WEBVTT - Surveillance: CPI Expectations with Chaudhuri

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<v Speaker 1>Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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<v Speaker 1>with Jonathan Ferrell and Lisa Brownwitz Jayleie. We bring you

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<v Speaker 1>insight from the best and economics, finance, investment, and international relations.

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<v Speaker 1>Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg dot Com,

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<v Speaker 1>and of course on the Bloomberg Terminal. Joining us now

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<v Speaker 1>is Gaki Choundery, head of Ice Shares America's investment strategy

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<v Speaker 1>at black Rock. Great to catch up with you again.

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<v Speaker 1>Let's just start with CPI, What you're looking for tomorrow

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<v Speaker 1>and how you expect this market to respond to it. Hey,

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<v Speaker 1>good morning, Great to be here. So very exciting days

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<v Speaker 1>for those of us who look at the inflation markets,

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<v Speaker 1>which is everyone these days. Um So, I think we're

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<v Speaker 1>probably going to get something that's a little bit stronger

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<v Speaker 1>at least than what the market is pricing in on

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<v Speaker 1>both the core and the headline. And when I think

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<v Speaker 1>about the core or data, I think what will be

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<v Speaker 1>important for us to look at is the breadth of

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<v Speaker 1>the strength. Um So, thinking back to sort of the summer,

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<v Speaker 1>you'll remember that most of the strength and cp I

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<v Speaker 1>was coming from those reopening sectors. So whether you think

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<v Speaker 1>about travel or f as or hotels, things like that.

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<v Speaker 1>And I think what we saw in the October data

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<v Speaker 1>more specifically, was that there was a little bit of

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<v Speaker 1>a breath broadening out, so we were seeing strengthen both

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<v Speaker 1>goods and services inflation. So I am looking forward to

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<v Speaker 1>seeing more of that, more of strength and some of

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<v Speaker 1>the goods parts of the market as well as services

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<v Speaker 1>such as shelter inflation. Where is the opportunity for investors, Gary,

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<v Speaker 1>given the fact that we've seen inflation rise to the

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<v Speaker 1>fastest pace since the nineteen eighties, likely to continue in

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<v Speaker 1>that vein with likely pressure then coming from the Fed

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<v Speaker 1>next year. Yes, absolutely, so I would say a couple

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<v Speaker 1>of things here. We do think that inflation, you know,

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<v Speaker 1>if you look about a year ahead from now, so

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<v Speaker 1>obviously we're going to see a pick up in the

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<v Speaker 1>near town, but after that we're likely to moderate. But

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<v Speaker 1>I think what it's important to note is we're still

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<v Speaker 1>going to settle at a level that is higher than

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<v Speaker 1>the pre pandemic period, which was obviously, as we know,

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<v Speaker 1>below two percent. So we're going to settle at that

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<v Speaker 1>higher level of inflation, and investors need to think about

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<v Speaker 1>hedging their portfolios in a multi asset fashion. So obviously

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<v Speaker 1>looking at equities of those companies what we call the

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<v Speaker 1>quality companies that are able to pass on higher prices

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<v Speaker 1>to their cast, you know, pass on the higher prices.

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<v Speaker 1>Within the bond markets, obviously, you know expectations are our

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<v Speaker 1>expectations are for yields to go higher. But at the

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<v Speaker 1>same time, sort of moving your allocations to inflation link

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<v Speaker 1>bonds I think could make sense. We've certainly seen a

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<v Speaker 1>huge amount of flow both into T I P and

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<v Speaker 1>S t I P, which are the two E t

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<v Speaker 1>F tak us. Twenty of the fixed income E t

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<v Speaker 1>F flows this year have come into inflation link bonds

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<v Speaker 1>and I expect that to continue to do well as

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<v Speaker 1>compared to nominal bonds. And in the last area, I

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<v Speaker 1>think that makes sense. It's really looking at real assets,

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<v Speaker 1>so you should be looking at a basket of diversified commodities,

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<v Speaker 1>looking at reads UH and looking at infrastructure. I think

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<v Speaker 1>all of those makes sense for an investor to think

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<v Speaker 1>about in a regime of higher inflation than the pre

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<v Speaker 1>pandemic one. Gargi, it's fantastic to speak with you, in

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<v Speaker 1>part because you've got a bird's eye view for the

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<v Speaker 1>retail and the institutional investors. Have you felt a big

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<v Speaker 1>divergence between the two heading into year end as retail

