Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Lee. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg
Speaker 1: dot com, and of course, on the Bloomberg terminal. Laurie
Speaker 1: Cavassin that joining us now the head of US equity
Speaker 1: strategy at OBBC Capital Markets. Laurie, your year end, next
Speaker 1: year fifty fifty? Walk us through it? Sure, Look, it's
Speaker 1: all about the numbers for us, John. And before I
Speaker 1: get into that, let me just tell you I sympathize
Speaker 1: with where your head is at. We called our weekly
Speaker 1: this morning good bye one. We're ready for it to
Speaker 1: be God. But look, I think it's you know, it's
Speaker 1: first off, the strong economy. Most of our economic modeling
Speaker 1: is playing us to an SMP five hundred north. Then
Speaker 1: it is looking at stocks versus bond that Lee for
Speaker 1: another year. I think stocks are still the best game
Speaker 1: in town. So are models. They are appointing us to
Speaker 1: about an eight percent type return. I think where things
Speaker 1: get interesting is what happens with pe multiples. If you
Speaker 1: assume a flattish pe we should be you know, around
Speaker 1: my target if you assume some crack contraction, but based
Speaker 1: on more aggressive FED and that's a realistic risk in here.
Speaker 1: Um that does point you to about down two percent
Speaker 1: on the year on our models, that would be our
Speaker 1: worst case scenario. It's a real risk monitor But the
Speaker 1: preponderance of the evidence on the economy and again stocks
Speaker 1: versusponse is telling us to look for another good year
Speaker 1: in stock, not as good as what we had this year,
Speaker 1: though frankly it felt lousy to get to this return
Speaker 1: that we've gotten UM, but I think we'll have another
Speaker 1: good year next year, but it's gonna be a bit harder.
Speaker 1: It's gonna be a bit harder on your outline. How
Speaker 1: in the first half of the year you might get
Speaker 1: an out performance of the value trades of some of
Speaker 1: the cyclicals, and in the back end it's going to
Speaker 1: be a rotation back into growth. Can you give us
Speaker 1: a sense of what that means in terms of the
Speaker 1: ongoing barishness in terms of economic growth that you see
Speaker 1: to the second half of the year. So look at it,
Speaker 1: it's not and you know, I'm sure my economist is
Speaker 1: kind of shuddering if he's hearing this right now. But
Speaker 1: you know, what we're seeing in tree is that if
Speaker 1: you look where the street economists are forecasting, they're right
Speaker 1: and around two and a half percent. Now, that's not
Speaker 1: a recession by any stretch, but it is a deceleration
Speaker 1: back to trend like growth. And what we do tend
Speaker 1: to see is that when markets and markets again are
Speaker 1: very forward looking, when we're in a hot economy like
Speaker 1: we're supposed to be in next year, for percent is
Speaker 1: basically the number in place for next year by most
Speaker 1: economists value, small cap cyclicals tend to outperform. But when
Speaker 1: you move back down to trend like growth or below
Speaker 1: trend like growth, that's when those more defensive parts of
Speaker 1: the market, like large cap secular growers and the growth
Speaker 1: trade itself tend to outperform. And we think at some
Speaker 1: point in the middle of next year, we're going to
Speaker 1: see markets start to focus on three and be done
Speaker 1: with two, and once that happens, will probably be well
Speaker 1: into fed rate hikes, and that also tends to be
Speaker 1: a trigger to get you away from those cyclical trades
Speaker 1: and back towards the growth trades. Wishing time away all right,
Speaker 1: let's dwell on the hair and the now for our
Speaker 1: radio audience. You've got a beautiful backtrol sciantistic communing or house.
Speaker 1: I love the name. My son's called Leo two, and
Speaker 1: you've got one for Leo of your family. I'm interested
Speaker 1: in Santa rally or lack thereof talk to us at
Speaker 1: the very end of one, even though there's but this
Speaker 1: week left. According to John Farrow, are you expecting value
Speaker 1: to still stabilizes it in last week a little bit
Speaker 1: towards the end. It's a great question, Caroline, and we've
Speaker 1: said in the very near term, if you're trying to
Speaker 1: trade now through December thirty feet, we just stay balanced
Speaker 1: on everything. Look, I think, oh Macron is really, at
Speaker 1: the end of the day a threat to the value trade.
