Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily
Speaker 1: we bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: On the virus, A definitive conversation on COVID with Deborah
Speaker 1: Fuller of the University of Washington School of Medicine and
Speaker 1: Microbiology Professor. I can't say enough about the esteem of
Speaker 1: their program, Dr Fuller, I want to go to the
Speaker 1: idea that we were all afraid of measles and maybe
Speaker 1: EXCEENNI vaxers were less afraid of measles now and there's
Speaker 1: different variants of measles D four B to whatever those
Speaker 1: numbers are. Are the variants of this virus to be
Speaker 1: treated like the variants of other things we've contained, or
Speaker 1: the variance here different. The variance here could be could
Speaker 1: be quite different. And that's just because we have increasing
Speaker 1: evidence that some of these new stars COPE two variants
Speaker 1: are not only gaining an ability to transmit more efficiently,
Speaker 1: but developing mutations that could potentially evade uh antibody I
Speaker 1: mean responses, and that would potentially suggest that our current vaccines, Uh,
Speaker 1: it might, it might impact our the efficacy of our
Speaker 1: current vaccines. Now, our vaccines are very high efficacy, much
Speaker 1: higher than so we're not talking about complete loss of
Speaker 1: protection by the vaccines. We're talking about a bit of
Speaker 1: a decline that's say maybe, and that's still a very
Speaker 1: very effective vaccine. But it's something that as vaccinologists we
Speaker 1: keep an eye on because gets to a certain threshold,
Speaker 1: we may get to a point where we have to
Speaker 1: update those vaccines. With Dr Fullers, some people would put
Speaker 1: this as a race, basically a race to get enough
Speaker 1: people vaccinated before the virus mutates enough to set you
Speaker 1: back further and cause an increased circulation of the virus.
Speaker 1: How are we doing in that race? Yeah, it truly
Speaker 1: is a race between viral evolution and vaccination rate. The
Speaker 1: goal is to reach herd immunity. We are currently estimating
Speaker 1: about of the population immune to be able to shut
Speaker 1: down this pandemic. But herd immunity depends on two things,
Speaker 1: and one is how transmissible is the virus and how
Speaker 1: efficacious is your vaccine. So as the virus mutates, and
Speaker 1: we talked about that that it commutate to increase transmission
Speaker 1: and potentially reduce vaccine efficacy. That raises the bar in
Speaker 1: terms of how many people we have to vaccinate. So
Speaker 1: it's like this the cycle that pushes our goal posts
Speaker 1: further down the line, So it truly is a race
Speaker 1: and dr piller. Perhaps this is sort of an underappreciated
Speaker 1: aspect of this pandemic. People expecting recovery and yet not
Speaker 1: necessarily understanding how much this new strain of virus that
Speaker 1: is more transmissible, possibly potentially according to some reports, more virulent,
Speaker 1: how much that has accelerated the spread of the pandemic.
Speaker 1: How much has that set us back in terms of
Speaker 1: a need to vaccinate more people, Otherwise we're gonna be
Speaker 1: dealing with lockdowns and other types of social distancing measures instead.
Speaker 1: I think I think we started here hearing early on
Speaker 1: when we started talking about her community, we're thinking sixty
Speaker 1: six and now what we're hearing is and that could
Speaker 1: even go go higher. And of course that's a huge
Speaker 1: difference in terms of the numbers of people that will
Speaker 1: need to receive the vaccine to get to that point.
Speaker 1: And the more people you have to vaccinate, the longer
Speaker 1: is going to take to get there. Should we assume
Speaker 1: we will see a traditional vaccine work with some challenges today?
Speaker 1: All the way J and J other experts like you
Speaker 1: Dr Fuller talking about the efficacy of a more traditional vaccine,
Speaker 1: do we need that in terms of more traditional vaccines like, uh,
Speaker 1: like you mean, like the kinds that we had before
Speaker 1: the RNA vaccines. Yeah, so, so the j J one
Speaker 1: that's coming out, I would not categorize that as traditional.
Speaker 1: That's actually kind of new as well. Is just using
Speaker 1: a different way to deliver a genetic material into ourselves
Speaker 1: so that we can produce the vaccines. So it's actually,
Speaker 1: in some respects quite similar to the URNA vaccines. And
Speaker 1: the vantage of both of these types of vaccines is
Speaker 1: that should the virus undergo uh an evolution where it
Speaker 1: is starting to reduce their efficacy, they are what we
Speaker 1: call plug and play vaccines are very very quick to update.
