Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day,
Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot com. Well, outdoor dining in New
Speaker 1: York City and other areas generally was deemed I believe
Speaker 1: a success. Uh you know, I guess had band aid
Speaker 1: on a very difficult wound there for restaurant owners. But
Speaker 1: as we head into the autumn and then the winter,
Speaker 1: you have to think about indoor dining. How is that
Speaker 1: going to work in New York and in other markets.
Speaker 1: To get a sense of that, we welcome Kate Creator,
Speaker 1: food editor for Bloomberg Pursuits. Kate some really interesting stories
Speaker 1: on the Bloomberg recently. I guess one that caught our
Speaker 1: I librot it In will be New York's first three
Speaker 1: star dining room to reopen, so I guess they're gonna
Speaker 1: give it a try. What are most restaurants how are
Speaker 1: they thinking about it? I think most restaurants are excited
Speaker 1: to be back. And so many of them have done
Speaker 1: such a terrific job with outdoor dining here in New
Speaker 1: York City. UM, but a lot of them have just
Speaker 1: waiting holding their cards for indoor dining. And then Governor
Speaker 1: Cromo announced it in a place like Lea Bernadine that
Speaker 1: had not been open, that wasn't doing take out, jumped
Speaker 1: and was like, you know what, it's going to be
Speaker 1: a risk no matter when we do it. And so
Speaker 1: now as the time so September thirty, they'll be reopening.
Speaker 1: Well so interestingly with Lebernardna and they obviously have a
Speaker 1: huge amount of resources. It's a huge airy space. UM.
Speaker 1: People were probably socially distant in there even before COVID.
Speaker 1: Given the amount of space it's it's in midtown Manhattan.
Speaker 1: They will be able to potentially make a little bit
Speaker 1: of money or least cover their overheads. But what about
Speaker 1: smaller or more closely uh fitted restaurants. I mean, it's
Speaker 1: going to be such a challenge. I know you talked
Speaker 1: to Amanda Cohen from Dirk Candy, whose restaurant is tiny,
Speaker 1: who would maybe have six guests, eight guests, and those
Speaker 1: numbers just don't work. I think air Repair, like you said,
Speaker 1: has resources. He got p PP money and was able
Speaker 1: to say even in the best case, will break even,
Speaker 1: and we're willing to take a loss. But they all
Speaker 1: everybody's betting that it's going to go up to in
Speaker 1: the near future. Governor Cuomo hinted that it might happen
Speaker 1: as soon as November one, which can't come soon enough
Speaker 1: for a lot of these places. So, Kate, how did
Speaker 1: how did some of the restaurants that really did make
Speaker 1: the investment in outdoor dining? Um? You know, you drive,
Speaker 1: I've been in the city a few times, and even
Speaker 1: out here New New Jersey, We've seen people get really
Speaker 1: creative on how they outfit space and now I'm starting
Speaker 1: to see more of the space eaters popping up. Hell,
Speaker 1: how did those restaurants do? Do you think in hindsight? Um,
Speaker 1: I mean, I think a lot of them have sort
Speaker 1: of gotten into the moment and then engaged. And also
Speaker 1: a lot of them have a hospitality gene and they
Speaker 1: like to serve people, and they want to see customers
Speaker 1: and faces and cook. You know, chefs like Tom Colichio,
Speaker 1: they want to cook. You know, they're not They're not
Speaker 1: like lobbyists. They don't want to spend their time in Washington.
Speaker 1: So I think for a lot of them, you know,
Speaker 1: until as as the numbers start to shake out, and
Speaker 1: then we'll start to see I think, more and more closings,
Speaker 1: which is gonna be hard. But right now I think
Speaker 1: a lot of them are engaged and going day to day.
Speaker 1: The p PP money obviously it's coming to an end
Speaker 1: of the end of the month, and there's no word
Speaker 1: on whether it's going to be an extension as all.
Speaker 1: Right now it looks like there isn't going to be.
