Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
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Speaker 1: YouTube search Bloomberg clovel News. The fort annual JPMorgan Healthcare
Speaker 1: Conference underway. Virtually it's the event where it comes. It's
Speaker 1: the event where really anything in the healthcare space and
Speaker 1: everyone involved in the healthcare space typically gather on an
Speaker 1: annual basis. As we mentioned, it's virtual this year, and
Speaker 1: one of the companies participating is our upcoming guest. Jeff
Speaker 1: Jonas is Chief Innovation Officer on on the board of
Speaker 1: directors of Stage Therapeutics. Jeff joins us on the phone
Speaker 1: from Florida. Jeff, how are you, You're You're all well
Speaker 1: and thanks for having me. Yeah, thanks so much for
Speaker 1: joining us. First, first off, an update from you know
Speaker 1: what you're seeing right now at the JP Morgan Healthcare Conference.
Speaker 1: I know that you're attending it virtually as of now,
Speaker 1: as everybody is doing, but give us an update on
Speaker 1: on on really what the red is. Well, you know,
Speaker 1: it's a funny time. This has been a funny conference,
Speaker 1: and it's been, as you've mentioned, a standard get together
Speaker 1: conclay for biotech and pharma for decades, and this is
Speaker 1: the second year has been virtual. That said, I've been
Speaker 1: attending virtually. Um, there's some interesting news in the Cristoper space,
Speaker 1: some M and A, but it's still not the same
Speaker 1: as you know, being packed like sardines and Union Square.
Speaker 1: I can tell you which right now. We're glad not
Speaker 1: to be packed like sardines. Hey, Jeff. One thing though, UM,
Speaker 1: I do think about the pandemic and how it's affected
Speaker 1: the medical community and all of us overall, the questions,
Speaker 1: the information we've learned as we've watched vaccines being raid
Speaker 1: and understanding you know the process if you will. And
Speaker 1: I also think the world at large, the importance of
Speaker 1: mental wellness. We're talking about it like we've never before.
Speaker 1: How how how do you see the pandemic kind of
Speaker 1: impacting that world? In your world specifically, Well, you know,
Speaker 1: I'm a psychiatrist by training or recovering psychiatrists, and it's
Speaker 1: if you look at what's happened, I think, as you've
Speaker 1: pointed out, UM, we've seen a vast increase in the
Speaker 1: diagnosis of people suffering from mental health disorders, anxiety disorders,
Speaker 1: and really across the economic and age spectrum. It's not
Speaker 1: focusing on any particular segment. It's really all of us.
Speaker 1: And you know, there's there's actually some really good data
Speaker 1: around this. UM. And without belaboring this, if you look
Speaker 1: just for example, the economic costs are in the US
Speaker 1: just for depressive disorders in the year two thousand, year talking,
Speaker 1: it was about three billion, which was very substantial. In
Speaker 1: one the estimate of the cost of depress and is
Speaker 1: almost eight hundred billions, more than two and a half
Speaker 1: fold what we saw in the in the year two
Speaker 1: thousand and the same has been true that kind of
Speaker 1: increased for neurological disorders. So I think we all know
Speaker 1: that our lives are different. People are under stress. Um,
Speaker 1: there is a paucity of of availability of mental health practitioners,
Speaker 1: people are isolating more so it really is a perfect swarm.
Speaker 1: But Jeff, you know, I hear the data from one
Speaker 1: and I asked myself, is that actually measuring the effect
Speaker 1: of the pandemic? Because here we are two and we're
Speaker 1: entering your three of the pandemic. So I'm wondering to
Speaker 1: what extent you can actually attribute that increase in depression
Speaker 1: and anxiety to the pandemic versus what we won't see
Speaker 1: for years. Succomb Oh, I think that's exactly right. Remember,
Speaker 1: these are all instantaneous numbers or incidents as it were,
Speaker 1: the sequali or the after effects of what we're going
Speaker 1: through now. I think many of these things are still
Speaker 1: yet to be counted. So, if you know, I think
Speaker 1: that's why we're seeing, you know, this, this negative impact
Speaker 1: on brain health and the increasing diagnosis of ment of
Speaker 1: depression and anxieties sorts across the board. Hey what about
Speaker 1: to Jeff? You know, we talked so much here in
Speaker 1: Bloomberg about data collection, Right, the better the pros and
Speaker 1: cons of data collection, Right, But I do think about
Speaker 1: the data that's being collected during the pandemic about mental wellness,
Speaker 1: how that might help us in terms of figuring out
Speaker 1: more productive, more constructive strategies to really help all of
Speaker 1: us with our mental well being. Well, I think that's
Speaker 1: a really important point. And mental health has not been
Speaker 1: on the forefront of people's minds, you know, over the
Speaker 1: last decade, even though it is almost a crisis in
Speaker 1: our ability to deliver beneficial care. And I think the
Speaker 1: data we're acquiring now are really pointing out to the
Speaker 1: area that we have significant unmet medical need. We don't
Speaker 1: have enough practitioners. There hasn't been a lot of innovation
Speaker 1: and mental health medication and treatments over the last twenty years,
Speaker 1: so there's been a posse of that sort of innovation
Speaker 1: as well. So our hope is and and again the
Speaker 1: data are still coming in that with with better data
Speaker 1: and more information, we'll be able to craft better therapies
Speaker 1: that are really more tailored to individuals versus the sort
Speaker 1: of one size fits all that's really predominated, especially in
Speaker 1: psychiatry over the last twenty years. So what does that
Speaker 1: actually look like on a practical level, Well, the first
Speaker 1: thing we have to do is start looking at people's
Speaker 1: individual problems, and you know, and the socioeconomic issues, but
Speaker 1: more importantly, to make accurate diagnoses and to provide therapies
Speaker 1: as quickly as possible. If you think about this from
Speaker 1: a medical standpoint, if you had a broken leg, you
Speaker 1: wouldn't wait around, you know too, you know, two months
Speaker 1: in order to get better or to see a doctor.
