WEBVTT - Grantham Sees Stocks ‘Super Bubble,’ Says Selloff Has Begun 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Charle Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanavak. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 clus technology, politics, economics, all partnising the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:28.360 pm Eastern Time on Bloomberg Radio, or watch us on YouTube. 0:00:28.400 --> 0:00:31.600 Search to Bloomberg Global News. Well, we want to talk 0:00:31.600 --> 0:00:33.800 a little bit more about COVID because this story definitely 0:00:33.800 --> 0:00:36.839 caught our attention. A Bloomberg Opinion column on how a 0:00:36.960 --> 0:00:40.720 vaccine to prevent all COVID is within reach. With the details, 0:00:40.760 --> 0:00:43.280 Let's bring in Lisa Jarvis, the former executive director of 0:00:43.360 --> 0:00:46.640 Chemical and Engineering News. She writes about biotech drug discovery 0:00:46.640 --> 0:00:49.320 in the pharmaceutical industry for Bloomberg Opinion, recently cut up 0:00:49.320 --> 0:00:52.440 to with Dr Anthony Faucy. She joins us on the 0:00:52.479 --> 0:00:56.040 phone in Chicago. Lisa, nice to have you here with 0:00:56.160 --> 0:00:59.240 Katie and myself. When you talk about a vaccine to 0:00:59.280 --> 0:01:01.240 prevent all COVID, we're talking to what about a pen 0:01:01.400 --> 0:01:04.840 coronavirus vaccine? UM, tell us a little bit more about 0:01:04.920 --> 0:01:09.360 what you found out, Hi, Katie, Hi Carol and Katie, 0:01:09.400 --> 0:01:12.560 thank you for having me. Yes, a pan coronavirus vaccine. 0:01:12.720 --> 0:01:15.480 There are two different ways to think about that. One 0:01:15.520 --> 0:01:18.880 would be a vaccine that would protect protect you from 0:01:18.920 --> 0:01:22.160 all the different variants of Stars Kobe too, so for 0:01:22.280 --> 0:01:26.160 the current pandemic. And then another would be a broader vaccine. 0:01:26.240 --> 0:01:29.679 So let's think about future pandemics, um, even things that 0:01:29.720 --> 0:01:32.880 have cropped up in the past, like the original Stars. 0:01:33.000 --> 0:01:35.560 So you would have a broad acting vaccine that would 0:01:36.240 --> 0:01:41.120 protect you against many different kinds of coronaviruses. So, is 0:01:41.160 --> 0:01:44.560 this something that drugmakers are currently working on, because, like 0:01:44.640 --> 0:01:46.840 as you describe in your piece, if you look at 0:01:47.080 --> 0:01:48.960 fires or if you look at Maderna, it seems like 0:01:49.000 --> 0:01:52.080 they've so far have been really focusing on making almost 0:01:52.200 --> 0:01:57.840 variant specific vaccines. Yeah. I think one of the reasons 0:01:57.840 --> 0:02:01.680 for that is that research on these type of uh 0:02:01.920 --> 0:02:07.480 pan coronavirus vaccine feels earlier and risk here um and UM. 0:02:07.560 --> 0:02:10.160 So we have a few companies that are working on 0:02:10.240 --> 0:02:13.400 pan coronavirus vaccines. They're most mostly in the biotech space. 0:02:13.480 --> 0:02:15.880 One of those I did talk about in the article 0:02:15.960 --> 0:02:19.760 That's your Biotechnology. Another one that does have a clinical 0:02:19.800 --> 0:02:25.120 trial running that fits into this category is called Gritstone UM, 0:02:25.200 --> 0:02:27.600 but a lot of the work is still in academic 0:02:27.639 --> 0:02:30.480 and government lab UM. I think what I'm trying to 0:02:30.560 --> 0:02:34.560 argue is that it probably would speed things along to 0:02:34.680 --> 0:02:37.400 get some of the heft of the big pharma world 0:02:37.440 --> 0:02:42.160 behind this concept. UM, because we all know that there 0:02:42.160 --> 0:02:44.760 probably will be more variants, and we all know that 0:02:44.840 --> 0:02:48.280 there will definitely be future pandemics. You know, it was 0:02:48.320 --> 0:02:51.280 funny reading through your column, Lisa, I thought, okay, because 0:02:51.280 --> 0:02:53.600 it does sound like we're chasing these variants with like 0:02:54.000 --> 0:02:56.720 you know, from vaccine to vaccine to