1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Ley, we bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:29,920 Speaker 1: dot com, and of course, on the Bloomberg terminal. Let's 6 00:00:29,920 --> 00:00:32,360 Speaker 1: do more on all Things markets with Richard Bernstein, CEO 7 00:00:32,479 --> 00:00:35,639 Speaker 1: and ce IO of r B Advisors. Richard, when you're 8 00:00:35,640 --> 00:00:38,720 Speaker 1: looking ahead to two now that there's a question about 9 00:00:38,720 --> 00:00:40,840 Speaker 1: the fiscal agenda here in the States and a question 10 00:00:40,920 --> 00:00:42,840 Speaker 1: as to how much of a growth impact we could 11 00:00:42,880 --> 00:00:45,879 Speaker 1: see from the omicron variant, do you think differently this 12 00:00:45,960 --> 00:00:49,360 Speaker 1: morning than you did a week ago? Well, Kaylee, I 13 00:00:49,400 --> 00:00:51,920 Speaker 1: think that the markets right now were caught between a 14 00:00:52,000 --> 00:00:54,560 Speaker 1: rock and a hard place. Right in the short term, 15 00:00:54,600 --> 00:00:57,240 Speaker 1: we've got this slew of bad news, whether it's builback 16 00:00:57,280 --> 00:01:00,440 Speaker 1: better that you just mentioned, or whether it's COVID, or 17 00:01:00,480 --> 00:01:02,800 Speaker 1: whether it's the FED from last week deciding they're gonna 18 00:01:02,800 --> 00:01:04,800 Speaker 1: be tighter. You know, in the short term, you don't 19 00:01:04,800 --> 00:01:07,679 Speaker 1: have a lot of good news. However, that short term 20 00:01:07,760 --> 00:01:12,120 Speaker 1: news could cause the better longer term outlook as we 21 00:01:12,160 --> 00:01:16,680 Speaker 1: go through three. So I think the short term here 22 00:01:16,720 --> 00:01:18,920 Speaker 1: could be a little rocky. But I think to try 23 00:01:18,959 --> 00:01:23,080 Speaker 1: and trade that maybe a full scheme. So what do 24 00:01:23,080 --> 00:01:24,920 Speaker 1: you do? You just sit on your hands, Richard, Wait 25 00:01:25,120 --> 00:01:27,240 Speaker 1: what see what happens into the new year. Is that 26 00:01:27,280 --> 00:01:30,000 Speaker 1: the right strategy here? I think, to some extent that's 27 00:01:30,000 --> 00:01:32,000 Speaker 1: absolutely right. I mean, it's always cute to say we 28 00:01:32,040 --> 00:01:34,080 Speaker 1: should trade and trade out, trade and trade out, but 29 00:01:34,480 --> 00:01:37,759 Speaker 1: very few people can actually do that successfully. So so 30 00:01:37,840 --> 00:01:41,080 Speaker 1: saying one thing and doing is is another. So I think, look, 31 00:01:41,200 --> 00:01:44,880 Speaker 1: it's pretty clear that inflation is probably going to be 32 00:01:45,000 --> 00:01:49,600 Speaker 1: higher than people think in two I think that is 33 00:01:49,640 --> 00:01:52,400 Speaker 1: the most important thing that portfolio should be structured for 34 00:01:52,800 --> 00:01:54,400 Speaker 1: right now. Now that's not gonna look that way in 35 00:01:54,440 --> 00:01:57,800 Speaker 1: the next two weeks perhaps, But remember, if we do 36 00:01:57,880 --> 00:01:59,600 Speaker 1: shut down, let's say COVID is a lot worse than 37 00:01:59,600 --> 00:02:03,160 Speaker 1: anybody things, and we do shut down, the supply disruption 38 00:02:03,240 --> 00:02:05,920 Speaker 1: problems that we've already had just get worse. They don't 39 00:02:05,960 --> 00:02:08,560 Speaker 1: get better, and so the whole notion of the of 40 00:02:08,639 --> 00:02:14,560 Speaker 1: inflation and of us being a price taker just gets worse. Richard. 41 00:02:14,600 --> 00:02:16,600 Speaker 1: I'm gonna dig a little bit into that inflation call. 42 00:02:16,639 --> 00:02:20,640 Speaker 1: When you're thinking about inflation into two, are you thinking 43 00:02:20,680 --> 00:02:24,200 Speaker 1: we see some more deeply embedded wage based inflation start 44 00:02:24,320 --> 00:02:28,360 Speaker 1: to emerge? I think many much of the inflation excuses 45 00:02:28,360 --> 00:02:31,960 Speaker 1: are the inflation sort of narrative around it being transitory 46 00:02:32,000 --> 00:02:34,560 Speaker 1: has suggested that it's it's all due to the supply 47 00:02:34,639 --> 00:02:37,200 Speaker 1: chain constraints. But how much of this has demand and 48 00:02:37,240 --> 00:02:39,560 Speaker 1: how much of it becomes deeply embedded as we look 49 00:02:39,600 --> 00:02:43,760 Speaker 1: into three? Right, So, so, Gina, one thing you said, 50 00:02:43,800 --> 00:02:47,080 Speaker 1: I think it's very important that the word transitory. So 51 00:02:47,080 --> 00:02:50,000 Speaker 1: I think it's important to understand the supply disruptions have 52 00:02:50,200 --> 00:02:54,200 Speaker 1: already lasted an awful lot longer than the seventy seventy 53 00:02:54,240 --> 00:02:57,720 Speaker 1: four oil embargo right now was a supply disruption. It 54 00:02:57,800 --> 00:03:00,440 Speaker 1: was a political supply disruption, and but it was a 55 00:03:00,480 --> 00:03:03,960 Speaker 1: supply disruption and that changed the way people thought about 56 00:03:04,000 --> 00:03:07,799 Speaker 1: inflation for basically the next ten years. And it wasn't 57 00:03:07,800 --> 00:03:09,919 Speaker 1: the beginning of inflation, but it changed the way people 58 00:03:09,919 --> 00:03:12,639 Speaker 1: thought about it. So our supply disruption is are already 59 00:03:12,720 --> 00:03:16,000 Speaker 1: much bigger, much broader, and longer than what we saw. 60 00:03:17,320 --> 00:03:20,160 Speaker 1: But to get to your question explicitly, yes, we're having 61 00:03:20,160 --> 00:03:23,640 Speaker 1: a perfect storm in the labor market right now. There's 62 00:03:23,680 --> 00:03:27,080 Speaker 1: no one issue that's causing the labor market to be type. 63 00:03:27,080 --> 00:03:29,360 Speaker 1: But you can think of you know, whether it's baby 64 00:03:29,360 --> 00:03:33,079 Speaker 1: boomers retiring, whether it's COVID restrictions, whether it's immigration restrictions, 65 00:03:33,360 --> 00:03:35,560 Speaker 1: whether it's the rise of unions. I mean, all these 66 00:03:35,560 --> 00:03:38,200 Speaker 1: you could argue are good or bad. Not my day job, 67 00:03:38,560 --> 00:03:41,040 Speaker 1: but you're getting a perfect storm that is tightening the 68 00:03:41,120 --> 00:03:44,360 Speaker 1: labor market. And I think that's a substantial change that's 69 00:03:44,400 --> 00:03:46,520 Speaker 1: not going to go away. Well, you talk about all 70 00:03:46,560 --> 00:03:49,240 Speaker 1: these supply side issues, supply side issues or not something 71 00:03:49,280 --> 00:03:51,839 Speaker 1: that monetary policy is equipped to address. What the FED 72 00:03:51,880 --> 00:03:56,680 Speaker 1: can do is tamped down on demand. So and the 73 00:03:56,680 --> 00:03:59,280 Speaker 1: fence policy operates with a lag when we think about 74 00:03:59,280 --> 00:04:03,560 Speaker 1: monetary polic See so, how does the inflation conversation actually 75 00:04:04,200 --> 00:04:07,760 Speaker 1: get solved? In your view? So that's kind of my 76 00:04:07,880 --> 00:04:10,840 Speaker 1: point is, and I'm not sure it does get solved, 77 00:04:10,880 --> 00:04:12,760 Speaker 1: so to speak. That's why I think one should have 78 00:04:12,760 --> 00:04:15,360 Speaker 1: been on higher inflation. I'm not talking the ninety seventies 79 00:04:15,400 --> 00:04:17,840 Speaker 1: type inflation, but think of it as an over under bed. 80 00:04:18,040 --> 00:04:19,800 Speaker 1: I think right now you should get the over on 81 00:04:19,960 --> 00:04:24,160 Speaker 1: inflation as we looked at three, because you're right, you know, 82 00:04:24,200 --> 00:04:26,800 Speaker 1: all monetary policy can do is to sign me demand, 83 00:04:27,200 --> 00:04:31,000 Speaker 1: and that's politically unacceptable, especially as we head towards the 84 00:04:31,040 --> 00:04:34,279 Speaker 1: mid terms in two would be a lot for the Fed, 85 00:04:34,960 --> 00:04:39,000 Speaker 1: really tu intervening, Richard, Is that actually the case because 86 00:04:39,080 --> 00:04:42,080 Speaker 1: my impression, certainly, and listening to the narrative coming out 87 00:04:42,080 --> 00:04:45,000 Speaker 1: of DC at the moment, the Democrats in particular, and 88 00:04:45,000 --> 00:04:48,200 Speaker 1: the President is focused very much on this idea that 89 00:04:48,240 --> 00:04:50,919 Speaker 1: he needs to tamp down inflation. It was interesting to 90 00:04:50,920 --> 00:04:53,000 Speaker 1: see the pivot that we got from j Pal posts 91 00:04:53,200 --> 00:04:56,720 Speaker 1: he was his reappointments the Democrats and I agree, we've 92 00:04:56,760 --> 00:05:01,040 Speaker 1: never really seen this before, the politics stick that that 93 00:05:01,120 --> 00:05:04,240 Speaker 1: they once inflation brought down. So what we owe in 94 00:05:04,240 --> 00:05:07,880 Speaker 1: a different difference kind of picture here relative to previous 95 00:05:07,920 --> 00:05:11,120 Speaker 1: cycles where we've seen inflation coming through. So I'll use 96 00:05:11,200 --> 00:05:13,480 Speaker 1: my analogy again, rock in a hard place. I think 97 00:05:13,480 --> 00:05:15,880 Speaker 1: the Biden administration is caught in a rock in a 98 00:05:15,920 --> 00:05:21,000 Speaker 1: hard place on inflation. Why because they reappointed j Pal. Right, 99 00:05:21,040 --> 00:05:23,640 Speaker 1: we made the argument many months ago that if he 100 00:05:23,720 --> 00:05:28,000 Speaker 1: reappointed j Pal, he owned inflation. If he didn't, then 101 00:05:28,000 --> 00:05:31,359 Speaker 1: it was the previous administration that would own inflation. Because j. 102 00:05:31,520 --> 00:05:34,760 Speaker 1: Powe was appointed by the previous administration. So by not 103 00:05:34,880 --> 00:05:38,320 Speaker 1: reappointing Powell, he would say we have a clean slate 104 00:05:38,360 --> 00:05:41,200 Speaker 1: where we have to fight inflation. But now he owns it, 105 00:05:41,480 --> 00:05:43,039 Speaker 1: and and so again I think the rock in the 106 00:05:43,040 --> 00:05:44,960 Speaker 1: hard place is the right way to think about it. 107 00:05:45,400 --> 00:05:48,080 Speaker 1: Richard talked to us a little bit about your investment strategy. 108 00:05:48,120 --> 00:05:51,279 Speaker 1: If we're going to have a more deeply embedded inflation, 109 00:05:51,720 --> 00:05:53,960 Speaker 1: if we're going to have faster inflation, but maybe not 110 00:05:54,120 --> 00:05:57,360 Speaker 1: seventies inflation, what do you do with your asset allocation, 111 00:05:57,720 --> 00:06:01,479 Speaker 1: and specifically within the equity market, it's your mix. Yeah, 112 00:06:01,480 --> 00:06:04,640 Speaker 1: So I think, um Gina the you know, obviously you 113 00:06:04,640 --> 00:06:07,680 Speaker 1: want to have pro inflation assets in in the portfolio. 114 00:06:07,760 --> 00:06:10,600 Speaker 1: And I think you know, most investors, whether the institutions, 115 00:06:10,600 --> 00:06:14,480 Speaker 1: individuals makes a difference. Most investors are are very underweight 116 00:06:14,560 --> 00:06:17,280 Speaker 1: pro inflation assets. But at the same time, getting to 117 00:06:17,360 --> 00:06:19,240 Speaker 1: some of the other questions we were just talking about, 118 00:06:19,480 --> 00:06:22,400 Speaker 1: one has to remember that inflation really pops up in 119 00:06:22,440 --> 00:06:25,239 Speaker 1: a late cycle environment, doesn't really happen in early cycle 120 00:06:25,320 --> 00:06:28,479 Speaker 1: Environment's more of a late cycle environment. So I think 121 00:06:28,520 --> 00:06:30,719 Speaker 1: you want to have spare tires in the portfolio so 122 00:06:30,760 --> 00:06:35,279 Speaker 1: we are overweight energy and industrials and and some emerging markets, 123 00:06:35,279 --> 00:06:37,640 Speaker 1: you know, all the traditional pro inflation type assets on 124 00:06:37,680 --> 00:06:40,000 Speaker 1: the equity sign. But at the same time, our more 125 00:06:40,000 --> 00:06:42,920 Speaker 1: recent editions have been things like consumer staples that we 126 00:06:43,040 --> 00:06:46,760 Speaker 1: started to add spare tires to the portfolio. All right, Richard, 127 00:06:46,760 --> 00:06:48,839 Speaker 1: Before we let you go, Tom and John aren't here, 128 00:06:49,520 --> 00:06:52,440 Speaker 1: and that means that we haven't talked about football yet, 129 00:06:52,520 --> 00:06:54,720 Speaker 1: or at least European football. I when I think football, 130 00:06:54,720 --> 00:06:56,279 Speaker 1: I think a very different kind of football. I'm not 131 00:06:56,400 --> 00:06:59,240 Speaker 1: educated on this subject, but I know you like the Spurs, or, 132 00:06:59,279 --> 00:07:01,919 Speaker 1: as Tom Keene would call them, the Tots. Do you 133 00:07:01,920 --> 00:07:03,720 Speaker 1: have any thoughts you would like to share with our 134 00:07:03,720 --> 00:07:07,240 Speaker 1: television and radio audience this morning. Um? Well, as I've 135 00:07:07,240 --> 00:07:09,880 Speaker 1: said many times, any Spurs fan out there will will 136 00:07:10,040 --> 00:07:12,280 Speaker 1: know that being a Spurs fan is like being sisyphus. 137 00:07:12,800 --> 00:07:14,400 Speaker 1: We get to the top of the hill and then 138 00:07:14,400 --> 00:07:18,160 Speaker 1: we seem to roll back down and um it's um. 139 00:07:18,240 --> 00:07:20,040 Speaker 1: You know if if New Yorkers think it's hard being 140 00:07:20,080 --> 00:07:23,560 Speaker 1: a Met fan, uh, Spurs are are probably the biggest 141 00:07:23,640 --> 00:07:27,880 Speaker 1: challenge to one's personal psyche. But they're great team. I 142 00:07:27,880 --> 00:07:31,480 Speaker 1: had to say, Richard, Richard to two against Liverpool. I 143 00:07:31,480 --> 00:07:33,720 Speaker 1: thought it was a much better game. I appreciate it. 144 00:07:33,600 --> 00:07:36,400 Speaker 1: It was a fairly controversial game, Harry Kane what he 145 00:07:36,440 --> 00:07:38,800 Speaker 1: did over the weekend. But never this feels like a 146 00:07:38,840 --> 00:07:40,520 Speaker 1: team that could be on the turn at the moment, 147 00:07:40,640 --> 00:07:44,200 Speaker 1: so appreciate the content. Is a very good manage. Yeah, 148 00:07:44,280 --> 00:07:46,480 Speaker 1: and we'll see what happens. Yeah, yeah, yeah, there's but 149 00:07:46,560 --> 00:07:49,120 Speaker 1: you see, that's that's the story is. There's always hope, 150 00:07:49,200 --> 00:07:53,040 Speaker 1: there's always a sun rising, and um, we'll see what happens, 151 00:07:53,400 --> 00:07:55,240 Speaker 1: all right, Richard Bernstein leaving us with a little bit 152 00:07:55,280 --> 00:07:57,200 Speaker 1: of optimism, at least for the sports world this morning 153 00:07:57,240 --> 00:07:59,200 Speaker 1: of our v advisors, thank you so much for joining 154 00:07:59,240 --> 00:08:07,760 Speaker 1: us in Happy holiday is to you and yours. Let's 155 00:08:07,760 --> 00:08:10,600 Speaker 1: continue our conversation on the fiscal part of this equation. 156 00:08:10,640 --> 00:08:14,240 Speaker 1: Henrietta Trades, director of economic policy research at Beta Partners, 157 00:08:14,320 --> 00:08:16,920 Speaker 1: joins us. Now, So, Henrietta, it doesn't seem like this 158 00:08:16,960 --> 00:08:19,600 Speaker 1: is entirely a done deal. Chuck Schumer wants to put 159 00:08:19,640 --> 00:08:22,400 Speaker 1: Bill back better to a vote in January, really calling 160 00:08:22,440 --> 00:08:25,640 Speaker 1: out Mansion on his bluff. Do you agree with Goldman 161 00:08:25,800 --> 00:08:27,800 Speaker 1: that if he is a though if it doesn't pass 162 00:08:27,880 --> 00:08:30,000 Speaker 1: we're going to see a real read through into growth 163 00:08:30,040 --> 00:08:33,520 Speaker 1: here in the US. I think that's a perfectly valid 164 00:08:33,679 --> 00:08:37,120 Speaker 1: argument and good economic policy and thinking um the child 165 00:08:37,160 --> 00:08:39,520 Speaker 1: tax credit alone, I think one of the biggest components 166 00:08:39,520 --> 00:08:42,440 Speaker 1: that changes when that benefit lapses at the end of 167 00:08:42,480 --> 00:08:45,120 Speaker 1: this year is it moves from a monthly payout to 168 00:08:45,280 --> 00:08:48,079 Speaker 1: an annual payout. Never mind the drop from thirty six 169 00:08:48,480 --> 00:08:50,920 Speaker 1: dollars a year to two thousand dollars, it's that an 170 00:08:51,320 --> 00:08:54,520 Speaker 1: that monthly pay out that so many families used to 171 00:08:54,559 --> 00:08:57,319 Speaker 1: spend on food. Um that I think is going to 172 00:08:57,400 --> 00:09:00,520 Speaker 1: have a material impact if you disposal income, which is 173 00:09:01,080 --> 00:09:03,960 Speaker 1: you would call it for that income threshold. I think 174 00:09:04,000 --> 00:09:06,240 Speaker 1: that's going to be a major driver. And then you have, 175 00:09:06,400 --> 00:09:10,880 Speaker 1: of course, the near term impacts of incredible amounts of 176 00:09:10,920 --> 00:09:15,440 Speaker 1: investment across all kinds of energy sectors, the health care space. 177 00:09:15,480 --> 00:09:17,760 Speaker 1: It's hard not to see what this touches. UM. So, 178 00:09:17,840 --> 00:09:20,760 Speaker 1: I think it's very appropriate to have a downward revision 179 00:09:20,800 --> 00:09:23,080 Speaker 1: to economic forecast for two in the back of this 180 00:09:23,120 --> 00:09:26,640 Speaker 1: bill not becoming law. And may so were you surprised 181 00:09:26,679 --> 00:09:29,280 Speaker 1: how strong the language was from the White House over 182 00:09:29,320 --> 00:09:32,400 Speaker 1: the weekend post a Fox interview. It feels like bridges 183 00:09:32,400 --> 00:09:35,200 Speaker 1: are being burnt here. If they are, is there a 184 00:09:35,240 --> 00:09:38,640 Speaker 1: way back? How do they reconnect the White House and 185 00:09:38,800 --> 00:09:43,400 Speaker 1: Joe Mansion after this? That's exactly right. I spoke with 186 00:09:43,440 --> 00:09:46,360 Speaker 1: a number of Democrats in the immediate hours after Senator 187 00:09:46,400 --> 00:09:49,960 Speaker 1: Mansion's commentary on Fox News No Less, and I think 188 00:09:50,040 --> 00:09:53,400 Speaker 1: the White House felt very stabbed in the back that 189 00:09:53,480 --> 00:09:56,760 Speaker 1: they had had meetings and conversations with Senator Mansion. Even 190 00:09:56,760 --> 00:10:00,079 Speaker 1: President Biden personally at his home in Delaware. Hearing the 191 00:10:00,240 --> 00:10:03,440 Speaker 1: news second hand from a TV screen as opposed to 192 00:10:03,440 --> 00:10:06,200 Speaker 1: getting a heads up from the senator from West Virginia 193 00:10:06,360 --> 00:10:10,440 Speaker 1: was a huge blow. Obviously, the tensions have been fraud 194 00:10:10,559 --> 00:10:13,680 Speaker 1: and Senator mentioned has an election coming up, and I 195 00:10:13,720 --> 00:10:17,520 Speaker 1: think it makes sense for him to cross the rubicon 196 00:10:17,640 --> 00:10:20,880 Speaker 1: into being an independent who caucuses with Democrats as opposed 197 00:10:20,920 --> 00:10:24,040 Speaker 1: to being a Democrat Democrats. So I think that's the 198 00:10:24,080 --> 00:10:27,200 Speaker 1: direction that he's painting right now, the path that he's 199 00:10:27,280 --> 00:10:29,719 Speaker 1: drawing for himself, and it makes political sense for him. 200 00:10:29,760 --> 00:10:32,199 Speaker 1: But absolutely burns bridges at the White House. You can 201 00:10:32,200 --> 00:10:35,199 Speaker 1: see that from the Press Secretary's response and from majority 202 00:10:35,200 --> 00:10:37,520 Speaker 1: of Leader Schumer's response as well. I don't think there's 203 00:10:37,520 --> 00:10:39,480 Speaker 1: a fear that he'll affect and become a Republican. But 204 00:10:39,559 --> 00:10:41,959 Speaker 1: the scenario where he becomes an independent the coxes of 205 00:10:42,080 --> 00:10:46,040 Speaker 1: Democrats makes a lot of sense to me. Okay, if 206 00:10:46,080 --> 00:10:47,440 Speaker 1: that is the case, that he is going to be 207 00:10:47,600 --> 00:10:50,920 Speaker 1: largely and independent, how should we think about what the 208 00:10:50,960 --> 00:10:53,680 Speaker 1: president can do next? Um, I've read a lot over 209 00:10:53,720 --> 00:10:56,120 Speaker 1: the weekend talking about the fact that maybe what should 210 00:10:56,120 --> 00:10:59,559 Speaker 1: be the focus here is fewer programs that are smaller 211 00:10:59,600 --> 00:11:02,240 Speaker 1: but they last longer. Kind of what's what can be 212 00:11:02,320 --> 00:11:06,920 Speaker 1: we formulated here to make to make it work that 213 00:11:07,120 --> 00:11:10,920 Speaker 1: is actually going to provide some benefit to the American people. Well, 214 00:11:10,960 --> 00:11:14,400 Speaker 1: I think you have a really big problem that's beyond policy. 215 00:11:14,520 --> 00:11:17,760 Speaker 1: The Senator Mansion voiced yesterday at about the ten minute 216 00:11:17,800 --> 00:11:21,720 Speaker 1: mark in his program on Fox News when he said 217 00:11:21,800 --> 00:11:25,679 Speaker 1: he doesn't support the current strategy in the process of reconciliation, 218 00:11:26,040 --> 00:11:28,960 Speaker 1: when he said we should move to the original committee process. 219 00:11:29,200 --> 00:11:32,120 Speaker 1: What you're talking about there is abandoning a Democrat only 220 00:11:32,200 --> 00:11:34,800 Speaker 1: package and going in a scenario where you need at 221 00:11:34,880 --> 00:11:37,680 Speaker 1: least three or four or maybe even ten Republicans to 222 00:11:37,679 --> 00:11:40,760 Speaker 1: get on board before Senator Mansion will support anything. That's 223 00:11:40,800 --> 00:11:44,080 Speaker 1: a huge hurdle and we'll have more material implications than 224 00:11:44,160 --> 00:11:47,760 Speaker 1: just the policy. On the policy front, I think you're 225 00:11:47,920 --> 00:11:49,559 Speaker 1: not going to be in a situation where you get 226 00:11:49,559 --> 00:11:52,600 Speaker 1: a permanent child tax credit increase. That bill alone would 227 00:11:52,600 --> 00:11:56,200 Speaker 1: be one point six trillion dollars. So the truncated period 228 00:11:56,200 --> 00:11:58,040 Speaker 1: of time where you get you know, one to three 229 00:11:58,120 --> 00:12:00,880 Speaker 1: years worth of policy is half of the course. It's 230 00:12:01,040 --> 00:12:03,280 Speaker 1: very normal in Washington. It was part of the two 231 00:12:03,320 --> 00:12:06,200 Speaker 1: thousand seventeen tax bill and basically every other big piece 232 00:12:06,240 --> 00:12:09,480 Speaker 1: of legislation I've ever seen. So to anticipate that this 233 00:12:09,520 --> 00:12:12,079 Speaker 1: will all be short term makes sense. I think that 234 00:12:12,280 --> 00:12:15,840 Speaker 1: Senator Mansion has an issue with the overall sack the bill, 235 00:12:16,280 --> 00:12:18,400 Speaker 1: and so what I see is the power from here 236 00:12:18,480 --> 00:12:22,559 Speaker 1: is you take inspiring the sender's package, which currently has 237 00:12:22,600 --> 00:12:26,480 Speaker 1: a host of the provisions in clean energy retrofitting for 238 00:12:26,520 --> 00:12:30,200 Speaker 1: your home, for example, UM and also the business expense 239 00:12:30,200 --> 00:12:33,160 Speaker 1: deduction that expires from the two thousand seventeen tax bill. 240 00:12:33,440 --> 00:12:36,120 Speaker 1: Cobble those together, get a portion of the child tax 241 00:12:36,160 --> 00:12:39,520 Speaker 1: credit that maybe is means tested and less beneficial for families, 242 00:12:39,880 --> 00:12:42,160 Speaker 1: strip out the self deduction, and try to put that 243 00:12:42,200 --> 00:12:45,280 Speaker 1: bill on the floor, maybe with a top bound of 244 00:12:45,320 --> 00:12:48,920 Speaker 1: about seven billion and see where that gets you. So, Henrietta, 245 00:12:48,960 --> 00:12:51,839 Speaker 1: where then is the dollar figure? If we're going to 246 00:12:51,960 --> 00:12:55,520 Speaker 1: have this cobble together bill that is substantially smaller, has 247 00:12:55,640 --> 00:13:00,199 Speaker 1: less provisions within it, what's the total dollar figures for 248 00:13:00,280 --> 00:13:04,480 Speaker 1: spending from the fiscal government? Coming in somewhere between three 249 00:13:04,520 --> 00:13:07,319 Speaker 1: hundred billion and seven hundred billion is my new range. 250 00:13:07,559 --> 00:13:10,160 Speaker 1: That's down from one point four to one point six trillion, 251 00:13:10,200 --> 00:13:12,560 Speaker 1: which was my range when we were going a Democrat 252 00:13:12,600 --> 00:13:15,600 Speaker 1: only strategy. Now that we're going to need potentially Republican 253 00:13:15,679 --> 00:13:17,640 Speaker 1: votes and we need to make this bill smaller, my 254 00:13:17,760 --> 00:13:20,520 Speaker 1: main fear is that seven hundred billion is probably the 255 00:13:20,559 --> 00:13:24,000 Speaker 1: top line and three hundred billion is the small end um. 256 00:13:24,120 --> 00:13:26,440 Speaker 1: One thing I'd encourage investors to keep an eye on 257 00:13:26,600 --> 00:13:30,720 Speaker 1: is an emergency supplemental out of the tornadoes that hit UH. 258 00:13:30,920 --> 00:13:34,800 Speaker 1: It's like Kentucky and nearby. That's must pass. That's legislation 259 00:13:34,800 --> 00:13:36,800 Speaker 1: that you can get Republican votes for. So it's not 260 00:13:36,840 --> 00:13:39,679 Speaker 1: outside the bounds of UH. You know, conventional thought to 261 00:13:39,720 --> 00:13:42,240 Speaker 1: see a bill passing with sixty votes in the first 262 00:13:42,280 --> 00:13:44,440 Speaker 1: quarter next year, and if you can tack on the 263 00:13:44,520 --> 00:13:47,320 Speaker 1: CTC and a host of the other components that have 264 00:13:47,440 --> 00:13:49,800 Speaker 1: bi partisan support. Um, I think you can get that 265 00:13:49,840 --> 00:13:52,800 Speaker 1: bill done by like February eighteenth, alright, just with a 266 00:13:52,800 --> 00:13:55,000 Speaker 1: smaller price tag. Thank you so much to Henrietta Trace 267 00:13:55,080 --> 00:14:02,040 Speaker 1: for joining us this morning. In the central banks are 268 00:14:02,080 --> 00:14:04,560 Speaker 1: instead of tightening, it is loosening policy. But tightening is 269 00:14:04,559 --> 00:14:06,040 Speaker 1: the name of the game and so many parts of 270 00:14:06,040 --> 00:14:08,360 Speaker 1: the world, and increasingly so here in the US. Is 271 00:14:08,400 --> 00:14:11,280 Speaker 1: the FED looks potentially to raise interest rates three times 272 00:14:11,679 --> 00:14:14,160 Speaker 1: next year? How are is the omicron variant? Maybe change 273 00:14:14,160 --> 00:14:16,920 Speaker 1: that calculus? Laura Ray In, chief US economist at FS 274 00:14:17,000 --> 00:14:20,600 Speaker 1: Investment Investments, joins us. Now, So, Laura, given how rapidly 275 00:14:20,800 --> 00:14:23,240 Speaker 1: this variant in particular seems to be swept spreading, and 276 00:14:23,280 --> 00:14:26,200 Speaker 1: given now the likelihood that the build back Better agenda, 277 00:14:26,200 --> 00:14:28,760 Speaker 1: at least in its holistic current form, may not be 278 00:14:28,880 --> 00:14:31,640 Speaker 1: passed on the fiscal side, does the FED have to 279 00:14:31,680 --> 00:14:35,400 Speaker 1: think differently than it did just a week ago on Wednesday? 280 00:14:35,960 --> 00:14:38,320 Speaker 1: You know, I think the FED is well aware that 281 00:14:38,680 --> 00:14:41,840 Speaker 1: the pandemic that variants are going to continue to be 282 00:14:41,880 --> 00:14:45,360 Speaker 1: a challenge, and these are gonna come fast, and they 283 00:14:45,360 --> 00:14:50,080 Speaker 1: could also these waves could pass us by also fairly quickly. 284 00:14:50,400 --> 00:14:52,880 Speaker 1: I think what they're really focused on right now is inflation, 285 00:14:53,320 --> 00:14:57,080 Speaker 1: and of course step one is this really rapid tabor. 286 00:14:57,160 --> 00:14:58,560 Speaker 1: They want to get that out of the way to 287 00:14:58,600 --> 00:15:02,560 Speaker 1: give themselves the flexibility, so, you know, give it. Getting 288 00:15:02,600 --> 00:15:05,400 Speaker 1: the taper out of the way and March puts March 289 00:15:05,480 --> 00:15:08,280 Speaker 1: on the table as a rate hike option. I think 290 00:15:08,400 --> 00:15:11,440 Speaker 1: that's where we start to get more specific with timing 291 00:15:11,440 --> 00:15:14,680 Speaker 1: and thinking about the variants where the economy is doing. 292 00:15:14,720 --> 00:15:18,239 Speaker 1: How resilient we've been in the face of these challenges, 293 00:15:18,560 --> 00:15:23,320 Speaker 1: because as rapidly as the virus continues to evolve, our 294 00:15:23,360 --> 00:15:27,160 Speaker 1: ability to work around it also continues to improve. Okay, 295 00:15:27,160 --> 00:15:30,000 Speaker 1: so we're getting better at handling the virus side of things, 296 00:15:30,000 --> 00:15:32,840 Speaker 1: but we also have had monetary and fiscal stimulus at 297 00:15:32,840 --> 00:15:35,840 Speaker 1: our backs for most of this pandemic. Now the monetary 298 00:15:35,880 --> 00:15:37,560 Speaker 1: side and theory is going to start to wane, and 299 00:15:37,600 --> 00:15:40,720 Speaker 1: the fiscal side remains a question. In Goldman Sachs downgraded 300 00:15:40,800 --> 00:15:43,280 Speaker 1: its views on US growth for not just the first quarter, 301 00:15:43,400 --> 00:15:45,600 Speaker 1: not just the second quarter, already out to the third 302 00:15:45,680 --> 00:15:48,800 Speaker 1: quarter on the basis and build back better, not getting past. 303 00:15:48,880 --> 00:15:53,360 Speaker 1: Do you agree with that thesis? You know, I think 304 00:15:53,440 --> 00:15:57,400 Speaker 1: it's strong to pencil in the build Back Better plan 305 00:15:57,520 --> 00:15:59,960 Speaker 1: is adding one percent to GDP, and each of the 306 00:16:00,000 --> 00:16:03,960 Speaker 1: those orders, um, they were probably higher than my forecast 307 00:16:04,160 --> 00:16:07,080 Speaker 1: for next year, which was for four percent growth in 308 00:16:07,120 --> 00:16:09,120 Speaker 1: the first half and then two and a half percent 309 00:16:09,200 --> 00:16:12,200 Speaker 1: growth in the second half. And that really reflects the 310 00:16:12,240 --> 00:16:15,520 Speaker 1: fact that I think our economy, while still growing at 311 00:16:15,520 --> 00:16:19,200 Speaker 1: a healthy clip, is just going to be decelerating back 312 00:16:19,240 --> 00:16:22,560 Speaker 1: towards sort of our long run potential. That's a combination 313 00:16:22,640 --> 00:16:26,240 Speaker 1: of the lower labor force participation and to your point, 314 00:16:26,280 --> 00:16:30,880 Speaker 1: the fact that these myriad tail winds are dissipating, and 315 00:16:31,240 --> 00:16:33,520 Speaker 1: you know, you look at the fed rate heights cycle 316 00:16:33,960 --> 00:16:36,160 Speaker 1: that is going to be a head to into our economy. 317 00:16:36,520 --> 00:16:40,240 Speaker 1: Maybe not next year specifically, certainly towards the end of 318 00:16:40,280 --> 00:16:43,160 Speaker 1: next year that could materialize, but that impacts things with 319 00:16:43,200 --> 00:16:45,440 Speaker 1: the lag. I do think they were on a trajectory 320 00:16:45,480 --> 00:16:48,240 Speaker 1: for slower growth, which you know is going to feel 321 00:16:48,240 --> 00:16:54,080 Speaker 1: weird after six quarters of just really extraordinarily supercharged exponential growth. 322 00:16:54,840 --> 00:16:56,720 Speaker 1: Laura and the interest of trying to get a sense 323 00:16:56,760 --> 00:17:00,320 Speaker 1: for how much build back Better contributed to up tomism 324 00:17:00,360 --> 00:17:04,680 Speaker 1: in the in the asset markets and contributed to forecast optimism. 325 00:17:04,720 --> 00:17:07,040 Speaker 1: How much are you talking to clients about build back 326 00:17:07,080 --> 00:17:11,680 Speaker 1: Better specifically, and and from your perspective, how much optimism 327 00:17:11,920 --> 00:17:16,119 Speaker 1: was um sort of tied to this package getting past. 328 00:17:17,960 --> 00:17:21,240 Speaker 1: I think the optimism has slowly been fading. I think 329 00:17:21,280 --> 00:17:24,199 Speaker 1: for economists, you know, we've just been hammering that we 330 00:17:24,280 --> 00:17:28,159 Speaker 1: need infrastructure spending um and it's good not only for 331 00:17:28,200 --> 00:17:30,200 Speaker 1: just the economy in the near term, but for long 332 00:17:30,280 --> 00:17:34,040 Speaker 1: run productivity growth. I think for markets, there's been a 333 00:17:34,119 --> 00:17:38,679 Speaker 1: real focus on real assets and that's been happening partly 334 00:17:38,720 --> 00:17:42,760 Speaker 1: because of inflation, because it's an underappreciated sector that we 335 00:17:42,840 --> 00:17:45,320 Speaker 1: just haven't really needed to focus on, and I think 336 00:17:45,359 --> 00:17:49,199 Speaker 1: build back Better has was part of that optimism. I 337 00:17:49,240 --> 00:17:53,040 Speaker 1: think the inflation narrative is still very strongly in play there, 338 00:17:53,440 --> 00:17:56,679 Speaker 1: and real assets is a place that we see a 339 00:17:56,680 --> 00:18:00,240 Speaker 1: lot of interest in focus from clients. But I think 340 00:18:00,240 --> 00:18:02,760 Speaker 1: at the end of the day, UM, you know, people 341 00:18:02,880 --> 00:18:05,359 Speaker 1: are have been seeing this bill struggle along for the 342 00:18:05,400 --> 00:18:08,200 Speaker 1: better part of a year now, and the reality is 343 00:18:08,240 --> 00:18:11,760 Speaker 1: that optimism I think had faded some time ago. It's 344 00:18:11,800 --> 00:18:15,520 Speaker 1: really just sort of tempered, cautious hope that something will 345 00:18:15,560 --> 00:18:18,640 Speaker 1: get done right. And when you're talking to those clients 346 00:18:18,640 --> 00:18:21,240 Speaker 1: about the biggest upside and downside risk to the economy 347 00:18:21,280 --> 00:18:26,480 Speaker 1: going into two. What are you talking most about? You know, inflation? Inflation. 348 00:18:26,480 --> 00:18:29,439 Speaker 1: Inflation is the topic, and I actually am trying to 349 00:18:29,480 --> 00:18:33,480 Speaker 1: get them to move away from just focusing on inflation 350 00:18:33,480 --> 00:18:36,879 Speaker 1: to how you manage that in investing, because what we 351 00:18:36,960 --> 00:18:40,120 Speaker 1: actually see is that inflation is one of the uh 352 00:18:40,119 --> 00:18:43,080 Speaker 1: in a in a high and rising inflation environment is 353 00:18:43,080 --> 00:18:46,159 Speaker 1: one of the most detrimental to equities, and it's a 354 00:18:46,240 --> 00:18:52,160 Speaker 1: place where investors and typically underestimate the impact of inflation 355 00:18:52,160 --> 00:18:56,200 Speaker 1: on forward valuations. And so for that reason, you really 356 00:18:56,240 --> 00:19:00,560 Speaker 1: need to rotate out of just these big traditional um 357 00:19:00,600 --> 00:19:03,920 Speaker 1: index funds and into something that's more active and really 358 00:19:03,960 --> 00:19:06,840 Speaker 1: captures the fact that equity markets for a long time 359 00:19:06,920 --> 00:19:10,560 Speaker 1: now have seen this huge dispersion underneath, right, we have 360 00:19:11,000 --> 00:19:15,399 Speaker 1: a small number of super charged large cap equities pulling 361 00:19:15,440 --> 00:19:18,160 Speaker 1: the whole thing higher, and underneath there are a lot 362 00:19:18,200 --> 00:19:21,119 Speaker 1: of equities which are not which you're struggling at this point, 363 00:19:21,400 --> 00:19:24,680 Speaker 1: and annual returns are not looking as good. So from 364 00:19:24,680 --> 00:19:27,119 Speaker 1: that perspective that, of course fixed income is really I 365 00:19:27,119 --> 00:19:29,119 Speaker 1: think going to struggle next year and a higher inflation 366 00:19:29,119 --> 00:19:30,760 Speaker 1: and fund right, and I'm Glad you brought up the 367 00:19:30,760 --> 00:19:33,320 Speaker 1: divergence going on within the equity market, because the really 368 00:19:33,320 --> 00:19:36,080 Speaker 1: clear divergence has emerged between small cups and large caps 369 00:19:36,119 --> 00:19:39,840 Speaker 1: as well. When you're thinking about capitalization and the small 370 00:19:39,880 --> 00:19:43,000 Speaker 1: caps versus large gaps going into two and then follow 371 00:19:43,080 --> 00:19:46,359 Speaker 1: that on with style, how would you recommend crafting that 372 00:19:46,440 --> 00:19:51,000 Speaker 1: allocation going into your head? So for us, we're really again, 373 00:19:51,040 --> 00:19:54,919 Speaker 1: you know, focused on the inflation protection, so focused on 374 00:19:54,960 --> 00:19:59,200 Speaker 1: real assets, and I think focused on energy, which uh, 375 00:19:59,240 --> 00:20:01,040 Speaker 1: you know has come a long way, but I think 376 00:20:01,040 --> 00:20:04,520 Speaker 1: it's still relatively undervalue, and it's a place where, given 377 00:20:04,520 --> 00:20:08,280 Speaker 1: that things are starting to feel really late cycle, I 378 00:20:08,320 --> 00:20:10,680 Speaker 1: think the economy is going to be able to handle 379 00:20:10,760 --> 00:20:13,400 Speaker 1: rate hikes. I'm just not sure the market is going 380 00:20:13,440 --> 00:20:15,320 Speaker 1: to be able to handle it. We need to just 381 00:20:15,400 --> 00:20:18,440 Speaker 1: brace for that volatility. So I think for us, it's 382 00:20:18,440 --> 00:20:21,720 Speaker 1: a it's a twofold story because we really want to 383 00:20:21,800 --> 00:20:29,400 Speaker 1: keep investors rounded in opportunistic credit, in lower duration credit options, 384 00:20:29,720 --> 00:20:33,640 Speaker 1: and we want to maintain the help on the equity 385 00:20:33,680 --> 00:20:38,520 Speaker 1: side when it comes to the inflation challenge. Lord, good morning, 386 00:20:38,520 --> 00:20:40,240 Speaker 1: it's a guy. Can I just take you back to 387 00:20:40,280 --> 00:20:43,200 Speaker 1: the tape? How much flexibility do you think the FED 388 00:20:43,800 --> 00:20:46,399 Speaker 1: currently has in the way that it's thinking about that type. 389 00:20:46,640 --> 00:20:49,439 Speaker 1: It has accelerated it. We've obviously learned that over the 390 00:20:49,480 --> 00:20:52,520 Speaker 1: last few days. But if we do see overcrown taking 391 00:20:52,560 --> 00:20:56,480 Speaker 1: off in January February, how much flexibility is there still 392 00:20:56,480 --> 00:21:00,000 Speaker 1: in the process. Could the Fed manage it's maybe backlow, 393 00:21:00,119 --> 00:21:02,960 Speaker 1: did a little bit more, maybe actually deliver a little 394 00:21:02,960 --> 00:21:05,800 Speaker 1: bit more on the monetary front up front if we 395 00:21:05,880 --> 00:21:08,800 Speaker 1: have to deal with that January February and then really 396 00:21:08,840 --> 00:21:12,479 Speaker 1: push hard into the end of that type and then 397 00:21:12,560 --> 00:21:15,359 Speaker 1: ultimately where where they were and where they announced a 398 00:21:15,400 --> 00:21:18,480 Speaker 1: few days back. If I were at the FED, I 399 00:21:18,480 --> 00:21:21,439 Speaker 1: would be kicking myself for not having initiated the taper 400 00:21:21,560 --> 00:21:25,600 Speaker 1: significantly earlier. I think right now they just need to 401 00:21:25,600 --> 00:21:28,320 Speaker 1: get out of the way. They feel like if they 402 00:21:28,359 --> 00:21:31,640 Speaker 1: want to really pivot towards the levels that they can 403 00:21:31,680 --> 00:21:36,040 Speaker 1: pull that will actually do something to the underlying economy 404 00:21:36,080 --> 00:21:38,840 Speaker 1: that the taper and the quantity of easing is really 405 00:21:38,880 --> 00:21:43,480 Speaker 1: more a financial market help. So at this point I 406 00:21:43,480 --> 00:21:47,080 Speaker 1: think they really need to address the inflation and be 407 00:21:47,240 --> 00:21:51,280 Speaker 1: able to give themselves the flexibility to manage that. You know, 408 00:21:51,400 --> 00:21:53,840 Speaker 1: I've heard several of your guests talking about how the 409 00:21:53,880 --> 00:21:55,959 Speaker 1: FED is in a rock and a hard place, and 410 00:21:56,000 --> 00:21:57,879 Speaker 1: I think you know, this is the moment where they 411 00:21:57,880 --> 00:22:03,200 Speaker 1: need to really give us clarity on how they are 412 00:22:03,320 --> 00:22:07,480 Speaker 1: going to manage what is absolutely going to be monitor 413 00:22:07,600 --> 00:22:12,200 Speaker 1: um financial market volatility, how they are going to manage 414 00:22:12,200 --> 00:22:14,800 Speaker 1: through that, because it's not a question of if it's 415 00:22:14,800 --> 00:22:17,960 Speaker 1: going to happen, it's just a question of when. During 416 00:22:18,000 --> 00:22:20,520 Speaker 1: their rate high process, if they are going to be 417 00:22:20,560 --> 00:22:24,120 Speaker 1: focused on inflation, they need to prepare markets for that 418 00:22:24,440 --> 00:22:27,480 Speaker 1: so that they don't just blink in the face of 419 00:22:27,560 --> 00:22:31,000 Speaker 1: volatility as they have as we've seen uh in the 420 00:22:31,080 --> 00:22:34,040 Speaker 1: last in the last expansion, Does the FED put live 421 00:22:34,080 --> 00:22:36,000 Speaker 1: on or will it be dead forever? Thank you so 422 00:22:36,080 --> 00:22:38,920 Speaker 1: much to Laura Ram of f FS Investments for your 423 00:22:38,960 --> 00:22:46,879 Speaker 1: insight this morning. How close are we to the end 424 00:22:46,880 --> 00:22:49,520 Speaker 1: of the pandemic? That was g Gronval Johns Hopkins Center 425 00:22:49,600 --> 00:22:52,680 Speaker 1: of Health Security Senior scholar trying to help us understand 426 00:22:52,920 --> 00:22:55,280 Speaker 1: the threat posed by the omicron variants, and we will 427 00:22:55,280 --> 00:22:57,119 Speaker 1: get more insight now. How lucky we are to be 428 00:22:57,200 --> 00:22:59,960 Speaker 1: joined by Dr Peter Hotes, Dean of the National School 429 00:23:00,200 --> 00:23:03,240 Speaker 1: of Tropical Medicine at Baylor College of medicine. Doctor Hope 430 00:23:03,280 --> 00:23:05,600 Speaker 1: has has done a lot of work with tropical diseases 431 00:23:05,880 --> 00:23:10,080 Speaker 1: and vaccine development. Dr great to speak with you. From 432 00:23:10,160 --> 00:23:14,000 Speaker 1: your view, Are we overestimating or underestimating the threat of 433 00:23:14,040 --> 00:23:17,359 Speaker 1: the omicron variant right now? Well, I think it's not 434 00:23:17,400 --> 00:23:20,920 Speaker 1: so much sure we're either underestimating or overestimating. I think 435 00:23:20,960 --> 00:23:24,280 Speaker 1: the problem is we're missing the weak link in our 436 00:23:24,320 --> 00:23:28,480 Speaker 1: response to this pandemic. We're missing that third rail, and 437 00:23:28,480 --> 00:23:31,280 Speaker 1: and that's where our vulnerability is. So let me explain 438 00:23:31,320 --> 00:23:34,080 Speaker 1: the further. The first the first rail is the delta 439 00:23:34,160 --> 00:23:37,080 Speaker 1: variant that's still with us, that's still surging. Now you've 440 00:23:37,119 --> 00:23:41,479 Speaker 1: got O macron, which is so highly transmissible, superimposed on that, 441 00:23:41,640 --> 00:23:44,600 Speaker 1: and how you're starting to see a lot of people 442 00:23:44,600 --> 00:23:48,080 Speaker 1: getting infected in some extraordinary numbers put out there by 443 00:23:48,119 --> 00:23:51,480 Speaker 1: the NIH Director over the weekend in terms of number 444 00:23:51,520 --> 00:23:54,119 Speaker 1: of new cases on a daily basis. But here's the 445 00:23:54,160 --> 00:23:57,280 Speaker 1: third piece that I think was our greatest vulnerability, and 446 00:23:57,320 --> 00:24:02,680 Speaker 1: that is our healthcare workers. We're getting symptomatic COVID, not 447 00:24:02,760 --> 00:24:06,560 Speaker 1: necessarily sick enough to be hospitalized, but sick enough to 448 00:24:06,600 --> 00:24:09,000 Speaker 1: be knocked out of the workforce for a period of time. 449 00:24:09,040 --> 00:24:11,720 Speaker 1: So they can't come into work. And that's happening on 450 00:24:11,760 --> 00:24:17,360 Speaker 1: an already depleted health system infrastructure where some we've lost UM. 451 00:24:17,440 --> 00:24:21,480 Speaker 1: Some say maybe it's of the workforce already. And now 452 00:24:21,520 --> 00:24:24,200 Speaker 1: if you have all these healthcare workers at home, UM 453 00:24:24,280 --> 00:24:27,760 Speaker 1: sick with breakthrough COVID because the immunity even against the 454 00:24:27,800 --> 00:24:31,280 Speaker 1: third immunization wanes pretty quickly after a couple of months, 455 00:24:31,320 --> 00:24:34,359 Speaker 1: according to new data coming out of Imperial College, that's 456 00:24:34,359 --> 00:24:36,040 Speaker 1: the weak link. We're not going to have the healthcare 457 00:24:36,080 --> 00:24:39,440 Speaker 1: personnel to take care of all the sick. Dr let's talk. 458 00:24:39,520 --> 00:24:41,080 Speaker 1: Let's dig into that week link of a little bit, 459 00:24:41,119 --> 00:24:44,760 Speaker 1: because I have two questions that naturally result from your commentary. 460 00:24:44,840 --> 00:24:48,760 Speaker 1: The first is, where is the length the weakest nationally? 461 00:24:48,920 --> 00:24:51,600 Speaker 1: Are there areas of extraordinary weakness in this country that 462 00:24:51,640 --> 00:24:55,080 Speaker 1: we need to be concerned about, either regionally or you know, 463 00:24:55,160 --> 00:24:58,680 Speaker 1: suburban versus urban? And then secondly, at some point does 464 00:24:58,760 --> 00:25:03,520 Speaker 1: that weak link necessitate ultimate shutdowns? And I say this 465 00:25:03,600 --> 00:25:05,560 Speaker 1: because it does seem to me that risk assets are 466 00:25:05,960 --> 00:25:08,600 Speaker 1: sort of generally assuming that the U. S. Economy will 467 00:25:08,640 --> 00:25:10,439 Speaker 1: not have to shut down again, we will not be 468 00:25:10,560 --> 00:25:14,240 Speaker 1: forced into isolation. But I just wonder if our our 469 00:25:14,240 --> 00:25:16,399 Speaker 1: links are weak enough. If we ultimately have to protect 470 00:25:16,400 --> 00:25:19,880 Speaker 1: the healthcare workers, is the mechanism of shutdown the only 471 00:25:19,920 --> 00:25:23,880 Speaker 1: way to do so well. The searches are happening both 472 00:25:23,880 --> 00:25:26,480 Speaker 1: in rural and urban areas. So here in Texas and 473 00:25:26,480 --> 00:25:30,080 Speaker 1: the Panhandle of Texas, we're already seeing pretty bad surges 474 00:25:30,880 --> 00:25:34,880 Speaker 1: on on hospitals and places like Amarillo. For instance. Here 475 00:25:34,880 --> 00:25:37,679 Speaker 1: in our in Houston are Texas Medical Center, which is 476 00:25:37,680 --> 00:25:40,720 Speaker 1: the world's largest medical center. There's a lot of heftier 477 00:25:40,800 --> 00:25:43,960 Speaker 1: so it's it's it's probably gonna happen here in Houston 478 00:25:44,119 --> 00:25:47,800 Speaker 1: last in terms of because we have so much potential capacity, 479 00:25:47,840 --> 00:25:50,320 Speaker 1: but there are vulnerabilities. But even in New York and 480 00:25:50,400 --> 00:25:53,639 Speaker 1: New Jersey now where you're seeing um very high rates 481 00:25:53,680 --> 00:25:57,080 Speaker 1: of O macron accounting for the variants, I'm really worried 482 00:25:57,240 --> 00:26:00,160 Speaker 1: about that. You know. The problem is the country has 483 00:26:00,200 --> 00:26:02,640 Speaker 1: no appetite for shutdowns, and I think that's why you're 484 00:26:02,640 --> 00:26:06,000 Speaker 1: seeing Tony Faucci um sort of hold back on and 485 00:26:06,160 --> 00:26:09,440 Speaker 1: even talking about that. It just there's just too much 486 00:26:09,560 --> 00:26:13,439 Speaker 1: political pushback right now and on doing that. So I 487 00:26:13,520 --> 00:26:16,120 Speaker 1: put out an article in the l A Times over 488 00:26:16,119 --> 00:26:18,119 Speaker 1: the weekend to see if there's some out of the 489 00:26:18,160 --> 00:26:20,720 Speaker 1: box things you can do to keep our work for 490 00:26:20,800 --> 00:26:23,840 Speaker 1: healthcare workforce in the workforce, and and one of them 491 00:26:23,840 --> 00:26:26,919 Speaker 1: which nobody has really commented on so far, is is 492 00:26:27,040 --> 00:26:30,959 Speaker 1: should we consider a fourth immunization a second boost? Because 493 00:26:31,000 --> 00:26:34,280 Speaker 1: we are seeing that very dramatic drop off from data 494 00:26:34,320 --> 00:26:37,760 Speaker 1: from the UK and Germany after the after the fies 495 00:26:37,800 --> 00:26:40,199 Speaker 1: are boost, it's a it's good for a couple of 496 00:26:40,240 --> 00:26:43,439 Speaker 1: months and then against omicronic drops off very quickly. So 497 00:26:43,560 --> 00:26:46,639 Speaker 1: what a second boost sort of keep everybody in the 498 00:26:46,680 --> 00:26:49,240 Speaker 1: healthcare workforce for that period of time, knowing that it 499 00:26:49,280 --> 00:26:52,120 Speaker 1: may only last a couple of months, but better than 500 00:26:52,280 --> 00:26:56,199 Speaker 1: better than nothing, and keep people on the job. In 501 00:26:56,320 --> 00:26:59,960 Speaker 1: terms of the infrastructure to deliver that is it in play? 502 00:27:00,280 --> 00:27:04,359 Speaker 1: How easy would that be to manage? I think I 503 00:27:04,400 --> 00:27:06,480 Speaker 1: think it wouldn't be that hard to manage. I think 504 00:27:06,520 --> 00:27:10,240 Speaker 1: the problem is the public perception, because you're hearing from 505 00:27:10,560 --> 00:27:15,160 Speaker 1: Dr Fauci, from Dr Collins others, and from the CDC 506 00:27:15,320 --> 00:27:18,160 Speaker 1: director over the weekend how hard it is to even 507 00:27:18,240 --> 00:27:21,879 Speaker 1: encourage Americans to get a third immunization to get that boost, 508 00:27:21,960 --> 00:27:24,280 Speaker 1: or only about thirty of those have gotten two doses, 509 00:27:24,280 --> 00:27:27,320 Speaker 1: have gotten three doses and I think they'll be there'll 510 00:27:27,359 --> 00:27:30,680 Speaker 1: be a lot of hesitation to make that recommendation because 511 00:27:30,880 --> 00:27:32,960 Speaker 1: it will just add to the confusion and maybe turn 512 00:27:33,040 --> 00:27:35,919 Speaker 1: people off forgetting that third immunization. So the so a 513 00:27:35,960 --> 00:27:38,720 Speaker 1: lot of this is optics and how you communicate that 514 00:27:38,800 --> 00:27:41,959 Speaker 1: to the American people and the healthcare workforce. Dr Hotels, 515 00:27:42,040 --> 00:27:44,439 Speaker 1: you mentioned the situation here where I sit in New 516 00:27:44,480 --> 00:27:46,240 Speaker 1: York and New Jersey, and I have been walking down 517 00:27:46,280 --> 00:27:49,240 Speaker 1: the street seeing lines wrapped around the block for COVID 518 00:27:49,280 --> 00:27:51,560 Speaker 1: testing and I know anecdotally of friends who are waiting 519 00:27:51,840 --> 00:27:54,880 Speaker 1: like a week to get a PCR test back. As 520 00:27:54,960 --> 00:27:57,760 Speaker 1: we face this threat of a more rapidly spreading variant, 521 00:27:57,840 --> 00:28:01,680 Speaker 1: do we have the testing capacity to respond to it appropriately, 522 00:28:01,840 --> 00:28:04,000 Speaker 1: for people to be notified that they're positive so they 523 00:28:04,000 --> 00:28:07,600 Speaker 1: can take the proper steps to isolate themselves. I think 524 00:28:07,680 --> 00:28:10,439 Speaker 1: you answered your own question just by telling me that 525 00:28:10,480 --> 00:28:12,399 Speaker 1: people are going around the block, and the answer is 526 00:28:12,440 --> 00:28:16,200 Speaker 1: obviously not. You know, we've never figured out testing. I 527 00:28:16,640 --> 00:28:19,720 Speaker 1: don't understand why, I mean, why you can't walk into 528 00:28:19,760 --> 00:28:23,320 Speaker 1: CVS or write Aid or Dwayne Read or wherever the 529 00:28:23,359 --> 00:28:26,439 Speaker 1: major pharmacy chain wherever you live, lay a couple of 530 00:28:26,440 --> 00:28:28,520 Speaker 1: bucks on the counter and say give me a home 531 00:28:28,600 --> 00:28:31,800 Speaker 1: testing kit that will ask me a dozen doses, you know, 532 00:28:32,240 --> 00:28:35,480 Speaker 1: I mean it's not without a doctor's prescription. I mean 533 00:28:35,520 --> 00:28:38,760 Speaker 1: it was. It was never rocket science to know what 534 00:28:38,800 --> 00:28:40,640 Speaker 1: we needed to do. I just don't know why we 535 00:28:40,680 --> 00:28:43,600 Speaker 1: can never organize ourselves as a nation to do so 536 00:28:43,640 --> 00:28:46,320 Speaker 1: many things about this COVID response to other countries. Have 537 00:28:47,040 --> 00:28:49,000 Speaker 1: all right, Dr Peter Hotest, thank you so much for 538 00:28:49,040 --> 00:28:51,600 Speaker 1: your extremely valuable insight. This morning, he of course joining 539 00:28:51,640 --> 00:28:54,880 Speaker 1: us from the Baylor College of Medicine. This is the 540 00:28:54,880 --> 00:28:59,160 Speaker 1: Bloomberg Surveillance Podcast. Thanks for listening. Join us live week 541 00:28:59,240 --> 00:29:02,320 Speaker 1: days some him to ten a m. Eastern on Bloomberg 542 00:29:02,400 --> 00:29:06,240 Speaker 1: Radio and on Bloomberg Television each day from six to 543 00:29:06,400 --> 00:29:11,040 Speaker 1: nine am for insight from the best in economics, finance, investment, 544 00:29:11,160 --> 00:29:16,200 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 545 00:29:16,280 --> 00:29:20,080 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 546 00:29:20,200 --> 00:29:24,400 Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg