Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. We continue to be reminded
Speaker 1: by many headlines that we are still in a health crisis,
Speaker 1: a health pandemic, and among the headlines that we're really
Speaker 1: watching out for and monitoring today, as we had Israel
Speaker 1: lowering the minimum age for boosters to thirty from forty,
Speaker 1: German Chancellor Angela Merkel coming out saying measures currently in
Speaker 1: place to curb the virus remained sufficient, even as infection
Speaker 1: numbers tied to the spread of the Delta varritor on
Speaker 1: the rise and the number of UK workers going to
Speaker 1: the office that's increasing. We're tracking that really closely, and
Speaker 1: then traffic on China's typically busy streets that has shown
Speaker 1: some signs of recovery after the country quashed a resurgence
Speaker 1: in COVID cases. And there's also a study out saying
Speaker 1: India may face an unprecedented six hundred thousand new infections
Speaker 1: a day if the nation fails to boost the pace
Speaker 1: of shots. So that's some of the key headlines. I
Speaker 1: also want to point out that Dr Anthony Faucci, of course,
Speaker 1: one of the voices that we've turned to increasingly, of course,
Speaker 1: over the course of the pandemic is White House COVID
Speaker 1: advisor Dr Anthony Faucci. He had some comments on MSNBC
Speaker 1: earlier today on what a third vaccine may mean. Listen up.
Speaker 1: So we may not have to get a variant specific boost.
Speaker 1: We're preparing for it, we're doing clinical trials with it.
Speaker 1: But the data that we've seen right now indicate that
Speaker 1: we may be able to get a good response that
Speaker 1: covers the boosts by the original VEXX, that covers the
Speaker 1: variance excuse me, by the by the original vaccine that
Speaker 1: we got. I believe it's entirely conceivable that this third
Speaker 1: dose superimposed upon the two doses of MODERNA and FISA
Speaker 1: very well may allow for a rather prolonged period of protection.
Speaker 1: And that, of course is Dr Anthony Fauci, White House
Speaker 1: COVID Advisor, speaking earlier on MSNBC. And what's interesting is
Speaker 1: there have been many from the medical community thinking that
Speaker 1: we might need to get a COVID booster shot every year,
Speaker 1: just like many of us get a flu shot. So
Speaker 1: that comment from Dr faucing that observation could maybe change
Speaker 1: things going forward. All of this happening when we've got
Speaker 1: cases topping two hundred twelve point seven million deaths passing
Speaker 1: four point four million. These are global numbers. And as
Speaker 1: for the vaccine, more than four point nine billion doses
Speaker 1: have been administered so far. Alright, So a lot going on,
Speaker 1: and we know it's not a straight line when it
Speaker 1: comes to moving beyond this crisis. Back with us as
Speaker 1: Dr Vino Pali, He's founder and CEO of My Doctor,
Speaker 1: Urgent k are also the chief COVID vaccine officer at
Speaker 1: My Doctor with us once again on the phone in
Speaker 1: New York City. Dr Paley, good to have you back
Speaker 1: here on Bloomberg Radio. How are you and give us
Speaker 1: an update on the COVID cases that you are seeing currently.
Speaker 1: Hi Carol, great to be a view, Yes, doing great. Uh, definitely,
Speaker 1: COVID case of been going up with the Delta variant.
Speaker 1: We're in New York City, will be a very diverse population.
Speaker 1: Although we have very good vaccination numbers in New York City,
Speaker 1: we still have a certain percentage of people who are
Speaker 1: not vaccinated. So we are seeing these cases both in
Speaker 1: the y are in in the claim the origin care
Speaker 1: is anything different from the first or second or third
Speaker 1: way that we've seen of COVID cases as a result
Speaker 1: of the variant. The Delta variant is something different. So
Speaker 1: Delta VATAN definitely presents a little bit different presence with
Speaker 1: more flue license and school license and um. And of
Speaker 1: course it's highly contagious as we know. Unlike the first
Speaker 1: two of the Alpha variant. Maybe you saw a loss
Speaker 1: of smell and taste, you don't see as much with
Speaker 1: the Delta variant. But definitely it's a little bit different
Speaker 1: presentation and it affects more severely and unvaccinated folks. How
Speaker 1: do you well, First of all, I want to ask
Speaker 1: you demographics. I know some of the things that we've
Speaker 1: seen it's been younger individuals. I'm curious if you're seeing
Speaker 1: some of that as well. I also read something I
Speaker 1: think it was yesterday about pregnant women in some areas
Speaker 1: because they haven't gotten the vaccine UM leading to some
Speaker 1: really serious outcomes. Right, So, so, so we do know that,
Speaker 1: uh for first, let me talk about the pregnant folks.