Speaker 1: You just have to swap out the genetic material and
Speaker 1: the way you go to producing them. In the past,
Speaker 1: our traditional vaccines would take somewhere between eight to nine
Speaker 1: months to update. These ones, They're going to be weeks,
Speaker 1: uh maybe a month to start to get back out again.
Speaker 1: So this is that's good news for us that these
Speaker 1: are the types of X means that can that can
Speaker 1: chase that viral evolution much quicker. To just to wrap
Speaker 1: things up, could we just get your assessment of the
Speaker 1: administration's goal to vaccinate one million Americans per day for
Speaker 1: a hundred days. We're already around those levels and have
Speaker 1: been now for about a week or so. I wander
Speaker 1: from your perspective, doctor, whether the goal itself is just
Speaker 1: not bold enough or whether there will be supply issues
Speaker 1: down the road that we need to address at the
Speaker 1: moment that actually make that one million rate quite optimistic. Right. Well,
Speaker 1: it it sounds impressive, but but it may not be enough.
Speaker 1: I think it's a good start, uh, to get to.
Speaker 1: But if we want to get to a goal where
Speaker 1: we keep talking about wanting to sort of be mass
Speaker 1: free by labor Day or something, uh, we're probably going
Speaker 1: to need to start there and then quickly accelerate maybe
Speaker 1: double or even triple that rate to get to there.
Speaker 1: But I think once some mechanisms are in place to
Speaker 1: to achieve that consistently a million doses a day, then
Speaker 1: that that's the kind of thing they could leverage to
Speaker 1: continue to increase the rate and double and even triple
Speaker 1: that just quickly. Do you have a place holder on
Speaker 1: the calendar. It's the remarker out there for you that
Speaker 1: you're thinking about when things not to get pet that
Speaker 1: restriction start to be removed again. Well, I always keep
Speaker 1: telling people that I'd love to have a mass free
Speaker 1: day by Labor Day. But you know, and and it
Speaker 1: goes from the perspective of you know, I've runed the
Speaker 1: lab of twenty people, many of them are young parents
Speaker 1: who are eager to see those kids go back to
Speaker 1: school in the fall and get things back to normal.
Speaker 1: Don't appreciate time come back, saying Dr of the University
Speaker 1: of Washington School of Medicine television. This John mentioned China.
Speaker 1: As we heard President at the Davos Agenda. We now
Speaker 1: speak to truly an authority on this. George Magnus is
Speaker 1: at Oxford University's China Center. We're thrilled he could join
Speaker 1: us after his wonderful, hugely, hugely readable effort red Flags.
Speaker 1: George Magnus, thrilled to have you on this day where
Speaker 1: the leader of China speaks. What did not say? He's
Speaker 1: very good, it's saying the appropriate things what did he
Speaker 1: not speak of? Well, I only heard kind of brief
Speaker 1: snippets of his address. I mean what he what he
Speaker 1: didn't say actually, of course other things that you would
Speaker 1: never expect him to say, which, of course are you know,
Speaker 1: the nuances about China's economic recovery. I mean, he he
Speaker 1: does talk about, you know, we mustn't have a cold
Speaker 1: war mentality, which he didn't say he was partially responsible
Speaker 1: for injecting into the global system. He did say that
Speaker 1: decoupling leads to division, which is obviously appointed remark of
Speaker 1: the United States, not saying that actually China has been
Speaker 1: doing selective decoupling for years. Um. And he did say
Speaker 1: that openness and inclusiveness are really important, which is something
Speaker 1: that he didn't say China doesn't really practice. So um,
Speaker 1: you know, there's a there's a lot of the things
Speaker 1: that he said that are the opposite of actually what
Speaker 1: actually takes place in the country in the country. And George,
Speaker 1: this is the big question, isn't it. What can the
Speaker 1: incoming administration do to actually change the behavior of China.
Speaker 1: Getting them to say the right things on the international
Speaker 1: stage of the world with economic forum, that's one thing.
