Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
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Speaker 1: YouTube search Bloomberg Global News. Okay, it's all about when
Speaker 1: you think about the narrative of this pandemic, how it's evolved,
Speaker 1: how it's had an arc since the beginning. I think
Speaker 1: now where we are in the narrative is the delta
Speaker 1: variant and vaccine nations, getting people vaccinated, getting who vaccinated?
Speaker 1: How young? How old? Uh, it's now turning towards the
Speaker 1: very youngest. We think about getting back to school, and
Speaker 1: there's lots of discussions and arguments to be made on
Speaker 1: both sides. Dr Elizabeth med joins US. She's medical director
Speaker 1: of Pediatric Quality and safety at this Whedish Health Services
Speaker 1: joining us on the phone from Seattle. Uh dr me,
Speaker 1: thanks so much for joining us here. I guess you know.
Speaker 1: Lots of parts of the country are just about going
Speaker 1: back to school, and California starts a week from Monday.
Speaker 1: Uh Here on East Coast, it's it's right after a
Speaker 1: labor day. But the discussion is who should get vaccinated
Speaker 1: as we think about back to school, should we be
Speaker 1: should we be getting kids vaccinated? And how young? You know,
Speaker 1: I think absolutely. What we recommend is that kids twelve
Speaker 1: and over who are eligible for the vaccine get the
Speaker 1: vaccine and get it soon. You know. The reality is
Speaker 1: that it takes several weeks between the couple of doses
Speaker 1: and then full immunity two weeks after that second dose.
Speaker 1: And so for many kids who haven't gotten the vaccine yet,
Speaker 1: we're already sort of talking about post going back to
Speaker 1: school dates for them to be fully fully protected. The
Speaker 1: cover of the new issue of Bloomberg Business Week is
Speaker 1: all about In the cover story of today's Big Take,
Speaker 1: We're going to talk about it in just a few minutes.
Speaker 1: It's all about vaccine mandates for kids, and there's some
Speaker 1: pretty startling. UH statistic in here, UH the rollout of
Speaker 1: shots to mills of kids ages twelve to seventeen, Although
Speaker 1: they account for seven point five percent of the U
Speaker 1: S population, it's really lagged. Only of that group has
Speaker 1: received their first dose. Why is that, doctor made? Why
Speaker 1: are we seeing this reluctance from parents to inoculate their
Speaker 1: kids When we think about vaccines in the early parts
Speaker 1: of our lives, that's when we get the most vaccines. Yeah,
Speaker 1: that's right. You know. I think there are a couple
Speaker 1: of factors that play into that. And so one of
Speaker 1: those factors, I think is that we know that older
Speaker 1: adults tend to get sicker, right, and so we know
Speaker 1: that although kids can get very thick, can end up
Speaker 1: in the i C you can die from COVID, can
Speaker 1: have long COVID, and all those other complications that we
Speaker 1: think about, the rates of that happening in children and
Speaker 1: teens are significantly lower than an older adults. And so
Speaker 1: I think that for many people who are high risk,
Speaker 1: you know, they want to get the vaccine for themselves
Speaker 1: as soon as possible, and they may think differently about
Speaker 1: it when it comes to their kids. I think the
Speaker 1: other factor here is that we know it's hard to
Speaker 1: make a health care decision for yourself, and it's even
Speaker 1: harder to make it for someone else, and so people,
Speaker 1: I think are feeling like they want to make sure
Speaker 1: they have all of their questions before they proceed with
Speaker 1: vaccines for their children. So dr me, what do we
Speaker 1: know about how young we could, uh, we can give
Speaker 1: this vaccine to a person? How young can they be? Mentioned?
Speaker 1: Twelve and older? How about some of the younger kids? Yeah,
Speaker 1: so at this point it's approved for twelve and over.
Speaker 1: We anticipate that it will be approved for younger children,
Speaker 1: probably down to age five, potentially down to age two,
Speaker 1: by kind of early to mid fall, and I know
Speaker 1: that a lot of parents are desperately waiting for those
Speaker 1: dates to get their younger children vaccinated. And the reality
Speaker 1: of this pandemic is that, I think even for families
Speaker 1: where everyone who's eligible has had the vaccine, so everybody
Speaker 1: twelve and older and then the adults in the household,
Speaker 1: many of those families still have younger children who are
Speaker 1: not yet eligible. And so I think it's hard to
Speaker 1: sort of feel like we can get back to life
Speaker 1: as normal for our families when we still have one
Speaker 1: or more young children that aren't yet able to get
Speaker 1: the vaccine who are living in our house. Doctor. Back
Speaker 1: in May, Dr Fauci, the nation's top infectious disease doctor,
Speaker 1: he said that by the first quarter of two UH
Speaker 1: we're going to have quote enough information regarding safety and
Speaker 1: UH immune genicity. You can help me out with that
Speaker 1: one if you want to be able to vaccinate children
Speaker 1: at any age. Does do you agree with that timeline
Speaker 1: that in the first part of next year we're gonna
Speaker 1: be able to vaccinate newborns to UH to two year olds. Yeah,
Speaker 1: I think that rings true for the most part. I mean, um,
Speaker 1: we know that there are ongoing trials down to age
Speaker 1: six months for multiple of the vaccines, and so we
Speaker 1: anticipate having quite a bit of safety data even down
Speaker 1: to union since I would guess that it will be
Speaker 1: very similar to the flu shot, and so for the
Speaker 1: flu shot, we start giving that at six months and older.
