Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. We're gonna talk a bit
Speaker 1: about more, a little more about COVID uh Switzerland joining Spain,
Speaker 1: the UK and suggesting that the virus pandemic may be
Speaker 1: shifting to an endemic phase. You've got the White House
Speaker 1: moving to prevent future shortages of COVID night Team tests
Speaker 1: ensuring they continue to be produced in large number, crety,
Speaker 1: A lot going on. Australia's cases are surging. It's just
Speaker 1: a reminder it's a global pandemic and until we all
Speaker 1: get through it, we're all gonna have to deal with it. Yeah,
Speaker 1: it really speaks to the fact that vaccine or I say,
Speaker 1: COVID fatigue is absolutely a factor. Here a people saying, well,
Speaker 1: you know, we're done with this, We're gonna just live
Speaker 1: our lives as normal, and in some case numbers show
Speaker 1: that maybe you can't do that just yet. Speaking of
Speaker 1: COVID fatigue, some of those who get COVID, it's sticking
Speaker 1: around for a long time, those long haulers. Let's get
Speaker 1: to that and more. But Dr Batty Raman, Principal investigator
Speaker 1: of the Radcliffe Department of Medicine at the University of Oxford.
Speaker 1: She joins us on the phone from Oxford, England. Dr Ramen,
Speaker 1: nice to have you here with us. How are you
Speaker 1: and what are you seeing when it comes to the
Speaker 1: progression of COVID in the UK. Thanks Carol. I'd like
Speaker 1: to take this opportunity to say, UM, you know, really
Speaker 1: appreciate this invitation. UM. COVID is still very high. The
Speaker 1: number of cases are still very high in the UK. UM.
Speaker 1: An increasing concern for many is the long term effects
Speaker 1: of COVID. As you might no long covid is um.
Speaker 1: The is a syndrome that some people may experience beyond
Speaker 1: the acute space it's a serious global health concern and
Speaker 1: UM has already affected one point three million people here
Speaker 1: in the UK that constitutes more than two percent of
Speaker 1: our population. And it is estimated that more than fifty
Speaker 1: million worldwide will be affected by long COVID and that
Speaker 1: many will will will continue to be diagnosed with ongoing
Speaker 1: symptoms and complications from COVID. Is the normal simplicancy. We
Speaker 1: are statistic and I'm not sure if your team shared
Speaker 1: it with our producer, but is it correct that nearly
Speaker 1: one quarter of virus survivors will have some kind of
Speaker 1: long term effect? Yes, that's that's true. So roughly about
Speaker 1: can have sometimes some type of long term effect. Touch
Speaker 1: us a little bit about one what that looks like
Speaker 1: and how you actually go about addressing it. Yes, so
Speaker 1: this is what people are commonly referring to long COVID
Speaker 1: or prosecutically of COVID or past UM. Long COVID is
Speaker 1: defined by consistent systemctings beyond three months of infection. The
Speaker 1: most common manifestation is fatigue, but people to report a
Speaker 1: range of symptoms including headaches, body pain, gas or intestinal symptoms,
Speaker 1: brain fog. So there are multitude of symptoms that people experience.
Speaker 1: We know that it it really affects someone's ability to
Speaker 1: return to work. That more than fifty percent of people
Speaker 1: with long covids have either not been able to return
Speaker 1: to work or have returned to modified duties. It has
Speaker 1: huge implications for the economy. What can we do about it?
Speaker 1: So I think we're still looking for answers. Um there
Speaker 1: has been some evidence that the mitochondria of the muscle,
Speaker 1: which is basically the powerhouse of all the cells, might
Speaker 1: be contributing to the symptom of fatigue. The certainly is
Speaker 1: the pre clinical studies showing that the virus might hijack
Speaker 1: the mitochondria and affect the seal's ability to fight the
Speaker 1: infections and promote inflammatory pathways. So we're particularly interested in
Speaker 1: testing a treatment or a therapy that Accelor Therapeutic have developed.
Speaker 1: It's called the EX five, a mixture of five amino
Speaker 1: acids um which has been shown to have a beneficial
Speaker 1: effect to the mitochondria and also result in meaningful reduction
Speaker 1: in other markets of inflammation, a little fat and even
Speaker 1: incident resistance. So we talk about long COVID, just how
Speaker 1: long is long? Are we talking about weeks, months, years, even? Yeah?