Speaker 1: And yet we don't treat mental health with the same urgency.
Speaker 1: And these are life threatening conditions that we do with
Speaker 1: other medical conditions. So if you need to see a psychiatrist,
Speaker 1: you may have to wait, you know, several weeks or
Speaker 1: if not months, or psychlotherapist. And so the kind of
Speaker 1: data that we need and what we're seeing is that
Speaker 1: is really demonstrating not only the economic loss but the
Speaker 1: personal cost of delaying therapy and not having better access
Speaker 1: to mental health across the board. All right, we've got
Speaker 1: to run. Hey, Jeff Um come back anytime. We'd love
Speaker 1: to continue this conversation. Jeff Jonas, his Chief Innovation Officer,
Speaker 1: Board of Directors member, former CEO of Stage Therapeutics, joining
Speaker 1: us on the phone from Florida. I do think the
Speaker 1: increased conversation we're having about mental wellness, it's really important. Yeah,
Speaker 1: And I think his point about you know, what this
Speaker 1: looks like in a few years really stands because we
Speaker 1: don't know the effects. Yeah, exactly in personalization, right, individualization.
Speaker 1: That makes a lot of sense to me. Medicine increasingly
Speaker 1: moving in that direction. This is Bloomberg Business Week, and
Speaker 1: this is Bloomberg Radio. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: as we mentioned, a lot coming this week on the
Speaker 1: US economy, Fitch J. Powell up on Capitol Hill for
Speaker 1: his confirmation hearing, and a lot is on the terminal
Speaker 1: and at Bloomberg dot com about interest rates and inflation.
Speaker 1: New York Fed President Bill Dudley winging Goldman Sacks also
Speaker 1: with some comments both writing about you know, Tim, more
Speaker 1: aggressive FED tightening cycles. Are all looking at the economy
Speaker 1: thinking the Fed has to play catch up. We'll do that,
Speaker 1: howevery that's the question, because we're also seeing some major
Speaker 1: disruptions as a result of a Macron. A great story
Speaker 1: on the Bloomberg Terminal by Sean Donnan and other of
Speaker 1: our Bloomberg Economics colleagues. Here Sean Donn and his senior
Speaker 1: economics writer for Bloomberg News, He joins us on the
Speaker 1: phone from Maryland. Sean, I was having a conversation with
Speaker 1: a friend earlier this morning over text because we were
Speaker 1: talking about the disruptions happening at our kids nursery school,
Speaker 1: and she wrote that short staffing because of COVID is
Speaker 1: the new supply chain And I said, oh, my god,
Speaker 1: you're absolutely right. You hit it the nail on the head.
Speaker 1: What have you found about the economic effects of all
Speaker 1: of these workers calling out sick? Well, I mean, that's
Speaker 1: a great way of thinking about it. This is I mean,
Speaker 1: if you remember back that supply chain crisis that hit
Speaker 1: us all last skier starting to hit the tail end
Speaker 1: of that's something that we weren't really expecting in terms
Speaker 1: of UH an economic impact. And as we were going
Speaker 1: into this O Macron variant, we had kind of gotten
Speaker 1: into a groove and how we deal with surges the
Speaker 1: economy and businesses have become pretty good at adapting UH
Speaker 1: to new conditions. And then all of a sudden, we've
Speaker 1: got this new condition UH in the economy, which is
Speaker 1: just we've got a lot of people outsick in America
Speaker 1: right now because we're getting all of these positive tests
Speaker 1: and people may not be getting as sick in the
Speaker 1: broadly as as as they were beforehand, but they still
Speaker 1: have to stay at home in quarantine for five days
Speaker 1: ten days, depending on the business that you work for. UH,
Speaker 1: that may affect their family members who may be forced
Speaker 1: to stay home because of rules as well. And at
Speaker 1: a certain point, when you start talking to businesses, they're saying, actually,
Speaker 1: it's having a material impact on our ability to do business.
Speaker 1: So I talked Toledo Pizza, which is a pizza chain
Speaker 1: down here, and the CEO, James Beale, it's a family company,
Speaker 1: they've been around since you've never seen anything like this.
Speaker 1: He's literally having the shut stores because they don't have
Speaker 1: enough people, and they don't have enough people, not because
Speaker 1: they can't hire enough people, which was a lot of
Speaker 1: the impact last year, but because it got too many
Speaker 1: people calling in sake right now, right and we've seen
Speaker 1: we've all been places where we see signs that they
Speaker 1: just you know, closed because they just don't have enough workers.