Speaker 1: We do know that COVID affects pregnant people differently that
Speaker 1: at the higher risk of severe illness, hospitalizations, going on
Speaker 1: a ventilator, or even UH directors for death. UM. You
Speaker 1: know that from initial data. We also know that COVID
Speaker 1: causes pe term UH, pe term labor um and other
Speaker 1: adverse events. So vaccinating pregnant women is definitely helpful and
Speaker 1: there is no safety issues that we have seen from
Speaker 1: the data that we have so far. So currently CDC
Speaker 1: is recommending pregnant folks get vaccinated and even UM mothers
Speaker 1: of our best meeting their infant should get vaccinated. Let's
Speaker 1: talk about younger, young younger folks that you ask Carold. Definitely,
Speaker 1: the hospitalization and hospitalizations have gone up, infection grades have
Speaker 1: gone up in younger folks now, so I think it's
Speaker 1: a perfect timing to vaccinate children, you know, especially truland
Speaker 1: over as CDC has recommended, So we need to move
Speaker 1: forward with vaccinating children as well. A lot of paper
Speaker 1: parents are hesitancy wanted to look at data now that
Speaker 1: stas a group of FISER vaccine. I think the parents
Speaker 1: should be encouraged to vaccinate their cares well. And how
Speaker 1: do you see the FDA full approval of the FISER
Speaker 1: by in tech vaccine. How do you see that may
Speaker 1: be really helping the situation and encouraging those who may
Speaker 1: be decided not to get the vaccine as of yet
Speaker 1: to maybe go out and get it. Are you seeing
Speaker 1: any signs of it um impacting the number of people
Speaker 1: getting that vaccine. I think it's definitely going to persuade people,
Speaker 1: people who are hesitantly, you know, as we know that
Speaker 1: thirty of unvaccinated folks in surveys up said that they
Speaker 1: would get the vaccine. Fau A grouse to vaccines completely,
Speaker 1: not just emergency authorization, So so I think that should
Speaker 1: persuade more people to come forward. And in our own
Speaker 1: clinics we're seeing people making more appointments to get vaccines. Now, yeah,
Speaker 1: I feel like it's it's and I know I think
Speaker 1: Dr Facci made some comments I was reading in earlier
Speaker 1: today about expectations for the Maderna vaccine to get FDA
Speaker 1: full approval, and I think the J and J vaccine
Speaker 1: as well. Can you, with any uh confidence, look ahead
Speaker 1: to six months, eight months or something and say it
Speaker 1: will feel a lot more normal It does already compared
Speaker 1: to a year ago, obviously, But I just wonder what
Speaker 1: kind of visibility do you feel like you have when
Speaker 1: you look out at what we've come through, where we
Speaker 1: are today, and where we might be going. I think
Speaker 1: we'll definitely we're definitely going in the right direction. In
Speaker 1: adding these appear of food vaccines with more modern engage
Speaker 1: coming out in a few months or probably end up
Speaker 1: in September October. I think it's going to boost more
Speaker 1: confidence and people getting vaccinated. Uh. I think as we
Speaker 1: increase numbers in terms of vaccination, we should be able
Speaker 1: to see less number of case and hopefully we'll get
Speaker 1: back to some semblance of normalcy. But at the same time,
Speaker 1: I think we shouldn't forget some of the public health measures,
Speaker 1: especially in large gatherings schools, where you should still continue
Speaker 1: to wear masks and protect yourself, and I think combining
Speaker 1: all these measures with the vaccination is definitely I think
Speaker 1: we're going to have a pasty outlock. We're talking with
Speaker 1: Dr Polly, He's founder and CEO at my Doctor Urgent
Speaker 1: Care with us on the phone in New York City.
Speaker 1: Dr Polly, you are on the front line. You're seeing
Speaker 1: COVID cases, You're seeing treatment, You're seeing the trends as
Speaker 1: they go up and they go down depending on where
Speaker 1: we are in this health crisis. You've also gone out
Speaker 1: to communities to talk to people who are among the unvaccinated.
Speaker 1: Tell me about some of those experiences and whether or
Speaker 1: not you're able to to to to, you know, convince
Speaker 1: people to to actually get the vaccine. Absolutely. You know,
Speaker 1: vaccine hesitancy and vaccine lest information has been another epidemic
Speaker 1: that we're dealing within this pandanic So we do to
Speaker 1: go out into the community talk to folks. I know,
Speaker 1: especially in New York City, you have several African American folks,
Speaker 1: Hispanic folks who are very healthy tom to get vaccine,
Speaker 1: and we have several examples where we have to continuously
Speaker 1: go and educate them about the safety and efficacy. UM
Speaker 1: So we we've we've definitely seen positive impact of that
Speaker 1: and people coming to the clinic and making appointments and
Speaker 1: getting vacant. There's still a small percentage who are on
Speaker 1: the who are still on the boarder whether to get
Speaker 1: vaccine or not. And I hope the fd a fluel
Speaker 1: in a fluing booster shock might help them with their
Speaker 1: confidence in getting vaccination. Yet yeah, no, And I am
Speaker 1: curious about you know, when people is it just when
Speaker 1: they say this is why I'm not getting it. Is
Speaker 1: it because the approval or is there something else going on? Uh,
Speaker 1: in terms of their thinking and they're how they're coming
Speaker 1: to conclude 's about the vaccine when you have those conversations,
Speaker 1: some people were waiting for their proval. But there's there's
Speaker 1: a small fraction of people that you know, don't believe
Speaker 1: that COVID actually exists, and that's kind of sad. And
Speaker 1: I think there's so much misinformation about that on social
Speaker 1: media that is somewhat difficult to combat. But hopefully tide
Speaker 1: will turn over and people um will see the truth
Speaker 1: and and the scientific facts that you're presenting, and hopefully
Speaker 1: they will also be converted. But I think what we
Speaker 1: need is the majority of the population to be vaccinated
Speaker 1: to get to that herd immunity. Uh. And hopefully you know,
Speaker 1: other countries are able to vaccinate their own people so
Speaker 1: we can prevent mutake further mutations of the squireus. Interestingly enough,
Speaker 1: uh and not surprising, we've seen the debate about masks
Speaker 1: still playing out, especially among the names school systems, especially
Speaker 1: at schools start to Some have already reopened, specially in
Speaker 1: the South, but as they opened here in the Northeast
Speaker 1: as well, South Carolina's second larger school system, they inserted
Speaker 1: them their self itself into the center of that debate
Speaker 1: last week when it voted by a landslide to mandate
Speaker 1: face masks, so they defied the state's ban on such measures.
