Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
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Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. Things are opening up in
Speaker 1: some parts of the world. We're certainly seeing it in
Speaker 1: New York City. Uh UK Prime Minister Borg Johnson says
Speaker 1: he remains confident that England's lockdown will end on June
Speaker 1: twenty one. We're seeing things move forward. We know that
Speaker 1: there are still, though some tough situations in some of
Speaker 1: the emerging parts of the world. Yeah. According to Bloomberg
Speaker 1: Vaccine Tracker, at this rate of vaccination is going to
Speaker 1: take more than a year to get the entire world
Speaker 1: to a place that would be a comfortable level to immunologists.
Speaker 1: That's a lot immunity, all right, so let's get to it.
Speaker 1: Dr i los Bata Black with back with us. He's
Speaker 1: our clinical professor of medicine and why you land gown.
Speaker 1: He is on the phone in New York City. Dr
Speaker 1: lsbad are nice to have you here. We were thinking, God,
Speaker 1: there's so many things we want to ask you. But
Speaker 1: our David Weston caught up with Dr Anthony Fauci this
Speaker 1: week at the Bloomberg Business Week Live event and he's
Speaker 1: like kind of questioning whether or not we're going to
Speaker 1: need a booster. Hi, guys, Happy Friday. So just to
Speaker 1: clarify in terms of vaccines, because I certainly you know
Speaker 1: in the hospitals, we do have our little sticker that
Speaker 1: says we're vaccinated, so that's not a totally crazy idea.
Speaker 1: And just again to clarify if you're vaccinated, if you're
Speaker 1: with other people who are vaccinated. CDC says no mask
Speaker 1: requirement needed. Insider outside, there still are some businesses who
Speaker 1: will say you should wear a mask. Hospitals, healthcare facilities,
Speaker 1: so you know, respect where you're going, because people were
Speaker 1: individual businesses and facilities may say even with a vaccine
Speaker 1: we want you to wear a mask if you're vaccinated,
Speaker 1: if you're with someone who is not vaccinated, you know,
Speaker 1: the risk is lobano zero would be kind to our mask.
Speaker 1: Think of the Yankees, right, they were vaccinated as several
Speaker 1: players and administrators, yet they recovered virus from their nose
Speaker 1: and screening, so low risk but not zero. And certainly
Speaker 1: if you're not vaccinated, yes, please wear a mask and
Speaker 1: certainly think about getting vaccinated. Um In terms of boosters, Uh, yeah,
Speaker 1: you know, we measure antibodies and and certainly for six
Speaker 1: months or so, those antibodies are high, but they do
Speaker 1: seem to drop down, and we're not totally confident about
Speaker 1: T cell immunity, so it is likely at some point,
Speaker 1: maybe in the fall, we will need booster shots. And
Speaker 1: of course the question is will we need booster shots
Speaker 1: that are designed for some of the new variants that
Speaker 1: are coming out. Are you guys planning for boosters at
Speaker 1: n y Landown? No? No, at this point, we really are.
Speaker 1: Vaccines are distributed to us as everyone by the state.
Speaker 1: Those usually come in through the federal government, so they're
Speaker 1: distributed to the states and then given out to the
Speaker 1: individual facilities. Uh, will you go back and explain T
Speaker 1: cell immunity versus antibodies, because I don't think the late
Speaker 1: person has has a grasp of what that means. And
Speaker 1: I certainly don't mean Grol knows because you asked questions
Speaker 1: about this, so you know, for just in terms of
Speaker 1: booster shots, we have many vaccines. We give out mumps,
Speaker 1: Musles rebell a to kids, hepatitis, influenzas, shingles. You know,
Speaker 1: we we do. Over time can lose antibodies and therefore
Speaker 1: potentially be susceptible, so we do. We do give booster shots.
