WEBVTT - Surveillance: Pandemic Response With Dr. Bright 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:09.200 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brownwitz Jay Lee. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance, an Apple podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:29.120 dot com and of course on the Bloomberg Tournament. Please 0:00:29.120 --> 0:00:30.840 talk about the pandemic was still and we can do 0:00:30.840 --> 0:00:34.360 that with Rick Bright, the Rockefeller Foundation Pandemic Prevention and 0:00:34.520 --> 0:00:37.800 Response Senior Vice President. Great to have you with us 0:00:37.880 --> 0:00:40.279 on the program. Sir, I want to start with how 0:00:40.320 --> 0:00:43.040 you're working with the current administration and the difference since 0:00:43.080 --> 0:00:47.400 you're experiencing from working with the previous administration as well. 0:00:47.400 --> 0:00:48.920 What are you learning so far and what are the 0:00:48.960 --> 0:00:52.320 additional things you've been able to achieve. Well, thanks for 0:00:52.360 --> 0:00:54.960 having me this morning, in this afternoon around the world. 0:00:55.320 --> 0:00:59.320 It's really a stark difference between this administration and last administration. 0:00:59.640 --> 0:01:02.640 It isn't a secret, um that I had my frustrations 0:01:02.680 --> 0:01:05.959 with the slow rollout of overall response to the pandemic, 0:01:06.400 --> 0:01:09.640 and they just continued to increase my frustrations as we 0:01:09.880 --> 0:01:13.200 missed the ball and getting testing across our country getting 0:01:13.280 --> 0:01:17.319 vaccines made and getting vaccine rollout. What we see now 0:01:17.480 --> 0:01:21.720 with the Divide administration is a complete one eight turnaround, 0:01:22.080 --> 0:01:24.840 a lot of communication with the state and local levels 0:01:24.880 --> 0:01:28.960 from the federal government, a lot of collaboration, transparency, and 0:01:28.959 --> 0:01:31.800 you're starting to see that payoff and dividends with the 0:01:31.880 --> 0:01:34.920 rollout of the vaccine. We have more than double of 0:01:35.000 --> 0:01:38.920 the vaccination right now that we had on January. We 0:01:39.000 --> 0:01:42.440 have more people getting treated, we have more testing being done. 0:01:42.760 --> 0:01:45.160 In the passage of this American Rescue Plan is a 0:01:45.200 --> 0:01:49.320 true commitment to accelerating on all engines, all all cylinders, 0:01:49.360 --> 0:01:51.480 to make sure we can end the pandemic. We struggled 0:01:51.520 --> 0:01:53.640 with testing in the United Kingdom, but seem to do 0:01:53.680 --> 0:01:56.600 a much better job with sequencing and understanding variants much 0:01:56.600 --> 0:01:58.880 more quickly than other countries. Sat down that was in 0:01:58.880 --> 0:02:01.320 the UK, Rick and I just want to the United States, 0:02:01.600 --> 0:02:03.920 can we do a better job down in your experience 0:02:03.920 --> 0:02:07.120 that we're doing that right now? We absolutely have to 0:02:07.120 --> 0:02:09.280 do a better job. That is the big blind spot 0:02:09.320 --> 0:02:11.160 that we have right now with this pandemic in the 0:02:11.240 --> 0:02:14.359 United States and around the world. We haven't been doing 0:02:14.440 --> 0:02:17.360 enough sequencing, we haven't been targeting the sequencing to the 0:02:17.480 --> 0:02:21.440 right populations. What we're finding is these variants are now emerging, 0:02:21.760 --> 0:02:23.720 and we're finding them in parts of the United States. 0:02:23.760 --> 0:02:26.160 And if you backtrack, well, we realize they were in 0:02:26.160 --> 0:02:30.000 the United States for two or four months. They're widespread 0:02:30.040 --> 0:02:32.680 before we even know they're here, they're upon us. We 0:02:32.760 --> 0:02:34.839 know the threat of these variants. We know that they 0:02:34.840 --> 0:02:37.960 can transmit more readily. We know that some of them 0:02:37.960 --> 0:02:41.080 can evade some of the vaccine immunity that we're seeing 0:02:41.120 --> 0:02:43.800 from the vaccines and the therapeutics. So we have to 0:02:43.840 --> 0:02:46.760 get in front of them. The United States hasn't been 0:02:46.760 --> 0:02:50.280 done a good job. The CDC, however, did announce recently 0:02:50.320 --> 0:02:53.520 they would invest more in the sequencing for the United States. 