Speaker 1: As the delta spread continued in the South. What are
Speaker 1: you anticipating as we are fully back to schools in
Speaker 1: the fall, especially among many kids who are not yet vaccinated,
Speaker 1: should we expect to see an uptick in cases? Carol?
Speaker 1: I'm going to tellious sciences with us right, masking just
Speaker 1: based on scientific back So definitely of schools or parents
Speaker 1: or teachers don't follow these masking mandates or recommendations, well, definitely,
Speaker 1: do you see uptake in schools and certain communities and
Speaker 1: certain states like the states who are men sing um um.
Speaker 1: I think people need to understand vaccination alone is not
Speaker 1: going to solve the problem. Especially vaccines are not a
Speaker 1: group for kids below twelve years, so so we really
Speaker 1: need to follow other public help measures, especially masking. You know,
Speaker 1: it's interesting, I'm thinking where I was a year ago
Speaker 1: and how things were feeling, and you know, we were
Speaker 1: coming up the summer where things started to feel better,
Speaker 1: and then we all of a sudden came into the
Speaker 1: fall in the winter and we knew things got worse again.
Speaker 1: Are we in a different place twelve months later because
Speaker 1: of the vaccine? I think we your but will be
Speaker 1: in a better place probably next year once we get
Speaker 1: the majority of people vaccinated. You know, you're right, You're
Speaker 1: absolutely like Hett when you said you know things were
Speaker 1: getting better, but also said I think we be a
Speaker 1: somewhat prematurely. We drew some of the public health measures. Uh.
Speaker 1: All this mixing up vaccinated and unvaccinated folks and the
Speaker 1: deltivating is coming in change the entire dynamic. But I
Speaker 1: think that the good news right now is two things.
Speaker 1: The approval of fighter vaccine and the booster vaccine. So
Speaker 1: I think we will be in a we will definitely
Speaker 1: be in a better place, um like fun next summer,
Speaker 1: right next summer. Uh. And I am curious to what
Speaker 1: you think about You know, we kicked this off earlier.
Speaker 1: We mentioned Dr Anthony Faucci, obviously a go to voice
Speaker 1: throughout this pandemic, and talking about a third vaccine and
Speaker 1: what it may mean, and that I think we were
Speaker 1: Dr Paley believing that we would be needing to get
Speaker 1: a booster perhaps every year, just like we get a
Speaker 1: flu shot to deal with COVID specifically, and Anthony Fauci,
Speaker 1: Dr Anthony Fauci now saying maybe we don't need that,
Speaker 1: maybe that that third booster shot will do enough to
Speaker 1: boost our immunity for a longer period of time. What
Speaker 1: are the conversations that you're having among your medical pers uh,
Speaker 1: and what you're seeing and reading? How do you how
Speaker 1: do you think about that? So? So I think so
Speaker 1: the question is the void is schoosed to do and
Speaker 1: it's basically dropping off the immunity that we've already gotten
Speaker 1: from two shots. So it's adding additional layer and probably
Speaker 1: you know, expanding it to further a few more months
Speaker 1: or hopefully to uh near completely here. So it all
Speaker 1: depends on what this virus is going to do. I think,
Speaker 1: what conditions are going to present to this virus. If
Speaker 1: it's mutates into a different variant or more virial and
Speaker 1: more contagious medium, of course we will need a booster,
Speaker 1: and we might even need a mutation specific booster. So
Speaker 1: right now, the current vaccines that we have are very
Speaker 1: effective against delta variant. But let's say, for you know,
Speaker 1: if things are not done right, uh, you know, with
Speaker 1: all these masking mandates, if you're not calling public health measures,
Speaker 1: if not enough people are vaccine needed, the virus will
Speaker 1: have chance to mutate more and become more virulent, and
Speaker 1: then of course we'll have to then think about actional booster.
Speaker 1: But time will tell. I don't think we can predict
Speaker 1: right now if you need it nearly vaccine or not.
Speaker 1: Hopefully I hope that's not the case and we should
Speaker 1: hopefully we'll be done with this thing sooner. But if not,
Speaker 1: you know, we'll, you know, we'll look at the data,
Speaker 1: We'll look at science and see if you'll need any
Speaker 1: more early shots are not. The worst gar scenario would
Speaker 1: be to have to you know, to to have shots
Speaker 1: like to you know, every year, probably not as uh,
Speaker 1: you know, as much needed as possible. Hopefully we can
Speaker 1: prevent that. But let's see fingers crossed on that one. Hey,
Speaker 1: one last question. I think the expectation was that we
Speaker 1: were going to go through the entire Greek alphabet when
Speaker 1: it came to variants, is that still to common? And
Speaker 1: could we still get a variant that's even worse than
Speaker 1: the delta variant? I think they are still looking at
Speaker 1: a couple more variants. Uh there was delta delta plus
Speaker 1: variant we mentioned, and then the Ganda variant. But I
Speaker 1: think they are not variants of concern at this point,
Speaker 1: but they're still they're they're still being looked at by
Speaker 1: scientists all over the world, and you're looking at from CDC.
Speaker 1: So I think we won't go through the entire week alphabet, right, Uh,
Speaker 1: you know, I know, I hope not. But but there
Speaker 1: are variants that they're looking at, but they're not as
Speaker 1: new Ryland or as contagious as of now. All right,
Speaker 1: kind of leave it on that note. A deep deep
Speaker 1: dive into the COVID headlines on this Tuesday, August dr
Speaker 1: you know PAULI, thank you so much. He is founder
Speaker 1: in chief executive officer of my Doctor Urgent Care, on
Speaker 1: the phone from New York City. I want to mention
Speaker 1: one other headline involving COVID. The effectiveness of vaccines among
Speaker 1: frontline workers declined to sixty six percent after the delta
Speaker 1: variant became dominant, compared with nine before it a rose.