Speaker 1: And while the little drifts and drafts of news we've
Speaker 1: been getting have helped stabilize the value trade, ultimately if
Speaker 1: we do see case counts worsen that actually all year
Speaker 1: has portended out performance by things like growth, large cap
Speaker 1: and secular more defensive positioning. But the problem we have
Speaker 1: right now is that the Fed in this more hawkish tilt,
Speaker 1: that we're all of a sudden having to digest is
Speaker 1: really a threat to the growth trade because that's where
Speaker 1: the expensive valuations are, and when we're in hiking periods,
Speaker 1: expensive stocks tend to underperform um when rapes are rising um.
Speaker 1: And so we really think that that's we're sort of
Speaker 1: hot between a rock and a hard place. Over the
Speaker 1: next couple of weeks, we just build on that a
Speaker 1: little bit because what we've seen in Credit Suite have
Speaker 1: pointed this out that the expectations for high rates that
Speaker 1: have fed haven't translated into high yields and that hasn't
Speaker 1: hurt the multiple. Can you want me through the relationship
Speaker 1: between fed rate high expectations and multiples on the SMP
Speaker 1: that you expect to evolve through next year? So look,
Speaker 1: I think the multiple question is a very very challenging one.
Speaker 1: And I know that there are some of my peers
Speaker 1: out there in the strategy world here saying, hey, fed
Speaker 1: rate HIGs always produced contraction, we gotta bake that in
Speaker 1: for next year. And I actually don't think it's quite
Speaker 1: that simple, John. We're starting to see pe multiples compressed
Speaker 1: at the individual stock level. If you look at the
Speaker 1: Russell two thousand, if you even look at the medium
Speaker 1: stock in the SMP. But we've seen a very kind
Speaker 1: of flattish move on the overall top down numbers. And
Speaker 1: I'll just take you back to the fact that we're
Speaker 1: still in this keewee world. And yes, the tapering is coming,
Speaker 1: it's more aggressive than expected. But the FED balance sheet
Speaker 1: has really kind of distorted what happens with PE multiples recently.
Speaker 1: If you expect sort of a flattish balance sheet over
Speaker 1: the next year or so, what that should tell you
Speaker 1: is that we should have a flat ish PE multiple.
Speaker 1: It's really when you get into quantitative tightening and he
Speaker 1: contracts and you contract the balance sheet, that's what the
Speaker 1: recent history is telling that should cause the contraction and
Speaker 1: the multiple. So it's just very complicated right now, Lori.
Speaker 1: This is a really important point and goes to the
Speaker 1: idea that we heard out of out of Seth Carpenter
Speaker 1: from Morgan Stanley over the weekend. The Fed is not
Speaker 1: willing to go to quantitative tightening too quickly because they
Speaker 1: do not understand the effect on Marcus the same degree.
Speaker 1: Are you saying that that's had a bigger effect in
Speaker 1: propping up equity valuations and on the flip side, would
Speaker 1: have a bigger effect on the downside if they were
Speaker 1: starting to withdraw that liquidity than even rate hikes or
Speaker 1: anything else. So let's go back to you know, John
Speaker 1: and my Frankly desire for this year to just be over. Um.
Speaker 1: If you go back to I remember I was on
Speaker 1: vacation at the time that last week of the year.
Speaker 1: I thought I could take vacation, and we had just
Speaker 1: a ridiculous down draft in the equity market. A lot
Speaker 1: of holidays were ruined on, a lot of portfolios were
Speaker 1: ruined in that last week of the year. But what
Speaker 1: we were dealing with back then, um was the kind
Speaker 1: of two through ats right. It was a threat to
Speaker 1: growth from the trade war, and it was a tighter
Speaker 1: fed that we were actually pricing and quantitative tightening. So
Speaker 1: that's really you know, it's not in my base case,
Speaker 1: it's not even on my poe Haast to rise on.