Speaker 1: So what about the restaurants that took p PP money
Speaker 1: that now don't feel like they can reopen. Do they
Speaker 1: have to pay that back in full? Um? They do, well,
Speaker 1: they have to pay back. It's the loans. The terms
Speaker 1: of the loans are actually pretty good. I think it's
Speaker 1: one percent um that you have a year two to
Speaker 1: pay back. So in terms of in terms of taking
Speaker 1: money and and you know, making having an investment in
Speaker 1: your restaurant, it wasn't the worst deal to make. But
Speaker 1: a lot of them, I mean, the best case scenarios
Speaker 1: is if they can follow the guidelines and not have
Speaker 1: to pay it back at all, and then that just
Speaker 1: becomes money that like for our repair at laburner Den Fuels,
Speaker 1: they're reopening. So, Kate, do we know how many restaurants
Speaker 1: have closed in New York or are expected to close?
Speaker 1: Have you heard any reliable data on that? There's um no, everybody.
Speaker 1: I mean there's a lot of like scary numbers. I
Speaker 1: think open table ahead, um an eight percent number that
Speaker 1: might close. That was nationwide and New York has been
Speaker 1: really hard hit because a lot of these restaurants are
Speaker 1: small and the signs aren't aren't great for them reopening
Speaker 1: given current guidelines. But there's no we we haven't seen
Speaker 1: numbers that we really trust yet. What are restaurants, the
Speaker 1: smaller ones in particular, putting money into in order to
Speaker 1: try to keep going? What's the design you know, costs
Speaker 1: that they're spending on. What are they spending will see on?
Speaker 1: They've been you know what a lot of them have been.
Speaker 1: Really they've they've figured out like fun ways to make money,
Speaker 1: like meal kits and take out. A lot of them
Speaker 1: have pivoted to meal kids. I'm actually betting that a
Speaker 1: lot of them also, like bars, will become sort of
Speaker 1: private dining rooms. So Amanda Cohen, for instance, could you
Speaker 1: could buy out her restaurant with ten of your friends
Speaker 1: or whatever the mandated group is, and then it becomes
Speaker 1: something that's viable for her, viable for you and your friends,
Speaker 1: and then you feel safe when you're there. And that's
Speaker 1: also bars are going to be really hard hit right now,
Speaker 1: especially in New York City, because you don't go to
Speaker 1: a bar for it to be empty, you know, you
Speaker 1: go to a bar for it to be sort of
Speaker 1: crowded and fun and um, so I think a lot
Speaker 1: of bars are going to rely at a model like
Speaker 1: um buyouts, having like a group of friends buy it out,
Speaker 1: and then that hopefully will be economically sustainable for them.
Speaker 1: So it's interesting, Kase. I mean they guess the next
Speaker 1: several months are gonna be critical here as we pivot
Speaker 1: to the cooler months. Um, how much longer can out
Speaker 1: were dining really go? Do you think that's the that's
Speaker 1: the what D twenty billion dollar question? But I think
Speaker 1: I'm I've talked to like there's a lot of enterprising
Speaker 1: she have some restaurateurs and someone was like, I'm going
Speaker 1: to go full Game of Thrones, you know, I'm going
Speaker 1: to have like sterilized furs and wraps and we'll figure
Speaker 1: out some really good heating lamps. And I found that engaging.
Speaker 1: I feel like I'm in Like I'll put on my
Speaker 1: down jacket and go eat outside, and I feel like
Speaker 1: I'm in Game of Thrones totally, as long as the
Speaker 1: cast is there as well. Thank you so much. Always
Speaker 1: fun and very informative. Kate Crater is food editor for
Speaker 1: Bloomberg Pursuits, and her recent story, What the Future of
Speaker 1: Restaurants Might look Like has some terrifying data in there,
Speaker 1: but also some some great pointers for restaurants and people
Speaker 1: who might want to eat in them. It is time
Speaker 1: for Bloomberg Opinion. We're joined today by Noah Felment, Professor
Speaker 1: of Law at Harvard University. Professor is also a Bloomberg
Speaker 1: Opinion Calmness from Boston, Massachusetts. Professor, thanks so much for
Speaker 1: joining us here. I want to go to your when
Speaker 1: of your most recent comments, a new justice won't win
Speaker 1: Trump an election verdict? Talk to us about that, because
Speaker 1: it seems like if Trump gets his another appointment on there,
Speaker 1: it will be six to three conservative verses, perhaps more liberal. Um,
Speaker 1: how does that play a How does a math work? Well?