Speaker 1: This is according to report from the CDC, the Centers
Speaker 1: for Disease Control and Prevention. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. You are listening to Bloomberg Business Well, the
Speaker 1: headlines continue to come out regarding the crisis in Afghanistan.
Speaker 1: As we mentioned, we are waiting some comments from President Biden,
Speaker 1: expected to make them from the White House at any moment.
Speaker 1: Get that update, will take you there live when it begins.
Speaker 1: Many though, many aspects to this story we know that,
Speaker 1: including how the Afghan war is turning a U. S
Speaker 1: Military startup into a unicorn. So let's get into that story.
Speaker 1: It's featured in the new issue of Business Week out
Speaker 1: later this week, online at business week dot com and
Speaker 1: on the Bloomberg Terminal. It's also among our most read
Speaker 1: stories on the Bloomberg Today. So here to tell us
Speaker 1: more is Bloomberg Business Week Technology editor Joshua Brucetein. He
Speaker 1: is on the phone in New York City. Hey, Joshua,
Speaker 1: good to have you here with us. So who is
Speaker 1: this company? Thanks Carol. The company is called Field dot
Speaker 1: Ai UM and it was started by a former Navy
Speaker 1: seal who served in Afghanistan and elsewhere overseas and was
Speaker 1: trying to solve a problem that was pretty specific to
Speaker 1: those deployments, which was entering buildings and contested areas. UM
Speaker 1: he built a type of drone, a small drone that
Speaker 1: they would send into buildings in advance that would map
Speaker 1: the space and send video to troops outside, flying autonomously
Speaker 1: in buildings um and that would allow them to enter
Speaker 1: if you know, if there were no enemy combatants inside. UM.
Speaker 1: So Shield has, as you said, has become a unicorn.
Speaker 1: It's just raised about two million dollars and bought several
Speaker 1: other technology companies in an attempt to move beyond that
Speaker 1: specific application and start doing things more relevant to the
Speaker 1: type of wars America might fight in the future. Specifically,
Speaker 1: against UM enemies like UM, I should say rivals like
Speaker 1: China and Russia. So what are those? Because I have
Speaker 1: to say to be fair and is it sounds so simple, right,
Speaker 1: and it makes sense and it sounds so logical, right. Yeah,
Speaker 1: let's throw drone drones into kind of basically map out
Speaker 1: the space and check out the security. So where else
Speaker 1: can they take this? Yeah? I think the idea here
Speaker 1: UM for SHIELD is that they could take the UM
Speaker 1: autonomous software they've been developing for this one application and
Speaker 1: apply it to other things, maybe trying to have UM
Speaker 1: communication between semi autonomous fighter jets they are patrolling a
Speaker 1: coast UM or UM or you know, networks, networks of
Speaker 1: vehicles both small and large. It's sort of open ended
Speaker 1: at this point, I think, UM, and they're really just
Speaker 1: trying to look at, you know, where the U. S.
Speaker 1: Military is trying to take artificial intelligence, which is one
Speaker 1: of the big questions UM, you know for the pentic
Speaker 1: on itself. Yeah, I was gonna say, how comfortable are
Speaker 1: they with this? It's interesting. I think one of the
Speaker 1: one of the aspects of having these small drones that
Speaker 1: are surveys that we're serving in a relatively low stakes environment,
Speaker 1: just you know, sending video from one side of a
Speaker 1: wolf to another. Is that they slowly started to build
Speaker 1: up some trust within the military for using these things
Speaker 1: in UM in bigger, more complicated and frankly more dangerous situations. UM.
Speaker 1: But I think that you know, there isn't full trust
Speaker 1: in these sort of systems is in the military, just
Speaker 1: like you know, anyone who's looking at relying on artificial
Speaker 1: intelligence is still questioning like is this stuff really going
Speaker 1: to work all the time when it matters well? And Joshua,
Speaker 1: I wonder how much of their success right now is
Speaker 1: military contracts? Is it all of it? Yeah? Right now,
Speaker 1: Shield only does military contracting UM. Interestingly, they said to
Speaker 1: me that they were interested in potential commercial applications. I
Speaker 1: think those are mostly around mapping and also maybe working
Speaker 1: UM on domestic law enforcement, which is an interesting and
Speaker 1: somewhat controversial spin on pretty much on a lot of
Speaker 1: military hardware and end systems that you know, maybe police
Speaker 1: de wartments and states we want to use UM some
Speaker 1: of them, some of the surveillance type capabilities that they're building. Obviously,
Speaker 1: that's probably going to be a big fight in some
Speaker 1: of the cities where they would be trying to do that.
Speaker 1: It does sound you know, we had a conversation with
Speaker 1: the Raytheon CEO, Greg Hayes. He joined us here on
Speaker 1: Bloomberg Business Week on radio and TV, and we talked about,
Speaker 1: you know, kind of where things are going, certainly on
Speaker 1: the defense side. He talked about things about hypersonic weapons
Speaker 1: which are super fast, um, but also using AI in
Speaker 1: different things when it comes to aerospace and and obviously
Speaker 1: that leads to military a slow problem. You know, maybe
Speaker 1: it's a slow process, but it does sound like this
Speaker 1: is a company that, if they are on the cutting edge,
Speaker 1: could stand to benefit longer term. Yeah. I think that
Speaker 1: this is the shift that a lot of smaller technology
Speaker 1: companies that have basically not been able to get any
Speaker 1: sort of foothold within in the Pentagon. See. Um, if
Speaker 1: we're moving towards software systems that aren't the historic competence
Speaker 1: of the large defense contractors, then maybe there's room for
Speaker 1: new players, especially as you know the U. S. Military
Speaker 1: is trying to do things that hasn't done before. Um.
