Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: Search Bloomberg Global News Visor. That Human Safety testing, they
Speaker 1: begun for a new pill to treat the virus that
Speaker 1: could be used at the first sign of illness. You've
Speaker 1: got the head of the w h O calling recent
Speaker 1: increases in deaths and cases quote truly worrying trends that
Speaker 1: they kind of back and forth. We see, Tim, you're
Speaker 1: seeing a lot of good news when it comes to
Speaker 1: treatments and vaccines, where we're seeing bad news when it
Speaker 1: comes to the numbers still going up, and then countries
Speaker 1: like Germany putting in stricter lockdown measures in place starting
Speaker 1: in just a few days and astra Zeneca its own
Speaker 1: starts and stops if you will. They said they're going
Speaker 1: to release to date results from the final stage trial
Speaker 1: of its vaccine within forty eight hours. They're really responding
Speaker 1: to criticism from a US science agency. So let's get
Speaker 1: our daily check on all things COVID back with us.
Speaker 1: As Dr Seth Letterman, co founder, CEO, chairman of the
Speaker 1: New York based specialty pharmaceutical and biopharma company Tonics Pharmaceuticals,
Speaker 1: he joins us on the phone in New Bedford, Massachusetts.
Speaker 1: Dr Letterman, nice to have you back here on Bloomberg.
Speaker 1: How are you great? Thank you very much for having
Speaker 1: me on. So tell us, um, we want to get
Speaker 1: into the work that specifically you guys are doing. But
Speaker 1: tell us about the astra Zenica vaccine specifically and this
Speaker 1: fiser maybe having a new pill to treat the virus
Speaker 1: at the first sign of illness. Um, when you hear
Speaker 1: about that, you think, what, well like, the astros Nicat
Speaker 1: story is really unprecedented. It's unprecedented that the Data Safety
Speaker 1: Monitoring Committee would raise an alarm publicly, and it's just
Speaker 1: unclear what happened. So I think we all have to
Speaker 1: wait and watch over the next forty eight hours. But
Speaker 1: I think that the trouble they're having is also a
Speaker 1: testament to how incredibly well the Fiser, Maderna and J
Speaker 1: and J programs went. If you think about the complexity
Speaker 1: of these trials, tens of thousands of people data coming
Speaker 1: in the public clamoring for information, and that this is
Speaker 1: really the first big glitch that we've seen is really remarkable.
Speaker 1: Although I really don't know what more to say about
Speaker 1: it though, except that coming on the heels of the
Speaker 1: other problems that astra Zenek has had, it does seem
Speaker 1: to be eroding confidence in their effort. Is that erosion
Speaker 1: of confidence warranted though, because we do talk to a
Speaker 1: lot of people who followed this closely who say that
Speaker 1: the data still show that this looks like it's going
Speaker 1: to be an art is an effective vaccine. I think
Speaker 1: it's a challenge for them to get it went confidence back,
Speaker 1: but I hope that they will, because, certainly on the
Speaker 1: range of numbers that are being reported by outlets like
Speaker 1: the Washington Post between sixteen nine and se seemed like
Speaker 1: a vaccine that should be out there and could be
Speaker 1: helping people. Yeah, exactly well, and you guys are working
Speaker 1: on your own vaccine as well. Tell us where you
Speaker 1: are on that process. It's a little bit different than
Speaker 1: some of the ones that have been put out there already,
Speaker 1: but get us up to speed on that if you
Speaker 1: thanks for working on a vaccine that's based on a
Speaker 1: live virus spector. We call it ten X eighteen hundred
Speaker 1: and live virus vaccine vectors induce a stronger immunity and
Speaker 1: a T cell immunity. So we're hoping that the current
Speaker 1: vaccines that are eu A authorized will solve the problem.