Speaker 1: First of all, it's important to say that that could happen.
Speaker 1: You might get all of the Republican appointees lining up
Speaker 1: with the president. But until now, Chief Justice John Roberts
Speaker 1: has been signaling like crazy that he does not want
Speaker 1: the Court to be seen as a partisan body, and
Speaker 1: I don't think he would be on board, which means
Speaker 1: that without a new appointment, it could well be five
Speaker 1: to four, you know, without with Justice Ginsburg still haven't
Speaker 1: been alive, it could have been five to four with
Speaker 1: ch Chief Justice Roberts crossing the aisle. The point is
Speaker 1: that right now, a new justice might actually not go
Speaker 1: along with the other Republicans. Imagine a new justice who
Speaker 1: has just been named by Trump. That person's reputation would
Speaker 1: be ruined not just for today or tomorrow, but for
Speaker 1: twenty or thirty years if she decided to vote in
Speaker 1: order to give the presidency to Trump in a closely
Speaker 1: contested case, so she might act differently, or other Republican
Speaker 1: nominated justices might also cross the line. So my point
Speaker 1: is just that we don't have a guarantee. Yeah, I mean,
Speaker 1: what about the idea of court packing, because if the
Speaker 1: conservative justice were to fear that that might also sort
Speaker 1: of play into it. If there's a whole lot of
Speaker 1: game theory going on here, isn't there? No, there absolutely is.
Speaker 1: You know, imagine that we get a Republican nominee confirmed
Speaker 1: right now before the election, and then Um, in a
Speaker 1: close vote, gives the election to the president. Democrats are
Speaker 1: going to be enraged, not just for a day or two,
Speaker 1: but Democrats are gonna be enraged for four years, and
Speaker 1: the call to pack the court is going to become
Speaker 1: almost impossible for a Democratic majority to stop. You know,
Speaker 1: many people, including Joe Biden, have said they don't like
Speaker 1: court packing. What court packing would need to become mainstream
Speaker 1: would be four more years of Donald Trump. That would
Speaker 1: really change I think almost everybody's mind if the Supreme
Speaker 1: Court gave the election to Trump. So I think some
Speaker 1: of the justices who care a lot about the court
Speaker 1: might be worried about producing that outcome. So Noah, it
Speaker 1: looks like, uh, we're going to get a vote on
Speaker 1: a replacement for Ruth Bader Ginsburg. Um. You know, before
Speaker 1: the election, we're gonna get an appointment here. How do
Speaker 1: you what do you think the ramifications are of that? First,
Speaker 1: you know, some Democrats are going to turn out and
Speaker 1: vote more aggressively for Donald against Donald Trump as a consequence,
Speaker 1: But there's also going to be part of Trump's base
Speaker 1: that sees this as a major accomplishment. There are many
Speaker 1: Republicans who voted for him just because of what he
Speaker 1: would do for the Supreme Court, and some of those
Speaker 1: people are also going to turn up. So it's not
Speaker 1: at all clear that it helps or hurts Trump. And
Speaker 1: from Trump's perspective, he also can't take the risk probably
Speaker 1: of not choosing somebody because then his base one might
Speaker 1: become frustrated or angry with him. So we don't really
Speaker 1: know what it's going to mean in that term. In
Speaker 1: those terms, what we do know is that it's going
Speaker 1: to create a new norm in the United States that
Speaker 1: if you're the president from one party and the senators
Speaker 1: from the same party, you're going to choose justices, and
Speaker 1: if there's any split between those things, you're not gonna
Speaker 1: be able to pick any justices. That's the new world
Speaker 1: that we're going to be entering. What about the tenor
Speaker 1: of the court just more generally, maybe definitely have had
Speaker 1: some non typical or maybe unexpected decisions from the likes
Speaker 1: of Justice Roberts and others. You know that you would
Speaker 1: have assumed would vote one way, and then they arrive
Speaker 1: in the court and they vote another. In recent years,
Speaker 1: it's a super important point that you're making. We have
Speaker 1: to remember that even people who look extremely conservative, chief
Speaker 1: just as Roberts or Justice Neil Gorsuch who is put
Speaker 1: on the Court by Donald Trump, have come up with
Speaker 1: some surprisingly liberal outcomes, not because they're liberal, but because
Speaker 1: they're jurisprudence in those cases pushed to a liberal outcome.