vaccine, and it's 0:02:56.720 --> 0:02:59.360 going to be I think you say, like whackamle, right, Like, 0:02:59.400 --> 0:03:01.760 how do you a key up? How long though, would 0:03:01.760 --> 0:03:06.640 it take to create a pan coronavirus vaccine? Right? So, 0:03:07.320 --> 0:03:10.079 and this is something that Dr Fatti will tell you, 0:03:10.520 --> 0:03:14.400 UM to be really cautious about. UM. It could be months, 0:03:14.400 --> 0:03:16.800 but it could be years. And UM, I think it 0:03:16.880 --> 0:03:20.280 probably depends on a few different things. One would be 0:03:20.320 --> 0:03:22.600 how lucky we are and finding I talked about in 0:03:22.639 --> 0:03:24.799 the story this idea you want to find a spot 0:03:25.320 --> 0:03:28.239 on you know, in particular, say the spikes protein of 0:03:28.280 --> 0:03:30.799 the virus that isn't changing, So something that's going to 0:03:30.880 --> 0:03:33.440 look the same from variant to variant. UM sets the 0:03:33.520 --> 0:03:38.160 first step, um And And there's some early clues on that. 0:03:38.200 --> 0:03:40.120 I think we're going to make progress on that quickly. 0:03:40.560 --> 0:03:43.520 Two is being able to test those quickly, and three 0:03:43.760 --> 0:03:46.520 is being able to manufacture those at a scale. You know, 0:03:46.560 --> 0:03:48.240 as you know, we would want to give this to 0:03:48.320 --> 0:03:51.440 billions of people in some of these types of vaccines 0:03:51.440 --> 0:03:54.760 are much different than the ones we take now, so 0:03:55.880 --> 0:04:00.160 you know years, um, but we're gonna be facing this, right, 0:04:00.160 --> 0:04:03.400 We're gonna be facing this virus probably for years. We 0:04:03.480 --> 0:04:06.240 are going to be and so it matters, um And 0:04:06.440 --> 0:04:09.000 And I to distress that it's not that I think 0:04:09.200 --> 0:04:12.840 the variant specific approach, like creating an omicron specific vaccine 0:04:12.920 --> 0:04:16.560 is a terrible plan. It's just that by the time 0:04:16.880 --> 0:04:18.640 we have it, we may have moved on to the 0:04:18.680 --> 0:04:22.000 next variant, right, and so it will no longer be relevant. 0:04:22.080 --> 0:04:24.760 And we know that each of these variance looks a 0:04:24.839 --> 0:04:27.880 lot different from the one before it so far. So UM, 0:04:27.920 --> 0:04:31.040 that's why it's concerning. Lisa, could you walk me through 0:04:31.080 --> 0:04:32.640 the science a little bit here? And I went to 0:04:32.680 --> 0:04:35.080 a lover arts school, so my grasp on all of 0:04:35.120 --> 0:04:38.400 this is very tenuous. But in thinking of about a 0:04:38.560 --> 0:04:42.800 pan coronavirus vaccine, I mean, would it be similar to 0:04:42.839 --> 0:04:47.760 the flu? How? How should I be thinking about this? Um? Yeah, 0:04:47.920 --> 0:04:50.920 somewhat similar to the flu? And I mean, well, I 0:04:50.960 --> 0:04:54.120 should say, in the flu vaccine, they're putting different strains 0:04:54.240 --> 0:04:57.120 in based on what they predict is going to be circulating, 0:04:57.240 --> 0:04:59.880 right in this case, um, And people are working on 0:05:00.080 --> 0:05:02.160 universal vaccines, by the way, and a lot of the 0:05:02.200 --> 0:05:06.720 WORKOUP coronavirus vaccines are borrowing from that. UM. What you 0:05:06.760 --> 0:05:10.800 would be doing is trying to predict, um, what's coming next, 0:05:10.960 --> 0:05:15.240 and trying to find areas again on parts of the 0:05:15.320 --> 0:05:19.440 virus that looks similar across lots of different strains, lots 0:05:19.440 --> 0:05:23.320 of different families. UM. So if you could somehow package 0:05:23.360 --> 0:05:26.919 those all onto into one vaccine. UM. The ones I 0:05:26.960 --> 0:05:30.760 described that are happening UM, that government and academic labs 0:05:30.760 --> 0:05:33.440 are primarily working on are called a nanoparticle. So imagine 0:05:33.440 --> 0:05:36.080 a ball and if you tack a bunch of different 0:05:36.520 --> 0:05:40.960 um parts from various types of viruses onto the surface 0:05:41.000 --> 0:05:42.960 of the ball