Speaker 1: T cells are a little harder to measure. T cells
Speaker 1: are the memory cells. They're the ones that when the
Speaker 1: B cells that make antibodies, and those antibodies, for example,
Speaker 1: like in the moderna vaccine or fights or you know,
Speaker 1: the messenge our name makes the spike protein to body says, hey,
Speaker 1: the spike protein we don't recognize. You form antibodies, and
Speaker 1: so when the real covid comes in, your body fights
Speaker 1: it off right away. Now, those antibodies are around for
Speaker 1: at least six months, we think, both with infection uh
Speaker 1: and and the vaccine, but over time they drop. We
Speaker 1: do think other cells called T cells or memory cells
Speaker 1: still will be able to UM call up those antibodies
Speaker 1: with a little bit of a delay. The actual memory cells,
Speaker 1: those T cells to say, the spike protein or covid
Speaker 1: are harder to measure. We do have some tests for that,
Speaker 1: they're not widely available UM and I think most people
Speaker 1: you know would say that's good, but we want to
Speaker 1: give a booster to make sure the antibody levels remain high.
Speaker 1: That's the most secure way. But I think we're learning
Speaker 1: that even if your antibodies drop, you'll probably be okay.
Speaker 1: We're all going to go to at some point like
Speaker 1: kind of the antibody tests, like to get an idea
Speaker 1: of kind of where we are, which that data collection
Speaker 1: help us in understanding more about the COVID vaccine. So
Speaker 1: we're not widely doing that now, that's you know, not inexpenses.
Speaker 1: People who have had a shot of antibodies. You can
Speaker 1: order a antibody to spike protein. I mean, if someone
Speaker 1: really they have some immune issue, they're not sure they
Speaker 1: really formed antibodies. We're not doing that because that's another
Speaker 1: layer of costs on top of things. When you do
Speaker 1: order a routine I g G. Covid antibody. It's usually
Speaker 1: for people who have had an infection, and those usually
Speaker 1: stay positive for six or eight months, but often they
Speaker 1: do drop down and patients are like frustrated, Oh my gosh,
Speaker 1: I went through COVID and now I don't have antibodies.
Speaker 1: They probably still have some protection the T cells, but
Speaker 1: we do encourage them to get vaccinated. Dr les better.
Speaker 1: What's a realistic way for us to think about, just
Speaker 1: in the last thirty seconds, how this is going to
Speaker 1: to play out over the next couple of years. Is
Speaker 1: it going to be just a yearly shot like we
Speaker 1: get with the flu shot and then that's that's it.
Speaker 1: We're gonna We're gonna do that. It may be. I
Speaker 1: think we have to see what happens in India and
Speaker 1: other parts of the world Brazil, if there are widespread
Speaker 1: infections as there are in low vaccination reach, much higher
Speaker 1: risk of mutant variants, and we may need to develop
Speaker 1: vaccines every year to those mutants if they can escape
Speaker 1: our normal vaccine. I think we have to wait and
Speaker 1: see what happens. But unfortunately it's a possibility. So why
Speaker 1: some people say there's really no going back to normal
Speaker 1: because the world has changed, Because of the virus. Doesn't
Speaker 1: mean things won't reopen up, but it's going to be different.
Speaker 1: Maybe we can just get it with the blue shot.
Speaker 1: Yeah right, I can. I can work with that. Dr
Speaker 1: and Les Pater have a good and safe weekend. He's
Speaker 1: clinical professor of Medicine at n y U Lango Medical Center.
Speaker 1: On the phone in New York City. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. What a great week, a busy one.
Speaker 1: Another great new issue of the magazine, something Business Week
Speaker 1: has done before. The how To issue is back, bigger
Speaker 1: and better than before, because along with it the actual
Speaker 1: issue is a Bloomberg Live event called appropriately so the
Speaker 1: Bomberg Business Week, five days of virtual life programming, bringing
Speaker 1: the magazine to life a different vertical every day. Here
Speaker 1: with the recap Bloomberg Business weekend. To Joie Webber in
Speaker 1: our Bloomberg Interactive Broker Studio, You've had a really killer week.
Speaker 1: It was great, and you know, we tried to when
Speaker 1: we were thinking about this, we wanted to pair it
Speaker 1: with the magazine and basically bring the magazine to life
Speaker 1: in a way that we had never attempted to do before.