Speaker 1: So you know, this past July, we got a vast
Speaker 1: expansion in the rights of LGBTQ people from Justice Core
Speaker 1: such joined by Justice Roberts. So even though we're about
Speaker 1: to get a very conservative nominee, in my opinion, somebody
Speaker 1: more conservative than Roberts or Gore such. Nevertheless, you can't
Speaker 1: predict for certain that for ever that person will always
Speaker 1: line up with the conservatives. There is always some element
Speaker 1: of unpredictability in it. So, Professor, what do we know
Speaker 1: about some of the leading candidates for this vacant spot.
Speaker 1: The leading candidate, I think, by pretty much all accounts
Speaker 1: is Judge Amy Coney Barrett, who is a judge on
Speaker 1: the Seventh Circuit, one of the appeals courts in the
Speaker 1: United States, and she previously was a professor for many
Speaker 1: years at the Notre Dame Law School. She's incredibly smart.
Speaker 1: I clerked at the same time she collected the Supreme Court,
Speaker 1: she worked for Justice Scalia, I worked for Justice Suitor.
Speaker 1: By all accounts, everyone agreed was maybe the smartest or
Speaker 1: one of the two smartest lawyers in our entire group.
Speaker 1: Very very well thought of, and extremely conservative. Um openly,
Speaker 1: so it's not, you know, I'm not saying anything negative
Speaker 1: about her. She would own that that description. So you know,
Speaker 1: she seems overwhelmingly likely to be the pick because she's
Speaker 1: eminently qualified and her perspective matches that of many of
Speaker 1: Trump's voters. I would add that she was involved in
Speaker 1: a confrontation with Senator Diane Feinstein when she was up
Speaker 1: for nomination, in which Diane Finstein used kind of um
Speaker 1: antique what I would call when did call at the
Speaker 1: time in Bloomberg anti Catholic language to question her about
Speaker 1: her religious beliefs, and that further galvanized support for Judge
Speaker 1: Barrett among conservatives. I would say that backfired very badly
Speaker 1: for Senator Finstein. No, it is briefly is it true
Speaker 1: that as the country wishes, so the Supreme Court goes.
Speaker 1: It does seem to have been that way over the
Speaker 1: past number of years. Sometimes the Supreme Court, as they say,
Speaker 1: follows the election returns, but not always. You know, there
Speaker 1: are there have been moments in our history where the
Speaker 1: Court got way out ahead of what the public wanted.
Speaker 1: Um An example would be Citizens United the Supreme Court
Speaker 1: opinion that says the corporations have free speech and that
Speaker 1: they can spend essentially unlimited amounts of money on candidates.
Speaker 1: Most people in the public, acquainted poles, don't like that outcome,
Speaker 1: but it's still out there. On the other hand, as
Speaker 1: the public became more in favor of rites, the Court
Speaker 1: started delivering constitutional men statuary decisions on gay rights. So
Speaker 1: you know, you can't you can't absolutely make a rule.
Speaker 1: Sometimes the Court is with sometimes it's out had right.
Speaker 1: Noah Feltman, thank you so much for joining us once again.
Speaker 1: Fascinating discussion. We will keep a close eye on this.
Speaker 1: Noah Feldman, Professor of Law, Harvard University, also a Bloomberg
Speaker 1: Opinion columnists. You can read his work at Bloomberg dot Com,
Speaker 1: Slash Opinion, or O P I N Go on the terminal.
Speaker 1: Fascinating work coming out of our Bloomberg opinion folks, and interesting.
