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Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm

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Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing

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Speaker 1: you the latest news from the world of business and finance,

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Speaker 1: plus technology, politics, economics, all harnessing the power of Business

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Speaker 1: Week reporters and editors, not to mention our journalists and

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Speaker 1: analyst in more than one and twenty countries. You can

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Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.

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Speaker 1: You can also listen to our radio show at two

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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on

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Speaker 1: YouTube search Bloomberg Global News. Well Kitty Gratfield and Tim

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Speaker 1: Stanobeck live in the Bloomberg Interactive Broker Studio in New York. Katie,

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Speaker 1: we talked about the World Economic Forum postponing its annual

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Speaker 1: meeting in Davos that had been slated for January, this

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Speaker 1: amid fresh waves of coronavirus across Switzerland and the globe.

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Speaker 1: Just as you and I were speaking, just now, or

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Speaker 1: as Doug was speaking, I got a notification that more

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Speaker 1: events in my own life have been canceled in the

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Speaker 1: coming days. And it certainly makes sense that we're starting

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Speaker 1: to see that absolutely, And I mean there were the

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Speaker 1: headlines crossing the terminal this morning. That's cool. Closing surging too.

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Speaker 1: So it's conferences, it's schools, it's workplaces, it's everywhere. All

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Speaker 1: of this happening when we expect millions of Americans to

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Speaker 1: be traveling to see one another for the holidays coming up.

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Speaker 1: Let's talk to about it with Dr Peter alperand vice

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Speaker 1: president of doc Simity. It's a platform for medical professionals.

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Speaker 1: Dr Alburn joins us once again on the phone from Austin, Texas.

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Speaker 1: Dr Alburn, how how are things in Austin, Texas right now? Uh? Well,

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Speaker 1: thanks for having me on the broadcast. You know, things

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Speaker 1: in Austin are going pretty well. Um, we are seeing

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Speaker 1: an upticking cases, but in general people are being careful. Um.

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Speaker 1: I think people are you know what to do in

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Speaker 1: terms of masking and uh yeah, it's it's not the

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Speaker 1: Christmas we had all hoped for. Um, but you've got

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Speaker 1: to be vigilant. We'll help us understand what it looks

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Speaker 1: like on the ground there because I think a lot

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Speaker 1: of people are really stuck in their universes right now.

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Speaker 1: And if you live in New York City, here's what

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Speaker 1: you know. You have to wait in line for hours

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Speaker 1: to get a COVID test, and if you want to

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Speaker 1: get a rapid test, you have to go to you

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Speaker 1: try to get one at a pharmacy and they're all

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Speaker 1: sold out. Are you seeing in Austin right now? Yeah,

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Speaker 1: we're definitely seeing pressure on the on the places where

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Speaker 1: you would go to get tests, as well as the

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Speaker 1: home test that you would get in UM in the

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Speaker 1: pharmacy as well as you know, and a lot of

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Speaker 1: people have gone online those are also very much sold

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Speaker 1: out so bad I was going to ask for me

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Speaker 1: and send him send him my way. Now, I'm just kidding, doctor.

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Speaker 1: I am curious to hear your perspective on the sort

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Speaker 1: of inevitability feeling that is percolating, at least in New

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Speaker 1: York City. I mean, I've heard time and time again

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Speaker 1: over the past few weeks that, oh, well, I'm going

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Speaker 1: to get it anyway. And I mean does the data

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Speaker 1: that we have on this variant stack up against that?

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Speaker 1: I mean we've heard a lot about how much more

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Speaker 1: easily transmissible it is, for example, Yeah, I think, um,

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Speaker 1: you know, inevitability is a pretty strong word. I'm here's

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Speaker 1: what we know right, we know that on thecron is

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Speaker 1: indeed very contagious and very easily transmissible. UM. The early

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Speaker 1: data seems to suggest that there is the potential that

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Speaker 1: the disease caused by omicron might be a little bit

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Speaker 1: more mild than some of the previous variants, particularly delta.

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Speaker 1: But the the answer is, you know, this variant, we've

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Speaker 1: only really discovered a couple of weeks ago, and we

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Speaker 1: don't know a ton about it. UM. I think inevitability

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Speaker 1: is strong. Um is probably too strong, because I think

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Speaker 1: we all need to do the things that we know

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Speaker 1: that are helpful. Wearing masks, you know, when you're in

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Speaker 1: a tight group, trying to social distance to the best

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Speaker 1: that you can. And please go out and get your

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Speaker 1: booster shot or your first vaccine if you haven't had one. Yeah,

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Speaker 1: and we're all we are seeing here in the United

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Speaker 1: States a lot of people going out and getting those boosters,

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Speaker 1: which is some encouraging news. Hey, you mentioned South Africa

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Speaker 1: and the idea that we we learned about this a

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Speaker 1: couple of weeks ago. UM, we did learn today at

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Speaker 1: one pm New York time that infections are slowing in

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Speaker 1: South Africa. Daily coronavirus cases they're almost having amid a

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Speaker 1: fourth wave of infections fueled by the omicron variant. How

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Speaker 1: should we read into that and if course, with the

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Speaker 1: caveat that it's pretty much summer in South Africa, so

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Speaker 1: it's a different environment than in the United States. Yeah,

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Speaker 1: I think we have to be really careful with that data.