Speaker 1: But if they don't, we will be out there in
Speaker 1: phase one we expect this year and hopefully in efficacy
Speaker 1: trials next year. The reason that we are still charging
Speaker 1: forward if it's an unanswered question about whether the three
Speaker 1: EUA vaccines will provide durable immunity, and we we think
Speaker 1: that stimulating T cells strongly has a potential to provide
Speaker 1: that kind of durable immunity. We talked about this Tim
Speaker 1: and I with you last time. Because this is a distinction,
Speaker 1: because I think every time you come on, I'm like, well,
Speaker 1: why are you guys still pursuing your vaccine? But it
Speaker 1: is a different No, it's longer term protection um from
Speaker 1: the virus. And when remind us, when you talk longer term,
Speaker 1: what does that mean specifically? Are we talking years? Are
Speaker 1: tell us? Yeah? Yes, years or decades? Well, and there
Speaker 1: are two phases of covid. One is we have to
Speaker 1: extinguish this pandemic. And it seems like there's a great
Speaker 1: potential for the eu A vaccines to make strides. And
Speaker 1: I've I'm halfway through my fasor vaccine protocol. I urge
Speaker 1: everyone to get vaccinated. I think that these three vaccines
Speaker 1: are great, but I think that we also have to
Speaker 1: think longer term that COVID will be endemic. So we
Speaker 1: have to think about children being born in the future
Speaker 1: into a world where COVID is endemic. And I believe
Speaker 1: that COVID vaccination will become part of childhood vaccinations. So,
Speaker 1: for example, the MMR vaccine mumps, Measles rebella is a
Speaker 1: live virus vaccine and that provides years and decades of protection. Hey, dr,
Speaker 1: let him into that end? What what what place do
Speaker 1: you think treatment has Because Caroline just talked about this
Speaker 1: Visor pill, that is Visor's testing a safety of a
Speaker 1: new pill to treat the coronavirus that could be used
Speaker 1: at the first sign of illness and how about forty
Speaker 1: seconds left. It's very exciting. Um, I think that now
Speaker 1: you're seeing that. You know, even with the vaccinations, we're
Speaker 1: going to be rumbling along having cases and serious disease
Speaker 1: and unfortunately continue immortality. So I think it's wonderful. It's
Speaker 1: a new it's a new approach. It inhibits a viral enzyme,
Speaker 1: and I think it could complement what's available with him
Speaker 1: disavere from Gilead and uh, you know the Eli Lillian
Speaker 1: regenera on antibodies. I think that's a very important area
Speaker 1: for continued development. Dr Letterman. Something I'm we're curious about
Speaker 1: is you guys are working, as you mentioned, uh, specifically
Speaker 1: on your t n X vaccine. It's different. It's about
Speaker 1: T cell immunity, and you still think that because COVID
Speaker 1: will be endemic, that we're going to need tools like
Speaker 1: this going forward. Is there a point though, that you
Speaker 1: look at COVID or the virus and you say, wait
Speaker 1: a minute, you know, we can't keep developing this or
Speaker 1: it's not going to make sense. Is there a point
Speaker 1: where you do that and I bring it up to
Speaker 1: because I think investors are pretty excited about your stock.
Speaker 1: I mean it's up this year, thank you. There may
Speaker 1: be a point, but we're certainly not there yet. I think,
Speaker 1: as I mentioned, the E way vaccines are certainly taking
Speaker 1: some of the air out of the tire of the virus,
Speaker 1: but we do the to have durable protection. And one
Speaker 1: of the things we really don't know is how much
Speaker 1: immunity is out there. It's easy to measure antibody immunity,
Speaker 1: but it's hard to measure T cell immunity. And that's
Speaker 1: why one of the other programs we have is a
Speaker 1: skin test to look at T sell immunity. It's very
Speaker 1: similar to the PPD test that is used to measure
Speaker 1: exposure to tuberculosis. But I think that our tool, maybe
Speaker 1: other tools they could see how many people have T
Speaker 1: cell immunity could give us a better idea about the
Speaker 1: amount of immunity and the population and either confidence or
Speaker 1: less confidence in in whether there will be a spike
Speaker 1: after all this spring break travel. So where are you
Speaker 1: in development of that and bringing that to market. Well,
Speaker 1: we just had a response from the FDA on our
Speaker 1: developed expect to file the I and D in the
Speaker 1: second quarter and to be in clinical trials in the
Speaker 1: third quarter. So what would that mean as far as
Speaker 1: when there could potentially be Is this the type of
Speaker 1: thing that they would do emergency use authorization for? Is
Speaker 1: this the type of thing you could bring to market?
Speaker 1: We would hope for emergency use authorization, but I think
Speaker 1: that that will also depend on where the country is
Speaker 1: in terms of the COVID situation in the fall in spring.
Speaker 1: But I think that that's a decision that FDA will make.
Speaker 1: The will will certainly ask for it, but they'll have
Speaker 1: to make that determination. Do you feel like in general
Speaker 1: the US is doing a lot better when it comes
Speaker 1: to getting control of COVID? And I do wonder though,
Speaker 1: does it none of this matter unless we everywhere around
Speaker 1: the world we get it under control. Basically, the US
Speaker 1: is doing a great job in making vaccine available. It
Speaker 1: is really remarkable. I think that Operation Warp speed is
Speaker 1: almost equivalent to the Manhattan Project and the speed in
Speaker 1: which these vaccines came out, and we're all lucky. I
Speaker 1: think at how effective the three EUA vaccines appear to
Speaker 1: be and the impact they're having. The problem is that
Speaker 1: it's hard to keep Americans at home and if you
Speaker 1: look at the lockdowns in Germany and Ireland Italy. Um,
Speaker 1: it makes me almost envious that the government could control
Speaker 1: people that way. But obviously that's not an option in
Speaker 1: the United States. So I hope that people would just
Speaker 1: wait a few more months to we to we reached
Speaker 1: higher numbers of vaccinations before they went on vacation travel.
Speaker 1: But obviously, as they say, a free country, and nobody
Speaker 1: asked me, so I think now a lot of vaccine
Speaker 1: experts are just cringing, waiting to see what will happen
Speaker 1: in the coming weeks. DR you're one of those vaccine experts,
Speaker 1: what do you think will happen in the coming weeks.
