Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: on YouTube search Bloomberg clovel News. All right, so let's
Speaker 1: talk about the latest when it comes to the coronavirus
Speaker 1: and of course the pandemic. I should point out global
Speaker 1: COVID cases passing two hundred seventy point two million deaths
Speaker 1: topping five point three million. More than eight point shots
Speaker 1: have been given out seventy point four Now, because that
Speaker 1: was a couple of hours ago, was it? Okay? So
Speaker 1: you just got the latest and I didn't realize, but
Speaker 1: I had heard in a reminder that we've had more
Speaker 1: COVID deaths in the United States this year than we
Speaker 1: did last year, which to me was like shooting with
Speaker 1: vaccines available. Um, Lucky for us, our team has gotten
Speaker 1: Dr Michelle Longmyer. She's chief executive officer of MEDABAL. She's
Speaker 1: with us on the phone from Palo Alto, California. Hey,
Speaker 1: Dr Longmeyer. Uh so let's talk about it. I think
Speaker 1: it's about a year or so ago that we caught
Speaker 1: up with you. Um, what's what's new in your orbit?
Speaker 1: What lasting changes do you think are going to stay
Speaker 1: with us post pandemic as a result, you know, I
Speaker 1: think everyone is thinking about not only vaccination, right, but
Speaker 1: boosters were We definitely are seeing the importance of the
Speaker 1: booster shots with the omicron variant. And you know, I
Speaker 1: think in our world where my company it takes part
Speaker 1: in the development of vaccination or just you know, have
Speaker 1: a very forward looking perspective on the importance of you know,
Speaker 1: not only the vaccine, the tracing of the variants, and
Speaker 1: then of course the importance of the booster shops. Help
Speaker 1: us understand where things could be right now when it
Speaker 1: comes to vaccines for every American. And again this is
Speaker 1: my world, so I'm still waiting for those vaccines to
Speaker 1: become available for for kids under five here in the US,
Speaker 1: help us understand where clinical trials are and where they
Speaker 1: still need to go. Yeah, I mean, it's very important
Speaker 1: in the vaccine strategy that we really canvass you know,
Speaker 1: the full population. As we see with a variant, anyone
Speaker 1: who's not protected with immunity then becomes, you know, a
Speaker 1: potential source of not only in section and sickness, but
Speaker 1: also mutation of the virus itself. So, you know, in
Speaker 1: the vaccine strategy, it's incredibly important that we're actually we
Speaker 1: get to a point where we have the clinical data
Speaker 1: to offer the vaccination to people of all ages. You know.
Speaker 1: In parallel, it's very important that people get the vaccination
Speaker 1: and then follow up with those booster shops because we're
Speaker 1: seeing that the immunity offered by the booster shot is
Speaker 1: likely extremely you know important when we look at these
Speaker 1: variants where the original vaccination was developed against a slightly
Speaker 1: different strain. Are we and just kind of about uh,
Speaker 1: just kind of about forty seconds left here, um in
Speaker 1: terms of clinical trials, are we all kind of in
Speaker 1: a clinical trial right now? By taking that third booster
Speaker 1: shot when it kind to we'll see how effective it
Speaker 1: is against a Macron. Well, it's an interesting question. Certainly,
Speaker 1: we are tracking the efficacy of the booster to this variant,
Speaker 1: and it's something that all vaccine manufacturers and the overall
Speaker 1: clinical trial industry is looking at um and something will
Speaker 1: continue to track. All right, We're gonna leave it on
Speaker 1: that note. So glad we were able to connect Dr
Speaker 1: Michelle Longmier, she's chief executive officer at METABAL on the
Speaker 1: phone from Palo Alto, California. You know, Tim, Tim, We
Speaker 1: we know it's just we have to see how it
Speaker 1: all plays out and we'll get a better idea of that.
Speaker 1: Have an effective the boosters are essentially or whether or
Speaker 1: not we're gonna need a whole new booster again question
Speaker 1: by the way, Yeah, it's like, wait a second, kind
Speaker 1: of aren't we No, I mean we've we've been all
Speaker 1: part of this grand experiment, like, you know, working it
Speaker 1: out together. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The
Speaker 1: nation continuing the damage to really kind of work their
Speaker 1: way through, uh, dealing with the damage and loss caused
Speaker 1: by that historical and catastrophic group of tornadoes. That moved
Speaker 1: across the broad section of the country this weekend in
Speaker 1: a so if that's at times was as wide as
Speaker 1: three quarters of a mile. I mean, I've seen the footage.
Speaker 1: I've looked at a lot of the cover. It's just remarkable, Tim,
Speaker 1: how much and unfortunate how much was impacted as a result.