Speaker 1: The other thing, though, Sean I'm thinking about, is the
Speaker 1: markets have this great ability to look through things, and
Speaker 1: we've had a lot of guests coming on like we
Speaker 1: have to look through this period of a macron and
Speaker 1: just get to the other side of the economy. Uh
Speaker 1: and and things start to bounce back pretty quickly. Um,
Speaker 1: why shouldn't we just be doing that here, like we
Speaker 1: understand what's going on, and why won't it just be
Speaker 1: maybe a few week thing where we'll explain away in
Speaker 1: the data points what was going on and look forward.
Speaker 1: Oh sure, I mean look absolutely could be a question
Speaker 1: of just a few weeks. Uh. And we've seen that
Speaker 1: a lot of people point to what happened in South Africa,
Speaker 1: what's been happening in the UK. Already some science possibly
Speaker 1: out of New York that the omicron cases are are
Speaker 1: peaking there. But really we've also got to think about
Speaker 1: the scale of the impact and how that kind of
Speaker 1: flows through the through the economy right now. As an
Speaker 1: economist I like called Nick Bunker, he's the chief economist
Speaker 1: that indeed the job site we're all familiar with, um.
Speaker 1: And he grew up in the Boston area, and he says,
Speaker 1: this is a lot like the Blizzarders seventy eight, which
Speaker 1: is this legendary blizzard that hit uh, New England in
Speaker 1: nineteen seventy eight, which up to four feet of snow
Speaker 1: get dropped on the economy and for a few weeks
Speaker 1: there you have this huge disruption in the economy, there's
Speaker 1: a huge clean up operation, there's a big bounce back.
Speaker 1: But you've got to think about this as not just
Speaker 1: a regional economic event. This is like the blizzard or
Speaker 1: seventy eight kind of hit everywhere in the US at
Speaker 1: the same time right now in terms of workers staying home,
Speaker 1: and that is um that's all. It may not be
Speaker 1: as big a deal as what we saw in March
Speaker 1: and April when we had these lockdowns in place and
Speaker 1: the pandemic was very new. We've adapted. We're all working
Speaker 1: from home, or a lot of us are working from home.
Speaker 1: We're finding new ways to to work and and and
Speaker 1: do our jobs. But it could be pretty short and sharp,
Speaker 1: and that could flow through as well into supply chains.
Speaker 1: What if that brings us back to a place where,
Speaker 1: for example, those parts shortages that we were seeing last
Speaker 1: year that we're pretty acute again, those get extended further
Speaker 1: into this year and that starts affecting GDP. And that's
Speaker 1: one of the reasons we've seen economists UH downgrade their
Speaker 1: growth forecast for for the first quarter. And you know
Speaker 1: that's the quarter we're in. Now, we can look at
Speaker 1: what's happened now, we can expect good things on the horizon,
Speaker 1: but you know, it pays to pay attention to what's
Speaker 1: happening around us now as well. Hey, Sean, what's the
Speaker 1: best what's the most important piece of data that you're
Speaker 1: gonna be watching for are in the coming weeks to
Speaker 1: help us understand what actually happens with the omicron variant
Speaker 1: in regard to technomic impact. I think there's there's there's
Speaker 1: a couple of things. One is what really happens to
Speaker 1: some of the big industrial companies like the automakers and
Speaker 1: how many people do they have outsick? And does that
Speaker 1: really then again flow through into the economy. And remember
Speaker 1: that story about car prices that we were all telling
Speaker 1: last year and inflation. Uh so what do we see
Speaker 1: in kind of heavy industry like that? Uh. The other
Speaker 1: one is one that's kind of harder to get a
Speaker 1: handle on, and that's I wish we had to take
Speaker 1: her on the on the terminal for how many Americans
Speaker 1: are outsick on any given day, because in some ways
Speaker 1: that would be the best economic barometer you could have
Speaker 1: right now. Sickco I'm one of our programmers are listening. Hey.
Speaker 1: One thing I do think about though, and highly recommended
Speaker 1: sixty minutes at a great piece about kind of what's
Speaker 1: going on in the US labor force right now. I
Speaker 1: do wonder too, um sean for companies who are like man,
Speaker 1: I don't want to ever be in a position where
Speaker 1: we might go through something like this and where my
Speaker 1: you know, reliance on workers, um just really makes me
Speaker 1: so vulnerable. I want to automate as much as I can.
Speaker 1: I wonder how much automation is going on that's going
Speaker 1: to stay with us forever in certain industries that will
Speaker 1: impact the labor force for years to come. I think
Speaker 1: there's no doubt that one of the long term I'm
Speaker 1: gonna call it a scar here, but it's a change,
Speaker 1: and some we'll see it as a positive change. Uh,
Speaker 1: in this economy is going to be more automation. I'm
Speaker 1: gonna bring us back to Ledo Pizza here in the
Speaker 1: DC area, and they've got a hundred and ten stores.
