Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 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, an Apple podcast, Suncloud, Bloomberg
Speaker 1: dot com and of course on the Bloomberg Tournament. Please
Speaker 1: talk about the pandemic was still and we can do
Speaker 1: that with Rick Bright, the Rockefeller Foundation Pandemic Prevention and
Speaker 1: Response Senior Vice President. Great to have you with us
Speaker 1: on the program. Sir, I want to start with how
Speaker 1: you're working with the current administration and the difference since
Speaker 1: you're experiencing from working with the previous administration as well.
Speaker 1: What are you learning so far and what are the
Speaker 1: additional things you've been able to achieve. Well, thanks for
Speaker 1: having me this morning, in this afternoon around the world.
Speaker 1: It's really a stark difference between this administration and last administration.
Speaker 1: It isn't a secret, um that I had my frustrations
Speaker 1: with the slow rollout of overall response to the pandemic,
Speaker 1: and they just continued to increase my frustrations as we
Speaker 1: missed the ball and getting testing across our country getting
Speaker 1: vaccines made and getting vaccine rollout. What we see now
Speaker 1: with the Divide administration is a complete one eight turnaround,
Speaker 1: a lot of communication with the state and local levels
Speaker 1: from the federal government, a lot of collaboration, transparency, and
Speaker 1: you're starting to see that payoff and dividends with the
Speaker 1: rollout of the vaccine. We have more than double of
Speaker 1: the vaccination right now that we had on January. We
Speaker 1: have more people getting treated, we have more testing being done.
Speaker 1: In the passage of this American Rescue Plan is a
Speaker 1: true commitment to accelerating on all engines, all all cylinders,
Speaker 1: to make sure we can end the pandemic. We struggled
Speaker 1: with testing in the United Kingdom, but seem to do
Speaker 1: a much better job with sequencing and understanding variants much
Speaker 1: more quickly than other countries. Sat down that was in
Speaker 1: the UK, Rick and I just want to the United States,
Speaker 1: can we do a better job down in your experience
Speaker 1: that we're doing that right now? We absolutely have to
Speaker 1: do a better job. That is the big blind spot
Speaker 1: that we have right now with this pandemic in the
Speaker 1: United States and around the world. We haven't been doing
Speaker 1: enough sequencing, we haven't been targeting the sequencing to the
Speaker 1: right populations. What we're finding is these variants are now emerging,
Speaker 1: and we're finding them in parts of the United States.
Speaker 1: And if you backtrack, well, we realize they were in
Speaker 1: the United States for two or four months. They're widespread
Speaker 1: before we even know they're here, they're upon us. We
Speaker 1: know the threat of these variants. We know that they
Speaker 1: can transmit more readily. We know that some of them
Speaker 1: can evade some of the vaccine immunity that we're seeing
Speaker 1: from the vaccines and the therapeutics. So we have to
Speaker 1: get in front of them. The United States hasn't been
Speaker 1: done a good job. The CDC, however, did announce recently
Speaker 1: they would invest more in the sequencing for the United States.