Speaker 1: It's hard to tell because we don't know. As I say,
Speaker 1: the I call it the denominator, how many people really
Speaker 1: have been exposed, how many people have asymptomatic cases? Didn't
Speaker 1: know about it? Uh, you know, wrote it off. A
Speaker 1: lot of people are unaware that you can have gastro
Speaker 1: intestinal symptoms only and since that's not common knowledge, that
Speaker 1: that could result in them being immune and not even
Speaker 1: thinking in their minds that they had it. Um. You know,
Speaker 1: the antibodies fade over time, so someone who might have
Speaker 1: been sick in March or April, would be antibody negative now,
Speaker 1: but still have T cells. So I think it's a big,
Speaker 1: big unknown. I'm cautiously optimistic, but um, you know what
Speaker 1: they say, what would I do? Not what I say.
Speaker 1: I'm certainly saying, hunger down until a lot more is known.
Speaker 1: Really quick question fifteen seconds if you have if you
Speaker 1: have COVID, you automatically developed T cells just quickly. Almost
Speaker 1: everyone would unless they had some kind of immunate efficiency.
Speaker 1: All right, good to know, Always learn something. Dr Seth Lederman,
Speaker 1: thank you so much, Founder, chief executive officer, chairman of
Speaker 1: Tonics Pharmaceuticals. Joining us on the phone from New Bedford, Massachusetts.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic from Bloomberg Radio. Coming up in
Speaker 1: the new issue of Bloomberg Business Week that later this
Speaker 1: week online and on the Bloomberg Right Now, reporting on
Speaker 1: how the unemployment system is plagued by sixty three billion
Speaker 1: dollars in fraud and dysfunction. Uh, Tim, those are real numbers, Yeah,
Speaker 1: they certainly are. And Joel Weber is the editor of
Speaker 1: Bloomberg Business Week, joining us on the remote from Brooklyn.
Speaker 1: Olivia Rockman is us economy reporter at Bloomberg News, joining
Speaker 1: us on the phone from New York City. Carol mentioned it, Joel,
Speaker 1: billions of dollars lost to fraud. It's it's a big number,
Speaker 1: and it's all the more concerning because it's happening in
Speaker 1: in a space that you know, we have millions of
Speaker 1: people who remain vulnerable. And when you see this much
Speaker 1: money seeping out the sides and the dysfunction that accompanies that,
Speaker 1: it's caused for concern. So, so Ben, can you help
Speaker 1: dive into the story and tell us what you were
Speaker 1: able to find out your through your reporting. Yeah, and
Speaker 1: just a note on that sixty three billion number, that's
Speaker 1: actually a backward looking at the gar And so you know,
Speaker 1: now that SIDEN has reinstated unemployment through September, we're just
Speaker 1: going to see that figure continue to grow as more
Speaker 1: people apply and as the system continues to be available.
Speaker 1: So how come it's so bad? One of the reasons
Speaker 1: is that the unemployment application systems that are administered by
Speaker 1: spats are just websites, and so anyone in any country
Speaker 1: can simply apply online. Another issue is that the pandemic
Speaker 1: Unemployment Assistance program, which was launched as part of the
Speaker 1: Cares Act for gig workers and self employed workers, doesn't
Speaker 1: require an employer verification, and so a lot of people
Speaker 1: either in foreign countries or of the United States have
Speaker 1: been applying with the hopes that they get through without
Speaker 1: that extra stept. So what do you know about where
Speaker 1: this money has gone and is there any chance that
Speaker 1: the U. S. Government can get it back? Because this
Speaker 1: has real consequences, because this is meant for the American people,
Speaker 1: people who need the money. Right We spoke with some
Speaker 1: security experts who have been working with states and they
Speaker 1: mentioned that there are major crime rings coming out of Nigeria.
Speaker 1: Some federal inmates and United States prisons have been able
Speaker 1: to apply and get money, as well as people in
Speaker 1: countries including Japan, of countries in Africa, countries in Europe, etcetera.
Speaker 1: So it really is coming from all over the place.
Speaker 1: In terms of getting the money back, it seems to
Speaker 1: us right now that their real effort is in prosecuting
Speaker 1: the criminals that they found, but not as much about
Speaker 1: getting the money backed currently. So so many of the
Speaker 1: problems here also right right from the federal kind of
Speaker 1: state interactions, and so what what are state unemployment offices
Speaker 1: doing to combat this threat? Right now? States don't have
Speaker 1: a ton of resort of that hand, other than that
Speaker 1: some have hired security firms to do additional verification to
Speaker 1: try to keep fraudsters out of their systems. But that said,
Speaker 1: what happens when you have these extra processes is that
Speaker 1: Americans who do qualify for benefits and actually need them
Speaker 1: often get lost in that system. Um, so it's sort
Speaker 1: of a lose lose situation right now. So, Olivia, you
Speaker 1: gotta talk about some of the crazy stuff you came
Speaker 1: across in doing this story. Um, people wearing masks to
Speaker 1: kind of get benefits you talk about. I guess there's
Speaker 1: a case you talk about in Nevada last year where
Speaker 1: there was something like claims to a single home address.
