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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along

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Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jay Leye. We bring

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Speaker 1: you insight from the best and economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg

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Speaker 1: dot com, and of course on the Bloomberg terminal. Let's

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Speaker 1: get to it right now, Charles Cancer and Bieberger Berman

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Speaker 1: Long Short Fund, City of portfolio manager and author of

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Speaker 1: the Cancer Sweet Green Index. What's going on? Charles? The

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Speaker 1: Sweet Green Index? I think references my my study of

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Speaker 1: how folks are coming back to work, and yesterday online

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Speaker 1: it was was almost a too our wait at at

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Speaker 1: twelve o'clock, which which for us like you in New York,

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Speaker 1: it feels good to get some vibracy back into into

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Speaker 1: midtown and folks are coming slowly back to work and

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Speaker 1: kids are going back to school. Also hopefully it's returned

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Speaker 1: to normal slowly. I look where we are, Charles cantor

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Speaker 1: right now in the sequence of interviews I've done with

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Speaker 1: thinkers who keep going back to the dreaded teword technology.

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Speaker 1: You you and your team are expert at this. The

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Speaker 1: overlay of technology seen Microsoft, Amazon, Whole Foods, the rest

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Speaker 1: of it, but unseen as well. Tell us about the

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Speaker 1: unseen technology now that makes you a bull owning stocks

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Speaker 1: look I think I think the technology goes to to

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Speaker 1: to to quality of business and and sometimes references forward thinking.

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Speaker 1: I think you Amazon example earlier, where you reference the

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Speaker 1: hiring is fascinating to us because it speaks to those

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Speaker 1: that have scale um and those that are forward thinking.

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Speaker 1: I think a lot of businesses out there are struggling

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Speaker 1: tremendously with with labor. They blaming to some degree the

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Speaker 1: stimulus um, which references the fact that people are getting

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Speaker 1: paid a lot, not to look um. As that gets

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Speaker 1: peeled back, I think folks are going to remind themselves

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Speaker 1: that it's really about competitive positioning and the lack of

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Speaker 1: forward thinking, and the lack of building a culture and

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Speaker 1: a pay system that really attracts and rewards the best talent,

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Speaker 1: and the lack of investing in technology and and all

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Speaker 1: of that technology investing is happening in some of the

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Speaker 1: best businesses that have come out of COVID as winners

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Speaker 1: and will remain winners because they're forward thinking and the

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Speaker 1: COVID experience for many businesses I think have revealed weaknesses

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Speaker 1: in in in investment decisions, whether it being supply chain,

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Speaker 1: in culture, in labor management. That and those seeds were

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Speaker 1: planted not last week, but many years ago. So Charles, well,

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Speaker 1: how dove tell this please into a market call? How

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Speaker 1: do you take this thesis that basically people are getting

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Speaker 1: exposed by the COVID even if they're hiding behind it,

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Speaker 1: and decide what to buy and what to short Because

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Speaker 1: for us, you know, I think we all like to

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Speaker 1: keep it simple and and and focus on the macro.

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Speaker 1: Focus on for you know, focus on is a growth

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Speaker 1: versus value. But as stock pickers and people that love

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Speaker 1: understanding nuance and fundamentals, we just don't think you can

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Speaker 1: paint this environment with with one with one brush. And

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Speaker 1: and value simply means that trades at a discount of

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Speaker 1: the market, and growth means that that revenues are strong.

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Speaker 1: The reality is in this environment you've got to be

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Speaker 1: painted a lot of attention to the middle of the

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Speaker 1: of the income statement, because I think businesses will continue

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Speaker 1: to suffer grows, margin degregation and potentially operating margin degregation

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Speaker 1: through forces driven by supply chain, cost, labor management, and

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Speaker 1: lack of competitive positioning, and so we will continue to

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Speaker 1: stay with with the beyond privilege, resilient and and and

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Speaker 1: kind of leading businesses, many of them sitting technology, but

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Speaker 1: they're sit in other industries as well. So I think

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Speaker 1: my word of caution is is to pay attention to

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Speaker 1: the details. Yes, revenue growth being fantastic because of kind

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Speaker 1: of a generational shifting in driven by demand coming out

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Speaker 1: of COVID, But as the dust settles into into next year,

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Speaker 1: I think it's going to be a focus back on

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Speaker 1: wait a minute, which businesses actually are built to lost,

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Speaker 1: who has the pricing power, who can hire the best labor,

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Speaker 1: and who has has much more diversified supply change that

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Speaker 1: can that can manage the global inconnect interconnected environment. And

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Speaker 1: so it's it's for us. It's going to be about

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Speaker 1: the companies. It hasn't really been because of the flood

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Speaker 1: of money um and and government stimulus and the like.

