Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Again, another bang up jobs
Speaker 1: number today, some good news for folks that really take
Speaker 1: a look at the jobs as a driver this economy.
Speaker 1: And earlier today, speaking from the White House, President Biden
Speaker 1: said July's jobs report shows that his economic policies are working.
Speaker 1: Let's take a listen. What is indisputable now is this
Speaker 1: The Biden plan is working. The Biden Plan produces results,
Speaker 1: and the Biden Plan is moving the country forward. Right now.
Speaker 1: The first administration is history to jobs every single month
Speaker 1: in our first six months in office. Alright, That was
Speaker 1: President Biden that I would say, taking a little bit
Speaker 1: of a victory lap there on the strong data coming
Speaker 1: out of the labor market. Let's bring in Lindsay Pigs,
Speaker 1: chief economists for Steple Financial. She joins us on the
Speaker 1: phone from Wisconsin. So, Lindsay, you know, on the surface,
Speaker 1: it seemed like a really really solid number. It's not
Speaker 1: that million dollars, that million job number that people were
Speaker 1: hoping for at some point here, but still very strong.
Speaker 1: What's your takeaway, Well, it certainly was very strong. And
Speaker 1: to your point, if we actually add in the revision
Speaker 1: from June and May, the overall change was actually well
Speaker 1: over a million new jobs added to the U. S economy.
Speaker 1: So I think this was a very strong report all around.
Speaker 1: Really hard to find weakness in that type of jobs number.
Speaker 1: But but, but, and this is what Michael McKee talked
Speaker 1: to us a little bit about Dave Wilson earlier. It
Speaker 1: covers the first two weeks of the month, that's the
Speaker 1: survey data comes in. So that wasn't when we were
Speaker 1: talking about the delta variant. That wasn't when companies were
Speaker 1: saying do not return to the office in September. How
Speaker 1: does that affect the way that hiring is going to
Speaker 1: go uh in this period. Well, there is some fear
Speaker 1: that that the impact on the delta variant is going
Speaker 1: to have an impact going forward, but at least for now,
Speaker 1: businesses don't appear to be deterred from continuing to add
Speaker 1: employees as we as we continue to attempt to reach
Speaker 1: this this new normal. Now, to your point, we have
Speaker 1: seen the fear of the delta variant to lay some
Speaker 1: companies reopening requiring employees to go back to work, but
Speaker 1: that doesn't necessarily translate into the second part of the equation,
Speaker 1: which is layoffs or a slower pace of hiring. This
Speaker 1: just speaks to a different way that we are working
Speaker 1: and right now, still restaurants, hotels, the travel industry, the
Speaker 1: the industries that were the hardest hit are those that
Speaker 1: are most desperate to get employees back in the doors
Speaker 1: so that they can reopen to full capacity. But the
Speaker 1: one constraint that they are seeing is the limited pool
Speaker 1: of available labor. So I do think that this report
Speaker 1: could actually be it could have been ecuse me, even
Speaker 1: stronger if we saw more workers available and ready to
Speaker 1: go back to work. Do you expect that to materially
Speaker 1: change over the next several weeks as schools reopened. I know,
Speaker 1: for example, California reopens a lot of their schools Monday.
Speaker 1: A lot of other schools in the South and the
Speaker 1: West have are to reopened, and here in the Northeast
Speaker 1: kind of after Labor Day. For a lot of people,
Speaker 1: we hear that childcare and back to school is a
Speaker 1: really big issue. Do you factor that into your outlook
Speaker 1: for labor? Oh? Absolutely. According to the BLS, there's some
Speaker 1: seven million Americans that report they are currently sidelined from
Speaker 1: the labor force because of daycare or childcare issues. And
Speaker 1: as we see America's youth return to full time in
Speaker 1: person learning, I do think that's going to create a
Speaker 1: lot less pressure on the labor market. Also, as we
Speaker 1: see some of these federal programs expire, enhance unemployment benefits expire,
Speaker 1: and also vaccination rates continue to rise, that's going to
Speaker 1: eliminate some of the fear of contracting or spreading the
Speaker 1: virus or even the new delta variants. So as we
Speaker 1: move forward, there are a lot of factors that are
Speaker 1: on the positive side for the economy to continue this
Speaker 1: recovery at a very robust pace. Lindsey F. J. Powell
Speaker 1: sees a month like this, with those May and June
Speaker 1: upward revisions as well, how does he changes thinking at
Speaker 1: the FED. Well, policymakers have been very clear that they
Speaker 1: will continue to wait for further substantial progress, particularly when
Speaker 1: it comes to the labor market before adjusting accommodation. Now,
Speaker 1: certainly one report is not going to be enough to
Speaker 1: dictate a change in policy, but it certainly moves the ball.