Speaker 1: But you know, I think it's a sort of wide
Speaker 1: open space. No, it's interesting and well and I love
Speaker 1: the stats that you conclude. I mean you say that
Speaker 1: this company got about seventeen million in military contracts. Sounds
Speaker 1: like a pretty decent contract. But as you say, the
Speaker 1: Pentagon's budget regularly exceeds seven hundred billions, So this is
Speaker 1: just a fleck of dust, right in terms of their
Speaker 1: overall spending. Yeah, Like you're not even buying a single
Speaker 1: fighter jet for that kind of money. So there's a
Speaker 1: it's a it's a it seems like a lot, but
Speaker 1: it's not much. I'm curious, UM, talk to me because
Speaker 1: you're writ about a little bit about the background of
Speaker 1: this company too, and I think about juxtaposing that against
Speaker 1: what's been going on in Afghanistan. Well, the company, UM,
Speaker 1: the company, as I said, sort of got its start
Speaker 1: in these wars that the United States has been fighting
Speaker 1: since nine eleven UM in both Afghanistan and Iraq. Um
Speaker 1: they've also been their their technology has been used in Syria.
Speaker 1: And you know, as the United States has spent the
Speaker 1: last two decades sending UM people overseas to fight in
Speaker 1: these situations, they've discovered they've discovered a lot of a
Speaker 1: lot of new problems and challenges and you know, so
Speaker 1: they just kind of built a technology that was specifically
Speaker 1: aimed at those um at those situations, and now we're saying,
Speaker 1: you know, what else can we do with this right?
Speaker 1: And and the individuals who are involved in either founding
Speaker 1: or co founding the company, or senior executives in the company,
Speaker 1: I mean, these are people who and individuals who know
Speaker 1: people who are trying to get out of Afghanistan or
Speaker 1: hopefully got out by this time. Other Americans. Yeah. Absolutely.
Speaker 1: I talked to a number of of Shield employees over
Speaker 1: the last um week or two, and a lot of
Speaker 1: them were spending a lot of time texting people I knew,
Speaker 1: calling people they knew, trying to get friends out. I know.
Speaker 1: I talked to one of the people I talked to
Speaker 1: just sent me a textas morning saying that a family
Speaker 1: that they knew had managed to get out of the country.
Speaker 1: And I think that looms pretty large for them at
Speaker 1: the moment. You cover this world, you cover high tech
Speaker 1: tech overall. I'm going to be catching up with Kathy
Speaker 1: Would a little bit later on who is all about
Speaker 1: disruption innovation? And I do wonder and I've got to
Speaker 1: maybe put this question to her as well. But for
Speaker 1: something like the military that has been so entrenched in
Speaker 1: certain ways, but increasingly uber high tech. I mean, it
Speaker 1: seems like this is also an area where we'll see
Speaker 1: and continue to see a lot of innovation, a lot
Speaker 1: of disruption in terms of how we fight wars. We've
Speaker 1: already seen it. We talked about kind of how they
Speaker 1: are much more akin to playing a video game. Things
Speaker 1: have changed dramatically, But my gut says, and based on
Speaker 1: some of the reporting that you do and others, that
Speaker 1: there's still a lot more to come in terms of
Speaker 1: disruption of the military. Yeah. I think that this is
Speaker 1: this is one of the big strate egict priorities of
Speaker 1: the military. UM. And there's a lot of tension UM
Speaker 1: that's going to come with those developments. Um. You know,
Speaker 1: I mean people in defense circles talk about AI is
Speaker 1: the next big arms race. You know, China is trying
Speaker 1: to build things that will combat US capabilities and vice versa. UM. Also,
Speaker 1: the use of artificial intelligence raises all sorts of ethical
Speaker 1: questions UM that people are going to have to sort
Speaker 1: out and get comfortable with, or maybe not get comfortable
Speaker 1: with and decide not to do some of these things. UM.
Speaker 1: So I think that we're going to be talking about
Speaker 1: and debating these issues for years to come. Yeah, that
Speaker 1: that absolutely makes sense. Hey this company, okay, you said,
Speaker 1: I think because of its latest funding round round ten
Speaker 1: million from investors, including disruptive technology advisors. So that puts
Speaker 1: the company with a valuation of what in a quarter billion?
Speaker 1: Is it also very possible that this becomes a takeout
Speaker 1: play for a military company or other I mean, I
Speaker 1: guess it's a possibility. Whenever you talk to um, you know,
Speaker 1: a rising startup that's just raised a lot of money.
Speaker 1: You asked me that question, and they tell you that
Speaker 1: it will never happen, and um, sometimes it happened. Yeah,
Speaker 1: fair enough, fair enough. Hey listen, it's a great story
Speaker 1: and certainly relevant to everything that's going on. Joshua Brewsting,
Speaker 1: He's Technology editor Bloomberg Business Week. On the phone in
Speaker 1: New York City. You're listening to Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: You're listening to Bloomberg Business Week on this Tuesday, August.