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Speaker 1: But at the end of the day, it's it's quality

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Speaker 1: of business that wins out. And and and what's an

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Speaker 1: example of this, if we can chance and forgive me

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Speaker 1: for jump again, give me an example of this right now,

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Speaker 1: who's gotting it done? What are your favorite lungs, well,

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Speaker 1: I think our favorite lung center a center in in

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Speaker 1: in in the technology space. We're big believers in Amazon

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Speaker 1: because of their scale. Were big believers in Adobe because

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Speaker 1: of their scale. I mean we we love the businesses

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Speaker 1: that are facilitating today's environment, and you find them in

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Speaker 1: business businesses that would include Microsoft and work Day and

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Speaker 1: businesses that are are maybe not as obvious to to

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Speaker 1: to to and are not discussed each and every day.

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Speaker 1: So so for us, the loans don't really change much.

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Speaker 1: They continue to compound, they continue to take market share,

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Speaker 1: and they continue to liver for share doers. I mean

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Speaker 1: Microsoft is an example. Yes, the forty billion dollars doesn't

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Speaker 1: really matter, but it's but it's it's a signal that

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Speaker 1: they have more capital that they know what to do with.

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Speaker 1: And like many companies, balance sheets are fantastic um and

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Speaker 1: and they're buying back they stoff. Look for us, it's

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Speaker 1: I would stay. I'd be very cautious on consumer facing

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Speaker 1: businesses that are going to face tremendous labor and supply

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Speaker 1: chain issues into Christmas um as well as industrial cyclicals

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Speaker 1: that are not going to have the pricing power necessary

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Speaker 1: to manage supply chain complexities was really important conversation. We

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Speaker 1: appreciate its sound to kick things elf this morning. Thank you,

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Speaker 1: sir as a wise child's kinds of that of Newberger

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Speaker 1: Berman Buck dem sty with us right now. Unfortunately we

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Speaker 1: have to move from the lightness of John's jetender to

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Speaker 1: the reality of the great unraveling. It is some Auckland,

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Speaker 1: New Zealand to Singapore in the last twenty four hours,

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Speaker 1: and now we come out to the reality of Saint Nashville, Tennessee,

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Speaker 1: or wherever you want to pick on back to the

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Speaker 1: direction is not good. We're up to eight hundred deaths.

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Speaker 1: We were at sixteen hundred two cups of coffee ago.

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Speaker 1: What direction do you observe on this pandemic nationally and globally?

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Speaker 1: The nationally the news is I think a little bit

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Speaker 1: more positive. But we're seeing is a plateau ng up

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Speaker 1: that peak that we have been experiencing for the lost week.

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Speaker 1: The deaths are still growing up, but previously we have

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Speaker 1: seen that there is a lag and the death we

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Speaker 1: would use as the pandemic its self plateaus. Globally, there

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Speaker 1: is hot pockets as countries that have managed to maintain

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Speaker 1: epidemic control have this low indulating rate of cases. Other

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Speaker 1: countries are seeing surgeries and trying to adapt accordingly. Um

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Speaker 1: there's still a number of countries globally where vaccine rates

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Speaker 1: are shut south of and that is problematic. You are

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Speaker 1: in emergency medicine with your international acclaim and epidemiology, what

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Speaker 1: do the people you know? And emergency medicine observed now

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Speaker 1: is different from a year ago, different from sixteen months ago,

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Speaker 1: so unfortunately a lack of difference from sixteen months ago.

