Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: on YouTube search Bloomberg Global News. It's a bunch of headlines.
Speaker 1: Tim and I just want to mention before we get
Speaker 1: into our next guest. The U s c d C
Speaker 1: updating its COVID nighteen guidance for kindergarten through high school,
Speaker 1: providing flexibility for local decision makers to determine what's needed
Speaker 1: to safely keep kids in the classroom. We are, though, Tim,
Speaker 1: seeing infections rising across most regions of the world as
Speaker 1: that delta variant spreads that from the World Health organizations
Speaker 1: chief scientistic We're also seeing South Africa going through a
Speaker 1: third wave as it's just battering the country right now.
Speaker 1: And in Canada, residents in Ontario kulds the vast majority
Speaker 1: of restrictions lifted in August. A tale of two different
Speaker 1: stories when we look around the world when it comes
Speaker 1: to the vaccine and with COVID, And then there's those
Speaker 1: late day headlines from Fiser yesterday looking for emergency authorization
Speaker 1: for a third booster desk. Let's get to it with
Speaker 1: Dr Ian lust Beta, clinical professor Medicine at n y
Speaker 1: U Land going on the phone in New York City.
Speaker 1: I and so good to have you here. Happy Friday. Um,
Speaker 1: I gotta start with the Fiser headline. We are all
Speaker 1: trying to understand what's going on. Do we all need
Speaker 1: to be all of a sudden now a little worried
Speaker 1: about when our vaccine is going to wear off? When
Speaker 1: we need to get a booster. What's the conversations you
Speaker 1: guys are having at the hospital? Sure? Happy Friday, Thanks guys.
Speaker 1: So there's no question the Delta variant, the Indian variant,
Speaker 1: is really becoming a global dominant stream. I'm not surprising.
Speaker 1: We're really seeing evolution and action here right. The organisms
Speaker 1: adapt to a changing environment. They tend to become more
Speaker 1: fit uh and outcompete other organisms even if they're similar.
Speaker 1: So what we're really seeing is the virus adapt and
Speaker 1: change and become more contagious, higher concentrations in sneezing or coughing.
Speaker 1: At this point, though it seems to be similar risk.
Speaker 1: In other words, we're not seeing more deaths really as
Speaker 1: a result of delta other than in people who are
Speaker 1: not vaccinated. So for people who are not vaccinated, of
Speaker 1: hospitalized patients are now patients who have not received vaccines.
Speaker 1: So this is certainly an argument for the vaccine. The
Speaker 1: concern is that we are seeing some breakthrough cases. So
Speaker 1: I've certainly had my share of patients who have received
Speaker 1: both vaccines and who then become symptomatic with the delta variant.
Speaker 1: And a lot of this data is really based out
Speaker 1: of Israel, where they were vaccinated before we were, and
Speaker 1: they're beginning to see more breakthrough case says as well.
Speaker 1: So that's really the concern. Why why is that Is
Speaker 1: it because of the delta variant? That's a great question.
Speaker 1: So it's it could be for a few reasons. One is, uh,
Speaker 1: even though we're seeing antibodies that do slightly decrease over time.
Speaker 1: I can tell you most of the patients that we
Speaker 1: check for spike protein, and we try not to check everyone.
Speaker 1: I mean, that would be a waste of resources if
Speaker 1: you're checking antibodies on everyone who's who's been vaccinated UM.
Speaker 1: But in select people who may be traveling or have
Speaker 1: other issues, those antibodies are sky high. But it does
Speaker 1: look like over time, uh, and certainly in Israel UM
Speaker 1: that antibody levels are dropping. So probably a combination of
Speaker 1: slightly lower antibody levels and perhaps a more aggressive variant
Speaker 1: in DELTA is why we're seeing UM these breakthrough infections.
Speaker 1: The good news is in terms of hospitalizations, and part
Speaker 1: of this is our data and part of it is Israel's.
Speaker 1: You know, we're seeing a range of effectiveness that drops
Speaker 1: from to about nine. So the vaccines are still very effective.
Speaker 1: The question is will that begin to wane over time?