Speaker 1: It included a tragedy at an Amazon warehouse. And on
Speaker 1: Saturday night, this story caught my eye. It was by
Speaker 1: our own Spencer Soaper, technology and e commerce reporter for
Speaker 1: Bloomberg News. He joins us now on the phone from Seattle. Spencer,
Speaker 1: before seeing the story, I didn't know that Amazon had
Speaker 1: any sort of policy when it came to having phones
Speaker 1: on people who work in these fulfillment centers. Bring us
Speaker 1: up to speed on on why now the deadly collapse
Speaker 1: at this Amazon warehouse is putting the spotlight on the
Speaker 1: phone band. Okay, yeah, so the phone band goes back
Speaker 1: years and before the pandemic hit. Uh, employees will be
Speaker 1: required to leave their phones in their cars or leave
Speaker 1: them in lockers at the facilities, you know, before checking
Speaker 1: in and going through security. And Amazon relaxed those rules, um,
Speaker 1: you know, because of the pandemic and just the you know,
Speaker 1: the need for people to see alerts and keep in
Speaker 1: contact with loved ones and that sort of thing. UM.
Speaker 1: And then you know, Amazon has been hinting this year
Speaker 1: that they would return UM to this phone band potentially
Speaker 1: at the turn of the year in some places were
Speaker 1: actually some facilities were actually returning to it a little
Speaker 1: bit earlier than that, just kind of feeling employees out
Speaker 1: on how they'd react. And so obviously after this tornado
Speaker 1: hits UM, people are you know, very keen to have
Speaker 1: their have their phones with them. It's it's something that
Speaker 1: I think many workers want anyway, for a variety of reasons.
Speaker 1: You have kids in daycare or school, you have loved
Speaker 1: ones who have an emergency and might need to contact you.
Speaker 1: But this this uh tornado that collapsed the facility and
Speaker 1: UM in Illinois and killed six people, it just really
Speaker 1: really reinvigorated this. This conversation made me think, too, Spencer,
Speaker 1: that I think years ago there was a point where
Speaker 1: if you had a cell phone, you wouldn't just pull
Speaker 1: it out in a meeting and like look at what
Speaker 1: was on it, or excuse yourself from a conference room
Speaker 1: meeting to take a call. And things have certainly changed
Speaker 1: in offices where I see people I've done it like you,
Speaker 1: It's just like we've moved to a different level. Like
Speaker 1: you have your phone on with you at all times,
Speaker 1: but in warehouses and factories and distribution centers, like, it's
Speaker 1: a realization that that's not necessarily the case for a
Speaker 1: lot of workers. Yeah, and and there has to be
Speaker 1: some differentiation, right, There's a difference between having a device
Speaker 1: in your pocket that kind of a lurkes you to
Speaker 1: an emergency, and there's and there's also a danger of
Speaker 1: wandering an industrial work area with your phone in front
Speaker 1: of you watching Instagram or TikTok, you know. So, um,
Speaker 1: they definitely need rules around these things. But I think
Speaker 1: a lot of employees and particularly would come be like Amazon,
Speaker 1: which you know, wants to deliver wants to customers. First,
Speaker 1: there's not a lot of trust. You're in this huge
Speaker 1: facility there, you like, we don't have access to a
Speaker 1: window or anything or cancer what's going on outside. People
Speaker 1: would prefer to have access to information about you know,
Speaker 1: extreme weather events themselves without having to go through some
Speaker 1: kind of Amazon filter and without being isolated from it. Right.
Speaker 1: I think about how the times you've been in I
Speaker 1: know we've been in a news room, right Tim and
Speaker 1: send your phone goes off on some kind of weather alert.
Speaker 1: Are some concerns, yeah, he Spencer. I'm wondering if this band,
Speaker 1: if it goes to smart watches as well, because one
Speaker 1: thing anecdotally that I've noticed, especially for for people who
Speaker 1: work in situations where they're not really supposed to have
Speaker 1: their phones on them, is that they've resorted to smart watches.
Speaker 1: And increasingly we've seen the smart watches be able to
Speaker 1: correct connect on their own to cellular right, you don't
Speaker 1: need to have WiFi for it. Are those band as
Speaker 1: well or have where those band during the band? I'm
Speaker 1: not clear about that, but definitely there have been a
Speaker 1: lot of people talking about investing in those devices. Um,
Speaker 1: you know where Amazon employees if this band is to
Speaker 1: is to come back and uh so, yeah, I imagine
Speaker 1: it could be a tricky thing to to enforce. So
Speaker 1: is Amazon gonna do anything differently? No idea, um um,
Speaker 1: trying to hear more from them, you know. Least I
Speaker 1: saw was that this band would this band would come
Speaker 1: back into effect in December, but with with the COVID
Speaker 1: and new variants emerging, who knows if that gets kicked
Speaker 1: down the line again, and who knows if this is
Speaker 1: the kind of incident that gets them to rethink it entirely.
