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
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: YouTube search Bloomberg glovel News. Let's get to a little
Speaker 1: bit more of those COVID headlines. We talked about COVID
Speaker 1: nineteen cases in the UK, rising the most in the world,
Speaker 1: as virus restrictions ended in England, New York City no
Speaker 1: plans for new indoor mask mandates. We know what's going
Speaker 1: on in l A, Southeast Asia, continuing to reel from
Speaker 1: a fresh wave of the virus. Well. Earlier today on
Speaker 1: Bloomberg TV and Radio, Dr Anthony Fauci caught up with
Speaker 1: our own David Weston to talk about the rising cases
Speaker 1: and as pleaded people check it out, but among the
Speaker 1: vaccinated people, that's a significant risk. And that's the reason
Speaker 1: why we are practically pleading with people to please, if
Speaker 1: you're not vaccinated yet, seriously consider getting vaccinated because this
Speaker 1: is a nasty virus, particularly if you're unvaccinated. All right,
Speaker 1: of course, Dr Anthony Fauci there earlier, M Blomberg RADI
Speaker 1: hum Blomberg TV. Let's see what our next guest has
Speaker 1: to say about all of this. Dr Justin Zogi is
Speaker 1: with us. He's chief medical officer at LA based here.
Speaker 1: They provide telehealth services and doctor house calls to over
Speaker 1: seventy five million Americans. He's on the phone in l A.
Speaker 1: Dor Zoggy, Good to have you here. How are you
Speaker 1: and tell me what you're seeing when it comes to
Speaker 1: COVID cases, specifically out there on the West Coast. Hi, Carol,
Speaker 1: thank you so much for having me on your show. Sure, um,
Speaker 1: you know you're right. I'm based in Los Angeles, and
Speaker 1: in Los Angeles there's been a significant rise in COVID
Speaker 1: cases over in the past two weeks and it is
Speaker 1: quite concerning it. As a result, as you know, Los
Speaker 1: Angeles has reinstated the mask mandate um, and you know
Speaker 1: there are breakthrough cases happening. Obviously, vaccination is the most
Speaker 1: important thing for people to do UM and even among
Speaker 1: those who are vaccinated, there are some breakthrough cases. So
Speaker 1: we are seeing some patients who have been vaccinated and
Speaker 1: are getting the vaccine. That being said, those who are
Speaker 1: vaccinated have a much lower likelihood of ending up in
Speaker 1: the hospital or of dying, and so we do strongly
Speaker 1: urge all of our patients to get vaccinated. Of those
Speaker 1: people who are not vaccinated and get this COVID nineteen
Speaker 1: as a result of the delta variant, how bad is it?
Speaker 1: It can be quite severe. It's in fact it's the
Speaker 1: most contagious and we think the most severe strain of
Speaker 1: the COVID nineteen virus um. It's thought that this is
Speaker 1: actually two fiftent more contagious than the original strain, right,
Speaker 1: which explains why it's spreading like wildfire and why people
Speaker 1: who have even been vaccinated are getting it. How the
Speaker 1: distinction is that if you have been vaccinated and you
Speaker 1: get it, uh, there's a you'll be much less likely
Speaker 1: to have severe consequences, meaning much lower likelihood of dying
Speaker 1: from the vaccine, much lower likelihood of ending up in
Speaker 1: the hospital, and also less severe symptoms. Just generally you
Speaker 1: may have some you know, cold cold like symptoms, cough, uh, fever,
Speaker 1: and in some pieces it can be more severe, but
Speaker 1: generally you're vaccinated. That's the best line of defense we
Speaker 1: have the country overall, and I feel like the world
Speaker 1: overall continues to in a large way. Of course, it's
Speaker 1: not a straight path forward. Continue to reopen, but it's tricky.