Speaker 1: So I'm not really convinced that we're going to be
Speaker 1: vaccinating You weren't against COVID anytime soon, but I think
Speaker 1: those young infants kind of six months and older will
Speaker 1: certainly be in the next way. What do we know
Speaker 1: about dosage I was surprised when when my son got
Speaker 1: his first flu shot that he got two of them
Speaker 1: separated a few months apart, whereas I only got one,
Speaker 1: and it was that he got double passage. Basically, so
Speaker 1: for that first year, for any child who's seven or younger,
Speaker 1: for that first year, we recommend getting two doses a
Speaker 1: month apart to really kind of stimulate the immune system
Speaker 1: because for many vaccines, that first sort of primed you,
Speaker 1: and then that second dose is really what confers the
Speaker 1: full immunity. And after that we consider that yearly dose
Speaker 1: sort of a booster. And so it may be the
Speaker 1: same with with COVID. You know, we're already talking about
Speaker 1: potentially having boosters for high risk groups that have already
Speaker 1: received the two vaccine series, so I think it will
Speaker 1: be probably fairly similar to that. Dr me just quickly,
Speaker 1: do you think schools will mandate vaccinations. I don't see
Speaker 1: that happening personally until they help full FDA approval for
Speaker 1: the age groups that we're talking about, and so I
Speaker 1: think at that point we can really have that discussion.
Speaker 1: But in my mind, it is unlikely to happen until
Speaker 1: we reached that milestone, and hopefully that will be in
Speaker 1: the next few months. So do you think full approval
Speaker 1: just in the last thirty seconds here, we could see
Speaker 1: that by next school year, so that next school year
Speaker 1: they'll be mandated. I think it's there possible. And you know,
Speaker 1: so much of this is dependent on what is happening
Speaker 1: in the United States, and that has been very changeable,
Speaker 1: so we really have had to be nimble with our
Speaker 1: guidance and I think that will continue to ring true
Speaker 1: as we enter of the winter and then spring next year.
Speaker 1: Dr Mead, We like talking to people who are in hospitals,
Speaker 1: who are on the ground, who are talking to patients,
Speaker 1: who are working with patients, just to get an update
Speaker 1: from the front lines. Are you seeing younger and younger
Speaker 1: patients in your hospital than at other points during the pandemic?
Speaker 1: We really are, you know. I'm a I'm a hospital pedutrician,
Speaker 1: so I only work in the hospital. I see newborns
Speaker 1: up to eighteen who are sick, who are hospitalized, and
Speaker 1: I will tell you that throughout the pandemic, although the
Speaker 1: rates are lower than in adults and especially older adults,
Speaker 1: we have seen young infants, kids, and teens who are
Speaker 1: hospitalized who are very ill with COVID who are in
Speaker 1: the ICU, kids who are having long COVID symptoms. So
Speaker 1: although the rates are lower, I think it's really important
Speaker 1: to reinforce for people this is still a disease that
Speaker 1: can cause really critical illness in newborns all the way
Speaker 1: through those those children and teenage years. So Dr me,
Speaker 1: what are when you do see these patients and you know,
Speaker 1: are most of them unvaccinated? And if so, what are
Speaker 1: some of the typical reasons that you're finding, uh in
Speaker 1: your hospital? You know, the majority of patients that are
Speaker 1: showing up to the hospital that are very sick, that
Speaker 1: are ending up in the ice with the delta variant
Speaker 1: in particular, are on vaccinated. So we know that the
Speaker 1: vast majority of those statients have not received the vaccine.
Speaker 1: And I think that's such an important point because we
Speaker 1: know that although people who are vaccinated can transmit the
Speaker 1: delta variant, they are vastly less likely to end up
Speaker 1: with severe symptoms in the hospital, in the i CU
Speaker 1: or to die from COVID. Right, So, what we're seeing
Speaker 1: across the country is that it seems to be the
Speaker 1: skewing now to younger people who are not vaccinated. So teams,
Speaker 1: and all the young adults to people in their twenties
Speaker 1: and thirties who have not received the vaccine, who are
Speaker 1: ending up in the hospital and who are very, very
Speaker 1: very sick on adulta variant in particular, if I think
Speaker 1: back to how I felt at the beginning of this
Speaker 1: pandemic and the way that I spoke with friends parents
Speaker 1: of young kids, we always said to each other, Hey,
Speaker 1: this could be so much worse. This could be something
Speaker 1: that is really a big danger to our kids. And
Speaker 1: I'm wondering, now, if we've gotten to that point, what
Speaker 1: do we know about how dangerous the delta variant is
Speaker 1: two kids? Is it more dangerous than the earlier or
Speaker 1: or or the earlier versions of COVID nineteen that we
Speaker 1: saw here in the US and in March April may
Speaker 1: have last year. You know, the comprehensive data on that
Speaker 1: really remains to be seen. So we don't have good
Speaker 1: national data at this point on what the actual sort
Speaker 1: of increase in rates of serious illness are. We do
Speaker 1: know that it is still thankfully more rare in kids
Speaker 1: and teens, and we're very grateful for that because that's
Speaker 1: not something we typically see in pediatrics when it comes
Speaker 1: to infectious disease, right, usually children get much thicker than adults,
Speaker 1: and so this seems to be different than that, which
Speaker 1: is good. But we know that rates of infection are skyrocketing.
Speaker 1: So we had about seventy two pediatric cases in the
Speaker 1: last week. That was almost double the number from the
Speaker 1: prior week, and it was five times the number that
Speaker 1: we were seeing during the weeks in June. And so
Speaker 1: as we start to see the numbers of six children
Speaker 1: and children who are positive for COVID going up, we
Speaker 1: know that those total numbers of kids who are really sick,
Speaker 1: who are ending up in the hospital will also go up.
Speaker 1: So Dr Me just give us a sense of how
Speaker 1: things are in Seattle. Here in New York City, we're
Speaker 1: seeing cases go up, even though we have very high
Speaker 1: vaccination rates. What's the how are things in Seattle? You know? Unfortunately,
Speaker 1: across the country, we are starting to see those bed
Speaker 1: numbers go up. So we're seeing hospitals start to fill again.