Speaker 1: So we took the sections of the magazine and basically
Speaker 1: um them days around them, and then there were little
Speaker 1: things like the back page, which we call the last
Speaker 1: thing became a thing that we did every day, and
Speaker 1: so it was just a fun experiment. And UM, We've
Speaker 1: got a lot of great guests. We had so much
Speaker 1: great content in the issue from UM, from the newsroom
Speaker 1: and outside of the newsroom even UM to do all
Speaker 1: these how two stories, So I'm very satisfied with how
Speaker 1: it all came together. Well, let's stick on the live
Speaker 1: event for for one second, because there was so much
Speaker 1: great stuff from that this week, Sol and I'm wondering
Speaker 1: when you think about the names who you want involved,
Speaker 1: how you come to those conclusions, how you design it,
Speaker 1: and how you think about those themes. Well, it really
Speaker 1: starts with the themes of the day, right. So we
Speaker 1: started with a business and industries day and we really
Speaker 1: wanted to delete into companies there, and then we we
Speaker 1: did tech and innovation. It was like, who would you
Speaker 1: want to talk to on a tech and innovation day? Well,
Speaker 1: Kathy would would be a great place to start, right,
Speaker 1: So UM, so we ended up having you know, all
Speaker 1: of these things kind of come together perfectly, and you know,
Speaker 1: it's just starts with us making a lot of asks
Speaker 1: of people. And you know, the other thing that that
Speaker 1: I think really made the event be especially special, can
Speaker 1: I say that especial? Is that it with this combination
Speaker 1: of live things, some of which were making news, with
Speaker 1: things that we had put prior energies into um and
Speaker 1: it's sort of a reflection of what we do in
Speaker 1: the magazine every week. We have the news stories and
Speaker 1: we have other things that we put that are still
Speaker 1: gonna make news, but they required some some future planning,
Speaker 1: and so you get this little marriage of the two.
Speaker 1: And I really liked how how that came together in
Speaker 1: a fent. I thought that that was specially and unique
Speaker 1: and uniquely business Week. Yeah, those some of those pieces
Speaker 1: were just so much fun. Whether it's making a movie
Speaker 1: franchise right, or making the best chicken parmi on or
Speaker 1: it was just they were and you know, just to
Speaker 1: give you a sense of how Justin lynn Win is
Speaker 1: what you mentioned there, and he's the director of The
Speaker 1: Forthcoming Fast and The Furious uh nine and he's directed
Speaker 1: more than a couple other ones. And that started Brett began,
Speaker 1: who is the story of the editor, who is the
Speaker 1: mastermind of the issue. He and I several months ago
Speaker 1: started having just weekly video calls with one another to
Speaker 1: kick ideas around, and we're talking like that wasn't like
Speaker 1: January or February we started this and I had just
Speaker 1: wrapped up watching um Star Wars stuff, I think, And
Speaker 1: I said, what would it be like to do how
Speaker 1: to make a franchise that doesn't suck? Right? Like that
Speaker 1: Star Wars stuff right now is so good, but we
Speaker 1: all can b that the movies were not as good.
Speaker 1: And I said, you know, let's go to Disney and
Speaker 1: let's ask them how do you make Star Wars not suck?
Speaker 1: And Disney politely declined in that last a couple of
Speaker 1: a couple of other asks, um and look fast and
Speaker 1: furious that it has such a cult following. I think
Speaker 1: that cult following thing is a thing that we infused
Speaker 1: throughout the issue as well. There's several other ideas that
Speaker 1: hit on that note, and it speaks to like, you
Speaker 1: you get a rabid fan base and you get to
Speaker 1: make that movie as long as you want to make
Speaker 1: that movie. Yeah, exactly, I love it. Joel, what were
Speaker 1: what were some of your favorite how twos in here?
Speaker 1: Like what did you come away with that that you're
Speaker 1: going to do differently? So there's there's an art to
Speaker 1: all the how two articles and that you want to
Speaker 1: surprise people and give them something actionable that they that
Speaker 1: they wouldn't have otherwise thought of. Um. And so there's
Speaker 1: there's some charming ones in here, um, how to build
Speaker 1: a business online business? You know, only fans. I'm not
Speaker 1: gonna be starting a business, not only fans. But it's
Speaker 1: most surprising thing was that people are starting businesses that
Speaker 1: have nothing to do with what you would think it
Speaker 1: would be about. A woman's basically has a whole new
Speaker 1: lease on life and she's transitioned out of personal training
Speaker 1: in person to do it all there. And so I
Speaker 1: just think that for all the bad stuff in the
Speaker 1: world right now, and we've all been through plenty, there's
Speaker 1: this sense of optimism that I think some of these
Speaker 1: are rooted in of like can you make aspects of
Speaker 1: your life better? So I know that's a roundabout answer
Speaker 1: for you, um, but you know, it's all it's all there.