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<v Speaker 1>investors see the inflation concerns and a longer term nature

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<v Speaker 1>of them potentially as being more of a threat in

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<v Speaker 1>the institutions that seem relatively sanguine or even optimistic in

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<v Speaker 1>their outlooks um, I don't think it's a retail versus

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<v Speaker 1>institutional bifurcation. I think there are investors that brought into

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<v Speaker 1>that really did buy into that transitory story. I know

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<v Speaker 1>we don't say that word anymore, it's been retired, but

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<v Speaker 1>there were investors that did buy into that story, and

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<v Speaker 1>they could have been from the wealth community as well

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<v Speaker 1>as the institutional community. I think more and more we're

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<v Speaker 1>gravitating towards the space where investors are asking me, and

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<v Speaker 1>I'm sure many other strategies and portfolio managers across Wall Street,

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<v Speaker 1>around what is the best inflation head? You know, we've

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<v Speaker 1>written papers and we're coming out with our year ahead outlook,

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<v Speaker 1>and this is something that we're focusing on because this

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<v Speaker 1>is what our clients are asking us. So I think

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<v Speaker 1>the story has changed from what do I need to

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<v Speaker 1>do to insulate my portfolio for the next two or

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<v Speaker 1>three months to very much a belief now that this

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<v Speaker 1>is probably with us for a slightly longer period of time,

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<v Speaker 1>and how should I play for it in that medium

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<v Speaker 1>term period. And Gargy speaking of the two outlook, we've

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<v Speaker 1>talked a lot already this morning about the divergence in

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<v Speaker 1>the headline level where we think the SMB five were

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<v Speaker 1>strategists think it will end up at the surface level

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<v Speaker 1>when you talk about the leadership beneath. It was supposed

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<v Speaker 1>to be value over growth, small caps over large that

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<v Speaker 1>actually didn't really happen. Does that actually happen in you

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<v Speaker 1>we'll see, I mean, listen, there there are a lot

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<v Speaker 1>of reasons why it didn't happen. You know, we saw

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<v Speaker 1>that did take place in the beginning of the year,

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<v Speaker 1>and then you had the delta scare and again this year,

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<v Speaker 1>right when we were all getting pretty optimistic about the

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<v Speaker 1>growth prospect and you know we still are. You do

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<v Speaker 1>have this omicron fear that is in the markets. We

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<v Speaker 1>see that in the bond pricing right now. Um So

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<v Speaker 1>for next year, I think there is reason to believe that, yes,

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<v Speaker 1>we can see some of those cyclical components of the

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<v Speaker 1>economy do better. But we have to be a little

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<v Speaker 1>bit humble around some of the risks that have come

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<v Speaker 1>up more recently, whether it is with the Federal Reserve,

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<v Speaker 1>whether it's with the new variant. UM. So what we're

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<v Speaker 1>telling investors to do is really focus on a value

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<v Speaker 1>and a quality barbell and then really look at some

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<v Speaker 1>of those companies that have that pricing power, that ability

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<v Speaker 1>to pass on higher prices and um. You know, that's

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<v Speaker 1>what we think investors should do for just awesome and

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<v Speaker 1>so always and could hear from your county chantry there

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<v Speaker 1>of plank Rock Market Banner. I wonder if he is

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<v Speaker 1>the head of Right Strategy Bank America Global Research. Mark

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<v Speaker 1>the front end the back end of the yeld curve.

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<v Speaker 1>Let's start with the back end and then we can

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<v Speaker 1>go to the front end. What is driving tens right now?

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<v Speaker 1>Mark why we down at one fifty? So tends are

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<v Speaker 1>believing that the Fed maybe making a policy error by

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<v Speaker 1>essentially overweighting a fight against inflation versus supporting growth. UM.

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<v Speaker 1>They're doing that because there's concerns about the omicron variant

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<v Speaker 1>and the recent uptake in cases that we have seen.

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<v Speaker 1>They're doing that because they're worried that the FED is

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<v Speaker 1>going to be tightening into supply constrained inflation and reduction

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<v Speaker 1>of consumer purchasing power. And they're doing it because they're

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<v Speaker 1>worried that risk assets may be very sensitive to overall

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<v Speaker 1>rate levels in the stance of policy. So that's what's

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<v Speaker 1>keeping the back end relatively pinned. It's what's keeping it

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<v Speaker 1>around one and a half percent right now. Um, But

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<v Speaker 1>it's what's allowing the curve to flatten because the market

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<v Speaker 1>has gotten the message from the FED and they know

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<v Speaker 1>that the FED is going to be tightening in the

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<v Speaker 1>not too distant future. This is a reason why I

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<v Speaker 1>love covering this market. It's enough to make your head spin.