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Speaker 1: So there's a difference in patients. But right now nationally

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Speaker 1: we have a shortage of resources. UM, I was working,

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Speaker 1: I'm gonna be working the overnight tomorrow night. I was

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Speaker 1: at working the overnight last week. UM My hospitals are full,

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Speaker 1: UM money hospitals on diversion, which is where the hospital

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Speaker 1: says we have no capacity, please find somewhere else to

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Speaker 1: receive care. There's long wait time to the ICU, and

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Speaker 1: the challenge that we're going to face is as the

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Speaker 1: COVID nineteen cases continue to be a recent high, we

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Speaker 1: are now about to face a flue pant flue surge

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Speaker 1: as well. And so you know, physicians everywhere we are

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Speaker 1: concerned that we do not have the resources to adequately

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Speaker 1: care for all the patients who are critically ill who

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Speaker 1: need them. Dr Han Sarti, how prepared are we for

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Speaker 1: another pandemic? Well as prepared as we could be. Right,

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Speaker 1: We've been doing the same thing the last eighteen months. Right,

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Speaker 1: So we have optimized um at a health facility level,

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Speaker 1: as a health system level, as much as possible. Right.

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Speaker 1: We have search preparedness plans, we have stockpiles a ppe,

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Speaker 1: we have the number of ventilators, we have a number

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Speaker 1: of ice, you beds, we have you have a critical

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Speaker 1: shortage of healthcare workers and especially nurses. So we are

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Speaker 1: running at maximum capacity. I don't know how you go

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Speaker 1: beyond maximum capacity. Well, I ask this because I've heard

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Speaker 1: a President Biden talk about getting a planting other to

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Speaker 1: combat more effectively the next pandemic. And there was a

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Speaker 1: study that was reported today from Duke In a number

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Speaker 1: of other medical researchers talking about other covid uh IF

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Speaker 1: infections that they are tracking around the world. I mean,

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Speaker 1: how much of a concern is this in the near

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Speaker 1: term versus just something that's going to happen once every

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Speaker 1: hundred years. Well, I wish it was one every hundred years.

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Speaker 1: I fear it will be more frequent now. There are

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Speaker 1: several variants of interests that have emerged. Um there's some

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Speaker 1: variants that higher transmissibility than COVID. We don't know how

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Speaker 1: that plays out, given that a significant proportion of the

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Speaker 1: American population is a vaccinated or be has had COVID.

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Speaker 1: And we also don't know if these newer variants are

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Speaker 1: likely to cause severe illness or mildest symptoms, which is

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Speaker 1: what I'm really praying for. Doctor gotta leave it that

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Speaker 1: about to Hansanty that John's Helpkins Associate Professor of Emergency Medicine.

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Speaker 1: This is a joy. He's a former Prime Minister of Latvia.

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Speaker 1: Far more, he is a physicist and I mean real

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Speaker 1: physicist with electrical engineering from the University of Maryland. Valdis

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Speaker 1: Dombrowsky is European commission Executive Vice President and Commissioner for Trade.

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Speaker 1: And what you need to know is a year ago,

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Speaker 1: eight months ago, ten months ago he was in the

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Speaker 1: Timeout chair over vaccination and he and others in Europe

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Speaker 1: have had the great success story of the turnaround of

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Speaker 1: Europe in vaccination. Prime Minister, thank you so much for

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Speaker 1: joining us today. How did you in Brussels in Europe

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Speaker 1: turnaround vaccination in Europe to sevent good morning. Indeed, as

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Speaker 1: regards vaccination campaign, by now more than seventy percent of

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Speaker 1: adual population in Europe are vaccinated. And what was important

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Speaker 1: is that European Union was acting on this as a whole,

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Speaker 1: so on behalf of the anti seven member states, we

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Speaker 1: were securing vaccines and that's what helps to secure this

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Speaker 1: availability because it's clear that the biggest and uh soorts

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Speaker 1: say richest EU countries could secure vaccines on their own,

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Speaker 1: but not the smallest anatonomically less developed countries. So we

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Speaker 1: ensure that vaccines are available across Europe and managed to

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Speaker 1: how a very effective vaccination campaign. Right, Prime Minister, how

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Speaker 1: did you sell unvaccinated people? The New York Times today,

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Speaker 1: Sir has a brilliant article and the failure of America