Speaker 1: I mean one of the ones that I personally did,
Speaker 1: I interviewed somebody at NAZDAC and I said, you know what,
Speaker 1: what's made you a better manager? And she said, well,
Speaker 1: outside of my job, I have this personal board and
Speaker 1: I have different archetypes on this personal board, and I
Speaker 1: meet with these people one on one and I've had
Speaker 1: this kind of structure in my work professional life for
Speaker 1: years and it's brought you know, it's it's brought success
Speaker 1: to my life, my work life. And I just thought
Speaker 1: that was so phenomenal that you could, you know, outside
Speaker 1: of what you're doing during your day job, that you
Speaker 1: can put a structure on on on yourself that helps
Speaker 1: improve your how you look at work and career. I
Speaker 1: feel like certainly the Arc of the Week and also
Speaker 1: every magazine, what I think is so great is you've
Speaker 1: got serious stuff that's on the economy markets, but then
Speaker 1: you can go and there can be something on you know,
Speaker 1: an alcohol or making the best burger, or there could
Speaker 1: be somebody like Deep October who's teaching you about kind
Speaker 1: of how to deal with how to meditate. Yeah. So,
Speaker 1: and you know I should also mention that, you know,
Speaker 1: we had all this live programming through the week multiple times.
Speaker 1: Carol Masser was a mixologist and mixing cocktails. So she
Speaker 1: got some good she got some good kids. You know,
Speaker 1: I'm pretty embarrassing at it. I hope that you know
Speaker 1: her cocktail game for if anybody's going to Carol Master's
Speaker 1: house this summer, like, I hope that there's some mean
Speaker 1: cocktails coming. Enjoy. Enjoy. Yeah, there are a couple of
Speaker 1: times where she left, you know, she had to leave
Speaker 1: the show early to go and you know, quote unquote work.
Speaker 1: So there's a surprise and delight element. And I think
Speaker 1: that's what we try and do in the magazine always
Speaker 1: is give you stuff, news that your you need. We
Speaker 1: we want to take you in on big stories that
Speaker 1: you're only going to get from Bloomberg, but we also
Speaker 1: want to surprise and delight you with some other content
Speaker 1: to follow this stroll. I have no idea, but I
Speaker 1: leave it. I leave it to you all. But you know,
Speaker 1: there's a new issue next week, right. We always do,
Speaker 1: and you know, we're often planning things way out into
Speaker 1: the future, and this was sort of the embodiment of that.
Speaker 1: I mean to see what we did online. If you
Speaker 1: haven't seen it, go to business week dot com uh
Speaker 1: to see all the videos. Follow us on social you
Speaker 1: can see all those like It took months to pull
Speaker 1: this off, and huge kudos to everybody involved that at
Speaker 1: Bloomberg for helping it all come together. When do you
Speaker 1: started planning the next one to? Oh? Now, yeah, I
Speaker 1: think we'll do a little odd. Yeah, I mean I
Speaker 1: love your two dollar bill. So that one just so
Speaker 1: everybody can hear because it might be relevant on Friday.
Speaker 1: This dates back to when I was younger, slightly younger,
Speaker 1: not that much younger, but slightly younger. Go to the
Speaker 1: bank on a Friday, Uh, buy them out of two
Speaker 1: dollar bills and that's what you're going to tip your
Speaker 1: bartender with and it will be twice as much as
Speaker 1: the person next. But it's already got me thinking about
Speaker 1: what I'm going to submit for you for next year. Okay, alright,
Speaker 1: pressures on. Well, you can p good one after here
Speaker 1: and we'll see that way you're not on the spot. Well,
Speaker 1: the cocktails that I'll be making at my desk afterwards,
Speaker 1: you do not have to tip me. I'm just gonna
Speaker 1: say this time, I haven't gotten to get into two
Speaker 1: dollar bills, so you're you're gonna be light on a tip.