Speaker 1: Getting them to act differently is another. Do you expect
Speaker 1: a change in approach from the new administration in the
Speaker 1: United States? I expect a change of tone, you know,
Speaker 1: but not really a change of substance. And I think
Speaker 1: the uh, you know, the and we've seen enough and
Speaker 1: heard enough already, even though it's only like a week old,
Speaker 1: not even the administration of the appointees who are in
Speaker 1: key positions, M and I don't really hear or or
Speaker 1: sense any marked change of direction. So I think it
Speaker 1: would be unusual, given what we know about the individuals concerned,
Speaker 1: if there wasn't a change of tone. And certainly strengthening
Speaker 1: alliance is whether that's with Europe or with the Quad,
Speaker 1: so Australia, Japan and India, U much stronger overtures towards
Speaker 1: Indo Pacific countries. I mean, these kinds of things I
Speaker 1: think will be forthcoming. And I think that is something
Speaker 1: which the Chinese actually we're probably fearful of and why
Speaker 1: they probably didn't want him elected. But I think that's
Speaker 1: that's where I think sort of the rubber is going
Speaker 1: to meet the road proverbially, is sort of a more
Speaker 1: united kind of front amongst countries to confront China on
Speaker 1: very very important issues, but not necessarily on tariffs, which
Speaker 1: were never really going to be going to change anything. Meanwhile,
Speaker 1: financial markets have been voting between the US and China
Speaker 1: and opting for China. There was data out of the
Speaker 1: UN saying that China overtook the United States for the
Speaker 1: first time as the world's top destination for new foreign
Speaker 1: direct investments this past year, and this has been ongoing
Speaker 1: with a huge shift of financial firms ring to expand
Speaker 1: in China despite some of these ongoing tensions between the US,
Speaker 1: UH and China. Do you think that this money is
Speaker 1: well founded in terms of its bed on the Chinese
Speaker 1: economy going forward, based on its pre eminence in how
Speaker 1: it has recovered from the pandemic versus say the US
Speaker 1: and Europe, well at least, so, you know, it's like
Speaker 1: so many things, it is, there's so much nuanced involved.
Speaker 1: I mean, I'm not saying that every company that puts
Speaker 1: money to work in China is you know, it is
Speaker 1: kind of throwing it down the drain. But actually we
Speaker 1: also have to recognize, you know, there's a lot of
Speaker 1: self serving money that's going into China and justifying it
Speaker 1: on the basis of being there for that reason. But
Speaker 1: I think that, you know, the the the essence of
Speaker 1: the kind of the the the u N report or
Speaker 1: the untapped report you referred to. I mean it's not
Speaker 1: you know. I mean, the world is basically kind of
Speaker 1: imploded because of the pandemic foreign direct investment ground to hold.
Speaker 1: China managed to to its credit, to with Drawconian measures
Speaker 1: to suppress COVID and allow its economy to come back. Um,
Speaker 1: you know reasonably well during the last part of two
Speaker 1: thousand and twenty um and uh, and the FDI flow
Speaker 1: is going into China went up by four percenter. You're
Speaker 1: not talking about a huge kind of amount, But yeah,
Speaker 1: I mean you know that. I mean, I do think
Speaker 1: credit where credits due. I mean, they've they've certainly managed
Speaker 1: to achieve and accomplish something with their economy which the
Speaker 1: rest of us obviously are looking at slightly green and
Speaker 1: TINGI with envy. But you know, in the fullness of time,
Speaker 1: when imagine when we get on top of our own
Speaker 1: pending problems, so I think they catch up, will become
Speaker 1: quite apparent. George Wrights catch up, So please come back soon.
Speaker 1: So much to talk about. Author of Red Flags, George
Speaker 1: Magnus Oxford University, China Center Research Associate. And this day,
Speaker 1: after all of the inauguration begin our political coverage forward
Speaker 1: for President Biden and for our legislative branch. Brian Style
Speaker 1: joins us now first out of the lock with the
Speaker 1: fascinating first District of Wisconsin. This is less aspens Old District.
