Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanabek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
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Speaker 1: YouTube search Bloomberg Global News. So something Tim that we've
Speaker 1: definitely been talking about in the news room amount of
Speaker 1: know what you folks over at Quick Take, whether it's
Speaker 1: been on your mind this morning, But about Texas Governor
Speaker 1: Greg Abbott lifting the mask mandate Texas, I think actually
Speaker 1: you and I may be touched on it yesterday. Yeah,
Speaker 1: we did towards the late in the day yesterday, but
Speaker 1: it was the lead of our nine am show this morning,
Speaker 1: because look, this comes at a time where people definitely
Speaker 1: do not feel like we're on the other side of
Speaker 1: the pandemic and healthcare professionals are saying, hey, it's a
Speaker 1: little early to be opening up. Yeah, and they're getting
Speaker 1: ready to allow businesses to operate at full capacity. I
Speaker 1: think it all begins next week, even though some of
Speaker 1: their city and county officials say, wait a minute, this
Speaker 1: is too fast. Basically, let's get into it, because we
Speaker 1: did get an update on the vaccine and the virus
Speaker 1: yesterday from President Biden talking about all Americans will have
Speaker 1: enough UH COVID vaccines by May, but working on getting
Speaker 1: the places and the vaccinators in place to give them out.
Speaker 1: Let's get to our guest. A. Lissa Wraps, she CEO
Speaker 1: of the healthcare solutions company Surgical Solutions. She's with us
Speaker 1: once again on the phone from Deerfield, Illinois. A. Lissa,
Speaker 1: nice to have you back here on Bloomberg. How are you.
Speaker 1: I'm well, Carol, Hi, Tim, Thanks for having me back.
Speaker 1: And I'm feeling a little bit more optimistic about the
Speaker 1: state of vaccine than I even was a few days ago.
Speaker 1: How come I think that now that J and J
Speaker 1: has had the shot approved and there's just going to
Speaker 1: be more vaccine in the market. You know, if if
Speaker 1: we're on a current average of one point nine million
Speaker 1: shots given per day at that page of American adults
Speaker 1: could be vaccinated by August and maybe we can accelerate
Speaker 1: that further, and that becomes that interesting almost tipping point
Speaker 1: for from a herd immunity standpoint with adults. Now the
Speaker 1: children are a different issue. I understand J and J
Speaker 1: vaccines plus has less efficacy than the other two, but
Speaker 1: at the same time, that's a much greater clip of vaccinations,
Speaker 1: which is I think possibly a light at the end
Speaker 1: of the tunnel. Lissa, that's I mean, that's great, great
Speaker 1: to hear that the optimism has changed in just recent days.
Speaker 1: You have over two hundred employees on the front lines
Speaker 1: of the COVID nineteen crisis. They're working to provide services
Speaker 1: and equipment for hospitals. What are you hearing from them?
Speaker 1: What's it like for them on the front lines right now?
Speaker 1: So in the early days it was really well throughout,
Speaker 1: COVID has been extraordinary and clinician burnout and they're burnout
Speaker 1: is very real. So that's a whole different conversation. But
Speaker 1: as it relates to the vaccine in the last few months,
Speaker 1: as their sites of service in the thirty five possibles
Speaker 1: where Surgical Solutions operates. As they've all been receiving the vaccine.
Speaker 1: There were still hiccups that we talked a little bit
Speaker 1: about that when I was last on how there were
Speaker 1: hiccups and delivery even that hospitals of all essential workers,
Speaker 1: which I found very frustrating due to regulatory requirements and
Speaker 1: tracking um through technology. But now I think some of
Speaker 1: that has been solved for and now we're seeing and
Speaker 1: the education of our staff through lots of mechanisms is high,
Speaker 1: so we are seeing a much greater clip of people
Speaker 1: getting the first shot and then a second. We've all
Speaker 1: been receiving maderna advisor to date, and I'm hopeful that
Speaker 1: when it when there's a one shot option, we'll see
Speaker 1: it increase even further. But at least the friction in
Speaker 1: terms of getting the vaccine as an essential worker seems
Speaker 1: to have been dramatically reduced, and now access to vaccines
Speaker 1: themselves sites of hospitals being out of vaccine seems to be.
Speaker 1: Replenishment seems to be going a little bit better. That's good.
Speaker 1: That's great to hear because you guys are seeing it directly.
Speaker 1: What about the one of the things that President Biden
Speaker 1: brought up is getting kind of the supersites out there
Speaker 1: so that people can actually get the vaccine and having
Speaker 1: the vaccinators in place. And I'm curious if that's where
Speaker 1: you know some of your employees and team members know
Speaker 1: really are seeing this firsthand. Are they being asked to
Speaker 1: work long our work more places to get those vaccines out.