Speaker 1: But that is sort of a dire scenario that you know,
Speaker 1: Frankly will keep me up at night on on some
Speaker 1: of the nights where I'm you know, letting my mind
Speaker 1: race um. But look, I think at the end of
Speaker 1: the day, quantitative easing, quantitative tightening, this is all a
Speaker 1: new tool right. But what I can tell you, Lisa,
Speaker 1: is that since the year over year trend in the
Speaker 1: FED balance sheet has really dovetailed very nicely with the
Speaker 1: year over year trend in the PE multiples in the market. Um,
Speaker 1: so it is having an impact. And I've sympathize, you know,
Speaker 1: with with those who say they don't quite understand what
Speaker 1: the unwind is going to do. But what I can
Speaker 1: tell you is that the Fed has propped up PE
Speaker 1: multiples through the balance sheet. Laurie magnificent as always and
Speaker 1: going to catch up with you. Thank you for everything
Speaker 1: you've done for us this year. Have been great to
Speaker 1: work with you. Lorie Cavassein that of Obbos on a
Speaker 1: secret market. She wants the year done. Mike College joins
Speaker 1: us now City of Portfolio Manager for PATM Fixed Income. Mike,
Speaker 1: I promise would get to this coal at the front end.
Speaker 1: You think that maybe we've seen the peak of ye's
Speaker 1: at the front end and at the long end on
Speaker 1: tent as well. Might just walk us through the framework
Speaker 1: at PATM right now when you get around the table together,
Speaker 1: how you explain this Jonathan, Again, it's looking at the
Speaker 1: long term view, right, and everybody's so caught up on
Speaker 1: this growth surge and on this inflation surgeon, and we've
Speaker 1: done a lot of work on this, and when you
Speaker 1: really peel it back, it's been more demand driven than
Speaker 1: supply driven. Right. If you look at supply of stuff
Speaker 1: that's being made around the world and being shipped, it's
Speaker 1: higher in many places, in many cases than pre COVID,
Speaker 1: but the demand has jumped, like especially for goods, for
Speaker 1: durable goods, for imports. That demand is going to come down, right.
Speaker 1: That big jump in the savings rate we saw last
Speaker 1: year with all the fiscal stimulus, all the helicopter money
Speaker 1: that has already been spent, it's gone, right, So what's
Speaker 1: going to happen going forward as the fiscal stimulus really retrenches.
Speaker 1: Notwithstanding these infrastructure and BBB packages, which I think are
Speaker 1: just really non events in terms of their economic impact.
Speaker 1: It was the helicopter money sending people cash last year
Speaker 1: that really jumped spending and that is going away, right,
Speaker 1: So so the supply demand in balance is going to
Speaker 1: come back into balance over the next twelve months. So
Speaker 1: that's really the big picture. And the FED, though, right
Speaker 1: is kind of trapped or they paying themselves in the
Speaker 1: corner they're going to hike rates because they see these
Speaker 1: headline numbers. So the front end selling off the back
Speaker 1: end is is flattening, which happens every time you get
Speaker 1: a FED rate hiking cycle. So I think the curve
Speaker 1: is going to continue to the point where it's totally flat.
Speaker 1: But that's already priced in. If you look at the
Speaker 1: one year note, Jonathan in two years from now, which
Speaker 1: is reflected in the three year yield. Not to sound
Speaker 1: to wonky on a Monday morning, but that's at one six.
Speaker 1: The ten year note ten years forward is at one.
Speaker 1: So the market is already priced in a totally flat curve,
Speaker 1: which is ultimately what will happen when the Fed's done hiking. Michael,
Speaker 1: you're talking about an idea that a lot of people
Speaker 1: disagree about that you're going to see inflation come down
Speaker 1: enough that can justify the Fed's patients. How can you
Speaker 1: see their rhetoric this Wednesday kind of confirming that if say,
Speaker 1: they do accelerate the taper as they're expected to do
Speaker 1: and continue to talk about uncertainty, you know they're they're
Speaker 1: not being patient, right, That's why the front end is
Speaker 1: getting killed here. I mean two thirties this cycle. Just
Speaker 1: earlier this year peaked at around basis points. I always
Speaker 1: look at thirties because you know, we are, you know,
Speaker 1: manage a lot of long term money. For insurance companies,
Speaker 1: pension plans, they live in that thirty year space. Not
Speaker 1: like retail investors that was at two thirty. It's at
Speaker 1: one today. It's been cut in half, so it's halfway
Speaker 1: to zero, right, and it will get to zero. But
Speaker 1: again that's already priced in. The FED has turned really
Speaker 1: hawk ish. Uh, they're getting really us if they're gonna
Speaker 1: accelerate their taper, they're probably going to pull forward and
Speaker 1: accelerate rate hikes. But ultimately, what's priced into that ten
Speaker 1: year note and the twenty year note is where that
Speaker 1: funds rate is going to average over the next ten years.