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Speaker 1: I think that, um, first of all, the population in

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Speaker 1: terms of the total number of people vaccinated is very different.

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Speaker 1: The amount of time they're spending outdoors, given that at

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Speaker 1: summer versus winter is different. Um. And I think that,

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Speaker 1: you know, you've got to be really careful about getting

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Speaker 1: whipsode in multiple directions with the data here, UM, I

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Speaker 1: think it takes some time for us to put together

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Speaker 1: that information. It's certainly um. You know, we see all

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Speaker 1: sorts of discussion on our network as well, with physicians

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Speaker 1: talking about the latest and greatest data on on our

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Speaker 1: on our news feed that we that we monitor. But

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Speaker 1: I think the bottom line is is that this is

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Speaker 1: a time for us to go back to what we

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Speaker 1: know is no works, which is being you know, just

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Speaker 1: being careful and doing the things that we know to

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Speaker 1: be true and not necessarily you know, I don't know,

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Speaker 1: no one' davocating for the complete return to the lockdowns

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Speaker 1: like we had in April of last year. But we

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Speaker 1: just need to be careful, so maybe not at can

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Speaker 1: fleet return to lockdown. But you know, as some and

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Speaker 1: I were just talking about, you are starting to see

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Speaker 1: a lot of events get canceled, whether it's you know,

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Speaker 1: school closing or companies telling their workers that they can

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Speaker 1: return home and work from home. I mean, would you

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Speaker 1: expect to see more of that type of behavior in

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Speaker 1: the coming weeks, especially since we are talking on December

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Speaker 1: twenty and a lot of people have holiday travel planned. Yeah,

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Speaker 1: I think we probably will see more of that. You know,

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Speaker 1: school closures is such a complicated and fraud issue. Um,

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Speaker 1: you know, parents aren't justifiably exasperated and um, you know

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Speaker 1: it's really tough out there, uh for for those families.

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Speaker 1: But I do think you're going to see probably no

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Speaker 1: slightly restrictions around large gatherings of big events where you

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Speaker 1: could see that that would be the first thing. Um.

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Speaker 1: You know, again, like I said, school closures are complicated.

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Speaker 1: Dr Albn, just in the last forty seconds we have

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Speaker 1: what advice can you give for getting together safely with

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Speaker 1: family and friends and loved ones during the holidays. Yeah,

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Speaker 1: you know, it is important to see your family and UM,

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Speaker 1: we know that it's going to happen. So my recommendations

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Speaker 1: are to do like I said, do the things we

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Speaker 1: know to be true. Please, please go get vaccinated if

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Speaker 1: you haven't, If you can test yourself for corona before

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Speaker 1: you have that gathering of everybody, that's important, particularly if

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Speaker 1: you're going to be seeing your your grandparents or other

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Speaker 1: people who might be UM you know, more at risk

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Speaker 1: from a severe infection UM. And you know, try to

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Speaker 1: limit it so that it's not a gathering of people.

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Speaker 1: But maybe you know eight to ten. All right, some

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Speaker 1: very good advice as we do head into the final

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Speaker 1: week before Christmas and of course New Year's as well.

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Speaker 1: Dr Peter Alperin, we love having you on the program,

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Speaker 1: Vice president of dox Simity. It's a digital platform for

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Speaker 1: medical professionals. He's joining us on the phone from Austin, Texas.

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Speaker 1: President Biden's job approval ratings stands at just above forty

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Speaker 1: three percent. That's according to an average of approval poles

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Speaker 1: from eight In fact, Biden is less popular at this

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Speaker 1: point in his presidency than any other president except President Trump.

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Speaker 1: Going all the way back to President Jimmy Harder. But

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Speaker 1: here's the thing. America's economy improved more in Joe Biden's

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Speaker 1: first twelve months than any other president during the past

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Speaker 1: fifty years, so writes Bloomberg Editor in Chief Emeritus Matt

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Speaker 1: Winkler in a column for Bloomberg Opinion. Matt Winkler joins

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Speaker 1: us now live in the Bloomberg Interactive Broker studio. Matt,

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Speaker 1: Great to have you you with us. What were the

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Speaker 1: metrics that you used to measure President Biden's first year

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Speaker 1: in office? Great to be with you and their ten

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Speaker 1: And they're known to all of us, gross domestic product,

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Speaker 1: profit growth s and P five hundred performance, consumer credit,

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Speaker 1: non farm payrolls, manufacturing jobs, business productivity, the dollars appreciation,

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Speaker 1: and the SMP relative to UH the benchmarks around the world,

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Speaker 1: as well as per capita disposable income. And so, Matt,

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Speaker 1: I'd love to hear your thoughts on that mismatch that

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Speaker 1: if you know, you look at those measures, you just

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Speaker 1: lied out that the economy is doing really well. But