Speaker 1: Because there are also some like school, some workplace shootings
Speaker 1: and things. There was a big shooting and the FedEx
Speaker 1: facility recently that got them talking about cell phones as well.
Speaker 1: So this is a kind of the kind of event
Speaker 1: that could encourage an employer to do things differently. What
Speaker 1: about other employers, Yeah, um, I don't I didn't do
Speaker 1: a survey of every employer in the in the country,
Speaker 1: but there are places that don't allow them. But also,
Speaker 1: like I said, there's a difference between having a phone
Speaker 1: with you at work and having your phone out in
Speaker 1: front of you and not paying attention when when it's
Speaker 1: a safety risk. So I think that's the conversation that's
Speaker 1: going to be happening now. And companies also may ban
Speaker 1: them for sake for um uh, to protect sensitive information,
Speaker 1: that sort of thing. So there's just all kinds of
Speaker 1: layers and reasons to do things. But in this particular situation,
Speaker 1: employees are saying, you know what, these devices can be lifesavers.
Speaker 1: I want to have it with me. Spencer just in
Speaker 1: the last thirty seconds that we have with you. M
Speaker 1: Right before you came on, you published a story about
Speaker 1: that the warehouse claps is being investigated by OSHA. What
Speaker 1: are we looking for? What are you following here? Well,
Speaker 1: it's pretty um expected that OSHA will investigate. We had
Speaker 1: six people die at a workplace, so and it's gonna
Speaker 1: they have up to six months. So imagine they're just
Speaker 1: going to try to see what kind of safety protocols
Speaker 1: they had in place and that sort of thing. Was
Speaker 1: Amazon doing drills for this type of behavior? Um? But again,
Speaker 1: OSHA's rules are pretty soft. You know a lot of
Speaker 1: things that they recommend employers do or just recommendations, and
Speaker 1: so there's no penalty for not doing them. So I
Speaker 1: am kind of curious to see what takes up. All right, Spencer,
Speaker 1: thank you so much, Bloomberg News Technology and e Commerce
Speaker 1: for Porter Spencer Sober Sober that is joining us from
Speaker 1: our Seattle bureau. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: it's not been easy running a restaurant during COVID. We
Speaker 1: all know that, right, But for one dining establishment in
Speaker 1: New York City surviving COVID took it to becoming more
Speaker 1: profitable than ever. Tim It's a great story. It is
Speaker 1: a great story, and it's right Joshua Brewstein, Technology editor
Speaker 1: for Bloomberg business Week. Joshua story is featured in the
Speaker 1: upcoming issue of Bloomberg business Week magazine. You can read
Speaker 1: it now on the Bloomberg and at Bloomberg dot com
Speaker 1: slash business Week. Joshua joins us now also joining us
Speaker 1: as Joel Weber, Editor at Bloomberg business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio as well. Twenty
Speaker 1: five dollar an hour minimum wage, No outdoor seating, uh,
Speaker 1: no tipping, uh. The list of things that makes dirt
Speaker 1: Candy in the Lower east Side unique, Joel, it continues
Speaker 1: to go on. Well, the the outdoor seating is actually
Speaker 1: part of that part of that story because when when
Speaker 1: josh first pitched this story, it was sort of like,
Speaker 1: look like every restaurant, especially New York like kind of
Speaker 1: the Kingdom of of restaurants, um is going through something
Speaker 1: right now, and and can we use dirt Candy as
Speaker 1: a vehicle to to basically right along and see what
Speaker 1: this is like for for chefs, the employees, everything, and
Speaker 1: and it ended up being sort of this amazing look
Speaker 1: under the hood in the in the kitchen, on the countertop, etcetera.
Speaker 1: As Josh followed it for months. And you know, I
Speaker 1: think that outdoor seating thing is part of it. And
Speaker 1: it's the opening anecdote, which is like a lot of
Speaker 1: these restaurants have those sheds. They came in handy for
Speaker 1: a while, and even when it's cold like now and
Speaker 1: nobody's really using them, although maybe starting to trickle through,
Speaker 1: you quite fair to bring them tear them down yet. Um.