Speaker 1: And really importantly, the Rockefeller Foundation has been working hand
Speaker 1: in hand with the US government to one um come
Speaker 1: up with new testing strategies to use testing and screening
Speaker 1: and testing to reopen our schools. Number two that that
Speaker 1: testing leads to identification in more cases. And then just
Speaker 1: a couple of weeks ago, Rockefeller Foundation hosted a conference
Speaker 1: with the government and private sector and public sector to
Speaker 1: identify the challenges we have in the United States to
Speaker 1: improve our sequencing, and not just a sequencing itself, but
Speaker 1: how we analyze it, how we communicate it, and how
Speaker 1: we tie it to the downstream. So so what type
Speaker 1: of question. Every mutation isn't impactful, but we do need
Speaker 1: to know the ones that are, and we need to
Speaker 1: know where they are so we can in front of them. Rick,
Speaker 1: there's one thing about analysis and identification. There's another thing
Speaker 1: about prevention. And this goes to this question of how
Speaker 1: international the effort of vaccination has to be. The idea
Speaker 1: that the United States is doing really well, it is
Speaker 1: doing much much better than Europe and a lot of
Speaker 1: the most of the developing world. How much do you
Speaker 1: think the US needs to do in order to get
Speaker 1: vaccin scenes out to some of the less wealthy parts
Speaker 1: of the world in order to prevent some of these
Speaker 1: variants from being established, from frankly mutating in the first
Speaker 1: place and gaining a foothold. It sounds like you've been
Speaker 1: working on pandemic prevention for quite a while. So that's
Speaker 1: a critical Actually, that's a critical point, and and it's
Speaker 1: something that gets lost in the news, gets lost in
Speaker 1: the enthusiasm for increasing a vaccination rate in a wealthy
Speaker 1: country in the country that has vaccine production within the borders,
Speaker 1: and we can vaccinate everyone in the United States, but
Speaker 1: we are still extremely vulnerable to this virus and to
Speaker 1: we vaccinate a sufficient level people around the world. The
Speaker 1: virus likes to mutate, and a mutates in people mostly
Speaker 1: who haven't been vaccinated. That's what infects more readily. And
Speaker 1: if the virus mutates and its circles in some part
Speaker 1: of the world is not covered with vaccines, and that
Speaker 1: virus circulates back into into the United States and it's
Speaker 1: changed in some way. We can see reinfections, can see
Speaker 1: escape from the immunity from our vaccine. So it's a
Speaker 1: real crisis. This pandemic will not end anywhere in the
Speaker 1: world until we ended everywhere in the world. And that's
Speaker 1: a critical part on the global picture for vaccinations. Rick,
Speaker 1: before we let you go, want to finish on something
Speaker 1: really sensitive and quite important. I think one thing that's
Speaker 1: been lost over the last twelve months increasingly as trust,
Speaker 1: trust and institutions, and trust and officials as well. You've
Speaker 1: worked with both governments. I understand that you had worked
Speaker 1: with President Biden in the initial COVID task Force, and
Speaker 1: as we know you worked with the Trump government, the
Speaker 1: Trump administration as well, And when you quit, you said
Speaker 1: the following that some of the decisions being made with dangerous,
Speaker 1: reckless and causing lives to be lost. And it was
Speaker 1: the interference of politics in science. And I think one
Speaker 1: thing that people struggle with right now when they hear
Speaker 1: a policymaker speak, even the President of the United States currently,
Speaker 1: is it driven by politics or driven by science? When
Speaker 1: he says July four, we can get together it to again.
Speaker 1: Is that just about sending out a nice message to
Speaker 1: the public, or is that driven by science. What I
Speaker 1: see the difference in President Biden President Trump is their
Speaker 1: ability and willingness to listen to the scientists. And when
Speaker 1: President Biden nounced says that he can meet a target
Speaker 1: and meet a goal, you can bet that he's vetted
Speaker 1: it with the scientists. You can bet Dr Faucci, the
Speaker 1: scientists at n I H and CDC and FDA BARDA
Speaker 1: have weighed in on that goal. And when he sets
Speaker 1: the goal, I do think sometimes it's an ambitious goal,
Speaker 1: but we should be ambitious in stopping this pandemic. So
Speaker 1: I believe when he sets it out, we can achieve it.
Speaker 1: But we're gonna have to work really hard to get there.
Speaker 1: It's gonna take every one of us. It can't be
Speaker 1: a policymaker or just a government that achieves that goal.
Speaker 1: Each of us has a role. We have to wear
Speaker 1: our mask. We have the social distance with Voyd crowds.
Speaker 1: Everything that we need to do that's been bringing down
Speaker 1: that curve. We need to keep doing it to take
Speaker 1: that curve all the way to the baseline while we
Speaker 1: accelerate our vaccination rates. That's how we'll achieve that goal
Speaker 1: July four. If we all work together, would love to work.