Speaker 1: It moves the FED closer to at least releasing an
Speaker 1: outline for an eventual adjustment to policy, with of course
Speaker 1: taper being that first step. And we continue to anticipated
Speaker 1: outline being released as early as later this month, with
Speaker 1: a formal announcement coming for taper by the end of
Speaker 1: the year. So that does make the actual taper event
Speaker 1: at least in my opinion, of two events pushing that
Speaker 1: first rate increase out to three or beyond. So even
Speaker 1: as the data continues to strengthen, we're still looking at
Speaker 1: a FED likely to be very accommodated, very patient for
Speaker 1: quite some time. Lindsay has the delta variant altered um
Speaker 1: Steeple's outlook for GDP for the remainder this year until
Speaker 1: next year. Well, we had already factored in a lingering
Speaker 1: fear of the virus and potentially a second round resurgence
Speaker 1: around the fall, the time when we start to see
Speaker 1: flu season set in. So we had anticipated that some
Speaker 1: return of restrictions would be placed in the country, not
Speaker 1: the owner's restrictions that we saw in twenty but certainly
Speaker 1: a return of mask mandates. This this was not unanticipated
Speaker 1: by ourselves or I think many economists trying to factor
Speaker 1: in these uncertainties. But I think the biggest component right
Speaker 1: now is the change in policy metrics, specifically coming out
Speaker 1: of the federal government. When you talk about UH stopping
Speaker 1: the the influx of trillions upon trillions upon trillions of
Speaker 1: dollars into the economy, that's going to have a material
Speaker 1: effect on top line g d P. When we look
Speaker 1: at the organic components, the consumer is extremely strong, wage growth,
Speaker 1: gage growth up at four percent, housing, manufacturing services all
Speaker 1: running it at full speed. The economy is well established,
Speaker 1: but it will be slower than the six and a
Speaker 1: half percent at the start of the year. Lindsay Piggs,
Speaker 1: I thank you so much for joining us. Really appreciate
Speaker 1: it as always. Lindsay Piggs Pigs, chief economists for Steeple
Speaker 1: Financial Paul Sweeney temps down of ECNY Bloomberg Interactive Broker's
Speaker 1: studio in New York. Paul, earlier this week, you and
Speaker 1: I uh got the news in the afternoon of the
Speaker 1: New York Auto Show, right was canceled. We're discussing that
Speaker 1: it felt like one of those moments, like from March
Speaker 1: of where you think things are going in a certain
Speaker 1: way and then you start hearing about these events being canceled,
Speaker 1: and that that changes things. Um Indeed, the delta variant
Speaker 1: is increasingly threatening some parts of the US economy. Read
Speaker 1: Pickart writes about it on the Bloomberg terminal and on
Speaker 1: Bloomberg dot com. She's US economy reporter for Bloomberg New
Speaker 1: She's on the phone in Washington, d C. Read help
Speaker 1: us make sense of the jobs report that we got today,
Speaker 1: coming out a time when companies are saying, wait a second,
Speaker 1: we've told you to come back to the office in September.
Speaker 1: Hold that thought. Maybe October, maybe January. Absolutely so so.
Speaker 1: The delta variant, as we all know, it's spreading rapidly,
Speaker 1: and as a result, it's injected a lot of uncertainty
Speaker 1: into the economic outlook. In just a couple of weeks.
Speaker 1: So we got to f fantastic jazz report today. UM.
Speaker 1: But the key thing to keep in mind about it
Speaker 1: is that it's a snot shot of mid July. So
Speaker 1: in the weeks since then, delta has escalated and companies
Speaker 1: like Black Cross up in Amazon have all pushed back
Speaker 1: their return to work these um and as you mentioned
Speaker 1: just now, you've also started to seek conventions start to
Speaker 1: get canceled. UM. So we're trying to monitor high frequency
Speaker 1: data as a result, UM, and you're start just starting
Speaker 1: to see UM there it might be having an impact
Speaker 1: on spending, particularly on things like entertainment and travel. Um.
Speaker 1: But you know, the key with these high frequency indicators
Speaker 1: is there is a lot of noise. So interpreting this
Speaker 1: volatile data on a week tweek basis can be quite challenging. Yeah,
Speaker 1: it does, but I think it's really helpful for those
Speaker 1: that can really spend the time with it because I
Speaker 1: think about certain data points like open table, you know, restaurants,
Speaker 1: where's the restaurant traffic? What are we seeing in the
Speaker 1: last week or two? Because this two and I've been
Speaker 1: talking about it just feels like this delta variant discussion
Speaker 1: is really heated up over the last couple of weeks.
Speaker 1: Right so, so right now with the open table data,
Speaker 1: we haven't been a clear downward trend yet, but the
Speaker 1: same that didcount to me that I thought was quite interesting. UM.
Speaker 1: So there's a company called Castle Systems which essentially tracks
Speaker 1: UM electronic access to office buildings, so you know, think
Speaker 1: of like the little fob that you often white to
Speaker 1: get into your office building on each day. And you
Speaker 1: started to see this pullback UM last week from its
Speaker 1: pandemic peaks just a week earlier. And so we're starting
Speaker 1: to kind of see these moments where it's not you know,
Speaker 1: you're not sure if it's UM a one week thing
Speaker 1: or the start of a broader trend. But the fact
Speaker 1: that it could be the start of a broader trend
Speaker 1: is part of why there's all of the economic concerncy
Speaker 1: that we have and plays a lot into you know,
Speaker 1: how long we think this is gonna last? What UM,
Speaker 1: what the economic effects are going to be UM. But
Speaker 1: when it comes to monthly data, things like the jobs report,
Speaker 1: we're going to have to wait a little while until
Speaker 1: we can actually start to see any impact in those figures.
Speaker 1: We're talking about this during during the break and it's
Speaker 1: it seems like, at least the way that we're living
Speaker 1: right now, I haven't pulled back my spending. I'm still
Speaker 1: going into the office. Maybe in the metro New York
Speaker 1: area's got generally a high vaccination rate. Maybe you know, UM,
Speaker 1: it'll be interesting to see on the regional side read
Speaker 1: what is the other data that we should really be
Speaker 1: keeping an eye on, because you do point out that
Speaker 1: total spending using Make of America debon and credit cards
Speaker 1: decelerated meaningfully last week according to economists from the Bank
Speaker 1: m JP. Morgan actually had a no doubt today as well,
Speaker 1: UM using their Chase cards spending data that showed a
Speaker 1: similar kind of picture in terms of I'll pull back
Speaker 1: in spending on travel, UM and entertainment categories. UM. But
Speaker 1: but I do want to talk a little bit about
Speaker 1: today's jobs report, if that's okay. It's one of those
Speaker 1: things that, you know, not often do we get to
Speaker 1: talk about a report that's kind of right across the board.
Speaker 1: There's this obviously had a couple of caveats, um and
Speaker 1: like every report does. UM, but I think it showed
Speaker 1: us that heading into this the delta variant, we had
Speaker 1: a lot of momentum. So not only did we get
Speaker 1: more jobs than we expected UM for the July report,
Speaker 1: but we also saw pretty significant upward revision to the
Speaker 1: prior month as well. So you have all this job growth,
Speaker 1: you saw unemployment decline more than most people thought UM,
Speaker 1: and you saw the number of long term unemployed or
Speaker 1: the folks who have been out of work for twenty
Speaker 1: seven weeks or more followed by the most on record. UM.