Speaker 1: We haven't been a part of the actual vaccination team yet,
Speaker 1: although we're working longer hours and and doing all sorts
Speaker 1: of things to support minimally invasive surgeries, which is tangentially related.
Speaker 1: But I firmly believe that working with our existing big
Speaker 1: box retailers, and it almost doesn't matter which one we
Speaker 1: talk about, whether it's a Walgreens or CVS or a
Speaker 1: Walmart or Costco that has infrastructure for shot delivery. As
Speaker 1: you know, will Greens all ready have the food shot
Speaker 1: as as this Costco, etcetera. That to me is the
Speaker 1: cleanest and simplest way to ensure that it's going to
Speaker 1: be mass rollout from a retail consumer facing perspective. I'm
Speaker 1: wondering how you're thinking about this year as the CEO
Speaker 1: of Surgical Solutions. What are you planning for in terms
Speaker 1: of how your employees will change their behavior once we
Speaker 1: are on the other side of this pandemic. How they're
Speaker 1: going to I mean, I gotta tell you, Uh, we
Speaker 1: are like planning for mass vacations at this point, and
Speaker 1: I'm wondering as as a leader, like how do you
Speaker 1: plan for that because people have some pent up demand
Speaker 1: to take a break, right, Like you all can't take
Speaker 1: August off? Sorry? Right? No, No, that certainly wouldn't work. Actually,
Speaker 1: scheduling a vacation time has become a very real priority
Speaker 1: in team leaders could call our account supervisors or junior
Speaker 1: account managers. Have to be very I have to be
Speaker 1: very dedicated and clear and how they're going to allow
Speaker 1: for staggered vacation time because people need it, We want
Speaker 1: them to have it. They've earned it, they should take it.
Speaker 1: But you can't take it all at once, to your point,
Speaker 1: and so making sure we're intentional so there isn't a
Speaker 1: drop in coverage and being choiceful and how we planned
Speaker 1: for that's going to be important. And then also being
Speaker 1: being clear that in past years people have chosen not
Speaker 1: to take vacation. It's like no, no, not only have
Speaker 1: you learned it, you should take it. We all need
Speaker 1: a break. It's exhausting. This has been exhausting on numerous levels,
Speaker 1: and taking the time off is really key. A couple
Speaker 1: of our one of our director of implementation, UM, we
Speaker 1: had and rotate for a few days off only, and
Speaker 1: he came back saying he was super rejuvenated and refreshed
Speaker 1: with his music. To my ears, that's what time off
Speaker 1: is supposed to do. So it's needed and we just
Speaker 1: need to be planning for it here, especially especially in
Speaker 1: this time when kind of the lines are blurred between
Speaker 1: work and home and all of that. UM Alyssa, always
Speaker 1: great to uh talk with you. Alessa Wrap, CEO over
Speaker 1: Surgical Solutions, joining us on the phone from Deerfield, Illinois.
Speaker 1: What's the message, take a vacation. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovich
Speaker 1: from Bloomberg Radio. A lot of great stories being reported
Speaker 1: for Bloomberg Business Week. What about sick time during working
Speaker 1: from home? We're going to get to that a little
Speaker 1: bit later on. Then there's a story that stayed at
Speaker 1: the top of the most read on the Bloomberg from
Speaker 1: most of yesterday about that four day work week. You
Speaker 1: can I talked about that. Yeah, sounds pretty nice. I
Speaker 1: think to a lot of people it was like, sign
Speaker 1: me up to everyone. Well. Stevan Nikola is the person
Speaker 1: who wrote that story. German business reporter on for Bloomberg
Speaker 1: News joining us on the phone from Berlin. Stevan, it's
Speaker 1: great to talk to you about this. I loved it
Speaker 1: when you joined us on quick Take yesterday. UM tell
Speaker 1: us about the company a when Yeah, thanks for having
Speaker 1: me so. ABAN is a Berlin based tech company that
Speaker 1: when it went into lockdown last year, it realized that
Speaker 1: its employees stuffered from stress, and it gave employees half
Speaker 1: of Friday off U two sort of ease into the weekend.