Speaker 1: We get some mole in the weeks some months ahead
Speaker 1: right there at the Rockefeller Foundation, and I hand joined
Speaker 1: us now ons Fargo Securities equity strategist. And for some
Speaker 1: people this story has got boring. Been talking about it
Speaker 1: since the early part of November. We've just ripped in
Speaker 1: cyclical small caps out performing the NAT stacks struggling. We're
Speaker 1: seeing that again this morning. When do things start to
Speaker 1: change for you, Anna, Well, when we see how well
Speaker 1: a trade has performed, you know, the good news is
Speaker 1: it's working. The bad news become well. That opportunity or
Speaker 1: the juice you saw has mostly been squeezed out. So
Speaker 1: for us, what we're looking forward to is maybe less
Speaker 1: so much of the value trade still on it, but
Speaker 1: we're starting to get interested in other parts of the market,
Speaker 1: other drivers. And for us, we think that next game
Speaker 1: in town could be earnings expectations. Let's talk about that.
Speaker 1: What do you see the opportunity around ownings expectations as
Speaker 1: we get deeper into the year. Well, for us, it's
Speaker 1: playing a little bit more of that kind of mid cycle,
Speaker 1: mid recovery place because the first early cycle stuff tends
Speaker 1: to have the early urge as you see, you know,
Speaker 1: growth prospects improved, as you see more confidence build up,
Speaker 1: economic recovery, the things that are most sensitive kind of
Speaker 1: what's gonna move first, A lot of that has occurred.
Speaker 1: So for us now becomes the things that come next
Speaker 1: that comes with more reopening. So an example of that
Speaker 1: could be the aerospace industry and also the consumer services
Speaker 1: that has a lot to do with hotels, restaurants. You
Speaker 1: see these areas where people are going to be are
Speaker 1: looking forward to spending their money, especially now they have
Speaker 1: that it is an all stimulus check. So and this
Speaker 1: story makes sense, and then you see game stuff as
Speaker 1: John was talking about the fourth biggest holding in the
Speaker 1: rustle two thousand and Perhaps people will go buy more
Speaker 1: games at stores or AMC. Perhaps peop will be going
Speaker 1: to theaters, but they've been affected by different stories as well.
Speaker 1: How much do you buy into the meme stocks expecting
Speaker 1: some of the stimulus checks to feed into people's bank
Speaker 1: accounts and directly into Robin Hood versus fight against this
Speaker 1: and say the fundamentals do not justify this price action. Well,
Speaker 1: you know, it kind of reminds me of like the
Speaker 1: Kings and Beauty contest concept here, where you know everyone
Speaker 1: is liking it, so must be good. Um. But something
Speaker 1: to keep in mind too is I think it's actually
Speaker 1: part of one big picture. As people have high savings rates,
Speaker 1: they have high real disposable income, then you're adding on
Speaker 1: top of that additional stimulus. Certainly, some of that direct
Speaker 1: check is going to be used for bridging the gap,
Speaker 1: but another part of that is going to be used
Speaker 1: not just on experiences going out buying things for themselves, um,
Speaker 1: but also on taking a little more higher risk playing
Speaker 1: it in the equity market. And keep in mind, what's
Speaker 1: really helpful for retail traders in the equity market is that.
Speaker 1: You know, the more sophisticated the investor is, you can
Speaker 1: use leverage product. Think about the retail flow and options markets.
Speaker 1: You're able to use leverage products and get multiples of
Speaker 1: what you put in. So that's could be an attractive
Speaker 1: risk reward for a lot of retail traders and a
Speaker 1: leverage checks going into companies that are considered zombies or
Speaker 1: perhaps even insolvent. And by all other account how much
Speaker 1: does what happens over the next couple of months determine
Speaker 1: the pain later on when people assess the longer term
Speaker 1: prospects for the economy. I think it's very important, Lisa,
Speaker 1: and you think about that. You don't want to be
Speaker 1: putting money in zombie companies. You want to avoid those
Speaker 1: things we call them value traps um. You know, they
Speaker 1: can really hurt you later on when you're just spraying
Speaker 1: and praying. But you know, right now, it looks like
Speaker 1: so far, the financial system is pretty solid, our banks
Speaker 1: are pretty solid. You're not seeing too much strain there
Speaker 1: um when it comes to you know, uh, you know,
Speaker 1: miss appropriate cash to you know, risky companies going under.
