Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well, we are seeing progress
Speaker 1: and as well as some concerns when it comes to
Speaker 1: COVID nineteen in the vaccine rollout. The nation's top infectious
Speaker 1: disease doctor heading up the President's COVID team, Dr Anthony Fauci,
Speaker 1: he made some comments at the National Press Club yesterday
Speaker 1: talking about the progress. Yes, but still far from being
Speaker 1: over COVID nineteen. It's really a critical time right now
Speaker 1: because we could just as easily swing up into a
Speaker 1: surge that would be a setback for public health, but
Speaker 1: that would be a psych logical setback too. Again, that
Speaker 1: was Anthony Fauci. Of course, Dr Anthony Fauccy, director of
Speaker 1: the U S National Institute of Allergies and Infectious Diseases.
Speaker 1: So tim a lot going on. We've got New York
Speaker 1: City saying beaches will open in May, UK rolling out Maderna,
Speaker 1: but we've got global case is still above a hundred
Speaker 1: and thirty two million, six eighty nine million shots given worldwide.
Speaker 1: At the same time, we're seeing a lot of news
Speaker 1: when it comes to vaccines, the United Kingdom rolling out
Speaker 1: the Moderna vaccine, giving those first shots today, and also
Speaker 1: news from the European Union about Astra Zeneca. So let's
Speaker 1: get into it with Dr Sandro Galia. He's Dina Professor
Speaker 1: at Boston University School of Public Health, author of the
Speaker 1: upcoming book it will be out in the fall of
Speaker 1: the Contagion. Next time. He joins us again on the
Speaker 1: phone from Boston. The Contagion Next time, Dr Galia, that
Speaker 1: terrifies me. Nice to though half you back here. Thank
Speaker 1: you talk to you. So how do you see kind
Speaker 1: of where we are? I do feel like Dr Fauci.
Speaker 1: We also heard from the President yesterday talking about progresss,
Speaker 1: you know, seeing over the weekend, a day where we,
Speaker 1: you know, rolled out four million vaccines vaccinations in the
Speaker 1: United States, and yet there's always those words of caution. Yeah,
Speaker 1: I think we've made remarkable progress before. A million vaccines
Speaker 1: today is extraordinary. We've had hundred fifty million shots since
Speaker 1: President Biden has taken opposite about seventy days, and in
Speaker 1: many respects, we're sort of on the brink of an
Speaker 1: amazing sort of transition making breakthrough. Will have enough people
Speaker 1: who are immunized where it will be difficult for the
Speaker 1: virus to spread. At the same time, there remains the
Speaker 1: concern about the variants and also the concerns as restrictions
Speaker 1: ease and parts of the country, particularly Michigan, you are
Speaker 1: seeing more cases spreading. Now, the cases that are spreading,
Speaker 1: there's a question about demographically. They're affecting more young people
Speaker 1: who have less severe disease, as you know, and as
Speaker 1: we've discussed on the show. So so it's a balance
Speaker 1: of multiple forces, more vaccines, fewer people susceptible, at the
Speaker 1: same time easing of restrictions, more young people getting cases.
Speaker 1: And I think the question on everybody's minds, which you
Speaker 1: heard in Dr Fauci's comments is which of these will
Speaker 1: we be able to push forward first, will be able
Speaker 1: to get it at people vaccinated so that we are
Speaker 1: much less susceptible so that we can really see a
Speaker 1: dampening in the course of COVID or will we have
Speaker 1: other flare ups, other clusters that become outbreaks. What does
Speaker 1: the pandemic being gone look like when this turns endemic? Right,
Speaker 1: we do have a flu season every single year where
Speaker 1: where thousands and sometimes tens of thousands of people do die,
Speaker 1: but we don't call it a pandemic. That's true, it's
Speaker 1: uh in many respects of it becomes It becomes pandemic
Speaker 1: when we when we establish a baseline prevalence that that
Speaker 1: we grow comfortable with. And of course what that looks
Speaker 1: like remains to be seen. But I think most commentators
Speaker 1: have settled on that if we can get the surges
Speaker 1: under control, that this will be something that probably will
Speaker 1: be with us, where we will have some number of
Speaker 1: cases every year, potentially requiring some boosters responsive to variance annually,
Speaker 1: but it will be a disease that we live with
Speaker 1: the same way we live with flu. So you know,
Speaker 1: tell us what's going on at your university, because I
Speaker 1: think the last time we talked in February, you were
Speaker 1: just returning to in person classes. Tell us kind of
Speaker 1: where you are and how things are going. Yeah so
Speaker 1: we so we we continue to offer teaching in a
Speaker 1: combination of in person and hybrid. Most of our students
Speaker 1: are online, but about ten at any one time are
Speaker 1: in person, and our faculty and staff come in as
Speaker 1: needed depending on the teaching needs and the needs of
Speaker 1: the scholarship. We have announced, as have many other of
Speaker 1: our peer universities, that our expectation is that we will
Speaker 1: be fully back to in person teaching in the fall
Speaker 1: of starting in September. That we we expect more or
Speaker 1: less a return to a business as it was before
Speaker 1: the pandemic in the fall. That will undoubtedly be accompanied
Speaker 1: with some testing. Um whether or not there will be masking,
Speaker 1: I think that remains to be seen. But by the
Speaker 1: expectation of at least at our school, our university, and
Speaker 1: our peers is that the fall, assuming that other things
Speaker 1: are not intervene, will be back to teaching in person.