Speaker 1: So have a great weekend. It's a good week, Bloomberg
Speaker 1: Business Week nditor Joe Webber. Go to Bloomberg business Week
Speaker 1: dot com check out all the amazing content and the
Speaker 1: new how to issue. You're listening to Bloomberg. This is
Speaker 1: the Big Take, the best Boomberg's in depth original reporting
Speaker 1: from around the globe. Well, we actually make sure we do.
Speaker 1: As the Economy covers is what kut. The data kind
Speaker 1: of broken down a bit. It's fun to becoming more
Speaker 1: and more expensively, to be looking at the shifting billion
Speaker 1: dollars for their own entry levels. There's been ways of
Speaker 1: immigration that have faced a lot of resistance, a lot
Speaker 1: of color behind the scenes, and a great untold story.
Speaker 1: How did Bezos really come out on top? As the
Speaker 1: cover says Jeff wins, he always seems to win the
Speaker 1: Big Take on Bloomberg Radio. Well, the Big Take definitely
Speaker 1: caught our attention today. It's also one of our most
Speaker 1: read stories on the Bloomberg about how world dominating super firms.
Speaker 1: To him, they are getting bigger tech here and more Chinese.
Speaker 1: Tom or like his chief economist at Bloomberg Economics, and
Speaker 1: he joins us on the phone from Washington, d C. Tom,
Speaker 1: first of all, this is chock full of data. Charts
Speaker 1: is an interactive experience. I encourage everybody to check it
Speaker 1: out at Bloomberg dot com. Take us through how you
Speaker 1: put it together, the analysis that you did to come
Speaker 1: to these findings. So what we've tried to do to
Speaker 1: is take a kind of grand sweep through thirty years
Speaker 1: of corporate history. We targeted the top fifty listed firms
Speaker 1: in the world, and then we pulled data on their
Speaker 1: financials and their market cap from the Bloomberg terminal and
Speaker 1: ran a bunch of analysis. And when you crunch the numbers,
Speaker 1: it tells you a number of stories. So there's a
Speaker 1: story about a transition from West to East, the rise
Speaker 1: of the Chinese mega firm. There's a story about UM,
Speaker 1: the fall of big oil and the rise of big
Speaker 1: tech UM. And of course there's a sort of a
Speaker 1: bigger story about the big getting bigger. Go back to
Speaker 1: and the top fifty firms in the world, where they
Speaker 1: had a market cap of about five percent of global GDP.
Speaker 1: If you look at that number now it's close to thirty.
Speaker 1: That's a big change. And listen, we talked about inequities
Speaker 1: in our world at general. In general, you know, time
Speaker 1: between individuals by we're seeing it also happening within the
Speaker 1: corporate community. You just laid it out with that stat Yeah,
Speaker 1: and of course the too a related, right. I mean,
Speaker 1: if you think about, um, we think about the biggest
Speaker 1: firms getting bigger, we also think about the entrepreneurs who
Speaker 1: created those firms getting richer. And so the dynamic between
Speaker 1: the big getting bigger in the corporate sector and the
Speaker 1: rich getting richer in society at large, these two trends
Speaker 1: are intimately connected. Well. And it's interesting you guys write
Speaker 1: to the advantage of superstar firms and joy became all
Speaker 1: the more glaring during the pandemic, and it's it's why
Speaker 1: we saw an Amazon just take off like a rocket
Speaker 1: during the pandemic. Yeah, I mean the pandemic, Carol, I mean,
Speaker 1: as you know, it was the disaster for the mom
Speaker 1: and pop store, right, the corner store, which relies on
Speaker 1: foot traffic to drive revenue. They had a terrible time
Speaker 1: in America and around the world. But the biggest firms
Speaker 1: in the world, the Amazon's, the Google's, the Netflix, the facebooks,
Speaker 1: they will almost they have a business model which is
Speaker 1: almost tailor made for the pandemic. Right, Um, so the
Speaker 1: pandemic gave them sort of kind of compounded their advantage.