Speaker 1: So right now it's looking okay, but it's definitely a
Speaker 1: soft spot that you always got to keep an eye
Speaker 1: on and I always great to catch up with you.
Speaker 1: Send out regards to Chris One. You and I have
Speaker 1: that last Faco Securities equity strategist on the outlook cover
Speaker 1: wilst Faco Michael Holland joining us now holding the company
Speaker 1: Chairman Michael. We caught up with Amby Joseph Cohen of
Speaker 1: Government Saxility this week and a question I asked her,
Speaker 1: I want to ask it of you as well. You
Speaker 1: have seen it all in your decades on Wall Street,
Speaker 1: and I think it would really be helpful for us
Speaker 1: if you could frame just how unique, truly unique original
Speaker 1: this moment is as we throw everything at this recounty. Jonathan,
Speaker 1: thank you, besaudes the corner. I've been around Bossard for
Speaker 1: about the same amount of time, which is forever, and
Speaker 1: the reality is is always different. Each time is different.
Speaker 1: So that's what keeps it interesting and keeps us humble. Uh,
Speaker 1: she said, Brothers, since this is quite humble. I think
Speaker 1: this time around. What what she and I could could
Speaker 1: observe is that we are in the early stages of
Speaker 1: a major recovery around the world. Were your word global
Speaker 1: from before the earnings increases, could easily surprise to the
Speaker 1: upside over the next twelve months. We talked about a
Speaker 1: five point five percent median figure for the US. That's
Speaker 1: probably way understated for the GDP goats over the next
Speaker 1: twelve months. And fin me and most importantly is the
Speaker 1: vaccine news in the US is, if you were pointing
Speaker 1: out just a few minutes ago, continues to surprise to
Speaker 1: the upside relative to the rest of the world, particularly Europe.
Speaker 1: The unknowable is rising rates. What will they do to
Speaker 1: stock valuations? And for listeners and viewers if they didn't
Speaker 1: hear Uh earlier in the week, Sebastian Page whom you
Speaker 1: had on the show. He pointed out the good numbers
Speaker 1: that over the last twenty years when rates are rising,
Speaker 1: you're just as likely to get the stock market increased
Speaker 1: as it pulled to a stock market decrease relative to Pe.
Speaker 1: So that's the unknown, especially in the other kind of
Speaker 1: the cycle. Michael, and to jump in, I think we've
Speaker 1: got to talk about the cycle and the additional unique
Speaker 1: part of this recovery is just how quickly things move.
Speaker 1: And Mike, I think we had a snapshot of that
Speaker 1: last year, and I just wonder what the lesson was
Speaker 1: for you, we can snap back really quickly from this pandemic.
Speaker 1: We had a little bit of a hint of that
Speaker 1: center of that last year before things had to slow
Speaker 1: down again. The speed of the cycle, Markel, can you
Speaker 1: told to that the speed of the recovery that you're expecting.
Speaker 1: That's the wonderful thing about these things as they change
Speaker 1: and experiencing new things every time in cycles, Jonga, This
Speaker 1: time around, I expect uber uger speed. I think the
Speaker 1: I think the the recovery by the fourth of July
Speaker 1: to use President bodies of goal line is very likely
Speaker 1: to occur, and maybe even even sooner. We're just getting
Speaker 1: such good news on the vaccine front in the US,
Speaker 1: and that's I think that's uh just one of the
Speaker 1: one of the not the major key to to what
Speaker 1: you just answered, because it's coming with a pardon my phrase,
Speaker 1: work speed. Well, you know, there's really interesting conundrum here
Speaker 1: for investors that the incredible boom that you're talking about
Speaker 1: is pretty well accepted and being accepted more and more
Speaker 1: every day, and yet how to translate that into investment
Speaker 1: thesis becomes more complicated. Your resume is basically a tutorial
Speaker 1: of fund management whether it's the State Street UH passively
Speaker 1: managed funds, or whether it's a black Stones alternative asset
Speaker 1: management at the head of that, and Michael, I'm wondering
Speaker 1: from your perspective, how the best way to play this now?
