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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day,

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Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Find the Bloomberg Markets

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Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. Well, outdoor dining in New

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Speaker 1: York City and other areas generally was deemed I believe

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Speaker 1: a success. Uh you know, I guess had band aid

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Speaker 1: on a very difficult wound there for restaurant owners. But

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Speaker 1: as we head into the autumn and then the winter,

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Speaker 1: you have to think about indoor dining. How is that

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Speaker 1: going to work in New York and in other markets.

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Speaker 1: To get a sense of that, we welcome Kate Creator,

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Speaker 1: food editor for Bloomberg Pursuits. Kate some really interesting stories

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Speaker 1: on the Bloomberg recently. I guess one that caught our

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Speaker 1: I librot it In will be New York's first three

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Speaker 1: star dining room to reopen, so I guess they're gonna

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Speaker 1: give it a try. What are most restaurants how are

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Speaker 1: they thinking about it? I think most restaurants are excited

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Speaker 1: to be back. And so many of them have done

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Speaker 1: such a terrific job with outdoor dining here in New

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Speaker 1: York City. UM, but a lot of them have just

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Speaker 1: waiting holding their cards for indoor dining. And then Governor

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Speaker 1: Cromo announced it in a place like Lea Bernadine that

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Speaker 1: had not been open, that wasn't doing take out, jumped

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Speaker 1: and was like, you know what, it's going to be

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Speaker 1: a risk no matter when we do it. And so

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Speaker 1: now as the time so September thirty, they'll be reopening.

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Speaker 1: Well so interestingly with Lebernardna and they obviously have a

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Speaker 1: huge amount of resources. It's a huge airy space. UM.

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Speaker 1: People were probably socially distant in there even before COVID.

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Speaker 1: Given the amount of space it's it's in midtown Manhattan.

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Speaker 1: They will be able to potentially make a little bit

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Speaker 1: of money or least cover their overheads. But what about

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Speaker 1: smaller or more closely uh fitted restaurants. I mean, it's

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Speaker 1: going to be such a challenge. I know you talked

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Speaker 1: to Amanda Cohen from Dirk Candy, whose restaurant is tiny,

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Speaker 1: who would maybe have six guests, eight guests, and those

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Speaker 1: numbers just don't work. I think air Repair, like you said,

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Speaker 1: has resources. He got p PP money and was able

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Speaker 1: to say even in the best case, will break even,

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Speaker 1: and we're willing to take a loss. But they all

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Speaker 1: everybody's betting that it's going to go up to in

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Speaker 1: the near future. Governor Cuomo hinted that it might happen

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Speaker 1: as soon as November one, which can't come soon enough

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Speaker 1: for a lot of these places. So, Kate, how did

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Speaker 1: how did some of the restaurants that really did make

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Speaker 1: the investment in outdoor dining? Um? You know, you drive,

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Speaker 1: I've been in the city a few times, and even

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Speaker 1: out here New New Jersey, We've seen people get really

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Speaker 1: creative on how they outfit space and now I'm starting

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Speaker 1: to see more of the space eaters popping up. Hell,

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Speaker 1: how did those restaurants do? Do you think in hindsight? Um,

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Speaker 1: I mean, I think a lot of them have sort

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Speaker 1: of gotten into the moment and then engaged. And also

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Speaker 1: a lot of them have a hospitality gene and they

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Speaker 1: like to serve people, and they want to see customers

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Speaker 1: and faces and cook. You know, chefs like Tom Colichio,

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Speaker 1: they want to cook. You know, they're not They're not

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Speaker 1: like lobbyists. They don't want to spend their time in Washington.

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Speaker 1: So I think for a lot of them, you know,

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Speaker 1: until as as the numbers start to shake out, and

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Speaker 1: then we'll start to see I think, more and more closings,

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Speaker 1: which is gonna be hard. But right now I think

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Speaker 1: a lot of them are engaged and going day to day.

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Speaker 1: The p PP money obviously it's coming to an end

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Speaker 1: of the end of the month, and there's no word

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Speaker 1: on whether it's going to be an extension as all.

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Speaker 1: Right now it looks like there isn't going to be.

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Speaker 1: So what about the restaurants that took p PP money

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Speaker 1: that now don't feel like they can reopen. Do they

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Speaker 1: have to pay that back in full? Um? They do, well,

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Speaker 1: they have to pay back. It's the loans. The terms

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Speaker 1: of the loans are actually pretty good. I think it's

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Speaker 1: one percent um that you have a year two to

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Speaker 1: pay back. So in terms of in terms of taking

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Speaker 1: money and and you know, making having an investment in

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Speaker 1: your restaurant, it wasn't the worst deal to make. But

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Speaker 1: a lot of them, I mean, the best case scenarios

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Speaker 1: is if they can follow the guidelines and not have

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Speaker 1: to pay it back at all, and then that just

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Speaker 1: becomes money that like for our repair at laburner Den Fuels,

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Speaker 1: they're reopening. So, Kate, do we know how many restaurants

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Speaker 1: have closed in New York or are expected to close?