Speaker 1: And what's amazing about the story is you know that
Speaker 1: that sort of is an embodiment of it. But there
Speaker 1: have been many things that have pushed restaurants as entrepreneurs
Speaker 1: and these chefs to like come up with a new
Speaker 1: way of doing things, and believe it or not, despite everything,
Speaker 1: Dirt Kenny is more profitable than ever. How have they
Speaker 1: done it? Josh? Yeah, I mean it's interesting because, as
Speaker 1: you said, Um, Dirt Candy did a couple of things
Speaker 1: that would seem to make it harder to be um
Speaker 1: to be more profitable. It raised wages which were already
Speaker 1: pretty high for a restaurant. It was paying eighteen dollars
Speaker 1: an hour before the pandemic UM and then had to
Speaker 1: lay off its entire staff in March. And when they
Speaker 1: reopened UM in May of this year, they came back
Speaker 1: with twenty five dollars um for the opening for the
Speaker 1: opening wage, uh, including health benefits, which is pretty much
Speaker 1: unheard of in the restaurant industry. That was a that
Speaker 1: would ended up being an advantage. Are one of the
Speaker 1: key challenges that restaurants are having right now, which is
Speaker 1: hiring people um. And the other thing. It was also
Speaker 1: an advantage when they were laid off, right. Yeah, absolutely
Speaker 1: when UM, when they laid people off in because their
Speaker 1: wages were higher, Uh, the employees got higher unemployment checks,
Speaker 1: which you know, wasn't a direct benefit to the restaurant,
Speaker 1: but did make everyone feel a little bit better about
Speaker 1: what was, you know, an unbelievably bad situation. I was
Speaker 1: particularly surprised that even with all those great benefits that
Speaker 1: you don't typically associate with a job at a restaurant,
Speaker 1: she still had a really hard time getting people back
Speaker 1: to work. Yeah, did you say two out of the
Speaker 1: forty people? Am I getting that stat right, that's about right.
Speaker 1: I think they had thirty five people before the pandemic.
Speaker 1: They laid off about thirty of them and made this
Speaker 1: offer when they were going to rehire, Hey, you can
Speaker 1: all come back. We're gonna give you these big races.
Speaker 1: You'll be able to buy into health insurance. And only
Speaker 1: two people came back, which I think really is a
Speaker 1: testimony to how much people in the restaurant industry just
Speaker 1: don't around anywhere very long. If you let someone in
Speaker 1: your restaurant like leave at the end of the shift,
Speaker 1: Amanda saying, like, you know, chances are that they might
Speaker 1: not come back, coach, So they're just a lot of movement. Um.
Speaker 1: She one thing she was able to do was get
Speaker 1: new people in the door faster than I think some
Speaker 1: of her competitors were, just because you know, you pay
Speaker 1: people more money, they're more likely to show up. So actually,
Speaker 1: let's just you know, talk about dirt candy in in
Speaker 1: a bigger sense, which is, you know, this is uh
Speaker 1: revered restaurant among vegetarians. Right, So what has she done
Speaker 1: with the menu during this time? Yeah, So one thing
Speaker 1: that she did with the menu, and this was something
Speaker 1: that Amanda said was difficult for her to um to stomach. Basically,
Speaker 1: was she really paired it down? She simplified it dirt.
Speaker 1: Candy's a tasting menu, which means that you can only
Speaker 1: order one thing. It's a it's a five course tasting menu.
Speaker 1: She used to have multiple tasting menus. But now you
Speaker 1: go in and it's basically, as she put it, as
Speaker 1: kind of like an admission. Uh, you know, you pay
Speaker 1: the dollar and you get dinner, and it's a great dinner. Um,
Speaker 1: you're not gonna get to choose, you're not gonna be
Speaker 1: able to substitute things. And that does a couple of things.
Speaker 1: It allows her to cut way back on food waste
Speaker 1: because she's able to meticulously plan how much she's going
Speaker 1: to need. And I was surprised at how much of
Speaker 1: a difference that makes, and just the economics of a restaurant. Um.
Speaker 1: The other thing it does is if you restaurants have
Speaker 1: a problem typically where if they raise if they raise prices,
Speaker 1: people order less. You know, if if you go in
Speaker 1: and the entrees costs more, maybe you just don't order appetizers.
Speaker 1: But if it's a tasting menu, you're kind of going
Speaker 1: in and you're either in or you're out, and so
Speaker 1: that for her has worked. Can I just say she
Speaker 1: get rid of tipping, which I talked about a lot,
Speaker 1: because I just gotten a point where I'm very happy
Speaker 1: to tip people, but there's tip jars everywhere, and when
Speaker 1: it comes to restaurant space in particular, I think, let's
Speaker 1: pay people a real wage um, which is an experiment
Speaker 1: that New York has flirted with before. Right. So the
Speaker 1: fact that we've we've had ebbs and flows and now
Speaker 1: it's back to somebody uh leaning into a different model, right, Yeah. Absolutely.