Speaker 1: It's gonna be very uh interesting to watch, I think
Speaker 1: Vannie just kind of not only kind of the appointment,
Speaker 1: the voting, the vetting, the hearings for the Supreme Court
Speaker 1: nominee once again highly contentious. It's always fascinating. I mean,
Speaker 1: just think back to the Kavana hearings. You know, it's
Speaker 1: just really fascinating to watch. But isn't it a small
Speaker 1: world pole when you know, we're speaking with no Feldman
Speaker 1: who literally clerks at the same time as the top
Speaker 1: contender for the post right now, it really is just
Speaker 1: a very you know, not small, but very rare world. Yeah, yeah,
Speaker 1: it's it's interesting and U you know, so he Professor
Speaker 1: Feltman obviously has a great read on this potential Supreme
Speaker 1: Court nominee. And uh, I think my takeaway was two things.
Speaker 1: You know, obviously very qualified, as you would expect, but
Speaker 1: also very conservative, and I guess you would expect that
Speaker 1: as well. So we'll see how the vetting process and
Speaker 1: the you know, the hearing and the you know, the
Speaker 1: testimony and so on and so forth, how that plays
Speaker 1: out over the next several weeks. Again, President Trump would
Speaker 1: like to get this nominee, uh, you know, put forward
Speaker 1: and kind of on the court by election day. I
Speaker 1: do think it's important to read editorials like Noah as
Speaker 1: though a new justice won't win Trump in an election.
Speaker 1: Verdict is his his editorial today, because there are so
Speaker 1: many factors that go into these things, and to tease
Speaker 1: out all the elements is really important. It's I think
Speaker 1: it's it's so important not to just jump to an
Speaker 1: initial conclusion from an initial reading of something. Dr Anthony
Speaker 1: Fauci still believes that we could be back to relative
Speaker 1: normalcy in America by the end of one The head
Speaker 1: of the National Institute for Allergy and Infectious Diseases spoke
Speaker 1: with Carlile co founder David Rubinstein at the Bloomer Equality Summit,
Speaker 1: and they discussed how the US will ensure it is
Speaker 1: distributed fairly throughout the population. Now there's a concern in
Speaker 1: the minority community. I believe that when the vaccine is available,
Speaker 1: wealthy white people will get it first, and then it
Speaker 1: will trickle down and the last people to get it
Speaker 1: will be minorities who might need it better more than
Speaker 1: than wealthy white people. What can you do to assure
Speaker 1: people that people of minority backgrounds will be getting this
Speaker 1: in the same fair way that it should be distributed. Well,
Speaker 1: there will be a prioritization, I mean classically, notwithstanding COVID nineteen,
Speaker 1: whenever there is a shortage of vaccine in the sense
Speaker 1: of when you're rolling it out and you don't have
Speaker 1: all the doses. Classically, the Advisory Committee on Immunization Practices
Speaker 1: advises the c d C who makes that determination about
Speaker 1: what prioritization is going to be done. We're complementing that
Speaker 1: with another group from the National Academy of Medicine, which
Speaker 1: has recently met to also give a recommendation. We don't
Speaker 1: know exactly what the decision is going to be, but
Speaker 1: I can tell you, David, from past experience, clearly people
Speaker 1: who can benefit from the vaccine the most and those
Speaker 1: who are at the highest risk of serious complications will
Speaker 1: be in the higher priority. Almost certainly, the first priority
Speaker 1: will be the frontline workers, the people such as the
Speaker 1: health care providers who put themselves at risk, but close
Speaker 1: behind them will very likely be people who could benefit
Speaker 1: the most, and almost certainly that would include minorities. The
Speaker 1: vaccine has become a political football with President Trump pushing
Speaker 1: for a vaccine pre election. Our next guest, Riley Griffin
Speaker 1: and Bloomberg health care reporters here to tell us how
Speaker 1: the Trumpet illustrations going overdrive to make that happen again.
Speaker 1: We just heard from Dr Fauci with David Rubinstein with
Speaker 1: those interesting comments. So interesting, Riley, what do you take
Speaker 1: from what we just heard from Dr Fauci as you're
Speaker 1: speaking with David Rubinstein. I think that's fairly consistent with
Speaker 1: with what we've been hearing previously, which is that frontline workers,
Speaker 1: those who are in health care facilities, and those who
Speaker 1: are on the grounds and say today jobs where they
Speaker 1: can't work from home are certainly going to receive prioritization. Next,
Speaker 1: Ye're gonna want to consider at risk communities. But one
Speaker 1: major concern here is an increasing embudding sense of vaccine
Speaker 1: hesitancy among broad Americans as this game of political football,
Speaker 1: as you say, um create an additional set of doubts
Speaker 1: surrounding vaccines efficacy. So explain that a little bit more.