Speaker 1: Do the lifting of restruction restrictions excuse me, and the
Speaker 1: continued reopening make you nervous? You know, I think it's
Speaker 1: it's a Balasi act, right. Keeping things closed has significant
Speaker 1: consequences um on everyone. Right, We've we've heard of the
Speaker 1: impact of the lockdown on school children, for example, and
Speaker 1: the impact that has on their development, with the CDC
Speaker 1: coming out and saying that we need to reopen schools
Speaker 1: because of the impact of the lockdown on children. Similarly,
Speaker 1: you know, we were just hearing on the headlines about
Speaker 1: the impact on the stock market and travel, um and
Speaker 1: people's mental health. You know, I'm seeing a lot of
Speaker 1: patients with depression anxiety from the lockdown, and so there
Speaker 1: is a significant cost associated with the lockdown and with
Speaker 1: these restrictions um at the same time, for a long time,
Speaker 1: it has been our best defense against COVID nineteen. The
Speaker 1: silver lining here is that with vaccination, you know, that
Speaker 1: will free us up to open up even more right
Speaker 1: and will allow us to avoid these these restrictions and
Speaker 1: will help us to return to more normalcy. It's it's
Speaker 1: it's really a balancing act. But if I can give
Speaker 1: one one, uh, you know, one message to to our
Speaker 1: list centers here is if you have not yet been
Speaker 1: vaccinated to please do do consider getting vaccinated, because this
Speaker 1: is this is our way of freeing ourselves from the
Speaker 1: shackle of COVID nineteen and going back to more normal.
Speaker 1: Thoughts on people wearing masks even if they're vaccinated, you know,
Speaker 1: I think that uh you know, I'm as difficult as
Speaker 1: it is in Los Angeles with wearing indoor masks. I
Speaker 1: do think it's the right call, right because we have
Speaker 1: been seeing significant rise in cases, and you know, where
Speaker 1: as a complete shutdown has significant impacts as really challenging
Speaker 1: to do, simply telling people to wear a mask when
Speaker 1: they're indoors is less restricting than you know, not leaving
Speaker 1: the home at all. We're limiting contact completely. And I
Speaker 1: do think that you know, given given that we were
Speaker 1: seeing breakthrough cases and people who are vaccinated, I think
Speaker 1: it makes sense to have people wear face masks indoors,
Speaker 1: right And I think this this will just help protect
Speaker 1: both the vaccinated and unvaccinated people in our in our communities.
Speaker 1: Um and just the way to mitigate the glowth of
Speaker 1: the virus until more people are vaccinated. Great to check
Speaker 1: in with you. Thank you so much, Dr Justin Zoggi.
Speaker 1: He's chief medical officer at Heel on the Phone in
Speaker 1: l A. Check out their website, their business where they
Speaker 1: are doing telehealth and doctor house calls, growing six since
Speaker 1: May due to the COVID nineteen demand. Of course, he
Speaker 1: is chief medical officer at Hell. As we mentioned, they
Speaker 1: are l A based. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: All right, let's get to it an online story at
Speaker 1: Bloomberg dot com. On at Bloomberg business Week dot com,
Speaker 1: I should say, and who knew, from the iconic Weber
Speaker 1: to the BBQ guys, groolmakers are the hottest thing when
Speaker 1: it comes to post pandemic I p S. Let's get
Speaker 1: into what's going on. Joining us is Bloomberg News Deals
Speaker 1: reporter Crystal Ce and Bloomberg Business weekender Joel Webber, both
Speaker 1: in our Interactive Brokers studio. Are you grilling a lot?
Speaker 1: You know you would think that, um, I would grill
Speaker 1: every day since my last name is Webber and it's
Speaker 1: spelled the same way. So let's just get that out
Speaker 1: of the out of the way. To start with, I'm
Speaker 1: not related. If I were related, you know, I wouldn't
Speaker 1: be sitting here right now. I would be you know,
Speaker 1: getting ready for an I p O at a grill.