Speaker 1: And then onto Paul Ryan, who Congress Style worked for
Speaker 1: and he now holds court from Jamesville in the very
Speaker 1: far west of the district over to the Lake and
Speaker 1: of course over to Kenosha as well. Brian, it is
Speaker 1: such an interesting district and really is the polarity of
Speaker 1: America from Jamesville to Kenosha. How are you going to
Speaker 1: straddle that polarity forward? Southeast Wisconsin is a great place
Speaker 1: to live and work. It's about hard working families getting
Speaker 1: the job done. What we need to do is actually
Speaker 1: address the policies that are impacting people in Wisconsin are
Speaker 1: across the country. We gotta work to get people back
Speaker 1: to work, to keep America healthy, to defeat COVID, and
Speaker 1: to keep our communities and our country safe. If we're
Speaker 1: focused in on the policies that matter to workers and
Speaker 1: families in Southeast Wisconsin, those are the values that matter
Speaker 1: to everyone across the United States. We're gonna be able
Speaker 1: to come together to move the ball forward on behalf
Speaker 1: of the American run claim working for President Biden made
Speaker 1: clear he needs bipartisan to succeed. How can you break
Speaker 1: bread with President Biden? How can you break bread with
Speaker 1: Speaker Pelosi? I think there's areas where we can come together.
Speaker 1: We can come together to ultimately defeat this virus, making
Speaker 1: sure that we have the resources on the front lines
Speaker 1: for our nurses and our doctors, vaccine, development of vaccine rollout.
Speaker 1: We can come together, I think on infrastructure. But at
Speaker 1: the same time, that means Congress has to get to work.
Speaker 1: Where we've seen on day one Joe Biden making pretty
Speaker 1: extreme executive decisions that I think are against the interests
Speaker 1: of the American people. We're gonna have to push back
Speaker 1: against that. But I think we can come together to
Speaker 1: work on some of the most pressing issues, in particular
Speaker 1: getting workers back to work. Can you get behind a
Speaker 1: one point nine trillion dollar packet for COVID relief? What
Speaker 1: we've seen is a lot of money going in and
Speaker 1: providing liquidity into the market. What we need to do
Speaker 1: now is begin to target that relief to those individual
Speaker 1: rules who have been impacted through no fault of their own.
Speaker 1: These broad brush strokes of relief, I think I have
Speaker 1: a risk of overheating and putting us further into debt
Speaker 1: and in particular not being good stewards of taxpayer dollars.
Speaker 1: I'd like to see us target that relief to those
Speaker 1: people who have been negatively impact Think about people working
Speaker 1: maybe in the service industry, your your cooks, or your
Speaker 1: your frontline folks. That's where we need to target the
Speaker 1: relief rather than these broad brush strokes, which are just
Speaker 1: not a good use of taxpayer dollars in some instances.
Speaker 1: So if that's where the money goes, would you be
Speaker 1: behind the one point nine trillion. I mean, if you
Speaker 1: look at the liquidit in the markets that was provided
Speaker 1: by the Central Bank, this COVID relief package would do
Speaker 1: something else. I think what we would be seeing is
Speaker 1: some of this is not good use of taxpayer dollars
Speaker 1: in the initial proposal. We're gonna have to see what's
Speaker 1: actually written on paper. Some of these top line numbers
Speaker 1: are being floated around on Capitol Hill. What I'd like
Speaker 1: to see is us narrowly tailor this to those people
Speaker 1: that have been impacted, rather than these big broad brush
Speaker 1: strokes where they're going to try to implement all sorts
Speaker 1: of policy objectives unrelated to COVID or unrelated to getting
Speaker 1: folks back to work. Okay, I ninety four moving north
Speaker 1: up to lake. It's part of your headache as well.
Speaker 1: If we have stimulus, and congressmen, you we're gonna have
Speaker 1: to have a bridge to nowhere infrastructure project. How do
Speaker 1: you envision infrastructure as a conservative guy? One easy opportunity
Speaker 1: there is, let's push forward with private sector infrastructure investment.
Speaker 1: This is where I was so frustrated by Joe Biden's
Speaker 1: decision on day one to kill the Keystone pipeline. That
Speaker 1: was billions of dollars of private sector infrastructure investment, thousands
Speaker 1: of jobs, hundreds of those jobs from southeast Wisconsin. Those
Speaker 1: are the types of jobs that we should be able
Speaker 1: to rally around. Private infrastructure investment would be critical, and
Speaker 1: I was disappointed to see Joe Biden kill the Keystone
Speaker 1: Pipeline on day one of his administration. Fine, but we're
Speaker 1: looking forward? Is the common ground on infrastructure? I have
Speaker 1: a aged watching nothing essentially nothing get done in Washington.
Speaker 1: How do Republicans provide bipartisan leadership to get to a
Speaker 1: second stimulus bill that builds bridges, fixes airports, etcetera. I
Speaker 1: think the big conversation is what is the pay for?