Speaker 1: Is this across groups and across the country, or is
Speaker 1: it in particular demographics and in particular communities. We're still
Speaker 1: learning more about their distribution plans, so that's all subject
Speaker 1: to change. But the idea would be that communities that
Speaker 1: are at risk UM, Black American Hispanics and so forth
Speaker 1: might get prioritization. But again we don't know this yet.
Speaker 1: We have yet to see a vaccine receive an emergency
Speaker 1: use approval. UM vaccine makers are still in late stage studies.
Speaker 1: We actually saw Johnson and Johnson launch its Phase three
Speaker 1: trial just today in sixty thou patients. So all of
Speaker 1: this is going to depend on the data and as
Speaker 1: soon as we have a positive read out. The Trump
Speaker 1: administration suggests that within twenty four hours of clearance by
Speaker 1: US regulators, those vaccines which have been manufactured at risk
Speaker 1: amid the clinical trial process will be deployed to administration site.
Speaker 1: So we can really get this going, Riley. Do we
Speaker 1: even know how the decision or is going to be
Speaker 1: made or who is going to make it in terms
Speaker 1: of who gets the vaccine first. Is it simply a
Speaker 1: f D A type of decision or does can it
Speaker 1: become politicized by having some involvement by the White House
Speaker 1: or other political entities. So this is certainly a team effort.
Speaker 1: What we have right now is a cohort called Operation
Speaker 1: Warp Speed, which brings together the Department of Health and
Speaker 1: Human Services, It sells the health federal agencies UM as
Speaker 1: well as the Department of Defense, which brings to it
Speaker 1: a logistics expertise, and they are determining these IS strategies
Speaker 1: together with the CDC, and that's quite critical. Something my
Speaker 1: college and I have reported today UM actual in Santaz
Speaker 1: and Sheriffs Dine and I is that the Trump administration
Speaker 1: has shifted billions of dollars previously allocated to public health
Speaker 1: programs into its Operation Warp Speed Vaccine Push, which reflects
Speaker 1: the US government's increasing focus on a medical solution to
Speaker 1: use the COVID nineteen pandemic. But simultaneously are reporting raises
Speaker 1: um question about how transparent the effort is being in
Speaker 1: terms of disclosing the funding it's received as well as
Speaker 1: the money deploying to vaccine makers. And that has taken
Speaker 1: some money away from p PP equipment and masks and
Speaker 1: so on as well. According to the story Riley talked
Speaker 1: us about Johnson and Johnson, it's now entering the last
Speaker 1: age and its trials. Is this particularly because we had
Speaker 1: the story on Fiser yesterday. Do they really want to
Speaker 1: jump in there. They've been planning for a September started
Speaker 1: date for its Phase three clinical trials for quite some time,
Speaker 1: really pushing UM their clinical trials to the test in
Speaker 1: terms of acceleration. So what we know from today is
Speaker 1: they've launched the sixties thousand person final stage studies. It's
Speaker 1: one of the largest two dates and that's bringing it
Speaker 1: into the folds of only a handful of front renders
Speaker 1: conducting trials in the US in hopes of bringing a
Speaker 1: shot to market to call the pandemic um. The important
Speaker 1: day to keep in mind here is that the company
Speaker 1: expects to be able to approach US regulators with an
Speaker 1: emergency authorization in the beginning of contingent on good data.
Speaker 1: And we'll have answers as to whether or not this
Speaker 1: is safe and effective as soon as by the end
Speaker 1: of the year. And Vonnie, one thing I want to
Speaker 1: share with you that makes this candidate so different from
Speaker 1: Madernas and spisors and after Zenica's is that J and
Speaker 1: J is taking a one dose shot approach, which is
Speaker 1: different from those other other front runners which have a
Speaker 1: two dose vaccine regimen. It also doesn't need uber cold
Speaker 1: storage facilities to be able to maintain the vaccine UM
Speaker 1: and generated a strong immune response in early studies in
Speaker 1: only fifteen days. So if you talk to J and
Speaker 1: J and their chief medical officer, like I did just
Speaker 1: this morning, what you'll hear from them is they think
Speaker 1: they're differentiated and that they're going to have a vaccine
Speaker 1: that's more easily distributed globally to health care facilities with
Speaker 1: limited infrastructure, um, and can get that immune response quickly.