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Speaker 1: yet President Joe Biden's approval ratings not as hot. I mean,

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Speaker 1: does that all just boil down to inflation or what's

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Speaker 1: going on. Well, you know what's so often missing in

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Speaker 1: the day to day reporting from everywhere is context, and uh,

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Speaker 1: this is the context which is the most important, you

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Speaker 1: could argue subject in our lives is the economy. And

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Speaker 1: given that we are in unprecedented circumstances with COVID nineteen,

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Speaker 1: context is easily misplaced or just not available. So if

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Speaker 1: one wanted to understand, okay, where did we come from

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Speaker 1: since Biden was inaugurated, probably the best way to do it,

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Speaker 1: which is what we did at Bloomberg with my colleague Shenpei,

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Speaker 1: is take a look at all of the measures of

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Speaker 1: the economy that are most relevant, give them equal waiting,

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Speaker 1: and say, how did he do? Now? What motivated us

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Speaker 1: to do that? We did get right away in the

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Speaker 1: Biden administration a very rigorous vaccination program which did a

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Speaker 1: lot of good you could say, in the first three

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Speaker 1: or four months of the year. And then on top

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Speaker 1: of that, there was the unprecedented American Relief Act, which

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Speaker 1: cut the poverty rate in half and put you know,

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Speaker 1: thirty billion dollars into American households. So you look at

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Speaker 1: those two things, and those were policy initiatives, What did

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Speaker 1: the economy do and as uh you noted, Biden comes

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Speaker 1: out one or two, number one or number two in

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Speaker 1: the ranking all the way back to Carter saved for

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Speaker 1: per capita disposable income and it's not even close. He's

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Speaker 1: way ahead of everybody. You know. The final thing is

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Speaker 1: that since you mentioned inflation, uh, and we're talking about context.

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Speaker 1: You know, when everybody talks about inflation, nobody mentions the

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Speaker 1: market doesn't agree with them. The bond market is saying, no,

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Speaker 1: we still think it's transitory. The simplest context is to

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Speaker 1: just say the yield on the benchmark ten year treasury

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Speaker 1: is still fluctuating, way below one point seven percent. And

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Speaker 1: you know, back in the seventies, when inflation was very high,

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Speaker 1: the yield, whether it was a tenure or a thirty year,

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Speaker 1: was over twelve. So we're not there yet. The people

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Speaker 1: with the most at stake and the bond market are

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Speaker 1: saying the Biden economy, so far, so good. So we

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Speaker 1: have the context for for what happened in one and

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Speaker 1: the benchmarks for what is all of this portend though

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Speaker 1: for two, especially on a day like today going into

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Speaker 1: New Year, where we you know, have Senator Joe Mansion yesterday,

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Speaker 1: essentially torpedoing President Biden's Build Back Better program, as well

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Speaker 1: as rising coronavirus cases throughout the country. COVID nineteen is,

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Speaker 1: without a doubt, the variable that is going to probably

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Speaker 1: befuddle us most because we still don't understand everything there

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Speaker 1: is to know about the pandemic. Having said that, even

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Speaker 1: with this new variant, fewer people are dying if they

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Speaker 1: are vaccinated. That's a fact. We know that, and so

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Speaker 1: that's cause for some hope. The other part of this

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Speaker 1: is that the Infrastructure Act, which was a bipartisan piece

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Speaker 1: of legislation, is going to benefit the job market, is

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Speaker 1: going to benefit municipalities, UH, states everywhere coast to coast,

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Speaker 1: north to south, east to west, as far as the

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Speaker 1: eye can see. It's not gonna abate anytime soon. In fact,

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Speaker 1: it's just gonna get going in twenty two. So, uh,

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Speaker 1: those are some good things that should keep things going

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Speaker 1: in as far as the Build Back Better, Biden himself said, look,

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Speaker 1: I'm not done with this. I'm going to come back

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Speaker 1: to it in twenty two. Uh. Larry Summers told David Weston,

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Speaker 1: I think a week ago he thought that whatever does

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Speaker 1: emerge from Build Back Better, whatever you know, Uh, politics

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Speaker 1: are involved, it will be better not worse. So, uh,

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Speaker 1: those are some things we can anticipate. And now you've

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Speaker 1: got some great stats on here on corporate America. One

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Speaker 1: that jumped out to me is that profit margins are

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Speaker 1: around fifteen percent, which is the widest sense. How is

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Speaker 1: the consumer doing in all of this? Though? Consumer is

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Speaker 1: doing great, and we know that because consumer credit is

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Speaker 1: with Biden number one of all the presidents. Now what

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Speaker 1: that means is that Americans are are obviously feeling good,

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Speaker 1: otherwise they wouldn't be taking on credit. One of the

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Speaker 1: reasons why they are taking on credit is because interest rates,

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Speaker 1: even with the acceleration of inflation, are still relatively low

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Speaker 1: when you compare where interest rates have been over the

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Speaker 1: past fifty years. The reason why corporate America is booming

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Speaker 1: and doing as well as it is is because the

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Speaker 1: debt ratios, that's what you were referring to, which makes