Speaker 1: And that experiment went so well sales, employee engagement, and
Speaker 1: clients and satisfaction all rose that in January, ABN decided
Speaker 1: to go a step further and they rolled out a
Speaker 1: full day week for the entire company with no cuts
Speaker 1: and salaries of benefits, and the CEO says it's working
Speaker 1: really well. Toe Webber, I'm thinking, all right, sign me
Speaker 1: up Bloomberg Business Week nitor Toie Webber is here on
Speaker 1: the Access Land in Brooklyn. I feel like, as we're
Speaker 1: all thinking about Joel getting back to work post pandemic.
Speaker 1: We're trying to figure out is it a hybrid? Are
Speaker 1: we working from home? Are we going to the office?
Speaker 1: What is it? Yeah? You know, more importantly, like if
Speaker 1: you're going to do a four day work week, which
Speaker 1: which day do you exercise from that work week? You know,
Speaker 1: like Friday is the obvious choice, but like Monday, there's
Speaker 1: clearly strong case for that. Yeah, Like Wednesday was like
Speaker 1: the out of the box. When that a colleague said, like,
Speaker 1: what why bother with Wednesday? So I thought it was
Speaker 1: fitting that on a Wednesday we would talk about which
Speaker 1: one to get it up. But but seven, the thing
Speaker 1: that I thought was most interesting about this is like,
Speaker 1: even if you lop off a day, whichever day of
Speaker 1: the week it happens to be, it doesn't seem to
Speaker 1: affect productivity. What did we learn about that? Yeah, so
Speaker 1: there are studies out there that productivity isn't dropping in
Speaker 1: some cases, Um, we are seeing increased productivity even and
Speaker 1: the CEO of the company told me he saw the same.
Speaker 1: He said that employees find ways to work smarter and
Speaker 1: not less, but smarter and that just as productive and
Speaker 1: and just um, going back to the Monday, Wednesday, Friday discussion.
Speaker 1: He said that Friday's are the most popular days to
Speaker 1: take off, followed by Monday and then actually Wednesday, as
Speaker 1: you suggested, because it gives people a nice break in
Speaker 1: the middle of the week and they can restart recharged.
Speaker 1: I'm just gonna say Fridays I like because that's always
Speaker 1: sometimes have a wine guest and we can drink wine
Speaker 1: on here. So I'm not getting rid of Friday. Let's
Speaker 1: get rid of my money. Nobody says, give a case
Speaker 1: of the Fridays. You know what I'm wondering though, are
Speaker 1: we still productive these four days? Like we when they
Speaker 1: cut it down? What did they find? Yeah, they did
Speaker 1: find that that productivity is basically the same or even improved.
Speaker 1: And Uh, it's that, you know, workers tend to be
Speaker 1: more focused during the four days, and they tend to
Speaker 1: put a lot of effort into those four days that
Speaker 1: they are either in the office or or king from home. Um.
Speaker 1: Interestingly enough, UM, the CEO of that company also expected
Speaker 1: you know, productivity to you know, uh suffer when he
Speaker 1: sent all of his employees at home, and he said
Speaker 1: clearly that didn't happen. Much of the country work has
Speaker 1: worked just as as well from home and uh, lopping
Speaker 1: off another day with the natural choice for him, and
Speaker 1: he said it really restored a work life balance that
Speaker 1: has you know, left him energized for the rest of
Speaker 1: the week. Hey, Stephan, I want to move to another
Speaker 1: story that you wrote, this one coming out today talking
Speaker 1: about Tesla speaking of the corporate world. You've got to
Speaker 1: get to those four days of work somehow. And it
Speaker 1: turns out the European corporate car market is huge. This
Speaker 1: was really surprising for me to see. Um, a lot
Speaker 1: of companies are a company's account for a large proportion
Speaker 1: of cars so old, uh in Europe, right, Yeah, that's
Speaker 1: that's correct. Around around sixty percent of new cars sold
Speaker 1: in Europe are brought by corporate customers. So that is
Speaker 1: the huge market. And uh, it's worth about three hundred
Speaker 1: sixty billion dollars and it's a market the local automakers dominate.
Speaker 1: UM and of course Tesla has a hard time cracking
Speaker 1: that market, partly because it's lacking servicing stations. One company
Speaker 1: told me that you know, it's it's workers would love
Speaker 1: to get Tesler's but the company is not comfortable offering
Speaker 1: those cars as a perk because they are afraid that
Speaker 1: these employees would take time off from work to to
Speaker 1: deal with repairs, and the likes from Mercedes, BMW and Volkswagen.
Speaker 1: They offer same day fixes nearby for these company cars
Speaker 1: that that these workers get as a perk, and and
Speaker 1: that's why there's there's the favorite models for many companies.
Speaker 1: But if you're only working four days, you know that
Speaker 1: extra day seems like a day that you could like
Speaker 1: your car. Just bringing it all together here with the bone.
