 0:04:52.720 --> 0:04:54.880 a really good question, and we have to separate the 0:04:54.920 --> 0:04:57.720 long term issues from the short term issues. And of course, 0:04:57.720 --> 0:04:59.280 the only way to get to the long term is 0:04:59.360 --> 0:05:02.400 to get through the short term. But in the longer term, 0:05:02.640 --> 0:05:05.120 the only way we're going to grow in any meaningful 0:05:05.160 --> 0:05:08.720 way is that we increase productivity, because our population growth 0:05:08.760 --> 0:05:12.760 is slowing, and productivity plus population growth gives you long 0:05:12.880 --> 0:05:16.160 term economic growth. So I encourage and I support, and 0:05:16.160 --> 0:05:18.960 I think it's great for the longer term outlook to 0:05:19.080 --> 0:05:21.760 get more investments spending in there so that over the 0:05:21.760 --> 0:05:25.440 next decade we become richer rather than poorer as our 0:05:25.480 --> 0:05:29.520 population growth rates and demographics change. And the short run, though, 0:05:29.560 --> 0:05:32.479 that's not going to help very much. The net impact 0:05:32.560 --> 0:05:34.719 on GDP and the very short term is going to 0:05:34.760 --> 0:05:38.160 be relatively small. It will create jobs, it will certainly 0:05:38.200 --> 0:05:41.200 help the the the the environment, and that's probably the 0:05:41.240 --> 0:05:44.760 most important reason for moving forward quickly with it. But 0:05:44.880 --> 0:05:48.159 the cyclical problem, the shorter term problem, has its roots 0:05:48.240 --> 0:05:51.720 in I think credit growth outside the United States, which 0:05:51.760 --> 0:05:54.000 is flat or down in most of the economies that 0:05:54.040 --> 0:05:57.320 I'm looking at. That's probably the most important short term issue, 0:05:57.560 --> 0:06:01.160 much more important than infrastructure. All we're talking about economies 0:06:01.160 --> 0:06:03.760 outside the United States. It's Freedom Day in the UK. 0:06:03.880 --> 0:06:06.839 It should be a happy day. Restrictions are being lifted. Great. 0:06:07.000 --> 0:06:09.839 Not so great is the resurgence and COVID cases the 0:06:09.880 --> 0:06:12.760 country is seeing because of the delta variant. How big 0:06:12.760 --> 0:06:15.560 do you think the economic pick up there will actually 0:06:15.600 --> 0:06:19.480 be given some of those remaining fears. While you're asking 0:06:19.480 --> 0:06:21.640 me to look into a crystal ball that's yet to 0:06:21.680 --> 0:06:25.159 be delivered. We've never seen this before, so we don't 0:06:25.200 --> 0:06:27.920 really know. What we do know is we're getting anecdotal 0:06:28.000 --> 0:06:32.000 evidence that companies are having trouble operating because of absentee 0:06:32.080 --> 0:06:35.320 ism in the UK, that fifty new cases a day 0:06:35.520 --> 0:06:39.800 are generating maybe five hundred thousand absentees from work and 0:06:39.839 --> 0:06:44.240 that's caused production chain problems everywhere along the line. And 0:06:44.279 --> 0:06:46.640 this is stuff we have no basis to evaluate because 0:06:46.680 --> 0:06:49.440 we've never seen it before. So let's say that I'm 0:06:49.480 --> 0:06:51.800 worried about it, and at the end of the day, 0:06:51.800 --> 0:06:55.520 in the very very short term, the course of the virus, 0:06:55.560 --> 0:06:58.200 the course of the pandemic is probably the most important 0:06:58.240 --> 0:07:01.640 short term restoration, much more important than taper or or 0:07:01.720 --> 0:07:04.400 interest rates or anything like that. Carl very quickly here, 0:07:04.440 --> 0:07:08.880 what's the timeline of getting us GDP back to something 0:07:08.960 --> 0:07:12.040 on the edge of normal, say three or under three percent? 