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Speaker 1: it possible for companies to get more out of literally

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Speaker 1: their borrowing than they ever have before. So their profit

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Speaker 1: margins are much bigger, fatter than it goes all the

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Speaker 1: way back to. So, um, you know, the consumer and uh,

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Speaker 1: corporate America both are in a very good place right

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Speaker 1: now from a historical perspective. It's so interesting though, because

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Speaker 1: we don't we don't see this playing out politically. Either

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Speaker 1: Democrats aren't doing a great job of of of hammering

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Speaker 1: this message, or Republicans are doing a really good job

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Speaker 1: of essentially comparing President Biden to President Carter. Who. Well,

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Speaker 1: that's our that's our job. It's called news judgment, and

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Speaker 1: journalists are supposed to do more than just simply report

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Speaker 1: what people say and what they do. They're supposed to

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Speaker 1: provide the context and say here's what it means. And unfortunately,

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Speaker 1: our profession just isn't there, which is why we are

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Speaker 1: doing this column. So what what would you I mean,

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Speaker 1: what would you like to see from from news media

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Speaker 1: when reporting a ren reporting on the president? Well, I think,

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Speaker 1: for one, every time we bring up inflation, it would

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Speaker 1: be nice to see a parenthetical clause everywhere that says yes,

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Speaker 1: But the market doesn't agree with that. And the market

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Speaker 1: is twenty nine trillion of US Treasury securities, you know,

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Speaker 1: it's a big market. It's the market that tells every

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Speaker 1: other market what to do. That's that's a start. At

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Speaker 1: least that provides some context and understanding that. Why Janet Yellen,

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Speaker 1: for one, the Treasury Secretary, who is arguably, you know,

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Speaker 1: one of the smartest people to be in that position,

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Speaker 1: has said that most of the inflation that we are

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Speaker 1: experiencing still is related to what you would call supply

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Speaker 1: shortcomings bottlenecks that result from UH people being immobilized by

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Speaker 1: the pandemic UM. So, yeah, I mean I think that

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Speaker 1: it's very important. Is something we do at Bloomberg, which

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Speaker 1: is what does the market tell you that is relevant

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Speaker 1: to whatever people are saying politically. Oftentimes the market is

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Speaker 1: saying something that's very different from what the politics are.

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Speaker 1: And you know, you can expect politicians to say whatever

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Speaker 1: they can because it suits their interests. But the market

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Speaker 1: is not ideological, it's not political. It's just looking for

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Speaker 1: relative value. And I'm curious. I mean, you mentioned the

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Speaker 1: bond market in terms of what the market is saying. Clearly,

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Speaker 1: the bond market, when you look at those long term rates,

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Speaker 1: doesn't seem too stressed about inflation. When you look across

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Speaker 1: the asset picture and you look at the stock market,

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Speaker 1: do you see a similar message there? Yeah, for the

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Speaker 1: same reason. Look, when you have interest rates as low

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Speaker 1: as we have UH stocks have been the right investment

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Speaker 1: that's been proven over the past decade or more, and UM,

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Speaker 1: unless that changes, that equation changes, UM, it's likely that

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Speaker 1: stocks will continue to hold their value. Now. One of

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Speaker 1: the other parts of this is, remember when began, very

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Speaker 1: few people thought we would have the vaccine that would

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Speaker 1: prevent UH infection of COVID nineteen, and yet we did

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Speaker 1: have not just one, but several vaccines. That's called innovation.

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Speaker 1: Innovation is very much a part of the stock market. UM.

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Speaker 1: That's where you've seen companies simply become household names practically

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Speaker 1: overnight because they've created value where there was not. You know,

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Speaker 1: whether it's a Twilio, which is relatively recent, or it's

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Speaker 1: a Tesla or even going back further Amazon, all of

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Speaker 1: these companies are creating value, and that's why the stock

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Speaker 1: market is so attractive. The column is Biden's economic performance

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Speaker 1: is unbeatable. Matt Winkler as editor in Chief emeritus for

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Speaker 1: Bloomberg News. He wrote this piece for Bloomberg Opinion. Be

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Speaker 1: sure to check it out on the Bloomberg terminal and

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Speaker 1: at Bloomberg dot com. Well. In recent years, we've seen

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Speaker 1: US organizations that have ties to China come under increased scrutiny.

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Speaker 1: Among those in recent years and especially in recent weeks

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Speaker 1: has been Ray Dalio, of course, and Bridgewater Associates. We're

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Speaker 1: joining us now to talk all about Dahlio's China fascination

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Speaker 1: and when it started. Is Andy Brown, editorial director at

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Speaker 1: Bloomberg New Economy. He joins us on the phone from

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Speaker 1: New York City. Andy, before we get into the history here,

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Speaker 1: why are we talking about this right now? I think

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Speaker 1: why we're talking about this right now is because Ray Dahio,

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Speaker 1: perhaps more than other Wall Street billionaires, has remained um

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Speaker 1: very publicly and very volubly pro China in his views

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Speaker 1: at a time when political sentiment in Washington, d c.