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<v Speaker 1>The idea that at a certain point the FED might

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<v Speaker 1>get a message from the markets that are getting a

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<v Speaker 1>message from the Federal Reserve and say, well, they think

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<v Speaker 1>that we're making a policy error. Perhaps will tap the

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<v Speaker 1>brakes not raise rates as much. At what point does

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<v Speaker 1>a yield curve flattening send that message to the Federal Reserve?

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<v Speaker 1>So I think that the FED is probably not too

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<v Speaker 1>happy about the shape of the curve, given where they

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<v Speaker 1>are in their hiking cycle. They're just about to start

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<v Speaker 1>and they know that the market is telling them that

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<v Speaker 1>they may not be able to hike by all that much.

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<v Speaker 1>That's not a real warm and fuzzy signal if you're

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<v Speaker 1>at the Fed. But that's not your issue right now.

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<v Speaker 1>Your issue is that you need to guard against elevated inflation.

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<v Speaker 1>You need to start leaning against demand, and need to

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<v Speaker 1>start doing that by tightening financial conditions. That's how the

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<v Speaker 1>FED transmits monetary policy. And so even though it's not

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<v Speaker 1>a great signal for the Fed, I don't think it's

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<v Speaker 1>going to prevent them from taking the necessary action and

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<v Speaker 1>beginning to withdraw a monetary policy accommodation. Well, the action

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<v Speaker 1>that will be taking in the most immediate term may

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<v Speaker 1>come on Wednesday, and of course we have the cp

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<v Speaker 1>I print tomorrow mark or either of those events actually

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<v Speaker 1>going to be catalyst for the bond market or is

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<v Speaker 1>all of that already priced in and the market already

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<v Speaker 1>front rent both of those events. So the market certainly

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<v Speaker 1>expecting elevated inflation tomorrow. Our economists who have had a

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<v Speaker 1>great call on this are projecting, though, that CPI is

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<v Speaker 1>going to realize even higher than expected. Uh. They project

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<v Speaker 1>a reading that's going to be two tents above consensus

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<v Speaker 1>on headline at one tenth above consensus on four. So

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<v Speaker 1>that's gonna be Probably it's gonna further this flattening dynamic

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<v Speaker 1>that we're seeing in the market, or it's gonna firm, uh,

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<v Speaker 1>the amount of rate hikes that are expected for next year. Now,

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<v Speaker 1>the meeting next week, we think will confirm some things

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<v Speaker 1>that are likely widely expected now by the market, such

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<v Speaker 1>as a more accelerated pace of taper, essentially doubling the

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<v Speaker 1>monthly just reduction and then ending purchases by the time

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<v Speaker 1>of the March fo MC meeting, which may give the

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<v Speaker 1>Fed there will give the Fed the option to hike

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<v Speaker 1>if they want. Um. It's also going to give us

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<v Speaker 1>an updated reading on the dot plot UM And certainly

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<v Speaker 1>we're sympathetic to former New York Fed President Dudley's views

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<v Speaker 1>that we're probably gonna see more hikes that get priced

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<v Speaker 1>two maybe three for next year. But the thing that

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<v Speaker 1>could surprise the market that we sense is still underappreciated

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<v Speaker 1>by clients is a discussion of the Fed's balance sheet.

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<v Speaker 1>At least you mentioned this earlier. The Fed maybe gearing

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<v Speaker 1>up for quantitative tightening. They haven't given us much guidance yet.

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<v Speaker 1>But if they start to shrink the balance sheet at

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<v Speaker 1>some point next year, that we think could really weigh

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<v Speaker 1>against risk assets, because it's going to be adding duration

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<v Speaker 1>risk to the market. It will be adding more term

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<v Speaker 1>premium that will lean against the flattening pressures slightly. But

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<v Speaker 1>most importantly, it's going to be withdrawing liquidity out of

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<v Speaker 1>markets um and the extent to which Powell elaborates on

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<v Speaker 1>this or provides hints in that direction may end up

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<v Speaker 1>being the big surprise for the meeting next week. Mark

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<v Speaker 1>just quickly, just in terms of sequencing, then, do you

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<v Speaker 1>think that needs to happen before we get that right?