Speaker 1: I mean this was a previous question about restaurant labor.
Speaker 1: Amanda wasn't early was an early pioneer in going for
Speaker 1: a service feed instead of tipping, and a lot of
Speaker 1: people who tried this, other other upscale dining establishments um
Speaker 1: gave up on it. But she's stuck with it, even
Speaker 1: though she said it wasn't very good for her business
Speaker 1: for quite some time, but it has. I think it
Speaker 1: earns her some reputation and it does kind of add
Speaker 1: to the the just the or of the restaurant, which
Speaker 1: is how you get people in the door to a
Speaker 1: certain extent, So she able to make this work because
Speaker 1: part of your story dives into the idea that she's
Speaker 1: only been able to make this work through consulting fees.
Speaker 1: And indeed, one time when you were in there talking
Speaker 1: to her, she was actually working on a consulting project,
Speaker 1: I think building a menu for a university. Um. Can
Speaker 1: she make this work? Yeah? So that that anecdote, UM,
Speaker 1: was about halfway through my time there. I started spending
Speaker 1: time there in the spring. Um. And but and you've
Speaker 1: just been tell you a lot of everyone of the
Speaker 1: same question for the story was when are you going
Speaker 1: to take me to the rest anyway? Forgive me good? Um?
Speaker 1: And so at that point she was saying, it's really tough.
Speaker 1: And by the fall she was like, you know, all
Speaker 1: of a sudden, things are working, are working better. I'm
Speaker 1: able to cut down. She's cutting down on labor costs
Speaker 1: even though wages were up because she employed fewer people.
Speaker 1: I'm saying with food, prices were up, but the quantity
Speaker 1: of food she was using was less, and she raised
Speaker 1: her prices. And everyone's been stuck inside and really wants
Speaker 1: to go to a restaurant, so demand was way up.
Speaker 1: So what are the remaining challenges that she's sort of
Speaker 1: obsessed with as we're looking at Macron, etcetera. What what
Speaker 1: what are the things on the horizon that she's still
Speaker 1: stressed about and just got about thirty seconds. Yeah, I
Speaker 1: think the main thing with restaurants is uncertainty. Um, you know,
Speaker 1: who knows what's going to happen with the next wave
Speaker 1: of the pandemic. That's why Joel is you alluded to.
Speaker 1: She's uh, you know, doesn't really like the dining Shed,
Speaker 1: but she won't tear it down because who knows what's
Speaker 1: coming next. I like the Dining Shed, even even in
Speaker 1: December January. I just think they're great. I really like them.
Speaker 1: All right, Um, thank you so much. And maybe in
Speaker 1: the new year you'll take us to this restaurant you're invited, Okay,
Speaker 1: all right, we're gonna hold you to it. Joshua Brustin
Speaker 1: these Technology editor Bloomberg Business Week here in our interactive
Speaker 1: broker studio along with Till Webber, Editor Bloomberg Business Week.
Speaker 1: Check out this story uh in the upcoming issue of
Speaker 1: Bloomberg Business Week magazine. It will be on newstands, online,
Speaker 1: and of course, on the Bloomberg terminal. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. This story is today's Bloomberg Big Take.
Speaker 1: It's pretty incredible. The question on everyone's mind, what could
Speaker 1: possibly go wrong with our economic global economic outlook, our
Speaker 1: Bloomberg Economics team with the biggest economic risk for two
Speaker 1: and here to tell us about them, and there are
Speaker 1: quite a few. Is Bloomberg Economics chief economis economist Tom
Speaker 1: or Like He joins us on the phone from Washington. Hey, Tom,
Speaker 1: good to have you here with Tim and myself. So
Speaker 1: this story pretty incredible. Um, there is quite a bunch
Speaker 1: of things that could go wrong in two Is that fair? Well?
Speaker 1: I think if we look back at the experience of
Speaker 1: the last two years, Carol, a lot has gone wrong,
Speaker 1: right from the virus to inflation, of flaring geopolitical tensions.