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Speaker 1: And public sentiment in the United States more broadly has

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Speaker 1: turned decisively anti China. And so it makes it seem

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Speaker 1: as though he is somewhat out of step. And so Andy,

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Speaker 1: let's dig into that. Why Why is Dahlio, like you say,

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Speaker 1: still probably publicly pro China when a lot of you know,

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Speaker 1: his his peers on Wall Street have taken or at

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Speaker 1: least backed away from their support. Well, I think most

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Speaker 1: fundamentally because China is where the money is and where

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Speaker 1: the opportunities are now for Wall Street giants like Bridgewater,

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Speaker 1: like black Stone, black Rock and and so on. I mean,

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Speaker 1: there's there's been a lot of very negative focus on

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Speaker 1: the collapsing price of Chinese equities as presidentigen Thing cracks

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Speaker 1: down on property and big tech platforms and after school

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Speaker 1: tutoring and so on. But you know, don't forget the

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Speaker 1: Chinese economy actually is motoring along quite well. Reason that

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Speaker 1: it's reasonably healthy. It's attracted, um, it actually attracted more

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Speaker 1: attracts more direct foreign investment in the United States now,

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Speaker 1: UM companies are investing more and more. Despite all the

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Speaker 1: talk about supply chains retreating from China, US companies continue

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Speaker 1: to invest there um and in the Chinese companies were

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Speaker 1: investing more in the United States. So, you know, big picture,

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Speaker 1: there are opportunities plus and here's the decisive things for

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Speaker 1: Wolf Street. China needs the technical expertise. Doesn't necessarily need

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Speaker 1: the money. He's got plenty of money, but what it

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Speaker 1: needs is expertise to help develop a sophisticated financial uh industry. Well, Andy,

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Speaker 1: there's a great new piece published today on the Bluebirg

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Speaker 1: Terminal by our colleague Catherine Burton that talks about Dahio's

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Speaker 1: China fascination and that it predates ties to Beijing's billions,

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Speaker 1: that is the money that Bridgewater handles for China. So

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Speaker 1: take us back years ago, decades ago to really understand

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Speaker 1: Dahlio's connection to China. Yeah. Look, I got to say

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Speaker 1: that there's nothing particularly unusual in Ray Dalio's history with China.

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Speaker 1: I mean, it's pretty much par for the course. Is

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Speaker 1: this is what Wall Street billionaires do. Um Over the years,

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Speaker 1: they've invested millions and millions of dollars and charitable good

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Speaker 1: works in China. Ray Dalio himself apparently invests something like,

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Speaker 1: according to our stories, something like a hundred and fifty

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Speaker 1: million dollars. Well, you know, Steve Schwartzman, founder of black Stone,

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Speaker 1: kicked in a hundred million dollars of his own money

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Speaker 1: into a scholarship program at Chinhua University, which is President

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Speaker 1: che Ching Ping's almintor um. You know, the Gates Foundation

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Speaker 1: over the years has put in four hundred million dollars

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Speaker 1: to fight disease in China. I mean, this is just

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Speaker 1: what people, what billionaires do in order to win influence,

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Speaker 1: one might say, curry favor with with Chinese uh, leaders

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Speaker 1: and Andy, like you just laid out, I mean across

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Speaker 1: Wall Street, both firms and billionaires courting China. What does

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Speaker 1: that mean for their relationship with Washington? Because if you

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Speaker 1: think of the climate in both parties right now, it

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Speaker 1: seems like the sentiment against you know, money flowing into China,

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Speaker 1: it's pretty negative right now. Yeah, it sort of puts

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Speaker 1: Wall Street on a collision course with Washington. I mean,

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Speaker 1: the real hoops in Washington d C. Essentially believe that

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Speaker 1: pumping money into China is giving comfort and support to

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Speaker 1: the enemy. Now, the Biden administration, of course, wouldn't go

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Speaker 1: nearly um that far, although it is moving in a

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Speaker 1: generally that direction. It inherited tariffs, trade tariffs on China,

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Speaker 1: it inherited sanctions from the Trump administration, and indeed it's

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Speaker 1: adding to them. Just the other day, at blacklisted the

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Speaker 1: company d j I, which is the world's largest manufacturer

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Speaker 1: of all drones. So increasingly there is a tension between

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Speaker 1: wool Street's ambition for China and Washington's ambition to put

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Speaker 1: economic relations with China into a ball. Andy, Well, we

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Speaker 1: have you. I don't know if it's gonna be the

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Speaker 1: last time we have you before the end of the year.

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Speaker 1: Just in the last thirty seconds we have with you,

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Speaker 1: what is the main thing we need to watch between

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Speaker 1: the US and China going into Look, the big issue

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Speaker 1: I think is is Taiwan. Um that you have a

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Speaker 1: lot of uh military activity now in the Taiwan straight

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Speaker 1: and both the Chinese and US leaders to recognize that, um,

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Speaker 1: it's dangerous and UM there need to be Godrail. Andy Brown,

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Speaker 1: editorial director at Bloomberg New Economy, knows all things China,

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Speaker 1: spent years living in China. Andy, thank you so much

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Speaker 1: for taking the time and joining us on Bloomberg Business Week.