Speaker 1: So some of the patients we've seen, UM, who've who've
Speaker 1: volunteered for our study have had long COVID since we'll
Speaker 1: have had ongoing symptoms since March so UM, you know,
Speaker 1: so sorry twenty So this is we're talking about really
Speaker 1: protracted symptoms for some people. But the definition that the
Speaker 1: UK has introduced by nice refers to symptoms beyond three
Speaker 1: months of infection. What's the what's the timeline in terms
Speaker 1: of this treatment that you talk about, um, that might
Speaker 1: help with these COVID long haulers? Uh? Is this something
Speaker 1: that will see maybe put into use later on this year?
Speaker 1: Just got about thirty seconds left here, Yeah, so we
Speaker 1: hope to have some results by mid twenty two. The
Speaker 1: study has already started recruitment as well underway. There's been
Speaker 1: a huge number of participants interested and the first patient
Speaker 1: has been dosed with the treatment. So UM, so we've
Speaker 1: got some Uh. It looks really promising just in terms
Speaker 1: of reaching our target and finishing the study UM quite
Speaker 1: early on, UM, and we hope that there's some positive
Speaker 1: for patients worldwide. We'll look forward to hearing more on
Speaker 1: that as you guys go through the testing process. Dr
Speaker 1: Betty Rama and Principal Investigator for the Radcliffe Department of
Speaker 1: Medicine at the University of Oxford, on the phone from Oxford.
Speaker 1: Another story I just want to mention having to do
Speaker 1: with COVID from the Associated Press u S Army for
Speaker 1: the first time offering a maximum enlistment bonus of fifty
Speaker 1: dollars to highly skilled recruit who joined for six years.
Speaker 1: The AP learning this as the service struggles to bring
Speaker 1: in soldiers into critical jobs amid the continuing pandemics with
Speaker 1: A two creating or dealing with a work shortage. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Well, this week's Bloomberg
Speaker 1: Business Week, it's all about the year ahead. The cover story.
Speaker 1: The issue is about the biggest dangers to the economy,
Speaker 1: the global economy this year in folks, surprise, surprise, it's
Speaker 1: really not about COVID for more. Let's bring in our
Speaker 1: senior executive editor for Economics at Bloomberg, Head of Bloomberg Economics,
Speaker 1: Stephanie Flander. She is with us on the phone in London,
Speaker 1: along with Bloomberg Business Week editor Joell Webber on the
Speaker 1: access line and Brooklyn. You know, Joel, the t I
Speaker 1: a issue. I love it. It It always looks into you know,
Speaker 1: what's going to go on maybe and what are these
Speaker 1: stories that are to dominate this year? But so much
Speaker 1: of what happens this year depends on kind of global
Speaker 1: bankers getting it right. And I'm talking about you know,
Speaker 1: we're talking about central bankers getting it right. Yeah, and
Speaker 1: talk about a well timed story right just on the
Speaker 1: heels of of yesterday. UM. And you know, we try
Speaker 1: and gaze into a crystal ball as as much as
Speaker 1: we can in this issue. UM. We always feel like
Speaker 1: whenever we're talking about the year ahead, people are just
Speaker 1: like I want to always know what's going on with
Speaker 1: the economy. And I think that is especially true now
Speaker 1: living through what we've all lived through, the unpresented nature
Speaker 1: of of not only COVID but also the responses to COVID.
Speaker 1: And now we find ourselves somewhere hopefully maybe on the
Speaker 1: back end, and we get to deal with, um, you know,
Speaker 1: the aftermath of all of this. UM. But you know,
Speaker 1: like you said in the top there, UM, COVID perhaps
Speaker 1: maybe not the central theme that we have to rustle
Speaker 1: with now. And we we've seen what response can can
Speaker 1: look like and how we can manage um. So so
Speaker 1: Stephanie over to you, what what job is it that
Speaker 1: the central bankers have to rustle with now? They have
Speaker 1: to work out whether the glabal economy is kind of
Speaker 1: especially the US economy if you're the FED, is permanently
Speaker 1: changed as a result of COVID, that they should really
Speaker 1: take seriously the idea that people don't want to go
Speaker 1: back to their jobs, you know, having trouble filling jobs,
Speaker 1: that we're really going to have inflation kind of endemic
Speaker 1: in the economy rather than just being this transitory thing,
Speaker 1: or whether actually we are all going to be going
Speaker 1: back to normal, the economy is going to be more
Speaker 1: or less like it was in a year or so.