Speaker 1: Tell us about some of the crazy stuff you came across. Yeah,
Speaker 1: So on that point about the masks, some people that
Speaker 1: have applied for benefits and then have to go through
Speaker 1: an online video process to verify their identity who are
Speaker 1: fraudsters have been three D printing fake spaces that they
Speaker 1: wear on these video calls to appear to be the
Speaker 1: person that they're impersonating, which was shocking to me. What
Speaker 1: about the people doing this from prison? So prisoners are
Speaker 1: actually submitting their identification cards, their inmate identification cards as
Speaker 1: their drivers licenses, and some of them were able to
Speaker 1: get through just using that ext but they wouldn't qualify,
Speaker 1: is what you're saying. They should you know, they're getting
Speaker 1: through the system. Yeah, So when you step back from
Speaker 1: all of this, I mean it feels rather existential, like
Speaker 1: we need we have millions of people who need this money. Um,
Speaker 1: even if it's a sieve, at least some of it's
Speaker 1: going there. Like, how are we how we're going to
Speaker 1: look back on all of this, do you think? So?
Speaker 1: One thing in terms of good news is that biden
Speaker 1: latest stimulus bill, the American Rescue Act, allocated about two
Speaker 1: billions states divided among states to address in part fraud
Speaker 1: and so that may help in the coming months sort
Speaker 1: of alleviate some of the stress that the states are facing.
Speaker 1: But overall this, you know, this really becomes a taxpayer issue,
Speaker 1: and you know, Americans are going to have to flip
Speaker 1: this bill. If the government can't we coop the dollars. Well,
Speaker 1: and I think the other thing is to um, what's
Speaker 1: interesting about this story. What's important about this story is
Speaker 1: we have talked about it so much leading up to
Speaker 1: the massive stimulus package being passed and talking about the
Speaker 1: importance of this money getting into the economy, consumers having
Speaker 1: access to it, Olivia to spend, and to help out
Speaker 1: with the recovery. I mean, there's there's lots of moving
Speaker 1: parts to this, but you know that's what we're kind
Speaker 1: of counting on to get this economy, uh, continuing to
Speaker 1: be on track. Right. We talked so much about retail
Speaker 1: sales and consumer spending driving the recovery, but when we
Speaker 1: have examples like in this story a couple of week
Speaker 1: spoke to who couldn't get their unemployment insurance because they
Speaker 1: were flagged for FROG even though they weren't criminals. Um,
Speaker 1: that just holds back, you know, the entire economy as well. Hey,
Speaker 1: you mentioned that that this is a backward looking number.
Speaker 1: What do we have to keep an eye on with
Speaker 1: the pushing through the one point nine trillion dollar stimulus
Speaker 1: plan to to see if any of the changes that
Speaker 1: have been made to better secure these funds are actually working. Right. So,
Speaker 1: there's a government body called the Office of the Inspector General,
Speaker 1: and they've been putting out reports every couple of months
Speaker 1: on the estimated amount of money that they think is fraudulent.
Speaker 1: And so, you know, as we continue to see this
Speaker 1: money go out, we look on our side, keep looking
Speaker 1: at these reports and seeing if they've kind of noticed
Speaker 1: the percentage of total dollars being paid to fraud go
Speaker 1: down or change it all right. I mean, listen, it's
Speaker 1: a massive system already kind of you know, strained, and
Speaker 1: then if you've got to go after fraud claims or
Speaker 1: fraudulent claims, uh, and a lot of them, I can
Speaker 1: just imagine how difficult it is for the system to
Speaker 1: get on top of it. Thank you so much, Olivia Rockman.
Speaker 1: That's our story. US economy reporter at Bloomberg News on
Speaker 1: the phone in New York. Jil Weber, editor of Bloomberg
Speaker 1: Business Week, on the remote access from Brooklyn. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes.
Speaker 1: Tim Stinovic from Bloomberg Radio. Great to have back with us.
Speaker 1: Joseph Stiglitz. He is co chair of the Commission on
Speaker 1: Global Economic Transformation at the Institute for New Economic Thinking,
Speaker 1: Nobel Laureate economists, Colombia University Professor of economics, author of
Speaker 1: numerous books, including People Power and Profits. Professor Stiglitz is
Speaker 1: joining us on the phone in New York City. Professor Stiglitz,
Speaker 1: great to have you back here on Bloomberg Radio. UM,
Speaker 1: let's talk about first of all, this report that you
Speaker 1: and the team at the Institute for New Economic Thinking
Speaker 1: have put out, and this is about dealing with the
Speaker 1: pandemic and the importance of it being a global effort
Speaker 1: and one that takes care of the developing world. What
Speaker 1: are you seeing currently though that warranted you and your
Speaker 1: team coming out and putting out this missive. Well, the
Speaker 1: key point is that that, uh, the developing countries, particularly
Speaker 1: in emerging markets, are not untrapped to have the kind
Speaker 1: of UH light at the end of the tunnel that
Speaker 1: we're beginning to see in the United States into distinct areas. UH,
Speaker 1: we're getting vaccinated. President Biden talked about July four being
Speaker 1: I heard day of independence from the from the COVID
Speaker 1: nineteen And there are many many countries, as we document
Speaker 1: around the world that have not had a single vaccine.
Speaker 1: They just can't get access, UH, they can't afford it. UH.