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Speaker 1: Oh no, no, no, this is not a honey Please,

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Speaker 1: I'll do the riding revels to good question. This is

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Speaker 1: the drive to the Globe on Bloomberg Radio, where we

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Speaker 1: are just under ten minutes away from the close of

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Speaker 1: trading on this Monday, December one, Tim Statue and Kitty

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Speaker 1: grabbed up live in the Bloomberg Interactive Broker studio. Let's

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Speaker 1: get into it with Michael Sheldon, executive director and chief

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Speaker 1: investment Officer at High Tower r d M Financial Group.

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Speaker 1: He joins us on the phone from Westport, Connecticut. High

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Speaker 1: Tower r d M Financial Group has one point two

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Speaker 1: billion dollars in assets under management that as of October one. Michael,

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Speaker 1: how are you good? Thanks very much, appreciate your having me.

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Speaker 1: We'll help us understand what's going on in the trade today.

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Speaker 1: We are bouncing off of session lows, but still we're

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Speaker 1: seeing a see if red across the screen, a three

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Speaker 1: day to kline uh out to close at a three

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Speaker 1: day declient. I'm wondering if this is more about omicrons

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Speaker 1: fears and the virus spiking, or more about what what's

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Speaker 1: happening and or what's not happening in Washington, d C. Yeah,

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Speaker 1: I think it's a combination of factors. Obviously, the markets

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Speaker 1: are more unsettled than they have been in some time.

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Speaker 1: I think the main factors are the ones you just mentioned,

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Speaker 1: but to just sort of delve into those, if you

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Speaker 1: look at the FED, the FED has really provided a

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Speaker 1: tremendous amount of accommodation over the past couple of years

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Speaker 1: or so, and they're slowly shifting gears towards removing some

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Speaker 1: of that accommodation. So they're sort of tapping on the

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Speaker 1: brakes just a little bit. But I think it's also

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Speaker 1: important to keep in mind that historically, at least in

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Speaker 1: the first twelve months when the Fed does start raising

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Speaker 1: rates and there's still some ways away from that, equity

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Speaker 1: markets have posted solid returns in that first twelve month period.

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Speaker 1: So that's that's one thing. And also the Federal Reserve

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Speaker 1: can shift policy, They can adjust policy if need be. Uh.

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Speaker 1: The second is obviously the virus. We've had a surge

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Speaker 1: in cases over the past several over the past several weeks,

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Speaker 1: and right now there's a lot of uncertainty about what's

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Speaker 1: going on in the viru lens of the virus. If

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00:25:08,800 --> 00:25:10,480
Speaker 1: you look at some of the data over the weekend

428
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Speaker 1: from South Africa, it looks like this virus spreads more

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00:25:13,680 --> 00:25:17,080
Speaker 1: easily but may not be as virulent. And then lastly,

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00:25:17,119 --> 00:25:19,840
Speaker 1: it's inflation. And obviously we're seeing some of the highest

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00:25:19,920 --> 00:25:22,200
Speaker 1: rates in terms of inflation that we've seen in decades.

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00:25:23,000 --> 00:25:25,920
Speaker 1: We think there's going to probably be some moderation inflation

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00:25:25,920 --> 00:25:27,919
Speaker 1: as we go through the year. And I would just

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00:25:28,000 --> 00:25:30,040
Speaker 1: keep an eye on very simple things like the number

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00:25:30,080 --> 00:25:32,959
Speaker 1: of tankers off the coast of California, or for example,

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00:25:33,040 --> 00:25:35,560
Speaker 1: the Baltic Try Freight Index, which measures freight rates, and

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00:25:35,800 --> 00:25:38,000
Speaker 1: both of those have started to come up. So I

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00:25:38,040 --> 00:25:40,600
Speaker 1: think those are the main factors that investors are watching.

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Speaker 1: And Michael, I'd love to hear your thoughts on what

440
00:25:43,920 --> 00:25:48,400
Speaker 1: the virus means for inflation and expect expectations going forward,

441
00:25:48,480 --> 00:25:52,040
Speaker 1: because obviously, if you look at global supply chains already

442
00:25:52,320 --> 00:25:56,480
Speaker 1: very stressed. I mean, if this adds even more stress,

443
00:25:56,560 --> 00:25:58,720
Speaker 1: if you have people going back to spending their money

444
00:25:58,760 --> 00:26:01,520
Speaker 1: on goods, I would love to hear your thoughts on

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00:26:01,520 --> 00:26:04,920
Speaker 1: whether that, you know, could cause inflation concerns to even

446
00:26:04,960 --> 00:26:08,200
Speaker 1: become more of a focus. Yeah, I think it's that's

447
00:26:08,200 --> 00:26:10,200
Speaker 1: a great question. And you know what's interesting if you

448
00:26:10,240 --> 00:26:12,479
Speaker 1: step back for this was this was no we've been

449
00:26:12,520 --> 00:26:15,720
Speaker 1: a no normal economic sort of cycle. If you go