Speaker 1: My co Hostim Stenovic is off today. I'm Carol Masser
Speaker 1: in our Interactive Broker studio. So out on the Bloomberg
Speaker 1: Bloomberg exclusive. The SEC will demand that the more than
Speaker 1: two fifty Chinese companies trading in US markets better and
Speaker 1: form investors about political and regulatory risks. So let's gettle
Speaker 1: bit more on this story. Or Ben Baine is financial
Speaker 1: regulations reporter at Bloomberg News. He covers the SEC. He
Speaker 1: joins us on the phone from Washington, d CF. We're
Speaker 1: sitting down for an exclusive interview with SEC Chair Gary Ginstler. Hey, Ben,
Speaker 1: good to have you here with us. Tell us a
Speaker 1: little bit about that conversation. Yeah, thanks so much, good afternoon. Yeah, So,
Speaker 1: as you said, I mean, we we we we really
Speaker 1: learned a lot about UM Chair Gary Ginstler's plan for
Speaker 1: dealing with an issue that's really um festered here in
Speaker 1: Washington UM for almost two decades. UM part of this
Speaker 1: goes back to a two thousand two law that required
Speaker 1: UM companies the publicly trade United States in New York,
Speaker 1: essentially to allow inspectors from Washington to look at their
Speaker 1: financial audits and UM China. UM has refused to allow
Speaker 1: access to US inspectors. And this has been an issue
Speaker 1: that has now you know, really gone through several administrations,
Speaker 1: multiple SEC chairs, and what we saw at the end
Speaker 1: of the Trump administration was really bipartisan push in Congress
Speaker 1: even to kind of look at is wonky UM you
Speaker 1: know issue about financial audits in kind of the broader
Speaker 1: scope of U. S. China relations, and the law was
Speaker 1: passed in December that basically put the SEC in charge
Speaker 1: of making sure that Chinese companies UM and they're audit firms,
Speaker 1: are allowing American inspectors to UM, you know, to to
Speaker 1: review those work papers. The concern is really UM, you know,
Speaker 1: that some of the financials may not be UM, you
Speaker 1: know what what they say they are UM. And also
Speaker 1: there's a lack of disclosure. If you think back to
Speaker 1: Luck in Coffee. I think that was kind of the
Speaker 1: example that a lot of people will point to. There's
Speaker 1: a separate issue that a SEC chair Gary Gensler, has
Speaker 1: really been raising over the past five weeks or so,
Speaker 1: and you really wanted to great detail with us today
Speaker 1: when we spoke with him, and that is about the
Speaker 1: structure of these Chinese firms. A lot of of the
Speaker 1: Chinese companies and Hong Kong based companies that UM are
Speaker 1: actually listed here in New York are not retually the
Speaker 1: operating companies that are listing shares, but rather they're shell
Speaker 1: companies which are often based in the Cayman Islands. So
Speaker 1: what the SEC chair essentially is saying is that American
Speaker 1: investors need to know a lot more about that corporate structure.
Speaker 1: There's concerns about how the financials um situation really works out,
Speaker 1: how does money flow back and forth? And are people
Speaker 1: really aware that they're actually, you know, holding a share
Speaker 1: of of of a shell company and not actually a
Speaker 1: company that's that's based in mainland China or or in
Speaker 1: Hong Kong. Yeah, I mean, right, clarification, transparency. This law though,
Speaker 1: or this requirement only as powerful as the punishment given
Speaker 1: if ignored. What's the punishment if Chinese companies And we're
Speaker 1: talking about the likes of what Ali Baba Bay do you?
Speaker 1: I mean the big Chinese companies who could say tough,
Speaker 1: we're not going to do it so and and and
Speaker 1: and thus far, that's exactly what what they've said, um
Speaker 1: and and and it's not that the companies are themselves
Speaker 1: saying that, you know, they're they're they're not thumbing their knows,
Speaker 1: you know, they're basically saying, look, we can't do this
Speaker 1: because the government in Beijing, UM won't let us do that.
Speaker 1: There's national security grounds are often cited as a reason
Speaker 1: for not um for audit firms not allowing US inspectors
Speaker 1: to look at the work papers. It's a very good
Speaker 1: point about what the um, what the consequences are, and
Speaker 1: what Congress did UM last December when they passed this
Speaker 1: new law. Which is why this issue has kind of
Speaker 1: come to the forefront now, is they basically said that
Speaker 1: if this isn't, if inspector is not allowed to look
Speaker 1: at these work papers to essentially review the financial audits,
Speaker 1: these companies could be delisted from US stock exchanges within
Speaker 1: three years. UM. When we when we discussed that with
Speaker 1: char Gensler, UM, you know, he very much indicated to
Speaker 1: us that you know, he's his agency, the SEC is
Speaker 1: full speed ahead on on what you know Congress laid
Speaker 1: out in in that timeframe. So UM, you know essentially
Speaker 1: where you know we could see over the next uh
Speaker 1: let's say three years. UM. You know some pretty some
Speaker 1: pretty significant repercussions if if things don't change those financial
Speaker 1: audits that already happens for a d r s of
Speaker 1: European companies trading here in the US, any other foreign companies.
Speaker 1: That's automatic. So what the SEC and and and there's
Speaker 1: a there's a quasi governmental agency UM known by its
Speaker 1: acronym as the PC would be here in Washington, which
Speaker 1: is overseen by the SEC. They essentially oversee the auditors.
Speaker 1: And over the course of you know, almost two decades
Speaker 1: of what they've done is basically go around the world
Speaker 1: to more than four dozen UM countries and they've reached
Speaker 1: agreements with these regulators that you know, essentially the American
Speaker 1: inspectors will be able to look at these work papers.
Speaker 1: The two holdouts of note are China and Hong Kong.