Speaker 1: So there there's definitely the sense that you have this
Speaker 1: massive wave of economist momentum heading into delta UM. And
Speaker 1: obviously a delta proposes, you know, adds uncertainty, but for
Speaker 1: now most economists see delta as a downside risk rather
Speaker 1: than changing fundamentally changing their baseline forecast. Hevery thanks so
Speaker 1: much for this. We really appreciate your reporting. Here. Reid Pickered,
Speaker 1: US economy reporter for Bloomberg News joining us on the
Speaker 1: phone from washing in, d C. Again, this that the
Speaker 1: narrative we've had tim for the last you know, seventeen
Speaker 1: eighteen months. It is what is a virus? What is
Speaker 1: a coronavirus? Right? What do we name it? What do
Speaker 1: we call it? And oh my gosh, this is bad.
Speaker 1: This is much worse than we thought. This is not
Speaker 1: just going to go away. Then it became one, thankfully
Speaker 1: of shutdowns and all that thing. And then it became,
Speaker 1: oh my goodness, these vaccines came, and it came perhaps
Speaker 1: earlier than we thought, and oh boy, are they efficient
Speaker 1: and do they get the job done? And now it's
Speaker 1: seems to be getting jabs into people in vaccination rates
Speaker 1: and mass. And but now we've got a delta variant.
Speaker 1: It is throwing a wrange in everything. It seems like
Speaker 1: we're just hitting rewind a little bit here and again
Speaker 1: the discussion points are point we've got to get people
Speaker 1: vaccinated and to um mass. We have to have that
Speaker 1: discussion again. I think that's coming back. It's definitely coming back,
Speaker 1: especially in the context of school. Paul. It's it's interesting because,
Speaker 1: and I've talked about this this week, but there's this
Speaker 1: air of uncertainty around corporate earnings and at least when
Speaker 1: it comes to guide and and companies just don't know
Speaker 1: what the delta variant is going to do in terms
Speaker 1: of changing consumer behavior. Peter Kern, the Expedia Group CEO
Speaker 1: and vice chair, was on Bloomberg TV earlier today. He
Speaker 1: said that even though this isn't COVID all over again,
Speaker 1: Like this isn't lockdowns at least here in the US.
Speaker 1: When it's it's more of a wave right. When cases
Speaker 1: go up, local governments around the world change their recommendations
Speaker 1: some he said, like Australia lockdown. That changes things, and
Speaker 1: it changes things in an unforeseen way. Yeah, it does.
Speaker 1: And it just kind of just reminds us, um that
Speaker 1: this is going to be with us for a while
Speaker 1: in some form, And it's a question of how has
Speaker 1: it has been from the beginning, of how we alter
Speaker 1: our behavior, how we deal with it, how we engage
Speaker 1: with it on a daily basis. Thankfully, you know, the vaccine,
Speaker 1: many many people are vaccinated in many parts of the world. Unfortunately,
Speaker 1: many parts of the the world are are tremendously under vaccinated,
Speaker 1: and that's where the focus needs to go on a
Speaker 1: global scale. But given that there is good vaccination rates
Speaker 1: and many parts of the world, Uh, you know, we're
Speaker 1: told by the exper US that this is this is different. Um.
Speaker 1: We can live with this, we can work through this, um,
Speaker 1: and but there may be some time force I'm asking, well,
Speaker 1: let's talk a little bit more about the virus and vaccines.
Speaker 1: Because it is the cover of this week's Bloomberg Business Week.
Speaker 1: It's available on newsstands and at Bloomberg dot com slash
Speaker 1: business Week. It is a double issue. It has a fantastic,
Speaker 1: fantastic group of stories. Joel Webber's editor of Bloomberg Business Week.
Speaker 1: He joins us now on the remote from Massachusetts, I
Speaker 1: want to start droll with the with the cover here. Uh,
Speaker 1: Vaccine Mandates for Kids is the next big back to
Speaker 1: school fight. It is the cover story by Riley Griffin
Speaker 1: and Susie Ring. Take us into Uh we talked to
Speaker 1: you earlier this week about the story. Take us into
Speaker 1: the cover though, who is it and how did you
Speaker 1: choose it? Amazingly, this is the daughter of one of
Speaker 1: our our directors on the staff. Really this is not
Speaker 1: a stock photo yet not a stock photo and we
Speaker 1: shot it last weekend. Um. She actually is a gap
Speaker 1: model or has been a gap models kind of took
Speaker 1: her out of her retirement. Did you did you have
Speaker 1: to get her agents to approved that dad approved? We
Speaker 1: did not. We did not pay Dad for for this. Um.
Speaker 1: So so uh, you know, we tried to look a
Speaker 1: little bit into the teacher with this story because we're
Speaker 1: just around the corner from the school year starting. Um,
Speaker 1: we're gonna have a real moment here with society when
Speaker 1: schools reopened and kids who you know, obviously below twelve
Speaker 1: don't have um vaccination abilities yet, but twelves and seven team,
Speaker 1: we've seemed really lackluster numbers, and so we're gonna see
Speaker 1: a really interesting moment here with schools decided to mandate
Speaker 1: vaccines as kids begin going back to school with those
Speaker 1: that can get vaccines, and then you know, potentially as
Speaker 1: early as the beginning of the new year, we could
Speaker 1: see kids under twelve start to get vaccinated as well. Yeah,
Speaker 1: it's interesting and Joel, you probably saw that the news.
Speaker 1: But here in the state of New Jersey where I live,
Speaker 1: the Governor Murphy just announced that schools will require masking.
Speaker 1: Everybody's coming back full service, everybody in the in the
Speaker 1: in the classroom, but h going to require mask and
Speaker 1: that appears to be one path forward in some some states.