Speaker 1: And yeah, an average, it's probably gonna be one percent
Speaker 1: or less. They're gonna get it to one and a half.
Speaker 1: Maybe they overshoot and get it to two or two
Speaker 1: and a quarter this cycle, but sometime in the next
Speaker 1: ten years, Lisa, it's going to be back to zero. Right.
Speaker 1: So on average, it's gonna bounce around between zero and two,
Speaker 1: and it's gonna average one or probably even less. Which puts,
Speaker 1: you know, ten year notes at reasonable value. Here, Michael,
Speaker 1: are you pricing in at all the risk that they
Speaker 1: might have to be more patient? I'm here in England
Speaker 1: with the Bank of England was really hawkish and none
Speaker 1: and not. Yeah, I'm Caroline, good morning. That's that's the risk, right,
Speaker 1: there's so much, so many ice stand in the front
Speaker 1: end now. Basically, you know three next year and and
Speaker 1: three three. That's a lot, right, That's a FED that's
Speaker 1: really moved thing moving for two plus straight years, right,
Speaker 1: I mean that's a lot. That's a long time to
Speaker 1: try to price in and figure out what the economy
Speaker 1: is gonna look like, what inflation is gonna look like,
Speaker 1: and what cold is gonna look right, So you're you're right,
Speaker 1: one of the risks right now. I think the hawk
Speaker 1: is scenario has kind of been priced in with this
Speaker 1: really flat forward curve. But but the risk is that
Speaker 1: you do get a big drop in activity over the
Speaker 1: next six and twelve months, and that inflation comes down
Speaker 1: a little more quickly than people think, and the FED
Speaker 1: and other central banks say, we're not going to be
Speaker 1: able to hike three times a year. Let's pull that back,
Speaker 1: and then the curve, you know, bull Bull Stephens, right,
Speaker 1: and we're not really ideally positioned for that. We're in
Speaker 1: the flattener, which has been working like crazy, but we're
Speaker 1: starting to cover something that in because we are concerned
Speaker 1: about that risk that the FED isn't able to hike
Speaker 1: six times, which is a pretty pretty high probability for sure. Mike,
Speaker 1: you always get me thinking, it's always great a cash
Speaker 1: out with you, Sir Michael Collins that of ahm, Mike,
Speaker 1: you're the best. Thank you. Sir. Ye joining us now
Speaker 1: is white leg level chief investment strategists at Black Rock,
Speaker 1: whiley I wanted to start with China and then we'll
Speaker 1: work our way back to the United States. But can
Speaker 1: you give me your rate on the Chinese economy following
Speaker 1: a week where people already started to reset their expectations
Speaker 1: for a policy shift from the Chinese Communist Party, what's
Speaker 1: your view on that? Well, what we have seen so
Speaker 1: far this year is that there is this greater pivot
Speaker 1: towards social objectives and common prosperity, and as evidenced in
Speaker 1: the regulatory climb down earlier in the year. But what
Speaker 1: we have also seen this year is that growth is
Speaker 1: deteriorating from quarter to quarter, from above in Q one
Speaker 1: to now below five percent in Q three, and kill
Speaker 1: Foy is looking even worse in terms of the kind
Speaker 1: of the growth levels. And as a result of the
Speaker 1: deteriorating growth trajectory, we have been off the view that
Speaker 1: support will have to ramp up heading into a significant year.