0:02:53.960 --> 0:02:57.680 And really importantly, the Rockefeller Foundation has been working hand 0:02:57.720 --> 0:03:01.480 in hand with the US government to one um come 0:03:01.520 --> 0:03:04.440 up with new testing strategies to use testing and screening 0:03:04.440 --> 0:03:07.720 and testing to reopen our schools. Number two that that 0:03:07.919 --> 0:03:12.040 testing leads to identification in more cases. And then just 0:03:12.160 --> 0:03:15.799 a couple of weeks ago, Rockefeller Foundation hosted a conference 0:03:15.880 --> 0:03:19.760 with the government and private sector and public sector to 0:03:19.840 --> 0:03:22.560 identify the challenges we have in the United States to 0:03:23.120 --> 0:03:26.560 improve our sequencing, and not just a sequencing itself, but 0:03:26.639 --> 0:03:29.280 how we analyze it, how we communicate it, and how 0:03:29.320 --> 0:03:33.080 we tie it to the downstream. So so what type 0:03:33.120 --> 0:03:36.480 of question. Every mutation isn't impactful, but we do need 0:03:36.520 --> 0:03:38.360 to know the ones that are, and we need to 0:03:38.360 --> 0:03:41.280 know where they are so we can in front of them. Rick, 0:03:41.400 --> 0:03:44.720 there's one thing about analysis and identification. There's another thing 0:03:44.720 --> 0:03:47.000 about prevention. And this goes to this question of how 0:03:47.040 --> 0:03:49.600 international the effort of vaccination has to be. The idea 0:03:49.680 --> 0:03:51.920 that the United States is doing really well, it is 0:03:51.960 --> 0:03:54.040 doing much much better than Europe and a lot of 0:03:54.080 --> 0:03:57.040 the most of the developing world. How much do you 0:03:57.120 --> 0:03:59.600 think the US needs to do in order to get 0:03:59.720 --> 0:04:02.640 vaccin scenes out to some of the less wealthy parts 0:04:02.640 --> 0:04:04.280 of the world in order to prevent some of these 0:04:04.360 --> 0:04:07.640 variants from being established, from frankly mutating in the first 0:04:07.640 --> 0:04:11.400 place and gaining a foothold. It sounds like you've been 0:04:11.400 --> 0:04:14.600 working on pandemic prevention for quite a while. So that's 0:04:14.600 --> 0:04:19.360 a critical Actually, that's a critical point, and and it's 0:04:19.400 --> 0:04:21.680 something that gets lost in the news, gets lost in 0:04:21.720 --> 0:04:25.839 the enthusiasm for increasing a vaccination rate in a wealthy 0:04:25.880 --> 0:04:29.920 country in the country that has vaccine production within the borders, 0:04:30.040 --> 0:04:33.120 and we can vaccinate everyone in the United States, but 0:04:33.160 --> 0:04:36.200 we are still extremely vulnerable to this virus and to 0:04:36.320 --> 0:04:40.039 we vaccinate a sufficient level people around the world. The 0:04:40.120 --> 0:04:43.400 virus likes to mutate, and a mutates in people mostly 0:04:43.440 --> 0:04:47.240 who haven't been vaccinated. That's what infects more readily. And 0:04:47.440 --> 0:04:50.440 if the virus mutates and its circles in some part 0:04:50.440 --> 0:04:53.080 of the world is not covered with vaccines, and that 0:04:53.160 --> 0:04:56.599 virus circulates back into into the United States and it's 0:04:56.680 --> 0:05:00.480 changed in some way. We can see reinfections, can see 0:05:00.640 --> 0:05:04.040 escape from the immunity from our vaccine. So it's a 0:05:04.120 --> 0:05:07.880 real crisis. This pandemic will not end anywhere in the 0:05:07.920 --> 0:05:11.279 world until we ended everywhere in the world. And that's 0:05:11.279 --> 0:05:14.400 a critical part on the global picture for vaccinations. Rick, 0:05:14.440 --> 0:05:16.080 before we let you go, want to finish on something 0:05:16.160 --> 0:05:18.760 really sensitive and quite important. I think one thing that's 0:05:18.800 --> 0:05:21.280 been lost over the last twelve months increasingly as trust, 0:05:21.640 --> 0:05:24.960 trust and institutions, and