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00:26:15,760 --> 00:26:18,440
Speaker 1: back to early two thousand twenty when the economy shut down,

451
00:26:19,080 --> 00:26:21,320
Speaker 1: basically people were at home and they were spending money

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00:26:21,320 --> 00:26:24,920
Speaker 1: on things like their home, their home office, and their

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00:26:24,960 --> 00:26:28,040
Speaker 1: homes and things of that nature. So if you look

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00:26:28,040 --> 00:26:31,560
Speaker 1: at goods, spending on goods surged very high. Spending on

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00:26:31,640 --> 00:26:34,880
Speaker 1: services actually came down dramatically. People weren't going out to restaurants,

456
00:26:34,920 --> 00:26:37,600
Speaker 1: they weren't traveling, and so you had a surgeon spending

457
00:26:37,640 --> 00:26:40,680
Speaker 1: on consumer goods now. I think what you'll start to

458
00:26:40,720 --> 00:26:43,440
Speaker 1: see as we get into two thousand twenty two, if

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00:26:43,480 --> 00:26:46,439
Speaker 1: we can get past the virus and that starts to

460
00:26:46,480 --> 00:26:48,760
Speaker 1: settle down, I think you'll start to see a pick

461
00:26:48,840 --> 00:26:51,199
Speaker 1: up and spending on services and some of the spending

462
00:26:51,200 --> 00:26:54,280
Speaker 1: on goods, which is really above the historical levels, will

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00:26:54,280 --> 00:26:57,000
Speaker 1: start to cool down. And if that's the case, then

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00:26:57,040 --> 00:26:59,280
Speaker 1: you should start to see some of the supply chain

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00:26:59,760 --> 00:27:04,280
Speaker 1: is you start to gradually moderate. And we're also seeing

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00:27:04,320 --> 00:27:06,560
Speaker 1: a number of people getting back into the labor force.

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00:27:06,840 --> 00:27:09,600
Speaker 1: We're not where we were beforehand. We're still several million

468
00:27:09,680 --> 00:27:12,160
Speaker 1: jobs short, but I think that's heading in the right

469
00:27:12,160 --> 00:27:14,960
Speaker 1: direction as well. So overall those two, that sort of

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00:27:14,960 --> 00:27:19,800
Speaker 1: combination should eventually help to reduce inflationary pressures over time.

471
00:27:20,040 --> 00:27:24,399
Speaker 1: I'm wondering what if, and the look I hate to

472
00:27:24,440 --> 00:27:27,399
Speaker 1: be so dismal here, but I'm I'm wondering what happens

473
00:27:27,440 --> 00:27:31,639
Speaker 1: if we don't get the variant under control. Well, I

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00:27:31,680 --> 00:27:33,680
Speaker 1: think that certainly could be a problem. And I think

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00:27:35,560 --> 00:27:38,320
Speaker 1: I'm sorry, go ahead, or there's another variant. Yeah, I

476
00:27:38,320 --> 00:27:39,560
Speaker 1: think we have to. I think we're living in a

477
00:27:39,600 --> 00:27:42,520
Speaker 1: world right now where there are going to be variations

478
00:27:42,800 --> 00:27:46,160
Speaker 1: to the original virus that we had. I think, unfortunately,

479
00:27:46,240 --> 00:27:48,399
Speaker 1: that's just the world we're living in. It seems from

480
00:27:48,400 --> 00:27:51,200
Speaker 1: the science that the more people who get vaccinated and

481
00:27:51,240 --> 00:27:54,600
Speaker 1: protect themselves, the more the country can sort of get

482
00:27:54,640 --> 00:27:56,840
Speaker 1: back on track. And we may not be living in

483
00:27:56,840 --> 00:27:59,679
Speaker 1: the same world we were pre two thousand and twenty,

484
00:28:00,040 --> 00:28:02,680
Speaker 1: but I think the economy has learned to adapt. And

485
00:28:03,160 --> 00:28:05,520
Speaker 1: I don't see I don't see closures the way we

486
00:28:05,560 --> 00:28:08,680
Speaker 1: had them in early two thousand twenty coming back anytime soon.

487
00:28:09,320 --> 00:28:12,520
Speaker 1: We could have localized shutdowns and closures, but I don't

488
00:28:12,560 --> 00:28:15,000
Speaker 1: see anything at a national level. And Michael, how do

489
00:28:15,000 --> 00:28:18,680
Speaker 1: you position a portfolio around that uncertainty, the uncertainty about

490
00:28:18,720 --> 00:28:23,240
Speaker 1: what kind of world we will be living income, Well,

491
00:28:23,240 --> 00:28:25,720
Speaker 1: that's a good question. And importantly to preface that, I

492
00:28:25,720 --> 00:28:28,560
Speaker 1: would say that, Uh, for investors, it's important to point

493
00:28:28,560 --> 00:28:31,280
Speaker 1: out that economic cycles typically last a number of years

494
00:28:31,280 --> 00:28:33,879
Speaker 1: as opposed to months or quarters. When you have a