Speaker 1: But how big of a deal is this really? For
Speaker 1: teslasting like they are? You know, clearly they have demand
Speaker 1: if it's many people want them, so so is this
Speaker 1: corporate um conundrum going to end up being a headache
Speaker 1: for them? And Stefan just got about thirty seconds. Yeah,
Speaker 1: I look for now of course, Um, you know, the
Speaker 1: company is building a new plant in Berlin. It's going
Speaker 1: to be huge outputting as much as five from thousand carts,
Speaker 1: so they need to sell those costs somewhere, and the
Speaker 1: corporate car market is just too big to ignore for them.
Speaker 1: So I think there's a third story that stuff I
Speaker 1: can do that ties it all together. I can find
Speaker 1: one the week. The week is not done yet, good
Speaker 1: stuff guys. Thank you so much. Jill Webber, Editor Bloomberg
Speaker 1: Business Week, Remote access from Brooklyn. Stuff on Nicola during
Speaker 1: this reporter joining us from Bertlin, staying up for us.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. Are you are
Speaker 1: listening to Bloomberg Business Week and really looking forward to
Speaker 1: our next guest? Because I feel like a top story
Speaker 1: at this hour. It's got to be, it continues to be,
Speaker 1: and that is the economy. We're counting down a Friday's
Speaker 1: monthly jobs report, watching the prospects for another round of
Speaker 1: stimulus from d C. So I gotta say, great to
Speaker 1: have back with us. Peter Atwater. Yeah. Peter Atwater is
Speaker 1: an adjunct professor of economics that William and Mary joining
Speaker 1: us on the phone from Pennsylvania. Professor Atwater, Great to
Speaker 1: have you on the show. How are you doing. I'm
Speaker 1: doing well, Jim, Thank you good. Um. What do you
Speaker 1: think of the we've been We've been dying to have
Speaker 1: you on and we're ucky I get so much time
Speaker 1: with you. How is the American economy doing right now?
Speaker 1: Because we are getting so many mixed signals. Right there's
Speaker 1: this optimism flashing in the bond market right now. The
Speaker 1: stock market is just of of record highs in recent weeks.
Speaker 1: At the same time, though, ten million Americans out of work,
Speaker 1: so it continues to be the case shaped recovery. Um.
Speaker 1: For those that were able to migrate to work from home,
Speaker 1: they are now counting down the hours to the reopening
Speaker 1: of the economy and getting back to life as normal.
Speaker 1: But as you said, there are ten million Americans unemployed,
Speaker 1: four point five million filing continuing claims, for whom the
Speaker 1: recovery is going to be very slow, even once it's reopened.
Speaker 1: What's kind of wacky is and we just did a
Speaker 1: conversation with one of our reporters. It's among our most
Speaker 1: read stories on the Bloomberg and it has to do
Speaker 1: with um Peter, what's going on in states and state revenues.
Speaker 1: I think we all thought, oh my god, the states
Speaker 1: are going to fall apart, municipalities are going to fall apart.
Speaker 1: Revenues actually aren't down that much, and this is kind
Speaker 1: of going against They expected two hundred billion in state
Speaker 1: A that's that's expected to come from the COVID relief
Speaker 1: package from President Biden, what do you say to that?
Speaker 1: So I say that we're seeing similar unevenness that we're
Speaker 1: seeing with individuals that we're seeing with businesses, we're seeing
Speaker 1: it with states. And so the challenge now for the
Speaker 1: administration is how do you provide support for the states
Speaker 1: that are not doing well in the face of the
Speaker 1: economy about to reopen, and you know, without it being
Speaker 1: viewed as a bailout on the one hand, and also
Speaker 1: without it being viewed as incremental stimulus. That runs the
Speaker 1: risk of the economy running hot. And I think it's
Speaker 1: going to be very difficult for the administration to get
Speaker 1: the current package that it's proposed on the States through
Speaker 1: because it, as as things stand right now, it gives
Speaker 1: everybody a reason not to like it. It's too much stimulus,
Speaker 1: it's too much relief, it's a bailout. Something is going
Speaker 1: to have to give there. Well, are you worried about inflation?
Speaker 1: I'm not. I I feel like the lone voice here.
Speaker 1: You know, last week, last week, we saw this intense capitulation,
Speaker 1: this intense climax on the reflation trade and bond yield.