Speaker 1: And one of the points we make is that that
Speaker 1: supply constraint is in part artificial. UH. The second thing
Speaker 1: is the United States has spent approximately seventeen thousand dollars
Speaker 1: UH per capita GDP on UH the Economic Recovery, the
Speaker 1: Rescue Act UH, combined with the Cares Act that was
Speaker 1: past last spring and the December bill UM. The developing
Speaker 1: countries are spending a fraction of that because they just
Speaker 1: don't have the money. UH. They're spending on average somewhere
Speaker 1: between two dollars and seventeen dollars per capita. Compare that
Speaker 1: with seventeen thousand dollars in the United States. Professor, Let's
Speaker 1: start with the recovery when it comes to vaccinations around
Speaker 1: the world, then get to economics in just a few
Speaker 1: minutes here, But obviously the two are intertwined. I gotta ask,
Speaker 1: you know, when it comes to this virus the way
Speaker 1: that we're looking at it, I think so many Americans
Speaker 1: look at it from a perspective of where they live,
Speaker 1: right in their neighborhood, who who they're around in their city,
Speaker 1: and those are the statistics that they're looking at. How
Speaker 1: easy it is to get them a vaccine. Make the
Speaker 1: case as to why we should take a global approach
Speaker 1: and why we're not out of the pandemic until the
Speaker 1: world is vaccinated. The real reason, one of the real
Speaker 1: reasons we are to be concerned is this virus seems
Speaker 1: particularly successful in mutating, and as long as it's mutating,
Speaker 1: as long as it's flourishing in any part of the world,
Speaker 1: and the longer it flourishes, the more mutations, some of
Speaker 1: those mutations are going to come back. And to put it,
Speaker 1: you know, bite us. We don't know when, and we
Speaker 1: don't know how bad it will be, will be Will
Speaker 1: those mutations be more um, contagious, more deadly uh with
Speaker 1: a uh. We just don't know. So we are at
Speaker 1: a very big risk letting this UH virus just basically
Speaker 1: flourish in some parts of the world. And listen, not
Speaker 1: apples to apples, but professor Stick, you know, coming off
Speaker 1: of the financial crisis, I think we learned hopefully a
Speaker 1: lot in terms of we thought this was going to
Speaker 1: be developed, you know, the developed world thing. We thought
Speaker 1: it really spread around the globe. In terms of the crisis.
Speaker 1: Is there something that we can or should have learned
Speaker 1: from that crisis that we can carry over to this
Speaker 1: crisis in terms of its impact globally. What you remember
Speaker 1: in that particular crisis, Uh. The G twenty was founded
Speaker 1: on the basis of the recognition that we needed to
Speaker 1: have a global economic recovery. Gordon Brown, who was the
Speaker 1: Prime Minister of the UK at the time, was particularly forceful.
Speaker 1: He pointed out that if one country is doing well,
Speaker 1: it helps its neighbors, and if it's doing poorly, it
Speaker 1: hurts its neighbors. UH. We've lost enormous number of jobs
Speaker 1: in the export area because of the global slowdown. So
Speaker 1: it's just in our own self interest that there will
Speaker 1: be a strong global recovery. UH. And certain sectors, of course,
Speaker 1: if we don't have a slow, strong recovery, they just
Speaker 1: won't be able to get back on their feet. So
Speaker 1: that's UH on the economic side, why it's so important
Speaker 1: for this to be a global recovery. Back in two
Speaker 1: thousand eight nine, China played a very big role in
Speaker 1: that global economic recovery. UH. It grew really uh, very
Speaker 1: very strongly. UH. This year China is the only major
Speaker 1: country growing, but it's only growing about three UH. Next
Speaker 1: year is expected somewhat stronger, but uh uh with Europe
Speaker 1: as weak as it is UM a decline of something
Speaker 1: like twice that of the United States and having a
Speaker 1: hard time getting the vaccines and getting the disease under control.
Speaker 1: It's really important that developing countries and emerging markets have
Speaker 1: a stronger recovery as we can engineer. We have about
Speaker 1: a minute and a half and then we'll take a
Speaker 1: break and come back and talk some more. But what
Speaker 1: what do we need to put in place in order
Speaker 1: for this to happen? At this point? Is this just
Speaker 1: a case I've developed government saying listen, we've got to
Speaker 1: spend to help these developing economies get the vaccine? There
Speaker 1: is it that the first big step that we have
Speaker 1: to do. And just got about a minute, and then
Speaker 1: we'll come back and talk more. Health is obviously UH
Speaker 1: the first order business. Getting vaccines, therapeutics, protective gear to
Speaker 1: the UH, developing countries and emerging markets is absolutely necessary.
Speaker 1: There's a policy framework though that can help facilitate that,
Speaker 1: and the acts a temporary suspension on some of the
Speaker 1: intellectual property rights that pertain particularly to COVID nineteen, meaning
Speaker 1: allow companies to reproduce vaccine and other technology so it
Speaker 1: can quickly be distributed. Absolutely and you know that they
Speaker 1: can pay uh license fee. It's not like you're uh
Speaker 1: not compensating those who did the basic research. But remember
Speaker 1: much of that research was funded by the public in
Speaker 1: the United States and in Europe. So, uh, the and
Speaker 1: the returns that have all the vaccine companies have already
Speaker 1: obtained or scheduled to obtain this year, are you look
Speaker 1: like they will be a enormous return on their private investments, right, so,
Speaker 1: and a recurring investment potentially. We did a great cover
Speaker 1: story on on Fighter specifically, So Professor stick, Let's let's
Speaker 1: talk about your plan and the Institute for New Economic Thinking,
Speaker 1: this three pronged strategy of helping the world in terms
Speaker 1: of getting beyond COVID and it's impact. We've already talked
Speaker 1: about vaccines, that vaccines need to be made available for
Speaker 1: the developing world. You also though the other two prongs
Speaker 1: economic recovery policies and debt management. Tuck briefly about those. Well.
Speaker 1: Uh I mentioned earlier that the disco space in the
Speaker 1: United States it's just so much larger than these developing
Speaker 1: countries and merching markets. They just don't have much much
Speaker 1: much they can do. So if there's the usual stanks
Speaker 1: of two little depth restructuring done too late. What happens
Speaker 1: is these countries growth gets so inhibited that in fact,
Speaker 1: they aren't able to pay as much as they would
Speaker 1: be able to pay if you gave them more space.
Speaker 1: Right now, Well, it's no different than the conversations. Well
Speaker 1: it is different, But I mean what we've been talking
Speaker 1: about massive stimulus here in the United States, that we
Speaker 1: don't want the economy to fall into such a slump
Speaker 1: that it's going to be much tougher to get out
Speaker 1: of him. Yeah, the one point nine trillion dollar stimulus package,
Speaker 1: relief package, if you want to call it that, Professor Stigletts,
Speaker 1: does that go far enough? What else do you want
Speaker 1: to see from the US government? Well, that was to
Speaker 1: get us out of the hole. Uh, but you know,
Speaker 1: things weren't great in January two nine, uh January twenty
Speaker 1: when they when the pandemic struck. We had huge infrastructure gaps,
Speaker 1: We had not addressed the problem of climate change. We
Speaker 1: have huge problems of inequality which have been both exposed
Speaker 1: and exaggerated by the pandemic. So uh, once we are
Speaker 1: umwill on the road recovery. It will be absolutely imperative
Speaker 1: that we start addressing those longstanding needs if we're going
Speaker 1: to get a really robust and resilient economy. So to me,
Speaker 1: this was just the first step, and there there needs
Speaker 1: to be a longer run program put in place. What's
Speaker 1: it What's a more effective policy in your view, Professor Stigletts.
Speaker 1: Is it um mass suspending programs by the federal government
Speaker 1: or is it increasing taxes and tax policy, especially as
Speaker 1: the President and his team are now talking about about practice,
Speaker 1: you know, taxing the wealthier to provide new revenue into
Speaker 1: the system. Well, I think that uh, we will be
Speaker 1: approaching uh closer to full employment, there's still will be
Speaker 1: uh uh particular groups that are not fully integrated into
Speaker 1: the labor market. Uh. And one of the reasons I'm
Speaker 1: a big fan of having type labor markets is the
Speaker 1: only time when you do that. But as we approach
Speaker 1: full employment, uh, we have to make they have the
Speaker 1: resources to make those investments I talked about in infrastructure, education,
Speaker 1: R and D addressed the problems of inequality. You're going
Speaker 1: to need more revenue and the United States it has
Speaker 1: a distorted tax system. Uh. We are one of the
Speaker 1: few countries where those at the very top a a
Speaker 1: lower overall attacks rate than those down below. Can I
Speaker 1: just tell you? Can I tell you? One of the
Speaker 1: most read stories on the Bloomberg Professor Stickletts is Jamie
Speaker 1: Diamond of JP Morgan, David Solomon of Goldman, lots of
Speaker 1: other New York business leaders warning Governor Cuomo of New
Speaker 1: York that proposed tax hikes would risk the state's economic
Speaker 1: recovery and worse than the exodus of residents to lower
Speaker 1: tax locations. If you were in a room with Jamie
Speaker 1: Diamond David Salmon, what would you say to them? Uh,
Speaker 1: that they're wrong? But why why are they wrong? There
Speaker 1: are two aspects of this. We were talking about a
Speaker 1: minute ago. Was raising taxes at the national level, and uh,
Speaker 1: that's somewhat different than at the state level. There aren't
Speaker 1: many Americans who are so uh disloyal that you raise
Speaker 1: their taxes and they say, I'm going to go live
Speaker 1: in Singapore. There are a few, but those are exceptions,
Speaker 1: and we actually have an ex at tax to discourage
Speaker 1: that kind of behavior. But I think most Americans, you know,
Speaker 1: value living in the United States, and so they're not
Speaker 1: gonna just leave. Um. And that's why I'm not worried
Speaker 1: about raising the well wealth tax or getting rid of
Speaker 1: some of the distortions, the lower tax on capital gangs,
Speaker 1: the lower tax on divotings. Uh, why should a work
Speaker 1: or pay a higher tax rate than thank somebody who's
Speaker 1: clipping coupons. At the state level, we've done some research
Speaker 1: looking at those effects. What happens if an individual state
Speaker 1: races their tax and obviously at some level people will move.
Speaker 1: I'm not going to deny that, but the evidence is
Speaker 1: that the migration is much less than uh, those who
Speaker 1: are raising those warnings, UH say so. Um, you know,
Speaker 1: one has to be mindful that people have a choice
Speaker 1: of where to live. And it's particularly true and obviously
Speaker 1: in the New York area where you can live in
Speaker 1: New Jersey, Connecticut and or New York State and uh,
Speaker 1: it's not a big move. Um, New Jersey taxes are
Speaker 1: high to I live there. They're not, They're not. I'm
Speaker 1: just gonna say, yeah, listen, can we can we talk
Speaker 1: outlook with you? Because we'd be remiss if we didn't. Tim,
Speaker 1: And I ask you about when you get the economic outlook,
Speaker 1: I mean, everybody's talking about a second alf recovery. How
Speaker 1: does it look to you? UM, what's the economic story
Speaker 1: maybe later this year. How do you see it? I
Speaker 1: am very optimistic. I think as a result of at
Speaker 1: one point nine trillion dollars, we're going to have a
Speaker 1: strong recovery. And I think most people see that. The
Speaker 1: FED has talked about six and a half percent. I
Speaker 1: gather gold Mi Sacks has talked about eight percent UH
Speaker 1: growth rates. UM. You know, there's so much uncertainty. UH.
Speaker 1: Remember we were talking before about the global recovery is
Speaker 1: very danguous because Europe is at a slow vaccine rolled out,
Speaker 1: the emerging markets, developing countries UH don't have the resources
Speaker 1: they have that kind of UH stimulus that we've had
Speaker 1: in the United States. So all those obviously are going
Speaker 1: to affect the the overall strength of the US recovery.
Speaker 1: But basically I'm very optimistic. And if we can get
Speaker 1: some of the uh second round uh those investments in
Speaker 1: infrastructure UH that I talked about before climate change, then
Speaker 1: then I think we're really set for it good. It's
Speaker 1: going to be a tough sell in Washington. Professor, what
Speaker 1: is the message that you would have Republicans or two
Speaker 1: Democrats to convince them to get at the table together
Speaker 1: and get something through and we only have that a
Speaker 1: minute left. Well, I think remember what we were talking
Speaker 1: about now is investment, and even if we have to borrow,
Speaker 1: the fact is that uh, anybody ought to be looking
Speaker 1: at this from the national balance sheet and these investment
Speaker 1: strength in our national balance sheet. But uh, in fact, uh,
Speaker 1: there are so many gaps in our tax structure that
Speaker 1: we we could have a more efficient and fairer tax
Speaker 1: structure that uh we we a mixture of borrowing and
Speaker 1: raising taxes, improving environmental taxes would actually so benefit our
Speaker 1: economy and our growth and our standards of living. Yeah,
Speaker 1: just looking for it. Also more equitable when it comes
Speaker 1: to all of these, Professor Stiglitz, thank you so much.
Speaker 1: Joseph Stiglitz. He's Nobel Laurie Economists of course, of course
Speaker 1: professor of economics at Columbia University, and of course he
Speaker 1: is on the Commission on Global Economic Transformation at the
Speaker 1: Institute for New Economic Thinking. Room a journal now, but
Speaker 1: you let me drive? Oh no, no, no no, no, honey, please,
Speaker 1: I'll do the right l let me. I want to drive.
Speaker 1: Just drives, good questions, get trying love the drive to
Speaker 1: the globe. Thanks, we'll drying us Bloomberg Radio. It is
Speaker 1: time for the Drive to the close. Just about ten
Speaker 1: minutes left in today's trading session. Back with us is
Speaker 1: Kathy Boyle. She's present founder of Chapen Hill Advisors, and
Speaker 1: she is once again on the phone in Pound Ridge,
Speaker 1: New York. Hi, Kathy, how are you hey? Caroline? Just great.
Speaker 1: It's delighted to be here, Carol and Tim. I know
Speaker 1: my hosts move around. This one's the keeper. We're gonna
Speaker 1: keep him. Thanks for now, for now. Um listen, Uh,
Speaker 1: this market environment, I'm not quite sure. It feels like
Speaker 1: things are getting better. Um, there's certainly optimism about the
Speaker 1: second half. How do you see it? So I think
Speaker 1: that we are in you know, look, the market could
Speaker 1: continue this craziness. You know, we just had the best
Speaker 1: twelve months in the sm T since nineteen thirty six.
Speaker 1: It's really hard to believe, right, but we've got you know,
Speaker 1: I think people are under estimating the interest rate effect.
Speaker 1: You know, we certainly see it today with small caps
Speaker 1: right down for almost four percent, and look at the
Speaker 1: tech stocks, you know, the combination there and there's a
Speaker 1: lot of concentration. I think people don't often look at
Speaker 1: things like the overweight in their various positions. So they
Speaker 1: have money managers, mutual funds, and ets and very often
Speaker 1: they think they're diversified, but they have many of the
Speaker 1: same things. And then we do have this giant rebalancing
Speaker 1: going on here. It's supposed to be three hundred and
Speaker 1: sixteen billion dollars worth of money that should flow out
Speaker 1: of other investments into bonds to rebalance the portfolios. So
Speaker 1: where are you seeing opportunity right now? Um? Well, I
Speaker 1: think there's certainly opportunity alternative things. I'm gold and silver
Speaker 1: have both pulled back, and I think those are excellent
Speaker 1: inflation hedges, not for your entire just for a hedge
Speaker 1: or PC of your portfolio. I think you want to
Speaker 1: look at some long short portfolios active managers like an
Speaker 1: a q R UM. You know those types of managers
Speaker 1: can hedge the bets. Um. I think you want to
Speaker 1: be very very careful about playing vanilla et s because
Speaker 1: people underestimate again the risk there's no downside protection. You
Speaker 1: want to look back and look for managers that actually
Speaker 1: did well in more turbulent times because I think the
Speaker 1: easy money has been made and I think this interest
Speaker 1: rate risk is much greater than many people recognize. How
Speaker 1: to get back to the rebalancing that you were talking about,
Speaker 1: You're talking about what just the equity side of portfolios
Speaker 1: getting out of balance with the fixed income side, and
Speaker 1: that's why we'll see moves or explain it a little
Speaker 1: bit more. Yeah, So the numbers are pretty dramatic. You know,
Speaker 1: every quarter, um, you know, the sixty forty portfolios, sixty equities,
Speaker 1: bonds or fixed income. They need to rebalance to keep
Speaker 1: that in line with their investment policy statement. So you'll
Speaker 1: see pension funds which are a huge amount of money,
Speaker 1: any balanced mutual fund, and then certain banks may have
Speaker 1: that kind of limitation, insurance companies UM, and also the
Speaker 1: Bank Japan's pension fund is a big one as well.
Speaker 1: So you combine those big numbers and you're looking at
Speaker 1: you know, three D sixteen billion has to go into
Speaker 1: fixed income. So where does it come out of? It
Speaker 1: comes out of either your alternatives or your equities. A
Speaker 1: lot of it will be in traditional equity. So as
Speaker 1: the flow comes out short term, that can be a
Speaker 1: catalyst for a downturn in the market, can be, but
Speaker 1: not a guarantee correct. Correct If everything was easy and
Speaker 1: it repeated just like it did before. We have a
Speaker 1: much easier time managing our portfolios. Okay, so you mentioned
Speaker 1: gold and silver, but on the equity side, is there
Speaker 1: any opportunity there? So? I think you're certainly seen a
Speaker 1: huge rotation from growth to value. So value has underperformed
Speaker 1: for a very long period of time. Um, So I
Speaker 1: think there is relative safety. You remember, when the markets
Speaker 1: go down, it takes all sectors down, but value will
Speaker 1: tend to um hold up better. So you want to
Speaker 1: look there are some of the healthcare stocks, um, uh,
Speaker 1: pharmaceutical stocks, you know, certainly they're getting a boost from
Speaker 1: the vaccine and um, you know in some other developments.
Speaker 1: But I think you know, if you even the Russell
Speaker 1: one values up, um, I think it's up around eleven
Speaker 1: your date, while the Russell large cap grows is slightly negative.
Speaker 1: So that's a complete switch. Yeah, you know, going back
Speaker 1: to the six portfolio, you know the conversations that have
Speaker 1: happened over the last few months about you know, kind
Speaker 1: of the death are of the sixty portfolio, um because
Speaker 1: of performance. How do you think though that could ultimately
Speaker 1: impact how people invest, especially among those institutional portfolios. Yeah,
Speaker 1: so I think that that's a good point, girl. And
Speaker 1: you know a lot of the smaller pensions, and you've
Speaker 1: seen some of the foundations in the colleges universities. Some
Speaker 1: of those were the first ones to actually consider an
Speaker 1: alternative sleeve. Um. The committees on the pension funds are
Speaker 1: often made up of you know, very big you know
Speaker 1: ceo CFOs, and they tend to be very very afraid
Speaker 1: of being wrong, so they tend to move slower towards
Speaker 1: change in their allocations with a smaller or more little,
Speaker 1: more nimble and more reflective. So I think, um, I think,
Speaker 1: you know, it depends on the alternative um uh sleeve
Speaker 1: and whether not, Like real estate right now is a
Speaker 1: dangerous game for most people to play. UM. So that
Speaker 1: takes that's a typical alternative sleeve. So you might see
Speaker 1: more into the monity market, which has been very beaten up,
Speaker 1: or you may see more into the golden silver, the
Speaker 1: specifics of right metals. All right, we got around. Hey, Kathy,
Speaker 1: have a good night. Kathy Boyle. She is president and
Speaker 1: founder of Shapen Hill Advisors. She's with us on the
Speaker 1: phone from Pound Rage, New York. Thanks for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or
Speaker 1: Bloomberg dot com, and you can also listen to our
Speaker 1: radio show at two pm Eastern on Bloomberg Radio or
Speaker 1: watch us on YouTube search Bloomberg Global News m