Speaker 1: I think I think of Florida maybe taking a different
Speaker 1: path that's going to be. And you know, masking is
Speaker 1: divisive and and you know vaccination is is that plus
Speaker 1: like times of thousand really um, And what we know
Speaker 1: though is the delta variant being such a variable here. Um,
Speaker 1: I think we're going to see more and more states
Speaker 1: come around to a masking mandate, at least for school
Speaker 1: as sort of a uh AN entry point, right, And
Speaker 1: obviously I think some of those decisions are going to
Speaker 1: break down politically at least dong state lines. But yeah,
Speaker 1: that that masking mandate is sort of part of it,
Speaker 1: and the vaccination discussion isn't far beyond. Now, keep in mind,
Speaker 1: the other variable on all of this is that school's
Speaker 1: mandate vaccines all the time. You know that it's different
Speaker 1: about the COVID one is that we still don't have
Speaker 1: and the FDA backing and that FDA acting is sort
Speaker 1: of the thing that everybody's watching for. We're still under
Speaker 1: the Emergency Use authorization. I don't imagine though, that people
Speaker 1: who are declining shots right now are going to be
Speaker 1: lining up once the FDA fully approves these vaccines. But
Speaker 1: you know it's because of delta. We've actually seen some
Speaker 1: uptick in places uh in terms of inoculations in places
Speaker 1: that have been there too for slow to adopt. So
Speaker 1: it is yet another thing that can hopefully help overcome
Speaker 1: some hesitancy. One thing that we were also talking about
Speaker 1: this week, joll and it's in the current issue of
Speaker 1: Bloomberg Business Week is the mad rush to deliver groceries
Speaker 1: in ten minutes. Vcs have bet billions of dollars on
Speaker 1: getting you bananas and beer in a very short period
Speaker 1: of time. Uh, what's the opportunity there? This is a
Speaker 1: story by Alex Webb of Bloomberg Quick take Over in London.
Speaker 1: The illustration for this story is awesome. It's a little
Speaker 1: beer can with rocket jets on attached to it. Back
Speaker 1: um there. Obviously, there have been the instant cart kind
Speaker 1: of services that have effectively teamed up with grocery stores
Speaker 1: and to do delivery for the past year. But the
Speaker 1: other phenomenon on is this new thing where we're seeing
Speaker 1: basically what are dark stores pop up and those these
Speaker 1: locations are actually their own services, things like gorillas is
Speaker 1: is is it one? Get here? Is another? Bill puff
Speaker 1: as another. There's other ones. Even New York has its
Speaker 1: own versions of this. But they're all promising basically to
Speaker 1: be able to deliver groceries within tend to fifteen or
Speaker 1: twenty minutes. And VC has spotted a huge opportunity here
Speaker 1: to disrupt the corner Deli. Those corner delis have long
Speaker 1: been very profitable UM, and by pouring a ton of
Speaker 1: VC money into this, it's opened up an opportunity. But
Speaker 1: the thing is that that window is is dependent upon
Speaker 1: UM being there without that much competition, and we're already
Speaker 1: seeing so many competitors that potentially the profit won't won't
Speaker 1: be sustainable. I love the corner of Bodega. I know
Speaker 1: I do too. I think most peop who would want
Speaker 1: to take it from you? Right? I had to go
Speaker 1: to ours this morning to get some milk, ran out
Speaker 1: of milk and it was closed. It was too early.
Speaker 1: I had to put a one that was way further away,
Speaker 1: And I was actually thinking about this story because it
Speaker 1: was like the one time where I needed to get
Speaker 1: milk in ten minutes or less. Joe Weber Or Weber
Speaker 1: is editor at Bloomberg Business Week, joining us each and
Speaker 1: every day here on Bloomberg Business Week. You heard Paul
Speaker 1: earlier mentioned New Jersey Governor Phil Murphy mandating masks in
Speaker 1: schools as cases increase among a younger population. That next
Speaker 1: month is going to start in person lessons. Also some
Speaker 1: other virus headlines United becoming the first major US carry
Speaker 1: to require employee inoculation UH and JP Morgan Chase, as
Speaker 1: we talked about earlier, is bringing back its mask requirement
Speaker 1: as Amazon did for frontline workers, even for those people
Speaker 1: who have already been vaccinated. So a host of virus
Speaker 1: news to get to. Let's do it as we do
Speaker 1: each and every Friday, with Dr Ian LUs Beder, clinical
Speaker 1: Professor of Medicine at n y U Langones Medical Center,
Speaker 1: joining us on the phone from New York City. Dr
Speaker 1: LUs Beder always great to check in with you on Fridays.
Speaker 1: It feels different now, and I know I don't I
Speaker 1: don't want to. I don't want to say that we're
Speaker 1: not looking at the data because the data is different,
Speaker 1: and that's why it does feel different. I think where
Speaker 1: are we in terms of getting out of this pandemic?
Speaker 1: Hello Tim and Paul, Hope you guys are doing well. Um.
Speaker 1: I think in terms of the pandemic, it's becoming pretty
Speaker 1: obvious that essentially everyone, certainly in the United States and globally,
Speaker 1: is going to be exposed to the delta variant. We always,
Speaker 1: even at the beginning of this, with vaccines and so forth.
Speaker 1: Two years ago, talked about slowing the spread, and I
Speaker 1: think that's really all we can hope for is to
Speaker 1: slow the spread. Everyone is going to be exposed at
Speaker 1: this rate. The vaccinated people certainly have an advantage UH
Speaker 1: in the sense that at this time it looks like
Speaker 1: the vaccines, even as antibody levels drop a bit, are
Speaker 1: really avoiding UM for the most part, hospitalizations and severe disease.
Speaker 1: You know, the unvaccinated UH typically will get a bad cold,
Speaker 1: but certainly a significant percent will get hospitalized. And at
Speaker 1: this point it looks like the vast majority of patients
Speaker 1: who are hospitalized with COVID are unvaccinated. So vaccines are
Speaker 1: one arm. Everyone is going to be exposed. Even those
Speaker 1: who have been vaccinated may well get DELTA to one
Speaker 1: degree or another, it looks like they will avoid severe disease,
Speaker 1: and we're relying on other things to kind of hold
Speaker 1: things up. Masks, for example, which also are not a
Speaker 1: cure old by any means, they do reduce spread maybe
Speaker 1: fifty depending on the kind of mask, obviously the more effective.
Speaker 1: So I think what we're doing is trying to UM
Speaker 1: have a variety of techniques to to mitigate because we're
Speaker 1: really not going to stop the pandemic at this point,
Speaker 1: there are just too many people who are unvaccinated. Uh.
Speaker 1: It's too hard to destroy me at all these vaccines,
Speaker 1: and I think all we can do is do our
Speaker 1: best to sort of protect vulnerable people while the pandemic
Speaker 1: plays out. And this is really what happened in Unfortunately
Speaker 1: without vaccines. But it took about three years for everyone
Speaker 1: to get infected, fifty million plus dead, uh, and ultimately
Speaker 1: it went away. And I think that's what's gonna happen here.
Speaker 1: But there will be more carnage before that happens. Dr
Speaker 1: los Pader want to get a sense of timing if
Speaker 1: we can even do that. In terms of this delta variant,
Speaker 1: is this something that could burn itself out quickly or
Speaker 1: is this going to stay around? I'm thinking about some
Speaker 1: of the short surgeones we saw in the UK and
Speaker 1: in Israel. Um, is that what we're gonna see here?
Speaker 1: Is this going to be here for longer in terms
Speaker 1: of this variant? You know, I think that's a good question.
Speaker 1: I think in the next few months we are going
Speaker 1: to have a significant increase in cases throughout the United
Speaker 1: States and basically everyone in the US. Probably by the
Speaker 1: end of the year will be exposed and whoever gets sick, um,
Speaker 1: you know, will get sick. And so I think in
Speaker 1: the US it probably will burn itself out. Globally it
Speaker 1: probably will continue, and of course as it continues globally
Speaker 1: there's risk of other variants. So I think Delta will
Speaker 1: burn itself out in the United States. Fortunately, it doesn't
Speaker 1: seem to be much worse than the original alpha variant.
Speaker 1: Maybe in some pockets, certainly much more contagious. But I
Speaker 1: don't think COVID will go away, and it may even
Speaker 1: become a chronic illness like influenza, where you do get
Speaker 1: a yearly shot. We don't really know that yet. Hopefully
Speaker 1: that won't happen. It did not happen in with influenza,
Speaker 1: which is different. Um. But I agree with you. I
Speaker 1: think we're going to see a surge in the next
Speaker 1: few months and then probably a significant drop in cases
Speaker 1: as the wave goes through the United States. Is this
Speaker 1: the last wave of the of this pandemic? Good question, US.
Speaker 1: I think at the end of this ways everyone in
Speaker 1: the United States three million plus will have been exposed
Speaker 1: one way or another to COVID. Either they will have
Speaker 1: had the vaccine, they will have had the disease of
Speaker 1: or they will have UM you know, recovered or died.
Speaker 1: So I think in the US come mid year, I
Speaker 1: think will be in a somewhat better place. If there's
Speaker 1: still new variants that are coming up, and are antibody
Speaker 1: levels are dropping, which they probably will, we may need
Speaker 1: a booster sometime, you know, elate full early winter. The
Speaker 1: the FDA hasn't really commented about that. Most people that
Speaker 1: I've checked still have good antibody levels. Some are still
Speaker 1: getting delta because the delta is a little resistant, has
Speaker 1: mutated enough so that our antibodies UM don't fully capture it.
Speaker 1: So if a new strain were to come along that's
Speaker 1: significantly different, that could be a problem come you know,
Speaker 1: next spring. You know, Dr Tim and I always like
Speaker 1: to when we have experts in frontline healthcare workers on
Speaker 1: would like to ask how the folks at your facility
Speaker 1: are doing. It's been such a long seventeen months. How
Speaker 1: are they doing right now? So, you know, I think
Speaker 1: the hospitals in New York really had a terrible siege
Speaker 1: UM a year ago, a year and a half ago,
Speaker 1: we were really the epicenter. Fortunately, now, the the case rate,
Speaker 1: the incidents is somewhere three plus or minus. There are
Speaker 1: not many cases in the hospital. All of those cases
Speaker 1: are unvaccinated. Most are doing fairly well. So I think
Speaker 1: this area in the Northeast is doing fairly well. That
Speaker 1: is not the case in other parts of the country.
Speaker 1: So I think in in the Northeast or the Tri
Speaker 1: State area here, I think we're going to be okay.
Speaker 1: You know, kids with masks and so forth. I think
Speaker 1: maybe treating ourselves more than treating the disease. But um,
Speaker 1: you know, there there are pros and comes to that,
Speaker 1: but I think we're through the worst of it in
Speaker 1: New York as best as I can tell. Well, that
Speaker 1: is certainly some good news to end on. Dr Ian
Speaker 1: Las Beader, Clinical Professor of Medicine at n y U
Speaker 1: Langon Medical Center. It is always a treat to talk
Speaker 1: to you each and every Friday. Dr LUs Better, thank
Speaker 1: you so much for taking the time. All right, Berkshire
Speaker 1: Hathaway reporting earnings tomorrow. Everybody's gonna be looking, obviously for
Speaker 1: how the company is dealing with the current environment. But
Speaker 1: of course people really want to hear from Warren Buffett
Speaker 1: and what is Warren Buffett and his team going to
Speaker 1: do with all that cash on the balance sheet? What's
Speaker 1: the next big deal? Cat Chick Lnsky joins us. She
Speaker 1: is our ace Bloomberg News reporter on Warren Buffett and
Speaker 1: Berkshire Hathaway. She joins us on the phone from New
Speaker 1: York City. Kat, Thanks so much for joining us here.
Speaker 1: First question, really tough one, This might throw you back.
Speaker 1: Why did they report on Saturday? It's a weird quirk
Speaker 1: and uh definitely makes for a busy week for all
Speaker 1: the reporters. But it is that he tends to actually
Speaker 1: like to report on days in which shareholders can take
Speaker 1: some time to look at the the release without getting
Speaker 1: swamped by too many too much coverage of it. So um,
Speaker 1: so you know, he, Yeah, he has the weird quirk,
Speaker 1: but but he's he's loved to put it either on
Speaker 1: everybody's attention. I mean, he's got full attention at the marketplace.
Speaker 1: And what about that cash that that Paul mentioned? What
Speaker 1: do we know about the types of deals that that
Speaker 1: Berkshire Hathaway is looking at right now? Well, and that's
Speaker 1: the biggest question, right and you know, Berkshire has simply
Speaker 1: too much cash and too few opportunities. They really haven't
Speaker 1: been able to strike a ton of deals recently, and
Speaker 1: and that's been weighing on them for the past couple
Speaker 1: of years now, especially with the back boom going on um.
Speaker 1: But one of the biggest questions is will they have
Speaker 1: other avenues to deploy it. You know, Berkshire and Buffett
Speaker 1: have finally started doing more share buy backs, and we
Speaker 1: have a hint. You know that they did at least
Speaker 1: more than six billion dollars worth of buybacks in the quarter,
Speaker 1: which is a substantial amount. But when you're Berkshire and
Speaker 1: you're throwing off that much cash, you know, it's a
Speaker 1: little hard to tell if that's actually going to be
Speaker 1: able to keep up with the gushing flows of cash
Speaker 1: that the conglomerate produces. And I think that's gonna be
Speaker 1: the biggest key. You know. A couple of months ago
Speaker 1: we learned that Greg Abele is in line to take
Speaker 1: over for Buffett once he decided to to step down.
Speaker 1: And I think that's that's the key there. Once he
Speaker 1: decides agreed, and you know, he's coming up one Buffet
Speaker 1: is so I'm you know, I think he really loves
Speaker 1: to stick with this business. But every earning is from
Speaker 1: here on out, everyone's going to be scrutinizing it more
Speaker 1: because it's one thing to say, hey, you know, I'll
Speaker 1: give Warren Buffett the benefit of the doubts and maybe
Speaker 1: he can find you know, another deal months down the
Speaker 1: line and it's worth him waiting. Um. It's another thing
Speaker 1: to say that, you know, hey, I'm going to give
Speaker 1: greg Able that benefit of the doubt. Do we have
Speaker 1: any idea how their investment philosophy, they're operating strategy may
Speaker 1: change under Greg abel Well, we know for certain greg
Speaker 1: Abele is going to face more pressure and that might mean,
Speaker 1: you know, Buffett has long shine away from dividend um
Speaker 1: he finds by backs the much better use of shareholder return.
Speaker 1: You know, there is a chance and analysts keep raising
Speaker 1: this point of you know, greg Able might face more
Speaker 1: pressure to actually issue a diffident and have a one
Speaker 1: time you know, way to release that cash. We've also
Speaker 1: been seeing and this is you know a little different
Speaker 1: from Berkshire. We um there was a hint that Berkshire
Speaker 1: sold this vacuum cleaner company, Kirby Um, just in recent months,
Speaker 1: and so there is sort of this idea that maybe
Speaker 1: Berkshire is at a point in which it is really saying,
Speaker 1: look at all the companies we own, you know, are
Speaker 1: all of them sort of worth owning in the same way?
Speaker 1: And and that could be something that potentially changes. But
Speaker 1: obviously just one company down, we'll see um whether they
Speaker 1: sort of take that tax with other ones. I think
Speaker 1: it's really notable that the company can't find deals right now,
Speaker 1: considering that we are likely going to see a record
Speaker 1: summer in terms of amount of money UH spent on
Speaker 1: deals and is looking like it's going to be a
Speaker 1: record year. So so what makes a Berkshire deal at
Speaker 1: Berkshire deal agreed? And and I think actually Berkshire's pitch
Speaker 1: has just sort of been lost in the stream of
Speaker 1: capital that's coming after all these deals. I mean, Bercher's
Speaker 1: pitch for a long time to potential companies is, hey,
Speaker 1: you know, if you're a family owned business in particular,
Speaker 1: and you want it to have a home at this conglomerate,
Speaker 1: that will let you sort of run the business like
Speaker 1: you've wanted to run it and give you that sort
Speaker 1: of freedom to handle things on your own, that autonomy
Speaker 1: that something to be found at Berkshire. And and that's
Speaker 1: an enticing pitch. I think for many companies. But when
Speaker 1: you have private equity and you have facts, and you
Speaker 1: have all this money on the sideline, you know, buffet
Speaker 1: doesn't want to overpay for a deal. And so you know,
Speaker 1: if other companies are willing to pay up for some
Speaker 1: of these acquisitions, Berkshire, you know, is going to lose.
Speaker 1: I'm looking at the five year chart to function ceo
Speaker 1: MP and over the last five years Berkshire hathways underformed
Speaker 1: the SMP. Is there any pressure building? I think there's
Speaker 1: a lot of pressure building. Yeah, Berkshire has underperformed the
Speaker 1: SMP five hundred and you know, it's gotten to a
Speaker 1: point where I think people really question the size. I mean,
Speaker 1: it's a huge company. And when you look at all
Speaker 1: the arraysed businesses in it's in. You know, sometimes that
Speaker 1: breath is beneficial and that you know, when one business
Speaker 1: is doing well, maybe another business is not in it's
Speaker 1: sort of off sets it. But I think the idea
Speaker 1: that there's not that many huge deals that Berkshire can
Speaker 1: find for a well priced you know, a well priced price,
Speaker 1: and and I think that sort of question is going
Speaker 1: to continue to make investors a little more cautious on
Speaker 1: the stock catch Glinsky. Finance reporter Fort Bloomberg knew she's
Speaker 1: going to be up early covering Berkshire Hathway earnings on
Speaker 1: Saturday morning, and we certainly appreciate that. What a busy
Speaker 1: week we've had in terms of earnings, in terms of
Speaker 1: economic data today, we obviously had the jobs number coming
Speaker 1: in better than expected, markets generally moving hire. A lot
Speaker 1: of folks trying to say, boys, the next five to
Speaker 1: seven percent, moving this stock market higher or lower. Let's
Speaker 1: check up with Ryan Dietrich, He's chief market strategies for
Speaker 1: LPL Financial, joined us on the phone from Charlotte, North Carolina. Tim,
Speaker 1: if you don't know what, Charlotte's a little town southwest
Speaker 1: of Durham, North Carolina, at home with Duke University. Just
Speaker 1: wants to point that out to you. All right, Ryan,
Speaker 1: let's we've had a lot of earnings over the past
Speaker 1: couple of weeks, We've had a lot of economic data here.
Speaker 1: What say you about this equity market? Here? Guys, thanks
Speaker 1: for having me back. And before we go there, I
Speaker 1: do want to point out we are right now at
Speaker 1: LPL we're having a we call our focus conference with
Speaker 1: more than ten thousand of our advisors virtually we had
Speaker 1: speaking of Duke, we had Mike Sachowski virtually with our
Speaker 1: CEO Dan Arnold on Wednesday. And I'm not a huge
Speaker 1: Duke fan. I'll just give it out there, but it
Speaker 1: was an incredible Sweeney about that. Okay, there you go.
Speaker 1: But anyway that that that's my that's my part about Duke.
Speaker 1: It was really cool as our focus event with our advisors.
Speaker 1: But listen, there's like you said, I mean, there's the
Speaker 1: strong jobs number. FED is still accommodati of the economy
Speaker 1: is doing better than we thought. But what's also happening.
Speaker 1: We're making new highs right today could be the forty
Speaker 1: four new all time high so far this year. What
Speaker 1: in the world does that mean? Well, guys, and you
Speaker 1: look at previous years up to this point, only two
Speaker 1: had more new all time highs ninety five and sixty four,
Speaker 1: and that's a small sample size. What happens then those
Speaker 1: two previous years markets continue to be really strong, and
Speaker 1: ninety five they did pretty good the second half of
Speaker 1: sixty four. So I think the truth is there's a
Speaker 1: momentum behind this market. History would say you probably will
Speaker 1: you definitely want to continue to be a buyer, of
Speaker 1: any dips. But the answer your question could the next
Speaker 1: five or seven percent up or down. We wouldn't be
Speaker 1: surprised if it was down, right. We don't had a
Speaker 1: five percent correction since last October. This is August, the
Speaker 1: worst month of the year in a post election year.
Speaker 1: September is the worst month on average. October is obviously vaultile.
Speaker 1: So we've been bullish, come all you guys for a while,
Speaker 1: but I tell you it makes sense. Maybe we could
Speaker 1: be due for some normal third quarter of volatility. Here, Ryan,
Speaker 1: what is it that that that sets that sends stocks
Speaker 1: lower than the third quarter this year? Yeah, very welcould be, Yeah,
Speaker 1: very well, could be. You know, the FED policy and
Speaker 1: the inflation and the worries there at the same time,
Speaker 1: it's send the best answer, but sometimes the truth it's
Speaker 1: just been a while since we've had any volatility. Markets
Speaker 1: sometimes just get volatile to be volatile, but the inflation
Speaker 1: concerns are clearly still out there. And then also, hey,
Speaker 1: we're making new highs. People are pretty optimistic, right, I mean,
Speaker 1: sometimes if everyone's on one side of the boat, that's
Speaker 1: what can kind of trip things up, if you will,
Speaker 1: you know, Jackson Hole obviously is a couple of weeks
Speaker 1: from now that's going to be, you know, very closely watched,
Speaker 1: and they're they're going to talk about tapering or not
Speaker 1: and what's what's it mean? What's the FED thing about inflation?
Speaker 1: And we've seen some pretty big policy decisions made at
Speaker 1: Jackson Hole over the years. So we're not saying that's
Speaker 1: the trip up situation, but that's just something to be
Speaker 1: aware of. And lastly, September it's still out there. Remember
Speaker 1: said last September guys, we had nearly a ten percent correction. Honestly,
Speaker 1: no one probably remembers why it happened. We just had
Speaker 1: a big rally than a ten percent correction pre election jitters.
Speaker 1: Sometimes the calendar can just be something you want to
Speaker 1: pay attention to. Alright. So Ryan, we're, you know, well
Speaker 1: through the earning season here, we're gonna have some of
Speaker 1: the retailers coming up next, some consumer names coming up next.
Speaker 1: How's you take it at these earnings? They've been great
Speaker 1: in terms of comparisons. Are they good enough for this market? Yeah,
Speaker 1: we think they are. We are making new highs as
Speaker 1: we speak. I mean it's amazing, right, I mean, recent
Speaker 1: recent data says we might be up almost ninety percent
Speaker 1: year over year in the second quarter. Just a couple
Speaker 1: of months ago we were thinking, you know, about mid
Speaker 1: fifty percent. I mean, it's just amazing how quickly it's
Speaker 1: come up. So but that's the key thing, right, It's
Speaker 1: all about expectations and you know, clearing the bar, and
Speaker 1: the bar is getting higher and higher. I mean just
Speaker 1: today's again today's number UM on the jobs number obviously
Speaker 1: really strong. It's got some excitement. Look at the ten
Speaker 1: ure yield, right, the tenure yield obviously has been surprising
Speaker 1: many to the downside. Maybe potentially form a little double
Speaker 1: bottom with a nice move higher here. So we're optimistic
Speaker 1: that earnings will continue to be strong. But we also
Speaker 1: think that early cyclical value group UM that it is
Speaker 1: obviously struggled, no question about the last two or three months,
Speaker 1: is still where you're going to find some leadership the
Speaker 1: second half of this year. And with the action on
Speaker 1: the tenure, we're optimistic that maybe we found a technical
Speaker 1: bottom here and you can start having a higher tenure,
Speaker 1: which should be a tail win for banks, financials and
Speaker 1: value in general. I know you're studying in technicals. I
Speaker 1: know you're looking at the technicals. But this is all
Speaker 1: happening in the background of the delta variant spreading. Uh,
Speaker 1: We've been talking throughout the show about potential softening and spending.