Speaker 1: But again, all eyes are on this data. UM. Yeah,
Speaker 1: Riley just robbly just in the last twenty seconds here.
Speaker 1: Is it gonna be like a cocktail approach or is
Speaker 1: it gonna be one winner take all? So what J
Speaker 1: and Jay's suggesting right now is that they're going to
Speaker 1: take a one those shot approach. UM. I think that
Speaker 1: this is a really important question though, because if you're
Speaker 1: a patient and you get one of the first vaccines
Speaker 1: that's mildly efficacious, you may want another candidate down the road. UM.
Speaker 1: We don't yet know how these vaccines interact with one
Speaker 1: another as they're being tried in very stringent um studies solo.
Speaker 1: So I'll have more to you on that question in
Speaker 1: six months. Now, well, Ronny, we're gonna need a little
Speaker 1: sooner than that. We're all hoping fingers cross. All right, Riley,
Speaker 1: thank you so much. We appreciate it. Riley Griffin Bloombrick
Speaker 1: Healthcare Reporter. All right, it is time how to continue
Speaker 1: our look at this market which could be a head
Speaker 1: scratcher if you weren't following the narratives that we just
Speaker 1: spoke about with Sarah Ponzac. So do you very likely
Speaker 1: is following all those narratives? Is Hugh Johnson Chairman and
Speaker 1: ce IO of Hugh Johnson Advisers you we're seeing another
Speaker 1: down day for the NASDAC and of course this idea
Speaker 1: that the rotation to sicticles is overtaking the narrative? Again,
Speaker 1: does this last? Is this a lasting narrative? It's a
Speaker 1: lasting narrative from this point of view. Is that we've
Speaker 1: we've come very far, very fast. I think you know
Speaker 1: that in this market since the late March, and we've
Speaker 1: gotten to a level that was very overvalued, overvalued in
Speaker 1: my judgment, and now we're still overvaluedent overvalued. So we
Speaker 1: are getting sort of a gift back or a decline,
Speaker 1: let's call it a correction in what I think is
Speaker 1: an ongoing bowl market. The perception also is Vannie, that
Speaker 1: we're going to get in the future, uh, and I
Speaker 1: mean two thousand twenty one, we're going to get us
Speaker 1: spreading out of the growth in earnings. And when we
Speaker 1: start to get that where it's not limited to so
Speaker 1: few stocks, you're gonna start to see, Um, you're gonna
Speaker 1: start to see broader performance in the SNP five dred
Speaker 1: It won't be limited, it will be broader, and consumer
Speaker 1: cyclicals or consumer discretionary stocks will be at the top
Speaker 1: of that list. That's very consistent what we've seen in
Speaker 1: the previous bowl markets are in history. So things are
Speaker 1: going to broad now, which in my judgment is a
Speaker 1: is a good thing. But right now we're still pricing
Speaker 1: or overvalued. We have to come down to levels that
Speaker 1: make more sense. We're in the process of doing that, Hugh.
Speaker 1: How do you view valuation here? Are you a price
Speaker 1: to earnings type person and looking at the pe ratio
Speaker 1: of the marketing of sectors relative to historical levels, or
Speaker 1: how else do you think about valuation here? Given that
Speaker 1: rates are so low, price earnings ratios are key, and
Speaker 1: the key to price earnings ratios is just as you
Speaker 1: say or imply, is interest rates. And right now, when
Speaker 1: we take a look at what we expect for inflation
Speaker 1: one point one two thousand twenty maybe two percent in
Speaker 1: two thousand twenty two, that means the Federal Reserve is
Speaker 1: not going to change rates before two thousands, say twenty three,
Speaker 1: rates are going to stay low. Returns from fixed income
Speaker 1: are going to be just uninspiring, And that's a kind
Speaker 1: way of saying it. Between now and two thousand twenty three.