Speaker 1: How are we actually going to come together the side
Speaker 1: of the ledger of we need to build infrastructure. I
Speaker 1: think that is a broadfair, bipartisan analysis. I think the conversation,
Speaker 1: the adult conversation in the room, is going to be
Speaker 1: how are we going to pay for this? Is it
Speaker 1: a look towards raising everyone's taxes? Are we gonna find
Speaker 1: areas where we can provide efficiency and cut spending? Elsewhere?
Speaker 1: Can we use user fees? That's the adult conversation we
Speaker 1: have to have in the room. I think there is
Speaker 1: consensus on the side of the ledger of we need
Speaker 1: to invest in infrastructure. I'd like to see a conversation
Speaker 1: about how we can be thoughtful, productive stewards of taxpayer dollars,
Speaker 1: but also moving forward with that infrastructure investment. A congressman,
Speaker 1: I've got to ask, and I know you're crushed. We
Speaker 1: were frankly looking for your entreur to cancel you today.
Speaker 1: The Green Bay Packers kicked a field goal. Congressman, help
Speaker 1: me here, Paul Ryan, never want to let that happen. Bad,
Speaker 1: bad decision. You gotta go for the touchdown when you
Speaker 1: have one of the best red zone offenses in the
Speaker 1: league with two minutes left. That's a decision that's gonna
Speaker 1: haunt us until next season, for sure. I mean, this
Speaker 1: is the Democrats fault, isn't it's we got somebody to
Speaker 1: blame for that. That's a bad that's a bad football
Speaker 1: talk for I know, I know, Congressman. I know you
Speaker 1: condemned the mob that you know insurged on Capitol Hill
Speaker 1: on January six, but you also voted against impeaching Donald Trump.
Speaker 1: Does Donald Trump still have a place in the Republican Party.
Speaker 1: I think we need to hold the criminals they came
Speaker 1: into the Capitol accountable. We always need to hold people
Speaker 1: accountable for their actions. I'm a big tent Republican. I
Speaker 1: think there's plenty of room for lots of folks about
Speaker 1: how we're going to move the all forward. I don't
Speaker 1: think I'm teaching the president as productive. I voted against it.
Speaker 1: I think the Senate should pass it aside and get
Speaker 1: on with the work of the American people. The American
Speaker 1: people want to get folks back to work, They want
Speaker 1: to get America healthy. We need to keep our community safe.
Speaker 1: Let's put partisan politics aside and get on with the
Speaker 1: work of the American people. Right. But so, where do
Speaker 1: you see Donald Trump fitting in the Republican Party. I
Speaker 1: think he's a terrific voice about cutting taxes, about lowering
Speaker 1: the regulatory burdens. I think he should be a continuing
Speaker 1: voice to advance us on good, solid conservative policies going forward.
Speaker 1: The bigger the tent. We need more people on the
Speaker 1: Republican side, more people in the conservative movement to move
Speaker 1: our country forward, not less. You've got some demographic challenges there.
Speaker 1: We'll come back to you, Congressman next time. Green Bay
Speaker 1: explains what the hell happened there? That was absolutely extraordinary.
Speaker 1: He is from the first district of Wisconsin, is far
Speaker 1: away from Green Bays. You can get this morning, Congress
Speaker 1: and Style, thank you so much. Right now, as we
Speaker 1: spoke to Mr Style of Wisconsin an hour ago, we
Speaker 1: speak with Mr Evans of Philadelphia and Pennsylvania. His district
Speaker 1: is important, it is hugely democratic in guidance, and he
Speaker 1: is the leader of the third district of Pennsylvania were
Speaker 1: throwed the Congressman Evans could join us. UH this morning,
Speaker 1: Dwight Evans. You have a new Congress, You're in charge,
Speaker 1: You've got a president. You've got your house again, and
Speaker 1: lo and behold fifty fifty. Vice President Harris will give
Speaker 1: that important voice in the vote in the Senate. What
Speaker 1: does your team need to do to affect policy? I
Speaker 1: think person said good morning too, and I think that
Speaker 1: what we need to do is attempt to bring people
Speaker 1: together within the Congress. I think that President Biden and
Speaker 1: Vice President Harris the attempt to bring people together. The
Speaker 1: first crusted device. We must crush the virus. There's a
Speaker 1: direct connection between crushing of virus and the economy. UH
Speaker 1: coming back. You need to do both of those combinations.