Speaker 1: Is there going to be a requirement for students to
Speaker 1: be vaccinated? Yeah, so, we have not put the requirement
Speaker 1: in place yet at our university. But other universities have
Speaker 1: Our universities have announced that they will. Northeastern has, Brown
Speaker 1: University has Rutgers has that their students there will be
Speaker 1: a requirement. And I think it's an active it's an
Speaker 1: active conversation in all the universities right now. Do you
Speaker 1: think they it should it should be a requirement. From
Speaker 1: a medical perspective, I think what matters is that we
Speaker 1: get as many people vaccinated as possible. Whether whether getting nine,
Speaker 1: say of a community vaccinated, requires to make vaccination requirement
Speaker 1: or whether it can be achieve voluntarily. I think that
Speaker 1: defends very much on the particular university community. Hey, one
Speaker 1: thing I want to ask you. I'm going to actually
Speaker 1: talk with Arnold Donald, the CEO of Carnival and the
Speaker 1: CDC last night basically came out and said they think
Speaker 1: that we could see some US cruise ships back in
Speaker 1: order by midst are. What do you think about the
Speaker 1: cruise industry and what about that maybe reopening and what
Speaker 1: needs to be done? Well, I sort of I think
Speaker 1: I think I believe it was Viking that they said
Speaker 1: they will be reopening cruising but only for people who
Speaker 1: are vaccinated. And I think I think when the CDC
Speaker 1: isn't requiring that in the US so far not so
Speaker 1: far now, I mean, I think you know what you're
Speaker 1: doing from a business, from from the enterprise perspective, of
Speaker 1: the Viking perspective, you are saying that you are only
Speaker 1: going to have people obviously in close quarters, but people
Speaker 1: who are very low risk for transmission who have been tested, um,
Speaker 1: so you know they don't have COVID and essentially create
Speaker 1: a close community where there's no COVID in so there's
Speaker 1: no covidentt side. So so COVID is not going to
Speaker 1: spread and people who are at low risk. You know,
Speaker 1: the key about the vaccines is we know that people
Speaker 1: who are vaccinated can still get COVID and can still
Speaker 1: transmits COVID probably, But the key is that the case
Speaker 1: of COVID among people who are vaccinated that have been
Speaker 1: documented are much milder than they were before COVID. So
Speaker 1: so really this is part of Jim's question of us
Speaker 1: learning to live with COVID, like, what does it mean
Speaker 1: if there are still case of COVID but they're milder,
Speaker 1: and what's our tolerance for that? And I think all
Speaker 1: of that's being sorted out right now yeah, milder, and
Speaker 1: that they don't necessarily do the same damage that they
Speaker 1: would have done to us if we weren't vaccinated, because
Speaker 1: we don't get as sick as the studies have shown. Hey,
Speaker 1: what about variance. Where do variants come into this conversation.
Speaker 1: What's the latest thing you're seeing with how they're being
Speaker 1: able to spread more rapidly and also possibly make the
Speaker 1: vaccines lefs less effective. Yeah, the the the answer is
Speaker 1: yes to both. I think they the best data are
Speaker 1: that the variants and make make transmission more efficient and
Speaker 1: also have the vaccines being less effective. Having said that,
Speaker 1: having said that, the leading vaccines out there right now,
Speaker 1: the best evidence suggests that they remain maybe fifty maybe
Speaker 1: sixty effective against some of the variants um the transmissions,
Speaker 1: so they are not jumps up with the variants. So
Speaker 1: essentially they make the virus more dangerous. It makes it
Speaker 1: more dangerous for US and and and our line of defense.