Speaker 1: We're seeing the number of cases go up. We're seeing
Speaker 1: the number of I see you admissions go up. There's
Speaker 1: an estimation that there's about fifty thou people across the
Speaker 1: country getting hospital that's with COVID right now, and so
Speaker 1: we are very very concerned. I mean, these are numbers
Speaker 1: that we were seeing sort of at the height of
Speaker 1: the pandemic, and we really had gotten better for some
Speaker 1: time as people started to get vaccinated, and now with
Speaker 1: the delta variant and that increased contagion and transmitsibility, we're
Speaker 1: seeing those numbers go up again. So what I would
Speaker 1: just say is, we know for certain the absolute best
Speaker 1: way to protect yourself and the other people who live
Speaker 1: with you or who you have close contact with from
Speaker 1: the delta variant is to get vaccinated, because we know
Speaker 1: that will dramatically decrease your risk of ending up in
Speaker 1: the hospital or dying from COVID. DR me just in
Speaker 1: the last seconds that we have. What do you tell
Speaker 1: parents who come to you concerned that their kids under
Speaker 1: twelve can't yet be vaccinated and they're concerned about them
Speaker 1: actually getting COVID. I have so many parents who have
Speaker 1: that concern, who are just desperate for the vaccine to
Speaker 1: be approved for their younger children. We have a six
Speaker 1: year old in my house who's not yet eligible, who
Speaker 1: can't wait until he's able to get the vaccine, and
Speaker 1: I think that's actually the majority of parents that I
Speaker 1: talked to is who are really saying, you know, the
Speaker 1: older kids are vaccinated or I'm vaccinated. I just can't
Speaker 1: wait until my younger kids can get this so that
Speaker 1: we can really feel like our whole bottle and our
Speaker 1: whole family is protected. And my great hope is that
Speaker 1: that will happen really within the next couple of months.
Speaker 1: It certainly seems to be the direction that things are going.
Speaker 1: Dr Elizabeth Mead, a medical director of pediatric Quality and
Speaker 1: Safety at Swedish Health Services, joining us on the phone
Speaker 1: from Seattle. A big thank you for joining us this afternoon.
Speaker 1: The new issue of Bloomberg Business Wig magazine. It is
Speaker 1: available on newsstands now and at Bloomberg dot com Slash
Speaker 1: business Week. The cover story also Today's big Take. It's
Speaker 1: all about vaccine mandates for kids. Is it the next
Speaker 1: big back to school fight? Children have to get vaccinated
Speaker 1: for less urgent threats and it works, So why not
Speaker 1: with COVID? That's the big question. Joining us now is
Speaker 1: Joel Webber, editor at Bloomberg Business Week. He joins us
Speaker 1: on the remote from Massachusetts. Riley Griffin, his healthcare reporter
Speaker 1: for Bloomberg News. She joins us from New York City.
Speaker 1: Thank you so much for joining us today. UM, I'm Joel.
Speaker 1: I want to start with you. I I was really
Speaker 1: surprised to see the lack of vaccine uptake in kids
Speaker 1: who are ages twelve to seventeen only have received their
Speaker 1: first dose. What why is that? Yeah, there's definitely, um,
Speaker 1: a sense of of apathy and it has it's going
Speaker 1: to have some um, serious implications, I think, UM in
Speaker 1: the next weeks and months, especially as we're dealing with
Speaker 1: this delta surge. You know that apathy is it's sort
Speaker 1: of multifaceted and and some of that we go into
Speaker 1: in the story. UM. The fact that kids haven't been
Speaker 1: quite as susceptible yet is to covid is, I think
Speaker 1: one of the driving reasons. UM. There's also I think
Speaker 1: a feeling that the vaccines currently have emergency youth as authorization.
Speaker 1: They don't have the full f d A blessing. So
Speaker 1: I think there's still some vaccine hesitancy around it. UM.
Speaker 1: And we've seen, you know, other countries even take slightly
Speaker 1: different approaches to how kids are supposed to be vaccinated.
Speaker 1: So I think they're that all creates a little bit
Speaker 1: of a fog that has um led to a slow adoption.
Speaker 1: And I think where Riley and Susie King King story
Speaker 1: goes here is an important one because as we're just
Speaker 1: seeing now with New York mandating vaccines for for restaurants, friends,
Speaker 1: in the not so distant future, we could very easily
Speaker 1: see schools mandating vaccines. And one of the main questions
Speaker 1: that m Riley, i'd like you supposed to you is,
Speaker 1: you know, look like kids get vaccinated for all sorts
Speaker 1: of things that are far less urgent than COVID. So
Speaker 1: could we potentially see schools manding meaning that mandating COVID immunization. Absolutely,
Speaker 1: I mean, I think that's a great question, and it's
Speaker 1: one that we've seen play out, and there's precedent four.
Speaker 1: I mean, educators are having a debate on their hands
Speaker 1: right now as to whether to implement implement mandates requiring
Speaker 1: COVID nineteen vaccines as they routinely do for measle polio
Speaker 1: and other diseases, or to punt because of politics and
Speaker 1: let parents decide. This has really become so political, um
Speaker 1: in part because of that emergency use authorization that you described,
Speaker 1: But once there's a full approval in place. I have
Speaker 1: no doubt that schools um at the request of states,
Speaker 1: are going to put similar requirements in place. UM. This
Speaker 1: is really just a part of the bedrock of our
Speaker 1: education education system, and any parent listening knows that to
Speaker 1: be true. UM. And these mandates persist even though they've
Speaker 1: been so successful that the risk of contracting some of
Speaker 1: the illnesses they cover is almost non existent. You know,
Speaker 1: what I like to put in perspective is that the
Speaker 1: last US case of polio dates back to nineteen seventy nine,
Speaker 1: and yet all fifty states in the District of Columbia
Speaker 1: require kids to get vaccinated with a polio shot before
Speaker 1: going to school. Riley, You know, I fear that this
Speaker 1: is going to get really, really ugly, and really personal
Speaker 1: and really localized. Do we have any evidence or do
Speaker 1: we have any precedent here for a COVID nineteen requirement,
Speaker 1: because we've got a lot of states I'm thinking in
Speaker 1: the South and the West, they're going back to school.
Speaker 1: If they're they're not already back, they're going back in
Speaker 1: the next week or two. Yeah, So what we have
Speaker 1: right now is a legal vacuum because we've never seen
Speaker 1: before a mandate put in play ace for an emergency
Speaker 1: use authorized vaccine. That's not to say states can't do it.
Speaker 1: They are just a little hesitant to wade out into
Speaker 1: those tumultualist waters. But let me take you back into
Speaker 1: history for a moment, because in nineteen o five, the U. S.
Speaker 1: Supreme Court ruled to say that mandates are allowed, that
Speaker 1: states can require vaccination, and that individual liberties are not absolute,
Speaker 1: that the average person cannot say, hey, in the face
Speaker 1: of a public health pandemic, we are going to reject
Speaker 1: a vaccine mandate. And the first mandate actually for school
Speaker 1: kids goes back even further to eighteen fifty five. So
Speaker 1: there's a great deal of precedent um schools themselves to
Speaker 1: know that this could likely be coming. I've spoken with
Speaker 1: many administrators who said they're just waiting to get more
Speaker 1: parents on board. They want to bolster trust and confidence,
Speaker 1: especially while we still have that eu A status. How
Speaker 1: do they tell you, Riley, that they're getting parents on board,
Speaker 1: because we probably have a lot of parents who themselves
Speaker 1: are not vaccinated, who are saying, no way, no, how,
Speaker 1: when this thing becomes available for my kid. Well, one
Speaker 1: thing they're doing is turning to community organizers, those in
Speaker 1: the community that people trust. UM. Another thing is going
Speaker 1: to be waiting for additional data. You've got data on
Speaker 1: the under twelve cohort coming this fall. We'll see data
Speaker 1: from the Sizer BioNTech vaccine to be specific as soon
Speaker 1: as September. And one thing people have pitched is why
Speaker 1: not wait instead for that full approval before mandating the shots,
Speaker 1: So that could push things back a little bit further.
Speaker 1: I think we'll see this be somewhat of a patchwork
Speaker 1: of policies across all fifty states. We're already seeing that,
Speaker 1: of course, UM play out with masks, but you could
Speaker 1: see some of the early and more competent states in
Speaker 1: terms of vaccination come out and say we need kids,
Speaker 1: at least in that adolescent population where we've already seen
Speaker 1: an authorization, UM get the shot going into the false
Speaker 1: school year. So you know, one thing that really feels like,
Speaker 1: UM they're leading by but from behind here is the
Speaker 1: the FDA, really and and it seems like they're kind
Speaker 1: of they've been slow walking a bit on the on
Speaker 1: the regular for for adults front, and then that becomes
Speaker 1: almost UM pivotal for for uptick of vaccinating younger kids.
Speaker 1: What's going on with the FDA? Why is it taking
Speaker 1: so long? So the FDA is saying they've expedited the
Speaker 1: process for that sixteen plus cohort and that we could
Speaker 1: know as soon as September really whether or not that
Speaker 1: group is going to get a full approval. And US
Speaker 1: health officials all the way up to Biden himself are
Speaker 1: really hopeful that that's going to sway hesitant adults. Now
Speaker 1: with kids, they need six months of safety data, So
Speaker 1: you can't actually even apply for this biologics license that's
Speaker 1: what it's called in technical terms, until you have that
Speaker 1: six months. So we're going to see it take a
Speaker 1: little bit of time before FISER even makes the approach
Speaker 1: to get a full approval for younger children. Um, what
Speaker 1: can they do in the meantime, Again, it's just turned
Speaker 1: to those community organizers, activists, those at the grassroots level.
Speaker 1: Riley Griffin, his healthcare reporter at Bloomberg News. Riley's stories
Speaker 1: on the cover of the new issue of Bloomberg Days
Speaker 1: This Week magazine. It's available on newsstands and at Bloomberg
Speaker 1: dot com Slash Business Week. Also joining us Joel Webber,
Speaker 1: editor of the magazine. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio.
Speaker 1: Will be very fluid right now. We work UH and
Speaker 1: it's on a daily for the team that's working on it,
Speaker 1: but weekly from a leadership team, we're looking at making
Speaker 1: sure we understand the semi conductor situation, and we're allocating
Speaker 1: chips to our highest demand to take care of our
Speaker 1: customers and also the vehicles that are in plants that
Speaker 1: are capacity constraint, and it is especially your full size
Speaker 1: trucks and suv. That was GM CEO Mary Barra saying
Speaker 1: that company will be very fluid on allocating trips and
Speaker 1: it is currently focused on the highest demand vehicle. She
Speaker 1: appeared with Bloomberg David Weston earlier today on Bloomberg Surveillance.
Speaker 1: All right, when we talk autos, Tim, it's best to
Speaker 1: get in an expert, and we're talking about Kevin Tyney,
Speaker 1: and he's a theater senior autos analyst from Bloomberg Intelligence
Speaker 1: joining us on the phone from New Jersey. When I
Speaker 1: say he's an auto guy, he's the guy that's got
Speaker 1: like grease under his fingernails. He's always taking a part
Speaker 1: cars putting him back together. Like when he bought his house,
Speaker 1: He's they basically said, I bought a garage that had
Speaker 1: a house attached to it. So that's kind of you know,
Speaker 1: he's a real auto geek. Evan so Kevin. So that
Speaker 1: GM stock us down nine percent today, what gives? Yeah,
Speaker 1: I'm assuming it's uh, probably more in my eyes, an
Speaker 1: indictment of what consensus was than really where GM is at. UM.
Speaker 1: You know, maybe that that little bear's tone uh during
Speaker 1: the all but you know, I don't think that's that's
Speaker 1: something that's specifically to GM. Right, you're still navigating UM
Speaker 1: supply constraints, you know, chip shortage, whatever it winds up being.
Speaker 1: But I gotta tell you, you you know, some of the
Speaker 1: pricing data, that margin data is is pretty incredible. The
Speaker 1: kind of thing that the industry has probably worked decades
Speaker 1: to get to is kind of where it is now.
Speaker 1: And now it's it's a matter of managing it beyond
Speaker 1: once we get out of you know, post pandemic, post
Speaker 1: chip shortage. How they manage the business, How do they
Speaker 1: do that? How do they navigate through the chip shortage?
Speaker 1: Like what are they doing right now? Because we heard
Speaker 1: earlier in the year that car companies were even making
Speaker 1: changes to how they were building cars because they couldn't
Speaker 1: get the right chips right. And and I'll tell you him,
Speaker 1: you know, one of the things that's incredible. And I
Speaker 1: actually have to go back after this call to check
Speaker 1: the numbers again. But you know, I think Mary Barr
Speaker 1: talked about it. The focus is on the highest revenue
Speaker 1: and profit can tributing vehicles, and that's going to be
Speaker 1: full size SUVs and pickup trucks. But I was looking
Speaker 1: at the numbers for the US for the second quarter
Speaker 1: and this really jumped out at me. The average car
Speaker 1: coop and sedan for General motors was forty two dollars
Speaker 1: in the US, right, And all that means is that
Speaker 1: and now granted there was only forty thousand units sold
Speaker 1: in the quarter, but that's a nine thousand dollar increase
Speaker 1: from the first quarter sequentially, which basically says that all
Speaker 1: the low margin, um you know, low price vehicles are
Speaker 1: out of the mix. Um the like, the best selling
Speaker 1: vehicle was Chevrolet Bolt at like forty dollars, and then
Speaker 1: you have the second best selling was Corvette at eight
Speaker 1: two tho dollars. And we're seeing this across all the automakers.
Speaker 1: You know, Ford also Mustang is the best selling car,
Speaker 1: you know, so you're talking about car prices, you know,
Speaker 1: as in terms of average transaction that are near where
Speaker 1: trucks are now because you don't have any of that
Speaker 1: low profit margins stuff that was being made simply to
Speaker 1: hit corporate average fuel economy or missions targets. Are we
Speaker 1: going to ever? Is it? Is the intry just going
Speaker 1: to snap back to pre pandemic levels in terms of inventories,
Speaker 1: in terms of incentives. And I mean because there's really
Speaker 1: this is the worst time to be out looking for
Speaker 1: a car. Yeah, And and the short answer is no,
Speaker 1: I don't think any automakers, at least our domestic guys
Speaker 1: right if you had you know, if you look at
Speaker 1: a Toyota or Subaru or even a Honda in the
Speaker 1: United States, you know they they're inventory levels historically are
Speaker 1: way more manageable than what the old Fiat Chrysler now
Speaker 1: Stalantis or Ford or General motors run out. So if
Speaker 1: you figure sixty days historically is considered manageable, our domestic
Speaker 1: guys would typically be in the seventies to eighties range,
Speaker 1: and you know, the the high volume Asian brands would
Speaker 1: be closer to fifty days. So I think I think
Speaker 1: what you know, Ford and GM have talked out as
Speaker 1: getting and staying consistently in that fifty to sixty day range. Um,
Speaker 1: you know, so that's gonna support pricing, that's going to
Speaker 1: support margins, uh and get them all discounting. Now, Paul
Speaker 1: is like less than one percent. Typically it's six, right,
Speaker 1: so you could walk into a dealership and assume six
Speaker 1: percent off the sticker price right off the bat. Now
Speaker 1: it's less than one. Yeah, just the demand is their
Speaker 1: supply isn't right, Hey, Kevin, we learned yesterday that GM
Speaker 1: is going to idle some North American truck plants next
Speaker 1: week due to chip shortages. Mike McKee pointing out that
Speaker 1: usually automakers shut plants for retooling during July, but it's
Speaker 1: been almost forgotten because of distortions that we've seen during
Speaker 1: the pandemic. How should we read into that move? Yeah,
Speaker 1: that that would be for the model gear change over
Speaker 1: tim you know, you would see uh, you know, just
Speaker 1: machinery updates and and new processes put in place during
Speaker 1: that summer shut down. That's normal. You know, as you
Speaker 1: said that, this is a different kind of world in
Speaker 1: a different kind of year. So I'm not sure it's
Speaker 1: it's due to that. Um. You know, if you have
Speaker 1: and it's like this with any part in a vehicle, right,
Speaker 1: if you don't have luck nuts, you don't have a car, right,
Speaker 1: If you don't have a steering wheel, if you don't
Speaker 1: have a chip, you can't finish it and you can't
Speaker 1: drive it. So um, so there's probably a little bit
Speaker 1: more of that. It's probably only a week or so, um,
Speaker 1: you know, and then the focus will be back on
Speaker 1: on the truck side. So you know, there's there's no doubt.
Speaker 1: We're talking about most manufacturers, retail or in the twenty
Speaker 1: two thirty days supply, which is just crazy. So, um,
Speaker 1: I think they'll get it back closer to that fifty sixty,
Speaker 1: But I don't think we're getting back to eight Kevin,
Speaker 1: just real quick, thirty seconds, Tim, and I saw that
Speaker 1: the New York Car Show is canceled. I guess because
Speaker 1: of COVID. Is that a big deal for the automostry
Speaker 1: the car guys? It is? I mean, I I'm in
Speaker 1: Detroit in another week or two, you know, Pebble Beaches
Speaker 1: coming up, and I think, really all the car guys
Speaker 1: are really looking to get back out there and get
Speaker 1: together and congregate. Uh So I was kind of I
Speaker 1: was taken aback by that, and I'm hoping that doesn't
Speaker 1: set off the string for you know, the other events
Speaker 1: that are scheduled already through the you know, through the
Speaker 1: second half of the year. What's what's the material impact
Speaker 1: on companies though, because this is a time where the
Speaker 1: companies show media what their cars are, right, it's not
Speaker 1: that big of a deal. They've been able to survive
Speaker 1: without them, sure, yeah. And and it is just that
Speaker 1: in New York was mostly had become the luxury show,
Speaker 1: in California is mostly the imports show, and Detroit is
Speaker 1: the domestic show. So yeah, not probably not a huge
Speaker 1: impact to the bottom line. But I gotta say it's
Speaker 1: fun to go to sure. Yeah. Yeah, I've gotten to
Speaker 1: go a few times. It's a great one. Kevin Tynan,
Speaker 1: senior autos analyst at Bloomberg Intelli, is joining us from
Speaker 1: Bloomberg Intelligence Headquarters in Princeton, New Jersey, talking all things
Speaker 1: GM and autos. Hey paul Um six point six five
Speaker 1: billion dollars I saw that number. How does that sound
Speaker 1: to you? That sounds like, you know, the g d
Speaker 1: P of a you know, relatively small kind tree. But
Speaker 1: it's not, it's not. It's in fact, Elon Musk's uh
Speaker 1: compensation in the year as CEO of of Tesla, and
Speaker 1: the outside compensation that Elon Musk saw first awarded him
Speaker 1: a few years ago is increasingly hitting other companies. In
Speaker 1: the top folks at other companies. Andre's Melon, the wealth
Speaker 1: reporter at Bloomberg News, writes about that in a story
Speaker 1: out this morning. He joins us now in the Bloomberg
Speaker 1: Interactive Brokers studio. I you notice I said compensation, full compensation.
Speaker 1: I didn't say salary because this is not his salary.
Speaker 1: This is his total compensation. Take us through how this
Speaker 1: has worked, because it's a little complicated. Then, you know,
Speaker 1: just getting paid six billion dollars, you know, twenty four
Speaker 1: times a year. Yes, nobody gets that in bi weekly paychecks. Right.
Speaker 1: What happens is that you get awarded large chunks of equity.
Speaker 1: CEOs of public parid of companies mostly get paid in equity.
Speaker 1: And the special thing about equity is that it rises
Speaker 1: in value, especially when we're in a bull market, which
Speaker 1: we've been in for quite some time, except for a
Speaker 1: brief dip last year. Um, then the pay ends up
Speaker 1: being worth quite a bit. Ellon got a ton of
Speaker 1: money three years ago and that sended up being worth
Speaker 1: just you know, eye popping amounts, Like you said, GDP
Speaker 1: of a small country almost. So, I like in your story,
Speaker 1: h one of the folks your chat with cited something
Speaker 1: the great Man theory. I mean, what is the great
Speaker 1: Man theory? And how does it how does it relate
Speaker 1: to compensation? So in this context, it really goes back
Speaker 1: to the idea that companies increasingly are staking larger and
Speaker 1: larger pay packages on just the CEO saying that we're
Speaker 1: gonna issue this big award that will pay the CEO
Speaker 1: hundreds of billions, hundreds of millions of dollars or even
Speaker 1: a billion or two if the company triples in size
Speaker 1: and value or you know, grows in size and value
Speaker 1: by tenfold. And just taking that on on the CEO
Speaker 1: sort of gets the idea that it's it's just you
Speaker 1: stake it on one guy, and and that's being done
Speaker 1: to an extent that we haven't really seen before. What
Speaker 1: do shareholders think of this? They are largely fine with
Speaker 1: it um even though some investors are out or many
Speaker 1: investors have been out there saying that, you know, economy
Speaker 1: has to work for everybody. It's important that companies take
Speaker 1: care of their employees. But when push comes to shove,
Speaker 1: when it comes to CEO compensation, sort of the mantra
Speaker 1: that rules among investors is that if there's performance, it's
Speaker 1: okay with pay. If there's a lot of performance, it's
Speaker 1: okay with a lot of pay. And if you take
Speaker 1: that logic and draw it to an extreme, then it
Speaker 1: doesn't become so crazy to pay a CEO a few
Speaker 1: billion dollars if the market value increases by say billion,
Speaker 1: because it's just a small share of it, right. Crazy
Speaker 1: part ends up being when you're paying one person this
Speaker 1: even though he might be in charge of a company
Speaker 1: that employs ten thousand people, or a hundred thousand people,
Speaker 1: or half a million people. And that's what the critics
Speaker 1: are taking aim at, because that goes to the whole
Speaker 1: income inequality, but really wealth inequality. It just shines a
Speaker 1: light on it, and we see it every year when
Speaker 1: proxy statements are filed and we see what some of
Speaker 1: these folks are getting paid. But some of these pay
Speaker 1: packages that you cite in your story there, these are new.