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Speaker 1: Have you heard any reliable data on that? There's um no, everybody.

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Speaker 1: I mean there's a lot of like scary numbers. I

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Speaker 1: think open table ahead, um an eight percent number that

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Speaker 1: might close. That was nationwide and New York has been

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Speaker 1: really hard hit because a lot of these restaurants are

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Speaker 1: small and the signs aren't aren't great for them reopening

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Speaker 1: given current guidelines. But there's no we we haven't seen

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Speaker 1: numbers that we really trust yet. What are restaurants, the

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Speaker 1: smaller ones in particular, putting money into in order to

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Speaker 1: try to keep going? What's the design you know, costs

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Speaker 1: that they're spending on. What are they spending will see on?

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Speaker 1: They've been you know what a lot of them have been.

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Speaker 1: Really they've they've figured out like fun ways to make money,

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Speaker 1: like meal kits and take out. A lot of them

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Speaker 1: have pivoted to meal kids. I'm actually betting that a

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Speaker 1: lot of them also, like bars, will become sort of

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Speaker 1: private dining rooms. So Amanda Cohen, for instance, could you

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Speaker 1: could buy out her restaurant with ten of your friends

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Speaker 1: or whatever the mandated group is, and then it becomes

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Speaker 1: something that's viable for her, viable for you and your friends,

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Speaker 1: and then you feel safe when you're there. And that's

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Speaker 1: also bars are going to be really hard hit right now,

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Speaker 1: especially in New York City, because you don't go to

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Speaker 1: a bar for it to be empty, you know, you

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Speaker 1: go to a bar for it to be sort of

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Speaker 1: crowded and fun and um, so I think a lot

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Speaker 1: of bars are going to rely at a model like

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Speaker 1: um buyouts, having like a group of friends buy it out,

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Speaker 1: and then that hopefully will be economically sustainable for them.

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Speaker 1: So it's interesting, Kase. I mean they guess the next

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Speaker 1: several months are gonna be critical here as we pivot

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Speaker 1: to the cooler months. Um, how much longer can out

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Speaker 1: were dining really go? Do you think that's the that's

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Speaker 1: the what D twenty billion dollar question? But I think

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Speaker 1: I'm I've talked to like there's a lot of enterprising

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Speaker 1: she have some restaurateurs and someone was like, I'm going

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Speaker 1: to go full Game of Thrones, you know, I'm going

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Speaker 1: to have like sterilized furs and wraps and we'll figure

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Speaker 1: out some really good heating lamps. And I found that engaging.

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Speaker 1: I feel like I'm in Like I'll put on my

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Speaker 1: down jacket and go eat outside, and I feel like

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Speaker 1: I'm in Game of Thrones totally, as long as the

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Speaker 1: cast is there as well. Thank you so much. Always

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Speaker 1: fun and very informative. Kate Crater is food editor for

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Speaker 1: Bloomberg Pursuits, and her recent story, What the Future of

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Speaker 1: Restaurants Might look Like has some terrifying data in there,

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Speaker 1: but also some some great pointers for restaurants and people

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Speaker 1: who might want to eat in them. It is time

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Speaker 1: for Bloomberg Opinion. We're joined today by Noah Felment, Professor

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Speaker 1: of Law at Harvard University. Professor is also a Bloomberg

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Speaker 1: Opinion Calmness from Boston, Massachusetts. Professor, thanks so much for

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Speaker 1: joining us here. I want to go to your when

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Speaker 1: of your most recent comments, a new justice won't win

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Speaker 1: Trump an election verdict? Talk to us about that, because

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Speaker 1: it seems like if Trump gets his another appointment on there,

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Speaker 1: it will be six to three conservative verses, perhaps more liberal. Um,

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Speaker 1: how does that play a How does a math work? Well?

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Speaker 1: First of all, it's important to say that that could happen.

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Speaker 1: You might get all of the Republican appointees lining up

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Speaker 1: with the president. But until now, Chief Justice John Roberts

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Speaker 1: has been signaling like crazy that he does not want

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Speaker 1: the Court to be seen as a partisan body, and

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Speaker 1: I don't think he would be on board, which means

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Speaker 1: that without a new appointment, it could well be five

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Speaker 1: to four, you know, without with Justice Ginsburg still haven't

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Speaker 1: been alive, it could have been five to four with

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Speaker 1: ch Chief Justice Roberts crossing the aisle. The point is

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Speaker 1: that right now, a new justice might actually not go

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Speaker 1: along with the other Republicans. Imagine a new justice who

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Speaker 1: has just been named by Trump. That person's reputation would

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Speaker 1: be ruined not just for today or tomorrow, but for

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Speaker 1: twenty or thirty years if she decided to vote in

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Speaker 1: order to give the presidency to Trump in a closely

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Speaker 1: contested case, so she might act differently, or other Republican

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Speaker 1: nominated justices might also cross the line. So my point

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Speaker 1: is just that we don't have a guarantee. Yeah, I mean,

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Speaker 1: what about the idea of court packing, because if the

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Speaker 1: conservative justice were to fear that that might also sort

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Speaker 1: of play into it. If there's a whole lot of

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Speaker 1: game theory going on here, isn't there? No, there absolutely is.