Speaker 1: The other question that comes up is should we be
Speaker 1: developing a delta vaccine, which does make sense, but maybe
Speaker 1: we should put our efforts into vaccinating more people than
Speaker 1: giving a third dose to people who have already received
Speaker 1: you're preaching to the choir. So what's interesting though, is,
Speaker 1: and we've had this conversation this week, um Dr les
Speaker 1: Bader is that if you can't get those people to
Speaker 1: get the vaccine, you can't get to hurt immunity, and
Speaker 1: that increasingly gives the virus the opportunity to seize on
Speaker 1: two new hosts to continue to mutate, which could potentially
Speaker 1: I'm not I'm not a Susie pessimism or pessimistic kind
Speaker 1: of person, but it's it does open the or to
Speaker 1: creating a virus that is even more potent, more lethal,
Speaker 1: and more contagious, contagious than what we're dealing with right now. Right,
Speaker 1: that's the reality of it. Right. So the longer the
Speaker 1: virus replicates globally, the higher the chance of another variant developing.
Speaker 1: I think it's inevitable that there will be you know,
Speaker 1: and other variants you know, lambda all the way out
Speaker 1: to Iota. Um. So we certainly feel that there will
Speaker 1: be more variants. The question is will they be potentially
Speaker 1: more lethal? It is an argument to get everyone vaccinated.
Speaker 1: Of course, there's hesitancy, and rarely we are seeing you know,
Speaker 1: odd symptoms after people get vaccinated, and you know, you
Speaker 1: always have to tell patients, look, what is the risk
Speaker 1: of getting COVID versus the risk of the vaccine. The
Speaker 1: risk of you know, having a complication from COVID is
Speaker 1: far greater than the risk of a complication from the vaccine,
Speaker 1: although we do see a handful of the issues after that.
Speaker 1: But I agree with you. I think if if we
Speaker 1: can't get people every vaccinated and someone is willing to
Speaker 1: take a third shot, that probably would provide some protection. Yes, yeah,
Speaker 1: Dr Les, just in twenty seconds, are we gonna be
Speaker 1: wearing masks again in the fall? You know? I think
Speaker 1: right now we're seeing people well protected. There's no real
Speaker 1: urgent concern. The fall is a few months away. I
Speaker 1: don't see any real concerns. I think we're beginning to
Speaker 1: de mask. If Delta really takes off for another variant,
Speaker 1: we might have to rethink that approach. But right now
Speaker 1: people are taking their masks off and I think they're
Speaker 1: doing well. Let's get right back to Dr Ian lesbad Our,
Speaker 1: clinical professor of Medicine at n y U Land going
Speaker 1: on the phone in New York City. One more thing
Speaker 1: on the virus and then we want to move on. Um,
Speaker 1: what's the end game? You know, in terms of how
Speaker 1: you think Dr Lesbada, this works out. Is it just
Speaker 1: a case of a lot of people. I'm thinking of us.
Speaker 1: I'm just looking at the U S situation. A lot
Speaker 1: of people get the vaccine and that helps create some
Speaker 1: kind of herd immunity. You've got other people who are
Speaker 1: going to get the virus. They're either going to recover
Speaker 1: develop their own immunity, or they're going to die off.
Speaker 1: Unfortunately to be so blunt, and then that's how we
Speaker 1: get to a better place. Ultimately, Well, this is a
Speaker 1: global problem, and that even though we like to focus
Speaker 1: on the United States, we we really can't. Um at
Speaker 1: this point, I believe globally, out of eight billion, eight
Speaker 1: plus billion, people somewhere in the three billion range may
Speaker 1: have received you know one, one or more vaccines. We
Speaker 1: don't really have great data from countries like China and Russia,
Speaker 1: and we also really don't know how effective those vaccines are.
Speaker 1: They seem to be not nearly as effective as the
Speaker 1: you know, M R and A vaccines. I think, um,
Speaker 1: we are going through this for at least another year
Speaker 1: or more. We've back in nineteen eighteen it took three
Speaker 1: years in multiple waves with a Spanish flu um and
Speaker 1: I think we're going to see a higher death count
Speaker 1: and higher disability, and it may be even years of
Speaker 1: post covid or long hal symptoms. Um, this is not
Speaker 1: a completely benign illness. Even if you get it. Loss
Speaker 1: of smell and taste and so forth may be transient,
Speaker 1: but there may be other issues. So we do need
Speaker 1: to work on things perhaps like ipmecton or other maybe
Speaker 1: off the shelf medications or other treatments or preventatives. While
Speaker 1: we're waiting to vaccinate people, we really have not focused
Speaker 1: enough on that area of research, and I think we
Speaker 1: need to do that, and I think we still have
Speaker 1: kind of enough a rough year or two in the
Speaker 1: United States. I believe the as we said, UM, we
Speaker 1: still have a pretty good level of protection, you know,
Speaker 1: even against the delta variant. But in the areas of
Speaker 1: the country that are not vaccinated, they're going to have
Speaker 1: an increase in hospitalizations and other problems. It's it's look,
Speaker 1: this is something that we are and we know we're
Speaker 1: gonna have to be living with for years. And as
Speaker 1: you mentioned the question of treatment as a question of
Speaker 1: getting more and more people vaccinated, Dr less bide A,
Speaker 1: well have you. I want to talk about the heat
Speaker 1: wave that is hitting parts of the United States. California
Speaker 1: bracing for another weekend of heat that could set records
Speaker 1: temperatures above add ten degrees fahrenheit in some parts of
Speaker 1: the Central Valley of California. As a doctor, as a
Speaker 1: medical professional, how do people what do people need to
Speaker 1: know about surviving these type of heat? Very important? We're
Speaker 1: definitely seeing some global changes. Uh. Why and for how long?
Speaker 1: We don't really know. UM. I do want to mention
Speaker 1: something called Ariel's Checklist, which people can google a R
Speaker 1: I E. L. Ariel's Checklist, and it talks about acclimating
Speaker 1: to the heat, uh, not hiking in the middle of
Speaker 1: the day, slowly acclimating, hydrating, wearing loose clothing, getting enough
Speaker 1: sleep UH, and determining the wet bulb globe temperature. In
Speaker 1: other words, really what is the ambient temperature? And why
Speaker 1: this is very important is because, based on your age,
Speaker 1: health and activity, once the these temperature begins to rise,
Speaker 1: a lot of problems happen. There can be nausea, headache, dehydration,
Speaker 1: and once the body's temperature goes above one oh four
Speaker 1: often it's irreversible. You can have confusion, fainting, seizures UH,
Speaker 1: and death quite frankly, so once you get irreversible damage
Speaker 1: to the brain or the heart, uh, it's it's a
Speaker 1: real problem. So it's very important for people to understand
Speaker 1: the difference between heat exposure, heat exhaustion, and heat stroke.
Speaker 1: Heat stroke is really the life threatening, you know, condition,
Speaker 1: and to be very careful to get into cool areas,
Speaker 1: have some air conditioning, even if that's not available, to
Speaker 1: minimize your exposure, because this is often undiagnosed and people
Speaker 1: by the time they're symptomatic or often very far along
Speaker 1: with with body temperatures and core temperatures that are very
Speaker 1: elevated beyond what they are aware and people around them
Speaker 1: should pay attention and see if someone does not look
Speaker 1: good when they're outside, respond right away. Don't think they're
Speaker 1: making this up. It's it's a very lethful uh and
Speaker 1: often under diagnosed condition. And increasingly we're seeing these hotter
Speaker 1: temperatures coming earlier and sooner and uh more frequent, uh
Speaker 1: in places that normally didn't like the Pacific Northwest. Yeah,
Speaker 1: that was shocking, crazy, crazy, crazy. UM. Thank you so much.
Speaker 1: Dr Ia los Pader, Clinical Professor of Medicine, m y
Speaker 1: U Lengo Medical Center on the phone in New York City.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So our
Speaker 1: tough story on this Friday, of course, present find signing
Speaker 1: that sweeping executive order. It's all about promoting competition across
Speaker 1: American industries and in the labor market. He's calling on
Speaker 1: regulators to take steps to lower drug prices, tough and
Speaker 1: murder enforcement in tech and banking, give workers more power
Speaker 1: to change jobs and negotiate higher wages. There is a lot,
Speaker 1: I should say, there are a lot moving parts to this.
Speaker 1: Let's get to it and with what the Bloomberg audience
Speaker 1: needs to know. David McLachlan is Justice Department of Justice
Speaker 1: reporter for Bloomberg News, joins us on the phone from Washington,
Speaker 1: d C. David, this thing is wide ranging, it's far,
Speaker 1: it's sweeping. What do we need to know about the
Speaker 1: most important parts of it? Yeah, so it covers about
Speaker 1: seventy two different initiatives and and proposals. Um And the
Speaker 1: basic idea is that, um, you know, competition and a
Speaker 1: trust enforcement is primarily handled by the Federal Try Commission
Speaker 1: and the Justice Department they review mergers and and UM
Speaker 1: monopoly conduct and that sort of thing. But what the
Speaker 1: idea of this The idea of this order is to
Speaker 1: basically say to all government agencies that oversee different industries
Speaker 1: that you have a role to play in promoting competitions
Speaker 1: through rules and regulations, and that those agencies should be
Speaker 1: or could be doing more to promote uh competition in
Speaker 1: the market that they oversee. So is this about consumers winning?
Speaker 1: Is this about America winning against the rest of the
Speaker 1: rest of the world? Of what is what's the endgame?
Speaker 1: I'm kind of a payoff kind of girl, Like, what
Speaker 1: what's the point? Well, what I think this is a
Speaker 1: response to is a concern that many economists, any trust
Speaker 1: experts have been raising over the last few years UM
Speaker 1: about industries UM becoming over the last couple of decades
Speaker 1: very consolidated. And we see that mostly or maybe primarily
Speaker 1: in the tech company in the tech industry, with the
Speaker 1: big tech companies like like Amazon and Google, et cetera.
Speaker 1: But really it's an issue that UM many people see
Speaker 1: happening across the economy and the worry is that UM,
Speaker 1: it's leading to maybe higher prices, less choice for consumers. UM.
Speaker 1: There's also this labor market issue. You if you live
Speaker 1: in a town with fewer employers. This is definitely an
Speaker 1: issue in rural areas. You know, they have more leverage
Speaker 1: over you as a worker, and you have um less
Speaker 1: leveraged bargain for higher wages, which the President mentioned today.
Speaker 1: So this is really an effort to go beyond tech
Speaker 1: the stories that tend to be in the news right now,
Speaker 1: to cover other industries, UM and help consumers and workers. Okay,
Speaker 1: that's what you know. It's funny. We were just talking
Speaker 1: with Till whatever Business Week and Eric Palcunas about David
Speaker 1: versus Goliath, and it was about engine number one going
Speaker 1: after x on mobile. Uh, and they had a big win.
Speaker 1: And is that what it's about, is David versus Goliath?
Speaker 1: You know, individuals consumers who in many ways and and
Speaker 1: and some workers and we saw this play out during
Speaker 1: the pandemic, right that really got hurt hard and we're
Speaker 1: left behind. While we know that there were some workers
Speaker 1: that were able to work at home, there was no
Speaker 1: really disruption in their lives. Uh. You know, So is
Speaker 1: that what it's about, like getting to some of those
Speaker 1: inequities that we really saw big time during the pandemic. Yeah,
Speaker 1: because there's a plenty of research. Uh. And then then
Speaker 1: then some people dispute this, but there is research showing that. Um.
Speaker 1: So when you when you have a monopoly or dominant
Speaker 1: firmative market, of course that company may have the power
Speaker 1: to raise prices and may lead to less choice. But
Speaker 1: but some people think they are wider macroeconomic effects, effects
Speaker 1: on productivity, UM and income inequality. Like the superstar companies
Speaker 1: may pay their workers very well, but others in the
Speaker 1: economy who may not be working at those companies might
Speaker 1: be losing out. And so um, there are worries that
Speaker 1: that when not dominant firms or just a handful of
Speaker 1: dominant firms are controlling markets, there are bigger um problems
Speaker 1: that are being caused. Um. And so I think that's
Speaker 1: what the White and the White House is trying to
Speaker 1: get out with. So, David, that what happens now, because
Speaker 1: as we saw, we were listening to this, we were
Speaker 1: watching it, it was playing on our YouTube. When Biden
Speaker 1: signed this executive order, he was flanked by members of
Speaker 1: his cabinet, by antitrust officials. What do they go into
Speaker 1: now in order to put this into action. Well, so
Speaker 1: a lot of this now gets into rulemaking and regulations,
Speaker 1: which UM kendy as you know, kind of a long
Speaker 1: ruling process because it can involved court challenges. So so
Speaker 1: for example, one of the UM proposals are directives that
Speaker 1: is in the order is restoring net neutrality UM the
Speaker 1: requirements that Internet providers treat Internet traffic, but basically the
Speaker 1: same UM, and listeners might remember that that was a
Speaker 1: big fight for many years Obama tried to the Obama
Speaker 1: administration implemented that neutrality rule. They were challenged in the courts.
Speaker 1: Eventually we're undone and so that went on for many years,
Speaker 1: so the impact was not immediate, and so I think
Speaker 1: that could be UM. I don't know if every proposal
Speaker 1: will be fought in the courts, but uh, some certainly
Speaker 1: will be UM. So it could take some time, but
Speaker 1: even some agencies like the FTC are already acting to
Speaker 1: UM implement some of these ideas. Well. It's interesting when
Speaker 1: you were kicked off, you said, seventy two new different
Speaker 1: initiatives and proposals, all government agencies ever seeing different industries.
Speaker 1: It's all about being more competitive, and I was thinking, yeah,
Speaker 1: but it's an executive order, which could be overturned in
Speaker 1: a couple of years if there's a new president in
Speaker 1: the White House. But I do wonder is this potentially
Speaker 1: going to create some significant changes in terms of how
Speaker 1: US big business operates. Well, that's uh, certainly the hope
Speaker 1: by by those who want more aggressive UM. Any trust
Speaker 1: and force countee a lot of problems in in different markets. UM.
Speaker 1: I mean, I think a lot of the directives in
Speaker 1: the in the in the order we're telling like the
Speaker 1: any trust enforcement agencies can get tougher on on mergers
Speaker 1: and so. Um that's a decision that the agencies will
Speaker 1: have to make abically based on the facts of specific deals.
Speaker 1: But you know what they sort of does is it
Speaker 1: gives political support to enforcers and other regulators to take
Speaker 1: tougher action. They're not going to feel like they're out
Speaker 1: in left field or um, you know, unsupported. If they
Speaker 1: want to do something right now, they face their their
Speaker 1: their bossony this on Monday. If it's like, hey, wait
Speaker 1: a minute, we had that big signing, remember that. Um, yeah, exactly.
Speaker 1: Thank you so much, Davi McLaughlin for breaking it down
Speaker 1: for US. Bloomberg News Department of Justice reporter on the
Speaker 1: phone from Washington, d C. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic from
Speaker 1: Bloomberg Radio. Tim, what are you doing on Sunday? I'm
Speaker 1: going to be here. I'm going to be hosting, co
Speaker 1: hosting with that Lolo and Emily Chang, the special Billionaires
Speaker 1: going to space this one Richard Branson looking forward to
Speaker 1: There's gonna be some cool stuff. And you know who's
Speaker 1: gonna be on the ground there in New Mexica, none
Speaker 1: other than a Bloomberg News is at Low reporter who's
Speaker 1: right now on the phone from San Francisco, right in
Speaker 1: between jumping up a plane getting back from Sun Valley
Speaker 1: about to getting another plane to head to Spaceport America. Ed.
Speaker 1: Are you tired yet? I'm tired, but I'm excited. You know,
Speaker 1: these are not bad gigs, They're great. Hey, So take
Speaker 1: us through exactly what's going to happen on Sunday morning
Speaker 1: at nine am Eastern time. Yeah, that's a good that's
Speaker 1: a good way place to start, right. So, the Virgin
Speaker 1: Galactic Launch System is a two part to imagine an
Speaker 1: airplane that is dual fuselage with a big wing that
Speaker 1: connects both sides, and then the actual spaceship is planted
Speaker 1: in the middle, so it takes off like a normal airplane,
Speaker 1: climbs and climbs and climbs to a height which is
Speaker 1: a little bit of a surprise to some people, but
Speaker 1: around fifty ft THENT and just context, that's about twenty
Speaker 1: feet higher than like a commercial airliner would fly that
Speaker 1: we're crying across the United States, so it is it
Speaker 1: is pretty high attitude altitude. That's just the stage one.
Speaker 1: So you hit fifty feet and then then it's release, release,
Speaker 1: and the rocket part drops from the middle of the wing,
Speaker 1: and then it's engine ignites, and then it accelerates rapidly
Speaker 1: on an upward arc to around fifty to fifty miles
Speaker 1: above Earth's atmosphere, which is the point of controversy because
Speaker 1: there's a debate about whether that really is going into
Speaker 1: space or not. Is it. Well, if you're on NASA,
Speaker 1: and I think NASA is a pretty good standard, you
Speaker 1: know to go by. NASA says that anything above fifty
Speaker 1: miles above the Earth's atmosphere above Earth is space that
Speaker 1: anyone goes beyond that point is technically an astronaut, but
Speaker 1: others disagree. The others say that the common line, which
Speaker 1: is sixty two miles above Earth, the kind of internationally
Speaker 1: recognized boundary space, is true space. And Blue Origin you
Speaker 1: follow them on Twitter, They've been tweeting the differences between
Speaker 1: their system and their ambitions versus Virgin Galactics, and they
Speaker 1: say that Virgin Galactic are not going into space. Blue Origin,
Speaker 1: which is the company owned by Jeff Bezos, says that
Speaker 1: they simply are operating a high altitude plane. Okay, hold on,
Speaker 1: what do you think about this? Because here we are.
Speaker 1: This is not when they'se versus McDonald's duking it out.
Speaker 1: That's a really good analogy. Why why is this happening?
Speaker 1: Because it's not like, you know, this is open to
Speaker 1: normal people yet, like who cares? This is cool? The
Speaker 1: last time that the Virgin Galactics CEO, Michael cold Glazier
Speaker 1: was on bloom Blow Television, he said, this is not
Speaker 1: about a race between two billionaires. Let's be honest, guys,
Speaker 1: come on, let's real. Jeff bez Us walked past me
Speaker 1: yesterday in some valley. I've shouted out to him, Jeff,
Speaker 1: how are you feeling about Blue Origin? How are you
Speaker 1: feeling about July twenty, and he didn't reply. By comparison,
Speaker 1: Richard Branson has been on international media and TV for
Speaker 1: week drumming up interesting excitement about this. You know, when
Speaker 1: they do reach that fifty miles above a height, they
Speaker 1: will experience weightlessness. There will be six people on board total,
Speaker 1: two pilots for crew members. They call them crew members.
Speaker 1: They'll unbuckle and they'll float around for a few minutes.
Speaker 1: And I've never felt or experienced weight listeners. I would
Speaker 1: love to believe me, but I personally would take that
Speaker 1: to be in space, because I'm not sure where else
Speaker 1: you could do that to a four day I think,
Speaker 1: I think you know the answer to that question. I
Speaker 1: do not have the capital to fund my my own space.
Speaker 1: But that's why I say this is a billionaire's race,
Speaker 1: because ultimately, you know, the near term ambition to These
Speaker 1: two companies are funded by different means. You know, Virgin
Speaker 1: Galactic is a publicly traded company it was a des
Speaker 1: back and Blue Origin is bankrolled by Jeff Bezos. But
Speaker 1: at the end of the day, it's those two men
Speaker 1: that have made this happen, and they're putting themselves in
Speaker 1: pole position to be among a few people in history
Speaker 1: too are going into space, you know, as civilians. Well,
Speaker 1: this is all about the development of space tourism, right
Speaker 1: and you look at Virgin Galactic shares. We've been talking
Speaker 1: about it this week on air on a tear this year,
Speaker 1: they've more than doubled. Is there a viable business that
Speaker 1: these billionaires, these space billionaires are creating and that that
Speaker 1: will be with us for years to come? So what
Speaker 1: Virgin Galactics say about this is that their business model
Speaker 1: and future profitability is based on the efficiency of manufacturing
Speaker 1: the space craft. Because there's is not a rocket that
Speaker 1: just simply shoots straight up. It's a plane. It's more
Speaker 1: energy efficient. But they basically say that the way they
Speaker 1: go about building these these planes is that they can
Speaker 1: do this at volume and they can get regular flights.
Speaker 1: They say they charged around two hundred fifty dollars for
Speaker 1: the first six d people that have signed up. They're
Speaker 1: not taking orders at the moment, they're not taking bookings,
Speaker 1: but they're very confident they're going forward that they will
Speaker 1: be cash flow positive and reach profitability based on the
Speaker 1: business model. There are others out there to disagree. I
Speaker 1: think we've discussed this guy that Elon Musk says that
Speaker 1: launching as a business has a peak of about three
Speaker 1: billion dollars a year, regardless of the payload that you're
Speaker 1: sending up for him. The money's in the data, you know, Starlink, space, Internet,
Speaker 1: things like that, you know, and Elon Mask with respect
Speaker 1: is a good authority on this. But virgins Actic is
Speaker 1: very very confident that this is a viable business model.
Speaker 1: And Virgin's got Virgin Orbit, which is not connected to
Speaker 1: Virgin Galactic anymore, but it's still part of the Virgin empire.
Speaker 1: And you know the satellites, Yeah, it does, and for
Speaker 1: for a very similar delivery mechanism. It's basically accustomed seven
Speaker 1: or seven houseitude and the rocket drops off the bottom
Speaker 1: and then from the altitude launches on a sort of arc.
Speaker 1: But same same result, right, They put satellites into orbit
Speaker 1: and the money comes from the data generated. So two
Speaker 1: hundred fifty apart for a trip times six hundred, a
Speaker 1: hundred and fifty million dollars. As your Galactic has almost
Speaker 1: twelvellion dollar market cap, it's and when went public was
Speaker 1: a fraction of that. It's ten dollars a share because
Speaker 1: it was a fact. I gotta love it. I think
Speaker 1: continuing space exploration is is an interesting thing and I'm
Speaker 1: looking forward to that special. Thank you. It's gonna be
Speaker 1: fun day. I am. I'm bro journal now. But you
Speaker 1: let me drive? Oh no, no, no, no no home please,
Speaker 1: I'll do the riding drivel. I want to drive, Just drive, baby,
Speaker 1: question trying. This is the drive to the globe. Give
Speaker 1: me thanks. We'll drying us down on Bloomberg Radio. All right,
Speaker 1: just about ten and a half minutes to go. We
Speaker 1: are heading towards Carol. Flies when you're having fun, flies
Speaker 1: when you're having fun. It has been a fun week
Speaker 1: and interesting weeks and volatility this week. And let's get
Speaker 1: to with Natty Level. She is senior US Equity Strategies
Speaker 1: that US Global Wealth Management. Nattie joining us on the
Speaker 1: phone in New York City. Nadia, good to have you here.
Speaker 1: How do you explain this week? We had some selling,
Speaker 1: we had some buying. It's a risk on trade today.
Speaker 1: What do you believe investors are focusing on right now? Yes,
Speaker 1: it's so great to be here. Thank you for having me. Um. Yeah, So,
Speaker 1: in terms of the volatility this week, we do think
Speaker 1: that it has to do with a confluence of the
Speaker 1: things range and from you know, concerns around peak growth,
Speaker 1: labor supply shoulders, there's potentially courtailing growth. Obviously, the tels
Speaker 1: of variance and the emergent lambter variance is given some
Speaker 1: pause and concerns around global growth. I do think that dope,
Speaker 1: that investors should be focused on the overall strong economic
Speaker 1: growth that we're expected in Q two and that trying
Speaker 1: to sort of continue into back half of the year
Speaker 1: and and then we expect to see above TRYD grow
Speaker 1: into twenties. It's gonna be okay, right at least for
Speaker 1: the next six months. Absolutely, it's going to be okay.
Speaker 1: Earnings kick off next week. We are expecting another strong
Speaker 1: quarter of earnings. And at the end of the day,
Speaker 1: what dry at the stock market is earning. And we
Speaker 1: do think that ARN is a set up to beat.
Speaker 1: I mean, I'll unpack that just a little bit more
Speaker 1: for you. Wh we look at you two expectations, we
Speaker 1: think that they're just too low, right, what do you
Speaker 1: mean look at too low? But we are expecting growth
Speaker 1: on the SMP Carol, not enough really, because let's unpack that.
Speaker 1: You know, when you look at what what expectations are
Speaker 1: versus Q one is actually expected to decelerate, and so
Speaker 1: we don't agree with that. You should not expect you
Speaker 1: should expect you one to be the lowest quarter of
Speaker 1: the year in a non recession every year. Right now,
Speaker 1: consensus expectation is for Q two to decline about eight
Speaker 1: percent versus Q one, which is just peculiar, given that
Speaker 1: economic growth into two is expected to be more than
Speaker 1: three percentage points acceleration from Q one. What drives earning
Speaker 1: economic growth? So it's economic growth is stronger in Q two.
Speaker 1: For earn this growth should be even stronger than it was.
Speaker 1: And Q why do I am a bois can't tell
Speaker 1: for my voice say so, okay, So how does some
Speaker 1: how does an investor prepare for this? I think you.
Speaker 1: We continue to like the value trade. We know we
Speaker 1: saw some weakness in it over the last couple of weeks.
Speaker 1: We've seen growth outperformed value. Today is a better day
Speaker 1: for value. We think that trend would continue because we
Speaker 1: think that that's where the upside will be in earning.
Speaker 1: The more economically sensitive sectors would like consumer, discretionary, financials,
Speaker 1: even energy, and those sectors tend to be in the
Speaker 1: value index, and so we expect them to beat on
Speaker 1: earn instant in coming weeks and that should help to
Speaker 1: propel those stuffs even further. So those are the sectors
Speaker 1: that we be looking to to to add to and
Speaker 1: from a value growth UM standpoint, we're looking to add
Speaker 1: to the value. Mhmm. So what about the names that
Speaker 1: have really provided a lot of momentum? Uh, those big
Speaker 1: tech names, the big thing stocks have they already had
Speaker 1: their day in your view. In our view, they have
Speaker 1: had their moments. And the reason why they've had their
Speaker 1: moment recently, um is because race has p back right,
Speaker 1: and so that has allowed like valuations for those high
Speaker 1: valuation stock right. The discount rate has come down, and
Speaker 1: so that that caused the rocation in those tech stocks.
Speaker 1: We think some of that is going to reverse and
Speaker 1: and and value will start to outperforming because we do
Speaker 1: think that interest rates are going to move higher. We're
Speaker 1: starting to see that again today. We expect that the
Speaker 1: yield and the tenure will get to two percent by
Speaker 1: year end, and that is not a favorable set up
Speaker 1: for how your value staw. So yeah, to see some headwinds.
Speaker 1: So then what happens to the high flying tech companies.
Speaker 1: When interest rates go up like that, we expect them
Speaker 1: to stall out again as we star earlier in the year.
Speaker 1: We expect that head went to call back and we'll
Speaker 1: stall out. And that's why we can see up of
Speaker 1: our values. You think also economic growth tables. Those values
Speaker 1: have to sort of growth that we're seeing in value.
Speaker 1: It's just much higher than what we're seeing in the
Speaker 1: growth sectors. Two on the ten year by the end
Speaker 1: of the year, that's your forecast. But we know the
Speaker 1: FED is willing to let things go a little hot.
Speaker 1: Do you think the Fed changes monetary policy significantly before
Speaker 1: the end of the year, whether it's reducing asset purchases
Speaker 1: uh and letting things to start to roll off the
Speaker 1: balance sheet, and do they do anything when it comes
Speaker 1: to rates. So yeah, we do expect that this fad
Speaker 1: will start to mesh the message in the tape or
Speaker 1: and of the balance sheet at Jackson Hole or in September,
Speaker 1: and we expect that tape for it to start even
Speaker 1: in December or early next year. So that would be
Speaker 1: the change in terms of policy parts in terms of
Speaker 1: the interest rates and move in short en which we
Speaker 1: don't think that FAT is going to do that anytime soon.
Speaker 1: We're looking for late early a lot of late early
Speaker 1: four before the FED starts to change rates exactly exactly
Speaker 1: a long time. That is a long time, and so
Speaker 1: a lot can happen between now and then. But as
Speaker 1: we know, the FAT is very focused on economic data,
Speaker 1: is very data dependent. But we think that we don't
Speaker 1: see anything on the horizon to do rail the economic
Speaker 1: growth that we're seeing, and so inflation transitory in your view,
Speaker 1: transitory and our vie. Now we'll get we'll get t
Speaker 1: p I numbers next week, We'll get the producer prices
Speaker 1: next next week. Don't be surprised if those run hot.
Speaker 1: We already know that the FED has also agreed with that,
Speaker 1: and so we do expect them to run a little
Speaker 1: bit hot. But by the time we get into urine
Speaker 1: and two, we expect inflation to sort of normalize. So Nodia,
Speaker 1: what what derails this, this bull market? And when does
Speaker 1: that happen? I think what could derail this? It tends
Speaker 1: to be FAT policy, But I think that the FAT
Speaker 1: is very careful this time around. Also, this you inflation
Speaker 1: regime that they have, you know, average inflation of the
Speaker 1: course of the side gives them a lot more flexibility.
Speaker 1: And also the fetres very much about the labor market,
Speaker 1: and so those numbers will be closely watched. So I
Speaker 1: think the chance of a set policy mistakes that we
Speaker 1: have seen in the past that tends to derail the
Speaker 1: economy and the market, we think that probability is lower. Now.
Speaker 1: The other thing that, of course that we're all closely
Speaker 1: locked is these variants. But you got there, this will
Speaker 1: be managed. You've got you you know. It's it's interesting
Speaker 1: because everyone brings it up, and I think it just
Speaker 1: as a reminder that that is on everyone's radar because
Speaker 1: that's the big outlier and that's the big unknown. Yes,
Speaker 1: but even these variants, like I think even there's a
Speaker 1: little laura probably of that even derail in um the
Speaker 1: equity market, because I think that wants the sciences by
Speaker 1: a position to handle it, and also the markets themselves.
Speaker 1: We've already seen there's slopha variants. We're already seen farmer
Speaker 1: companies coming out working on booster shot to help combat
Speaker 1: specifically the delta variant, and so we think that that's
Speaker 1: going to happen, and so the market is getting more
Speaker 1: fustom and also relying on farmer We definitely have a
Speaker 1: little bit more of the playbook at this point, even
Speaker 1: though it's still being written. UM so much fun. Thank you,
Speaker 1: great Friday check in on the market. Thanks for listening
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