Speaker 1: Where do taxes come into this, because there's a striking
Speaker 1: graphical representation in here that shows the median effective tax
Speaker 1: rate of dwindled to only seventeen percent last year, at
Speaker 1: the same time profit margins heading in the opposite direction,
Speaker 1: staring from seven percent to over that same period of time. Yeah,
Speaker 1: I think, I think when we think about it, Tim,
Speaker 1: there's been this kind of this grand sort of theme
Speaker 1: in the global economy over the last forty years, starting
Speaker 1: with the Reagan Revolution, which has really tipped the balance
Speaker 1: in favor of corporations. Tax rates have been cut, and
Speaker 1: multinationals have become better kind of shifting their profits around
Speaker 1: some times in sort of fairly dubious ways to kind
Speaker 1: of maximize the benefit of low tax regimes. Um. And
Speaker 1: I guess, I guess the question which comes out of
Speaker 1: this research and some of the news flow from Washington,
Speaker 1: d C. And Beijing, is well, are we now at
Speaker 1: another moment for the global economy? Is the kind of
Speaker 1: the Reagan Revolution which tipped the balance from workers to corporations?
Speaker 1: Has that now when its course? And were we at
Speaker 1: the beginning of a new period where tax rates rise,
Speaker 1: where minimum wages why rise, and the balance starts tipping
Speaker 1: a little bit more towards workers. What's also interesting, and
Speaker 1: we kind of said that coming in or in the
Speaker 1: introduction Tom about the rise or the China rising. You know,
Speaker 1: we continue to see that and that is not just
Speaker 1: in terms of their you know, impact on manufacturing globally,
Speaker 1: but it's just the companies they are creating are behemoths. Yeah.
Speaker 1: So we've got um Ali Baba, the kind of the
Speaker 1: Chinese Amazon. UM, we've got ten cents the Chinese Internet giants, UM,
Speaker 1: a number of Chinese firms which have kind of muscled
Speaker 1: into the to the top ranks. UM. And of course
Speaker 1: there's an interesting dynamic UM there as well, because the
Speaker 1: people who say we need to regulate firms more, right,
Speaker 1: corporations have become too powerful, we need to regulate them more. Well,
Speaker 1: because of the dynamic between the chat between China and
Speaker 1: the United States, UM, the giant firms have a pushback
Speaker 1: against that argument. Right now. We're already starting to hear
Speaker 1: some of the the US superstar firms say, well, if
Speaker 1: you tax us more, if you regulate us more, if
Speaker 1: you kind of impede our dynamism, then that's going to
Speaker 1: make it harder for us to face off against these
Speaker 1: new Chinese humans. Tom, I want to end with just
Speaker 1: very briefly, something that that you talked about a little
Speaker 1: earlier on Quick Take Today, and it was capex and
Speaker 1: capex spending as as a portion of a company's spending
Speaker 1: and as as it relates to how many employees it
Speaker 1: actually has to hire and what that means for human capital. Yeah,
Speaker 1: So if we go back to the to the ninety nineties, Tim,
Speaker 1: and we think about the dominant firms, then it's industrial
Speaker 1: firms like General Electric, its energy companies like x On,
Speaker 1: and they do a lot of capital spending and they
Speaker 1: hire a lot of workers. But if you fast forward
Speaker 1: to and you think about the dominant firms, it's tech
Speaker 1: platforms like Alphabet or Facebook, which can really scale without
Speaker 1: adding a lot of workers and without doing a lot
Speaker 1: of capital spending. And that's a really important shift in
Speaker 1: the way the economy works, and something also central banks
Speaker 1: and tax authorities need to keep in mind. It's a
Speaker 1: really good point, important point to finish one. Hey, Tom,
Speaker 1: thank you so much. It is the Bloomberg Big Take.
Speaker 1: Check it out at Bloomberg dot Com tom or Like.
Speaker 1: He's Chief Economs of Bloomberg Economics from Washington, d C.
Speaker 1: I'm road Marco journal now. But you let me drive? No,
Speaker 1: no, no no, dru home honey please, I'll do the riding
Speaker 1: drivel lets me. I want to drive, Just drive baby,
Speaker 1: the question. Try. This is the drive to the Globe Community. Thanks.