Speaker 1: So when you talk about European countries, yes, there was
Speaker 1: UM some issues that have recently been resolved with a
Speaker 1: few of them, but for the most part, yes, I
Speaker 1: mean in Europe this this happens, uh, you know, companies
Speaker 1: from elsewhere in the world. American inspectors are able to
Speaker 1: take a look at these work papers. It's worth kind
Speaker 1: of going to I mean, this isn't American inspectors essentially
Speaker 1: going to a company and asking to see all of
Speaker 1: their financial records. This is one of the big accounting firms,
Speaker 1: for example, that does a financial audit. They have work papers,
Speaker 1: and the law requires that American inspects are able to
Speaker 1: look at those work papers. It's interesting too though that
Speaker 1: he said, um that firms could be delisted as soon
Speaker 1: as four if they failed to comply. I mean, that's
Speaker 1: a fairly large runway. Just got about forty seconds left. Yeah,
Speaker 1: it it does, Um, it does. It is. It is
Speaker 1: a long runway in um, you know, in in kind
Speaker 1: of calendar terms. But if you think about the size
Speaker 1: of some of these companies and the extent that these
Speaker 1: firms have investors in the US retail investors but but
Speaker 1: also pension funds, but also very large institutional investors across
Speaker 1: Wall Street and really, um, you know, across the country,
Speaker 1: it's not actually that long. Because if one of these
Speaker 1: companies is delisted and and they do have they do
Speaker 1: have to you know, American investors do have to pull back.
Speaker 1: That's a pretty significant process. Um. So I think, yes,
Speaker 1: it seems like, you know, hey, three years, that's a
Speaker 1: long time, But in terms of actually was involved, it's not.
Speaker 1: You look at something like a bay Do, black Rock, Vanguard,
Speaker 1: State Street, Tiro. I mean, these are some of the
Speaker 1: big investors, institutional investors we know in these names. So
Speaker 1: that's a really good point, Ben Bain, great reporting. Check
Speaker 1: out Ben's exclusive. It is on the Bloomberg terminal. He
Speaker 1: is financial regulations reporter right here at Bloomberg News a journal. Now,
Speaker 1: bet you let me drive. Oh no, no, no no, non, please,
Speaker 1: I'll do the run. I want to drive destrib the
Speaker 1: good question, dry job. This is the drive to the globe. Thanks,
Speaker 1: We'll try us Dawn on Bloomberg Radio. All right, just
Speaker 1: about ten a half minutes left in today's trading session.
Speaker 1: As Charlie said, we're getting a late day fade. We're
Speaker 1: definitely off our highs of the session, speaking of highs
Speaker 1: earlier today, whilst Fargo out saying that thanks to Steller
Speaker 1: US corporate earnings, the SMP five should rise by another
Speaker 1: eight percent through the end of the year. That percentage
Speaker 1: maybe a little bit off at this point because of
Speaker 1: the fade, meaning we could end up with a maybe
Speaker 1: close to sup in the benchmark for their target. We've
Speaker 1: got the SNP at eight seven as we speak back
Speaker 1: with us. As managing director and senior portfolio manager over
Speaker 1: at Wells Fargo Asset Management, she's Margie Patel, six hundred
Speaker 1: four billion in assets under management. She's with us once
Speaker 1: again on the phone from Boston, Markie, nice to have
Speaker 1: you here. Your team at Wells Fargo coming out with
Speaker 1: a pretty bullish call on the S and P. Five hundred.
Speaker 1: How do you see the market trade? Well, I think
Speaker 1: the market is going to continue to go up for
Speaker 1: the rest of the year because fundamentals are great. Second quarter,
Speaker 1: which we just wrapped up, was a very good Uh,
Speaker 1: no sign of margin pressure anywhere. Good signs to fundamental demand.
Speaker 1: Consumers in good shape, business has lots of money. Um,
Speaker 1: So that just says even though we fit highs, there's
Speaker 1: no reason why we shouldn't continue to even if the
Speaker 1: FED pulls off the gas pedal. Well, that's a question
Speaker 1: we should see next week at Jackson Hole. Uh what
Speaker 1: they say, But really they're they're kind of in a
Speaker 1: position that makes it difficult. On the one hand, their
Speaker 1: primary goal is to get the full employment or some
Speaker 1: millions off that and on the other hand, um, it
Speaker 1: doesn't look like inflation is requiring them to start to
Speaker 1: remove liquidity because they say it's temporary, and here and
Speaker 1: there there are signs it looks as if the inflation
Speaker 1: searche is coming coming down. So they may well talk
Speaker 1: a lot and not do anything for the rest of
Speaker 1: the year. I mean, this is basically fundamentals right. What
Speaker 1: you're saying is that and we expected to bounce back
Speaker 1: after the lows that we saw a year ago and
Speaker 1: the impact of the pandemic, we expected companies to bounce back.
Speaker 1: Is there something more, though significant that says it's not
Speaker 1: just about the pandemic bounce back at this point, it's
Speaker 1: more of a sustainable growth play. Yes, it is because
Speaker 1: corporations are in great shape. Uh. They have lots of
Speaker 1: liquidity on their balance sheet that they could buy back stock,
Speaker 1: race dividends, make acquisitions. They have chosen at this point
Speaker 1: mostly to keep their powder dry, so they have a
Speaker 1: lot of flexibility. Consumer savings is also a recordize, and
Speaker 1: employment keeps improving, and so it's it's very difficult to
Speaker 1: see much that could go wrong in famous last words,
Speaker 1: but things will as if corporations should continue to raise
Speaker 1: earnings and consumers which continue to have the awarewithal to spend. Uh.