0:07:12.520 --> 0:07:15.080 Is that sooner rather than later or can we extend 0:07:15.120 --> 0:07:18.680 that out it's later rather than sooner. Look at look 0:07:18.720 --> 0:07:22.520 at two thousand and eight, when everything seemingly went better 0:07:22.640 --> 0:07:25.240 after two thousand and nine, and it still took us 0:07:25.640 --> 0:07:28.360 I don't remember the exact time frame, three four years 0:07:28.640 --> 0:07:30.880 to get GDP back to where it was, and to 0:07:31.000 --> 0:07:33.120 get the unemployment rate back to where it was it 0:07:33.200 --> 0:07:37.360 took almost a decade. Right, economies do rebound, and initially 0:07:37.440 --> 0:07:40.560 they rebound quickly, but then the pace settles down to 0:07:40.680 --> 0:07:44.200 a slower pace. Is the harder to re employ, take 0:07:44.320 --> 0:07:46.880 time to get back to work. So this is you know, 0:07:47.280 --> 0:07:50.400 this is a marathon, it's not a sprint. And the idea, 0:07:50.400 --> 0:07:52.560 of course is to get the unemployment rate back down 0:07:52.640 --> 0:07:55.720 to where it was before the next hit comes. And 0:07:56.200 --> 0:07:59.240 this is what central bankers want to ensures get a 0:07:59.280 --> 0:08:01.200 half from you. They that view count Wine back there 0:08:01.440 --> 0:08:04.560 of high frequency economics, the chief economist and managing director 0:08:08.840 --> 0:08:11.680 sprat drop us with us suck and and this is 0:08:11.800 --> 0:08:15.280 the interview of the day folks on fixed income. I'm sorry, 0:08:15.320 --> 0:08:18.160 so Brod, so Brad. We were going on saying there, 0:08:19.280 --> 0:08:22.800 what is what is driving low yield? Is it the 0:08:22.920 --> 0:08:27.480 pricing in of global slowdown? Yeah, I think that this 0:08:28.120 --> 0:08:31.040 feels like a classic flight to quality, if you will, 0:08:31.560 --> 0:08:34.520 Tanning yields at the last ten to fifteen basis points 0:08:34.559 --> 0:08:39.680 have been reacting more to news flow and safe haven 0:08:39.760 --> 0:08:43.280 bed risks associated with the data variant, you know, lower 0:08:43.360 --> 0:08:47.560 core oil prices, um and and general concern if you will, 0:08:47.800 --> 0:08:51.520 on global economies and not so much on funding that seals. 0:08:51.520 --> 0:08:53.200 I mean, the data has been sort of back and forth. 0:08:53.320 --> 0:08:56.640 We got, you know, somewhat okay detail sales numbers, cp 0:08:56.800 --> 0:09:00.719 I was above consensus, but the markets, you know, right now, 0:09:00.840 --> 0:09:03.000 it seems to be more of a safe haven. But 0:09:03.120 --> 0:09:05.920 are we just textbook for bos where what we're really 0:09:06.000 --> 0:09:10.640 doing is pricing in the input of global disinflation, even 0:09:10.720 --> 0:09:13.320 if the US booms, even if the US does better, 0:09:13.640 --> 0:09:17.120 even if strategists call for higher yields, effect as we 0:09:17.400 --> 0:09:24.359 impute global disinflation into America and that suppresses yields. Oh absolutely, 0:09:24.440 --> 0:09:26.880 I think that it's a it's a it's a global uh, 0:09:27.200 --> 0:09:30.040 you know, bond market, if you will. The ECB has 0:09:30.080 --> 0:09:33.480 been very doublished. We get some forward guidance again on 0:09:33.880 --> 0:09:37.280 this week's the ECB meeting on Thursday. I think everybody's 0:09:37.280 --> 0:09:39.679 going to be paying attention to all the details, but 0:09:39.760 --> 0:09:42.800 they're going to broadly remain debbish. And Bonniels are at 0:09:42.880 --> 0:09:45.920 close to negative forty basis points. I think the lower 0:09:46.000 --> 0:09:48.520 global bond years are another fact that's going to keep 0:09:49.080 --> 0:09:53.000 US bond yields lower, and also the the the CPI 0:09:53.160 --> 0:09:56.680 or the inflation differential if you work between US and Europe, 0:09:56.720 --> 0:09:59.480 it's quite dramatic. So I think that as long as 0:09:59.520 --> 0:10:02.800 I stahould means contained overseas, you're going to see that 0:10:03.120 --> 0:10:05.319 global bonds are going to remain low. And John, look 0:10:05.360 --> 0:10:07.440 at the tenure yield for those of you on radio. 0:10:07.520 --> 0:10:09.559 I mean it's a decline, John, and then it's a 0:10:09.640 --> 0:10:13.560 real collapse and yield one right now very briefly breaking 0:10:13.600 --> 0:10:16.240 below that with down six basis points on a US 0:10:16.360 --> 0:10:19.040 tenure so bantary. You just mentioned something quite important the 0:10:19.080 --> 0:10:23.120 inflation dynamics in America. It's a very very different story 0:10:23.200 --> 0:10:26.440 to what we're experiencing right now in Europe and elsewhere. 0:10:26.520 --> 0:10:29.120 Why is that important for this bond market in the 0:10:29.320 --> 0:10:33.320 US in the treasury market, well, because of the yield 0:10:33.320 --> 0:10:37.000 differential between treasuries and bonds and tragedies and g gbs. 0:10:37.320 --> 0:10:40.000 Because the way the global bond market trades, you can 0:10:40.200 --> 0:10:44.319 you can buy assets in other currencies very easily, and 0:10:44.400 --> 0:10:48.280 as long as treasuries remain attractive on a currency adjusted basis, 0:10:48.320 --> 0:10:51.119 you're going to see this demand coming from from foreign investors. 0:10:51.520 --> 0:10:54.079 That's not exactly what's driving this price action here. This 0:10:54.120 --> 0:10:56.920 seems to be much more driven by a safe haven 0:10:56.960 --> 0:11:00.400 bid if you will, for for for treasuries. But broad speaking, 0:11:00.400 --> 0:11:03.920 as long as there's yield differentials differentials are wide, you're 0:11:03.920 --> 0:11:07.320 gonna see, uh, you know, at least treasuries are going 0:11:07.360 --> 0:11:10.600 to struggle to rise tragedy yields. I mean, I'm going 0:11:10.640 --> 0:11:15.400 to struggle to rise UM based on fundamentals. Envy you 0:11:15.840 --> 0:11:17.760 right now. I think you're in a really tough spot 0:11:17.800 --> 0:11:19.360 in this bond market, and I just wonder can you 0:11:19.440 --> 0:11:22.000 give us some insight to what your conversations with colleagues 0:11:22.360 --> 0:11:24.800 and clients sound like right now. The level of confusion, 0:11:24.840 --> 0:11:27.400 the degree of confusion about what it's taking place here 0:11:27.440 --> 0:11:30.960 in this bond market at the moment, Well, there's definitely 0:11:31.240 --> 0:11:33.680 a decent amount of confusion. And this is a completely 0:11:33.720 --> 0:11:36.920 out of consensus move, if you will, in in treasuries. UM. 0:11:37.160 --> 0:11:39.840 You know, the expectation broadly speaking, was for a gradual 0:11:40.000 --> 0:11:42.000 rising yields in the in the second half, and now 0:11:42.559 --> 0:11:46.160 we've basically reversed all the losses we've seen and it's 0:11:46.160 --> 0:11:48.959 a good portion of it in the last quarter UM 0:11:49.160 --> 0:11:50.679 that we saw from the beginning of the year, we 0:11:50.679 --> 0:11:53.760 saw a dramatic sell off between January and March, and 0:11:53.840 --> 0:11:56.760 I started to reverse those games. So and the flat 0:11:56.840 --> 0:11:59.319 me of the curve is also not a consensus in 0:11:59.400 --> 0:12:01.839 your views. So I think that we're all kind of, 0:12:02.360 --> 0:12:04.839 you know, trying to figure out where things go from here. 0:12:04.880 --> 0:12:07.959 I feel like the bondmarket is in a limbo. We're 0:12:08.000 --> 0:12:11.360 waiting on a whole bunch of other factors to come 0:12:11.400 --> 0:12:15.520 into play. For fundamental student polandflow, treasury ails to rise, 0:12:15.679 --> 0:12:18.640 what other factors about it? Because if it's not hot inflation, 0:12:18.720 --> 0:12:21.240 for instance, if it's not hawkish commentary coming out of 0:12:21.240 --> 0:12:23.360 the Federal Reserve, what is the catalyst that makes the 0:12:23.440 --> 0:12:27.120 old to go higher? I think employment is key. I mean, 0:12:27.200 --> 0:12:30.800 we're we saw some data that last month's employment print 0:12:30.880 --> 0:12:33.760 was quite strong. I think that the thread feels like 0:12:33.880 --> 0:12:38.800 they've reached their substantial for the progress mandate on inflation. Really, 0:12:38.880 --> 0:12:41.040 the concern now is on the on the employment front, 0:12:41.080 --> 0:12:43.760 and we need to see anywhere between five hundred thousands 0:12:43.920 --> 0:12:46.599 million jobs being created for the remainders here, and that 0:12:46.760 --> 0:12:49.160 I think is going to be the key for both 0:12:49.240 --> 0:12:52.800 policy as well as for tragedy. Is moving higher. Consensus 0:12:52.920 --> 0:12:55.480 has totally broken down, so Batary is going to catch up. 0:12:55.480 --> 0:13:03.679 Sbautaria that stay general head of US Right Strategy. The 0:13:03.800 --> 0:13:06.000 weather is always good for Barry red Holts. He wakes 0:13:06.080 --> 0:13:09.400 up optimistic each and every day. Barry, the toughest thing 0:13:09.480 --> 0:13:11.280 to do when you're gonna do this in the real 0:13:11.400 --> 0:13:14.120 world of real money. You're gonna get a call this 0:13:14.280 --> 0:13:17.599 morning from X number of people that have entrusted you 0:13:17.679 --> 0:13:20.600 with their money, and they're gonna say, go to cash. 0:13:21.040 --> 0:13:25.719 What do you say, Well, you know, the secret to 0:13:26.120 --> 0:13:29.600 dealing with clients who get nervous with a little volatility 0:13:29.880 --> 0:13:33.880 is having this conversation not when there's read on the screen, 0:13:34.160 --> 0:13:37.480 but when they actually first come to us and say, 0:13:38.080 --> 0:13:40.440 here's what I want to do with my money. Uh, 0:13:40.600 --> 0:13:43.040 here's the history of markets. Here's how often we get 0:13:43.080 --> 0:13:47.800 a ten percent draw down, draw down, one to three 0:13:47.920 --> 0:13:52.320 percent moves. There are dozens and dozens of those every year. 0:13:52.800 --> 0:13:55.480 If you go to cash every single time the market 0:13:55.920 --> 0:13:59.599 twitches one per cent um, you'll never be invested. And 0:13:59.720 --> 0:14:03.040 that's not what our thought processes. It's not day to day, 0:14:03.559 --> 0:14:07.160 it's decade to decade. Well, the decade to decade timeline 0:14:07.200 --> 0:14:10.680 gets across the set of worries that we have this morning. 0:14:11.240 --> 0:14:14.319 One of them is a consensus call was higher yields. 