Speaker 1: We'll drying us down on Bloomberg Radio this Indeed, everyone
Speaker 1: just about ten and a half minutes until the closing
Speaker 1: bell on this Friday, so let's get to it. And
Speaker 1: joining us with a check on the Drive to the
Speaker 1: Close is Katerina Simonetti. She is senior vice president and
Speaker 1: private wealth advisor at Morgan Stanley Private Wealth Management, and
Speaker 1: she's back with us. She joins us today on the
Speaker 1: phone from Philadelphia. Katerina, how are you good, Carol, Thank
Speaker 1: you for having me on the show. Well, it's nice
Speaker 1: to have you here. Uh. We were kind of laughing,
Speaker 1: not laughing, funny, not funny about what a crazy week
Speaker 1: it's been. I mean, listen, the markets have just been
Speaker 1: kind of all over the place, volatility, We've had inflation
Speaker 1: concerns this week, in particular that we had a big
Speaker 1: media deal on Monday, we all had to wrap our
Speaker 1: head around remembering that it was just Monday that it
Speaker 1: was announced, and then you had crypto plunging on Wednesday
Speaker 1: bouncing back. It's under pressure again today, retail earnings. There's
Speaker 1: just a lot being thrown at investors, and it does
Speaker 1: feel like we're taking a little bit of a breather today,
Speaker 1: a little bit of lighter volume. How do you see it,
Speaker 1: What is really driving the trade, particularly among equities? Well,
Speaker 1: Carol certainly had crazy week, and I would you know,
Speaker 1: even expand on it and say, you know that we've
Speaker 1: had you know, crazy six months. And naturally, when you
Speaker 1: kind of just take the whole market performance into consideration,
Speaker 1: from the performance of your you know, the your your
Speaker 1: average investor, the optic that we have seen, you know,
Speaker 1: has been happening so quickly and to such scale um
Speaker 1: that we've been calling for some type of a correction,
Speaker 1: for some type of a pool bag in the market
Speaker 1: for quite some time. And we started seeing these poolbags,
Speaker 1: you know, as early as February March. We first saw
Speaker 1: the ritation out of the expensive areas and then you know,
Speaker 1: eventually out of small caps, you know, and it seems
Speaker 1: to be like that this type of market that there's
Speaker 1: going to be hidening volatility. But at the same time,
Speaker 1: all of this is happening within the larger context of
Speaker 1: economic recovery and this bool market that we believe that
Speaker 1: we find ourselves in, so in a bull market, but
Speaker 1: also ready for a correction. I mean, when you're thinking
Speaker 1: about a correction here, what are we what are you
Speaker 1: actually expecting? So tim bull markets tend to last for
Speaker 1: a while, Like we have to number that boom markets
Speaker 1: lost for years and the one that lasted post financial crisis. Well,
Speaker 1: that's right, that that's that's exactly right. That's a perfect example.
Speaker 1: And in any given year over the last you know,
Speaker 1: several decades, the average provement, the average correction, you know,
Speaker 1: has been around fourteen per set. So we think that
Speaker 1: it is absolutely reasonable that we will have, you know,
Speaker 1: some type of a correction that could be anywhere from
Speaker 1: you know, let's they tend to fifteen percent. But we
Speaker 1: also don't believe that it's going to be long lived.
Speaker 1: You know, we're not looking at the recession, we're looking
Speaker 1: at the volatility. We're looking at market correcting itself. Teach
Speaker 1: is extremely healthy. You know, at this point in time,
Speaker 1: you know, but it also comes with buying opportunities, you know,
Speaker 1: for investors. I mean, this is a great opportunity to
Speaker 1: rebalance portfolio and to take advantage of you know, two
Speaker 1: of um, you know, some of this great positioning in
Speaker 1: this market. So where are the problem pockets of the
Speaker 1: market in your view? Well, really the problem packets are
Speaker 1: the overpriced securities. You know, this is kind of something
Speaker 1: that is very easy to recognize in this market when
Speaker 1: we look at the evaluations, when we look at multiples,
Speaker 1: when you know, we look at the expected earnings, you know,
Speaker 1: we see those trouble children, you know, we we we
Speaker 1: know that when when a stock or a certain sector
Speaker 1: went up, you know so much in the short time
Speaker 1: frame that it is reasonable to you know, to expect
Speaker 1: some type of a sell up. And we're seeing a
Speaker 1: lot of rotation. We seem that this type of rotation,
Speaker 1: you know, is the theme going on. Right you know,
Speaker 1: what we see right now is you know, opportunities and
Speaker 1: kind of like rotation almost back into reopening themes, right
Speaker 1: something like retail, consumer discretionary or you know, semiconductors or
Speaker 1: syntag um. So you know, we just have to be
Speaker 1: you know, conscious of this overpriced market areas and specifically
Speaker 1: from the portfolio, what does that mean or sitting tight?