Speaker 1: And I think for economists that means we just have
Speaker 1: to be a bit humble about our capacity to look
Speaker 1: into the future and pay much more attention to the
Speaker 1: risks they're looking into. That means thinking about army cron
Speaker 1: It means thinking about what happens if inflations is high,
Speaker 1: can markets sustain a tightening head? And of course geopolitical
Speaker 1: tensions from Russia, Ukraine to Taiwan, two elections everywhere from
Speaker 1: France to Brazil. Tom, is it fair to say the
Speaker 1: biggest risk out of all those is is potentially new
Speaker 1: variants and omicron. Yeah, that's right, and we're seeing from
Speaker 1: the consequences of that already with the UK encouraging people
Speaker 1: to work from home, masque restrictions in other parts of
Speaker 1: the world. I think it's important to keep in mind though,
Speaker 1: that there is a Goldilocks scenario for if it turns
Speaker 1: out to be really contagious but not very deadly, then
Speaker 1: the world could get a low cost inoculation and that
Speaker 1: could be a trigger the things that get back to
Speaker 1: some version of pre pandemic normal. This is exactly what
Speaker 1: we talked about last Friday with dr Im las Bader
Speaker 1: from n y U laying gown the idea that if
Speaker 1: this is potentially you know, spreads more easily, but it
Speaker 1: is less deadly and doesn't make us sick, then it
Speaker 1: could be Okay. We just don't know that yet though. Yeah,
Speaker 1: it's still just too early to say. And right now,
Speaker 1: of course, you hear the words new variant and immediate,
Speaker 1: people's minds go to the worst case scenarios if this
Speaker 1: does turn out to be like Delta or even worse
Speaker 1: than Delta, and we go into lockdowns again in the
Speaker 1: first part of to and supply chain snile up again.
Speaker 1: We're looking at lower growth, We're looking at higher inflation.
Speaker 1: That's a very challenging environment, one where the FED, the
Speaker 1: TB will not have easy answers. But at this point
Speaker 1: it's really too early to make a definitive judgment, and
Speaker 1: there is that sort of tantalizing possibility that this could
Speaker 1: be more contagious, less deadly, and so actually part of
Speaker 1: the end game and the return to normal. Hey, Tom,
Speaker 1: how how did you guys kind of um theorize around
Speaker 1: all the central banks? We know we've got what twenty
Speaker 1: plus or so making moves or decisions this week. Um
Speaker 1: what we might see in terms of maybe not coordinated
Speaker 1: central bank policies around the globe, and how that disconnect
Speaker 1: the problems that that could potentially cause. So I think
Speaker 1: one of the intriguing things looking into Carol is actually
Speaker 1: we're going to have divert and policies for some of
Speaker 1: the world's biggest central banks. The FED, we think is
Speaker 1: now barreling towards an accelerated taper, opening the path potentially
Speaker 1: to a first rate hike as early as March next year. Now,
Speaker 1: historically the People's Bank of China followed the FED. If
Speaker 1: the FED started hiking, the PBOC started hiking, and that
Speaker 1: was important for China and for the rest of Asia.
Speaker 1: In two for the first time, we think they might
Speaker 1: move in opposite directions. The FED starts to hike combating inflation.
Speaker 1: China is more worried about stress from ever Grand and
Speaker 1: the real estate slum, and that pushes the scent the
Speaker 1: People's Bank of China to start adding stimulus. If you've
Speaker 1: got the two of the world's biggest central banks moving
Speaker 1: in opposite directions, that's going to introduce some instant dynamics
Speaker 1: into markets, into currencies, into economic trajectories. Yeah, I think
Speaker 1: will be interesting. I agree with you, like the two
Speaker 1: behemoths when it comes to central banks and they're you know,
Speaker 1: varying policies. What else Tom is on your radar? You know,
Speaker 1: politics looms large parrel. We've got all the tensions between
Speaker 1: Russia and Ukraine, and of course Europe, where energy prices
Speaker 1: are already high and inflation is already high, relies on
Speaker 1: Russia for a lot of its energy imports. If Russia
Speaker 1: Ukraine bubbles over into something that looks like conflict and
Speaker 1: that gas pipeline gets turned off, well that's bad news
Speaker 1: for Europe, bad news for the ECB in the Bank
Speaker 1: of England as they try and combat inflation. Taiwan is
Speaker 1: a risk near the top of many people's worry lift.