495
00:28:33,920 --> 00:28:37,280
Speaker 1: bear market, a bear market of or more decline in

496
00:28:37,320 --> 00:28:41,080
Speaker 1: the market, that's typically caused by the Federal Reserve raising

497
00:28:41,160 --> 00:28:43,880
Speaker 1: rates significantly, and they do that when they have to

498
00:28:43,880 --> 00:28:47,360
Speaker 1: slow down the economy, or sometimes there's an exogen exogeneous

499
00:28:47,400 --> 00:28:50,160
Speaker 1: event like a surgeon oil prices, if oil prices were

500
00:28:50,200 --> 00:28:52,880
Speaker 1: to go up more than over a six to twelve

501
00:28:52,960 --> 00:28:56,600
Speaker 1: month period. So from our perspective, you know, we are

502
00:28:56,640 --> 00:28:59,960
Speaker 1: seeing some some choppiness in the markets, and the markets

503
00:29:00,000 --> 00:29:02,600
Speaker 1: are lacking a bit of leadership right now. But I

504
00:29:02,600 --> 00:29:04,719
Speaker 1: think if you look at some of the economic indicators.

505
00:29:04,760 --> 00:29:07,600
Speaker 1: For example, the Leading Economic Index came out this morning,

506
00:29:07,880 --> 00:29:09,959
Speaker 1: it's up nine months in a row, and it's up

507
00:29:10,000 --> 00:29:12,520
Speaker 1: eighteen of the last nineteen months. So I think that

508
00:29:12,640 --> 00:29:15,520
Speaker 1: suggests that looking ahead over the next six to twelve months,

509
00:29:15,800 --> 00:29:18,440
Speaker 1: the economy is likely to grow but remain choppy. So

510
00:29:18,880 --> 00:29:21,000
Speaker 1: to get back to your question, I think you want

511
00:29:21,040 --> 00:29:24,040
Speaker 1: to be diversified in your portfolio. UM. I think you

512
00:29:24,080 --> 00:29:26,560
Speaker 1: want to have some technology in your portfolio, even though

513
00:29:27,000 --> 00:29:29,120
Speaker 1: um there's been news about the concentration in that. But

514
00:29:29,160 --> 00:29:31,760
Speaker 1: you need some growth in your portfolio to meet your

515
00:29:31,800 --> 00:29:35,480
Speaker 1: long term investment objectives. We're looking at healthcare. We think

516
00:29:35,480 --> 00:29:38,440
Speaker 1: that's one of the forgotten sectors and sort of a

517
00:29:38,440 --> 00:29:41,160
Speaker 1: a GARP or growth at a reasonable price sector. And

518
00:29:41,200 --> 00:29:43,080
Speaker 1: then you also want to have some exposure to the

519
00:29:43,080 --> 00:29:46,000
Speaker 1: areas that are likely to benefit when the economy eventually

520
00:29:46,280 --> 00:29:48,840
Speaker 1: starts to reopen. I guess you could call it reopening

521
00:29:48,920 --> 00:29:51,360
Speaker 1: two point oh as we head through the through the

522
00:29:51,400 --> 00:29:54,800
Speaker 1: spring into the summer, and Michael, just quickly, I am

523
00:29:54,840 --> 00:29:57,000
Speaker 1: curious to hear your thoughts on tech when you think

524
00:29:57,000 --> 00:29:59,720
Speaker 1: about the market in terms of sectors we have you

525
00:29:59,760 --> 00:30:03,360
Speaker 1: know us about thirty seconds. Yeah, we're big believers in tech.

526
00:30:03,360 --> 00:30:06,440
Speaker 1: There is a lot of disruptive technology going on, uh,

527
00:30:06,480 --> 00:30:10,480
Speaker 1: in areas like the cloud and areas like artificial intelligence

528
00:30:10,560 --> 00:30:12,960
Speaker 1: and five G. You do want to have some broad

529
00:30:13,000 --> 00:30:15,959
Speaker 1: exposure in those areas. Uh. These kind of companies are

530
00:30:16,080 --> 00:30:18,640
Speaker 1: very innovative and they're likely to generate the kind of

531
00:30:18,720 --> 00:30:21,600
Speaker 1: returns within your portfolio. But you do want to have

532
00:30:21,680 --> 00:30:24,160
Speaker 1: some very You do want to have some diversification, and

533
00:30:24,200 --> 00:30:26,280
Speaker 1: you just want to be wary of the the weight

534
00:30:26,400 --> 00:30:30,160
Speaker 1: if you have of technology winning your overall portfolio. Michael Sheldon,

535
00:30:30,280 --> 00:30:33,080
Speaker 1: executive director and chief investment Officer at High Tower r

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00:30:33,160 --> 00:30:36,600
Speaker 1: DM Financial Group, joining us on the phone from Westport, Connecticut.

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00:30:37,640 --> 00:30:40,520
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast

538
00:30:40,520 --> 00:30:43,520
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com, and you can

539
00:30:43,520 --> 00:30:45,680
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540
00:30:45,720 --> 00:30:48,360
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00:30:48,360 --> 00:30:49,560
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