Speaker 1: You know, Carol, I I spent a lot of time
Speaker 1: looking at Google trends, and I do because it shows
Speaker 1: when the retail investors shows up and suddenly last week
Speaker 1: all they wanted to do was to search for reflation
Speaker 1: and bond yields. And that feels, you know, we may
Speaker 1: go a little higher, but that feels to me very
Speaker 1: sort of game stopp ish, where there was this intense
Speaker 1: rory that then fizzled out. And I honestly think folks
Speaker 1: have gotten way ahead of themselves on the reopening. So
Speaker 1: do you think the move up, like we were talking
Speaker 1: about the tenure at one point five, we've gone as
Speaker 1: far as point six. I kind of see it as
Speaker 1: a little bit of a catchup from the equity bounce
Speaker 1: back of okay, where we can see a trajectory of
Speaker 1: things getting better, it's going to take a while. How
Speaker 1: did you see the move up though and yields? So
Speaker 1: I I saw it in some ways very much mirroring
Speaker 1: what we've seen in commodities and and so we've also
Speaker 1: seen everybody now worried about shortages and you know the
Speaker 1: supply chain being a problem. The White House had a
Speaker 1: group of folks in last week worrying about chips supply
Speaker 1: and so that to me is all indicative of the
Speaker 1: same kind of sentiment that there's that there are shortages,
Speaker 1: that inflation is built into the system, and that problems
Speaker 1: are coming ahead. But it all presupposes that when the
Speaker 1: economy quote unquote reopens, people now fantasize that they're going
Speaker 1: to get back to what was, and we never do.
Speaker 1: I love this. I tweeted about this way. I just
Speaker 1: gotta jump because you say this whole idea of getting
Speaker 1: back to normal, right, the return to normal. I probably
Speaker 1: would be a really rich woman if I had a
Speaker 1: nickel for every time I said it or a guest
Speaker 1: said it. But you're saying that we don't. That's not
Speaker 1: what happens. No, we we carry our experiences, particularly traumatic experiences,
Speaker 1: with us, and I think that there's those that did
Speaker 1: not experience trauma. They've been spending wildly on homes and
Speaker 1: other things um already. So I struggle other than with
Speaker 1: travel and some entertainment where those at the very top
Speaker 1: are now suddenly going to splurge. But I worry as
Speaker 1: we moved down the economic chain, there there are people
Speaker 1: who have been traumatized by this financially and for whom
Speaker 1: I think we're going to see continued hoarding, continued reluctance
Speaker 1: to spend um. You know, I think about it in
Speaker 1: terms of what I call the pantry effect, where when
Speaker 1: you when you didn't have enough toilet paper, when you
Speaker 1: didn't have enough you know, whatever it was that you
Speaker 1: were rushing to costco to bill a spring, Well, it's
Speaker 1: still in your house even though supplies have come back.
Speaker 1: For Peter, is there is there any silver lining to that?
Speaker 1: I know it doesn't have the stimulus effects that economists
Speaker 1: want to see, that the Biden administration wants to see.
Speaker 1: But is there any silver lining to hoarding cash and
Speaker 1: paying down debt for some of these people who you say,
Speaker 1: we're financially traumatized and when we have about thirty seconds left? Yeah,
Speaker 1: I do think that there is getting stable, you know,
Speaker 1: getting some certainty and control back to their their lives
Speaker 1: is important, and I think that's part of the stimulus effort.
Speaker 1: But I think to assume that they're going to now
Speaker 1: wildly spend is woefully optimistic. Listen, I've said it a
Speaker 1: million times. We love hearing from you. You first coined
Speaker 1: the term to describe the economic world that we have
Speaker 1: been in this K shaped recovery, and I have to
Speaker 1: say in the break and Tim maybe you come in
Speaker 1: on because we've been talking about the case recovery as
Speaker 1: it relates to the covered relief package. Yeah, and it's
Speaker 1: a conversation happening in Washington right now. Just today President
Speaker 1: Joe Biden agreeing to moderate Democrats demands to narrow that
Speaker 1: eligibility for those stimulus checks. So now individuals earning over
Speaker 1: eighty dollars would not qualify for those direct payments, compared
Speaker 1: with a hundred thousand dollar cap that was in the
Speaker 1: previously drafted legislation. The ceiling for couples will now be
Speaker 1: a hundred and sixty thousand UM as compared to two
Speaker 1: hundred thousand before. Professor Atwater, is that the right move?
Speaker 1: Is that the right way to address the k shaped
Speaker 1: recovery here? Yeah? I think it is. I think that
Speaker 1: there has been you know, the policymakers use fairly blunt tools,
Speaker 1: and I think initially there was a sense that everyone
Speaker 1: needed to be helped. There is much greater clarity today.