Speaker 1: In a worst case scenario, you get a conflict which
Speaker 1: draws in the two world's two biggest powers, China and
Speaker 1: the United States. But even something which stopped short of
Speaker 1: that could be a blow for semiconductor production. And we
Speaker 1: saw how bad that can be the ship. By the way,
Speaker 1: there is some stuff about what could go right in
Speaker 1: two and here as well, so check it out. On
Speaker 1: the Bloomberg terminal, you're always the glass huffle. I love
Speaker 1: that about your tem or like chief economist of Bloomberg
Speaker 1: Economics on the phone from Washington, d C. You're listening
Speaker 1: to Bloomberg Business Week. I'm roam. Yeah, I'll bet you
Speaker 1: let me drive. Oh no, no, no, no, this is
Speaker 1: not a toy please, I'll do the riding gravels. I
Speaker 1: want to drive. It's a good question. Drive. This is
Speaker 1: the drive to the clothes down on Bloomberg Radio. All Right,
Speaker 1: just about ten minutes left in today's trading session. We
Speaker 1: are seeing the equity averages take another leg down. We're
Speaker 1: off our worst levels of the session, but still uh.
Speaker 1: In these last few minutes of trading, we are seeing
Speaker 1: investors more on the downside, more selling going into that
Speaker 1: closing bell. So we'll continue to track that in the meantime.
Speaker 1: Let's get to it. Jessica Biemer's portfolio manager at Easterly
Speaker 1: Investment Partner, and she joins us on the phone from Pennsylvania. Jessica,
Speaker 1: great to have you on the program today. How are you.
Speaker 1: I'm doing well. It's a gorgeous day out here in
Speaker 1: western Pennsylvania. How are you, Tim, We're doing pretty well.
Speaker 1: It's well. I mean I haven't been outside, to be honest,
Speaker 1: I don't actually even know. It looks like it's getting
Speaker 1: dark here. Enough, Jessica, talk a little bit about how
Speaker 1: we need to sort of wait await the FED decision here,
Speaker 1: because that certainly seems like what markets are doing. As
Speaker 1: Carol I mentioned, we're seeing a leg lower in the
Speaker 1: equity market, but look at the signal that that we're
Speaker 1: seeing right now. Investors are waiting to hear from J. Powell. Certainly,
Speaker 1: there's a lot of focus on the FED this week,
Speaker 1: and I think part of that comes from the fact
Speaker 1: that companies are really entering a period of quiet as
Speaker 1: we finished the end of the year. We do have
Speaker 1: a lot more company analyst days this year than last year.
Speaker 1: I think we have something like twenty seven analyst days
Speaker 1: in the month of December. So there are companies that
Speaker 1: are out there talking about two but really there isn't
Speaker 1: much that companies can say as we wait for the
Speaker 1: end of the year, and so a lot of the
Speaker 1: focus turns to the macro, and that turns to UM
Speaker 1: certainly what the Fed's going to say this week, and
Speaker 1: that's followed immediately by quadruple witching on Friday. So there's
Speaker 1: going to be a lot more volume this week in
Speaker 1: the options market and in the stock market UM. And
Speaker 1: I think that's really going to be driven by the
Speaker 1: macro at this point because companies are quiet. How much
Speaker 1: profit taking do you think is going on at this
Speaker 1: point that it's been aboutter year on many accounts. Certainly
Speaker 1: if you're in the equity markets, uh, and at this point,
Speaker 1: especially in some of those big tech names. Do you
Speaker 1: just say, I'm good. Yeah. I think it's a fair question,
Speaker 1: and it's something that we're going to be looking at
Speaker 1: even into January, because a lot of investors aren't even
Speaker 1: going to reflect on how strong one was until they
Speaker 1: get their final reports some time in mid to late January.
Speaker 1: But I think certainly we're focused on profit taking, but
Speaker 1: but even some tax flaw selling. Because if you look
Speaker 1: at the SMP, there a d two stock that are
Speaker 1: down here to date, UM, and that's sixteen percent of
Speaker 1: the index, and and they're down, you know, twelve and
Speaker 1: a half percent on average, with seven percent decline in
Speaker 1: the last month. What that tells me is that where possible,
Speaker 1: people are going to take tax losses. Now, that's negative
Speaker 1: right now. We're feeling it right now. But my guess
Speaker 1: is over the next couple of weeks that lightens up
Speaker 1: and so hopefully that will be more of a tail
Speaker 1: when going forward. UM. So you know, we're seeing profit taking,
Speaker 1: we're seeing tax law selling. That's very normal, um after
Speaker 1: such a strong year in the market. UM. I think
Speaker 1: there's going to be some very strong conversations going into
Speaker 1: next year about what to do with this higher and
Speaker 1: higher equity allocation, and that's where Tina comes in, uh
Speaker 1: with there is no alternative across the asset allocation choice,
Speaker 1: and I think a lot of people are going to
Speaker 1: stay in equities. Hey, what what should we keep an
Speaker 1: eye on, Jessica when it comes to learning from companies
Speaker 1: about how their first quarter, fourth quarter is going, and
Speaker 1: when you start expecting to hear from them as we
Speaker 1: get into the holiday season. Are we going to actually
Speaker 1: start to hear from them before the end of Q four?