Speaker 1: Vaccine less effective, but we do retain effectiveness of vaccine,
Speaker 1: which then brings us back to our best approach right
Speaker 1: now is to vaccinate as many people as possible, to
Speaker 1: leave the virus as little space as possible to move
Speaker 1: around your book coming out in the fall, The Contagion,
Speaker 1: the next contagion next time? Ah, what should we as
Speaker 1: global citizens be preparing for? Well, the the central thesis
Speaker 1: of the book is that we undoubtedly will be spending
Speaker 1: a lot of time focusing on biosurveillance and vaccines and
Speaker 1: all that, and all that's important, that we should do
Speaker 1: all that, but a lot of what's been going on
Speaker 1: in the past year is about our social and economic
Speaker 1: structures that left us exposed to this vaccine. It's about
Speaker 1: underlying health and equities that created health haves and health
Speaker 1: have not that the vaccine exploited, that when the appologies
Speaker 1: that the the epidemic exploited. That unless we tend to
Speaker 1: those underlying issues, the next contagion will end up with
Speaker 1: the same devastations socially and economically that we saw happen
Speaker 1: this time. So it really, Carol, builds on a lot
Speaker 1: of conversations you and I have had over the past
Speaker 1: year and a half since the pandemic has been around
Speaker 1: that that we cannot we cannot buy our way out
Speaker 1: of the consequences of a pandemic simply by dealing with
Speaker 1: vaccines and biosurveillance. That we actually need to tend to
Speaker 1: the underlying issues that that a large proportional population has
Speaker 1: underlying commor abilities that makes them vulnerable to illness when
Speaker 1: when the pandemic hit, that a large proportion of population
Speaker 1: has no choice but to actually go to work physically
Speaker 1: in person, which then means that we have a hard
Speaker 1: time control and transmission when a pandemic it. So the
Speaker 1: pieces of the book really is that we need to
Speaker 1: tend to these things. So very briefly, I mean, do
Speaker 1: you see anything policy wise coming out of Washington that
Speaker 1: that does help deal with these things? We just heard
Speaker 1: from the President about is two point two five trillion
Speaker 1: dollar infrastructure plan. Is there anything in there that would
Speaker 1: help so much? I do? I do. I actually think
Speaker 1: the singles from Washington have been have been very promising.
Speaker 1: Of course, it's opening to proven. The putting is in
Speaker 1: the eating and depends on how these things are implemented.
Speaker 1: But I think what the President is propos is in
Speaker 1: the infrastructure plan paying attention particularly investing in narrowing health gaps,
Speaker 1: that these are steps that we should be taking. Frankly,
Speaker 1: we should have taken as a country thirty four years ago.
Speaker 1: So I'm heart I'm heartened by these signals coming out
Speaker 1: of Washington, right, I mean water, you know, equality, jobs,
Speaker 1: I mean exactly. Um, so nice to catch up with you, Sanders,
Speaker 1: Stay safe. Dr Sandra Gallea. He's dean and professor at
Speaker 1: Boston University School of Public Health. He's author of the
Speaker 1: upcoming book it will be out in the fall, The
Speaker 1: Contagion Next time, joining us once again on the phone
Speaker 1: from Boston. I've said it before, what I love talking
Speaker 1: or why I love talking to him as we get
Speaker 1: the medical perspective, we get the academic perspective of what's
Speaker 1: going on in education because it has been so impacted
Speaker 1: because of the pandemic. So Tim great to check in
Speaker 1: with him. Yeah, it always is. And um, Boston University
Speaker 1: still not not just decided with what they're going to
Speaker 1: be doing when it comes to requiring vaccinations. Yeah, exactly.
Speaker 1: They expect to be back in the fall with some testing.
Speaker 1: So in the upcoming issue Bloomberg Business Week magazine Scene
Speaker 1: and it turns out it's also a most read story
Speaker 1: on the Bloomberg Today. It's about millions tumbling out of
Speaker 1: the global middle class in a historic setback. Not a
Speaker 1: good thing to him, No, I gotta turned my mic
Speaker 1: on there. Not a good thing at all. And you know,
Speaker 1: we were lucky enough to speak to Sean Donna, and
Speaker 1: senior trade and globalization reporter at Bloomberg News a little
Speaker 1: earlier in the day on Quick Take to talk all
Speaker 1: about what has changed over the last year because of
Speaker 1: the pandemic. So Sean, come on in here. You're joining
Speaker 1: us on the phone from Maryland. Talk to us a
Speaker 1: little bit about what happened in during the pandemic with
Speaker 1: regard to the middle class and why it was such
Speaker 1: a big deal that so many people fell out of
Speaker 1: the middle class. Well, thanks for having me again. Uh,
Speaker 1: it's uh, Look, what we've seen in the past year
Speaker 1: with the pandemic is really the upending of all sorts
Speaker 1: of economic truths, right and the end and the challenging
Speaker 1: of big ideas. And this is one that's kind of
Speaker 1: gone by unnoticed for thirty forty years. This this is
Speaker 1: around the world have embedding on this big growing new
Speaker 1: middle class and emerging economies and it's been ever growing.