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Speaker 1: to convince the unvaccinated to get vaccinated? What was the

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Speaker 1: Dombrawski method? Well, first of all, it must be said

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Speaker 1: if you look at the vaccination rates in the EU,

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Speaker 1: there are also an E one. There are a number

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Speaker 1: of countries which are actually lugging behind. So there is

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Speaker 1: still lots of work also in the EU to convince

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Speaker 1: the pop relation to vaccinate, and we are still in

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Speaker 1: this work. Of course, vaccination campaigns are run by individual

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Speaker 1: member states, but we are helping all we can by

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Speaker 1: providing all necessary evidence, all necessary information, helping also to

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Speaker 1: counter disinformation fake news, which we see in this context.

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Speaker 1: So it's still an ongoing work, Commissioner, You've made tremendous progress.

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Speaker 1: Many people have acknowledged that over the last several months.

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Speaker 1: It's a real turnaround. Why do you think then, even

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Speaker 1: with this fantastic progress with vaccinations across the continent, the

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Speaker 1: Europe has struggled to get the United States to reciprocate

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Speaker 1: on things like travel. Why stand being so difficult? Well,

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Speaker 1: that's I would say a bit of general tendency. We

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Speaker 1: see during the pandemics that we have lots of disruption

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Speaker 1: for travel. Actually we had it within the EU, but

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Speaker 1: also there we managed by now to set up what

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Speaker 1: we call EU the just All COVID Certificate, where people

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Speaker 1: which how proof of vaccination or negative test or which

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Speaker 1: how process they actually had had COVID can travel without

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Speaker 1: additional restrictions. Within the U. Many countries in use neighborhood

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Speaker 1: are using this system. But of course, as regards other countries,

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Speaker 1: they take all their own decisions, and we're still in

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Speaker 1: continued dialogue also with us because of these things that

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Speaker 1: also from the U S side, you've code it continued dialogue.

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Speaker 1: Characterize how that dialogue is going for us right now?

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Speaker 1: Are you making progress? Are you further along now than

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Speaker 1: you were a month ago? Or were coming nowhere? Well? Uh,

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Speaker 1: it's at the end of the day decision for US

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Speaker 1: to take which third country residents they are admitting in

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Speaker 1: look at the epidomological data also as a reliability of

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Speaker 1: the COVID certificates which EU is providing to its citizens,

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Speaker 1: this is a good basis actually to leave those restrictions.

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Speaker 1: How different is it dealing with President Biden and President

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Speaker 1: Well as regards trade, it must be said that we

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Speaker 1: are now on a much more positive track with by

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Speaker 1: the administration. Already several months ago we resolved longstanding Herbus

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Speaker 1: Boeing dispute. We are now working on resolving another trade

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Speaker 1: irritant from Trump era, which is still and aluminium tariffs.

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Speaker 1: And later this month we will be launching a Trade

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Speaker 1: and Technology Council where we will be cooperating in these

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Speaker 1: areas of trade of new and emerging technologies. And we

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Speaker 1: think it's important that EU and US, being strategic allies,

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Speaker 1: being like minded partners, actually work together on those issues.

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Speaker 1: So what's the main point of agreement between the European

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Speaker 1: and the trade negotiations there? Well? As regards China, we

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Speaker 1: share a number of concerns as regards China's socio economic model,

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Speaker 1: like roll of state on enterprises and their competitive neutrality,

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Speaker 1: industrial subsidies and transparency as this UH forced technology transfers

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Speaker 1: intellectual property rights. So also there we agreed already in

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Speaker 1: the EU US summits that will be cooperating closely and

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Speaker 1: seek common approaches boss bilateral but also for example, in

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Speaker 1: the context of the foremost of all trade organization. Let's

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Speaker 1: hope we can make some progress. Commissioner always fantasy to

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Speaker 1: catch up with you, sir, Thank you for your time

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Speaker 1: this morning. That's the get there, get my words out.