Speaker 1: Is this a time of active management or do you
Speaker 1: still see a role of passive really coming to the
Speaker 1: fore based on the idea that lower yields means that
Speaker 1: lower fees is better and that frankly, there still is
Speaker 1: that huge alpha and beta play together. Yeah, I don't
Speaker 1: think it's a binary thing, he said. I don't. I
Speaker 1: don't think it's active or passive. Um. I have evolved
Speaker 1: over the decades into both, and I think they are
Speaker 1: perfectly appropriate places to use passive. I'm on the board
Speaker 1: down at Vanguard, and for some stuff that they do,
Speaker 1: I'm a huge fan of that. But I think there
Speaker 1: are people and there are times when you can you
Speaker 1: can appropriately say something is really cheap and I would
Speaker 1: like to buy it, or to the contrary, you know
Speaker 1: it's way overvalued. Now I'm going to sell it. So
Speaker 1: I've been fortunate enough to be able to do to
Speaker 1: do vote and have the freedom to do vote. I
Speaker 1: think you're you're common about the asset management business. The
Speaker 1: fund management business is perfectly We're not We're not going
Speaker 1: to see any reversal of key reduction over over time.
Speaker 1: I think that, uh, we're going to continue because it
Speaker 1: just doesn't make sense to be paiding high seeds for
Speaker 1: the sort of numbers that the majority of people have
Speaker 1: been receiving over the decades. So I think I think
Speaker 1: logic is in place. Well, so there's a snundrum here also, Michael,
Speaker 1: for the likes of pension funds or for example, college endowments,
Speaker 1: and I know that you had experienced with the Harvard
Speaker 1: College Fund looking at returns in the future, there need
Speaker 1: to be higher returns and the benchmark in benchmark yields
Speaker 1: would imply. And so a growing number of pensions and
Speaker 1: other institutions are going to the private markets, which charge
Speaker 1: higher fees. What would your recommendation be for a situation
Speaker 1: like that at a time of yields sub two percent? Well,
Speaker 1: you can't, you can't make a case for traditional fixed
Speaker 1: income uh in the environment where people have those kinds
Speaker 1: of acquired returns. The fact at LEASTA there's questions, So
Speaker 1: wels is being asked day after day. Uh. In the
Speaker 1: endowment world. Uh, if you can't uh see yourself to
Speaker 1: a four or five percent pay out, what do you
Speaker 1: do when you go out to respectrum and you go
Speaker 1: to private equity, and you go to venture capital. But
Speaker 1: those those have been priced up. So I think at
Speaker 1: the very least, do a reality check if you're on
Speaker 1: the board of one of these things that you're managing
Speaker 1: one of these things, that it's possible we're gonna have
Speaker 1: a period of time there where we're gonna underperform what
Speaker 1: we would like to do. Having said that, you said
Speaker 1: it doesn't mean to stop trying, but you try to.
Speaker 1: You continue to work really hard to find the really
Speaker 1: smartest people in the world and unfortunately usually discovered. Jonathan
Speaker 1: talked about earlier warp speed with technology and information. I
Speaker 1: think get found pretty quickly. But the best people in
Speaker 1: the world have to have to be have to be used,
Speaker 1: and I think at the end of the day, I
Speaker 1: think those expectations have to be ratcheted down. Michael, You know,
Speaker 1: I really respect and appreciate your experience, and it's fantastic
Speaker 1: always just to sit here and listen to everything you've
Speaker 1: got to say. Michael Holland. There Holland Company, Chairman bla
Speaker 1: Arena Rucci, Barclay's senior US economist, uh Lorena, thank you
Speaker 1: so much for joining us here. I'd love to get
Speaker 1: your thoughts. I'm sure your clients are reaching out to
Speaker 1: you saying, talk to me about inflation. Where do I
Speaker 1: need to be concerned? Where do I need to look
Speaker 1: to see if inflation is creeping into this economy? What
Speaker 1: are you telling your clients? Good morning and thanks for
Speaker 1: having me today. That's a great question. Certainly, interest on
Speaker 1: inflation trends has increased a lot recently. I'd like to
Speaker 1: tell people that there is there are two parts to this.
Speaker 1: There is an inflation narrative where people are very bullish inflation,
Speaker 1: and there is the actual realize inflation data and inflation trends.
Speaker 1: What we're seeing right now is inflation and pressures. Underlying
Speaker 1: price pressures in the economy still being rather subdued and
Speaker 1: quite low relative to the FEDS target. We're seeing pockets
Speaker 1: of the economy producing strong price pressures, particularly on the
Speaker 1: good side of the economy. And this is where I
Speaker 1: tell people to look for rising price pressures and to
Speaker 1: prepare to see that in the realized data. And that
Speaker 1: makes sense to US, we have some supply chain bottlenecks
Speaker 1: as more demands comes online for goods. We have some
Speaker 1: rising shipping cost globally and higher global commodity prices. We're
Speaker 1: seeing increased price pressures from import prices China, pp I,
Speaker 1: U U S C p I. But what is lagging
Speaker 1: for the US is the services side of the economy
Speaker 1: that's lagging in terms of demand and in terms of inflation,
Speaker 1: and the services side of the economy it's a much
Speaker 1: bigger portion of US demand and US inflation. So until
Speaker 1: we see that rising, I don't think we need to
Speaker 1: be concerned about a very strong spike in inflation pressures. Blurrya,
Speaker 1: can you talk a little bit about the friction in
Speaker 1: bringing services back online in force. I'm thinking about this
Speaker 1: summer and the plans and people you know, making their
Speaker 1: travel arrangements right now at a time when you've got
Speaker 1: consumers receiving four checks every month for the next few
Speaker 1: months from the government free money, how quickly can services
Speaker 1: come back based on the need to hire qualified people
Speaker 1: in mass in such a short period of time. Yeah,
Speaker 1: that's a very good point, And what we need to
Speaker 1: highlight is that US consumers have this cash cash buffer
Speaker 1: that has been building up. There is no doubt about that.
Speaker 1: There is a lot of excess savings in the economy.
Speaker 1: They're one of the reasons why we're not seeing spending
Speaker 1: and employment in the services sector is that there isn't
Speaker 1: that confidence to come out and spend on services where
Speaker 1: you have to interact socially more. I think once we
Speaker 1: have critical mass in terms of vaccination and population immunity,
Speaker 1: this demand is likely going to come back, and so
Speaker 1: we expect that in the second half of the year
Speaker 1: there's going to be some friction here where demand comes back,
Speaker 1: but supply has a little bit of trouble adjusting because
Speaker 1: it's going to be tied to hire as many workers
Speaker 1: as you need and businesses need to readjust to the
Speaker 1: new world. So this could bring some price pressures in
Speaker 1: the services sector, and this is what we expect. We
Speaker 1: expect in the second half of the year, a shift
Speaker 1: from the good sector to the services sector, both for
Speaker 1: demand and inflationary pressures. But for us, the key is
Speaker 1: this is going to be a one of transitory spike
Speaker 1: or a sustained one, and we are on the first camp.
Speaker 1: We think as the economy opens up, we're going to
Speaker 1: see this spike that is going to be transitory, but
Speaker 1: it's not going to lead to sustained higher inflation in
Speaker 1: the US. But I mean, i'd love to get your
Speaker 1: thoughts on kind of the employment environment we had. Yesterday's
Speaker 1: jobles claims came in there. The trend is better, but
Speaker 1: still it over seven hundred thousand jobles claims stubbornly stubbornly
Speaker 1: high and appoints to you know, perhaps some of those
Speaker 1: folks that are been unemployed for a longer period of time,
Speaker 1: suggesting that they may not be able to come back
Speaker 1: that easily into the workforce. How do you think about
Speaker 1: the employment environment in this country as we begin to reopen. Yes, right,
Speaker 1: we've made progress, and that's important to highlight, going from
Speaker 1: double digit unemployment rates late last year early last year
Speaker 1: to where we are now, which is uh well into
Speaker 1: the single digits. But as you said, there needs to
Speaker 1: be more progressed to be made, and the challenges for
Speaker 1: me are around employment. Again, going back to the services factor,
Speaker 1: we know that some pockets of the labor market have
Speaker 1: been hardest hit, like hospitality, uh and travel, and those
Speaker 1: workers need to come back online. What we're seeing is
Speaker 1: also arise in long term unemployment and also a decline
Speaker 1: in the labor force participation rate. Those workers that are
Speaker 1: discouraged by high unemployment rate and I'm not even looking
Speaker 1: for a job. These are the groups of people that
Speaker 1: we need to bring back in the labor force. What
Speaker 1: happens to the labor market in our view is that
Speaker 1: employment will actually continue rising and will probably go to
Speaker 1: pre pandemic levels of employment in two But at the
Speaker 1: same time, we think that some of the We're actually
Speaker 1: optimistic that's some of the long term unemployed workers will
Speaker 1: come back and find jobs, but also some of the
Speaker 1: people that are discouraged now will come back in the
Speaker 1: labor force. So we have a cyclical rebound in the
Speaker 1: labor force participation rate happening next year. So this is
Speaker 1: going to make subsequent unemployment rate numbers look a little
Speaker 1: bit flaggish because the unemployment rate will start declining more slowly.
Speaker 1: But in our views, this is going to be a
Speaker 1: good thing, and it could actually lead to inflation because
Speaker 1: I'm that slack could be beaten out of the market.
Speaker 1: I do want to have a Bloomberg surveillance correction. I
Speaker 1: said fourteen dollars UH for for many months. It's a
Speaker 1: one time payment for now, but it goes exactly where
Speaker 1: I want to go. B Arena this idea that there's
Speaker 1: growing discussions among Democrats in particular about income assistance basically
Speaker 1: check sent to people who are permanent unemployed for a
Speaker 1: prolonged period of time. Do you see an argument for
Speaker 1: that in the successes that evidently helicopter money have had
Speaker 1: in spirring growth throughout the pandemic. So the way I
Speaker 1: I think about it is is this unemployment Insurance UM protection,
Speaker 1: these extra payments. They're lasting until September and the and
Speaker 1: the checks are one of checks. So I think they're
Speaker 1: filling a gap that we have in the economy right
Speaker 1: now because of the high unemployment rate and the damage
Speaker 1: done by this recession. Uh, once they come off UM
Speaker 1: and and consumers don't get these payments anymore, I don't
Speaker 1: think they will pose a risk to the recovery and
Speaker 1: a risk to inflation in the quarters after September. So
Speaker 1: I'm not too worried about these narrative that we're giving
Speaker 1: people too much money and that's going to lead to
Speaker 1: higher inflation on a sustained basis. This is the key
Speaker 1: to me. What is going to keep inflation higher over
Speaker 1: the medium term, and I think for that to happen,
Speaker 1: we actually need some of the structural issues that have
Speaker 1: been keeping inflation lower until now to change, and that
Speaker 1: is at the anchoring of inflation expectations, a lots inside credibility,
Speaker 1: and a change in the way labor bargaining works so
Speaker 1: we get faster way to growth. Blrina. What's the Barkley's
Speaker 1: US GDP forecast for this year and next, So we
Speaker 1: expect quite a robust and snappy recovery this year. Annual
Speaker 1: growth in one is about six and a half based
Speaker 1: on Barkley's forecasting, and next year we're looking at about
Speaker 1: four percent annual growth. Larina Roucie, thank you so much
Speaker 1: for being with us. Blori Rugie, Barkley's senior US economist,
Speaker 1: talking about the key aspects of inflation and employment. This
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Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg.