Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: Eastern Time on Bloomberg Radio, or watch us on YouTube
Speaker 1: search Bloomberg Global News. Watching some of the headlines, I
Speaker 1: have been messaging some of our team about this whole
Speaker 1: mix and match idea fiser though in bion Tech did
Speaker 1: come out saying a booster shout of their Kevin nineteen
Speaker 1: vaccine restored full protection. They did a large study results
Speaker 1: that are likely to bolster the argument for giving a
Speaker 1: third dose more widely in the population. We're also keeping
Speaker 1: an eye on what's happening in the UK because the
Speaker 1: country reported the most new cases since July there and
Speaker 1: they have just under seventy the population vaccinated. Right, so
Speaker 1: you're trying to Okay, so how is that? And let's
Speaker 1: not forget we've got a palle of experts advising the
Speaker 1: U S c d C meeting today to talk about
Speaker 1: booster shots, to talk about mix and match so we'll
Speaker 1: watch for some headlines on that. Let's get to it though,
Speaker 1: with Dr g G. Gronville. She's Senior Scholar at the
Speaker 1: Johns Hopkins Center for Health Security and Associate Professor in
Speaker 1: the Department of Environmental Health and Engineering at the Johns
Speaker 1: Hopkins Bloomberg School of Public Health, supported by Michael R. Bloomberg,
Speaker 1: founder of Bloomberg LP and Bloomberg Philanthropies. She is an
Speaker 1: immunologist by training, an author, and she joins us once
Speaker 1: again from Baltimore. Dr Gronville, good to have you back
Speaker 1: here on Bloomberg Radio. Help me make sense of some
Speaker 1: of the headlines that I expect that we're going to
Speaker 1: get pretty soon, and especially when it comes to mixing
Speaker 1: and matching vaccines, especially when it comes to getting a
Speaker 1: booster what's the guided you guys are coming to at
Speaker 1: Johns Hopkins or concluding that should be the guidance? Sure,
Speaker 1: So yesterday UM, the FDA announced that UM they that
Speaker 1: mixing and matching is the way to go. They didn't
Speaker 1: uh state of preference for a particular order of vaccine,
Speaker 1: like say, if you had J J vaccine, which which
Speaker 1: booster you should choose? UM. The panel that's meeting today
Speaker 1: may get more specific than that and make some more
Speaker 1: recommendations along that those lines. But right now, UM, it's
Speaker 1: looking like at least you can choose which of the
Speaker 1: three even if there is no recommendation. Is it a
Speaker 1: little confusing for someone like me and Tim that we're
Speaker 1: thinking about the booster so that when we go to
Speaker 1: sign up, is that then places are going to say,
Speaker 1: here's what we're offering, you know, I mean, I'm just
Speaker 1: thinking about the logistics of this, because then if you
Speaker 1: are if you want to go mix and match, then
Speaker 1: you want to know if you're going to go somewhere,
Speaker 1: what what vaccine you're going to get. Right right now
Speaker 1: you can you can learn where your vaccine site and
Speaker 1: what they're offering. UM. If you go to vaccine stack
Speaker 1: of UM you can or even you can see in
Speaker 1: the advertisement of whatever pharmacy you're planning on getting vaccinated
Speaker 1: that they will tell you, UM, if there's if they're
Speaker 1: offering fiser that day or maderna or J and J UM.
Speaker 1: So you do you do, You have to ask sometimes,
Speaker 1: but but that information is definitely available to you. What
Speaker 1: was going on before is that you know there was
Speaker 1: data that was showing that a third shot, if you've
Speaker 1: got the fiser maderna, for example, a third shot would
Speaker 1: be beneficial. And especially if you had the J and
Speaker 1: J vaccine, that a second shot of an MR and
Speaker 1: A vaccine. So either fiser maderna would be a good idea.
Speaker 1: And so people were going ahead and doing that ahead
Speaker 1: of any recommendation. So this will hopefully make those logistics easier.
Speaker 1: So what would you advise people who right now are
Speaker 1: getting emails from wherever they got their first two shots
Speaker 1: that say, hey, we are open for boosters if you
Speaker 1: want to come and get a booster. Should they wait
Speaker 1: for official guidance, should they wait for more guidance or
Speaker 1: should they just go ahead and get it done and
Speaker 1: wait for optionality so they can decide if they want
Speaker 1: to do mix and match. Um, so a few places
Speaker 1: are going ahead ahead. I'm not quite sure why they
Speaker 1: They are ahead of the FDA and CDC on that,
Speaker 1: but um, I think by the end of this week,
Speaker 1: you will have that option. UM, the data is pretty
Speaker 1: clear for people who had J and J vaccine to
Speaker 1: go ahead and get a fisor Maderna booster. UM. Other
Speaker 1: than that, it's not UM, it doesn't seem to be
Speaker 1: that that. UM, it's great a difference, Okay, because that's
Speaker 1: you know, we're we're being really specific because we're wondering
Speaker 1: these are questions that we were talking about last night.
Speaker 1: I mean, I've I've hit my six months from my
Speaker 1: second shot, and I'm getting you know, bombarded, to be
Speaker 1: quite honest, by emails of saying come get your booster,
Speaker 1: and I'm not pretty sure that I meet all the criteria.
Speaker 1: But I'm also thinking, you know, I'm trying to figure
Speaker 1: out what to do, right I. UM, I haven't gotten
Speaker 1: bombarded by emails, so I don't know what that says
Speaker 1: about the pharmacy UM that I go to. Sorry, I
Speaker 1: think get my original uh show from a mass vaccination site.
Speaker 1: So maybe that's why, UM, the follow up hasn't been there.
Speaker 1: But UM, but yes, I think, UM, for people who
Speaker 1: had Visor and Maderna, there doesn't seem to be much
Speaker 1: of a difference to get another visor and maderna mixer
Speaker 1: match or whatever. I think it's important for people to
Speaker 1: remember that, you know, these are different approaches, different vaccine companies,
Speaker 1: but they are still targeting the same virus. Are trying
Speaker 1: to stimulate your immune system to the same um the
Speaker 1: same you know, the same virus, the same part of
Speaker 1: the virus. And so uh, there there wasn't I wasn't
Speaker 1: expecting to see much of a difference between these UM
Speaker 1: mixing matches. Well, Dr Gronwell, in the last minute that
Speaker 1: we have with you, help us understand what's going on
Speaker 1: in the UK because for the first time since July
Speaker 1: COVID nineteen cases in the UK top fifty country certainly
Speaker 1: seeing a surge there. What's going on. So it's always
Speaker 1: hard to know exactly what's going on because you know,
Speaker 1: there's public health is especially as we have all seen
Speaker 1: with COVID. Uh, you know, there are lots of different
Speaker 1: mitigation measures that are very unevenly applied. UM. But I
Speaker 1: the vaccination rate for younger people is not good and UM,
Speaker 1: and so they haven't they haven't. It's even less than
Speaker 1: the United States, and and so that is where a
Speaker 1: lot of the cases are coming from. And so we
Speaker 1: all need to do better for younger populations. UM, because
Speaker 1: they have they incurred more risks from COVID than they
Speaker 1: certainly believe that they do. UM and uh. But you know,
Speaker 1: hopefully we will see some improvement over those numbers. UM
Speaker 1: and hopefully next week when children they're see starting to
Speaker 1: get vaccinated in the coming weeks. Got it, we gotta run. Hey,
Speaker 1: thank you so much, as always, Dr Gig Gronville or
Speaker 1: John Hopkins Center for Health Security at the Bloomberg School
Speaker 1: of Public Health. You're listening to Bloomberg Radio. This is
Speaker 1: Bloomberg Business Where with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Well the Bloomberg Big Take today.
Speaker 1: It's also I think it's still the most read story
Speaker 1: on the Bloomberg in the past eight hours at The
Speaker 1: story also find online at Bloomberg Business Week. It's about
Speaker 1: the hidden ways the ultra rich are passing well to
Speaker 1: their heirs tax free. It's a great story about Phil
Speaker 1: Knight and yes you know him as the co founder
Speaker 1: of Nike. UM. We've got our own in house tax expert,
Speaker 1: Ben Stepherman, his personal finance editor at Bloomberg News. He's
Speaker 1: with us in the Bloomberg Interactive Broker's studio, Ben. It
Speaker 1: is just a great read. I actually got to read
Speaker 1: it last night on my way home from the airport. Uh,
Speaker 1: what is film Knight doing? Explain exactly what he's doing
Speaker 1: with a gret Well, what we really haven't had a
Speaker 1: view like this ever into how billionaires escaped the state tax.
Speaker 1: And there's really nothing extraordinary about what film Knight is doing.
Speaker 1: It's completely legal. Um. But what we've been able to
Speaker 1: do is pull together some filings and really true prack
Speaker 1: them over the years with help from Ander's Melon and
Speaker 1: Devon and Devin Penalty in my colleagues, and we've really
Speaker 1: been able to show how these tools, there's three or
Speaker 1: four of them, that you put them together, these loopholes
Speaker 1: and billions of dollars can be trans transferred tax free
Speaker 1: to your heirs. Um. This is you know, the state
Speaker 1: tax and gift tax. It's a related thing. They're supposed
Speaker 1: to toll basically on every generation and it's supposed to
Speaker 1: be something that fights inequality. Well, I think we could
Speaker 1: show in this story that it's basically an optional tax. Now,
Speaker 1: if you hire the right advisors, you don't have to
Speaker 1: pay it, and it's legal, and he's not alone in
Speaker 1: doing it totally. Joe Weber, editor of Bloomberg Business Week,
Speaker 1: here with us as well. So how specifically do I
Speaker 1: do this when I leave? We're taking this would be
Speaker 1: a good problem to have. I don't think you have
Speaker 1: a joke. So you never know what allowed us to
Speaker 1: gain you know insights here that you know previously all
Speaker 1: this stuff has been them, But like as you said that,
Speaker 1: we haven't seen anybody bring it all together like this.
Speaker 1: So what helped us get that bigger picture? Usually these
Speaker 1: things are happening. We know these things are happening because
Speaker 1: I've talked to the advisors who set them up, but
Speaker 1: we don't know the dollars and cents attached them because
Speaker 1: when these wealthy people do it, it's all secret. What
Speaker 1: is different in this case is that Phil knight Is
Speaker 1: is an officer. Well, he's a former chairman of and
Speaker 1: he's the founder of Nike, a publicly traded company, and
Speaker 1: um the company is now effectively controlled by a trust
Speaker 1: that's controlled by his son, who's also on the board.
Speaker 1: And because of that, they both have the requirement to
Speaker 1: report their stakes in various entities that they control um
Speaker 1: that have Nike stock in them. And so we've been
Speaker 1: able to track all these trusts and um other transactions
Speaker 1: that have have involved Nike shares over the last twelve years,
Speaker 1: and and that really allowed us to tell the story. Okay,
Speaker 1: so again I'm curious, if I walk out of here,
Speaker 1: how do I how do? But okay, so not really
Speaker 1: but not wrong. Um So, if Congress we're going to
Speaker 1: do something, what would they do? The fixes are just
Speaker 1: the simplest things like that. It's just a paragraph of
Speaker 1: text in the tax law that the problem is not
Speaker 1: closing these loopholes. It's um you know, legally, it's just
Speaker 1: the political will to do it. You know. Basically what
Speaker 1: we have a situation we have a stalemate over the
Speaker 1: state tax where the Republicans have been trying to repeal it.
Speaker 1: They really hate the idea of taxing uh wealth at
Speaker 1: death and they call it the dex death tax. They've
Speaker 1: been trying to repeal it. Under Trump, they just kind
Speaker 1: of gave up and they said, hey, we're just gonna
Speaker 1: let it be and allow these loopholes to exist. And
Speaker 1: and therefore it basically becomes this optional tax for the wealthy.
Speaker 1: So um, but you're asking how do you do it?
Speaker 1: How do these things work? What's the common denominator? Really,
Speaker 1: what this is all about is making your wealth look
Speaker 1: smaller than it really is. Noble. Yeah, so, um, how
Speaker 1: does night do that? Well, let's say you hand you
Speaker 1: hand your airs a really valuable asset, and then they
Speaker 1: hand you back and I owe you. And according to
Speaker 1: the law, no actual money was transferred hands there, nothing
Speaker 1: that wasn't a gift. It's just we're just swapping assets,
Speaker 1: except the asset that I have is an I owe you.
Speaker 1: It's not a normal transaction to any smart business person
Speaker 1: whatever really make with a counterparty. But you can set
Speaker 1: up these relationships with trust your heirs or with trust
Speaker 1: controlled by your heirs, and they're legal, and it would
Speaker 1: be very easy to ban these these deals. And as
Speaker 1: a result, then in terms of taxation, how does that
Speaker 1: kind of Well, let's say I give you what's in
Speaker 1: this case, I give you Nike stock. Then Nike stock
Speaker 1: goes up a thousand percent. All those gains can go
Speaker 1: to your heirs and they're these special uh TOI mentioned grats.
Speaker 1: There's these special tools called grats, which are really kind
Speaker 1: of granta retained annuity trust. Yes, and and they work
Speaker 1: a little bit like what I just described. But the
Speaker 1: thing about a grat is if let's say I give
Speaker 1: you an asset and the investment value goes down over time,
Speaker 1: don't worry about it. Just scrap up that piece of paper,
Speaker 1: ripping in half, and you can start over. Nothing ever happened.
Speaker 1: You said, some of the ultra rich open one every month. Yeah. Yeah,
Speaker 1: it's just you keep rolling the dice, rolling the dice,
Speaker 1: rolling the dice, hope that you can and you don't
Speaker 1: have to put it, put almost any investment in these things, um,
Speaker 1: and just hope for the best. How much revenue do
Speaker 1: we know? Do we know how much revenue the US
Speaker 1: government misses as a result of a loophole such as this.
Speaker 1: Put it this way, Um, only seventeen billion dollars, which
Speaker 1: maybe sounds like a lot of money, but only seventeen
Speaker 1: billion dollars comes in from the estate and gift tax.
Speaker 1: There are Um, they're literally almost to the twenty richest
Speaker 1: Americans have two trillion dollars almost so um the amount
Speaker 1: that this should be coming in from this tax if
Speaker 1: it was actually impost on every transfer of wealthy of
Speaker 1: the top one point one percent, it would be a
Speaker 1: lot lot more. Yeah. Uh And and to that end,
Speaker 1: we do we have any sense I mean, Phil Knight
Speaker 1: is a very uh prominent one that the story basically
Speaker 1: is built around. Do we have a sense of how
Speaker 1: many other billionaires might be using this exact same playbook? Um,
Speaker 1: I would hazard to guess of almost every single one
Speaker 1: are are using something that we describe in this story.
Speaker 1: Maybe not all of them, maybe not in a sophisticated way.
Speaker 1: The thing is Phil phil Knight could have transferred even
Speaker 1: more money than he did, but he has these charitable intentions.
Speaker 1: He says he's going to give most of his wealth
Speaker 1: away eventually. So because if you're going to give money
Speaker 1: to charity, it just becomes a lot easier to avoid
Speaker 1: the taxes. And then that's intentional, that's not necessarily a loophole.
Speaker 1: It's just the government wanted to encourage people to to
Speaker 1: give to charity. And again, though, I mean, I feel
Speaker 1: like it doesn't sound like there's any momentum to change it.
Speaker 1: Well or is there? Yeah, we might have just created it.
Speaker 1: We'll see. The House Democrats have a proposal, and um,
Speaker 1: in a lot of ways they've they've scaled back Biden's
Speaker 1: proposal tax proposals, but the one exception is this area
Speaker 1: of the estate tax, and they are actually trying to
Speaker 1: close a couple of these loopoles. It's gonna say. You
Speaker 1: can see the headlines and the controversy over not doing something. Hey, Ben,
Speaker 1: you and the team reached out to Nike and Phil Knight.
Speaker 1: Any response. Um, what they've made quear is that all
Speaker 1: these plans are integrated with his philanthropic goals. But no,
Speaker 1: they didn't give us many more details than we then.
Speaker 1: We had all these details in the story came from
Speaker 1: our own reporting. You do it so well. Thank you.
Speaker 1: You really do the details. Um, And as we said,
Speaker 1: it's the most read story on the Bloomberg Find it
Speaker 1: at business week dot com. I gotta go. I gotta go.