Speaker 1: Will we hear from them before January? Dan, We're hearing
Speaker 1: from some of them now with their scheduled analyst days
Speaker 1: and just a handful left this week, and then they'll
Speaker 1: be radio silence for the next couple of weeks. Um.
Speaker 1: Starting in the first week of January, I expect to
Speaker 1: get a lot of updates on holiday sales. Um. This
Speaker 1: was a lot more um, it was a lot more
Speaker 1: widespread a few years ago. But I still expect a
Speaker 1: handful of companies to come out that first week and
Speaker 1: talk about their holiday sales. But we're quickly going to
Speaker 1: move into earning season. And my guess is that companies
Speaker 1: cannot wait to talk about earnings because as we saw
Speaker 1: during the third quarter. Companies have a lot of positive
Speaker 1: things to say about their strategy, about what they're doing
Speaker 1: to combat all of the macro concerns that we're discussing,
Speaker 1: and they just need to get out in front of
Speaker 1: investors and lay the groundwork for what their plans are
Speaker 1: in two Just what are the comparisons. I'm just trying
Speaker 1: to think about it. Right fourth quarter a year ago,
Speaker 1: where we were versus where we are today, the comparison
Speaker 1: is going to be in their favor. Yeah, I mean,
Speaker 1: it's really going to be companied by company Carroll. And
Speaker 1: I think what we've seen this year is that there
Speaker 1: were some very high PE ratios this time last year
Speaker 1: UM in the recovery parts of the market. So if
Speaker 1: you look at UM, whether it was consumer discretionary or
Speaker 1: financials or some other parts of the market had higher pas,
Speaker 1: they've actually earned their way into lower pas. What that
Speaker 1: means is that their earnings have accelerated and have delivered.
Speaker 1: So what we look at today with you know, a
Speaker 1: twenty one times forward PE for the SMP five hundred.
Speaker 1: Underneath that twenty one times are lots of companies that
Speaker 1: are trading, you know, in the low teens. The mid
Speaker 1: teens and lots of opportunities for further growth. UM. Year
Speaker 1: of your comparisons are still going to be tough next
Speaker 1: year because this year wasn't normal. All last year wasn't normal,
Speaker 1: and frankly, we don't know if we're going to get
Speaker 1: a normal twenty two UM, so I think we just
Speaker 1: stay focused on individual companies. I think we don't know
Speaker 1: if we're going to get a normal two. This is
Speaker 1: the quandary that the FED and everybody else and who's
Speaker 1: trying to make projections, whether you're a market strategist or
Speaker 1: an economist right like this, we just don't know yet
Speaker 1: what two is going to bring. Yeah, I think that's fair.
Speaker 1: I mean one of the things that I like to
Speaker 1: focus on is what companies are doing to face the future.
Speaker 1: And a couple of stats that I think are interesting
Speaker 1: is just this significant increase in mergers and acquisitions this
Speaker 1: year obviously versus a year where a little was done,
Speaker 1: but two point two trillion dollars worth of deals five
Speaker 1: percent year to date, and of that seven billion are
Speaker 1: still pending, they haven't closed yet, So we have a
Speaker 1: lot of momentum going into next year. And typically when
Speaker 1: you see these deals clothes. There's a lot of synergy.
Speaker 1: These integration creates higher margin and then if there are
Speaker 1: proceeds from a deal, they turn into share buy backs
Speaker 1: and other UM shareholder friendly UM allocations. And so I
Speaker 1: think that's a good stat and the I p O
Speaker 1: market has taken off, and we see a lot of
Speaker 1: strength going into the end of the year there. So
Speaker 1: I think there's a lot of reasons to be optimistic
Speaker 1: about the opportunities across the market. But I want to
Speaker 1: be very careful and say that this this does start
Speaker 1: to me looking like a more of a stock pickers market,
Speaker 1: where you know, there are parts of the market that
Speaker 1: are still very expensive and have done very well this year, um.
Speaker 1: And so you know, I think you have to be
Speaker 1: very careful making broad statements. Right. Yeah, No, that's a
Speaker 1: really good point. But I agree with you that M
Speaker 1: and A activity And as you said, if there's still
Speaker 1: thousands of deals that are just out there, um and
Speaker 1: they have to you know, carry themselves into the new year,
Speaker 1: that does provide some really interesting energy going into Jessica Bimer,
Speaker 1: thank you so much a great holiday A safe holiday
Speaker 1: portfolio manager at Easterly Investment Partners. Thanks for listening to
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