0:14:14.360 --> 0:14:17.679 I believe we've gone the other way. What happens the 0:14:17.800 --> 0:14:24.760 consensus when they're wrong? When you say, when their consensus 0:14:25.080 --> 0:14:27.640 is right most of the time when it comes to 0:14:27.840 --> 0:14:31.840 market prices, but when it comes to forecasting the economy 0:14:32.160 --> 0:14:35.560 or the stock market, consensus seems to be wrong most 0:14:35.640 --> 0:14:39.120 of the time. I can't count how many times I've 0:14:39.160 --> 0:14:43.240 been told that the bond bull market is over, that 0:14:43.560 --> 0:14:47.000 yields are done going lower, They'll never the tenure will 0:14:47.120 --> 0:14:49.880 never drop below two percent, I mean one and a 0:14:49.960 --> 0:14:53.080 half percent, I mean one point to five percent. You know, 0:14:53.240 --> 0:14:57.520 the US still is the cleanest shirt in the hamper 0:14:57.600 --> 0:15:01.000 of dirty laundry. And he we are, you know, we're 0:15:01.160 --> 0:15:06.080 we're one two that that's just astonishing. The people who 0:15:06.080 --> 0:15:09.000 have been betting against bonds have been on the losing 0:15:09.040 --> 0:15:13.040 side of that trade for it's almost forty years. What 0:15:13.120 --> 0:15:14.640 do you chalk it up to? Though, as you say, 0:15:14.680 --> 0:15:18.320 we're six right now? Why is that growth concerns? Is 0:15:18.400 --> 0:15:21.480 that positioning? What what do you make of that? You know, 0:15:22.040 --> 0:15:25.000 it's hard to look at the US is completely separated 0:15:25.040 --> 0:15:29.000 from the rest of the world's um bond markets. And 0:15:29.200 --> 0:15:32.520 and we've seen negative yields in Japan for how long 0:15:32.840 --> 0:15:37.680 and and negative yields in Europe. That that black hole, 0:15:37.800 --> 0:15:43.360 that gravitational pull has been exerted on the US because 0:15:43.480 --> 0:15:47.000 there's so much capital slashing around and it's not just 0:15:47.760 --> 0:15:51.160 the FED and que money is looking for a home. 0:15:51.480 --> 0:15:54.280 And if you just want to make sure you're gonna 0:15:54.360 --> 0:15:58.560 get your cash back return of capital, not return on capital, 0:15:59.040 --> 0:16:01.640 Well who cares if it's one percent? If I put 0:16:01.720 --> 0:16:04.520 a billion dollars in a bank, there's no guarantee that 0:16:04.640 --> 0:16:05.920 that bank is going to be there and give me 0:16:06.040 --> 0:16:08.560 my money back. So this is a way to make 0:16:08.680 --> 0:16:12.520 sure that money that gets parked for a while is safe. 0:16:12.760 --> 0:16:16.120 And maybe it has to do with some geopolitics, maybe 0:16:16.160 --> 0:16:19.240 it has to do with some economic concerns, but the 0:16:19.400 --> 0:16:24.360 biggest issue seems to be just an immense amount of capital, 0:16:24.600 --> 0:16:29.520 trillions of dollars slashing around without a good place to hide. Well, 0:16:29.560 --> 0:16:31.760 you mentioned the FED in quei there, Barry, how high 0:16:31.800 --> 0:16:34.200 do you think the risk of is is of a 0:16:34.320 --> 0:16:41.200 policy mistake? Well, every economic cycle that ends, most contractions 0:16:41.240 --> 0:16:45.360 are eventually caused by a policy. You know, I don't 0:16:45.360 --> 0:16:48.320 know if I would call it. The mistake sort of 0:16:48.720 --> 0:16:51.240 implies that if we only get this right, we can 0:16:51.400 --> 0:16:57.680 avoid recessions. Hey, eventually UM economies get old and vulnerable, 0:16:58.360 --> 0:17:01.120 and what wasn't a mistake in one year suddenly the 0:17:01.200 --> 0:17:05.720 next year becomes a problematic, and we tend to see 0:17:05.760 --> 0:17:10.360 bullmarkets killed not by old age, but by UM either 0:17:10.480 --> 0:17:14.879 fed tightening that's successive or too quick. If you believe 0:17:14.960 --> 0:17:19.600 the underlying economy is stable and strong and robust, well, 0:17:20.320 --> 0:17:23.080 sometime next year we should start moving off of this 0:17:23.240 --> 0:17:28.159 emergency footing and slowly bring rates up. The question is 0:17:28.320 --> 0:17:31.040 where does that become problematic for profits and where does 0:17:31.080 --> 0:17:33.920 