Speaker 1: Set up my grap Joe. Maybe we can share lawyer
Speaker 1: give me that and you know I'll reach out to
Speaker 1: you from a beach. Sounds so simple, all right, We
Speaker 1: gotta run, Joel. Thank you so much. Jill Webber, Editor
Speaker 1: Bloomberg business Week, Ben Steve Verman, personal finance editor at
Speaker 1: Bloomberg News. As we said, find it online at business
Speaker 1: week dot com. You're listening to Bloomberg Business Is Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on
Speaker 1: Bloomberg Radio. Alright, so top of mine at the Milk
Speaker 1: and Institute Global Conference. Who had so many conversations there
Speaker 1: on the West coast. We've got our TV team out
Speaker 1: there at the coast of outside Los Angeles. Long be right?
Speaker 1: Just about the supply chain problems? Yeah, I know, I know.
Speaker 1: The synapsies aren't there the ports, the two ports are
Speaker 1: very close together, nice together, and together they do account
Speaker 1: for a great portion of the traffic. The common theme
Speaker 1: here is supply chain disruptions and constraints, and we see
Speaker 1: it big time as companies report their latest quarterly updates
Speaker 1: and as our Josh winn Grove reports, the clock is
Speaker 1: definitely ticking in the efforts by the Biden administration to
Speaker 1: smooth out the bottlenecks. Their tool chest, to Tim a
Speaker 1: little bit limited. Josh wyn Grove, his White House correspondent
Speaker 1: at Bloomberg News. He's with us from the Bloomberg studio
Speaker 1: in Washington, d C. Josh, what power does the Biden
Speaker 1: administration have? What tools do they have in order to
Speaker 1: help fix this law? Jem Well I guess depends on
Speaker 1: you at on who you ask, But overall it's sort
Speaker 1: of like Joe Biden is a dad driving a station
Speaker 1: way and you know, threatening to pull this car over
Speaker 1: right away if you yeah, people don't behave like they
Speaker 1: have got this. Everyone's calling it a bully pulpit power,
Speaker 1: which is another way of saying, I suppose name and shame.
Speaker 1: They can either be the referee, they can get people
Speaker 1: in a room, crack some heads together if needed. And
Speaker 1: that's sort of the approach they're taking, and that's what
Speaker 1: led to that deal to move these ports. Seven. Of
Speaker 1: course that is only marginally uh, making a difference and
Speaker 1: difference until we get more other things going on. Every
Speaker 1: time Josh we hear that, we're like, what do you mean,
Speaker 1: why weren't they already? Like what is that? Well, there's
Speaker 1: no point in picking up a thing at three am
Speaker 1: if therehouse you're taking them two is closed, you know,
Speaker 1: and the warehouses are closed at that hour. And so
Speaker 1: these truck drivers, it's important, these truck port truck drivers
Speaker 1: have a raw deal. I mean, it is not a
Speaker 1: not a coveted position. And so we're wondering, well, why
Speaker 1: aren't there enough truck drivers. Well, gee, they're quitting because
Speaker 1: the pay and conditions are crumbing, and they're even crumbing
Speaker 1: or when things are backed up because they're sitting there unpaid,
Speaker 1: waiting for their things. They talked about that a little bit, Josh,
Speaker 1: because that's something I learned reading your story that you
Speaker 1: that that is available at Bloomberg dot com and on
Speaker 1: the terminal. It's it's not like the it's not like
Speaker 1: a trucking job for another firm. These are not unionized
Speaker 1: and um, like you said, pretty crumbing. Yeah. Then there's
Speaker 1: been a bunch of suggestions put forward by various industries,
Speaker 1: you know, either long running regulatory battles that they're picking,
Speaker 1: the supply chain crisis is a new sort of front
Speaker 1: to wage these long running battles. But the only thing
Speaker 1: the teamsters have said, getting to your question, Tim, is
Speaker 1: this is they think Joe Biden should help these guys
Speaker 1: unionize these drivers excuse me, unionized, And Joe Biden hasn't
Speaker 1: said anything about that, so we'll see what that happens.
Speaker 1: But essentially, they are the bottom rung of the ladder
Speaker 1: of the trucking industry. The pay is not great, the
Speaker 1: trucks are driving, or you know in some cases, you know,
Speaker 1: they're very thin margins. Shall we say, you know, let's
Speaker 1: let's you know, they're they're barely holding on. This is
Speaker 1: it's a rough job. And if they can get a
Speaker 1: job sort of either a unionized place or you're working
Speaker 1: for a bigger company with better conditions, more predictable hours,
Speaker 1: they're going to take it. It's no surprise. Help me,
Speaker 1: help me though. Support drivers, how are they different from
Speaker 1: the long haul drivers we see on the road when
Speaker 1: we're on a highway drive or something. What's the difference. Well,
Speaker 1: they're all treated or typically treated as independent contractors, and
Speaker 1: that means that they get paid either by the mile
Speaker 1: or by the shipment, but is opposed by the hour.
Speaker 1: So when they're sitting there waiting to pick up you
Speaker 1: know it's there, it's on their time, it's not on
Speaker 1: They're not gonna paid for that, and that's not great, right,
Speaker 1: And so there's not a lot of incentive for someone
Speaker 1: to hurry them up there they're so they have no
Speaker 1: choice but to sit there and wait for their their
Speaker 1: their container, and when they get it, they we don't
Speaker 1: have enough chassis, which of course is a little essentially
Speaker 1: trailers that pull these these things around and you know,
Speaker 1: you go every step down the ladder, it gets harder.
Speaker 1: The warehouses are full, the yards are full. We don't
Speaker 1: have enough of these containers. We don't have containers going
Speaker 1: back full. In a lot of cases, ships pile up
Speaker 1: empty containers and you know, hahull butt back to Asia
Speaker 1: if you will, because they can get more money for
Speaker 1: filling them there and bring them back to the u S.
Speaker 1: So a lot of moving parts on this, but it
Speaker 1: is a tough one. Tough one to parts in terms
Speaker 1: of certainly quick fixes, but even structural fixes will take
Speaker 1: a long time. So they're different from an Amazon driver
Speaker 1: that we see on the road or a Walmart driver
Speaker 1: that we see on the road, although many of those drivers,
Speaker 1: I'm sure in California used to maybe maybe had come
Speaker 1: up through the ranks of being a port port truck driver.
Speaker 1: I mean, it is a it's it's it's rough. It
Speaker 1: is the bottom rung. They have not been treated particularly well.
Speaker 1: And that you know now they're sort of even even
Speaker 1: getting a rare deal because when things are slowing up,
Speaker 1: the only people are person not getting paid to sit
Speaker 1: there in the gridlock is that truck driver. The you know,
Speaker 1: the dock workers getting paid, you know, the railway workers
Speaker 1: getting paid. The truck driver isn't getting paid well, Josh.
Speaker 1: As a result of all these challenges that you're describing,
Speaker 1: shipping prices have just rise dramatically. It now costs as
Speaker 1: much as twenty five thousand dollars to import a fort
Speaker 1: container from Asia. That's up from less than two thousand
Speaker 1: dollars two years ago, more than ten x in price
Speaker 1: of shipping. So politically, where does where does the president stand?
Speaker 1: I mean, you see Republicans coming in with with uh
Speaker 1: going full full court press on Biden because of these
Speaker 1: rising prices. Yeah, and they're you know, tying it in
Speaker 1: with the inflation issues we're seeing and that that is
Speaker 1: of course expected. I mean you're like, why am I
Speaker 1: talking to a white this reporter about this is because
Speaker 1: it's becoming a problem for Joe Biden, you know, And
Speaker 1: it's that and so we're gonna see if he can
Speaker 1: do it now. You know, Look, this is gonna boil
Speaker 1: down if you watch Fox News, this is going to
Speaker 1: be the worst crisis of you know, of supply chains ever.
Speaker 1: But what it's gonna boil down to is you're gonna
Speaker 1: wait more for certain goods than others. And it's not
Speaker 1: so much that there's gonna be a lack of goods
Speaker 1: across the board. In other words, the toy stores shelves
Speaker 1: will be full, you just might not be able to
Speaker 1: get the toy that you want. And that that's going
Speaker 1: to be, you know, a political issue. So we'll see
Speaker 1: where that goes. The backdrop for all of us to remember,
Speaker 1: we're buying more stuff than ever before. This is not
Speaker 1: a system that is failing to handle the normal amount
Speaker 1: of stuff. It is record stuff, even with all this
Speaker 1: great blocket, his record amounts of stuff for range of reasons,
Speaker 1: one being the American consumer is more powerful than ever.
Speaker 1: Another one is we're spending money on stuff instead of
Speaker 1: experiences because of the pandemic, and so were we are
Speaker 1: force feeding record amounts of stuff through what the Biden
Speaker 1: administration calls you know, your grandfather's system, like you know,
Speaker 1: an antiquated, creaky old piece of infrastructure, system of infrastructure
Speaker 1: and you know, low and behold, it ain't it ain't
Speaker 1: going very well. Wait wait, hashtag infrastructure perhaps times that's infrastructure.
Speaker 1: You know that there is money reports in the Infrastructure bill,
Speaker 1: which of course is the one of the two bills
Speaker 1: of Biden is, you know, pushing to get a deal
Speaker 1: on right now. So as they water down that build back,
Speaker 1: better build that reconciliation package. The hope is that if
Speaker 1: they can get both through that there'll be money for
Speaker 1: money reports in that other one. If Donald Trump gets
Speaker 1: his social media channel up and going, you know, it
Speaker 1: will be the most the toughest crisis ever. I mean,
Speaker 1: we're all looking forward to that. I'm sure. It makes
Speaker 1: it interesting. It makes it interesting. Yeah, I got our
Speaker 1: nef and notifications on my phone. I suppose one more
Speaker 1: couldn't hurt right. Pilot on Pilot on Josh. Thank you
Speaker 1: so much, Josh wyn Grove. It's a great story. It's
Speaker 1: so in depth, explains the supply chain crunch that we're
Speaker 1: seeing right now. He is Bloomberg News White House correspondent.
Speaker 1: There in our night and I want Studio in d C.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. So folks
Speaker 1: were talking Pinterest. We're talking PayPal, aren't we, Tim? We are?
Speaker 1: I mean this was a head scratcher to me when
Speaker 1: our own Leanna Baker and Ed Hammond yesterday broke the
Speaker 1: news that PayPal was interested in acquiring Pinterest. We saw
Speaker 1: pinterest stock shoot up as a result. Jenny Seraine shed
Speaker 1: some light on what exactly PayPal could do, and it
Speaker 1: has to do with ambitions to create a super app.
Speaker 1: China's Ali pay and we Chat. Jenny is with us
Speaker 1: right now. She's finance reporter for Bloomberg. Knew she's with
Speaker 1: us in the Bloomberg and actor Broker's studio. So if
Speaker 1: we look to China and what these Chinese companies have
Speaker 1: done with these so called super aps, what does that
Speaker 1: tell you about the paypals potential ambitions if it were
Speaker 1: to acquire a Pinterest. Yeah. I think it's so hard
Speaker 1: sometimes for Americans to really conceive of what China has
Speaker 1: going on. But it's really a one stop shop. You
Speaker 1: can do everything. You can do social media, you can
Speaker 1: go shopping, you can do investing, you can have your
Speaker 1: bank account. It's it's everything. And so PayPal has actually
Speaker 1: been really vocal that they want to do something similar
Speaker 1: here in the US. Um you know, there's CEO Dan Shulman.
Speaker 1: He talks a lot about being a destination app. So
Speaker 1: instead of having fifty or sixty different apps on your
Speaker 1: phone that you have to go to. He thinks that
Speaker 1: there's going to be five or six, and he wants
Speaker 1: PayPal to be one of those five or six that
Speaker 1: you kind of go to on a daily basis, like
Speaker 1: an aggregator, right exactly, I think, but but an aggregator.
Speaker 1: But I think he wants it to all be in
Speaker 1: the PayPal house. So you know, pinters are no pinters.
Speaker 1: I think this is definitely the path they've been on,
Speaker 1: and we've seen them at a lot of new and
Speaker 1: interesting things lately. Ahead this is a hard thing to
Speaker 1: do because this is not new for an American company
Speaker 1: trying to do this. Years ago. David Marcus, who as
Speaker 1: ago at Facebook, headed up Messenger when they split off
Speaker 1: Messenger from Facebook. I'm talking years ago. He talked about
Speaker 1: wanting to create a super app. Then Jenny and look
Speaker 1: at Messenger now it's no super app. Yes, So super
Speaker 1: apps have come and gone, lots of them in the
Speaker 1: U S. We've I think we've we're yeah, we're littered
Speaker 1: with failures on this front um and so we haven't
Speaker 1: been able to pull it off. And a lot of
Speaker 1: times folks point to like consumer preferences. Consumers in the
Speaker 1: U S seemed to really like kind of having their
Speaker 1: their one app for finance, their one app for social media,
Speaker 1: they're one app for shopping. Um. So you know, Amazon
Speaker 1: has tried, Google has tried. So many folks have tried
Speaker 1: um and we really haven't seen anything to get pulled
Speaker 1: off here. Well, is there something that we can learn
Speaker 1: from looking at the success in China that says, okay, yes,
Speaker 1: it can be replicated here in the United States, Or
Speaker 1: are the way Chinese approach maybe things different from how
Speaker 1: the US approach things. I think it's it's so hard
Speaker 1: to say it. I mean, it definitely seems like US
Speaker 1: consumers have shown their preference so far, but we haven't
Speaker 1: really seen anyone go at it in the way that
Speaker 1: PayPal is going at it. So you know, PayPal US
Speaker 1: have four hundred million users already, UM, and they've just
Speaker 1: slowly tacked things on. Absolutely, So they've slowly tacked things on.
Speaker 1: So you've seen them this year get into crypto. You know,
Speaker 1: you can buy a cell and hold crypto. Um. You've
Speaker 1: seen them, you know, talk about adding highled savings. They're
Speaker 1: gonna get into stock investing, so they're kind of slowly
Speaker 1: bolting on, and they're starting from that financial services perspective,
Speaker 1: which you know, a lot of the other times like
Speaker 1: Messenger for example, or an Amazon, they'd be coming at
Speaker 1: it from other angles and trying to tack on the
Speaker 1: finance piece. I think that's harder to do. Um. So
Speaker 1: we'll see, we'll see what people uh, what people has
Speaker 1: in its sleeve. But I think, you know, it's an
Speaker 1: interesting play. Well, how does Pinterest fit into this? Then? Yes,
Speaker 1: so Pinterest is a unique among the social media folks, right,
Speaker 1: So they have and for forty billion dollars, nice healthy
Speaker 1: premium for those guys. So, but they're unique in the
Speaker 1: sense that, um, you know, what people talks a lot
Speaker 1: about is wanting to be at the beginning of the
Speaker 1: shopping journey. So they don't want to be the thing
Speaker 1: that you click on at the very end when you're
Speaker 1: about to check out. They will just come back and
Speaker 1: kind of be along the way. So Pinterest would give
Speaker 1: them that. You know, people go to Pinterest and they're like,
Speaker 1: I want to buy some cowboy boots, and and they
Speaker 1: look and see what there is and and then they
Speaker 1: have added capabilities in recent years where you can click
Speaker 1: and shop directly from the pins um, so you could see,
Speaker 1: you know, a somewhat of a synergy there. It's but
Speaker 1: it's definitely a field. It's it's definitely not what you
Speaker 1: think of when you think of PayPal. So it would
Speaker 1: be a big leap. Is it too fragmented though already
Speaker 1: with a lot of big players that are actually doing
Speaker 1: it fairly well, that it would be tough to see
Speaker 1: the model pivot so significantly different. They're gonna have a
Speaker 1: lot of convincing to do. They're definitely going to have
Speaker 1: to teach and and kind of ingrain a new behavior
Speaker 1: into consumers. Now, they have been super successful at doing
Speaker 1: that in the online checkout space. They're like buy and
Speaker 1: far away the the leader in that space. So they have,
Speaker 1: you know, a track record in terms of convincing folks
Speaker 1: to to kind of come around their way of doing things.
Speaker 1: But this is a big leap, and this is a
Speaker 1: big change. Well, and then who's the other aggregate or
Speaker 1: I shouldn't use the word aggregated, but okay, you said
Speaker 1: that there might be four or five of them than
Speaker 1: is Google? Is it faced? Like who like? And then
Speaker 1: how do we think of the world? I mean, I
Speaker 1: think all of those folks would love to be a
Speaker 1: super ab and even if they've you know, tried and
Speaker 1: failed in the past, I think it's probably still on
Speaker 1: the table for them. You can't not look at the
Speaker 1: success that folks like Ali pay and we Chat pay
Speaker 1: have had um and probably and not think to yourself,
Speaker 1: I want that. I want I want folks coming to
Speaker 1: my site, you know, ten twenty whatever times a day,
Speaker 1: um and doing so many things that are our revenue
Speaker 1: generating and all that. So I think they definitely you
Speaker 1: can't not look at what's going on in China and
Speaker 1: India and Singapore and not want it. But you just
Speaker 1: don't have the consumer behavior quite here yet exactly. It's
Speaker 1: consumer behavior is such a challenge here, right because we're
Speaker 1: so used to just tapping credit cards or even putting
Speaker 1: our credit cards on our cards on our phone. And
Speaker 1: how does PayPal get people Jenny and twenty seconds to
Speaker 1: use the app to pay for something when using your
Speaker 1: credit card or tapping your phone is just as easy. Yeah,
Speaker 1: it's interesting because the US we were so far ahead
Speaker 1: in terms of you know, back in the nineties and
Speaker 1: early two thousands adopting credit cards and it's like put
Speaker 1: us back almost so now the rest of the world
Speaker 1: is completely passed us by UM. Tap to pay is
Speaker 1: totally old, but you know we're just now coming around
Speaker 1: to that. So well, we talked about that with fintech
Speaker 1: where I talked about it this pale I didn't milk.
Speaker 1: And when it comes to healthcare, that this idea of
Speaker 1: using the phone and emerging markets to help UM in
Speaker 1: terms of healthcare access, like they're ahead of us in
Speaker 1: the thinking. Great stuff as always, Jenny Surraine, she's our
Speaker 1: financial reporter at Bloomberg News. Check her out on the
Speaker 1: Bloomberg terminal and at Bloomberg dot com. This is Bloomberg Radio.
Speaker 1: I'm yeah, but you let me drive. Oh no, no,
Speaker 1: no no, this is not a travel I want to drive.
Speaker 1: It's a good question. Good drive is good? Drive to
Speaker 1: the globe on Bloomberg Radio. All right, let's get to it.
Speaker 1: We've done just about timmans left in the today's trading session.
Speaker 1: We are hovering near our best levels of the session.
Speaker 1: Looks like a record on the S and P five
Speaker 1: hundred now still just up about eight points. As we
Speaker 1: heard from Charlie down on the Dow, we are seeing
Speaker 1: some pressure thanks to IBM naszac though also an AT
Speaker 1: performer on a percentage basis, up five times of a percent.
Speaker 1: Let's drive to the grows with Chris Zacarelli, chief investment
Speaker 1: officer at independent advisor Alliance I joining us on the
Speaker 1: phone from Charlotte, North Carolina. Chris, it's great to have
Speaker 1: you on Bloomberg Business Week Radio. A month ago we
Speaker 1: were talking about inflationary worries, and here we are at
Speaker 1: record highs again. What's going on? Looks like the market
Speaker 1: is strugging off a little bit of the concerns about
Speaker 1: higher interest rates. For now. We're seeing you know, break
Speaker 1: evens jump a lot higher, but nominal yields, you know,
Speaker 1: staying staying pretty firm right around. So I think for now,
Speaker 1: stock investors feel like the inflation that we're seeing so
Speaker 1: far is going to be manageable by companies and profit
Speaker 1: margins aren't gonna be squeezed too much. We'll see if
Speaker 1: that is a is a true forecast or if markets
Speaker 1: be a little too sanguine about everything. Well, it's interesting, right,
Speaker 1: and this is where those earnings reports are so important.
Speaker 1: I'm gonna share a little bit of a statistics that
Speaker 1: we've got on the Bloomberg and it says that of
Speaker 1: the ninety companies and the S and P five hundreds
Speaker 1: of announced results in the third quarter posted better than
Speaker 1: expected earnings compared to eight for the whole season a
Speaker 1: year ago, one year ago. As for revenues topped that
Speaker 1: compares to six respective excuse me, a year ago. So
Speaker 1: I mean, not too shabby. No, companies are doing very well.
Speaker 1: They're increasing sales, they're maintaining their profit margins. It's boom
Speaker 1: times for for US corporations. And so the question is,
Speaker 1: you know, how long will that last? Well, you guys
Speaker 1: have to make decisions right and figure out investment strategies
Speaker 1: and portfolio How long do you think it will last.
Speaker 1: Do you think that these supply chain constraints are going
Speaker 1: to be manageable and not go on forever? Well, I
Speaker 1: would think, you know, by definition, a lot of these
Speaker 1: supply chain constraints and all out of the inflationary pressures,
Speaker 1: at some point they are going to resolve themselves. I
Speaker 1: think a lot of people were hopeful that they would
Speaker 1: resolve by the end of early two. I think most
Speaker 1: people in the market are a little bit more cautious.
Speaker 1: I think that they think that supply chain issues could
Speaker 1: last possibly for a couple of years. Hopefully on the
Speaker 1: transportation side of things it resolves more quickly. But you
Speaker 1: look at things like, uh, you know, shortages of semiconductors,
Speaker 1: which are so critical for almost every product in the
Speaker 1: economy right now, and you know, we're being told that
Speaker 1: to bring new production online and really ramp up to
Speaker 1: where we need to be, that could take a couple
Speaker 1: of years. So we do think that these problems are
Speaker 1: gonna be with us for longer than many of us
Speaker 1: had hoped, even as as recently as six months ago. Well,
Speaker 1: it's interesting because we're seeing companies like Procter and Gamble
Speaker 1: take a hit to their bottom line as a result,
Speaker 1: and companies like Unilever raising prices as a result of
Speaker 1: this is we do continue to get earnings from more
Speaker 1: and more companies. Chris, what are you looking for to
Speaker 1: see whether inflation is transitory or if it's something that's temporary. Well,
Speaker 1: for us, you know, we've we've definitely been a little
Speaker 1: skeptical of the idea that everything was transitory from the
Speaker 1: from the inflation front. You know, I think we all
Speaker 1: understand a lot of that dynamics that were caused by
Speaker 1: COVID that that in and of themselves have to be
Speaker 1: uh somewhat temporary, but but clearly there's a lot building
Speaker 1: up into the into the input costs, into the into
Speaker 1: the supply chains. And again, like we said, you know
Speaker 1: things like some may conductors are gonna last a little
Speaker 1: bit longer. So for us, we are really looking for
Speaker 1: those companies that are gonna have pricing power. And you
Speaker 1: just gave two good examples of some companies are able
Speaker 1: to raise prices. Other companies are having to eat some
Speaker 1: of those costs. And that's why, you know, everyone will
Speaker 1: say the biggest clice say in the book, which is
Speaker 1: it's a stock pickers market. And as an acting manager,
Speaker 1: you always want to say that behind those companies, yeah,
Speaker 1: you hear it a lot. But to the extent that
Speaker 1: you can find those companies with pricing power and do
Speaker 1: have competitive modes around their business, you know, we're really
Speaker 1: going to see which companies actually do have a moat
Speaker 1: around their business and which companies may have strong brand
Speaker 1: names like some of these consumer staples, but don't have
Speaker 1: as much of a mote as investors thought, or probably
Speaker 1: the come themselves thought. That's where the proof and the
Speaker 1: pudding is going to be over the next few months,
Speaker 1: if not a few quarters. Hey, Chris, quick question, So
Speaker 1: what if um? You know, what's interesting is we've got
Speaker 1: stocks up minus the dow, though we know that a
Speaker 1: lot of that is because of what's going on with
Speaker 1: IBM today. But if I look at the yield curve today,
Speaker 1: and if I look at what's going on in the ten,
Speaker 1: five and two, we see yields kind of back up
Speaker 1: to some of their highest levels, certainly of the day.
Speaker 1: Got that five year going up to above one point too.
Speaker 1: That's the hya sins February of twenty. We don't often
Speaker 1: it's interesting to see higher yields and yet we're also
Speaker 1: seeing higher equity gains. Is it just okay? On economy
Speaker 1: is growing, it's manageable. We understand the supply chain constraints
Speaker 1: and why that's pushing prices higher. But if this means
Speaker 1: that the FED tends to raise rates sooner rather than later,
Speaker 1: what does that mean for the equity markets? Potentially? So
Speaker 1: if the Fed begins raising rates more comply the market expects,
Speaker 1: all things being aqual you'd expect that to be a negative.
Speaker 1: And so I don't know that the market really believes
Speaker 1: they are going to raise rates so quickly. Clearly the
Speaker 1: taper is going to be announced next month. It would
Speaker 1: be a shock if they didn't do that. And and
Speaker 1: based on based on most people's base cases and ours included,
Speaker 1: you figure they wrap up tapering by the end of
Speaker 1: let's say June of next year's call it somewhere mid
Speaker 1: the FED if they get their way, they're gonna want
Speaker 1: to see unemployments just continue to go lower. And I
Speaker 1: think there's a real reluctance on the part of the
Speaker 1: FED to begin raising rates even if you heard um,
Speaker 1: you know, President Memester yesterday and so a lot of
Speaker 1: different people who have been speaking. They're really trying to
Speaker 1: divorce the idea of tapering from rate hikes, and so
Speaker 1: you know, inflation is what's going to force their hand.
Speaker 1: That's that's the trillion dollar question, and I wish I
Speaker 1: had the answer for you today. But if inflation runs
Speaker 1: hotter than everyone expects, the seed is just gonna happen
Speaker 1: to start raising rates more quickly. But if inflation stays
Speaker 1: somewhat manageable above two percent, but not on a straight path,
Speaker 1: the five on a continuous basis, I think the fed
Speaker 1: is gonna want to rate, wait to raise to raise rates,
Speaker 1: and the market may be surprised that they don't raise
Speaker 1: rates in to it all and they wait till January
Speaker 1: three would be a positive surprise record. So Chris, how
Speaker 1: do you how do you play this environment? Just in
Speaker 1: thirty seconds? Yep. So the way we're trying to play
Speaker 1: it is to have some balance. We've had growth in
Speaker 1: our portfolios all along. That was great last year, adding
Speaker 1: some cyclicles, adding some values, which we've done at the
Speaker 1: end of last year and throughout this year as we've
Speaker 1: had time, get more balanced than your portfolios. You need
Speaker 1: to have financials, you need to have materials, you need
Speaker 1: to have energy, uh, into some extent industrials balance those
Speaker 1: portfolios out. So many people are overweight technology and that
Speaker 1: was great last year. That may not be so good
Speaker 1: this year or into two. All right, we're gonna run. Hey, listen,
Speaker 1: Thank you so much, really appreciated. Chris Ecarelli, the chief
Speaker 1: investment officer at Independent Advisor Alliance, joining us on the
Speaker 1: phone from Charlotte, North Carolina. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com. And you can also listen to our radio
Speaker 1: show at two pm Eastern on Bloomberg Radio or watch
Speaker 1: us on YouTube. Sarah to Bloomberg Global News a m.