Speaker 1: It's a pretty thriving pizza chain here here. Locally, they
Speaker 1: have thirteen fewer people that they employ today than they
Speaker 1: did before the pandemic. And that's not about being outsick.
Speaker 1: That's just fewer staff that they need. And what they've done,
Speaker 1: according to the CEO, James Biel, was you know, part
Speaker 1: of that was driven by by shortages in the labor market,
Speaker 1: the hard the hard times they were having finding workers.
Speaker 1: But they've adapted. And one of the ways they've adapted
Speaker 1: is they've automated their ordering down their menu. You just
Speaker 1: don't need to deal with as many people as you
Speaker 1: used to get a pizza pizza, and that's a scar
Speaker 1: in this economy. Gotta runch on. It's a great story,
Speaker 1: Sean Donn, and he's seen your economics writer at Bloomberg
Speaker 1: News ruining us on the phone from Maryland. You're listening
Speaker 1: to Bloomberg Business Week and this is Bloomberg. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stenovic on Bloomberg Radio. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic
Speaker 1: on Bloomberg Radio. This week, Bloomberg Business Week's magazine, it's
Speaker 1: all about the your head issue, those things to keep
Speaker 1: on your radar in two and Tim. That includes, of course,
Speaker 1: the semiconductor space big story. Last year, it's going to
Speaker 1: contin knew to be so this year innovation disruptors and
Speaker 1: just plain old competition playing its way out. Yeah. The
Speaker 1: big question is who reigned supreme? And how about the
Speaker 1: long time you know, Kings of chip making or King
Speaker 1: of chip making? Does it remain king? We have our
Speaker 1: own king of chipmaking too, it's in King. He's US
Speaker 1: Semiconductor and Networking reporter at Bloomberg News. He joins the
Speaker 1: slide from the San Francisco studio and it's always great
Speaker 1: to have you on the program. Let's talk a little
Speaker 1: bit about Intel, because the company is on the brink
Speaker 1: of losing its status as the world's largest chipmaker. I
Speaker 1: thought that girl Singer came back to Intel to prevent
Speaker 1: this from happening. Yeah, no, that that's what he's been
Speaker 1: talking about. He's very, very focused on basically restoring Intel
Speaker 1: to its dominance. You remember when he left in two
Speaker 1: thousand and nine. Until it was at the peak of
Speaker 1: its powers, it was the largest chip maker by market value,
Speaker 1: the largest chip maker by revenue, the leader in terms
Speaker 1: of technology, the best plants, the best profit margins. You know,
Speaker 1: it really was a leader, and now it's not. It's
Speaker 1: arguably going to lose the last of those titles, which
Speaker 1: is the one by revenue in two thousand for two
Speaker 1: thousand and twenty one. And really everything that he said
Speaker 1: since he took over last year is look, I'm going
Speaker 1: to get Intel back. I'm going to put Intel back
Speaker 1: where it belongs. So hey, Ian, it's still going to
Speaker 1: be a dominant player Intel that is. But what's the
Speaker 1: significance of you know, Intel and the history of what
Speaker 1: it has done in terms of chipmaking and just really
Speaker 1: Silicon Valley. How is that just kind of remarkable in
Speaker 1: terms of this shift. Yeah, I mean Intel basically taught
Speaker 1: the industry that, you know, these are the economics that matter,
Speaker 1: Moore's law that everybody quotes good and more, the founder
Speaker 1: of Intel. It's about economics, It's about scale, it's about speed.
Speaker 1: Intel has always had the most capital to deploy. It's
Speaker 1: always moved faster. It's always made it difficult for the
Speaker 1: opposition to keep up. Now it's facing and we talked
Speaker 1: about some song in the story, but also t SMC
Speaker 1: in Taiwan. Companies that have as much access to capital,
Speaker 1: that are deploying as much capital, that are running just
Speaker 1: as fast as Intel, and they're enabling lots of other
Speaker 1: companies who they manufacture for to compete and to take
Speaker 1: market share away from Intel. Clearly that's not good for Intel.
Speaker 1: As you say, it's it's still a huge company. It's
Speaker 1: seventy billion dollars of revenue is not to be sniffed at.
Speaker 1: But that kind of lead that ability to say, hey,
Speaker 1: here we are. You need to come chase me, and
Speaker 1: this is the pain that is involved in chasing me.
Speaker 1: That's gone away. What do we always say about Intel's
Speaker 1: ability or packed Elsinger's ability to to pull this off. Yeah,
Speaker 1: I mean it's Initially when he came, you know, back
Speaker 1: to Intel last February, said all the right things, said, look,
Speaker 1: this isn't good enough, this is not Intel. These you know,
Speaker 1: mismanagement that's been going on while I've been away. I'm
Speaker 1: going to reverse that. Intel is back, you know, very much,
Speaker 1: beating his fist on his chest and using a lot
Speaker 1: of the throwbacks to Intel's prior leadership in terms of messaging.