that become an issue for consumers who depend so much 0:17:34.000 --> 0:17:36.840 on credit? Is a two percent, three percent, four percent, 0:17:37.280 --> 0:17:40.680 that's anybody's guests, And where people get that wrong, that's 0:17:40.760 --> 0:17:43.680 your policy mistake. Very thanks so much, Very hold to 0:17:43.880 --> 0:17:47.440 this for the important Brian des interview as well. Really 0:17:47.480 --> 0:17:51.240 looking forward to that Masters of Business on a podcast US. Well, 0:17:55.040 --> 0:17:57.919 Dr Erstein, I'm gonna cut to the chase. You were 0:17:57.960 --> 0:18:01.760 at Harvard Undergraduate winning a Stidges Hoops Prized. You did 0:18:01.880 --> 0:18:05.880 Harvard Medical as well, you were at Boston University Hospital, 0:18:06.480 --> 0:18:09.760 and what you did is you studied Fleming, you studied Sock, 0:18:09.960 --> 0:18:14.000 you studied Watson and Crick. You also studied Sharfstein. Guess what, 0:18:14.280 --> 0:18:17.240 there was no social media. How did guys like you 0:18:17.640 --> 0:18:22.359 and your profession adapt to virology and microbiology in the 0:18:22.520 --> 0:18:28.480 time of social media. Well, we're seeing just how challenging 0:18:28.600 --> 0:18:33.440 it is. Um. The misinformation that's out there, The fact 0:18:33.560 --> 0:18:37.720 that people are hearing again and again and again things 0:18:37.760 --> 0:18:41.240 that are just flatly untrue about the virus just shows 0:18:41.520 --> 0:18:43.760 how powerful for us it is. We don't have that 0:18:43.920 --> 0:18:47.560 kind of partisan divide on penicillin, but we have it 0:18:47.960 --> 0:18:51.520 on covid vaccine in the middle of a pandemic. Well, 0:18:51.560 --> 0:18:54.240 let's talk about who are the unvaccinated doctor and what 0:18:54.359 --> 0:18:59.000 policy make is it looking to do about it? Well, um, 0:18:59.440 --> 0:19:02.560 they're they're they're not all the same. Um. I think 0:19:02.680 --> 0:19:04.960 that there are a couple of different ways of looking 0:19:05.040 --> 0:19:08.040 at them. One way is, you know, there's still people who, 0:19:08.800 --> 0:19:12.280 um are open to getting vaccinated. They just wanted to 0:19:12.359 --> 0:19:16.280 be really convenient. And I've met them. I've been out vaccinating. 0:19:16.320 --> 0:19:18.600 I see people who say, you know, this is so 0:19:18.720 --> 0:19:20.640 easy because I can just walk down from my house. 0:19:20.720 --> 0:19:22.440 And so I decided to go do it, and I'm 0:19:22.440 --> 0:19:24.960 gonna bring in some friends. And you think, you know, 0:19:25.240 --> 0:19:27.640 that's great, we're here. That's why we're doing this big 0:19:27.680 --> 0:19:30.520 outreach campaign. There are other people who you really have 0:19:30.680 --> 0:19:33.720 to spend time with. And I've been talking to people 0:19:33.840 --> 0:19:38.159 at different workplaces or just friends of friends call me 0:19:38.480 --> 0:19:41.640 talk it over. Some of them decide yes, UM after 0:19:41.720 --> 0:19:45.000 a conversation, and then there's some people who really are 0:19:45.200 --> 0:19:47.760 dug in that they don't want to get vaccinated. And 0:19:48.240 --> 0:19:51.160 I think that numbers a large I've been seeing recent 0:19:51.240 --> 0:19:53.640 polls on that. Um. Initially it was in the ten 0:19:53.720 --> 0:19:57.400 percent range, but might be higher now with all this misinformation. 