Speaker 1: There some data from Bank of America Debt and credit cards.
Speaker 1: Yesterday it said it decelerated meaningful spending, that is last week,
Speaker 1: and then today we got some news from Chase that
Speaker 1: said spending spending data has softened recently as well. How
Speaker 1: do you look at alternative data like that when you're
Speaker 1: thinking about where the market's going to go. Well, we
Speaker 1: obviously pay attention to it, but at the same time,
Speaker 1: we're almost back in that world where what was bad
Speaker 1: news good news? Right? I mean, okay, so if the
Speaker 1: delta variant is terrible as it is, and then the
Speaker 1: spending slows down, and we do see a little economic
Speaker 1: slow down because honestly, the job's number was strong, a
Speaker 1: lot of that was before some of the delta variant stuff,
Speaker 1: like you know, kind of creep started creeping up again.
Speaker 1: So we have to have to look at it like that.
Speaker 1: But but again, if if things start to slow down, well,
Speaker 1: the Fed they've said what they've said, right, the Fed
Speaker 1: might actually you know, keep policy low for a while
Speaker 1: and then they ignore tapering for a little bit longer.
Speaker 1: So so as strange as it sounds, and fiscal policy
Speaker 1: still out there, so bad news could be good news.
Speaker 1: We saw that a lot last year, right, I mean
Speaker 1: this time a year ago. Markets in the midst of
Speaker 1: a five month winstree five month winstree can we have
Speaker 1: some of the worst headlines in our country's history. A
Speaker 1: lot of it was because, yeah, the economy came back,
Speaker 1: but that fiscal monetary policy is there, So it's it's
Speaker 1: just kind of the way I guess you gotta you
Speaker 1: gotta look at it from a full picture point of view,
Speaker 1: and bad news could be good news from an investment's
Speaker 1: point of view, Ryan, what are your investment professionals, you know,
Speaker 1: hearing from their clients these days? You know, I know
Speaker 1: there's that wall of worry out there, and uh, you know,
Speaker 1: you can make the argument that it's higher than ever
Speaker 1: right now. So what are they hearing? Yeah, I mean
Speaker 1: a great question there. So the two that we've been
Speaker 1: hearing a lot lately, a delta variant, which we just
Speaker 1: kind of touched on, and but also stagflation, right, I mean,
Speaker 1: stagflation is the idea clearly that the inflation is going higher,
Speaker 1: the economy is starting the weekends. Those are some of
Speaker 1: the things that are the concerns we're hearing about. Again.
Speaker 1: I mean, we're in the camp similar to the FED,
Speaker 1: that the inflation is probably transitory here, um, you know,
Speaker 1: And and and yeah, we had two percent inflation for
Speaker 1: like a decade, and we might see two and a
Speaker 1: half three percent for a couple of years, coming off
Speaker 1: the worst for session in our lifetime. That's that's not
Speaker 1: overly concerning to us, but we're watching it closely. But
Speaker 1: those are the two things we're hearing a lot about.
Speaker 1: And and you're right, there is a fear of heights.
Speaker 1: I mean people everyone's optimistic. Then you get a little correction.
Speaker 1: I remember the almost five percent correction back in the
Speaker 1: late January early February game stop. I mean that was
Speaker 1: only a five percent correction, not quite but almost. There's
Speaker 1: a lot of fear on that of modest pullback. So
Speaker 1: that's the thing we want to keep seeing. We're gonna
Speaker 1: pull backs eventually, want fear to come in and that
Speaker 1: can be you know, wash out the weekends and continue
Speaker 1: the upward trajectory that we think we're still on. So
Speaker 1: when you see those meme stocks and even Robin Hood
Speaker 1: today and so on, does that kind of point to
Speaker 1: you as a well, this is a sign of a
Speaker 1: frothy market, sign of a topping market when you see
Speaker 1: those types of market behaviors. Yeah, and in the near
Speaker 1: term absolutely can be. I mean there's no doubt. Remember
Speaker 1: coin bases I p O came out literally the day
Speaker 1: that you know, Bitcoin tops back in April, so you
Speaker 1: see then Robin Hood, So that's kind of out there. Um.
Speaker 1: But at the same time, you know, the meme stops
Speaker 1: are one that memes stocks are one thing. But the
Speaker 1: truth is, hey, earnings are strong. I know, evaluations are stretched,
Speaker 1: but when you have the relatively low rates that we
Speaker 1: still have, Yeah, you know, stocks about be expensive, but
Speaker 1: bonds are really expensive. So it still makes sense to
Speaker 1: us the second half of this year is we keep
Speaker 1: going that stocks will do a little bit better in
Speaker 1: bonds and value is probably gonna do a little bit
Speaker 1: better than growth. Is how we're telling our more than
Speaker 1: nineteen thousand advisors how we see the world. Brian Dietrich,
Speaker 1: chief market strategist at LPL Financial, joining us on the
Speaker 1: phone from Charlotte, North Carolina. Ryan is always a pleasure
Speaker 1: when you join us. Thank you so much for taking
Speaker 1: the time. Thanks for listening to Bloomberg Business Week. Download
Speaker 1: the podcast on iTunes, SoundCloud, or Bloomberg dot com, and
Speaker 1: you can also listen to our radio show at two
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