trust and officials as well. You've 0:05:25.000 --> 0:05:28.279 worked with both governments. I understand that you had worked 0:05:28.279 --> 0:05:31.039 with President Biden in the initial COVID task Force, and 0:05:31.240 --> 0:05:34.240 as we know you worked with the Trump government, the 0:05:34.240 --> 0:05:36.440 Trump administration as well, And when you quit, you said 0:05:36.480 --> 0:05:39.600 the following that some of the decisions being made with dangerous, 0:05:39.640 --> 0:05:41.599 reckless and causing lives to be lost. And it was 0:05:41.600 --> 0:05:43.720 the interference of politics in science. And I think one 0:05:43.720 --> 0:05:46.000 thing that people struggle with right now when they hear 0:05:46.000 --> 0:05:48.640 a policymaker speak, even the President of the United States currently, 0:05:49.000 --> 0:05:52.479 is it driven by politics or driven by science? When 0:05:52.520 --> 0:05:54.760 he says July four, we can get together it to again. 0:05:55.360 --> 0:05:57.440 Is that just about sending out a nice message to 0:05:57.480 --> 0:06:00.680 the public, or is that driven by science. What I 0:06:00.720 --> 0:06:03.800 see the difference in President Biden President Trump is their 0:06:03.800 --> 0:06:07.240 ability and willingness to listen to the scientists. And when 0:06:07.279 --> 0:06:10.360 President Biden nounced says that he can meet a target 0:06:10.400 --> 0:06:12.680 and meet a goal, you can bet that he's vetted 0:06:12.720 --> 0:06:15.479 it with the scientists. You can bet Dr Faucci, the 0:06:15.480 --> 0:06:18.120 scientists at n I H and CDC and FDA BARDA 0:06:18.200 --> 0:06:21.200 have weighed in on that goal. And when he sets 0:06:21.200 --> 0:06:23.760 the goal, I do think sometimes it's an ambitious goal, 0:06:24.160 --> 0:06:27.159 but we should be ambitious in stopping this pandemic. So 0:06:27.240 --> 0:06:30.280 I believe when he sets it out, we can achieve it. 0:06:30.320 --> 0:06:32.560 But we're gonna have to work really hard to get there. 0:06:32.600 --> 0:06:34.760 It's gonna take every one of us. It can't be 0:06:34.800 --> 0:06:37.839 a policymaker or just a government that achieves that goal. 0:06:38.279 --> 0:06:40.160 Each of us has a role. We have to wear 0:06:40.160 --> 0:06:43.680 our mask. We have the social distance with Voyd crowds. 0:06:43.800 --> 0:06:46.520 Everything that we need to do that's been bringing down 0:06:46.520 --> 0:06:48.880 that curve. We need to keep doing it to take 0:06:48.880 --> 0:06:51.280 that curve all the way to the baseline while we 0:06:51.560 --> 0:06:54.720 accelerate our vaccination rates. That's how we'll achieve that goal 0:06:54.880 --> 0:06:58.200 July four. If we all work together, would love to work. 0:06:58.240 --> 0:06:59.880 We get some mole in the weeks some months ahead 0:07:00.200 --> 0:07:07.560 right there at the Rockefeller Foundation, and I hand joined 0:07:07.600 --> 0:07:10.680 us now ons Fargo Securities equity strategist. And for some 0:07:10.720 --> 0:07:13.000 people this story has got boring. Been talking about it 0:07:13.000 --> 0:07:15.280 since the early part of November. We've just ripped in 0:07:15.360 --> 0:07:18.280 cyclical small caps out performing the NAT stacks struggling. We're 0:07:18.280 --> 0:07:20.680 seeing that again this morning. When do things start to 0:07:20.760 --> 0:07:23.880 change for you, Anna, Well, when we see how well 0:07:23.880 --> 0:07:26.200 a trade has performed, you know, the good news is 0:07:26.280 --> 0:07:29.600 it's working. The bad news become well. That opportunity or 0:07:29.600 --> 0:07:32.440 the juice you saw has mostly been squeezed out. So 0:07:32.480 --> 0:07:35.280 for us, what we're looking forward to is maybe less 0:07:35.320 --> 0:07:37.840 so much of the value trade still on it, but 0:07:37.880 --> 0:07:40.560 we're starting to get interested in other parts of the market, 0:07:40.800 --> 0:07:43.320 other drivers. And for us, we think that next game 0:07:43.360 --> 0:07:46.360 in town could be earnings expectations. Let's talk about that. 0:07:46.360 --> 0:07:48.960 What do you see the opportunity around ownings expectations as 0:07:48.960 --> 0:07:51.960 we get deeper into the year. Well, for us, it's 0:07:52.080 --> 0:07:54.600 playing a little bit more of that kind of mid cycle, 0:07:54.720 --> 0:07:58.920 mid recovery place because the first early cycle stuff tends 0:07:58.920 --> 0:08:01.240 to have the early urge as you see, you know, 0:08:01.280 --> 0:08:04.640 growth prospects improved, as you see more confidence build up, 0:08:04.720 --> 0:08:08.200 economic recovery, the things that are most sensitive kind of 0:08:08.280 --> 0:08:11.120 what's gonna move first, A lot of that has occurred. 