of the ball, you'd show that to 0:05:43.000 --> 0:05:45.560 your immune system and it would hopefully learn how to 0:05:45.760 --> 0:05:49.120 attack all of them um. So that's one way, and 0:05:49.160 --> 0:05:53.839 then another is you know, again to find this common um, 0:05:53.839 --> 0:05:59.640 this common piece that is across all the different coronaviruses, 0:05:59.720 --> 0:06:01.680 And there's a few different ways that you might think 0:06:01.720 --> 0:06:05.279 about delivering that, which you know could be similar to 0:06:06.080 --> 0:06:08.279 our current MR and a vaccine. Well, if you do 0:06:08.320 --> 0:06:11.520 think about what we did or what companies did right 0:06:11.560 --> 0:06:14.640 with certainly financial backing and help from the government, but 0:06:14.760 --> 0:06:16.920 able to create a vaccine. So if they all were 0:06:16.920 --> 0:06:21.159 working together on some kind of PAN coronavirus working out together, 0:06:21.200 --> 0:06:24.120 maybe it could be done a lot sooner rather than later. Hey, Lisa, 0:06:24.160 --> 0:06:27.040 thanks so much. Lisa Jarvis, as I mentioned earlier, former 0:06:27.080 --> 0:06:30.480 executive editor of Chemical and Engineering News, writes about biotech 0:06:30.560 --> 0:06:33.159 dructic discovery. I'm ready for a pan coronavirus, are you 0:06:33.440 --> 0:06:37.760 That sounds pretty good? Or a vaccine rather pand coronavirus. 0:06:37.800 --> 0:06:39.840 That's right. I don't want the pan coronavirus feel like 0:06:39.839 --> 0:06:43.160 we already have that. It's a good point. This is Bloomberg. 0:06:44.279 --> 0:06:47.880 You're listening to Bloomberg Business Week with Carol Masser and 0:06:47.960 --> 0:06:52.520 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We want 0:06:52.520 --> 0:06:54.760 to get to a story that is in the magazine, 0:06:54.800 --> 0:06:56.599 the new issue of Bloomberg Business Week. It is out, 0:06:56.640 --> 0:06:59.560 It's on newsstands, on line at Bloomberg dot com. It's 0:06:59.600 --> 0:07:02.320 a store Katie about a little known fraud prevention company 0:07:02.320 --> 0:07:05.400 that is trying to become the digital intermediary between the 0:07:05.440 --> 0:07:08.640 government and its citizens. It's basically, you know, kind of 0:07:08.640 --> 0:07:10.520 going after our identity. How do you feel about that? 0:07:11.200 --> 0:07:13.920 I would say I don't love it. As someone who's 0:07:14.160 --> 0:07:17.520 very crypto curious, drives to be off the grid, don't 0:07:17.560 --> 0:07:20.040 love it. But it's a fascinating story. And this little 0:07:20.080 --> 0:07:23.000 known company, I mean, it seems like it's fate is 0:07:23.440 --> 0:07:26.400 riding on a very very big claim. Exactly, I d 0:07:26.480 --> 0:07:28.880 dot me. Let's get into it. Blueberg New Senior economics 0:07:28.880 --> 0:07:31.680 writer Sean Donnan wrote it. He joins us on the 0:07:31.680 --> 0:07:35.000 phone in Maryland. Sean, it's an incredible read. First of all, 0:07:35.040 --> 0:07:38.000 I have to be quite honest, I didn't know about 0:07:38.000 --> 0:07:43.000 this company. I D dot ME Who are they Me? 0:07:43.320 --> 0:07:48.600 Is a company based in suburban Virginia. They are about 0:07:49.040 --> 0:07:52.680 a little over a decade old. It was created by 0:07:52.960 --> 0:07:56.800 two veterans who were at Harvard Business School together, a 0:07:57.080 --> 0:07:59.360 guy called Lake Hall and the guy called Matt Thompson, 0:07:59.560 --> 0:08:05.000 and originally was to try and set up a kind 0:08:05.000 --> 0:08:08.440 of marketplace targeting veterans. And they quickly ran into this 0:08:08.480 --> 0:08:11.040 issue of how do we verify that people have served 0:08:11.760 --> 0:08:15.560 and very quickly discovered that actually the software that they 0:08:15.600 --> 0:08:20.760 had which allowed veterans to verify their identity was actually 0:08:20.880 --> 0:08:24.640 the most powerful part of their business, and began focusing 0:08:24.680 --> 0:08:28.680 on on that. And you fast forward to and and 0:08:28.800 --> 0:08:33.160 the pandemic and UM I d ME as as as 0:08:33.160 --> 0:08:38.520 they're called, were hired by By the end of the pandemic, 0:08:38.520 --> 0:08:41.880 it was twenty seven states UH to try and verify 0:08:42.000 --> 0:08:45.960 the identity of people who are applying for unemployment benefits. 