Speaker 1: But you know, the story is really interesting, I think
Speaker 1: because it speaks to I mean, do you remember, like
Speaker 1: not that long ago girl where we were talking about
Speaker 1: like the dearth of companies that were in the public
Speaker 1: markets are going public, going public? And then all of
Speaker 1: a sudden, you know, we just had a huge change
Speaker 1: to that, and companies like Webber and and now Trigger,
Speaker 1: who you would think would have remained private for as
Speaker 1: long as they wanted, are testing the public markets. Yeah, exactly,
Speaker 1: So Crystal, come on in on this and your story
Speaker 1: here in terms of what we're seeing, because it is
Speaker 1: a really hot part of no pun intended pun intended hot,
Speaker 1: part of the I p O market. Yeah, actually there
Speaker 1: are two I p O s like you mentioned Trigger
Speaker 1: and Whoever. There's also a s Bag deal and after
Speaker 1: we publish a story, we actually found it as a
Speaker 1: fourth company in the girl space going publics called Solo Stove. So, like,
Speaker 1: I think people are just like wondering, like why there's
Speaker 1: so many girl companies. And the biggest question though, is
Speaker 1: as everybody start going out again, like all these companies
Speaker 1: going to be as hot as they were during the pandemic.
Speaker 1: And that's the question that we really try to answer him.
Speaker 1: And so first of all, why why do we think that, um,
Speaker 1: these companies who have been private and clearly you know,
Speaker 1: had a good run in the private market for so long,
Speaker 1: why do we think they're going in public all of
Speaker 1: a sudden at the same time. Yeah, So the interesting
Speaker 1: thing about this is that they're not using the proceas
Speaker 1: to growth the company. Like you said, they've been around
Speaker 1: for the longest time. They actually very established, you have,
Speaker 1: they're very profitable. A lot of the existing investors actually
Speaker 1: using this as a good opportunity to cash out. So
Speaker 1: as equity markets at all time high. What's better way
Speaker 1: to do it other than do an I P O
Speaker 1: and do I here top peak. It sounds right, it's
Speaker 1: hop sure that I mean, I guess the question is
Speaker 1: on the other side of the pandemic. We are a
Speaker 1: grilling family. My husband's at there in December January grilling
Speaker 1: often on our porch. But I mean, does the grill
Speaker 1: craze continue your endemic? We asked that question the banker
Speaker 1: I spoke to from City Group. He was saying that
Speaker 1: he grows actually when he was working from home. So
Speaker 1: this is the potential hybrid working model. You know, if
Speaker 1: you're home and you you have a lunch break, you
Speaker 1: can just go out for a fifteen minute break girl,
Speaker 1: stay a girl like a burger, and come back in.
Speaker 1: So that potential longevityo of this hybrid working model could
Speaker 1: benefit them. But also he's saying that people are picking
Speaker 1: it up as a hobby. It's not just that a
Speaker 1: one time purchase. You're also buying the accessories you also like,
Speaker 1: topping up on your existing grill. So even though that
Speaker 1: one time big ticket item was bought this year, their
Speaker 1: potential purchases coming up. My my joke on this story
Speaker 1: when we were first kind of kicking it around, was
Speaker 1: like to me, you know whoever, especially it's like this
Speaker 1: is a hundred year old piece of technology that really
Speaker 1: has not changed at all. It's like you put fire
Speaker 1: in a metal thing and and get what you get.
Speaker 1: And what's interesting though is as I sort of like
Speaker 1: started reading around the story, there is actually some tech
Speaker 1: going on that's pretty great to um and what are what?
Speaker 1: Why are grilling heads so excited about where the two
Speaker 1: companies have gone. It's become like a i LT device
Speaker 1: Almost a lot of these grills, especially the higher end
Speaker 1: model that could cause like thousands of dollars. They are
Speaker 1: tech enabled that you can connect it to your WiFi.