Speaker 1: It's time and they just need to kind of sit
Speaker 1: tight and you know, tweak a few levers and raise
Speaker 1: a few interest rates, but fundamentally they don't have to
Speaker 1: grapple with something different. And the risk is that at
Speaker 1: the end of the year it turns out that they
Speaker 1: just called that raw that for example, inflation really is
Speaker 1: a big issue. Financial markets are losing confidence in the
Speaker 1: central banks kind of understanding in the situation and we
Speaker 1: face a big problem, Stephanie. These aren't exactly synchronized, synchronized moves.
Speaker 1: We're we're talking about central banking, and you have the PBC,
Speaker 1: for example, continuing to ease, the ECB essentially passing the FED.
Speaker 1: Even emerging market it's hiking as quickly as they can,
Speaker 1: or at least that's what the market is telling us
Speaker 1: they're going to do. How much of that kind of
Speaker 1: dislocation across the world is a problem for the global
Speaker 1: economy because that's this is a new moment there. Yeah,
Speaker 1: I think so, And I think that was interesting. One
Speaker 1: of the things I was sort of thinking about as
Speaker 1: I wrote the piece is you have, on the one hand,
Speaker 1: a kind of familiar dynamic of, you know, if the
Speaker 1: Federal Reserve raises interest rates were emerging market economies that
Speaker 1: could face the biggest problems as a result of that.
Speaker 1: They kind of get the long end of that story.
Speaker 1: But actually there's a whole other thing going on, which
Speaker 1: is China's already slowed down a bit, and for the
Speaker 1: first time ever really certainly in living memory, that the
Speaker 1: People's Bank of China is going to do something different
Speaker 1: from the FED. They've always had to slavishly follow the
Speaker 1: Fed because they had their exchange rate tied to the dollar.
Speaker 1: They've kind of won their own declaration of independence from
Speaker 1: developing their economy and changing their policies, and they now
Speaker 1: have the freedom to cut interest rates just as the
Speaker 1: Federal Reserve is raising them. So that is an interesting
Speaker 1: moment the global economy viewers, and kind of staying as
Speaker 1: always a few steps behind, still waiting even for that
Speaker 1: much inflation, let alone problem needing to raise rates. Okay,
Speaker 1: so I mean, Stephane, the fact that Chinese going one way,
Speaker 1: the US going another, but even just the fact that
Speaker 1: we have I did a bit of cross talk there,
Speaker 1: so forgive me. But the fact that we have everyone
Speaker 1: not working in locked stop for a change that is
Speaker 1: radically different, right, And and so what what does that
Speaker 1: start to look like if you're if your power, for instance,
Speaker 1: and you're trying to control what you can control, but
Speaker 1: then there's all these other forces that could perhaps work
Speaker 1: against you. How much of that the calculus starts to
Speaker 1: have the factor in that stuff? Well, it certainly effects
Speaker 1: the certainly way thanks the way the financial markets think, right,
Speaker 1: because you've got the urosone more or less on hold.
Speaker 1: So you know, interesting, there is a certain amount of
Speaker 1: pressure pulling down the cost of money, pulling down long
Speaker 1: term interest rates, bond yield, even as you've got the
Speaker 1: Federal Reserve maybe four maybe five, maybe six rate rises
Speaker 1: this year, we don't know, um, So that is a
Speaker 1: different dynamic that we're not all darting to the same
Speaker 1: tune as the US. But I think it is still
Speaker 1: fundamentally the case. The most important story is going to
Speaker 1: be what happens to inflation in the US, what happens
Speaker 1: to inflation expectations to people trust that the Fed knows
Speaker 1: what it's doing, And as a consequence of that, of course,
Speaker 1: what happens in financial markets. What's this tricky Stephanie? Right?
Speaker 1: And in the question on on your pieces, which way
Speaker 1: to normal? Do we really know what normal? Is it
Speaker 1: a new normal on the other side of the pandemic?
Speaker 1: Isn't that part of the problem. Yeah, And that's what
Speaker 1: I found kind of curious, and it made me think
Speaker 1: about it writing this piece, and I was so glad
Speaker 1: that the editor asking me to do it just before.