0:19:57.640 --> 0:20:00.800 And these are the people who they get bid and 0:20:00.920 --> 0:20:02.840 they almost die and they said, well, what do you 0:20:02.880 --> 0:20:04.800 think about getting a shot now? And they go, I'm 0:20:04.840 --> 0:20:06.840 not so sure. I hear it might not be safe, 0:20:07.359 --> 0:20:09.000 you know, and you've got to scratch your head and 0:20:09.040 --> 0:20:11.119 go like, how could you have that view, you know, 0:20:11.280 --> 0:20:13.720 given that their hundred fifty million plus people who've been 0:20:13.800 --> 0:20:17.520 vaccinated safely and you almost died from COVID. So it's 0:20:17.600 --> 0:20:20.240 really it's really difficult when you get there. We have 0:20:20.320 --> 0:20:22.359 to have a sensible approach to these conversations. And I 0:20:22.400 --> 0:20:25.320 think you're right to draw a distinction between anti vaxus 0:20:25.359 --> 0:20:28.000 and people who are just hesitant about taking a vaccine. 0:20:28.320 --> 0:20:32.720 These vaccines are being deployed under emergency Youth authorization. I 0:20:32.840 --> 0:20:36.280 just wonder if full authorization, so to speak, Joshua, help 0:20:36.320 --> 0:20:38.119 things just a little bit, maybe on the margin, if 0:20:38.160 --> 0:20:42.040 it's all your thoughts, um, I do think it would help. 0:20:42.119 --> 0:20:45.480 And I think it's important for the US Food and 0:20:45.560 --> 0:20:48.639 Drug Administration now to be really explaining that process. I 0:20:48.720 --> 0:20:52.040 thought it's been important for a while. What is the difference, 0:20:52.200 --> 0:20:54.960 what data are they bringing in, what is the timeline. 0:20:55.000 --> 0:20:57.360 I think there are a lot of people who are confused, 0:20:58.000 --> 0:21:00.600 and I think just the will be really quiet until 0:21:00.640 --> 0:21:04.080 we tell everyone it's it's licensed. Approach isn't good enough 0:21:04.160 --> 0:21:07.080 for the pandemic. There should be more transparency, and I 0:21:07.160 --> 0:21:09.920 think that will affect some individuals who are waiting for that, 0:21:10.359 --> 0:21:13.560 but it will affect businesses a lot, particularly businesses who 0:21:13.760 --> 0:21:19.200 are um wondering about requiring vaccination or really pushing vaccination 0:21:19.280 --> 0:21:21.280 for their employees, but are waiting to see what the 0:21:21.320 --> 0:21:24.160 FDA does. Doctor I was catching up with a friend 0:21:24.200 --> 0:21:26.400 who's down in Florida over the weekend, and she says 0:21:26.560 --> 0:21:30.200 she knows about a dozen people who are fully vaccinated 0:21:30.240 --> 0:21:32.520 and yet are sick once again have tested positive for 0:21:32.600 --> 0:21:35.760 COVID nineteen. What do we really know about the protection 0:21:36.359 --> 0:21:39.240 that vaccinated people have, especially with the surge of the 0:21:39.320 --> 0:21:43.120 Delta variant and and others for that matter. Well, there's 0:21:43.160 --> 0:21:47.720 extraordinary protection against serious illness and death um from the 0:21:48.400 --> 0:21:51.720 from the vaccines. It's not perfect, but it's very very rare. 0:21:51.760 --> 0:21:55.439 I'm guessing those twelve people did not get particularly sick um, 0:21:55.600 --> 0:21:58.840 but you can get infected. There's still very good protection 0:21:58.960 --> 0:22:03.359 against any action for the Visor Madurna vaccines. It looks 0:22:03.440 --> 0:22:06.720 like for two shots. You know, people who are fully vaccinated, 0:22:06.800 --> 0:22:11.320 it's it's an excess of um of But that doesn't 0:22:11.359 --> 0:22:13.280 mean there won't be some people who are exposed, and 0:22:13.359 --> 0:22:15.800 people who are really opened up their lives and are 0:22:15.880 --> 0:22:18.480 doing things might well um get a little bit sick 0:22:18.640 --> 0:22:22.760 or test positive for example. But in general, if you're vaccinated, 0:22:22.840 --> 0:22:27.159