Speaker 1: The level of rates that we're looking at, therefore, can
Speaker 1: be supportive of price earnings ratios round current levels. Now,
Speaker 1: current levels, in my judgment, would mean twenty but we're
Speaker 1: up at twenty four right now, which is a problem.
Speaker 1: In other words, rates are supportive of price earnings ratios
Speaker 1: that are below current levels, not at current levels, and
Speaker 1: that's why we need this correction. So you're solutely right.
Speaker 1: It's rates, it's price earnings ratios, and they the price
Speaker 1: earnings ratio has to come down to be consistent with
Speaker 1: the level of rates. So we're pricing overvalued. However you
Speaker 1: want to say it. I love how you put this.
Speaker 1: You tell investors to maintain a meaningful exposure to equities,
Speaker 1: but also maintain a meaningful cast position to support lifestyles
Speaker 1: for at least six months to a year. What are
Speaker 1: you anticipating and what's a meaningful cast position. Yeah, that's
Speaker 1: a great question. It all depends on the person and
Speaker 1: exactly what they what they need, and my judgment that
Speaker 1: means six months of essentially of living expenses. Some would
Speaker 1: say that's not enough, it has to be maybe a
Speaker 1: year of living expenses. But given the risks in this market, Vannie,
Speaker 1: I think what we're talking about is is yes, I
Speaker 1: think you have to maintain a meaningful allocation equities because
Speaker 1: I think it's a bowl market. We're talking about a
Speaker 1: correction in a bowl market. But at the same time,
Speaker 1: given the level of risks, particularly the level of risk
Speaker 1: with a sort of second wave and we start to
Speaker 1: sort of roll back some of the reopenings, I think
Speaker 1: what you have to do is you have to have
Speaker 1: a meaningful defensive position or cash position six months to
Speaker 1: a year of your living expenses. So you, I know,
Speaker 1: again a long term bowl market only game in town.
Speaker 1: Are you happen to your clients, who again are looking
Speaker 1: for yield, you suggest that they look to perhaps some
Speaker 1: risk your asset classes perhaps emerging markets. Yeah, you kind
Speaker 1: of have to do both. You have to kind of
Speaker 1: have a little bit of if you're very price sensitive,
Speaker 1: and again with the risk being high and price sensitive,
Speaker 1: you should have a little defense. And again that means
Speaker 1: buying stocks like I mentioned Verizon, I there are plenty
Speaker 1: of others that have attractive dividend yields and will give
Speaker 1: you good defense if the market does go down further
Speaker 1: as I as I expect. At the same time, let's
Speaker 1: keep in mind that this is a correction and maybe
Speaker 1: a stiff one in an ongoing ball market. So you
Speaker 1: want to be sort of half position for defense and
Speaker 1: half position for the ball market. And that means really
Speaker 1: buying some of those stocks that will do well in
Speaker 1: a ball market, things like Facebook, Master Card, UH and Vidia, Apple,
Speaker 1: you know what they are. So you have to have
Speaker 1: some of that in your portfolio as well and take
Speaker 1: a hard look at them. If you're looking at international,
Speaker 1: I would still underweight international, but emerging is going to
Speaker 1: be better than developed. Hugh Johnson, thank you so much
Speaker 1: for joining us. As always, Hugh Johnson, Chairman and Chief
Speaker 1: Investment Officer of Hugh Johnson Advisors, giving us his thoughts
Speaker 1: on the market again, Vonnie, where given where interest rates are,
Speaker 1: given what we're hearing out of the Federal Reserve, looks
Speaker 1: like rates are gonna be lower for longer, kind of
Speaker 1: pushes investors valuations notwithstanding, into equities. Yeah, I mean, I
Speaker 1: think that's why you get these sort of bouts of
Speaker 1: massive gains and equities. It's just people desperately looking for
Speaker 1: something to do. And it's absolutely absolutely thinking going down,
Speaker 1: you have taken on more risk, maybe you know, going
Speaker 1: down the risk curve in terms on the credit as well.
Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe
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Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at
Speaker 1: Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at
Speaker 1: pt Sweeney. Before the podcast, you can always catch us
Speaker 1: worldwide at Bloomberg Radio