Speaker 1: But that's pout knowing your audience, Stephanie, well done. I
Speaker 1: look at the forecast and I sort of thought, it's
Speaker 1: funny because I've also written them, but had we've had
Speaker 1: economic research around the VID having boosted productivity in some areas,
Speaker 1: you know, businesses that had to bring in automation much
Speaker 1: faster than expected, everyone working from home and therefore being
Speaker 1: modiginously enabled in their work. You know that this was
Speaker 1: actually going to make us more productive weirdly and almost
Speaker 1: produced like a COVID dividend. So there was that whole discussion,
Speaker 1: and you know, other ways in which people felt there
Speaker 1: was a fundamental change, maybe in supply chains, you know,
Speaker 1: because of what's happened in China and what happened during COVID,
Speaker 1: and when you look at the forecast, and maybe economists
Speaker 1: are just not very original or imagine people, but they're
Speaker 1: all kind of expecting despite all of what we consider
Speaker 1: to be really important changes in the micro economy, they
Speaker 1: somehow think the macro economy is going to carry on
Speaker 1: more or less the same after this year. And that
Speaker 1: does seem like a bit of a disconnect, like who's
Speaker 1: going to turn out to be right? Is it? How
Speaker 1: are we really transformed as a result of COVID, or
Speaker 1: is this just you know a lot of this much
Speaker 1: less permanent than we think. Alright, we're gonna leave it
Speaker 1: on that note. It's an incredible story. Joel's right, it's
Speaker 1: so timely considering hearing from j Power all and all
Speaker 1: these uh fed central bankers are fed bankers, I should
Speaker 1: say this week. I mean, this is really front and center.
Speaker 1: So an incredible story and a great read and so relevant. Stephanie,
Speaker 1: thank you. Stephanie Flander, Senior Executive editor, head of Bloomberg
Speaker 1: Economics at Bloomberg News, on the phone from London, and
Speaker 1: our thanks to Joel Webber as well, Editor Bloomberg Business
Speaker 1: Week on the access line from Brooklyn. I love this issue.
Speaker 1: It's the year ahead. It's looking at what's ahead in
Speaker 1: the economy, what's ahead in politics, what's ahead in terms
Speaker 1: of how we consume. It's going to be all on
Speaker 1: our weekend show. But it's really a really smart issue,
Speaker 1: and it'll be on newstands tomorrow. Some of the stories
Speaker 1: already on the Bloomberg and also Bloomberg dot Com. We're
Speaker 1: coming out this week. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on
Speaker 1: Bloomberg Radio. Interesting story that popped up on our raidar.
Speaker 1: It also happens to be in Bloomberg Business Weeks You're
Speaker 1: Ahead issue, which is out on newsstands tomorrow on the
Speaker 1: Bloomberg and also at Bloomberg dot com and cretty. It's
Speaker 1: about how there is still no Amazon for housing, but
Speaker 1: there's some fintech companies they're working on it. It's it's
Speaker 1: in the works. But I mean, remember we've had a
Speaker 1: rough couple of months when it comes to Zillo and
Speaker 1: some of the other up piers. And for that, for
Speaker 1: more information on that sector, we've got to bring in
Speaker 1: the experts here, and that of course is Patrick Clark.
Speaker 1: He covers real estate for bloomber Keys on the phone
Speaker 1: from right here in New York City. Patrick, thank you
Speaker 1: for joining us. I loved your story because there's a
Speaker 1: line that stuck out to me. Uh whereas that it
Speaker 1: made sense to order pants online, but many consumers still
Speaker 1: prefer brick and mortar grocery stores where they can squeeze
Speaker 1: the avocado and I at the steak. I guess houses
Speaker 1: are no different. Tell us more about it. Yeah, I
Speaker 1: mean every house is different, just like every piece of fruit.