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Speaker 1: You know, imagine that we get a Republican nominee confirmed

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Speaker 1: right now before the election, and then Um, in a

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Speaker 1: close vote, gives the election to the president. Democrats are

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Speaker 1: going to be enraged, not just for a day or two,

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Speaker 1: but Democrats are gonna be enraged for four years, and

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Speaker 1: the call to pack the court is going to become

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Speaker 1: almost impossible for a Democratic majority to stop. You know,

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Speaker 1: many people, including Joe Biden, have said they don't like

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Speaker 1: court packing. What court packing would need to become mainstream

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Speaker 1: would be four more years of Donald Trump. That would

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Speaker 1: really change I think almost everybody's mind if the Supreme

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Speaker 1: Court gave the election to Trump. So I think some

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Speaker 1: of the justices who care a lot about the court

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Speaker 1: might be worried about producing that outcome. So Noah, it

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Speaker 1: looks like, uh, we're going to get a vote on

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Speaker 1: a replacement for Ruth Bader Ginsburg. Um. You know, before

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Speaker 1: the election, we're gonna get an appointment here. How do

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Speaker 1: you what do you think the ramifications are of that? First,

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Speaker 1: you know, some Democrats are going to turn out and

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Speaker 1: vote more aggressively for Donald against Donald Trump as a consequence,

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Speaker 1: But there's also going to be part of Trump's base

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Speaker 1: that sees this as a major accomplishment. There are many

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Speaker 1: Republicans who voted for him just because of what he

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Speaker 1: would do for the Supreme Court, and some of those

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Speaker 1: people are also going to turn up. So it's not

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Speaker 1: at all clear that it helps or hurts Trump. And

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Speaker 1: from Trump's perspective, he also can't take the risk probably

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Speaker 1: of not choosing somebody because then his base one might

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Speaker 1: become frustrated or angry with him. So we don't really

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Speaker 1: know what it's going to mean in that term. In

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Speaker 1: those terms, what we do know is that it's going

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Speaker 1: to create a new norm in the United States that

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Speaker 1: if you're the president from one party and the senators

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Speaker 1: from the same party, you're going to choose justices, and

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Speaker 1: if there's any split between those things, you're not gonna

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Speaker 1: be able to pick any justices. That's the new world

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Speaker 1: that we're going to be entering. What about the tenor

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Speaker 1: of the court just more generally, maybe definitely have had

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Speaker 1: some non typical or maybe unexpected decisions from the likes

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Speaker 1: of Justice Roberts and others. You know that you would

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Speaker 1: have assumed would vote one way, and then they arrive

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Speaker 1: in the court and they vote another. In recent years,

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Speaker 1: it's a super important point that you're making. We have

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Speaker 1: to remember that even people who look extremely conservative, chief

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Speaker 1: just as Roberts or Justice Neil Gorsuch who is put

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Speaker 1: on the Court by Donald Trump, have come up with

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Speaker 1: some surprisingly liberal outcomes, not because they're liberal, but because

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Speaker 1: they're jurisprudence in those cases pushed to a liberal outcome.

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Speaker 1: So you know, this past July, we got a vast

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Speaker 1: expansion in the rights of LGBTQ people from Justice Core

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Speaker 1: such joined by Justice Roberts. So even though we're about

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Speaker 1: to get a very conservative nominee, in my opinion, somebody

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Speaker 1: more conservative than Roberts or Gore such. Nevertheless, you can't

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Speaker 1: predict for certain that for ever that person will always

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Speaker 1: line up with the conservatives. There is always some element

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Speaker 1: of unpredictability in it. So, Professor, what do we know

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Speaker 1: about some of the leading candidates for this vacant spot.

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Speaker 1: The leading candidate, I think, by pretty much all accounts

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Speaker 1: is Judge Amy Coney Barrett, who is a judge on

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Speaker 1: the Seventh Circuit, one of the appeals courts in the

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Speaker 1: United States, and she previously was a professor for many

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Speaker 1: years at the Notre Dame Law School. She's incredibly smart.

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Speaker 1: I clerked at the same time she collected the Supreme Court,

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Speaker 1: she worked for Justice Scalia, I worked for Justice Suitor.

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Speaker 1: By all accounts, everyone agreed was maybe the smartest or

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Speaker 1: one of the two smartest lawyers in our entire group.

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Speaker 1: Very very well thought of, and extremely conservative. Um openly,

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Speaker 1: so it's not, you know, I'm not saying anything negative

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Speaker 1: about her. She would own that that description. So you know,

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Speaker 1: she seems overwhelmingly likely to be the pick because she's

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Speaker 1: eminently qualified and her perspective matches that of many of

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Speaker 1: Trump's voters. I would add that she was involved in

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Speaker 1: a confrontation with Senator Diane Feinstein when she was up

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Speaker 1: for nomination, in which Diane Finstein used kind of um

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Speaker 1: her religious beliefs, and that further galvanized support for Judge

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Speaker 1: Barrett among conservatives. I would say that backfired very badly

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Speaker 1: for Senator Finstein. No, it is briefly is it true

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Speaker 1: that as the country wishes, so the Supreme Court goes.

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Speaker 1: It does seem to have been that way over the

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Speaker 1: past number of years. Sometimes the Supreme Court, as they say,

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Speaker 1: follows the election returns, but not always. You know, there

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Speaker 1: are there have been moments in our history where the

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Speaker 1: Court got way out ahead of what the public wanted.

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Speaker 1: Um An example would be Citizens United the Supreme Court

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Speaker 1: opinion that says the corporations have free speech and that

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Speaker 1: they can spend essentially unlimited amounts of money on candidates.

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Speaker 1: Most people in the public, acquainted poles, don't like that outcome,

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Speaker 1: but it's still out there. On the other hand, as

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Speaker 1: the public became more in favor of rites, the Court

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Speaker 1: started delivering constitutional men statuary decisions on gay rights. So

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Speaker 1: you know, you can't you can't absolutely make a rule.

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Speaker 1: Sometimes the Court is with sometimes it's out had right.

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Speaker 1: Noah Feltman, thank you so much for joining us once again.

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Speaker 1: Fascinating discussion. We will keep a close eye on this.

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Speaker 1: Noah Feldman, Professor of Law, Harvard University, also a Bloomberg

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Speaker 1: Opinion columnists. You can read his work at Bloomberg dot Com,

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Speaker 1: Slash Opinion, or O P I N Go on the terminal.

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Speaker 1: Fascinating work coming out of our Bloomberg opinion folks, and interesting.

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Speaker 1: It's gonna be very uh interesting to watch, I think

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Speaker 1: Vannie just kind of not only kind of the appointment,

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Speaker 1: the voting, the vetting, the hearings for the Supreme Court

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Speaker 1: nominee once again highly contentious. It's always fascinating. I mean,

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Speaker 1: just think back to the Kavana hearings. You know, it's

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Speaker 1: just really fascinating to watch. But isn't it a small

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Speaker 1: world pole when you know, we're speaking with no Feldman

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Speaker 1: who literally clerks at the same time as the top

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Speaker 1: contender for the post right now, it really is just

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Speaker 1: a very you know, not small, but very rare world. Yeah, yeah,

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Speaker 1: it's it's interesting and U you know, so he Professor

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Speaker 1: Feltman obviously has a great read on this potential Supreme

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Speaker 1: Court nominee. And uh, I think my takeaway was two things.

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Speaker 1: You know, obviously very qualified, as you would expect, but

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Speaker 1: also very conservative, and I guess you would expect that

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Speaker 1: as well. So we'll see how the vetting process and

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Speaker 1: the you know, the hearing and the you know, the

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Speaker 1: testimony and so on and so forth, how that plays

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Speaker 1: out over the next several weeks. Again, President Trump would

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Speaker 1: like to get this nominee, uh, you know, put forward

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Speaker 1: and kind of on the court by election day. I

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Speaker 1: do think it's important to read editorials like Noah as

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Speaker 1: though a new justice won't win Trump in an election.

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Speaker 1: Verdict is his his editorial today, because there are so

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Speaker 1: many factors that go into these things, and to tease

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Speaker 1: out all the elements is really important. It's I think

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Speaker 1: it's it's so important not to just jump to an

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Speaker 1: initial conclusion from an initial reading of something. Dr Anthony

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Speaker 1: Fauci still believes that we could be back to relative

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Speaker 1: normalcy in America by the end of one The head

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Speaker 1: of the National Institute for Allergy and Infectious Diseases spoke

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Speaker 1: with Carlile co founder David Rubinstein at the Bloomer Equality Summit,

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Speaker 1: and they discussed how the US will ensure it is

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Speaker 1: distributed fairly throughout the population. Now there's a concern in

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Speaker 1: the minority community. I believe that when the vaccine is available,

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Speaker 1: wealthy white people will get it first, and then it

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Speaker 1: will trickle down and the last people to get it

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Speaker 1: will be minorities who might need it better more than

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Speaker 1: than wealthy white people. What can you do to assure

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Speaker 1: people that people of minority backgrounds will be getting this

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Speaker 1: in the same fair way that it should be distributed. Well,

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Speaker 1: there will be a prioritization, I mean classically, notwithstanding COVID nineteen,

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Speaker 1: whenever there is a shortage of vaccine in the sense

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Speaker 1: of when you're rolling it out and you don't have

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Speaker 1: all the doses. Classically, the Advisory Committee on Immunization Practices

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Speaker 1: advises the c d C who makes that determination about

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Speaker 1: what prioritization is going to be done. We're complementing that

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Speaker 1: with another group from the National Academy of Medicine, which

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Speaker 1: has recently met to also give a recommendation. We don't

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Speaker 1: know exactly what the decision is going to be, but

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Speaker 1: I can tell you, David, from past experience, clearly people

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Speaker 1: who can benefit from the vaccine the most and those

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Speaker 1: who are at the highest risk of serious complications will

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Speaker 1: be in the higher priority. Almost certainly, the first priority

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Speaker 1: will be the frontline workers, the people such as the

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Speaker 1: health care providers who put themselves at risk, but close

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Speaker 1: behind them will very likely be people who could benefit

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Speaker 1: the most, and almost certainly that would include minorities. The

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Speaker 1: vaccine has become a political football with President Trump pushing

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Speaker 1: for a vaccine pre election. Our next guest, Riley Griffin

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Speaker 1: and Bloomberg health care reporters here to tell us how

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Speaker 1: the Trumpet illustrations going overdrive to make that happen again.

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Speaker 1: We just heard from Dr Fauci with David Rubinstein with

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Speaker 1: those interesting comments. So interesting, Riley, what do you take

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Speaker 1: from what we just heard from Dr Fauci as you're

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Speaker 1: speaking with David Rubinstein. I think that's fairly consistent with

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Speaker 1: with what we've been hearing previously, which is that frontline workers,

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Speaker 1: those who are in health care facilities, and those who

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Speaker 1: are on the grounds and say today jobs where they

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Speaker 1: can't work from home are certainly going to receive prioritization. Next,

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Speaker 1: Ye're gonna want to consider at risk communities. But one

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Speaker 1: major concern here is an increasing embudding sense of vaccine

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Speaker 1: hesitancy among broad Americans as this game of political football,

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Speaker 1: as you say, um create an additional set of doubts

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Speaker 1: surrounding vaccines efficacy. So explain that a little bit more.

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Speaker 1: Is this across groups and across the country, or is

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Speaker 1: it in particular demographics and in particular communities. We're still

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Speaker 1: learning more about their distribution plans, so that's all subject

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Speaker 1: to change. But the idea would be that communities that

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Speaker 1: are at risk UM, Black American Hispanics and so forth

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Speaker 1: might get prioritization. But again we don't know this yet.

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Speaker 1: We have yet to see a vaccine receive an emergency

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Speaker 1: use approval. UM vaccine makers are still in late stage studies.

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Speaker 1: We actually saw Johnson and Johnson launch its Phase three

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Speaker 1: trial just today in sixty thou patients. So all of

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Speaker 1: this is going to depend on the data and as

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Speaker 1: soon as we have a positive read out. The Trump

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Speaker 1: administration suggests that within twenty four hours of clearance by

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Speaker 1: US regulators, those vaccines which have been manufactured at risk

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Speaker 1: amid the clinical trial process will be deployed to administration site.

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Speaker 1: So we can really get this going, Riley. Do we

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Speaker 1: even know how the decision or is going to be

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Speaker 1: made or who is going to make it in terms

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Speaker 1: of who gets the vaccine first. Is it simply a

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Speaker 1: f D A type of decision or does can it

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Speaker 1: become politicized by having some involvement by the White House

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Speaker 1: or other political entities. So this is certainly a team effort.

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Speaker 1: What we have right now is a cohort called Operation

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Speaker 1: Warp Speed, which brings together the Department of Health and

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Speaker 1: Human Services, It sells the health federal agencies UM as

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Speaker 1: well as the Department of Defense, which brings to it

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Speaker 1: a logistics expertise, and they are determining these IS strategies

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Speaker 1: together with the CDC, and that's quite critical. Something my

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Speaker 1: college and I have reported today UM actual in Santaz

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Speaker 1: and Sheriffs Dine and I is that the Trump administration

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Speaker 1: has shifted billions of dollars previously allocated to public health

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Speaker 1: programs into its Operation Warp Speed Vaccine Push, which reflects

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Speaker 1: the US government's increasing focus on a medical solution to

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Speaker 1: use the COVID nineteen pandemic. But simultaneously are reporting raises

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Speaker 1: um question about how transparent the effort is being in

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Speaker 1: terms of disclosing the funding it's received as well as

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Speaker 1: the money deploying to vaccine makers. And that has taken

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Speaker 1: some money away from p PP equipment and masks and

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Speaker 1: so on as well. According to the story Riley talked

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Speaker 1: us about Johnson and Johnson, it's now entering the last

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Speaker 1: age and its trials. Is this particularly because we had

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Speaker 1: the story on Fiser yesterday. Do they really want to

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Speaker 1: jump in there. They've been planning for a September started

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Speaker 1: date for its Phase three clinical trials for quite some time,

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Speaker 1: really pushing UM their clinical trials to the test in

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Speaker 1: terms of acceleration. So what we know from today is

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Speaker 1: they've launched the sixties thousand person final stage studies. It's

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Speaker 1: one of the largest two dates and that's bringing it

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Speaker 1: into the folds of only a handful of front renders

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Speaker 1: conducting trials in the US in hopes of bringing a

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Speaker 1: shot to market to call the pandemic um. The important

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Speaker 1: day to keep in mind here is that the company

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Speaker 1: expects to be able to approach US regulators with an

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Speaker 1: emergency authorization in the beginning of contingent on good data.

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Speaker 1: And we'll have answers as to whether or not this

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Speaker 1: is safe and effective as soon as by the end

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Speaker 1: of the year. And Vonnie, one thing I want to

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Speaker 1: share with you that makes this candidate so different from

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Speaker 1: Madernas and spisors and after Zenica's is that J and

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Speaker 1: J is taking a one dose shot approach, which is

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Speaker 1: different from those other other front runners which have a

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Speaker 1: two dose vaccine regimen. It also doesn't need uber cold

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Speaker 1: storage facilities to be able to maintain the vaccine UM

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Speaker 1: and generated a strong immune response in early studies in

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Speaker 1: only fifteen days. So if you talk to J and

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Speaker 1: J and their chief medical officer, like I did just

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Speaker 1: this morning, what you'll hear from them is they think

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Speaker 1: they're differentiated and that they're going to have a vaccine

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Speaker 1: that's more easily distributed globally to health care facilities with

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Speaker 1: limited infrastructure, um, and can get that immune response quickly.

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Speaker 1: But again, all eyes are on this data. UM. Yeah,

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Speaker 1: Riley just robbly just in the last twenty seconds here.

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Speaker 1: Is it gonna be like a cocktail approach or is

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Speaker 1: it gonna be one winner take all? So what J

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Speaker 1: and Jay's suggesting right now is that they're going to

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Speaker 1: take a one those shot approach. UM. I think that

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Speaker 1: this is a really important question though, because if you're

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Speaker 1: a patient and you get one of the first vaccines

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Speaker 1: that's mildly efficacious, you may want another candidate down the road. UM.

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Speaker 1: We don't yet know how these vaccines interact with one

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Speaker 1: another as they're being tried in very stringent um studies solo.

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Speaker 1: So I'll have more to you on that question in

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Speaker 1: six months. Now, well, Ronny, we're gonna need a little

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Speaker 1: sooner than that. We're all hoping fingers cross. All right, Riley,

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Speaker 1: thank you so much. We appreciate it. Riley Griffin Bloombrick

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Speaker 1: Healthcare Reporter. All right, it is time how to continue

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Speaker 1: our look at this market which could be a head

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Speaker 1: scratcher if you weren't following the narratives that we just

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Speaker 1: spoke about with Sarah Ponzac. So do you very likely

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Speaker 1: is following all those narratives? Is Hugh Johnson Chairman and

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Speaker 1: ce IO of Hugh Johnson Advisers you we're seeing another

431
00:23:16,240 --> 00:23:18,639
Speaker 1: down day for the NASDAC and of course this idea

432
00:23:18,720 --> 00:23:22,600
Speaker 1: that the rotation to sicticles is overtaking the narrative? Again,

433
00:23:23,359 --> 00:23:27,520
Speaker 1: does this last? Is this a lasting narrative? It's a

434
00:23:27,640 --> 00:23:30,800
Speaker 1: lasting narrative from this point of view. Is that we've

435
00:23:30,840 --> 00:23:33,159
Speaker 1: we've come very far, very fast. I think you know

436
00:23:33,320 --> 00:23:36,640
Speaker 1: that in this market since the late March, and we've

437
00:23:36,680 --> 00:23:41,919
Speaker 1: gotten to a level that was very overvalued, overvalued in

438
00:23:42,040 --> 00:23:47,760
Speaker 1: my judgment, and now we're still overvaluedent overvalued. So we

439
00:23:47,840 --> 00:23:50,760
Speaker 1: are getting sort of a gift back or a decline,

440
00:23:50,840 --> 00:23:53,240
Speaker 1: let's call it a correction in what I think is

441
00:23:53,280 --> 00:23:57,600
Speaker 1: an ongoing bowl market. The perception also is Vannie, that

442
00:23:57,680 --> 00:24:00,639
Speaker 1: we're going to get in the future, uh, and I

443
00:24:00,680 --> 00:24:03,720
Speaker 1: mean two thousand twenty one, we're going to get us

444
00:24:03,720 --> 00:24:07,400
Speaker 1: spreading out of the growth in earnings. And when we

445
00:24:07,480 --> 00:24:10,240
Speaker 1: start to get that where it's not limited to so

446
00:24:10,359 --> 00:24:13,760
Speaker 1: few stocks, you're gonna start to see, Um, you're gonna

447
00:24:13,800 --> 00:24:17,680
Speaker 1: start to see broader performance in the SNP five dred

448
00:24:17,760 --> 00:24:21,159
Speaker 1: It won't be limited, it will be broader, and consumer

449
00:24:21,280 --> 00:24:25,200
Speaker 1: cyclicals or consumer discretionary stocks will be at the top

450
00:24:25,240 --> 00:24:29,000
Speaker 1: of that list. That's very consistent what we've seen in

451
00:24:29,080 --> 00:24:32,199
Speaker 1: the previous bowl markets are in history. So things are

452
00:24:32,200 --> 00:24:34,679
Speaker 1: going to broad now, which in my judgment is a

453
00:24:35,240 --> 00:24:38,680
Speaker 1: is a good thing. But right now we're still pricing

454
00:24:38,960 --> 00:24:42,000
Speaker 1: or overvalued. We have to come down to levels that

455
00:24:42,119 --> 00:24:45,920
Speaker 1: make more sense. We're in the process of doing that, Hugh.

456
00:24:46,160 --> 00:24:48,960
Speaker 1: How do you view valuation here? Are you a price

457
00:24:49,000 --> 00:24:51,280
Speaker 1: to earnings type person and looking at the pe ratio

458
00:24:51,520 --> 00:24:54,600
Speaker 1: of the marketing of sectors relative to historical levels, or

459
00:24:54,600 --> 00:24:56,639
Speaker 1: how else do you think about valuation here? Given that

460
00:24:56,720 --> 00:25:01,040
Speaker 1: rates are so low, price earnings ratios are key, and

461
00:25:01,080 --> 00:25:03,719
Speaker 1: the key to price earnings ratios is just as you

462
00:25:03,800 --> 00:25:08,240
Speaker 1: say or imply, is interest rates. And right now, when

463
00:25:08,240 --> 00:25:11,320
Speaker 1: we take a look at what we expect for inflation

464
00:25:11,480 --> 00:25:15,720
Speaker 1: one point one two thousand twenty maybe two percent in

465
00:25:15,800 --> 00:25:20,320
Speaker 1: two thousand twenty two, that means the Federal Reserve is

466
00:25:20,359 --> 00:25:23,879
Speaker 1: not going to change rates before two thousands, say twenty three,

467
00:25:24,400 --> 00:25:27,359
Speaker 1: rates are going to stay low. Returns from fixed income

468
00:25:27,400 --> 00:25:30,919
Speaker 1: are going to be just uninspiring, And that's a kind

469
00:25:30,960 --> 00:25:33,960
Speaker 1: way of saying it. Between now and two thousand twenty three.

470
00:25:34,520 --> 00:25:37,720
Speaker 1: The level of rates that we're looking at, therefore, can

471
00:25:38,200 --> 00:25:43,240
Speaker 1: be supportive of price earnings ratios round current levels. Now,

472
00:25:43,520 --> 00:25:46,640
Speaker 1: current levels, in my judgment, would mean twenty but we're

473
00:25:46,720 --> 00:25:50,160
Speaker 1: up at twenty four right now, which is a problem.

474
00:25:50,200 --> 00:25:54,280
Speaker 1: In other words, rates are supportive of price earnings ratios

475
00:25:54,320 --> 00:25:57,680
Speaker 1: that are below current levels, not at current levels, and

476
00:25:57,840 --> 00:26:00,840
Speaker 1: that's why we need this correction. So you're solutely right.

477
00:26:01,359 --> 00:26:05,960
Speaker 1: It's rates, it's price earnings ratios, and they the price

478
00:26:06,000 --> 00:26:09,560
Speaker 1: earnings ratio has to come down to be consistent with

479
00:26:09,720 --> 00:26:13,760
Speaker 1: the level of rates. So we're pricing overvalued. However you

480
00:26:13,800 --> 00:26:16,800
Speaker 1: want to say it. I love how you put this.

481
00:26:17,000 --> 00:26:20,400
Speaker 1: You tell investors to maintain a meaningful exposure to equities,

482
00:26:20,400 --> 00:26:23,879
Speaker 1: but also maintain a meaningful cast position to support lifestyles

483
00:26:23,880 --> 00:26:26,359
Speaker 1: for at least six months to a year. What are

484
00:26:26,359 --> 00:26:31,800
Speaker 1: you anticipating and what's a meaningful cast position. Yeah, that's

485
00:26:31,840 --> 00:26:34,720
Speaker 1: a great question. It all depends on the person and

486
00:26:34,840 --> 00:26:38,399
Speaker 1: exactly what they what they need, and my judgment that

487
00:26:38,480 --> 00:26:42,480
Speaker 1: means six months of essentially of living expenses. Some would

488
00:26:42,480 --> 00:26:44,919
Speaker 1: say that's not enough, it has to be maybe a

489
00:26:45,000 --> 00:26:49,520
Speaker 1: year of living expenses. But given the risks in this market, Vannie,

490
00:26:49,560 --> 00:26:52,439
Speaker 1: I think what we're talking about is is yes, I

491
00:26:52,480 --> 00:26:55,640
Speaker 1: think you have to maintain a meaningful allocation equities because

492
00:26:55,640 --> 00:26:57,720
Speaker 1: I think it's a bowl market. We're talking about a

493
00:26:57,880 --> 00:27:00,359
Speaker 1: correction in a bowl market. But at the same time,

494
00:27:00,440 --> 00:27:03,960
Speaker 1: given the level of risks, particularly the level of risk

495
00:27:04,080 --> 00:27:07,000
Speaker 1: with a sort of second wave and we start to

496
00:27:07,160 --> 00:27:10,359
Speaker 1: sort of roll back some of the reopenings, I think

497
00:27:10,400 --> 00:27:11,840
Speaker 1: what you have to do is you have to have

498
00:27:11,880 --> 00:27:15,919
Speaker 1: a meaningful defensive position or cash position six months to

499
00:27:16,000 --> 00:27:20,159
Speaker 1: a year of your living expenses. So you, I know,

500
00:27:20,680 --> 00:27:23,280
Speaker 1: again a long term bowl market only game in town.

501
00:27:23,720 --> 00:27:25,920
Speaker 1: Are you happen to your clients, who again are looking

502
00:27:25,960 --> 00:27:28,200
Speaker 1: for yield, you suggest that they look to perhaps some

503
00:27:28,320 --> 00:27:31,840
Speaker 1: risk your asset classes perhaps emerging markets. Yeah, you kind

504
00:27:31,840 --> 00:27:33,919
Speaker 1: of have to do both. You have to kind of

505
00:27:33,960 --> 00:27:36,960
Speaker 1: have a little bit of if you're very price sensitive,

506
00:27:36,960 --> 00:27:39,800
Speaker 1: and again with the risk being high and price sensitive,

507
00:27:40,080 --> 00:27:42,399
Speaker 1: you should have a little defense. And again that means

508
00:27:42,440 --> 00:27:46,520
Speaker 1: buying stocks like I mentioned Verizon, I there are plenty

509
00:27:46,520 --> 00:27:49,640
Speaker 1: of others that have attractive dividend yields and will give

510
00:27:49,680 --> 00:27:52,760
Speaker 1: you good defense if the market does go down further

511
00:27:52,880 --> 00:27:56,080
Speaker 1: as I as I expect. At the same time, let's

512
00:27:56,119 --> 00:27:58,440
Speaker 1: keep in mind that this is a correction and maybe

513
00:27:58,480 --> 00:28:01,480
Speaker 1: a stiff one in an ongoing ball market. So you

514
00:28:01,560 --> 00:28:04,439
Speaker 1: want to be sort of half position for defense and

515
00:28:04,520 --> 00:28:07,359
Speaker 1: half position for the ball market. And that means really

516
00:28:07,400 --> 00:28:09,280
Speaker 1: buying some of those stocks that will do well in

517
00:28:09,320 --> 00:28:15,920
Speaker 1: a ball market, things like Facebook, Master Card, UH and Vidia, Apple,

518
00:28:16,400 --> 00:28:18,239
Speaker 1: you know what they are. So you have to have

519
00:28:18,359 --> 00:28:21,160
Speaker 1: some of that in your portfolio as well and take

520
00:28:21,200 --> 00:28:24,200
Speaker 1: a hard look at them. If you're looking at international,

521
00:28:24,840 --> 00:28:28,159
Speaker 1: I would still underweight international, but emerging is going to

522
00:28:28,240 --> 00:28:31,480
Speaker 1: be better than developed. Hugh Johnson, thank you so much

523
00:28:31,600 --> 00:28:34,720
Speaker 1: for joining us. As always, Hugh Johnson, Chairman and Chief

524
00:28:34,800 --> 00:28:38,280
Speaker 1: Investment Officer of Hugh Johnson Advisors, giving us his thoughts

525
00:28:38,280 --> 00:28:40,720
Speaker 1: on the market again, Vonnie, where given where interest rates are,

526
00:28:40,800 --> 00:28:43,160
Speaker 1: given what we're hearing out of the Federal Reserve, looks

527
00:28:43,160 --> 00:28:45,160
Speaker 1: like rates are gonna be lower for longer, kind of

528
00:28:45,160 --> 00:28:49,880
Speaker 1: pushes investors valuations notwithstanding, into equities. Yeah, I mean, I

529
00:28:49,920 --> 00:28:52,840
Speaker 1: think that's why you get these sort of bouts of

530
00:28:53,160 --> 00:28:56,520
Speaker 1: massive gains and equities. It's just people desperately looking for

531
00:28:56,600 --> 00:28:59,880
Speaker 1: something to do. And it's absolutely absolutely thinking going down,

532
00:29:00,080 --> 00:29:02,120
Speaker 1: you have taken on more risk, maybe you know, going

533
00:29:02,120 --> 00:29:04,840
Speaker 1: down the risk curve in terms on the credit as well.

534
00:29:06,280 --> 00:29:09,720
Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe

535
00:29:09,760 --> 00:29:13,280
Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast

536
00:29:13,280 --> 00:29:16,560
Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at

537
00:29:16,560 --> 00:29:18,920
Speaker 1: Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at

538
00:29:18,920 --> 00:29:21,800
Speaker 1: pt Sweeney. Before the podcast, you can always catch us

539
00:29:21,840 --> 00:29:23,240
Speaker 1: worldwide at Bloomberg Radio