Speaker 1: There's an app and you can control the temperature so
Speaker 1: you don't really have to like stand around and wait
Speaker 1: for your meat to smoke for fourteen now is you
Speaker 1: can just go to bed and next the next morning
Speaker 1: it's there. So that really just you know, transform the
Speaker 1: company into a bit of a tech company, and obviously
Speaker 1: the tech valuation is very favorable. Well that, I mean
Speaker 1: the other thing is right there are it's there's the
Speaker 1: grills were a grill in a smoker house. I mean,
Speaker 1: I've woken up in the morning or in the middle
Speaker 1: of the night and you know there's brisket that's been
Speaker 1: cooking for hours. I mean, that's another part of this story, right,
Speaker 1: I think the other part of the stories that I
Speaker 1: need an updated invite to come over to your house
Speaker 1: for a while. It's really good. Yeah, but that's true,
Speaker 1: like people often have more than one of these devices
Speaker 1: like you have. You have different needs and people getting
Speaker 1: more and more into these cooking hobbies, and you have
Speaker 1: all these cooking shows that are building big bugs, and
Speaker 1: they often advertise on these YouTube cooking shows or like
Speaker 1: magazines that are food related. So yeah, it's it's a
Speaker 1: big business. So I still can't believe I didn't think Webber.
Speaker 1: I'm really upset. I'm shocked. The other thing that it
Speaker 1: bears mentioning here is like they're sure there's the company
Speaker 1: aspect of that, but the Mannings actually figure into this one.
Speaker 1: Talk to us about um what Elien and Peyton have
Speaker 1: pulled off. Yeah, they are actually existing back of baby
Speaker 1: que Guys, which is a retailer for barbecue griels, and
Speaker 1: they're going public there s back with reported UM. I mean,
Speaker 1: spac it's another hot topic of the year and the
Speaker 1: past two years, and a lot of the spag deos
Speaker 1: tend to be unprofitable companies or people companies that are
Speaker 1: looking into very very far ahead in the future, like
Speaker 1: the space traveling electric vehicles, So it's not often then
Speaker 1: you get actually a profitable company that has an established
Speaker 1: track record. So this could really get people excited. It's
Speaker 1: just not just because of the growing element, but that
Speaker 1: it seems like a legitimate company. So can I throw
Speaker 1: in pools into this? Why not? Because that's part of it.
Speaker 1: I do not have a city backyard. It's really small, um,
Speaker 1: so pools are part of it, right that they have
Speaker 1: also taken off, It's part of this story. It's the
Speaker 1: entire home improvement trend that we saw the past year.
Speaker 1: At least three pool companies have gone public in the
Speaker 1: past year. All have seen shares rose more than faulty
Speaker 1: percent during this period. So everything that's that involves your
Speaker 1: immediate surrounding your home is getting an upgrade and all
Speaker 1: of these companies that benefit. And it makes me just think, like,
Speaker 1: especially off of today's headlines and everybody getting cold feed,
Speaker 1: it's like, you know, this is exactly what that trades about.
Speaker 1: Which is like, how can you find, uh, some companies
Speaker 1: that are are benefiting from you know, longevity of people
Speaker 1: staying at home? Right right? This like peak growth idea
Speaker 1: or peak pan you know, pandemic place. Having said that,
Speaker 1: robin Hood is also something just to do a quick
Speaker 1: before you leave robin Hood going public, how do we
Speaker 1: read that? Is that a sign of a peak in
Speaker 1: the market or something else? They are also a pandemic beneficiary.
Speaker 1: They actually acquired a lot of volume, a lot of
Speaker 1: users during this you know work from home period where
Speaker 1: people had not much to do except for setting home
Speaker 1: in trading stocks. And what we know is that they
Speaker 1: are going to list on July twenty nine and attend
Speaker 1: a work show. Are done virtually, and they will have
Speaker 1: a huge component in the I p O allocated to
Speaker 1: retail investors, which are their own users. It will be
Speaker 1: allocated through their platform, which is something that has only
Speaker 1: been done like one or twice. So it will be
Speaker 1: interesting how it turns out. All right, ChIL, given a
Speaker 1: choice between a grill smoker, a pool and a piece
Speaker 1: of robin Hood, what would you take les about? I'll
Speaker 1: take I mean being a webber, even though I'm not
Speaker 1: related to the Weber. There is nothing I can you know,
Speaker 1: just embrace the namesake, I think, and go with the
Speaker 1: grill or it for the weekend show. I'll have to
Speaker 1: work it in untill Webber Editor Bloomberg Business Week. Here
Speaker 1: in our interactor Broker's studio along with Crystal See Deals
Speaker 1: reporter at Bloomberg News. You're listening to Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. All right, let's get to it. Because the
Speaker 1: U s UK and their allies formally attributed the Microsoft
Speaker 1: Exchange hack to actors affiliated with the Chinese government and
Speaker 1: accused the Chinese government of a broad array of malicious
Speaker 1: cyber activities, escalating last week's tensions between the White House
Speaker 1: and China. That's one of our big macro stories today
Speaker 1: that we're gonna get into. Plus how China's crackdown on
Speaker 1: ride hailing giant de d raises a lot of questions
Speaker 1: about the future of an investment in Chinese startups. It's
Speaker 1: two big themes that we've been talking about ongoing with
Speaker 1: our own Andy Brown. He is Bloomberg New Economy editorial director,
Speaker 1: and he joins US on this Monday on the phone
Speaker 1: in New York City. Um, Andy, let me just start
Speaker 1: with um, first of all, the headline here about the US,
Speaker 1: the UK and their allies, you know, formally pointing the
Speaker 1: finger at the Chinese government for that Microsoft Exchange hack. Um.