Speaker 1: But then what became clear as Intel reported earnings averaged
Speaker 1: a seven percent decline on the day after every earnings
Speaker 1: was released because those earnings were showing margins narrowing and
Speaker 1: guess what, We're going to spend a lot of money
Speaker 1: to get us back. And so what what's really going
Speaker 1: on is saying the right things, making the right decisions arguably,
Speaker 1: but at the same time showing what the cost is
Speaker 1: and the amount of time it might take to get
Speaker 1: Intel back to leadership. Hey, in in a world where
Speaker 1: so much of the global economy is all about services,
Speaker 1: and certainly for the United States, we don't make a
Speaker 1: lot of stuff anymore. But the opportunity with a company
Speaker 1: like Intel where we actually make something, how important is
Speaker 1: that to the United States? And I think about you know,
Speaker 1: government intervention or government assistance here in making sure that
Speaker 1: we're still you know, making something in this global economy. Yeah,
Speaker 1: I mean if if you know, if you ought to
Speaker 1: view it from a nation centric point of view, and
Speaker 1: Gelsing are certainly one of those that does suit. So
Speaker 1: the chip industry is enormously important. It's a it's a
Speaker 1: fundamental piece of technology that underpins everything UM and the US.
Speaker 1: You know that the ability to manufacture that is really
Speaker 1: centered in only Intel and a bit in Micron. Everybody
Speaker 1: else kind of doesn't do it anymore. It's done by
Speaker 1: Sam song it's done by t SMC. Those are arguably
Speaker 1: the leaders right now. And what Girl Singer has argued,
Speaker 1: and there's you know, gained some traction with politicians who
Speaker 1: are listening to him, saying, look, if we don't have this,
Speaker 1: we we lose that ability. It's not something you can
Speaker 1: just get back, you know. It's it's based on knowledge,
Speaker 1: it's based on experience, and if that's going away, maybe
Speaker 1: it's gone for good. So he's really trying to do
Speaker 1: something about that. And you're not unprecedented, right, go back
Speaker 1: to is it the seventies right where the US you know,
Speaker 1: there was a consortium to really help develop the U
Speaker 1: S semiconductor sector. So it's not unprecedented, No, it's it's
Speaker 1: it's not unprecedented if you look at the numbers. You know,
Speaker 1: Intel became the world's largest chipmaker in ninety two. Up
Speaker 1: until nineteen ninety is you know, the US was responsible
Speaker 1: for sort of a third of production worldwide, Europe almost
Speaker 1: as much. You know, Asia was just a third. Now
Speaker 1: that's massively changed and that's a lot of money, and
Speaker 1: but it's it's nohow I think that people are much
Speaker 1: more concerned about that once you lose that. Know how,
Speaker 1: once you lose that experience, once that's gone, it's very
Speaker 1: hard to get back. And do you get the sense
Speaker 1: from your reporting that policymakers understand the importance of the
Speaker 1: chip industry to the United States? Do they understand what
Speaker 1: you know is does Intel and do my crime? Do
Speaker 1: they get what they're what they want from the US
Speaker 1: government in terms of actual help. I think there's two
Speaker 1: ways to look at this. You have an unprecedented piece
Speaker 1: of industrial policy, which is something that the US just
Speaker 1: doesn't do before Congress. Right now, the Chips Acts fifty
Speaker 1: two billion dollars sounds like a lot of money on
Speaker 1: the flip side hasn't been funded yet. It's still stalled,
Speaker 1: and that's causing frustration amongst the chip industries like Okay,
Speaker 1: so you finally woken up, you finally get it, but
Speaker 1: there's not enough money and be you haven't even funded that.
Speaker 1: So yes and no, I think is the answer to that? Hey,
Speaker 1: and I think about you know, investors who are into
Speaker 1: your conversation here and what you're saying, Um, I'm just
Speaker 1: look an outward. Intel was up about three point four
Speaker 1: percent last year. I mean, the SAX has been on
Speaker 1: a tear. So what do they need to keep in
Speaker 1: mind when they think about investing in or not investing
Speaker 1: in Intel. Well, you know, it's a very good question.
Speaker 1: Intel is the best performing chip stock this year. That's
Speaker 1: a very small sample size. We've had what six trading days.
Speaker 1: That's based upon what Intel has said at CS new
Speaker 1: products were coming back to leadership, We're going to do well,
Speaker 1: We're gonna start taking back market share. Maybe there's a
Speaker 1: chance that people are getting behind Intel's story, that they're
Speaker 1: looking over the horizon and saying, hey, maybe Intel's back
Speaker 1: on the flip side. We've got earnings coming later this quarter.
Speaker 1: The numbers there don't look good, you know, the numbers
Speaker 1: look for revenue down again, look for profit margins under
Speaker 1: um you know, under threat again. So it's a it's
Speaker 1: a do you believe in the future? Do you believe
Speaker 1: in this management? Do you believe that they're not just
Speaker 1: saying the right things, but they're putting the company in
Speaker 1: a position to exceed because short term it's not looking good. Yeah.
Speaker 1: Intel actually one of my gainers. We talked about the
Speaker 1: markets a little bit later on. It's one of the
Speaker 1: few stocks, uh in a lot of the selling that
Speaker 1: we're seeing today. That's actually a standout, uh Ian. I
Speaker 1: know I say it a lot, but I really mean it.
Speaker 1: And we do your must read always when it comes
Speaker 1: to anything in the semi space in King U, semiconductor
Speaker 1: networking reporter at Bloomberg News from our San Francisco studio.
Speaker 1: His story in the new issue upcoming issue the year
Speaker 1: Ahead issue of Bloomberg Business Week on newsstands later this week,
Speaker 1: online and always on the Bloomberg terminal. Check it out.
Speaker 1: You're listening to Bloomberg Radio. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic
Speaker 1: on Bloomberg Radio. Well, a macron has flared in a
Speaker 1: Chinese sports city that borders Beijing and spread inland. See
Speaker 1: the variant on the doorstep of the nation's capital, less
Speaker 1: than one month before the Winter Olympics in Beijing begin,
Speaker 1: and we know Tim pulling off safe games will be
Speaker 1: a big test for President. G Andy Brown is editorial
Speaker 1: director at Bloomberg New Economy. He joins us on the
Speaker 1: phone from New York City over the weekend, and you
Speaker 1: had a column out that was titled China's Betting on
Speaker 1: Olympic victory over COVID. This was New Economy Saturday. Since then, though,
Speaker 1: we've learned more about community spread in China. What do
Speaker 1: we know about how on then is spreading in the
Speaker 1: in the country and give us an update on COVID
Speaker 1: zero policy. Well, what we know is that there are
Speaker 1: forty cases in Tensin, is Beijing's ports city. It's less
Speaker 1: than a hundred miles from the Chinese capital, half an
Speaker 1: hour on the train. Um that outbreak UM has leaked
Speaker 1: into Honan Province to the south. Hanan is right now
Speaker 1: battling a delta outbreak. Both Tenjin and Honan um press
Speaker 1: up against Hubei Province, which is where many of the
Speaker 1: Winter Olympic ski and skating competition and lose competitions are
Speaker 1: taking place. This is really Beijing's nightmare. I mean, it
Speaker 1: has profound implications for the Chinese economy, for global supply chains,
Speaker 1: and indeed for domestic Chinese politics. This is an incredibly
Speaker 1: sensitive year when President Jijimping at the end of the
Speaker 1: year is seeking a twenty third term in office at
Speaker 1: the twentieth Party Congress. And you know China's success, his
Speaker 1: success in defeating COVID um has been is a is
Speaker 1: a big part of of his program this year. I
Speaker 1: mean basically, Andy, you write that his political credibility and
Speaker 1: China's political credibility really at stake here. Yeah. So you
Speaker 1: know they've presented the and and look, China, China defeat
Speaker 1: it Delta. It was, it's it's an extraordinary victory. Um.
Speaker 1: You know, they talked, they talked about a people's war, um.
Speaker 1: And they've compared and contrasted their success against COVID with
Speaker 1: America's failures. So they say, you know, propaganda, sort of
Speaker 1: nationalistic chess stumping propaganda. Look, the American democratic system is
Speaker 1: completely failed. Eight hundred thousand people, you know, died in
Speaker 1: the United States. It proves the superiority of the socialist system.
Speaker 1: And look, you know here it is UH in China.
Speaker 1: And if they can't contain this, and it looks it's
Speaker 1: going to be a really difficult job for them to
Speaker 1: hold to hold to their zero COVID policy. Given that
Speaker 1: Omicron is by some accounts seventy times more infectious UH
Speaker 1: than than Delta. It really seems that this is this
Speaker 1: is a this is an uphill battle for them. Yeah,
Speaker 1: it's one thing to be able to do this if
Speaker 1: borders are closed and you're not holding an event that
Speaker 1: attracts people from all over the world. Still, though, they
Speaker 1: are putting into place some huge restrictions when it comes
Speaker 1: to the Olympics. How are they trying to prevent this
Speaker 1: becoming a super spreader event? And indeed even one case
Speaker 1: it's too many for the Chinese government. Yes, so the
Speaker 1: Olympics is going to be held in the bubble. Um.
Speaker 1: I'm actually going, and I'm gonna be part of a
Speaker 1: part of that bubble, so we won't be allowed out
Speaker 1: of the venues, and that they're allowed to wander around.
Speaker 1: I ken indy um uh. But you know, it seems
Speaker 1: to me, and I'm not in any way medical special,
Speaker 1: but it seems to me almost a certainty that you're
Speaker 1: gonna get omikron outbreaks. Uh in the Olympic village among
Speaker 1: the athletes. It could well knock out individual athletes. It
Speaker 1: could even knock out whole teams. Um it really, it
Speaker 1: really does. Um. You know, Uh, foretell some some chaos
Speaker 1: during the games. Yeah, you do think about Andy, you know,
Speaker 1: fingers crossed things improve and and and everybody who goes,
Speaker 1: including yourself. You know are safe, uh, and that the
Speaker 1: numbers go in a different direction. But you do wonder
Speaker 1: if it doesn't go well, you know, what could be
Speaker 1: the implications, I mean, what could be the longer term
Speaker 1: implications for President g going forward if if things don't
Speaker 1: go well, Well, there's the economy that he has to
Speaker 1: think about. So, you know, to keep to defeat COVID,
Speaker 1: they've had these rolling lockdowns and travel restrictions. Uh, it's
Speaker 1: disrupted ports UM, it's closed down factories, it's dampened domestic
Speaker 1: consumption UM, and growth is slowing. And economists, even before
Speaker 1: there's omicron I'll break, the economists have been downgrading Chinese
Speaker 1: growth forecasts UM for next year and or rather for
Speaker 1: this year, and of course with a knock on impact
Speaker 1: the global economy through supply chain, many of which reports
Speaker 1: run through China. I do wonder, though, what has more
Speaker 1: of an effect on supply chains, you know, the closing
Speaker 1: of of something because of COVID, or you know, just
Speaker 1: people not showing up work because they are sick andy.
Speaker 1: So it's like you it's really it's hard to imagine
Speaker 1: a scenario where where this doesn't have an economic effect,
Speaker 1: because even a COVID zero policy that includes lockdowns, mass testing,
Speaker 1: and school being canceled. That is serious economic implications. Absolutely.
Speaker 1: You know, China, China did very well in two thousand
Speaker 1: and twenty and two thousand and twenty one when rich
Speaker 1: countries were all in lockdown and what people weren't buying services,
Speaker 1: they weren't going out to eat, they weren't traveling, They
Speaker 1: were buying goods, and these goods were made in China. Well,
Speaker 1: if only krone turns out to be as mild as
Speaker 1: we think we hope it will be, that situation could
Speaker 1: reverse within implications for China's exports right at the time
Speaker 1: when domestic consumption falls. This is really the worst of
Speaker 1: all worlds for China. God, it's so tricky, all right, Andy,
Speaker 1: Thank you so much, Bloomberg New Economy Editorial Director. You
Speaker 1: can sign up for the New Economy daily newsletter at
Speaker 1: Bloomberg dot com slash New hyphen Economy. This is Bloomberg
Speaker 1: Business Week Chart of the day coming up right here
Speaker 1: on Bloomberg Radio. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Let's get to the drive to the close. At New
Speaker 1: gagar Is with US global investment strategist for Commonwealth Financial Network.
Speaker 1: She joins us once again on the phone in Waltham, Massachusetts,
Speaker 1: and new great to have you here with us. Happy
Speaker 1: New Year. What a year it's already been in two,
Speaker 1: which is kind of funny for us to talk about this.
Speaker 1: How much how much do you pay attention to what's
Speaker 1: happened in these first five six trading days of two?
Speaker 1: You know, we talked about the first five days indicator
Speaker 1: and some market watchers watch that pretty closely, do you. Oh,
Speaker 1: Carol Kim, Happy New Year to you as well, and
Speaker 1: thank you so much for having he here. Uh so
Speaker 1: you know, the thing goes ast Jane. Where he goes,
Speaker 1: so goes the year, know, um, you know to that
Speaker 1: extent of course, you know we're watching markets every day,
Speaker 1: but of course we're not really um making any predictions
Speaker 1: on you know, a one day move or a ten
Speaker 1: day move, so to speak. Um. But yeah, you pointed
Speaker 1: to the market reactions today, What a day. Who would
Speaker 1: have thought when we started the day this morning that
Speaker 1: the NASACT composite would actually be one of the best
Speaker 1: book forming major composites and major indexes to end the day.
Speaker 1: So what happened here, which is it's really funny. I mean,
Speaker 1: we're on the NASDAC. They're barely down four tens of
Speaker 1: not even down four tens of one percent, and we're
Speaker 1: down more than two percent earlier. Yeah, so it looks
Speaker 1: like there is some technical buying coming in by you know,
Speaker 1: the buy the dip sort of traders. But really the
Speaker 1: equity sell off today and in the first ten days
Speaker 1: of twenty two and two is just a market reaction
Speaker 1: to the f O m C meeting minutes. So that
Speaker 1: reinforce the FEDS resolve of a hawkish pivots armicron or not.
Speaker 1: The fit is on a path to tapering. And now
Speaker 1: the debate is whether it is three rate hikes next
Speaker 1: year or four or more and the speed of balance
Speaker 1: is run off. You know. The thing is, it's just
Speaker 1: at this point, even if we get what three or
Speaker 1: four rate increases, it speaks to a growing economy. It
Speaker 1: speaks to earnings growth. Gina Martin Adams reminding us of
Speaker 1: our Bloomberg intelligence team that they're looking at s and
Speaker 1: earnings growth. Uh, this year, that's significant. You know, we
Speaker 1: might get some recalibration of multiples out of that because
Speaker 1: of the run up that we've already seen, but nonetheless
Speaker 1: it's still growth. How do you see this maybe recalibration
Speaker 1: in the equity trade playing out this year. How do
Speaker 1: you make the bets at this point or do you
Speaker 1: wait a little bit? Well, overall, I think we riskonssts
Speaker 1: are still resilient as liquid liquidity conditions remain easy and
Speaker 1: economic growth. As your point, it is also a tailor
Speaker 1: um and when starting from such low rates, higher interest
Speaker 1: rates are not successfully negative for equities, and equities could
Speaker 1: prove to be an inflation hedge to an extent. But
Speaker 1: of course higher interest rates doom pressure profitability and evaluation
Speaker 1: multiple for it to use the spending power. So I
Speaker 1: am expecting a more bumpier right in twenty twenty two
Speaker 1: and lower returns well for the last two years lights
Speaker 1: out performance that may not necessarily be alarming, right exactly
Speaker 1: like perspective everybody, it's interesting, there's a great chart. I'm
Speaker 1: going to talk about it. I didn't want to give
Speaker 1: it away, but I think I'm gonna do it with
Speaker 1: our team. I've been dying to talk about it all day. Um,
Speaker 1: we've got it right through on the markets and it.