Speaker 1: There is twenty two, characterized by the Winter Olympics, characterized
Speaker 1: by the Party Congress, and sure enough we have seen
Speaker 1: support actually date comes through in the form of triple
Speaker 1: our cut, in the form of greater phisical standing expectations
Speaker 1: that we continue to think that will be the case
Speaker 1: as we head into next year, which is why we
Speaker 1: are modestly constructive China assets, both on the equity side
Speaker 1: as well as on fixing come site CGB. You are
Speaker 1: not alone in this. A lot of people have said
Speaker 1: that there needs to be more accommodation in China because
Speaker 1: of some of these issues. And yet over the weekend
Speaker 1: the polop Euro of China it came out with rhetoric
Speaker 1: that was new around the housing market, talking about bringing
Speaker 1: down pricing because this is a place that people live,
Speaker 1: not just invested. How much is there sort of a
Speaker 1: talking out of both sides of the mouth, and frankly
Speaker 1: a harder line in maintaining the de leveraging stands from
Speaker 1: the polop era over the past few weeks. It's a
Speaker 1: It's a fine balance, isn't it. There's always a dance
Speaker 1: between this longer term journey of quality revolution, thinking about
Speaker 1: the leveraging and balancing that with the near term support.
Speaker 1: So indeed, we have seen kind of rhetoric pointing to
Speaker 1: wanting to deliver in the private sector in the housing
Speaker 1: market and also thinking about the resolution of how is
Speaker 1: it going to look like for a grant. But in
Speaker 1: order to make sure that in order to contain the
Speaker 1: spill over effects from the leveraging activities, growth side needs
Speaker 1: to be showed up even more, which is why we
Speaker 1: see easing policy coming through to make sure that the
Speaker 1: way is happening the housing market is properly contained within
Speaker 1: the housing market and does not lead to a broader
Speaker 1: spill over on the economic more broadly, uh and leading
Speaker 1: to a broader risk of which is not what we
Speaker 1: expect heading into next year. The warning really, I mean,
Speaker 1: it's great to get your perspective from China moving out
Speaker 1: to its worldwide impact. Of course, as China tries to
Speaker 1: give some support to its own economy and the acting
Speaker 1: markets reacted off US earlier. What about the supply chain
Speaker 1: issues is Jonathan was just mentioning, we get that first
Speaker 1: case of Omcrown coming into China, are you worried at
Speaker 1: any point of the inflationary pressure that we might see
Speaker 1: once again if indeed the new variant hits China, hits
Speaker 1: supply chains, hits US in Europe and in the US.
Speaker 1: You're absolutely right in that the zero policy, zero tolerance
Speaker 1: policy in China does mean that omic crown cases popping
Speaker 1: up in China will have even more kind of significant
Speaker 1: impact on the supply side, on the economic activity side,
Speaker 1: which is why we expect on the policy side things
Speaker 1: will have come to even more because they would have
Speaker 1: to kind of shut down on the economic side even
Speaker 1: more in comparison with their developed market develop market counterparts.
Speaker 1: Now in terms of the spill over more broadly and
Speaker 1: thinking about the kind of policy room we do see
Speaker 1: on the inflation side not too elevated. In the case
Speaker 1: of China, PPI is hyher CPI is still reasonably contained,
Speaker 1: and that actually does give them room to ease a
Speaker 1: bit more, even needs to be and if you think
Speaker 1: about versus last year, developed world has really kind of
Speaker 1: come through with policy revolution coordination of monetary side as
Speaker 1: well as the physical side. China has been rather reserved
Speaker 1: in their policy response, leaving the great room to to
Speaker 1: to to to act. So that that that is why
Speaker 1: our case in China is modestly constructive against the broader
Speaker 1: backdrop of a very very low starting allocation to China
Speaker 1: in global portfolios. But more broadly, thinking about twenty twenty
Speaker 1: two UM, we talked about supply side constraint. We do
Speaker 1: expect that kind of getting alleviated somewhat second half of
Speaker 1: the next year, and the combination of still robots to
Speaker 1: growth dynamics as well as the negative rate environment should
Speaker 1: continue to support equities. And within aquities, we prefer developed
Speaker 1: market aquities over emerging market aquities. Really within d M,
Speaker 1: it's for an international bias to the asset allocation, that
Speaker 1: equity allocation away from the United States towards the US.
Speaker 1: It's interesting that you should mention that so our d
Speaker 1: M equity core has gone through a bit of a
Speaker 1: journey in twenty twenty one. The first half of twenty one,
Speaker 1: we preferred US equities because the restart was way ahead
Speaker 1: in the US, but at the media point we pivoted
Speaker 1: from US to European maquities. Is the baton of growth
Speaker 1: pick acceleration shifted from the US to Europe. And sure enough,
Speaker 1: this this differentiated approach to play the uneven pace of
Speaker 1: restart was also reflected in the fact that the difference
Speaker 1: in earnings materialized earnings growth in Europe and in the US.