0:08:46.120 --> 0:08:49.600 And that was in the midst of a huge amount 0:08:49.600 --> 0:08:52.920 of money going out from Washington being managed by these 0:08:52.960 --> 0:08:56.960 different state agencies that were overwhelmed and also a real 0:08:57.160 --> 0:09:00.760 wave of fraud at the time and concerns about you know, 0:09:00.840 --> 0:09:03.360 and I feel like that was such a big, big trend. Hey, Joel, 0:09:03.360 --> 0:09:05.080 come on in on this. Joe Weber is the editor 0:09:05.160 --> 0:09:07.360 Bloomberg business Week magazine. I do feel like when all 0:09:07.360 --> 0:09:10.040 those benefits are coming out, we were finding out about 0:09:10.080 --> 0:09:13.240 problems in this system and and finding out company about 0:09:13.240 --> 0:09:16.839 companies like this one. Well that's right, and and I 0:09:16.960 --> 0:09:20.120 d ME really helps solve this problem. You know, this 0:09:20.240 --> 0:09:24.440 interface between government agencies and sort of the digital, the 0:09:24.480 --> 0:09:27.199 digital you I guess you could could think of it UM. 0:09:27.240 --> 0:09:31.240 And it really caught my attention. And and was this 0:09:31.360 --> 0:09:35.000 number that UM I d ME put it into the ether, 0:09:35.320 --> 0:09:38.840 which was this four billion dollars of fraud UM. And 0:09:38.880 --> 0:09:42.160 the moment that that was really introduced UM from from 0:09:42.200 --> 0:09:46.560 the company, I remember Sean just being like, well, that's 0:09:46.600 --> 0:09:49.960 a really big number. And so that kind of set 0:09:50.000 --> 0:09:52.040 off like our interest in it because we no one 0:09:52.320 --> 0:09:56.120 had really been able to actually connect dots to to 0:09:56.200 --> 0:09:59.280 anything that that big, and and boy it was big. 0:09:59.320 --> 0:10:01.040 And so I think one of the things that the 0:10:01.120 --> 0:10:03.680 story and the story begins with this is you know 0:10:03.720 --> 0:10:06.680 that there's this number that gets thrown out and all 0:10:06.720 --> 0:10:09.440 of a sudden, the apparatus kind of springs up around 0:10:09.440 --> 0:10:13.120 it too, to show how government might be getting taken 0:10:13.160 --> 0:10:17.000 advantage of that. You know, maybe maybe these programs shouldn't 0:10:17.040 --> 0:10:20.760 even um be around to begin with, because um, you 0:10:20.800 --> 0:10:24.360 know we're we're not able to actually execute them correctly. Um. 0:10:24.400 --> 0:10:26.920 But then I think it becomes more nuanced and Channa'll 0:10:26.920 --> 0:10:28.920 take it back over to you because that for under 0:10:29.280 --> 0:10:34.920 billion number, Uh, how real is it? How do we think? Yeah? So, 0:10:34.960 --> 0:10:37.240 I mean, what's we're really interesting is the CEO Blake 0:10:37.320 --> 0:10:40.400 Hall came out with assessment that essentially half of all 0:10:40.600 --> 0:10:43.560 unemployment benefits that have been paid out by Washington had 0:10:43.559 --> 0:10:47.719 been stolen by fraudsters. He was billing it as the 0:10:47.720 --> 0:10:52.440 biggest cyber heist uh in American history at the time. 0:10:52.480 --> 0:10:54.640 And at the time I was looking that he came 0:10:54.679 --> 0:10:57.080 out with that, I was doing some reporting on the 0:10:57.120 --> 0:11:00.080 unemployment system and people who were struggling to get of 0:11:00.120 --> 0:11:04.640 benefits that that they were owed at the time, and 0:11:04.679 --> 0:11:06.800 one of the things I kept hearing from people was 0:11:06.880 --> 0:11:10.040 that they were running into problems getting through I d 0:11:10.240 --> 0:11:16.079 ME s um verification and and essentially validating that they 0:11:16.080 --> 0:11:18.280 were who they said they were, and that a huge 0:11:18.400 --> 0:11:22.840 number of a of of claims were being held up 0:11:23.120 --> 