Speaker 1: Is it getting the overheated I don't think so, because
Speaker 1: one because the said has it seems of rather permanently
Speaker 1: anchored rates near zero, So that assures that there's liquidity trading,
Speaker 1: liquidity planning of liquidity in the banks if they had
Speaker 1: loan demand. And uh so, no, I don't think it's
Speaker 1: a it's overheated. And because corporate profits arising, profit margins
Speaker 1: are very good, there's no reason why we shouldn't sustain
Speaker 1: these relatively high um price earnings ratios high compared to
Speaker 1: this history. But then the quality of corporate earnings are better,
Speaker 1: so that seems not overheated. What do you mean quality
Speaker 1: of corporate earnings are better. Well, if you look at
Speaker 1: the if you look at the companies that are actually
Speaker 1: producing positive cash flow in their earnings, and the whole
Speaker 1: standard pores. It's much harder than it's been at other
Speaker 1: times market peaks where we've had pe speaking um, particularly
Speaker 1: in the technology sector UM compared to say the Internet boom,
Speaker 1: where many companies have no earnings. Now there are most
Speaker 1: of the companies have sustainable earnings and earnings are growing
Speaker 1: very rapidly. Uh if one of the main sectors has
Speaker 1: been leading in the market. All right, So you said
Speaker 1: positive creation of positive cash flow is higher sustainable earnings
Speaker 1: at earnings growth. I mean those are things, especially the
Speaker 1: cash flow that you can't really kind of play around
Speaker 1: with right, that's right, that's what at the end of
Speaker 1: the day, that really what counts. And then what sort
Speaker 1: of a pe multiple you want to put on that
Speaker 1: of course, uh, maybe be determined by market sentiment, But
Speaker 1: until we see a sea change in the FED, which
Speaker 1: doesn't look very likely, I think it's more the same. Well,
Speaker 1: you know, it's interesting market. I love talking with someone
Speaker 1: like you, and forgive me because I've been watching markets
Speaker 1: for a long time too. I'm not looking to age
Speaker 1: you or me or anybody, but we've seen a lot
Speaker 1: of market cycles. And I kind of smile when people
Speaker 1: say will make it a comparison to the tech bubble,
Speaker 1: because this doesn't feel like the tech bubble. I mean,
Speaker 1: what is truly different about the run up that we
Speaker 1: have seen in stocks, because we know stocks and go up,
Speaker 1: stocks and go down. But it does feel like these
Speaker 1: cycles happen much more quickly that any of the froth
Speaker 1: gets out of the market pretty quickly. Well, I think
Speaker 1: the big differences. We really don't seem to be in
Speaker 1: a cyclical market anymore. It seems as if we're in
Speaker 1: a secular advance because if you think back all the
Speaker 1: business cycles we've had out have been caused when the
Speaker 1: FED slams on the brakes, they see something they don't like,
Speaker 1: they restrict liquidity, we have a recession, interest rates go up,
Speaker 1: then they flood the system of money again, and then
Speaker 1: we have a cyclical rebound. We don't have that. We
Speaker 1: have more secular easing of money, keeping interest rates near zero.
Speaker 1: So that really there, I don't see an economic cycle
Speaker 1: per se driven by what the Fed has done, all right.
Speaker 1: Having said that, Having said that, the other flip side
Speaker 1: of this story, and I'd be remiss are Lisa Bronway
Speaker 1: is writing about this so well in terms of the
Speaker 1: gaps that are out there that if you're in the
Speaker 1: equity market, are your in financial markets, you know you
Speaker 1: have come out pretty well on the other side of
Speaker 1: this pandemic or as we as things start to improve.
Speaker 1: But for many Americans that's not the case. And that
Speaker 1: to me speaks to general wealth, general wellness of a society,
Speaker 1: and this is really a global society issue that's got
Speaker 1: to be a problem at some point already. Is to
Speaker 1: be fair, yes, and there's a lot of talk about
Speaker 1: getting the Federal Reserve more involved in creating income equality,
Speaker 1: and ironically, by their very actions they have promoted the opposite. Uh,
Speaker 1: the near zero interest rates have allowed money to flow
Speaker 1: to those wealthy investors with lots of cash to put
Speaker 1: into the market, wealthy investors who can make investments in
Speaker 1: real estate, fine art, commodities, things like that. So ironically,
Speaker 1: you actually, by having a zero interest rate policy exacerbated
Speaker 1: the income inequality or wealth inequality by having more flow
Speaker 1: to those who have a long liquid assets that they
Speaker 1: can take advantage. The FED we talked about a little
Speaker 1: bit again, You're not anticipating anything big out of Jackson Hall.
Speaker 1: Just talk, just talk. So at this point, I mean,
Speaker 1: what is the risk to the current trading environment. It
Speaker 1: sounds like you're all in bullish and it drives with
Speaker 1: what we heard from the Wells Fargo team about upping
Speaker 1: the forecast for the spire. Well, I think that for
Speaker 1: the rest of the year, it looks like growth looks
Speaker 1: pretty good. And the only UM question might be as
Speaker 1: we get into do we see a deceleration and growth
Speaker 1: UM from the Really the actions of the failed to
Speaker 1: keeping rates at zero to have sort of UM distorted
Speaker 1: the the capital returns and could we see the economy
Speaker 1: slow down from UM? You know, it's four percent to
Speaker 1: three one and a half percent in two, and then
Speaker 1: people might say, oh, well, now we need to revaluate
Speaker 1: the pe ratios. They need to come down even though
Speaker 1: we'renings look like they're moderating. So that's that's what I think.
Speaker 1: But that looks like that's a twenty two potential issue. Alright,
Speaker 1: So pushing that some a bit. Hey, Margie, thank you
Speaker 1: so much. Market patal she's managing director senior portfolio manager
Speaker 1: at Wells Fargo Asset Management, six hundred four billion in
Speaker 1: assets under management, joining us once again on the phone
Speaker 1: from Boston. Thanks for listening to Bloomberg Business Week. Download
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