Speaker 1: I guess, um, it's been the it's been the great
Speaker 1: challenge for companies, particularly tech companies. But I guess all
Speaker 1: companies that are looking for waste to to sort of
Speaker 1: carve out a either a small or large niche in
Speaker 1: the US housing market. Um, at the end of the day,
Speaker 1: they're really not a house is really not a commodity
Speaker 1: good even even a sort of mass produced house that
Speaker 1: looks like all the houses next to it, Like every
Speaker 1: house has a different view and every house will you know,
Speaker 1: age in different ways, and and um it's um not
Speaker 1: only did for the most part like literally to do
Speaker 1: homebuyers want to actually go squeeze the house, but they
Speaker 1: they it's just very hard to take the human element
Speaker 1: out of out of buying and selling one. So wait,
Speaker 1: are you saying that there isn't a Carbonna approach to
Speaker 1: buying a house and we can't go to a chaosk
Speaker 1: and say yeah, like that split level. It's you know,
Speaker 1: it's really I love that you said Carvana because it's
Speaker 1: it's how a lot of the companies, a lot of
Speaker 1: the prop teps as they call themselves prop tech companies, UM,
Speaker 1: A lot of them use the Carbonna model as an analogy,
Speaker 1: which is which is to say, that you know, UM,
Speaker 1: we started with pants or books and and and you know,
Speaker 1: slowly but surely have have worked our way up the
Speaker 1: value chain in terms of the types of um, the
Speaker 1: types of goods that you know, we're willing to that
Speaker 1: we feel competent buying online and you know, and we
Speaker 1: have gotten to cars in a way, right and and
Speaker 1: you know the bet is that houses are next. It's
Speaker 1: just that I think, UM, I think that you know,
Speaker 1: at at at each new level of value and it's
Speaker 1: not just value when it comes to a home, UM,
Speaker 1: it's it's value and complication and there's an emotional component.
Speaker 1: It just gets more complicated. Well, what's interesting is, and
Speaker 1: we've talked throughout the pandemic to UM real estate agents, realtors,
Speaker 1: heads of home companies where they talked about transactions during
Speaker 1: the deep throws of the pandemic back in where they
Speaker 1: did everything online, everything was a digital transaction. So it
Speaker 1: can be done. I guess right, More and more parts
Speaker 1: of the transaction can be done digitally. And I think
Speaker 1: that the pandemic was you know, I think it accelerated
Speaker 1: acceptance both by consumers, regulators, UM that UM, you know, lenders,
Speaker 1: what have you like that that that more things can
Speaker 1: be done virtually remotely. Um. And so so I think
Speaker 1: the pandemic spit this up, no question. Um. But um,
Speaker 1: it's one thing too, you know, it's one thing to
Speaker 1: speed it up, but it hasn't solved the problem. Creaty.
Speaker 1: I just want to get I want to get rid
Speaker 1: of that that that meeting that you have to have
Speaker 1: with everybody's lawyers and secure lawyers on one side, the
Speaker 1: sellers on another, or the part like I just want
Speaker 1: to get rid of that part of it. I have
Speaker 1: never bought a house, so I cannot relate, although I
Speaker 1: will admit I live in New York City and I
Speaker 1: look forward to the days where I can have a
Speaker 1: white picket fence. That being said, speaking of rental properties,
Speaker 1: which is what it actually kind of comes to mind
Speaker 1: as we talked about the pandemic, because a lot of
Speaker 1: people were actually shopping for apartment these virtual walkthroughs, and
Speaker 1: then I wonder how many people actually showed up at
Speaker 1: the apartment was like, this is a lot smaller than
Speaker 1: it looked on FaceTime. I'm curious, Patrick, what's next for this?
Speaker 1: I mean, is there a solution or is there any
Speaker 1: money making prospect when it comes to shopping for houses virtually. Yeah,
Speaker 1: I think there's two there's two main ways to think
Speaker 1: about it. One is, you know, you'll continue to have
Speaker 1: companies that improve and and sort of digitize and bring
Speaker 1: online components of the transaction. And some of these are
Speaker 1: the things that we don't really think about. It's like
Speaker 1: it's the people in the room at the closing date
Speaker 1: who you know, you barely understand who they are, but
Speaker 1: but this guy is you know, this guy has run
Speaker 1: the title on the home to make sure that the
Speaker 1: seller you really owns it for example, right, and and
Speaker 1: so there's pieces of it that that I think can
Speaker 1: be very successfully um you know, brought into the century
Speaker 1: here and there are also there's also a move to
Speaker 1: put more and more of these services together. So you
Speaker 1: have you know, you have brokerages that are real estate
Speaker 1: brokerages that are hiring that that are buying or building
Speaker 1: mortgage lenders internally, you have um, you know, traditional mortgage
Speaker 1: lenders who who are sparing in to offer different types
Speaker 1: of bridge finance that that would allow a buyer to
Speaker 1: compete like a cash buyer. You have you have this
Speaker 1: idea that you can bring all of these things together
Speaker 1: and and and again going back to the this idea
Speaker 1: of the you know, the closing meeting um basically to
Speaker 1: simplify and do more of the transaction online with one company,
Speaker 1: so the consumers only dealing with sort of one interface
Speaker 1: that I think there's some promise to that. One of
Speaker 1: the challenges is it's a lot of technology, it's a
Speaker 1: it's a lot of process you have to deliver to
Speaker 1: the customer. And so the question is one can you
Speaker 1: build it? And too can you actually make money doing it?