0:11:25.120 because of this no system. So I I kind of 0:11:25.120 --> 0:11:28.640 immediately or fairly quickly got in touch with Joel and 0:11:28.880 --> 0:11:31.040 and some of my other editors and said, hey, we 0:11:31.320 --> 0:11:35.280 really should be digging into this UH more deeply and 0:11:35.360 --> 0:11:38.960 kind of interrogating this a bit more because and then 0:11:39.080 --> 0:11:41.000 you know, you scratch the surface little when you discover 0:11:41.120 --> 0:11:43.959 that I d ME actually last summer signed a contract 0:11:44.040 --> 0:11:47.199 with the I R S to help UH delivered the 0:11:47.280 --> 0:11:49.640 child tax credit payments that went out and so that 0:11:49.760 --> 0:11:52.679 if you set up an online account with the I 0:11:52.920 --> 0:11:55.040 r S, you have to use I d ME. Now 0:11:55.520 --> 0:11:58.679 they also have an account with the Social Security Administration. 0:11:59.040 --> 0:12:02.920 They also do work with the Veterans Affairs Department, which 0:12:03.000 --> 0:12:07.040 means veterans who are seeking medical care sometimes have to 0:12:07.080 --> 0:12:10.480 set up I d me account altogether. Now, I d 0:12:10.600 --> 0:12:14.160 me says it has sixty eight million registered users. That's 0:12:14.240 --> 0:12:17.599 one in four American adults who, whether they know it 0:12:17.800 --> 0:12:20.200 or not, have an id ME account where it sometimes 0:12:20.400 --> 0:12:23.719 verified their identity there. And it's becoming this kind of 0:12:23.880 --> 0:12:28.800 gatekeeper to government services and benefits. And we had the 0:12:28.960 --> 0:12:31.599 stress test in the pandemic with what happened in the 0:12:31.720 --> 0:12:35.439 unemployment system. And while I d ME says rightly that 0:12:35.559 --> 0:12:38.360 they stopped a lot of fraud and so on, they 0:12:38.400 --> 0:12:41.480 also had a lot of problems associated with their software 0:12:41.720 --> 0:12:45.040 that raised a lot of questions about who we should 0:12:45.040 --> 0:12:48.720 allow to be the kind of gatekeeper the government services 0:12:48.880 --> 0:12:52.319 and should it be a for profit private company. So, 0:12:52.520 --> 0:12:54.400 you know, one of the things that the story goes 0:12:54.440 --> 0:12:57.959 into is sort of this this Kaka esque world that 0:12:58.040 --> 0:13:01.240 can descend upon you in when you try to prove 0:13:01.800 --> 0:13:05.920 who you say you are, and that goes awry and 0:13:06.160 --> 0:13:08.439 worth mentioning that majority of people who use I d 0:13:08.600 --> 0:13:11.120 ME probably don't have this problem, but but how weird 0:13:11.200 --> 0:13:14.079 can it get? John? The identity purgatory, I think is 0:13:14.120 --> 0:13:18.959 what you called it. Yeah, and uh, one California state 0:13:19.000 --> 0:13:23.480 assemblyman called it identity verification jail essentially. And we've also 0:13:23.520 --> 0:13:28.479 had people out in California. Um, uh, we've had activists 0:13:28.520 --> 0:13:31.640 out there, you know, say, look, we're essentially convicting people 0:13:32.280 --> 0:13:36.880 of a crime simply you know, by algorithms, sometimes by 0:13:37.080 --> 0:13:40.079 blocking them from from benefits and forcing them into this 0:13:40.120 --> 0:13:44.600 appeals process. Look, it's I got a had a call 0:13:44.840 --> 0:13:48.160 today from and that right Warmington, who we quote in 0:13:48.200 --> 0:13:51.160 the story. He's a sixty five year old healthcare administrator. 0:13:51.240 --> 0:13:54.040 She just uh started work at a at at a 0:13:54.120 --> 0:13:57.719 community clinic. Recently. She's in a better place than she 0:13:57.880 --> 0:14:01.160 was a few months ago. Uh, but she spent a 0:14:01.280 --> 0:14:04.600 lot of her spring last year just trying to get 0:14:04.640 --> 0:14:06.679 through the I d ME system. And what she said 0:14:06.880 --> 0:14:09.240 it was it was like opening a door and running 0:14:09.240 --> 0:14:13.040 into a brick wall over and over again because when 0:14:13.120 --> 0:14:15.160 she tried, essentially one of the one of the issues 0:14:15.160 --> 0:14:17.920 that you take a selfie of yourself, they match that 0:14:18.200 --> 0:14:21.160 two scans of your driver's license or your passport or 0:14:21.720 --> 0:14:25.360 other document. There's a facial recognition software and it often 0:14:25.920 --> 0:14:29.760 doesn't work. And then when that doesn't work and you 0:14:29.800 --> 0:14:32.840 have three tries, you get locked out for seventy two hours. Eventually, 0:14:32.880 --> 0:14:36.360 in that right, Warrington's and the lawyers, and it was 0:14:36.520 --> 0:14:38.280 lawyers to help her get through the system. We get 0:14:38.320 --> 0:14:41.080 a runch on. But that's terrifying. Um. When I was 0:14:41.160 --> 0:14:44.160 reading that, Bloomberg News Senior economics writer Sean Donnin and 0:14:44.240 --> 0:14:46.400 of course they'll editor editor U Booberg Business Week this 0:14:46.440 --> 0:14:50.080 story in the magazine. Do check it out. This is 0:14:50.160 --> 0:14:54.120 Bloomberg Business Week with Carol Masser and Bloomberg Quick takes 0:14:54.200 --> 0:14:57.840 Tim Stinovic on Bloomberg Radio. Um, and we want to 0:14:57.880 --> 0:15:00.200 get to this next story. It is the most read 0:15:00.280 --> 0:15:03.320 on the Bloomberg terminal today. It's about an individual who 0:15:03.360 --> 0:15:05.640 says U s stocks are in a super bubble, so 0:15:05.800 --> 0:15:08.240 get ready for a super crash. Let's bring in Bloomberg 0:15:08.280 --> 0:15:10.440 News Editor at Large Eric Shatzker for more on his 0:15:10.520 --> 0:15:14.760 conversation with longtime value investor Jeremy Grantham. This conversation, by 0:15:14.800 --> 0:15:17.600 the way, to be featured in a front row segment 0:15:17.720 --> 0:15:21.160 next week. Eric's story. As I said on the Bloomberg 0:15:21.280 --> 0:15:23.320 Terminal and Eric is on the phone in New York City, Eric, 0:15:23.480 --> 0:15:26.400 good to have you here. Um, Jeremy Grantham, You know, 0:15:26.960 --> 0:15:29.560 give us a little context for our world. I think 0:15:29.560 --> 0:15:31.560 there's many out there who know who he is. There 0:15:31.560 --> 0:15:34.520 probably are some that don't. Sure for those who don't, 0:15:34.560 --> 0:15:37.160 he's a value investing legend. He's been in the markets 0:15:37.240 --> 0:15:41.160 for fifty years. He's been calling market bubbles almost as long. 0:15:42.320 --> 0:15:44.440 People think of him as a perma bear, But to 0:15:44.560 --> 0:15:48.360 be honest, the reputation is a little unfair. Yes, he 0:15:48.520 --> 0:15:52.480 has called bear markets before in Japan and the nineteen eighties, 0:15:53.040 --> 0:15:56.600 in tech stocks in the late nineties, early two thousands, 0:15:56.880 --> 0:16:00.240 and in the housing market heading into the financial crisis. 0:16:00.440 --> 0:16:03.000 But he has also at times been pretty constructive on 0:16:03.040 --> 0:16:06.080 the market. Back on March to nine of two thousand nine, 0:16:06.160 --> 0:16:09.840 the day the SMP five hit its post crisis low, 0:16:10.320 --> 0:16:12.560 he said it was time to get back into the market. 0:16:13.000 --> 0:16:16.320 But now, as you said, he's calling this a super bubble, 0:16:16.400 --> 0:16:19.280 only the fourth in one hundred years, and he is 0:16:19.360 --> 0:16:24.400 predicting one epic crash. And Eric, let's walk through some 0:16:24.600 --> 0:16:28.400 of the alarm bells that he's seeing. What what is 0:16:28.520 --> 0:16:32.360 giving him the confidence to say that this We are 0:16:32.440 --> 0:16:35.480 in the super bubble now and it could be polic soon. 0:16:36.200 --> 0:16:39.440 He says. The pattern that has played out in the past, 0:16:39.560 --> 0:16:44.160 in two thousand and in two thousand and eight, and 0:16:44.240 --> 0:16:46.320 also in Japan, I should add in the nineteen in 0:16:46.360 --> 0:16:50.000 the late nineteen eighties is repeating itself. First, there's what 0:16:50.120 --> 0:16:52.440 he calls a blowoff, which is a rapid run up 0:16:52.760 --> 0:16:57.080 inspectative stock prices, which we had uh in late two 0:16:57.160 --> 0:17:02.480 thousand excuse me late early. Then the most speculative names 0:17:02.560 --> 0:17:05.919 in the market start to collapse, and that began in February, 0:17:06.080 --> 0:17:08.959 and a good indicator of that is cathy Woods Arc 0:17:09.160 --> 0:17:12.800 Innovation e TM, which is down from its high. And 0:17:12.960 --> 0:17:16.919 then he says, stalk the typically outperform in a bull market, 0:17:17.040 --> 0:17:20.480 like the mid caps, the Russell two thousand begin to 0:17:20.640 --> 0:17:24.440 underperform the higher quality blue chip names, and that's exactly 0:17:24.520 --> 0:17:29.080 what played out. He says, that is a recipe for 0:17:29.480 --> 0:17:32.719 a crack in the market. And furthermore, this is all 0:17:32.800 --> 0:17:37.679 statistically based. If you look at the trend of the SMPF, 0:17:37.720 --> 0:17:40.560 I've hundred over a very long period of time. What's 0:17:40.560 --> 0:17:44.760 happening now is a multi sigma deviation from the trend 0:17:44.840 --> 0:17:47.679 and that has always, in his view, been followed by 0:17:47.760 --> 0:17:50.560 a market crash. All right, you did have a conversation 0:17:50.640 --> 0:17:52.359 with him. We want to play a little clip um 0:17:52.520 --> 0:17:55.040 and this is just a segment Eric where you ask 0:17:55.160 --> 0:17:58.000 Jeremy Grantham, if this is a sell off, what's the bottom? 0:17:58.119 --> 0:18:01.840 Check it out, everybody. I think the crazy behavior, the 0:18:01.960 --> 0:18:04.520 peak of crazy behavior is behind us, I really do. 0:18:05.000 --> 0:18:09.200 I think we're now in the by the dip mode, 0:18:09.280 --> 0:18:13.840 which the super bubbles specialize in. You don't have two 0:18:13.960 --> 0:18:20.480 years of buying frenzy dying overnight. Typically so even you 0:18:20.600 --> 0:18:24.280 had some magnificent rallies. And by the dip is the 0:18:24.320 --> 0:18:28.040 watchword of practically every brokerage house out there, and it 0:18:28.200 --> 0:18:32.560 always is. You never, almost never have a major brokerage 0:18:32.600 --> 0:18:37.640 house say the game's over, guys, duck, it doesn't happen. 0:18:37.680 --> 0:18:42.160 The commercial imperative is it's overwhelming to stay bullish. That's 0:18:42.160 --> 0:18:46.080 how you make money. That's Jeremy Grantham. Eric's conversation a 0:18:46.160 --> 0:18:49.840 front row conversation that you can hear and its entirety 0:18:49.920 --> 0:18:52.400 next week. You know, Eric. What's interesting is He's right. 0:18:53.000 --> 0:18:55.000 Every Wall Street house I feel like has been coming 0:18:55.040 --> 0:18:58.720 out since the sell off began this year saying we 0:18:58.920 --> 0:19:01.240 we eat bye bye. It's still okay, It's still okay, 0:19:01.680 --> 0:19:04.480 Jeremy Grantham, I mean, how do we as you said, 0:19:04.640 --> 0:19:07.440 he's made some great calls. I'm always I always wonder 0:19:07.520 --> 0:19:10.679 about one of these kind of iconic investment voices, how 0:19:10.800 --> 0:19:13.520 we should read them, because has he gotten everything right? 0:19:13.720 --> 0:19:16.280 Or you know, how do we know? No? No, no no, 0:19:16.480 --> 0:19:19.080 And that is where we have to bring some skepticism 0:19:19.160 --> 0:19:22.760 to the conversation. He's a value investor, and let's not 0:19:22.920 --> 0:19:25.800 forget that. In the years following the financial crisis, and 0:19:25.880 --> 0:19:29.680 not just a couple of years, a decade plus value 0:19:29.960 --> 0:19:34.119 grammatically underperformed. So anybody who listened to the value crowd 0:19:34.960 --> 0:19:38.359 ended up after those ten years a lot poorer, right, 0:19:38.440 --> 0:19:40.840 having missed out on a lot of potential gains they 0:19:40.880 --> 0:19:44.320 would have had with a much more diversified portfolio of stocks, 0:19:44.440 --> 0:19:49.159 embracing companies like Amazon, Facebook, Tesla and the like. And 0:19:49.320 --> 0:19:52.520 so you have to look at it into perspective. Um, 0:19:52.800 --> 0:19:56.760 there's no question that the market has reached some extraordinary highs. 0:19:57.560 --> 0:20:03.240 Back in November, the SMP five touched north, and he's 0:20:03.280 --> 0:20:05.520 saying that in the next crash is going to go 0:20:05.640 --> 0:20:09.920 down to That's where the long term historical norm is 0:20:10.080 --> 0:20:12.879 right now, he says, and I'll repeat that in every 0:20:12.960 --> 0:20:16.840 past super bubble, that is what's happened. And furthermore, this 0:20:17.040 --> 0:20:20.440 time around, the Fed really doesn't have much animal left 0:20:20.560 --> 0:20:25.520 because we're living in inflationary times and they can't pump 0:20:25.600 --> 0:20:28.400 liquidity into the market because that would amount to sort 0:20:28.440 --> 0:20:32.720 of gasoline on the inflation fire. Right. It's incredible, and 0:20:32.800 --> 0:20:36.160 as we said, the most read story on the Bloomberg today, Eric, 0:20:36.280 --> 0:20:38.679 thank you so much, Bloomberg News Editor at Large, Eric 0:20:38.760 --> 0:20:43.639 Shatska sharing some of what he talked about with Jeremy Grantham, 0:20:43.640 --> 0:20:46.399 as he mentioned longtime value investor. Check it out the 0:20:46.480 --> 0:20:50.160 story right now at Bloomberg dot com. This is Bloomberg Radio. 0:20:50.800 --> 0:20:54.359 You're listening to Bloomberg Business Week with Carol Masser and 0:20:54.480 --> 0:20:58.880 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. This week, 0:20:58.920 --> 0:21:03.000 the National Retail Federation and hosted its Retail Big Show. 0:21:03.040 --> 0:21:05.439 It happened in New York City virtually and in person. 0:21:05.560 --> 0:21:07.399 It comes at a time, Katie, when I feel like 0:21:07.480 --> 0:21:11.440 retail continues to adapt and embrace that omni channel strategy 0:21:11.480 --> 0:21:13.320 that everybody talks about, but they still are dealing with 0:21:13.400 --> 0:21:16.159 supply chain challenges and higher costs of doing business and 0:21:16.240 --> 0:21:19.040 just finding workers. Right, Absolutely, all those questions is too 0:21:19.080 --> 0:21:21.760 we try to figure out the state of the American consumer, 0:21:21.840 --> 0:21:25.200 what they're spending money on. One that shifts back to services. 0:21:25.240 --> 0:21:27.520 So really interesting time for retail. All right, Let's bring 0:21:27.560 --> 0:21:30.920 in Nicki Barchi's vice president of Retail Innovation over an Aptos. 0:21:31.040 --> 0:21:33.639 They provide hardware and software services to the retail industry. 0:21:33.680 --> 0:21:37.760 They've got clients like Adidas. B j's Louis Vuitton tapestry 0:21:38.119 --> 0:21:41.520 so many. She joins us on the phone from Denver, Nikki, 0:21:41.560 --> 0:21:43.359 good to have you here with us. How are you 0:21:43.560 --> 0:21:48.800 and how's the retail industry doing. I'm I'm good. I'm 0:21:48.920 --> 0:21:52.280 recovering from COVID myself, which probably is a good analogy 0:21:53.720 --> 0:21:58.600 industry is doing right now. On Yeah, I would say 0:21:58.720 --> 0:22:03.640 that the holidays season was amazing. It was beyond amazing, 0:22:03.720 --> 0:22:08.919 like better than even with the supply chain issues. Retailers 0:22:09.119 --> 0:22:11.600 didn't have to promote nearly so much. So a lot 0:22:11.680 --> 0:22:16.000 of those benefits, even in the face of inflation, really came, 0:22:16.320 --> 0:22:18.640 you know, to the bottom line of retailers, not something 0:22:18.720 --> 0:22:21.879 that they had to had to give away in in 0:22:22.080 --> 0:22:25.639 cost or and discounts from two consumers. So I know, 0:22:25.920 --> 0:22:28.840 some of the headlines had said that the monthly spending 0:22:28.880 --> 0:22:32.359 in December was down, but that was on numbers that 0:22:32.480 --> 0:22:36.640 year over year were amazingly up. And obviously, I mean 0:22:37.200 --> 0:22:40.760 behavior shifted during the pandemic. My behaviors definitely shifted during 0:22:40.760 --> 0:22:44.200 the pandemic, but so did how people spend money. Obviously, 0:22:44.480 --> 0:22:48.600 online shopping was huge during the pandemic. Still is I mean, 0:22:49.080 --> 0:22:52.720 what is the future of actual physical stores look like? 0:22:52.880 --> 0:22:56.760