Speaker 1: And I believe that President Biden Vice President has will
Speaker 1: demonstrate that type of leadership. So they will first start
Speaker 1: off with the facting distribution and in the initiative that
Speaker 1: the President has put forward is the initiative of the
Speaker 1: distribution of the vaccine, which I think is very essential
Speaker 1: in terms of dealings problems. The second part of it
Speaker 1: is dealing with the economy and dealing with the economy
Speaker 1: in terms of small businesses, investing in infrastructure like schools,
Speaker 1: reopening those types of and and the president um elect
Speaker 1: or the president as he stated, it is basically attempting
Speaker 1: to deal with both sides, UH, the Democratic Republicans, and
Speaker 1: I think that we're in a good positions over that.
Speaker 1: Chris fran surely chosen got the Black Caucus going. Charles
Speaker 1: Wrangle renamed it in the seventies. I believe it was.
Speaker 1: And you know, you now provide important leadership there. You
Speaker 1: weren't joined by Reverend Warnock of Georgia, and you're also
Speaker 1: joined by a Vice President of the United States with
Speaker 1: an historic heritage. How will the new Black Caucus look
Speaker 1: going forward? Well, I think that the new Black Caucus,
Speaker 1: UH will look where it wants to get something done,
Speaker 1: which is very essential. We know that either party cannot
Speaker 1: do it by themselves and that's the reality. So the
Speaker 1: Black Caucus was, I think will tend to bomban alliance
Speaker 1: to attack the virus and then figure out how you
Speaker 1: deal with small businesses. That's very important in terms of rebuilding,
Speaker 1: building back this economy back. That's the reality that we face.
Speaker 1: I believe that the pre than it is given the
Speaker 1: opportunity can do those things. You're not talking about somebody
Speaker 1: who is new at this UH. President Biden vice president
Speaker 1: has have the skill set when you look at historically
Speaker 1: president experience, he has shown years of experience in the
Speaker 1: Senate Vice president United States. He has what I believe
Speaker 1: that's there. You're talking about sixty members in the Congressional
Speaker 1: Black Caucus. You're talking about six members on the Ways
Speaker 1: and Means Committee. So I think when you look at it,
Speaker 1: you basically have people who have the ability to bring
Speaker 1: it together. He's given the opportunity to UH to implement
Speaker 1: division and the agenda that he has representative. There's a
Speaker 1: question about impeachment at this point and the wisdom behind
Speaker 1: going forward with the trial given the immediacy of both
Speaker 1: the vaccination rollout as well as the aid needed to
Speaker 1: get to people. Do you think that it is a
Speaker 1: mistake to move ahead so quickly with impeaching the former
Speaker 1: President Trump. I believe we can do more than one thing.
Speaker 1: I believe it's a question of accountability. The House has
Speaker 1: voted for impeachment and that has now passed those to
Speaker 1: the Senate. I believe that we can conduct vote, we
Speaker 1: can implement the agenda regarding the virus and the economy,
Speaker 1: and we also can deal with the impeachment. It is
Speaker 1: a question of accountability. You can't ignore, you know. It's
Speaker 1: not like the Constitution has written somewhere in there where
Speaker 1: some document where it states that you can avoid the
Speaker 1: aspect of accountability. No one is above the question of accountability.
Speaker 1: I believe that process will be conducted in a very
Speaker 1: fair open way and we should move forward. The Congressman,
Speaker 1: thanks for being with us this morning, and we appreciate
Speaker 1: your patience as we had some technical problems just moments ago.
Speaker 1: Please come back soon. Democratic Congressman that Dwight Heavens of
Speaker 1: Pennsylvania Duck Cass now with Seabreez and we'll do the
Speaker 1: equity markets here. I know Doug's loaded the boat on
Speaker 1: game Stop, so we'll see how that's going. He's gonna
Speaker 1: buy the rest of the state of Florida here when
Speaker 1: he clears that trade. But we have to start with
Speaker 1: Henry Aaron Doug Cass. When I heard that Henry arn Uh,
Speaker 1: I just waited for Tom Boswell of the Baltimore Son
Speaker 1: and the Washington Post to published one of our great writers.
Speaker 1: And Tom Boswell absolutely nailed our ute and I, Doug,
Speaker 1: I think this needs to be said. The media for
Speaker 1: baseball in our childhood was East Coast, Big City American League.