Speaker 1: There's been this escalator to the middle class. It's just
Speaker 1: kept churning out new middle class, uh people in places
Speaker 1: like India and Indonesia and the Philippines and obviously China
Speaker 1: as well. What we saw was the pandemic and the
Speaker 1: economic crisis that came with it was for the first
Speaker 1: time in decades these economies, a lot of these economies
Speaker 1: were contracting. And when they contracted, what also contracted the
Speaker 1: number of people in that middle class. And the big
Speaker 1: question that we've got now, is this just a blip,
Speaker 1: is this a one time thing, or as these economies
Speaker 1: and we've heard this from the IMF this week, recover
Speaker 1: more slowly than advanced economies like us, is it going
Speaker 1: to be harder to get those people back into the
Speaker 1: middle class And is that going to be a bigger
Speaker 1: drag on growth? And is that going to really change
Speaker 1: or force a change in thinking by a lot of
Speaker 1: business exact and these CEOs around the world who've been
Speaker 1: betting in all of these consumers in new and exciting places. Yeah,
Speaker 1: it's such a great perspective. Jill Webber, Bloomberg Business Week editor,
Speaker 1: on the Access line in Brooklyn. I can just see
Speaker 1: Joel when Sean was talking to you about this idea, like, oh, yeah,
Speaker 1: I'm in yeah, And you know, I think the thing
Speaker 1: that really distinguishes it. It was the ability of the
Speaker 1: newsroom to make this a truly international story. It's like,
Speaker 1: you know, I think, I think we've talked about the
Speaker 1: China middle class um for basically almost every every story
Speaker 1: about UM, Chinese consumers for for a decade plus now. UM.
Speaker 1: But you know it's much bigger than that, um, the
Speaker 1: global middle classes of the American middle class, right um.
Speaker 1: And and these are people who have actually risen reason
Speaker 1: out of poverty around the world. UM. And I think
Speaker 1: the scary part, as this package shows, is you know,
Speaker 1: the grip the grip of gravity, I guess really and
Speaker 1: when um, when we have this much wealth spread across
Speaker 1: the world and this many people that are being sucked
Speaker 1: back towards poverty, it's going to become another economic challenge
Speaker 1: for not just like the next year or two, but
Speaker 1: potentially for for you know, years to come. UM. It
Speaker 1: makes stories like vaccines all the more relevant because the
Speaker 1: developing world remains what well behind the developed on that front. Um.
Speaker 1: So so all of those were really interesting. Me and Shahna,
Speaker 1: you know, being a guiding hand in all of this,
Speaker 1: you know, take us, take us through some of the countries,
Speaker 1: and what jumped out to you and what you learned. Yeah.
Speaker 1: So look, I mean one of the really important things
Speaker 1: with this story, and I think with any economic story
Speaker 1: is really the hit at at who's affected. And so
Speaker 1: we went out and uh we spent time talking to
Speaker 1: reporters in our bureaus, and we found we really ended
Speaker 1: up focusing on four countries. And in India we talked
Speaker 1: to a guy called Ratty Sharma, and Rabbi is a
Speaker 1: really interesting guy, father of two beautiful daughters. You've been married,
Speaker 1: and last year he was hoping for his wedding anniversary
Speaker 1: to give his wife their first car. And the car
Speaker 1: in particular that he'd been saving up for for years
Speaker 1: is a six thousand dollar car. It's called the Maruti Alto,
Speaker 1: and it's really the entry level car for uh, the
Speaker 1: American middle class. I'm trying to think of an American equivalence,
Speaker 1: probably the Toyota Corolla or or or a Ford Fusion. Uh.
Speaker 1: The uh. Then we we went out over to Thailand,
Speaker 1: and Thailand an amazing story and that it's really about
Speaker 1: us and how we're not traveling internationally and we're not
Speaker 1: going to these places that depends on tourists. And in
Speaker 1: Thailand this year they expect to have three million UH
Speaker 1: visitors in two thousand nineteen before the pandemic at thirty
Speaker 1: nine million visitors. And we'd talked to their this woman YadA,
Speaker 1: who's a street hawker there selves uh snacks and and
Speaker 1: fruit juice to tourists and those tours that she relies on.
Speaker 1: And she used to have a house and a mortgage
Speaker 1: and in a car with a car payment. Um that
Speaker 1: income has just gone and she's defaulted on both of
Speaker 1: those and moved into a rental house and very kind
Speaker 1: of something that I think a lot of people in
Speaker 1: American middle class can can can feel for. Uh. Then
Speaker 1: we went to South Africa and South Africa a young
Speaker 1: woman who has you know, moved into her first apartment
Speaker 1: and lost her job last year, was a big retailer
Speaker 1: that was getting close to bankruptcy. She moved back to
Speaker 1: the family home. But the important thing here is she's
Speaker 1: moved from this kind of steady job in the formal
Speaker 1: economy with an apartment in the formal economy to like
Speaker 1: this portfolio of side hustles and one of the biggest
Speaker 1: ones that she's built a room out back of the
Speaker 1: family home that she can rent out for a hundred
Speaker 1: dollars months. And then finally we we go to Brazil
Speaker 1: into this woman friends and that uh and friends and
Speaker 1: that is a secretary. She has a comfortable middle class
Speaker 1: existence like a lot of Brazilian she loves beef. But
Speaker 1: you know what, the price of food has changed so
Speaker 1: much in the past year. Uh, and they've got a
Speaker 1: real problem with food price inflation there in Brazil that
Speaker 1: she's now Uh. There's certain meatless Mondays in the meatless Tuesdays,
Speaker 1: and they're also when she goes to the butcher, she's
Speaker 1: looking at things like kidney and liver, the kind of
Speaker 1: thing that uh. You know, we think of its past
Speaker 1: generations who are trying to say with penny uh witty.