Speaker 1: I think where the pain really is as well as
Speaker 1: where those who have benefit really have have have fared.
Speaker 1: So I think that there is a need for greater
Speaker 1: precision and folks us on those whose whose lives have
Speaker 1: been upended versus those who are already on their trajectory
Speaker 1: to recovery. So I want to ask you. I kind
Speaker 1: of love your mix of you worked in financial services,
Speaker 1: you're in academia, Like you've seen a lot, you understand
Speaker 1: the intersection of a lot. Peter and I do wonder
Speaker 1: if we are at this juncture where we can really
Speaker 1: make some big changes in our economy, in our world
Speaker 1: and the inequities that are out there that are longer lasting.
Speaker 1: Like I've got cousin t J who's tweeting at me
Speaker 1: and I said, do you have a question for professor Atwater?
Speaker 1: He says, yeah, the economics of infrastructure and spectrum upgrades,
Speaker 1: the economic costs of not doing them, Like, there are
Speaker 1: things we need to be thinking about. How do you
Speaker 1: think about it in terms of let's do that long
Speaker 1: term plan for America. So, I think given the current mood,
Speaker 1: it's going to be difficult for us to tackle abstract
Speaker 1: ideas like climate change. Now having said that, I think
Speaker 1: there is enormous energy around addressing the problems that come
Speaker 1: from climate change, that come from the insufficient investment that
Speaker 1: we've made and so I think that no matter the administration,
Speaker 1: we will see an emphasis on repair, replace, remediate things
Speaker 1: that we see as real, tangible problems that we have
Speaker 1: to fix. What are some of those tangible problems, Well,
Speaker 1: certainly the effects of climate change are are are places
Speaker 1: where you know, whether it's flooding, you know, you look
Speaker 1: at you know, we still haven't done anything in New
Speaker 1: York around Sandy, but which is yeah, and you're seeing,
Speaker 1: you know, the infrastructure issues in Texas on the energy grid.
Speaker 1: I think that basic systemic infrastructure. I think we tend
Speaker 1: to think of infrastructure as solely transp rotation, but we
Speaker 1: have a number of critical system and networks that need
Speaker 1: to be upgraded if America is going to be competitive
Speaker 1: against global the global competition that's out there. Are you
Speaker 1: optimistic that there is the political will for that long
Speaker 1: term view? I mean, look, we talk a lot about
Speaker 1: executives that companies thinking on a quarterback quarter basis, But
Speaker 1: I think one criticism of people in Washington elected officials
Speaker 1: that is that they think about the next election as
Speaker 1: soon as they win that current election. So I agree
Speaker 1: with you that we are very short term focused. You know,
Speaker 1: with with low confidence comes to me here now thinking.
Speaker 1: But I also think part of that is a need
Speaker 1: for domestic investment versus investment abroad. And so I think
Speaker 1: that this this mantra of you know, whether it's build America,
Speaker 1: build back better, the make America great again, I think
Speaker 1: that both parties have tapped into a desire to reestablish
Speaker 1: America and focus on America first. That's what voters across
Speaker 1: the aisle are demanding. Can we do that in a
Speaker 1: world where increasingly the borders have come down or I mean,
Speaker 1: I know they've come back up again big time, but
Speaker 1: we constantly have I spent I don't know the last
Speaker 1: five ten years talking increasingly about globalization. Can we do
Speaker 1: it and it'll all work. Well, We're going to do it,
Speaker 1: I think, whether it works or not, because there is
Speaker 1: a need for this what I call the justin case economy,
Speaker 1: So that mindset that we have that we need and
Speaker 1: expect critical supplies, critical manufacturing, things that are vital to
Speaker 1: the American economy happening in America. And I think we
Speaker 1: were awakened in terms of the pandemic and what we
Speaker 1: didn't make here and probably need to. And so I
Speaker 1: think there was a there was a again a bipartisan
Speaker 1: view that we need to focus here at home first. No,
Speaker 1: really really thoughtful ideas and something to think about. Um.
Speaker 1: And I think that's interesting how you said, Peter, about
Speaker 1: how both sides of the aisle are thinking about this
Speaker 1: kind of make America great again. Yeah, we don't think
Speaker 1: of a common ground that often when it comes to
Speaker 1: Democrats and Republicans, but it's true. Yeah, great stuff, Peter
Speaker 1: b Well, thank you, thank you. Peter Atwater at Gen
Speaker 1: professor of economics. That William and Mary on the phone
Speaker 1: from Pennsylvania. You read his bio and it talks about
Speaker 1: at his son said, you're halfway to ninety, Like, what
Speaker 1: are you doing. I'm so glad he's had some time
Speaker 1: for us. I'm road journal. Yeah, but you let me drive?