Speaker 1: I don't know, how do you assess the damage of
Speaker 1: something like that or how do the two sides navigate
Speaker 1: through something like that. Yeah, well, this, this is this
Speaker 1: really is huge. Um, this has been going on for years.
Speaker 1: I think that's you know, you have to recognize that
Speaker 1: this this, uh, these accusations of Chinese cyber attacks have
Speaker 1: been poisoning US China relations for more than a decade UM.
Speaker 1: And this is one really sort of recalls an episode
Speaker 1: that I reported on extensively. It was about it was
Speaker 1: about a decade ago UM when Chinese military hack has
Speaker 1: got into Google servers and came very close to stealing
Speaker 1: Google source code, and that triggered a whole chain of
Speaker 1: events which ultimately led to Google exiting China or taking
Speaker 1: its um it's search engine out of China. This one,
Speaker 1: I think it is significant that Microsoft is at the
Speaker 1: heart of it. Another iconic US tech company, but also
Speaker 1: one that has invested over the years massively in China
Speaker 1: in spite of not getting much revenue out of China
Speaker 1: at all. I mean, Microsoft has been so dedicated to
Speaker 1: China's economic and technical development. It has its largest R
Speaker 1: and d UM unit in the world, facility in the
Speaker 1: world outside of the United States in China. So you know,
Speaker 1: later on top of that, what we've been seeing in
Speaker 1: terms of the Chinese government's crackdown on big Chinese tech companies,
Speaker 1: concerns about information we see it as you write about
Speaker 1: again about D d UM, what does it mean longer term? Andy,
Speaker 1: when it comes to foreign investment in Chinese companies or
Speaker 1: in China large you know better than all of us,
Speaker 1: UH and anybody's been reporting on business news for a
Speaker 1: long time, is that, you know, global multinational companies all
Speaker 1: they wanted to do is have some kind of presence
Speaker 1: in China, and we're really kind of willing to do
Speaker 1: anything to have some kind of footprint on the ground.
Speaker 1: Does that change going forward because of all of this
Speaker 1: that's going on. Look, I think I think you have
Speaker 1: to see this in the context of a steady deterioration
Speaker 1: UH in U S China relations. I mean, it just
Speaker 1: seems like we're getting revelations almost daily. Um. You know,
Speaker 1: it's so just in the last couple of days, the
Speaker 1: Biden administration has warned US companies against doing business in
Speaker 1: Hong Kong. Janney Yellen, the Treasury secretary. US Treasury Secretary,
Speaker 1: has announced that she's not going to restart the Security
Speaker 1: and Economic Dialogue, which has been the prime platform for
Speaker 1: US China negotiation on their bilateral relationship since the George W.
Speaker 1: Bush administration. Janet Yellen also, in an interview with The
Speaker 1: New York Times, UM has called into question whether or
Speaker 1: not the US is um going to you know, is
Speaker 1: going to keep to this the trade agreement that was
Speaker 1: the crowning achievement of UM, you know, the the last
Speaker 1: Trump administration. UM. So it's it's it really is all
Speaker 1: sort of falling apart. And then you know, you look
Speaker 1: at you look at this episode UM with d D
Speaker 1: and the announcement basically by the Chinese side that they're
Speaker 1: they're not gonna they're not going to allow you a
Speaker 1: Chinese companies to list in the US. And now you
Speaker 1: start getting capital market decoupling on top of all of
Speaker 1: the rest of it. So, Andy, there are worries, right
Speaker 1: and then there are the financial markets and investors who say, Yep,
Speaker 1: I'm worried, but I still see opportunity. You actually caught
Speaker 1: up with one that I think is a really key
Speaker 1: voice in trying to figure out what does this mean?
Speaker 1: What are the investment implications? Um, when it comes to
Speaker 1: what's going on in China. So I think two things.
Speaker 1: First of all, UM, investors still largely see opportunity in
Speaker 1: China that they tech invests in particular, see China as being,
Speaker 1: you know that the fastest growing source of consumer demand
Speaker 1: in the world, and so they're going to be there. Um.
Speaker 1: That's the first takeaway, regardless of everything that's going on.
Speaker 1: But what they are seeing is a lot of disruption
Speaker 1: in the near term. The reason that China was actually
Speaker 1: encouraging its tech companies to list outside of China is
Speaker 1: because the regulators within the financial regulators within China understood
Speaker 1: that Chinese markets simply weren't ready for that volume of
Speaker 1: I p o s. And what's going to happen now,
Speaker 1: according to the investors that I've been talking to, is
Speaker 1: that they're going to list now in in China, which
Speaker 1: and by the way, it takes a lot longer list
Speaker 1: in China than it does in the United States, and
Speaker 1: this is potentially going to deter UH investment in startups
Speaker 1: and damage China's entire innovation ecosystem. So there will be
Speaker 1: some implications it definitely Yeah, real real, real, short term,
Speaker 1: real short term disruption UH in you know the the
Speaker 1: people forget actually you know that that the initial wave
Speaker 1: of Chinese tech companies were funded and nurtured by foreign investors,
Speaker 1: most of them US investors. And even though that balance
Speaker 1: is now shifted where most of the money is coming
Speaker 1: from China, foreign investors still have a critical role to
Speaker 1: play UH in the development of Chinese technology, and this
Speaker 1: calls into question whether or not they're going to be
Speaker 1: able to free the invest Well, I highly recommend everybody
Speaker 1: check out Andy's latest column because it does have his
Speaker 1: interview he did with Gary Riischel, who he and his
Speaker 1: firm have invested in college endowment funds at a number
Speaker 1: of Chinese uniforms. So there's this incredible back and forth
Speaker 1: between Andy and Gary. Andy Brown, thank you, editorial director
Speaker 1: of Bloomberg New Economy brow the journal. Now but you
Speaker 1: let me drive Oh no, no, no, no, please, I'll
Speaker 1: do the right lest I want to drive just drives
Speaker 1: the question. Yeah, drive to the globe. Thanks, we'll drying
Speaker 1: us dawn radius. All right, just about ten and a
Speaker 1: half minutes left until today's closing bell. Charlie, of course,
Speaker 1: breaking down, uh, those major equity averages. We are down
Speaker 1: across the board, just off our loads of the session.
Speaker 1: But there is a question out there, you know, is
Speaker 1: economic growth has it peaked? So let's get to it
Speaker 1: with our market close guest, time for the drive to
Speaker 1: the close. You back. Puri is chief investment officer of
Speaker 1: America's of A Deutsche Bank Wealth back with us on
Speaker 1: the phone from New York City. De Back, Good to
Speaker 1: have you here with us. So what do you see
Speaker 1: as the reason for equity is predominantly being lower today?
Speaker 1: Thank you, cal Good afternoon. I think today's move is actually,
Speaker 1: you know, part of it can be explained by the
Speaker 1: COVID variant delta creating some reasons in the world to create,
Speaker 1: you know, short term lockdowns. I think there is a
Speaker 1: concern that this reopening is multi speed, multi regions, so
Speaker 1: not everywhere you're seeing this reopening trade working. And also
Speaker 1: the CDC director just yesterday saying that the pandemic is
Speaker 1: still very much alive in the States for those who
Speaker 1: are unvaccinated, and which is quite a substantial number of individuals.
Speaker 1: So I think, you know, to expect that we're out
Speaker 1: of the pandemic just yet might be a little bit
Speaker 1: too premature. I think the pandemic is going to have
Speaker 1: long shadows on policy on markets, and what today we
Speaker 1: are seeing is I think predominantly related to the concern
Speaker 1: that the reopenings reopening story might take a while to
Speaker 1: really get to get going. So having said that, are
Speaker 1: we are you redoing your market models? Well, we do
Speaker 1: our strategic models at the start of the year, which
Speaker 1: is a long term view of the markets, and and
Speaker 1: they're given that vational levels that we have been for
Speaker 1: the last you know, a few months, we did the
Speaker 1: revised LOBO our equity market returns for the next ten years.
Speaker 1: Having said that, you know, the short term tactical models,
Speaker 1: you know, we are looking at beyond a lot of
Speaker 1: these peaks, be it peak and uh, you know, economic growth.
Speaker 1: I think rather than just rolling over, I think we
Speaker 1: have plateaued and you're gonna see start to see moderation
Speaker 1: in the economic growth numbers. Saying could be set for
Speaker 1: you know, EPs growth number that we're going to see
Speaker 1: in the second quarter. I think chances are in the
Speaker 1: second half of beer you're gonna start seeing moderation and
Speaker 1: peak earnings growth. So peak economic growth, peak earnings growth
Speaker 1: most likely behind us when you're looking at the policy
Speaker 1: similar spoth from fiscal and monetary side, and I think
Speaker 1: there's good the you know, case to be made that
Speaker 1: even the big fiscal and Montrey impulses maybe also behind us.
Speaker 1: So I think when you take all of these things together, Carol, uh,
Speaker 1: you know, a good rationale can be made. The markets
Speaker 1: we just still you know, above double digits here today.
Speaker 1: Let's not forget that might be you know, taking some
Speaker 1: pause here, right and it's not like we're falling out
Speaker 1: of bed and forgive me and our Dave Wilson, I thought,
Speaker 1: gave us some really smart perspective on Bloomberg Radio and
Speaker 1: Bloomberg TV earlier today and talked about the conviction to
Speaker 1: the downside, or perhaps lack thereof. I mean, big tech,
Speaker 1: there are gains there. Small cap, which I've really taken
Speaker 1: a beating over the last few weeks, a few months,
Speaker 1: we've definitely seen a pull back there. They're not off
Speaker 1: as much as the bigger broader market averages gold isn't
Speaker 1: you know, we're not saying gold up a lot. So
Speaker 1: when you put that together, to me, it feels rather
Speaker 1: orderly in terms of the pullback, and maybe to be
Speaker 1: expected considering the run up that we've had. Absolutely, I mean,
Speaker 1: I think we need to keep in mind that once
Speaker 1: a year and the markets do correct, right that they
Speaker 1: you do see a ten plus percent pullback, and three
Speaker 1: or four times during the course of the year you're
Speaker 1: going to see a five plus percent retracement, and and
Speaker 1: we haven't had one in quite some time. What we
Speaker 1: have seen, however, is what I would call rolling corrections,
Speaker 1: where rather than a broad based market correction, you've seen
Speaker 1: certain sectors of the market go through, you know, a
Speaker 1: pullback or a correction. You know, it started with uh,
Speaker 1: you know, last year it was the value cyclical place
Speaker 1: they're corrected, and earlier this year it was the tech
Speaker 1: starts and some of the other you know, high flying links,
Speaker 1: be it on spack, innovation, e S. G um. So
Speaker 1: a lot of those things I think are still a
Speaker 1: concern and hence being selective really makes a lot of sense.
Speaker 1: And and here I would advise that you know, you
Speaker 1: could have your base rationale in terms of if you're
Speaker 1: really sensitive to heighten the inflation risk in your portfolio,
Speaker 1: maybe then you want to be have a little bit
Speaker 1: more biased towards the defensive. If your biggest you know,
Speaker 1: positive by this towards the reopening, then maybe it's a
Speaker 1: good time to start laying into some of these value
Speaker 1: names that have been clobored most recently given this reopening hiccup,
Speaker 1: because I do feel that, you know, it's not all
Speaker 1: end for the for the leisure, entertainment, airlines and truth
Speaker 1: industry stocks. These are going to come back once you
Speaker 1: start seeing more clarity in terms of the where we
Speaker 1: are with the delta variant. So markets may be reacting
Speaker 1: like they're supposed to write this progression. This whole idea,
Speaker 1: I think it's really smart, this idea of rolling correction.
Speaker 1: Right the markets are looking at what's happening and reacting,
Speaker 1: and markets you know, hopefully you know, are an indicator
Speaker 1: of kind of what's to come uh and and kind
Speaker 1: of foreshadowing. And so we're seeing the evolution as we
Speaker 1: move through this recovery, which everyone has been reminding us,
Speaker 1: including all the FETE officials, but market watchers, CEOs. It's
Speaker 1: not a health officials. It's not a straight path forward.
Speaker 1: It isn't And I think the only concern that I
Speaker 1: have there is really what the bond market is saying,
Speaker 1: which has been the case right for for quite some time.
Speaker 1: You know, when you look at a tenure number, you know,
Speaker 1: yields at one point one eight, I mean, that's really
Speaker 1: telling me maybe the bond market is going beyond the
Speaker 1: recovery and really looking at what the terminal rate when
Speaker 1: the next time that starts to hike, which is still
Speaker 1: years away. As for the most recent said you know,
Speaker 1: dot clot, maybe the terminal rate that we're going to
Speaker 1: get to for this economy is not going to be
Speaker 1: even close to what we had in the last bikele,
Speaker 1: which was two and a half per cent. So I
Speaker 1: think that to me a little bit of an area
Speaker 1: of concern um that bond holders you are really struggling.
Speaker 1: The financial repression is up and running, you know, full
Speaker 1: steam ahead. And also well let me just ask you, though,
Speaker 1: do you think the bond market story narrative and the
Speaker 1: equity market narrative, especially on a day like today, are
Speaker 1: in sync? They make sense? Are they at odds with
Speaker 1: one another. Is the equity market still too optimistic compared
Speaker 1: to what you're seeing in the bond market, or is
Speaker 1: the bond market too pessimistic. I would say it's the ladder.
Speaker 1: I think the bond market is a bit more pessimistic
Speaker 1: than what even the real you know, economic data, sentiment indicators,
Speaker 1: you know, you look at soft and hard data from
Speaker 1: this army what they're suggesting. But that could also be
Speaker 1: a function of the bond market, especially when you're looking
Speaker 1: at ten years, you know, number it's a little bit
Speaker 1: further out right when you look at stock market, especially
Speaker 1: the earnings there for the next for this quarter, in
Speaker 1: the next quarter. So I think there's a little bit
Speaker 1: of a difference in terms of the time frame we're
Speaker 1: talking about. But the bond market has been concerned with
Speaker 1: regards to you know, the Fed dot plots side. It
Speaker 1: seems to me that the bond market is just not
Speaker 1: ready for any talk of tapering either. And maybe that's
Speaker 1: going to be the real test, you know, in the
Speaker 1: next few months, when the Fed dog starts to you know, telegraph,
Speaker 1: wh at what stage it's gonna start implementing this tapering program.
Speaker 1: But I do feel that the bond Mark is definitely
Speaker 1: much more pessimistic view of the reopening story, and maybe
Speaker 1: the debt overhangs. Yeah, certainly it certainly feels that way. Deepak.
Speaker 1: Thank you so much. Dpak Purry, chief Investment Officer of
Speaker 1: America's Atory to Bank Wealth, with us on the phone
Speaker 1: in New York City. Thanks for listening to Bloomberg Business Week.
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