Speaker 1: The differences so far this year almost fifteen. But now
Speaker 1: looking ahead to twenty one, the uneven pace of restart
Speaker 1: is washing through a little bit. And if you look
Speaker 1: as kind of the earnings expectation difference across the US, Europe, Japan,
Speaker 1: you know they're different, arranging from to half percent to
Speaker 1: fifteen percent. So well, less kind of playing the theme
Speaker 1: of uneven restart and instead we see actually what I
Speaker 1: just talked about, this combination of netive real rate and
Speaker 1: dynamic kind of growth environments supporting DM aquities across the
Speaker 1: across the board were modestly constructive across DM aquiti is.
Speaker 1: But under that we also want to kind of think
Speaker 1: about bar boweling across cyclical sectors as well as secular growers.
Speaker 1: Growers like technology and healthcare. Well, they always smile, weally
Speaker 1: of black Rock on Europe, the international story, China too,
Speaker 1: against the United States. The focus right now on the pandemic.
Speaker 1: Primarister Boris john S saying O Macron represents of COVID
Speaker 1: nineteen cases right now in London and by tomorrow it
Speaker 1: will become the dominant strain. Joining us now to discuss
Speaker 1: is Joshua Chastein, weistein the Johns Hopkins bloom By skill
Speaker 1: of public health. Josh when let's start right here. Trust.
Speaker 1: How much trust is that of these politicians delivering these
Speaker 1: emphatic statements and scaring society. And that's the issue we
Speaker 1: have right now, isn't it. Who should we trust? And
Speaker 1: how long do we have to wait to have some data,
Speaker 1: some numbers that we can trust. Well, I think that
Speaker 1: you know the numbers themselves. How many cases, what percentages
Speaker 1: are of amacon those are true. The governments are saying,
Speaker 1: unfortunately there's some percentage of the population that has tuned
Speaker 1: everything out. But I think most people realize that this
Speaker 1: is a new variant, just like Delta was a new variant,
Speaker 1: and we're going to have to respond accordingly. Given the
Speaker 1: fact that omicron is now expected to become the dominant
Speaker 1: strain in the United Kingdom. As Boris Johnson was outlining
Speaker 1: this morning, is the third dose, is the booster shot
Speaker 1: go to be considered required in order to be fully vaccinated?
Speaker 1: I think that is becoming a distinct possibility with each
Speaker 1: study that comes out suggesting actually good news, which is,
Speaker 1: with three shots of the MR and a vaccine, people
Speaker 1: have a reasonable degree of protection from amacron. This is
Speaker 1: not the case of complete escape from the vaccines, but
Speaker 1: that third dose seems to really help, and that may
Speaker 1: in fact, you know, change some of the policies, but
Speaker 1: was considered fully vaccinated so far, companies have really led
Speaker 1: private companies when it comes to setting policy. You see
Speaker 1: in the United States a survey of companies actually shows
Speaker 1: that nearly two thirds of all of them are going
Speaker 1: to mandate vaccines for their workers, whether or not there
Speaker 1: is any sort of overarching law about that or policy.
Speaker 1: How have you seen the discussion changing among private corporations
Speaker 1: to get that third shot, the booster as part of
Speaker 1: the requirement. Well, I think the recognition right now is
Speaker 1: that to have a safe work place, which people want,
Speaker 1: you really can't you know, open up to a macron
Speaker 1: and doing things that are necessary to prevent this virus
Speaker 1: from getting into the workplace, spreading in the workplace, really
Speaker 1: rereaking havoc on all the plans that companies have is
Speaker 1: um you know, a priority to doing something to prevent that.
Speaker 1: So I think that companies are looking at the data
Speaker 1: just like public health officials are looking at the data,
Speaker 1: and it wouldn't surprise me if they start requiring the
Speaker 1: third chat. I mean, the third chat is very safe
Speaker 1: and it protects against amacron, So it's pretty logical that
Speaker 1: we could get there. You talk about we can have
Speaker 1: it in terms of the workplace, we can have it
Speaker 1: con travel plans ahead of the holidays as well. And
Speaker 1: I'm seeing, of course Prime Minister Johnson saying that the
Speaker 1: U has already supply of COVID lateral flow tests. It's
Speaker 1: interesting from a cultural perspective coming into the UK, everyone
Speaker 1: is testing every single day using these collateral flow tests
Speaker 1: that are being given out on the street or you're
Speaker 1: into your nearest pharmacy. How is testing distinguishing itself? As
Speaker 1: I'm looking at airlines fighting back against more PCR testing
Speaker 1: because of the length of weight and the hoops you
Speaker 1: have to jump in the price tag. What are the
Speaker 1: testing could they do well? I mean they could be
Speaker 1: doing the an engine testing as well. I mean I
Speaker 1: think that we now are at a point where with
Speaker 1: the virus sticking around and you know, making itself the
Speaker 1: unwanted holiday guests, it's really important to have testing, but
Speaker 1: to integrate testing into our lives and PCR testing isn't
Speaker 1: that great for that if you've got to wait an
Speaker 1: entire day, because even if you were negative, something could
Speaker 1: have happened in the interim. And so these an engine
Speaker 1: tests offer the opportunity to do things quicker. I don't
Speaker 1: think we really figured out completely, particularly with travel, how
Speaker 1: to integrate it into our routine. Just like you know,
Speaker 1: you know, not too many years ago we integrated all
Speaker 1: the security stuff into our routine. We have to integrate
Speaker 1: testing for a while into our routine. And you know,
Speaker 1: we're in a little bit of a rocky phase while
Speaker 1: that gets worked out. And this is what everyone from
Speaker 1: an individual perspective, war is about and comes a macro
Speaker 1: issue if everyone starts to worry. From Mr Johnson saying,
Speaker 1: look he declines to rule out new COVID curbs before Christmas,
Speaker 1: it's an important family moment, but it's an important important
Speaker 1: economic moment for spending, for consumer sentiment. How likely are
Speaker 1: we to see further lockdowns in the United States and worldwide?
Speaker 1: I don't think we're likely to see you know, full
Speaker 1: lockdowns unless we have a situation where there's just an
Speaker 1: incredible searche and hospitalizations. And you know, we don't yet
Speaker 1: have evidence that that i'm o'con is going to cause
Speaker 1: that in highly vaccine and population, so we are going
Speaker 1: to have to see UM if that were to happen,
Speaker 1: and of course the health care systemwhere to come, you know,
Speaker 1: be at risk, then probably all bets are off on
Speaker 1: the kind of restrictions that might be necessary. But probably
Speaker 1: we'll see very, very limited and target targeted policies to
Speaker 1: reduce the spread UM. And you know, again it's the
Speaker 1: uncertainty that gives everyone anxiety. But we are not back
Speaker 1: in March. We have vaccines that provide for action. We
Speaker 1: know a lot about the virus, we can find it,
Speaker 1: we can test for it. So I don't think that
Speaker 1: people have to be so worried they're going to be
Speaker 1: watching a replay of last year. Don't just quickly How
Speaker 1: much more time do you need personally to conclude that
Speaker 1: this is less natalie than previous variants. Well, it really
Speaker 1: you know, there are a lot of different views out there. UM,
Speaker 1: I think a very strong argument is we need to
Speaker 1: see how it behaves in different populations. And so I
Speaker 1: think when you see you know, for example, London, when
Speaker 1: it really does become you know, the dominant variant, looking
Speaker 1: at what happens to hospitalizations, I think we'll give a
Speaker 1: really a good view for the United States. Um, what
Speaker 1: the the the likely out come it's highly vaccinated population,
Speaker 1: um getting omicron spreading around? Does that really make people
Speaker 1: very sick? And we'll find out soon. Joshua, thank you
Speaker 1: sir for catching up. As always, Joshua Shausting that of
Speaker 1: John Sulkins. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live we days from seven to ten am
Speaker 1: Eastern on Bloomberg Radio and on Bloomberg Television each day
Speaker 1: from six to nine am for insight from the best
Speaker 1: in economics, finance, investment, and international relations. And subscribe to
Speaker 1: the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com,
Speaker 1: and of course on the terminal. I'm Tom keene In.
Speaker 1: This is Bloomberg,