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Speaker 1: Varis Dombroski is there. The European Commission Executive Vice President

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Speaker 1: and Commissioner of Trade in an important and different interview

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Speaker 1: here not nitpicking each moment about monetary policy and the

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Speaker 1: politics of Europe, and that would be with David Rubinstein,

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Speaker 1: peer to peer conversations. David joins us right now. What

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Speaker 1: was it like, David speaking to this different leguard. I've

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Speaker 1: known her for quite a while when she was ahead

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Speaker 1: of the i m F. She was the first woman

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Speaker 1: quite an important impact on the i m F, and

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Speaker 1: people were i'd say disappointed at the i mm that

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Speaker 1: she chose to leave, because after two terms she could

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Speaker 1: have had a third term. But I think Angela Merkel

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Speaker 1: really thought that a more important job for her was

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Speaker 1: to come back to Europe and run the European Central Bank,

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Speaker 1: where she's the first woman to do that, and she's

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Speaker 1: had a gigantic impact on the European Central Bank in

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Speaker 1: just the two years that she's been there, a lot

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Speaker 1: of criticisms, a lot of compare and contrast to the

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Speaker 1: previous leader. Mr Drogging occupied in Italy. Did you speak

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Speaker 1: to her of the interior politics of front for her

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Speaker 1: greeting and where she is right now. Well, I think

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Speaker 1: she feels she's got a pretty good grip on the

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Speaker 1: European Central Bank. She's an articulated policies which the bank

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Speaker 1: is pursuing, so they have a very clear policy now

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Speaker 1: of getting to two percent inflation. That's their real target,

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Speaker 1: not close to two percent, but two percent, which is

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Speaker 1: not easy to do, but that's what she wants to do.

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Speaker 1: She's also made it clear that the economic package they

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Speaker 1: put together to deal with COVID has worked, and maybe

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Speaker 1: better than they thought, because as you heard earlier, she

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Speaker 1: now thinks that they will recover to the gp GDP

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Speaker 1: levels they had before COVID in Europe by the end

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Speaker 1: of this year, which is really more than the United

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Speaker 1: States is doing. Perhaps one of the bigger challenges that

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Speaker 1: she has that the Federal Reserve does not is that

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Speaker 1: she's got a bit of a harder job hurting cats

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Speaker 1: than the Federal Reserve, which tends to remain a bit

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Speaker 1: more cohesive. Did she talk at all about trying to

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Speaker 1: keep a consistent message. It's such a tenuous moment. Yes,

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Speaker 1: For those who aren't familiar with the European Central Bank,

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Speaker 1: it's not like the Federal Reserve. The Federal Reserve is

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Speaker 1: in charge of monetary policy, but we have one part

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Speaker 1: of the one country that does physical policy. So we

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Speaker 1: have a physical policy for the United States and a

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Speaker 1: monetary policy in Europe. You have one monetary policy that

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Speaker 1: the e c B does, but each of the countries

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Speaker 1: have their own physical policy. So it is like hurting cats.

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Speaker 1: I uh, you know, said to her, somewhat facetiously, her

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Speaker 1: background as a national synchronized swimmer was that helpful in

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Speaker 1: enabling her to figure out how to get people to

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Speaker 1: work together, because she was a great synchronized swimmer. And

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Speaker 1: she now has an interesting situation where she has twenty

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Speaker 1: three central bankers of each of the countries and she

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Speaker 1: has to preside over that. Interestingly, she said, in many

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Speaker 1: of these meetings there are twenty two men and one woman.

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Speaker 1: And she said there's still amount of discrimination in Europe,

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Speaker 1: even though she's got this very lofty position. Uh, there

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Speaker 1: aren't that many women sitting in the meetings with her.

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Speaker 1: Do you think that she likes her job, David, Yes, Um,

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Speaker 1: she is a very very smart person who actually came

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Speaker 1: from France, United States for high school for a year,

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Speaker 1: and then she became the head of a major global

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Speaker 1: offer and the first woman to do that. I think

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Speaker 1: she relishes it in part because we didn't really talk

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Speaker 1: about this much on the air. But she now has

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Speaker 1: grand children and they live in Europe, and so she

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Speaker 1: has a chance to be back in Europe, and so

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Speaker 1: I think after living United States for about ten years,

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Speaker 1: she was ready to move back to Europe. David, we

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Speaker 1: have headlines at this moment, and I would be honored

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Speaker 1: to have your perspective of the final agreement of the

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Speaker 1: Canadian Pacific Company with Kansas City Southern. And as you know,

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Speaker 1: this is involved to Canadian giants, Canadian Pacific, in Canadian National,

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Speaker 1: in the US company as well strategic if you will,

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Speaker 1: in railroads. Is this what is to come in this

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Speaker 1: odd economy we're in, true? More mergers in combinations. I

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Speaker 1: do think you're going to see more mergers because people

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Speaker 1: fairly Uh. I would say, not inflated, but high value stocks.