Speaker 1: And that's the thing that you know, hopefully we'll we'll
Speaker 1: see some progress on. I look forward to the huberization
Speaker 1: of home buyer. Hey, Pat, thanks so much. Patrick Clark
Speaker 1: real Estate Report at Bloomberg News on the phone from
Speaker 1: New York City. Check them out at Twitter at Pat
Speaker 1: underscore Clark. I'm road, yeah, I'll bet you Let me drive. No, no, no, honey, please,
Speaker 1: I'll do the riding gravels. Let's I want to drive.
Speaker 1: It's a good question. Good drive. This is the drive
Speaker 1: to the globe well up down on bloom Bird Radio.
Speaker 1: All right, tick took everybody nine, about ten minutes left
Speaker 1: in today's trading session. We've seen some volatili this week,
Speaker 1: but certainly a lot more optimism bouncing around though today,
Speaker 1: and we are a little bit lower on those major
Speaker 1: equity averages. So let's get to it. Let's get to
Speaker 1: the drive to the clothes. Aaron Kennon is back with us,
Speaker 1: co founder, chief executive officer at Clear Harbor Asset Management
Speaker 1: approximately a billion a little bit more than a billion
Speaker 1: in assets under management, on the phone once again from Stanford, Connecticut. Hey, Aaron,
Speaker 1: nice to have you with Creedy and me. Happy you year.
Speaker 1: How are you doing great? Thanks for having me back. Carroll,
Speaker 1: Happy new year to do both of you. Well, So
Speaker 1: how do you make sense of what we've seen so far?
Speaker 1: It's just, you know what, five eight days in in
Speaker 1: the new year, we're trying to figure out the trend line.
Speaker 1: I think it's safe to say that it's going to
Speaker 1: be vaulatile this year, but but who knows, because I
Speaker 1: do feel like we've got some clarity to some extent
Speaker 1: from the Fed in terms of what's to come. How
Speaker 1: do you see it though, Well, you know, we're we're
Speaker 1: certainly moving into a very different um economic, monetary, fiscal environment.
Speaker 1: We're going from peak growth which was well above trend
Speaker 1: last year, uh what five point six odd percent and
Speaker 1: based on Bloomberg consensus to probably something closer to uh
Speaker 1: three and a half to possibly as high as four percent.
Speaker 1: But you know, peak monetary stimulus and peak fiscal stimulus
Speaker 1: last year towards you know, much more normalization. Growth certainly
Speaker 1: coming down. But but also the FED is unwinding their
Speaker 1: asset purchases and and and raising the funds rate, and
Speaker 1: so you know, this downdraft, in my opinion is is
Speaker 1: is about you know, less liquidity in the system. It's
Speaker 1: probably about more volatility. We should expect that in an
Speaker 1: environment with less liquidity, and that should be an incremental
Speaker 1: headwind two pe multiples in the equity market. Um. But
Speaker 1: but that doesn't mean that all all is lost this year.
Speaker 1: Earnings we still believe will will prove positive, and we
Speaker 1: certainly are already seeing in the first several trading sessions
Speaker 1: of the year this sort of sector dispersion like we
Speaker 1: didn't see last year. And it's not just sort of
Speaker 1: um growth to value, right, because if you look at
Speaker 1: what's happening in the equity market, industrials are really doing
Speaker 1: nothing year to date. But but energy is up over
Speaker 1: so it's funny that you say that. I was looking
Speaker 1: at the S and P five the members and like
Speaker 1: the top the seven out of the top ten names
Speaker 1: are your energy names, and you're talking about like some
Speaker 1: incredible gains. I think hess was up. Let me just
Speaker 1: look at my numbers. I mean each of these names.