Speaker 1: What does it mean? Well? I and to pare back,
Speaker 1: you know, so when we're looking within the portfolio design, right,
Speaker 1: you know, when we're looking at certain sectors of our
Speaker 1: portfolios that have been so inflated because you know, particular errors.
Speaker 1: Let's be technology for example, right, you know, if your
Speaker 1: normal allocation to technology is act, you know, and all
Speaker 1: of a sudden is twice that, you know because of
Speaker 1: such big appreciation. Now would be a good time to
Speaker 1: rebalance and also really carefully evaluate that that portfolio. Because
Speaker 1: not all sex is created equal. You know, if we
Speaker 1: take that sector for example, you know, if we have
Speaker 1: to look at earnings and we have to look at
Speaker 1: forward looking projections, this is very much a stock picker's
Speaker 1: market in my opinion. I got to ask you about
Speaker 1: bitcoin because it is down again more than ten percent today.
Speaker 1: It has been a wild week for the cryptocurrency decline
Speaker 1: earlier this week and one day of more than before
Speaker 1: it bounced back. How do you watch bitcoin as an
Speaker 1: asset in terms of how it could the risk off
Speaker 1: trade from that could actually go into equity markets well
Speaker 1: like Kim. It's certainly is a difficult area to address
Speaker 1: because there have been so much volatility, and I think
Speaker 1: that in a large scheme of things, the fact that
Speaker 1: we recently just recently started as really recognizing, you know
Speaker 1: that that part of the market as an asset clause
Speaker 1: you know, in itself, is a really big development um.
Speaker 1: And I think investors going into you know, specif investments
Speaker 1: have to expect higher volatility. That's just a reality. So
Speaker 1: favorite investment right now, I would say that going forward,
Speaker 1: favorite areas are banks, materials absolutely, because you know, when
Speaker 1: you think about it, the one area that is not
Speaker 1: going to be a surprise for anyone are going to
Speaker 1: be higher rates. And maybe not right now because absolutely,
Speaker 1: you know, we all know it's not a surprise that
Speaker 1: Federal Reserve first and foremost is committed to seeing this
Speaker 1: economy all the way through recovery. But higher rates are coming.
Speaker 1: You know, this is just atrel We just don't know,
Speaker 1: you know, how long it will take us to get there.
Speaker 1: And banks and you know sin set, you know, it's
Speaker 1: also you know, kind of just an area correstitude. They're
Speaker 1: positively quarrelate that you know, with a higher rate environment,
Speaker 1: you know, the same with materials. Uh. The other area
Speaker 1: of the market that would really like you know, quite early,
Speaker 1: any high quality, reasonably priced areas like healthcare. Healthcare is
Speaker 1: a perfect example. You know. We see a lot of
Speaker 1: exciting opportunities. So if a client comes to you right
Speaker 1: now and and wants to get into the markets um
Speaker 1: and and move over to you, and they have a
Speaker 1: large amount of money, how do you advise them timing wise? Exactly, tim,
Speaker 1: I think that that we just we have to take
Speaker 1: into consideration consideration where we are um and with this
Speaker 1: boom market right but at the same time, with this
Speaker 1: great degree of volatility, we would advise them to dollar
Speaker 1: cost average into this market like over the a year
Speaker 1: over I just even shorter time frame. Let's say you
Speaker 1: take a shorter tram time from like six months, because
Speaker 1: we don't want to miss this bloom market either. We
Speaker 1: don't want to take such a long time to get
Speaker 1: in that we're missing all of those appreciation opportunities. But
Speaker 1: with expected volatility, I think that the ty here is
Speaker 1: to be very selective when it comes to security selection
Speaker 1: and extremely disciplined, you know, with going into this high
Speaker 1: quality areas and kind of you know, nice high quality,
Speaker 1: well balance for value will do the trick. All right.
Speaker 1: We're gonna leave it on that now, Katerina, thank you
Speaker 1: so much of a great week in Katerina Seminetti. She
Speaker 1: is Senior vice president Private Wealth Advisor at Morgan Stanley
Speaker 1: Private Wealth Management. Thanks for listening to Bloomberg Business Week.
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