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Speaker 1: And when you have high value stocks, you can use

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Speaker 1: that as a really good currency to make acquisitions. And

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Speaker 1: I would say the anti trust authorities in the United States, UH,

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Speaker 1: they try to deal with some of these problems, but

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Speaker 1: very few major acquisitions are being blocked right now, and

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Speaker 1: in fact, there is no an trust official in charge

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Speaker 1: of the Justice Department because no one's been confirmed yet,

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Speaker 1: and so it's gonna take a while before I think

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Speaker 1: you've got the n I trust authorities catching up to

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Speaker 1: some of the all the acquisitions that are being done.

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Speaker 1: Maybe they're good acquisitions, but I don't know whether we

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Speaker 1: have the authorities yet. Really is focused on some of these.

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Speaker 1: Is private capital, private equity? How has that change transactions

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Speaker 1: and combinations? It seems like a new player has added

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Speaker 1: ever more money, more capital to the fire. Well, it's

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Speaker 1: not only private equity firms, but you now have UH

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Speaker 1: sovereign wealth funds which you're doing deals directly. And you

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Speaker 1: also have a new phenomenon family offices. Family office as

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Speaker 1: are doing deals directly as well. So it seems as

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Speaker 1: if there's not a lack of capital, plenty of deal

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Speaker 1: doing is going on. And until the FED raises interest

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Speaker 1: rates and until the economy slows down, I don't think

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Speaker 1: you're going to see any change in what we now

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Speaker 1: see in terms of lots of deals being done, lots

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Speaker 1: of investments at relatively high valuations. All right, before we

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Speaker 1: let you go, David, you did ask Christine Leguard about

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Speaker 1: working from home and when they actually start to gather

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Speaker 1: as a group. And I'm wondering, from your perspective, what's

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Speaker 1: the new September we've been talking about when people will

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Speaker 1: get back to the offices. For Carlisle Group, for the

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Speaker 1: companies that you speak with, when is the new time

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Speaker 1: to return. Well, at Carlisle, we have reopened our offices

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Speaker 1: UM after Labor Day, but we're not saying that everybody

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Speaker 1: has to come in, because everybody has to deal with

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Speaker 1: their own situation. We do think, uh in the United States,

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Speaker 1: that people will be coming back to work, but I

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Speaker 1: don't think you're gonna see anywhere in the United States

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Speaker 1: people coming back to work five days a week at

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Speaker 1: quite the pace they did before. Some firms will do

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Speaker 1: four days a week, maybe three days a week. In

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Speaker 1: terms of asking their people to come in, Carlos policy

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Speaker 1: is to have people come in a number of days

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Speaker 1: a week, but we're not selling them exactly what days

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Speaker 1: they have to come in UM. But each company has

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Speaker 1: to feel it its own way. I don't think we're

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Speaker 1: going back to the way we used to work, which

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Speaker 1: is five days a week, nine to five, And I

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Speaker 1: just don't think that's gonna happen in the office now,

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Speaker 1: David again, congratulations on your new book, that piece with

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Speaker 1: Ken Burns. Of course, out with Muhammad Ali right now.

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Speaker 1: Mr Rubinstein, the Carlisle Group, co founder, co chairman, peer

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Speaker 1: to peer conversations with Christine Legard. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from

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Speaker 1: seven to ten am Eastern on Bloomberg Radio and on

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Speaker 1: Bloomberg Television each day from six to nine am for

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: And subscribe to the Surveillance podcast on Apple podcast, SoundCloud,

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Speaker 1: Bloomberg dot com, and of course on the terminal. I'm

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Speaker 1: Tom keene In. This is Bloomer