Speaker 1: Oh no, no, no, Anne, please, I'll I want to drive.
Speaker 1: Just drive. Questions the drive to the globe. Thanks, we'll
Speaker 1: drying us Dawn on Bloomberg Radio. Right, folks, just about
Speaker 1: eleven minutes left in today's trading send session, bouncing around
Speaker 1: a little bit, bouncing around the bottom. Right now, I've
Speaker 1: got about a two decline on the NAZAC at text
Speaker 1: talks really taking the biggest hit here. Um, let's get
Speaker 1: into it with Sarah Mallock. She's head of Global Equities,
Speaker 1: Chief investment officer of Global Equities of Written y Viene
Speaker 1: on the phone from San Francisco, overseeing roughly four billion
Speaker 1: in assets under management. Sarah, nice to have you here
Speaker 1: with Tim and myself the tech route. Do we need
Speaker 1: to be concerned here? Well, thanks for having me. There's
Speaker 1: three issues weighing on the market, and a lot of
Speaker 1: those are hurting these long duration sectors like technology. The
Speaker 1: first issue is inflation. We do view that as more
Speaker 1: of a fear than reality, but it's causing a many
Speaker 1: tantrum for the market. The feeds should stay on its
Speaker 1: Dovis course, so I think that we're okay on inflation. However.
Speaker 1: The second is the backup in rate. These higher yields
Speaker 1: that we're seeing are being driven by growth, so we
Speaker 1: don't view it as an imminent risk even though the
Speaker 1: tenure interest rates are moving up. You know, as long
Speaker 1: as growth expectations and vaccines continue to roll out, we
Speaker 1: think will be okay. Third is valuations. Valuations on the
Speaker 1: S and P are over twenty times at this point,
Speaker 1: and we need that earnings growth to kick in for
Speaker 1: to drive the market's higher because we don't expect any
Speaker 1: more valuation expansion. And the beneficiaries of that faster earnings
Speaker 1: growth are going to be those shorter durations cyclicals and
Speaker 1: the and the source of funds of those cyclicals will
Speaker 1: most likely be technology stocks. And that's why you're seeing
Speaker 1: these tech stocks continue to compress in this kind of
Speaker 1: faster economic growth environment. Okay, I want to start with
Speaker 1: number two, bond yields. Is there a number that we
Speaker 1: should be concerned about? Is there a point when you
Speaker 1: start to get concerned about rising bond yields. Yeah. We
Speaker 1: look at, for example, high yield spreads, which actually remain
Speaker 1: quite low, so that's not causing any issues. We look
Speaker 1: at the UH, how steep is the yield curve. It
Speaker 1: remains steep, so it's telling you that growth is driving
Speaker 1: these yields higher and it's not to your recession. We're
Speaker 1: also watching commodities such as copper. Copper prices continue to
Speaker 1: move up. That's improved. That's plinty to improve economic performance.
Speaker 1: So as long as the drivers behind these yields are strong,
Speaker 1: we're not as worried about them. But you do need
Speaker 1: to watch the spreads. You do need Do you need
Speaker 1: to watch the slope of the yield curve and you
Speaker 1: start to see those start to move in the wrong direction,
Speaker 1: then we would become more concerned about higher yields, right.
Speaker 1: And and the other thing is, I mean there were
Speaker 1: some stories on the on the Bloomberg, some great reporting
Speaker 1: about inflation expectations short term versus longer term. If you
Speaker 1: look longer at on the curve in terms of what
Speaker 1: investors are expecting, they're not worried about inflation. Is it
Speaker 1: important to us to keep that in perspective? I think
Speaker 1: that's also another key to this is we do expect
Speaker 1: to see higher inflation because of the reopening of the economy,
Speaker 1: people going back demand for traveling. There's also some supply
Speaker 1: issues with logistics that as we're having trouble getting supply
Speaker 1: back online, it's causing spikes in prices. The longer term,
Speaker 1: there's headwinds for inflation in the labor markets. About labor
Speaker 1: is two thirds of company revenues. There's still a lot
Speaker 1: of flak in the labor markets. Higher productivity, demographics going
Speaker 1: in the in the wrong direction. All of that put
Speaker 1: the lid on inflation. So exactly, I agree with you.
Speaker 1: Our view is that inflation can see a short term spike.