Speaker 1: It cites some h new some research from Strategious Securities,
Speaker 1: and they say, in the past three decades, there have
Speaker 1: been four distinct periods of rate high cycles by the
Speaker 1: FED on average technology, which has been under pressure as
Speaker 1: we know in this first week too, UM is among
Speaker 1: the best performing sectors during those FED rate hikes cycles. So,
Speaker 1: you know, what are your thoughts about that? And that's
Speaker 1: according to their research. Yeah, well, if you think about Carl,
Speaker 1: what what has really been driving technology sveteran the product
Speaker 1: market in the last few years, It's really been those
Speaker 1: very big large cap growth names still you know, you
Speaker 1: call them fang or fan, Meg, whatever it is. But
Speaker 1: UM most of these companies that they tend to have UM,
Speaker 1: you know, better visibility in their in their earning. They
Speaker 1: they don't have quite as much leverage. So even that
Speaker 1: higher interest rates, we talk about how it can impact
Speaker 1: higher duration stock. Those are stocks that either have higher
Speaker 1: leverage or they have earnings coming way into the future.
Speaker 1: So those are not these lune cap growth names. So okay,
Speaker 1: so raises the question and what we should be keep
Speaker 1: an eye on right now and and and here's here's
Speaker 1: what's interesting. I'm playing around on the Bloomberg, and I'm
Speaker 1: looking at Arcum, Cathy Woods, arc Investment Management, right, the
Speaker 1: Ark Innovation ETF, a lot of the high flying stocks,
Speaker 1: and I like to check that out when we do
Speaker 1: see some broad selling off in the NASDAC, because the
Speaker 1: companies that she has in that are are those ones
Speaker 1: that she calls disruptive technology stocks. This was down more
Speaker 1: than five earlier in the day, it's it's now flat
Speaker 1: on the day today. What gives? Yeah, that's right. So,
Speaker 1: as I said, there is a lot of buying coming
Speaker 1: in from all the you know, technical pressures. A lot
Speaker 1: of stocks are hitting those fifty day or two hundred
Speaker 1: day moving averages and getting some buying, uh come support
Speaker 1: coming in at those levels. So not surprising because those
Speaker 1: higher flying stocks, of course, they bought a lot of
Speaker 1: the brunt in the early days, so not surprising for
Speaker 1: them to find a at least momentary bottom. So where
Speaker 1: would you be allocating new money at this point? Oh? Well,
Speaker 1: I I would be more diversified at this point because,
Speaker 1: of course it's not a surprise that we are expecting
Speaker 1: higher interest rates. So in a higher interest rate environment, financials,
Speaker 1: particularly banks, tend to do better. So that is certainly
Speaker 1: an area that I do find attractive. But also of
Speaker 1: the large tap tech names that have declined with the
Speaker 1: rest of the market and those higher flying names, I
Speaker 1: think they can get quite attractive as well. M okay,
Speaker 1: So help us think about where else our audience should
Speaker 1: be thinking about in terms of where they're putting their
Speaker 1: money and asset allocation. For me too, Um, we haven't
Speaker 1: talked much about fixed income, and I'm wondering if you
Speaker 1: see a place for that in a portfolio. Still. Yeah,
Speaker 1: so fixed income it's even trickier, you know, with expectations
Speaker 1: of rates rising. Certainly don't want to be in those
Speaker 1: very high duration uh fixed incomes. So I would still
Speaker 1: keep it to keep it mostly shorter duration at this point.
Speaker 1: M So short. I'm sorry you said you should have
Speaker 1: exposure to shorter duration. That's right, Yeah, you know, what's
Speaker 1: what's the what's the surprise that you think my catch
Speaker 1: investors off guard, especially when it comes to fixed income
Speaker 1: and we've already seen a big move up in yields
Speaker 1: at this point, it's safe to say that we've been
Speaker 1: recalibrating in terms of the expectations about FED policy. Could
Speaker 1: are you anticipating that the FED is a lot more
Speaker 1: aggressive than everybody is anticipating. That is quite likely. Uh,
Speaker 1: you know, the FED start to get aggressive, and especially
Speaker 1: if it starts to become clearer that the Feds behind
Speaker 1: the cove, well and we start to get more than
Speaker 1: start to see indications that the FED might actually hid
Speaker 1: more than four times, I might let the banda sheet
Speaker 1: run off much quicker and start much quicker on balance
Speaker 1: sheet run off. All right, We're gonna leave it on
Speaker 1: that note. Um, and thank you so much, really appreciated.
Speaker 1: A new Gagard Global Investment Strategies, a Commonwealth Financial Network
Speaker 1: on the phone from Waltham, Massachusetts. 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