0:08:11.160 --> 0:08:13.920 So for us now becomes the things that come next 0:08:14.120 --> 0:08:16.600 that comes with more reopening. So an example of that 0:08:16.640 --> 0:08:20.520 could be the aerospace industry and also the consumer services 0:08:20.560 --> 0:08:23.480 that has a lot to do with hotels, restaurants. You 0:08:23.520 --> 0:08:26.160 see these areas where people are going to be are 0:08:26.280 --> 0:08:28.960 looking forward to spending their money, especially now they have 0:08:29.040 --> 0:08:31.360 that it is an all stimulus check. So and this 0:08:31.480 --> 0:08:34.000 story makes sense, and then you see game stuff as 0:08:34.040 --> 0:08:36.800 John was talking about the fourth biggest holding in the 0:08:36.880 --> 0:08:39.839 rustle two thousand and Perhaps people will go buy more 0:08:39.840 --> 0:08:42.400 games at stores or AMC. Perhaps peop will be going 0:08:42.440 --> 0:08:45.080 to theaters, but they've been affected by different stories as well. 0:08:45.240 --> 0:08:47.760 How much do you buy into the meme stocks expecting 0:08:47.800 --> 0:08:50.160 some of the stimulus checks to feed into people's bank 0:08:50.160 --> 0:08:53.720 accounts and directly into Robin Hood versus fight against this 0:08:54.120 --> 0:08:58.320 and say the fundamentals do not justify this price action. Well, 0:08:58.360 --> 0:08:59.880 you know, it kind of reminds me of like the 0:09:00.040 --> 0:09:03.640 Kings and Beauty contest concept here, where you know everyone 0:09:03.760 --> 0:09:06.720 is liking it, so must be good. Um. But something 0:09:06.720 --> 0:09:08.600 to keep in mind too is I think it's actually 0:09:08.640 --> 0:09:12.040 part of one big picture. As people have high savings rates, 0:09:12.200 --> 0:09:15.280 they have high real disposable income, then you're adding on 0:09:15.360 --> 0:09:18.520 top of that additional stimulus. Certainly, some of that direct 0:09:18.559 --> 0:09:21.040 check is going to be used for bridging the gap, 0:09:21.320 --> 0:09:23.320 but another part of that is going to be used 0:09:23.360 --> 0:09:27.480 not just on experiences going out buying things for themselves, um, 0:09:27.520 --> 0:09:31.160 but also on taking a little more higher risk playing 0:09:31.160 --> 0:09:33.840 it in the equity market. And keep in mind, what's 0:09:33.840 --> 0:09:36.959 really helpful for retail traders in the equity market is that. 0:09:37.240 --> 0:09:40.000 You know, the more sophisticated the investor is, you can 0:09:40.120 --> 0:09:44.240 use leverage product. Think about the retail flow and options markets. 0:09:44.440 --> 0:09:47.440 You're able to use leverage products and get multiples of 0:09:47.440 --> 0:09:49.920 what you put in. So that's could be an attractive 0:09:50.000 --> 0:09:52.559 risk reward for a lot of retail traders and a 0:09:53.160 --> 0:09:57.679 leverage checks going into companies that are considered zombies or 0:09:57.720 --> 0:10:01.080 perhaps even insolvent. And by all other account how much 0:10:01.280 --> 0:10:03.880 does what happens over the next couple of months determine 0:10:03.920 --> 0:10:06.400 the pain later on when people assess the longer term 0:10:06.440 --> 0:10:10.520 prospects for the economy. I think it's very important, Lisa, 0:10:10.600 --> 0:10:12.880 and you think about that. You don't want to be 0:10:12.880 --> 0:10:15.560 putting money in zombie companies. You want to avoid those 0:10:15.600 --> 0:10:18.440 things we call them value traps um. You know, they 0:10:18.480 --> 0:10:21.240 can really hurt you later on when you're just spraying 0:10:21.320 --> 0:10:24.160 and praying. But you know, right now, it looks like 0:10:24.640 --> 0:10:27.600 so far, the financial system is pretty solid, our banks 0:10:27.600 --> 0:10:30.480 are pretty solid. You're not seeing too much strain there 0:10:31.000 --> 0:10:33.160 um when it comes to you know, uh, you know, 0:10:33.320 --> 0:10:36.720 miss appropriate cash to you know, risky companies going under. 0:10:36.800 --> 0:10:39.680 So right now it's looking okay, but it's definitely a 0:10:39.720 --> 0:10:41.440 soft spot that you always got to keep an eye 0:10:41.440 --> 0:10:43.200 on and I always great to catch up with you. 0:10:43.280 --> 0:10:45.000 Send out regards to Chris One. You and I have 0:10:45.160 --> 0:10:48.160 that last Faco Securities equity strategist on the outlook cover 0:10:48.280 --> 0:10:56.000 wilst Faco Michael Holland joining us now holding the company 0:10:56.080 --> 0:10:58.800 Chairman Michael. We caught up with Amby Joseph Cohen of 0:10:58.880 --> 0:11:01.439 Government Saxility this week and a question I asked her, 0:11:01.559 --> 0:11:03.640 I want to ask it of you as well. You 0:11:03.679 --> 0:11:06.360 have seen it all in your decades on Wall Street, 0:11:06.880 --> 0:11:08.960 and I think it would really be helpful for us 0:11:09.000 --> 0:11:11.920 if you could frame just how unique, truly unique original 0:11:12.280 --> 0:11:17.720 this moment is as we throw everything at this recounty. Jonathan, 0:11:17.760 --> 0:11:20.959 thank you, besaudes the corner. I've been around Bossard for 0:11:21.000 --> 0:11:23.720 about the same amount of time, which is forever, and 0:11:23.920 --> 0:11:28.000 the reality is is always different. Each time is different. 0:11:28.000 --> 0:11:32.040 So that's what keeps it interesting and keeps us humble. Uh, 0:11:32.200 --> 0:11:35.200 she said, Brothers, since this is quite humble. I think 0:11:35.280 --> 0:11:38.440 this time around. What what she and I could could 0:11:38.559 --> 0:11:41.880 observe is that we are in the early stages of 0:11:41.920 --> 0:11:45.120 a major recovery around the world. Were your word global 0:11:45.160 --> 0:11:49.120 from before the earnings increases, could easily surprise to the 0:11:49.240 --> 0:11:52.240 upside over the next twelve months. We talked about a 0:11:52.280 --> 0:11:55.680 five point five percent median figure for the US. That's 0:11:55.720 --> 0:11:58.640 probably way understated for the GDP goats over the next 0:11:58.640 --> 0:12:02.640 twelve months. And fin me and most importantly is the 0:12:02.720 --> 0:12:06.319 vaccine news in the US is, if you were pointing 0:12:06.360 --> 0:12:08.959 out just a few minutes ago, continues to surprise to 0:12:09.000 --> 0:12:12.000 the upside relative to the rest of the world, particularly Europe. 0:12:12.440 --> 0:12:17.600 The unknowable is rising rates. What will they do to 0:12:17.720 --> 0:12:21.120 stock valuations? And for listeners and viewers if they didn't 0:12:21.160 --> 0:12:24.520 hear Uh earlier in the week, Sebastian Page whom you 0:12:24.600 --> 0:12:29.600 had on the show. He pointed out the good numbers 0:12:29.640 --> 0:12:32.440 that over the last twenty years when rates are rising, 0:12:32.520 --> 0:12:35.960 you're just as likely to get the stock market increased 0:12:36.000 --> 0:12:38.640 as it pulled to a stock market decrease relative to Pe. 0:12:39.040 --> 0:12:42.800 So that's the unknown, especially in the other kind of 0:12:42.800 --> 0:12:44.640 the cycle. Michael, and to jump in, I think we've 0:12:44.640 --> 0:12:47.480 got to talk about the cycle and the additional unique 0:12:47.480 --> 0:12:49.880 part of this recovery is just how quickly things move. 0:12:50.200 --> 0:12:51.760 And Mike, I think we had a snapshot of that 0:12:51.840 --> 0:12:53.360 last year, and I just wonder what the lesson was 0:12:53.400 --> 0:12:56.439 for you, we can snap back really quickly from this pandemic. 0:12:56.480 --> 0:12:57.839 We had a little bit of a hint of that 0:12:58.040 --> 0:13:00.360 center of that last year before things had to slow 0:13:00.440 --> 0:13:02.760 down again. The speed of the cycle, Markel, can you 0:13:02.880 --> 0:13:05.559 told to that the speed of the recovery that you're expecting. 0:13:07.880 --> 0:13:11.520 That's the wonderful thing about these things as they change 0:13:11.559 --> 0:13:15.400 and experiencing new things every time in cycles, Jonga, This 0:13:15.520 --> 0:13:19.600 time around, I expect uber uger speed. I think the 0:13:20.000 --> 0:13:23.960 I think the the recovery by the fourth of July 0:13:24.080 --> 0:13:28.800 to use President bodies of goal line is very likely 0:13:28.840 --> 0:13:32.000 to occur, and maybe even even sooner. We're just getting 0:13:32.280 --> 0:13:34.680 such good news on the vaccine front in the US, 0:13:35.240 --> 0:13:37.840 and that's I think that's uh just one of the 0:13:38.120 --> 0:13:40.040 one of the not the major key to to what 0:13:40.160 --> 0:13:43.800 you just answered, because it's coming with a pardon my phrase, 0:13:43.920 --> 0:13:48.440 work speed. Well, you know, there's really interesting conundrum here 0:13:48.520 --> 0:13:52.079 for investors that the incredible boom that you're talking about 0:13:52.480 --> 0:13:54.960 is pretty well accepted and being accepted more and more 0:13:55.040 --> 0:13:58.040 every day, and yet how to translate that into investment 0:13:58.040 --> 0:14:02.000 thesis becomes more complicated. Your resume is basically a tutorial 0:14:02.000 --> 0:14:05.199 of fund management whether it's the State Street UH passively 0:14:05.200 --> 0:14:08.400 managed funds, or whether it's a black Stones alternative asset 0:14:08.440 --> 0:14:10.680 management at the head of that, and Michael, I'm wondering 0:14:10.720 --> 0:14:13.960 from your perspective, how the best way to play this now? 0:14:14.200 --> 0:14:16.320 Is this a time of active management or do you 0:14:16.360 --> 0:14:18.960 still see a role of passive really coming to the 0:14:18.960 --> 0:14:21.920 fore based on the idea that lower yields means that 0:14:22.000 --> 0:14:24.800 lower fees is better and that frankly, there still is 0:14:25.040 --> 0:14:29.480 that huge alpha and beta play together. Yeah, I don't 0:14:29.520 --> 0:14:31.760 think it's a binary thing, he said. I don't. I 0:14:31.760 --> 0:14:35.440 don't think it's active or passive. Um. I have evolved 0:14:35.440 --> 0:14:38.800 over the decades into both, and I think they are 0:14:39.520 --> 0:14:43.920 perfectly appropriate places to use passive. I'm on the board 0:14:43.960 --> 0:14:46.520 down at Vanguard, and for some stuff that they do, 0:14:47.200 --> 0:14:49.280 I'm a huge fan of that. But I think there 0:14:49.320 --> 0:14:51.920 are people and there are times when you can you 0:14:51.960 --> 0:14:56.160 can appropriately say something is really cheap and I would 0:14:56.160 --> 0:14:58.640 like to buy it, or to the contrary, you know 0:14:58.720 --> 0:15:01.040 it's way overvalued. Now I'm going to sell it. So 0:15:01.080 --> 0:15:03.880 I've been fortunate enough to be able to do to 0:15:04.440 --> 0:15:06.520 do vote and have the freedom to do vote. I 0:15:06.520 --> 0:15:09.960 think you're you're common about the asset management business. The 0:15:10.040 --> 0:15:13.160 fund management business is perfectly We're not We're not going 0:15:13.200 --> 0:15:16.440 to see any reversal of key reduction over over time. 0:15:16.520 --> 0:15:19.200 I think that, uh, we're going to continue because it 0:15:20.000 --> 0:15:22.160 just doesn't make sense to be paiding high seeds for 0:15:22.600 --> 0:15:24.800 the sort of numbers that the majority of people have 0:15:24.840 --> 0:15:27.720 been receiving over the decades. So I think I think 0:15:28.240 --> 0:15:32.600 logic is in place. Well, so there's a snundrum here also, Michael, 0:15:32.640 --> 0:15:35.840 for the likes of pension funds or for example, college endowments, 0:15:35.880 --> 0:15:37.840 and I know that you had experienced with the Harvard 0:15:37.880 --> 0:15:42.160 College Fund looking at returns in the future, there need 0:15:42.200 --> 0:15:45.600 to be higher returns and the benchmark in benchmark yields 0:15:45.600 --> 0:15:48.680 would imply. And so a growing number of pensions and 0:15:48.760 --> 0:15:51.840 other institutions are going to the private markets, which charge 0:15:51.920 --> 0:15:56.120 higher fees. What would your recommendation be for a situation 0:15:56.160 --> 0:16:00.720 like that at a time of yields sub two percent? Well, 0:16:01.400 --> 0:16:05.120 you can't, you can't make a case for traditional fixed 0:16:05.120 --> 0:16:09.240 income uh in the environment where people have those kinds 0:16:09.240 --> 0:16:12.080 of acquired returns. The fact at LEASTA there's questions, So 0:16:12.200 --> 0:16:15.360 wels is being asked day after day. Uh. In the 0:16:15.480 --> 0:16:19.920 endowment world. Uh, if you can't uh see yourself to 0:16:19.920 --> 0:16:22.160 a four or five percent pay out, what do you 0:16:22.200 --> 0:16:23.920 do when you go out to respectrum and you go 0:16:23.960 --> 0:16:26.280 to private equity, and you go to venture capital. But 0:16:26.320 --> 0:16:28.920 those those have been priced up. So I think at 0:16:28.960 --> 0:16:31.880 the very least, do a reality check if you're on 0:16:31.920 --> 0:16:33.560 the board of one of these things that you're managing 0:16:33.600 --> 0:16:35.560 one of these things, that it's possible we're gonna have 0:16:35.600 --> 0:16:37.600 a period of time there where we're gonna underperform what 0:16:37.680 --> 0:16:40.600 we would like to do. Having said that, you said 0:16:40.640 --> 0:16:43.040 it doesn't mean to stop trying, but you try to. 0:16:43.160 --> 0:16:45.800 You continue to work really hard to find the really 0:16:45.840 --> 0:16:51.200 smartest people in the world and unfortunately usually discovered. Jonathan 0:16:51.480 --> 0:16:55.600 talked about earlier warp speed with technology and information. I 0:16:55.720 --> 0:16:59.000 think get found pretty quickly. But the best people in 0:16:59.000 --> 0:17:01.520 the world have to have to be have to be used, 0:17:01.520 --> 0:17:03.000 and I think at the end of the day, I 0:17:03.040 --> 0:17:06.919 think those expectations have to be ratcheted down. Michael, You know, 0:17:06.960 --> 0:17:09.800 I really respect and appreciate your experience, and it's fantastic 0:17:09.840 --> 0:17:12.080 always just to sit here and listen to everything you've 0:17:12.119 --> 0:17:20.320 got to say. Michael Holland. There Holland Company, Chairman bla 0:17:20.359 --> 0:17:25.840 Arena Rucci, Barclay's senior US economist, uh Lorena, thank you 0:17:25.920 --> 0:17:27.760 so much for joining us here. I'd love to get 0:17:27.800 --> 0:17:30.040 your thoughts. I'm sure your clients are reaching out to 0:17:30.119 --> 0:17:33.800 you saying, talk to me about inflation. Where do I 0:17:33.840 --> 0:17:35.560 need to be concerned? Where do I need to look 0:17:35.560 --> 0:17:37.960 to see if inflation is creeping into this economy? What 0:17:38.040 --> 0:17:41.960 are you telling your clients? Good morning and thanks for 0:17:42.000 --> 0:17:45.719 having me today. That's a great question. Certainly, interest on 0:17:45.800 --> 0:17:49.800 inflation trends has increased a lot recently. I'd like to 0:17:49.840 --> 0:17:53.119 tell people that there is there are two parts to this. 0:17:53.320 --> 0:17:58.639 There is an inflation narrative where people are very bullish inflation, 0:17:58.680 --> 0:18:03.080 and there is the actual realize inflation data and inflation trends. 0:18:03.640 --> 0:18:07.800 What we're seeing right now is inflation and pressures. Underlying 0:18:07.840 --> 0:18:12.439 price pressures in the economy still being rather subdued and 0:18:13.280 --> 0:18:18.440 quite low relative to the FEDS target. We're seeing pockets 0:18:18.480 --> 0:18:22.880 of the economy producing strong price pressures, particularly on the 0:18:22.920 --> 0:18:26.280 good side of the economy. And this is where I 0:18:26.320 --> 0:18:29.240 tell people to look for rising price pressures and to 0:18:29.720 --> 0:18:32.680 prepare to see that in the realized data. And that 0:18:32.720 --> 0:18:36.919 makes sense to US, we have some supply chain bottlenecks 0:18:36.920 --> 0:18:41.520 as more demands comes online for goods. We have some 0:18:41.840 --> 0:18:46.480 rising shipping cost globally and higher global commodity prices. We're 0:18:46.480 --> 0:18:51.480 seeing increased price pressures from import prices China, pp I, 0:18:51.680 --> 0:18:54.720 U U S C p I. But what is lagging 0:18:54.800 --> 0:18:58.000 for the US is the services side of the economy 0:18:58.080 --> 0:19:01.400 that's lagging in terms of demand and in terms of inflation, 0:19:01.960 --> 0:19:04.440 and the services side of the economy it's a much 0:19:04.480 --> 0:19:09.159 bigger portion of US demand and US inflation. So until 0:19:09.240 --> 0:19:12.119 we see that rising, I don't think we need to 0:19:12.160 --> 0:19:17.480 be concerned about a very strong spike in inflation pressures. Blurrya, 0:19:17.560 --> 0:19:20.280 can you talk a little bit about the friction in 0:19:20.359 --> 0:19:24.280 bringing services back online in force. I'm thinking about this 0:19:24.320 --> 0:19:26.800 summer and the plans and people you know, making their 0:19:26.880 --> 0:19:29.840 travel arrangements right now at a time when you've got 0:19:29.880 --> 0:19:35.080 consumers receiving four checks every month for the next few 0:19:35.080 --> 0:19:39.639 months from the government free money, how quickly can services 0:19:39.760 --> 0:19:43.359 come back based on the need to hire qualified people 0:19:43.840 --> 0:19:47.920 in mass in such a short period of time. Yeah, 0:19:47.960 --> 0:19:50.600 that's a very good point, And what we need to 0:19:50.720 --> 0:19:56.400 highlight is that US consumers have this cash cash buffer 0:19:56.600 --> 0:19:59.280 that has been building up. There is no doubt about that. 0:19:59.320 --> 0:20:01.840 There is a lot of excess savings in the economy. 0:20:02.280 --> 0:20:05.320 They're one of the reasons why we're not seeing spending 0:20:05.400 --> 0:20:08.560 and employment in the services sector is that there isn't 0:20:08.600 --> 0:20:13.200 that confidence to come out and spend on services where 0:20:13.200 --> 0:20:16.480 you have to interact socially more. I think once we 0:20:16.600 --> 0:20:20.240 have critical mass in terms of vaccination and population immunity, 0:20:20.800 --> 0:20:24.400 this demand is likely going to come back, and so 0:20:24.440 --> 0:20:26.840 we expect that in the second half of the year 0:20:26.880 --> 0:20:30.240 there's going to be some friction here where demand comes back, 0:20:30.280 --> 0:20:33.960 but supply has a little bit of trouble adjusting because 0:20:34.119 --> 0:20:37.080 it's going to be tied to hire as many workers 0:20:37.119 --> 0:20:39.840 as you need and businesses need to readjust to the 0:20:39.880 --> 0:20:44.480 new world. So this could bring some price pressures in 0:20:44.520 --> 0:20:47.119 the services sector, and this is what we expect. We 0:20:47.160 --> 0:20:50.080 expect in the second half of the year, a shift 0:20:50.160 --> 0:20:53.399 from the good sector to the services sector, both for 0:20:53.600 --> 0:20:58.000 demand and inflationary pressures. But for us, the key is 0:20:58.600 --> 0:21:01.800 this is going to be a one of transitory spike 0:21:02.040 --> 0:21:05.320 or a sustained one, and we are on the first camp. 0:21:05.440 --> 0:21:08.600 We think as the economy opens up, we're going to 0:21:08.680 --> 0:21:11.720 see this spike that is going to be transitory, but 0:21:11.840 --> 0:21:15.480 it's not going to lead to sustained higher inflation in 0:21:15.520 --> 0:21:18.320 the US. But I mean, i'd love to get your 0:21:18.359 --> 0:21:21.320 thoughts on kind of the employment environment we had. Yesterday's 0:21:21.359 --> 0:21:25.119 jobles claims came in there. The trend is better, but 0:21:25.200 --> 0:21:29.159 still it over seven hundred thousand jobles claims stubbornly stubbornly 0:21:29.440 --> 0:21:31.960 high and appoints to you know, perhaps some of those 0:21:32.000 --> 0:21:35.520 folks that are been unemployed for a longer period of time, 0:21:35.600 --> 0:21:38.280 suggesting that they may not be able to come back 0:21:38.320 --> 0:21:40.160 that easily into the workforce. How do you think about 0:21:40.200 --> 0:21:45.320 the employment environment in this country as we begin to reopen. Yes, right, 0:21:45.440 --> 0:21:49.640