Speaker 1: We don't expect the FED to overreact on a short
Speaker 1: term spike in inflation, and longer term those expectations actually
Speaker 1: remain quite mild, which is positive for equities. So, Sarah,
Speaker 1: giving this backdrop, where are you seeing opportunity in the
Speaker 1: market right now? We think cyclicals are attractive, So looking
Speaker 1: for those companies that have the most banks there for
Speaker 1: your buck in terms of lever to the economy. So
Speaker 1: this is financial the consumer as the as the economy's reopened,
Speaker 1: the consumer has a very strong balance sheet and the
Speaker 1: consumers should be strong. Going outside of the US, non
Speaker 1: US benchmarks tend to have a heavier cyclical weight than
Speaker 1: US benchmarks, which tend to be more technology weighted. So
Speaker 1: looking at European benchmarks and also emerging market which should
Speaker 1: benefit from a reflation trade and also from stronger currency
Speaker 1: in versus a week or dollar. Okay, One thing I
Speaker 1: wanted to ask you, Sarah, as I think UM last
Speaker 1: time around, and I think it didn't work out either
Speaker 1: because the news or some other thing that the market,
Speaker 1: the part of the market that you were looking at
Speaker 1: was UM and I think this was in late February,
Speaker 1: you were looking at some of the digital names, whether
Speaker 1: it was a Service Now or a HubSpot. I'm just curious,
Speaker 1: do you still like that area of the market which
Speaker 1: has definitely come down significantly from its highs. Yes, so
Speaker 1: we have found opportunity in some of these digital names.
Speaker 1: In January when you saw a lot of the individ
Speaker 1: visual investors buying company that were heavily shorted and some
Speaker 1: long some hedge funds that had to pretty quickly be
Speaker 1: risk and sell some of these crowded technology names. And
Speaker 1: we still do like the structural growth of strong technology companies.
Speaker 1: The question is what price do you want to pay
Speaker 1: for them when you do see them dropping in a week,
Speaker 1: which for some of these companies that happened in January,
Speaker 1: we view that as a buying opportunity and we think
Speaker 1: another one will be coming up in some of these
Speaker 1: strong companies like service Now, hub Spot, um Salesforce. All
Speaker 1: of these companies are companies that you do want to
Speaker 1: own over time, and you need to pick your points
Speaker 1: that where you want to buy them because they're strong.
Speaker 1: Structural growth is still there. However, the companies that are
Speaker 1: really going to benefit from a faster growing economy in
Speaker 1: the narrow term, are going to be those civil because
Speaker 1: service now is down about from that February eleventh high. Hey,
Speaker 1: what are you guys hearing from clients when it comes
Speaker 1: to portfolio construction right now? I mean, are you really
Speaker 1: overweight equities in general? And I don't know, this is
Speaker 1: a question that depends on who the client is, But
Speaker 1: are you overweight equities because because fixed income isn't doing anything,
Speaker 1: you know, it depends on the needs of the client.
Speaker 1: You know, clients are some clients are more focused on
Speaker 1: income summer, more focused on capital appreciation. We're looking really
Speaker 1: at it, you know, with a rich reward of different
Speaker 1: asset classes, so equities you can get higher returns that
Speaker 1: also they come with a higher level of risk than
Speaker 1: other asset classes. So really it's for us, it's based
Speaker 1: on what is the client looking for um and then
Speaker 1: we have a very diversified platform that can offer them
Speaker 1: anything they need to help them meet their goals. Sarah
Speaker 1: Wee last question, So a year from now you're writing
Speaker 1: a book about one what do you think the title
Speaker 1: is going to be? Well, I think it it'll be
Speaker 1: the Return to Normal. So getting back to the normal
Speaker 1: way of life. I think we could see people actually
Speaker 1: almost everything happening greater than we expected. So so I
Speaker 1: think that we could, if anything, error on the side
Speaker 1: of more growth than we expect because of the stimulus. Uh,
Speaker 1: you know, we could overshoot in some ways. If you
Speaker 1: look at history post these types of periods, people actually
Speaker 1: it's almost like they come roaring back, and we may
Speaker 1: see that in the second half of this year, Ernest
Speaker 1: could be very back and loaded back to drive the market.
Speaker 1: That's probably more of the risk, right stutting down again, Well,
Speaker 1: I'm going back to Peter Atwaters and you really can't
Speaker 1: go back to normal because there's just things that have happened,
Speaker 1: whether it's increased agdization. So it's this interesting conversation we're
Speaker 1: having around that. Sarah, thank you so much, really appreciated.
Speaker 1: Sarah Malic, chief investment Officer of Global Equities over at
Speaker 1: New Vene with us from San Francisco. Thanks for listening
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