Speaker 1: But we've seen and that is borne out in the
Speaker 1: in the data in Brazil where beef sales have tanked
Speaker 1: and we've seen more people buy chicken, and in particular,
Speaker 1: eggs are selling in a record clip in Brazil. So
Speaker 1: it's the fundamental reshaping of people's lives that we're seeing
Speaker 1: out there in emerging economies in ways that are uh
Speaker 1: that should really resonate with a lot of people in
Speaker 1: the American middle class, and ways that are gonna drag
Speaker 1: on for a lot longer. The other way to think
Speaker 1: about all of this, if she's you back up, is
Speaker 1: if we think about the last crisis in two thousand,
Speaker 1: two thousand and nine that hit the American middle class
Speaker 1: pretty hard, and it was a decade of slow recovery
Speaker 1: after that that led to also it had all sorts
Speaker 1: of political repercussions the emerging economy is that pretty well
Speaker 1: around that crisis. This time around, the American middle class
Speaker 1: is probably gonna come out of this okay. In emerging economies,
Speaker 1: it's going to be a very different story. And there's
Speaker 1: this word um bifurcating that um we've talked about in
Speaker 1: terms of what the what that means for the for
Speaker 1: the global economy, Sean, And you know, so much of
Speaker 1: the story is backward facing, and basically, you know that
Speaker 1: little tour of the world that Sean just gave us,
Speaker 1: we have great charts and data points for for all
Speaker 1: of those um things in the in the story, and Sean,
Speaker 1: I'm just curious when you think about, you know, what's
Speaker 1: to come here, like what are the what are the
Speaker 1: moments and and data points that you will be sort
Speaker 1: of on the lookout as a reporter for in the
Speaker 1: in the month slash years to come. That will will
Speaker 1: help us understand just how devastating this past year has been.
Speaker 1: So and you gotta be quick. I'll be really I'll
Speaker 1: be really quick here. And it's the same one that
Speaker 1: we're all looking at here in the United States, and
Speaker 1: that's how quickly we get back to where we were
Speaker 1: in the path that we're on beforehand. In a place
Speaker 1: like India, it's gonna end this year with an economy
Speaker 1: that's five percent or so smaller. In the US, it's
Speaker 1: going to be one point six percent smaller. Place like Indonesia,
Speaker 1: it's going to be closer to like ten smaller this year.
Speaker 1: That's the gap that you need to close. And that's
Speaker 1: what comes ahead and why it's so important. It's some
Speaker 1: of what we've talked about. Tim. I'm just thinking about
Speaker 1: our conversations with Joseph Stieglitz Nobel Laureate talking about the
Speaker 1: developed having to take care of the developing nations and
Speaker 1: really be aware. Hey guys, thank you so much. Bloomberg Business,
Speaker 1: we get it. Or Joe Weber, Bloomberg News Senior Trade
Speaker 1: and Globalization reporter Sean don Don that story by the
Speaker 1: Way will be the upcoming issue of Bloomberg Business Week magazine.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovik on Bloomberg Radio. Alright, so just
Speaker 1: check in here because this was is the most it
Speaker 1: still is. I just looked. I just looked, Carol in
Speaker 1: the last eight hours, the most read story. This is
Speaker 1: what folks are reading about, and listen, no doubt about.
Speaker 1: It's about how Jamie Diamond said he's optimistic the pandemic
Speaker 1: will end with a U. S economic rebound that could
Speaker 1: last at least two years. Yeah, people want to read
Speaker 1: what Jamie Diamond has to say, and this is his
Speaker 1: longest letter ever, sixty six pages. Is Wall Street reporter
Speaker 1: joining us right here in the Bloomberg Interactive Broker's studio. Sheelie.
Speaker 1: Great to have you back on the show. Hey, why
Speaker 1: do you think everybody wants to know what Jamie Diamond
Speaker 1: is thinking? It's so funny you asked this, because twice
Speaker 1: today somebody has asked me. People have asked me, readers
Speaker 1: have asked me to do another kind of take of
Speaker 1: this or a podcast because they want to without reading.
Speaker 1: Since season stages. It's really a reset to the year, right,
Speaker 1: Jamie Diamond's tone positive negative. What does he think about
Speaker 1: the economy? Is he happy with the state of America?
Speaker 1: People care? And honestly as the biggest bank in the
Speaker 1: country and you know, the most profitable, right, it's really
Speaker 1: a matter of you know, what he says goes right. Well,
Speaker 1: it's also don't you think Hinnali too and Tim, I
Speaker 1: think you think that probably agree that you know this
Speaker 1: whole idea that this is someone who is seeing crisis
Speaker 1: before uh and understand, you know, the impact on the economy,
Speaker 1: the impact on business, the impact on the financial markets.
Speaker 1: He's seen it before. He's had a front row seat.
Speaker 1: He's been at the table during the financial crisis and
Speaker 1: other crises in his career, and so he is someone
Speaker 1: who can really kind of look at this and maybe
Speaker 1: put it in perspective and can see, you know, how
Speaker 1: bad it was and how quickly it's bounced back. Yeah,
Speaker 1: that's exactly right. And he took a tone that was
Speaker 1: really realistic. And while he said that the markets can
Speaker 1: be very buoyant until three very specific timeline he gave there,
Speaker 1: he also really gave a huge nod to how unequal
Speaker 1: all of this, um, you know, how unequal the economy
Speaker 1: really is right now and the country is. And then
Speaker 1: need for a social a social safety net, higher minimum
Speaker 1: wages across the country, um. Among other basic needs, right
Speaker 1: you know, immigration reform, healthcare, and and things that are
Speaker 1: very hotly contested, not just among corporate America but in Washington.
Speaker 1: You know, we talked about this a little bit on
Speaker 1: Quick Take earlier today Shonale. But the tone of his letter,
Speaker 1: and and you point ot out something that that has
Speaker 1: stuck with me, the difference in tone from this letter
Speaker 1: versus what we heard from Warren Buffett just a few
Speaker 1: weeks ago. Talk a little bit about that. Yeah, the
Speaker 1: reason I think this is so interesting, So Warren Buffett
Speaker 1: when he came out of this letter this year and
Speaker 1: didn't really talk about COVID and the economy at large,
Speaker 1: he was criticized as tone deaf. And then you have
Speaker 1: Jamie Diamond, who weighs in in a big way about
Speaker 1: the tone of the American economy and and and the
Speaker 1: American citizen saying that they've lost trust in our institutions,
Speaker 1: in our businesses, in our in our governments, in our schools,
Speaker 1: and our media, and you know it shows you that,
Speaker 1: you know, what place does the CEO have in the country.
Speaker 1: People do want him to speak up, right, People are
Speaker 1: listening to him, not just on the markets, but people
Speaker 1: do want him to weigh in on social matters because
Speaker 1: at the end of the day, JP Morgan is also
Speaker 1: a big employer, right, They are providing a lot of
Speaker 1: capitals to communities that need that money to to really
Speaker 1: make it through the worst of this crisis. Listen, you know,
Speaker 1: think about all the reporting that's going on right now,
Speaker 1: especially we're watching the CEOs down in Atlanta right when
Speaker 1: it comes to Georgia and voting rights and what people
Speaker 1: expect of CEOs and corporate leaders who are so careful
Speaker 1: about what they talk about, you know, politically Shinnale. But
Speaker 1: I do think there is as you said, employees increasingly
Speaker 1: want their leaders to do it there. You know, younger
Speaker 1: employees are shopping their companies based on what those companies
Speaker 1: stand for. Speaking of younger employees, that's what else. He
Speaker 1: was afraid of the new fin techs coming, you know,
Speaker 1: and talent wise. We knew that this was a competitive
Speaker 1: threat for a while all but for him to say,
Speaker 1: as the biggest bank in the country, serving more than
Speaker 1: half of US households. To say what a big threat
Speaker 1: fintech was in technology, right, he cited kind of the
Speaker 1: presence of Google and Apple and Amazon. Um, you know,
Speaker 1: others have also been concerned about big tech in other
Speaker 1: ways as well well. So what does that mean for
Speaker 1: the bank? Does that mean they go out and they
Speaker 1: potentially acquire a fintech company. It's a possibility because remember
Speaker 1: JP Morgan can't at its size go out and buy
Speaker 1: a bank, right, And plus it doesn't even need to
Speaker 1: think about how many people it serves independent. A lot
Speaker 1: of these fintech companies don't actually consider themselves banks either, Yeah,
Speaker 1: regulatory purposes and for just the way that they handle money. Yeah,
Speaker 1: a lot of this is payments, it's getting it's getting
Speaker 1: money from one side to the other, right, among other
Speaker 1: custody among other things. Right, So we'll see how JP
Speaker 1: Morgan chooses to grow. Right. They also have a big
Speaker 1: asset manager at the end of the day, and that's
Speaker 1: another place we could imagine them doing some deals. Yeah,
Speaker 1: exactly are they banks? Are they really a bank? Though?
Speaker 1: I'm just saying, is it time for us to like
Speaker 1: kind of relok at all? Of this, how would you
Speaker 1: what would you call it? I don't know, sanchun glomerate,
Speaker 1: thank you, thank you que Sandy while right like and
Speaker 1: or exactly exactly this is what you know. I just
Speaker 1: find it interesting, especially when we're talking about risk and
Speaker 1: you know, the public perception concerns about you know, financial
Speaker 1: firm still not trusting them. But that's because banks are
Speaker 1: not banks. And guess what the jaws the question? You know,
Speaker 1: Sandy Wile was really the glue to City Group in
Speaker 1: its past when it was really that financial supermarket. Jamie
Speaker 1: diamond is the glue to JP Morgan. And you know
Speaker 1: what happens JP Morgan without Jamie Diamonds when they start
Speaker 1: to talk about succession, which they're not doing of course.
Speaker 1: But and he does, and he has said he's not
Speaker 1: going anywhere yet, right exactly. He makes a joke every
Speaker 1: you know, he keeps saying five more years every year. So, hey,
Speaker 1: what what did you say about returning to work? We
Speaker 1: heard comments from him a few weeks ago in an
Speaker 1: interview that he did with Bloomberg TV about how he
Speaker 1: does see the value in doing stuff in person. But
Speaker 1: what did he say in the letter about returning to work? Yeah,
Speaker 1: he said that most people will be returning to work.
Speaker 1: You know, we heard from three um you know, finance
Speaker 1: titans today actually across different types of finance from We
Speaker 1: heard from Larry Fink, who wants to get people to
Speaker 1: back to work. We heard from Jamie Diamond, who wants
Speaker 1: to get back to work. I talked to a private
Speaker 1: equity executive at Blackstone also who says, you know, you
Speaker 1: can't really be doing your best workover zoom, So uh,
Speaker 1: people want to get back to work. That the bottom line.
Speaker 1: I'm going to contest. I'm going to attest to that. Rather,
Speaker 1: it's just I'm not going to contest. I'm going to
Speaker 1: attest to that because I'm back at home. I got
Speaker 1: so used to it like in the early days, and
Speaker 1: I had a nice little routine. I cannot wait to
Speaker 1: get back to the office. You're excited for you to
Speaker 1: get Huh, we're excited for you to get back here, Carol,
Speaker 1: I have all these lights. It just, oh my god,
Speaker 1: it's a nightmare. Shinali. This is great stuff, great reporting,
Speaker 1: and you were so wonderful in breaking down is so
Speaker 1: called quote unquote letter because it's more like a mini novel,
Speaker 1: is it not just quickly. It is just gonna say
Speaker 1: all sixty six pages and that's not even his deputy's work.
Speaker 1: Love it, love it, Thank you so much. Sinelli Bostic.
Speaker 1: She's Wall Street reporter at Bloomberg News, back in her
Speaker 1: Interactor Broker studio with Tim the story. It's on the
Speaker 1: terminal because everybody else is just saying, I'm bro journal. Yeah,
Speaker 1: but you let me drive? No, no, no, who's going
Speaker 1: to dr home? Honey? Please, I'll do the riding drivel?
Speaker 1: I want to drive, just drive baby. Thanks the question trying.
Speaker 1: This is the drive to the globe commune. Thanks. We'll
Speaker 1: drying up Dawn on Bloomberg Radio. All right, just about
Speaker 1: ten minutes left in today's trading session. Let's get to
Speaker 1: it with Leo Kelly, founder CEO and co c i
Speaker 1: O Adverden's Capital Advisors, overseeing three billion dollars in client assets.
Speaker 1: He's back with us on the phone from Hunt Valley, Maryland.
Speaker 1: Hey Leo, good to have you here with us. Um,
Speaker 1: how are you doing all? Doing well? Thanks for having
Speaker 1: me on the show. We're slowly, uh seemed to be
Speaker 1: finding our way out of the crazy year that was,
Speaker 1: and uh that's good news. Does it feel that way.
Speaker 1: Tell me why you say that, Um, it does feel
Speaker 1: that way. I think, Um, as we you know, as
Speaker 1: we look around anecdotally at activity, I know, and airport
Speaker 1: traffic is up tremendously. We're starting to get back to
Speaker 1: levels we were in the past. It's it's true of
Speaker 1: activity on the roads and so forth. Then of course,
Speaker 1: just look at the markets, look at um, you know,
Speaker 1: look at what's happening not only in the markets, but
Speaker 1: in the economy with uh, you know, with the the
Speaker 1: lays you're seeing in products because pent up demand combined
Speaker 1: with current demand, combined with lack of inventories is starting
Speaker 1: to explode and prices are starting arise. So yes, it
Speaker 1: does feel like we're coming out of this. So expectations
Speaker 1: if you look at the equity markets are certainly high
Speaker 1: as to where we are in the recovery. We are
Speaker 1: going to start hearing from companies not just about their
Speaker 1: first fiscal quarters, but also how they're thinking for the
Speaker 1: rest of the year. Um, what's the chance that the
Speaker 1: companies don't deliver on these high expectations or the concern? Well,
Speaker 1: you know, I do think when we know, when we
Speaker 1: look at the market, I think it's going to be
Speaker 1: hard for companies to not deliver here. I think there's
Speaker 1: some there's some chances like demand was good, but supply
Speaker 1: was an issue, right because the demand came back so abruptly,
Speaker 1: And there may be very specific circumstances. I do think
Speaker 1: that valuation in certain areas is an issue. And you can, um,
Speaker 1: you can achieve a really good growth in a business
Speaker 1: and so your stock get hit pretty hard because it
Speaker 1: doesn't match what the what the market is expecting. You're
Speaker 1: executing on all cylinders, but the market starts to expect
Speaker 1: beyond what you're capable of. UM. Now that said, there's
Speaker 1: so much money floating in this system between what the
Speaker 1: FETE is injected, multiple stimulus plans that we're talking about
Speaker 1: another two Trillion's astonishing how we use the word trillion
Speaker 1: with such ease these days. UM. The amount of money
Speaker 1: in the system is astonishing. I mean money supply went
Speaker 1: up over twenty five percent last year, UM, and that
Speaker 1: I think there's just no way to stop that momentum
Speaker 1: in the economy with that much money floating around the system,
Speaker 1: and that makes you nervous. It does make me nervous
Speaker 1: in the long run and the short run Carol, the
Speaker 1: that amount of money put in um is it has
Speaker 1: to have a positive effect, especially when that money translates
Speaker 1: to money supply increases. In O eight oh nine, the
Speaker 1: money went into the banks and the banks held onto it,
Speaker 1: so it never really increased money supply. Combine that with
Speaker 1: the fact that consumers are in far better shape than
Speaker 1: they were the last time because they still got paid
Speaker 1: through the crisis via unemployment benefits and p PP. They
Speaker 1: didn't have any money any place to spend them me
Speaker 1: only do so much online, and so personal savings rates
Speaker 1: exploded during the COVID. And then you then you add
Speaker 1: the fact that debt is down from the last debt crisis,
Speaker 1: Housing prices are up for in case are up, so
Speaker 1: the consumers in better shape, their net worth is better,
Speaker 1: They've they've had personal savings increases, and they've got all
Speaker 1: this pent up demand in this pent up activity that
Speaker 1: they want to start to uh, they want to start
Speaker 1: to enjoy. So yeah, I do think it speaks well
Speaker 1: as short run long term. It's an issue, Okay, So
Speaker 1: I'm curious what your short term is. And I say
Speaker 1: that because Tim and I earlier talked about the most
Speaker 1: read story on the Bloomberg Today, which has Jamie Diamond,
Speaker 1: of course, of JP Morgan saying this boom could easily
Speaker 1: run into two. So he's talking about the economic boom
Speaker 1: and ultimately the market boom. Is that your short term range?
Speaker 1: Are you talking shorter than that because you're you guys
Speaker 1: have been building up cash or holding onto cash. Yeah,
Speaker 1: we we you know, we've we've started to build a
Speaker 1: little bit more cash. I do again, I think we
Speaker 1: have to look at there is a separation between equity
Speaker 1: pricing and economic activity, and equities can get ahead of themselves.
Speaker 1: And in fact, if you look at the growth markets,
Speaker 1: they have not performed well this year. And we have
Speaker 1: been overweight international and value and small value because that
Speaker 1: performs well coming out of recession and V shaped pounce
Speaker 1: has always been our our prime, our prime model. Now
Speaker 1: I do think this thing has legs. I do think
Speaker 1: we'll see volatility because interest rates have to go higher,
Speaker 1: inflation is here, pricing is going to start and continue
Speaker 1: to rise. So in an intermediate from the intermediate term,
Speaker 1: which is a three years out or sell or more,
Speaker 1: you do have some challenges in terms of the long term.
Speaker 1: I say this all the time. We are addicted to painkillers.
Speaker 1: Every time there's financial stress, we just we just pour
Speaker 1: money into at the problem. And that's okay now where
Speaker 1: we currently stand. But I liken it to an aircraft carrier.
Speaker 1: We're heading for the iceberg. We can see it out
Speaker 1: in the distance, and rather than start the turn, we're
Speaker 1: speeding up. Sooner or later we have to. We have
Speaker 1: to pay the piper and um. So for now, short
Speaker 1: term intermediate, I think we're fine, but this is something
Speaker 1: that sooner or later we have to reverse the trend
Speaker 1: and start the turn. Well, that's unfortunate to end it
Speaker 1: on the image of the image of the ship heading
Speaker 1: towards the iceberg. Unfortunately we are out of time, Leo,
Speaker 1: But thank you so much for joining us today. Leo Kelly, Founder,
Speaker 1: chief executive officer and co chief investment Officer Edvarden's Capital Advisors,
Speaker 1: joining us on the front from Hunt Valley, Maryland. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
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