Speaker 1: These are like you know, hundred million dollar grants of options,
Speaker 1: you know that can just explode in value. And it's
Speaker 1: not just the founders that get these. These are just
Speaker 1: hired guns. That's what's new. I think, Yes, these are
Speaker 1: people on the payroll, they're hired. Help to put it colloquially,
Speaker 1: I'm I'm wondering what happens in a bear market and
Speaker 1: how this changes. Do CEOs start coming and saying, actually,
Speaker 1: I'd rather get compensated differently. So it's not just you
Speaker 1: don't get hired. You don't get to stay CEO if
Speaker 1: you don't think the cup the stock is going to
Speaker 1: go higher. So we got a small window of into
Speaker 1: that last year when the coronavirus took hold of the
Speaker 1: nation and the markets went haywire and the outlook for
Speaker 1: many companies changed pretty drastically. Obviously, bonus targets and three
Speaker 1: year plans for share payouts all of a sudden were
Speaker 1: obsolete and and didn't reflect reality. UM if a board
Speaker 1: then would be um teetotal when it comes to pay
Speaker 1: for performance and saying that this is ironclad. We're not
Speaker 1: changing anything, then a lot of CEOs would have lost
Speaker 1: out on a lot of money. What more than three
Speaker 1: companies ended up doing was to tweak performance targets, or
Speaker 1: issue new awards to make CEO's whole, or give them
Speaker 1: extra opportunities to make their money. So that doesn't necessarily
Speaker 1: reflect what every company did, but it's at least more
Speaker 1: than three d companies did it. So that should give
Speaker 1: you some idea of the willingness to price the options.
Speaker 1: That's what you ask for. You walk into your compensation
Speaker 1: community to reprice my option. PA, I think I's on
Speaker 1: my media review coming up, so and and and I
Speaker 1: understand right, I mean if if, if this is someone
Speaker 1: has value, the board generally is going to cave see
Speaker 1: that and honors. Just in the fifteen seconds we have left,
Speaker 1: do we see this spreading even more than I already has.
Speaker 1: What we don't see is any counter force that would
Speaker 1: stop it? Um? I have I have yet to see that.
Speaker 1: All right, we'll honder. Smelling Wealth, reporter for Bloomberg News.
Speaker 1: He's with us in the Bloomberg Interactive Broker studio. His
Speaker 1: news story Elon Musk's outrageous Moonshot award catches on across America.
Speaker 1: It has Elon Musk's numbers in there in addition to
Speaker 1: nine other CEOs. How much they got paid last year
Speaker 1: and it is quite a lot of money. Honors, Thanks
Speaker 1: so much for joining us a journal. Yeah, but you
Speaker 1: let me drive. Oh no, no, no, no, pleasel made
Speaker 1: I want to drive a ball. Just drive baby. Good
Speaker 1: questions the drive to the globe community. Thanks, we'll drive
Speaker 1: us down on Bloomberg Radio. All right, we have the
Speaker 1: markets pulling back just slightly, but let's face it, folks,
Speaker 1: we are at or near all time highs. We have
Speaker 1: a FED that, despite some comments by FED Vice chair
Speaker 1: Clarida about potential tapering some point in in the future,
Speaker 1: we have about as accommodative FED as you can ever want.
Speaker 1: We've got strong earnings coming through. So what do you
Speaker 1: do in this market? We'll check in with a professional
Speaker 1: Michael Sheldon. He's executive director and chief investment officer of
Speaker 1: High Tower r d M Financial Group. He joins us
Speaker 1: on the phone from Westport, Connecticut. So, Michael, I've got
Speaker 1: a friend. He goes by the name of Tom Keane.
Speaker 1: I'm trying to get him into the market, but he
Speaker 1: just keeps missing some entry points. What are you doing
Speaker 1: with your clients right here, right now. Well, I think
Speaker 1: it's important we remain generally constructive in our longer term
Speaker 1: outlook for the markets, and we think the tail winds
Speaker 1: for that are continued growth in consumer and business spending
Speaker 1: along with rising corporate profits. Back in March of this year,
Speaker 1: the estimate was that this year corporate profits would rise
Speaker 1: about and now they're up to about on a year
Speaker 1: of a year basis, and the estimates are for continued
Speaker 1: growth over the next couple of years, although more moderate
Speaker 1: than we're seeing this year. So I think ultimately we're
Speaker 1: likely to see a handoff from monetary and fiscal policy
Speaker 1: that's what's really helped rejuice the economy and gotten things
Speaker 1: going to one that's fueled by the private sector. And
Speaker 1: we clearly could see a few bumps in the road
Speaker 1: in an average year. Since nineteen eighty, for example, the
Speaker 1: we've seen an entry year draw down of about four
Speaker 1: while the markets have still finished positive about three quarters
Speaker 1: of the time. So over overall we remain generally positive
Speaker 1: and there will be some pullback along the way, and
Speaker 1: that's something investors need to be prepared for. How big
Speaker 1: of a pullback should we be prepared for are we
Speaker 1: talking I mean something like five percent? Are we talking?
Speaker 1: I think? I think, which is a higher level you
Speaker 1: just mentioned is more is less likely? Excuse me, because
Speaker 1: that's the kind of that's really what you what you
Speaker 1: sort of associate with a bear market, and bear markets
Speaker 1: typically really only happen if there's some kind of exogeneous
Speaker 1: event or when we're having a recession. And right now,
Speaker 1: the economic data overall is just generally pretty positive. So
Speaker 1: I mean, over the past twelve months, for example, we've
Speaker 1: had several pullbacks of anywhere between about four percent and
Speaker 1: nine percent, So something in that range wouldn't be unheard of.
Speaker 1: And again just keep in the back of your mind
Speaker 1: that since we had an average intra year draw down
Speaker 1: of about fourteen percent, so that shouldn't be I mean,
Speaker 1: that's also a possibility as well. Alright, Michael. So there
Speaker 1: is a debate in the market between those folks that
Speaker 1: are you know, sticking with the tried and true growth stories,
Speaker 1: the apples, the Amazons, the one that got them to
Speaker 1: this party. Some folks really over the last year have
Speaker 1: really done well with a rotation trade into some more
Speaker 1: cyclical names. Maybe the banks maybe some energy, maybe some
Speaker 1: small caps. Where are you in that discussion, that debate,
Speaker 1: So that's that's a good question right now. So we've
Speaker 1: definitely seen some rotation in the market. UM growth has
Speaker 1: really generally outperformed value for much of the past decade
Speaker 1: or so, only every once in a while and maybe
Speaker 1: for a quarter or a month or so, has grown.
Speaker 1: Has value outperformed growth. Same thing with foreign The US
Speaker 1: has outperformed foreign markets for much of the past decade.
Speaker 1: And over the past uh six to twelve months or so,
Speaker 1: we had almost a perfect cocktail. We had a rise
Speaker 1: in global growth, we had a rise in corporate profit expectations,
Speaker 1: arise in interest rates and inflation, and that gave us
Speaker 1: a pretty good bump up in value stocks and foreign
Speaker 1: stocks actually started to do better. So now over just
Speaker 1: over the past few months because of the growth in
Speaker 1: the delta variant, because of the rise of inflation UM
Speaker 1: combined with the decline and interest rates as investors worry
Speaker 1: about potent growth, we've started to see a rotation back
Speaker 1: into growth. So our thinking is right now that we're
Speaker 1: sort of in this transition, and we think you really
Speaker 1: want to have a barbell approach, meaning you want to
Speaker 1: have broad exposure to a range of sectors. We do
Speaker 1: think you want to have growth and you want to
Speaker 1: have broad exposure at this point, I gotta tell you,
Speaker 1: Michael Paul Sweeney yesterday talking with Dave Wilson, Uh, they
Speaker 1: kind of had me feeling like a little fomo with
Speaker 1: the way the markets have been in recent years and
Speaker 1: not just in recent years, but really for the past
Speaker 1: few decades. Yeah, you made a mention of the Fidelity
Speaker 1: Contra Fund and just throwing money near four one k
Speaker 1: in there and looking brilliant, and it makes me think,
Speaker 1: you know, it's for me and my peers, people who
Speaker 1: are sort of midway through their careers, how we're how
Speaker 1: we should be thinking about growth and about how we
Speaker 1: should be thinking about realistic growth, especially given what we've
Speaker 1: seen in the last few decades, and whether or not
Speaker 1: that sustainable. Well, that's a good point. I'm in the
Speaker 1: current year right now, we're forecast to see approximately about
Speaker 1: six and a half GDP growth, which is the fastest
Speaker 1: growth we've seen in number of decades. And the reasons
Speaker 1: behind that are because of the incredible fiscal and monetary
Speaker 1: support that we've seen to health the economy. First to
Speaker 1: sort of get out of a downturn in early last year,
Speaker 1: but by the monetary policy has continued as they fed
Speaker 1: by and twenty billion of bonds every month, which will
Speaker 1: start to slow for next year. For reference, the GDP
Speaker 1: estimate is about four that's still about twice the average
Speaker 1: of the past ten years or so. So I think
Speaker 1: ultimately growth should start to slow somewhat. There are some variables,
Speaker 1: for example, of productivity growth can rise above historic levels
Speaker 1: due to things like technology uh and disruptive technology that
Speaker 1: could help increase the rate of GDP growth. But ultimately,
Speaker 1: because of all the depth that's out there, economic growth
Speaker 1: will probably start to slow again. After strong growth this
Speaker 1: year and next year. Mike, we mentioned some international I
Speaker 1: think it's probably an area we probably don't talk enough about.
Speaker 1: How do you think about allocating capital to international mark kids,
Speaker 1: whether they be developed or developing emerging markets. Yeah, so
Speaker 1: that's a great question. Um. You know, as as registered
Speaker 1: investment advisors, we have to look at our asset allocation
Speaker 1: on a regular basis, and we've generally been overweight the
Speaker 1: US versus far in the past decade, which has been
Speaker 1: a pretty good decision. But um, these kind of things
Speaker 1: go in cycles, and historically after a period of outperformance,
Speaker 1: foreign markets start to perform better. So looking at the
Speaker 1: environment right now, foreign markets have more attractive valuation levels,
Speaker 1: they have higher dividend yields, and there's a variety a
Speaker 1: large number of companies outside the U S which US
Speaker 1: companies would gain access to by investing in foreign stocks
Speaker 1: versus US stocks. So the trade really hasn't worked that
Speaker 1: well so far this year, especially in emerging markets. But
Speaker 1: we think investors who have underweighted foreign stocks for much
Speaker 1: of the past decade or so should start to take
Speaker 1: a look at their allocation and and if the global
Speaker 1: recovery continues and the delta variants starts to recede, that
Speaker 1: should provide a bit of a tail when for foreign
Speaker 1: markets in period ahead. Is that is that an f
Speaker 1: to you or a when we think it's a win
Speaker 1: not an if? What? What? How concern should we be
Speaker 1: or how concern should investors be about the spread of
Speaker 1: the delta variant not just in the United States but
Speaker 1: around the world. Yeah, I think generally speaking, um, the
Speaker 1: developed markets around the world have obviously had more vaccinations,
Speaker 1: and the emerging markets and other parts of the world
Speaker 1: have had less access to two vaccinations. UH, the delta
Speaker 1: variant is certainly one of our near term concerns, and
Speaker 1: that along with rising inflation and worries about when the
Speaker 1: Fed will start to remove some of its policy accommodations,
Speaker 1: along with the fact interest rates have gone down, and
Speaker 1: a lot of a lot of explicit explanations for why
Speaker 1: interest rates have started to go down. Um, but those
Speaker 1: sort of factors all together could lead to maybe a
Speaker 1: speed bump or a pullback as we head into the
Speaker 1: August September October period. But I think more importantly, we
Speaker 1: think the bigger picture is that economic cycle and the
Speaker 1: last a period of years as a period as opposed
Speaker 1: to a period of months or quarters. Michael Sheldon, executive
Speaker 1: director and a chief investment officer at High Tower r
Speaker 1: d M, a financial group joining us from Westport, Connecticut,
Speaker 1: Thank you so much for taking the time. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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