Speaker 1: You're talking some really really strong gains. Absolutely, and that's
Speaker 1: clearly driven by the commodity which is having a very
Speaker 1: strong start to the ear up almost ten percent. But um,
Speaker 1: now there's a real question around whether or not the
Speaker 1: FEDS posture the markets pricing and what four times for
Speaker 1: for rate hikes this year will prove itself out, or
Speaker 1: whether or not they're they're going to ultimately need to
Speaker 1: to put their foot on the brakes with that with
Speaker 1: that game plan. Um, you know, I have a hard
Speaker 1: time believing that this sort of four times this year,
Speaker 1: three times next year, UM plan is going to play
Speaker 1: out close to that way. I have a hard time, well,
Speaker 1: I have a hard time believing. First of all, I
Speaker 1: think inflation will ultimately prove to be yes transitory UM,
Speaker 1: because supply chain bottlenecks or the cause of to a
Speaker 1: great extent of of this inflation and the headline piece
Speaker 1: of inflation we're seeing in the rising price of things
Speaker 1: like oil and natural gas. And that's the area I
Speaker 1: think on the headline, which may remain stubbornly high, but
Speaker 1: at the core um when when we're looking at goods
Speaker 1: and services, it's it's a supply chain bottleneck UH issue
Speaker 1: that needs to sort itself out and clear clearly, Amikron,
Speaker 1: this next variant UH, that is Amicron has has sort
Speaker 1: of a Steymied clarity on on the reopening trade generally
Speaker 1: both home and abroad, and I think it's really delaying
Speaker 1: this fine of the supply chain, and it's it's keeping
Speaker 1: this inflation question front and center for everyone. Right. So, Aaron,
Speaker 1: how many how many rate hikes are you expecting UH
Speaker 1: this year? The PO says three, Goman Sack Stapen Morgan
Speaker 1: say four. Jamie Diamonds says we need more than four.
Speaker 1: Where are you on that spectrum? Well, the short answer is,
Speaker 1: I don't know. I'm not an economist. I look at
Speaker 1: the market as as my um is my set of
Speaker 1: sort of does it matter. Does it matter to you
Speaker 1: whether it's three, four or five? No, it doesn't matter,
Speaker 1: but it's certainly helps us informs us. So what's informing
Speaker 1: me on on on on on the market right now?
Speaker 1: Is it pertains to that question is where are long
Speaker 1: term inflation expectations? Where where our long dated treasury yields?
Speaker 1: And what has the curve done over the last several days, months, quarters,
Speaker 1: and what how does this inform us? And I think
Speaker 1: what the market is telling me is growth is slowing
Speaker 1: and is going back towards trend over the next year
Speaker 1: or two. A long term inflation is not a concern.
Speaker 1: Short term inflation is a significant concern. And if the
Speaker 1: Fed races rates, they're going to they're going to just
Speaker 1: aggregate demand, but they're not going to solve the supply
Speaker 1: chain bottleneck issues. So it's not clear to me that
Speaker 1: this rate rise campaign of four this year, three next
Speaker 1: year solves the inflation problem. It will only exacerbate the
Speaker 1: demand side problem, could lead us towards a recession. It
Speaker 1: kind of sounds like you're in the camp of of
Speaker 1: really what Stephanie Flanders was discussing earlier, Carol in that
Speaker 1: the week, the likelihood of the Fed getting this wrong
Speaker 1: is super super high. What are your thoughts? Well, I
Speaker 1: think there's certainly a risk, but I also think that
Speaker 1: we we've learned through Chairman Pyle that he's pragmatic, he's
Speaker 1: willing to pivot, he's not all that stubborn. And um,
Speaker 1: we we saw that just a couple of years ago.
Speaker 1: We he was initially we thought as the market did
Speaker 1: that he was raising rates uh and too aggressively. And
Speaker 1: the market finally told him to stop, forced him to stop,
Speaker 1: and he did. And I think the market has a
Speaker 1: way of conveying these messages to not only investors, but
Speaker 1: the Fed in the loop. They'll do it again. Yeah,
Speaker 1: that is the so in that sense, I'm optimistic. Okay,
Speaker 1: I'm gonna leave it there. Hey Aaron, nice to check
Speaker 1: in with you. Aaron Kennon, he's found our chief executive
Speaker 1: officer at Clear Harbor Asset Management, joining us on the
Speaker 1: phone from Stanford, Connecticut. Thanks for listening to Bloomberg Business Week.
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