Speaker 1: The National League barely existed, particularly when the two teams
Speaker 1: from New York abandoned New York and Doug cass. For
Speaker 1: me and my childhood, Henry Aaron was a box score
Speaker 1: and he was on with Dizzy Dean on Game of
Speaker 1: the Week every once in a while, and that's all
Speaker 1: we knew about the guy. Yeah, I think that from
Speaker 1: my vamped point, um tom seven home runs were impressive,
Speaker 1: But to me it was the manner and the grace
Speaker 1: of hammering Hank when he confronted the force of racist
Speaker 1: vitriol in his pursuit of Babe Ruth's home run record.
Speaker 1: I think that many forget how vicious the attacks were
Speaker 1: on app. It was really an ugly moment for America,
Speaker 1: for baseball and for American sports. It was dug in
Speaker 1: and let's go to that because I you know, I'm
Speaker 1: thinking about Edward Matthews is my father called him and
Speaker 1: and all that go into the later part of his career.
Speaker 1: He's already iconic, and then in the pursuit of that
Speaker 1: iconic record. He just did it day after day, and
Speaker 1: there was a grind to it that everybody he was
Speaker 1: to hitting Tom that Sandy was two pitching um. They
Speaker 1: started their major league baseball careers only one year apart.
Speaker 1: There only one year difference in age. I know if
Speaker 1: you knew that. But even my cousin Sandy couldn't put
Speaker 1: Aaron away. I think that Aaron was one of only
Speaker 1: five players to hit over three hundred during his career
Speaker 1: against Sandy. But what was really impressive was his slash
Speaker 1: line against Sandy. For those that don't know baseball like
Speaker 1: we do, that's batting average, on base percentage, and slugging average,
Speaker 1: and it was. His batting average against Sandy was three
Speaker 1: sixty two, his on base percentage was thirty, and I
Speaker 1: believe his slugging at at average was close to six fifty.
Speaker 1: Doug Before we get to the markets, one more from
Speaker 1: me on on Henry Aaron what I and he was
Speaker 1: just before my time? But you know what, looking at
Speaker 1: some of the statistics, there's so many that jump out
Speaker 1: at you, but one of the ones that really jumps
Speaker 1: out of me in this day and ages, he played
Speaker 1: almost every game every year, well there was a hundred
Speaker 1: fifty four games, a hundred sixty two games, no day offs,
Speaker 1: you know, a day game after a night game. You
Speaker 1: only played ten games in a row. He played every
Speaker 1: single day, right and play and the great pictures completed
Speaker 1: almost every game. That game was much different than that
Speaker 1: the one M Paul one. The one stat that comes
Speaker 1: out to me was that he's starting salary in um
Speaker 1: N was six thousand dollars, but his ending salary was
Speaker 1: only two thousand dollars. Yeah, just extraordinary, different time and place.
Speaker 1: All right, Doug, we're starting here into earning season. Here,
Speaker 1: give us us how important is this earning season for you,
Speaker 1: as at least the actual numbers that get printed versus
Speaker 1: maybe some of the guidance we hear from some of
Speaker 1: these executives. I think the earning season is, um it's
Speaker 1: somewhat irrelevant because there's a rear view mirror. And I
Speaker 1: also also think, um Paul, it's it's taking a back
Speaker 1: burner and on the front burner is is this pandemic
Speaker 1: era central banking which is creating bubbles everywhere. If the
Speaker 1: market was a song, it would be the Tin Pally,
Speaker 1: the Tin Pan Alley hit. I'm forever blowing bubbles um,
Speaker 1: and for John Faroh Tom, I would mention to him
Speaker 1: that the song is currently the anthem of the English
Speaker 1: Premier League club west Ham. UM. So I think we're
Speaker 1: in the final phase of speculation. Speculation is running a
Speaker 1: muck upon us. It's probably spelling doomed for the eleven
Speaker 1: year bull market. Most should prepare. Most should not short,
Speaker 1: but most should prepare for this by reducing risk profile. UM.
Speaker 1: What's really concerning to me is that speculative behavior has
Speaker 1: become normalized. Many are really enjoying small caps backs, large
Speaker 1: cap testa speculations is growing ever more irrational. It's almost
Speaker 1: like a Janis Joplin song get a while you can, um,
Speaker 1: but history rhymes, and this is typically the last gas
Speaker 1: of a bull market. And I think that the ute,
Speaker 1: the young investors like Willie Sutton are attracted to these worthless,
Speaker 1: sometimes worthless, shiny objects of speculation because, to quote Sutton
Speaker 1: when asked why Rob's banks, that's where the money is.
Speaker 1: So that today the money is in speculation and SPACs
Speaker 1: and other you jaws epitomize that speculation. And every speculative
Speaker 1: cycle has an outlandish example of gambling and speculation today.
Speaker 1: It is games stop symbol gm e W traded at
Speaker 1: ten this morning. Do what should our more traditional investor
Speaker 1: to listen to US worldwide and across this nation. They're
Speaker 1: not in those things. They have money in their pension plan.
Speaker 1: Maybe they have an investment account as well. You can't
Speaker 1: tell me they should go to cash, you know, all
Speaker 1: of them. I mean, what do they do? Given the
Speaker 1: foolishness they observe future short most should probably increase the
Speaker 1: cash reserves relative to historic parameters. I personally find a
Speaker 1: record low number of stocks that meet my standards for
Speaker 1: purchase today and UM. I would say, for the second
Speaker 1: time in the last few years, it's my view that
Speaker 1: investors with the one or two year timeframe UM should
Speaker 1: sell many of their equities UM. The most important thing
Speaker 1: in looking at the larger cap stocks away from the
Speaker 1: speculation tom is that almost every traditional valuation metric is
Speaker 1: approaching all time highs. I have actually ten indicators, things
Speaker 1: like median enterprise value to sales, Warren Buffett's favorite UM
Speaker 1: sentiment stat market cap to g d P, enterprise value
Speaker 1: to free cash flow, medium price to sales, medium price
Speaker 1: to book, etcetera, etcetera, and they're all actually the historical percentile. So, Doug,
Speaker 1: I mean, you know, obviously the bull cases you're well
Speaker 1: well aware, is tremendous. Look liquidity in the marketplace. Uh,
Speaker 1: the economy globally is going to set to open up
Speaker 1: in the second half of this year, presumably Uh, stimulus
Speaker 1: around the globe. That's kind of the bull que are
Speaker 1: you saying that's fine? But the valuation is already pressing
Speaker 1: that all in. I think that we have to apply
Speaker 1: second level thinking, yes, Paul, Um, And I think I
Speaker 1: look at market looking at the upside reward versus the
Speaker 1: downside risk, and I see the upside reward being dwarf
Speaker 1: by that. Um, to use Ben Graham's phrase, I see
Speaker 1: little margin of safety for most stocks. Getting back to
Speaker 1: what you just mentioned, Um, we know that investor sentiment,
Speaker 1: is measured by almost every survey, has turned from fear
Speaker 1: to greed since March. UM. I believe that the consensus
Speaker 1: global economic and US corporate profit growth forecasts are too optimistic. Um.
Speaker 1: I think we're under playing that small US businesses have
Speaker 1: been gutted, and we'll leave a gap in consensus projections.
Speaker 1: And I so UM. And I also think that the
Speaker 1: Democratic Senate may mean more stimulus short term, but also
Speaker 1: means higher taxes on income and investments, something something like
Speaker 1: Cooperman talks about. And finally, I think we have this,
Speaker 1: this k recovery, this horrible schism between the halves and
Speaker 1: half not, and we have continued social division. It's approaching
Speaker 1: dangerous levels, as we saw on January six, Doug Kiss,
Speaker 1: here's the reality, and let's take it back to Henry Hearn.
Speaker 1: I looked at the time of the game in nine
Speaker 1: versus now. The players today are playing thirty four more
Speaker 1: games a year over the thirty minutes longer game now,
Speaker 1: I mean the hundred sixty two games and they're stretching
Speaker 1: it out. I mean they're to me, they're almost exhausted,
Speaker 1: just within the grind of the entertainment of it today. Yeah,
Speaker 1: that's a problem, the same problem. I play a lot
Speaker 1: of golf. Um, I've had lost hits a lawyer because
Speaker 1: of the time consumption. Um. So there's But you know this,
Speaker 1: I do like baseball. I like the purity of baseball.
Speaker 1: I think you share this sentiment because that it's untimed. Yeah. Absolutely,
Speaker 1: dot Cast, thank you so much for being with us
Speaker 1: today on the markets and of course on the memory
Speaker 1: of Hank Aaron, Mr Castle Sea Breeze Investments. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.