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<v Speaker 1>High can just that change your view on when they

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<v Speaker 1>make a move Now, we think that the sequencing will

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<v Speaker 1>be as they have historically done, rate hikes before balance

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<v Speaker 1>sheet reduction, or perhaps rate hikes with balance sheet reduction.

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<v Speaker 1>At the same time, we don't think it's likely that

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<v Speaker 1>they begin balance sheet reduction before rate hikes, primarily because

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<v Speaker 1>the Fed has a much better understanding of how rate

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<v Speaker 1>hikes or increases in the Federal funds rate end up

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<v Speaker 1>impacting the real economy. They've done this for years. They've

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<v Speaker 1>got good models, they give them confidence and how it works,

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<v Speaker 1>but they're less confidences. Less confident in is how the

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<v Speaker 1>balance sheet actually influences underlying economic conditions. That said, Powell

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<v Speaker 1>has told us all along that they have multiple tools

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<v Speaker 1>with the emphasis on the plural here to deal with

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<v Speaker 1>elevated inflation, and the two of the obvious tools to

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<v Speaker 1>us are rate hikes and bounty reduction. That means that

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<v Speaker 1>bounty reduction could potentially be pulled forward. Gets you thinking, Mark,

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<v Speaker 1>just wonderful, brilliant. Thank you, sir, Mark o'banna of Bank

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<v Speaker 1>America Global Research jointing us now is planned Herbert Columbia

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<v Speaker 1>Professor of economics and former chairman of the Council of

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<v Speaker 1>Economic Advisors. Professor, You've also got a book coming out

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<v Speaker 1>at twenty two called The Wall and the Bridge. We

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<v Speaker 1>can discuss that little bit later. I just want your

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<v Speaker 1>response to your read how you gauge this labor market

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<v Speaker 1>right now in America? Well, I think the labor market

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<v Speaker 1>is improving and is in frankly fairly good shape even

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<v Speaker 1>from a FED perspective. The question is what about the

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<v Speaker 1>participation rate? If everything else looks good in terms of

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<v Speaker 1>employment and monetary policy, bring back that participation rate. I'm

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<v Speaker 1>skeptical there. I think the labor market is in great

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<v Speaker 1>a bit is time for the FED to adjust. It's

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<v Speaker 1>time for the FED to adjust. This is a message

0:12:05.240 --> 0:12:07.280
<v Speaker 1>that you've sent before, and you're not alone in this,

0:12:07.400 --> 0:12:10.280
<v Speaker 1>especially with the likes of Bill Dudley, formerly of the

0:12:10.320 --> 0:12:13.240
<v Speaker 1>New York FED saying the same thing. At what point

0:12:13.280 --> 0:12:15.480
<v Speaker 1>do we start to see it reflected in wages that

0:12:15.520 --> 0:12:18.640
<v Speaker 1>are keeping up with the inflation that we're seeing consumer prices.

0:12:19.760 --> 0:12:21.679
<v Speaker 1>I think that won't happen very soon, and I think

0:12:21.679 --> 0:12:25.079
<v Speaker 1>in some respects it is already happening. We have demand

0:12:25.160 --> 0:12:27.560
<v Speaker 1>running faster than supply. There are a lot of supply

0:12:27.679 --> 0:12:30.640
<v Speaker 1>problems in the economy, but FED can't really fix those.

0:12:31.080 --> 0:12:33.679
<v Speaker 1>I FED had been focused on the word transitory. Now

0:12:33.840 --> 0:12:38.000
<v Speaker 1>fortunately it's backed away from from that definition. The game,

0:12:38.080 --> 0:12:41.160
<v Speaker 1>of course, is to stop a wage spiral from starting.

0:12:41.200 --> 0:12:43.120
<v Speaker 1>I think there is an opportunity for the FED to

0:12:43.160 --> 0:12:46.320
<v Speaker 1>do that, but the pivot to tapering and rate hikes

0:12:46.400 --> 0:12:48.280
<v Speaker 1>will have to be more aggressive than the FED and

0:12:48.400 --> 0:12:51.600
<v Speaker 1>telegraphed before. What do you say to people who argue

0:12:51.760 --> 0:12:54.520
<v Speaker 1>that inflation will naturally roll over next year, that some

0:12:54.559 --> 0:12:57.800
<v Speaker 1>of these pressures will become less of a pressure as

0:12:57.840 --> 0:13:00.400
<v Speaker 1>we get a more normal economy and people come back

0:13:00.440 --> 0:13:03.160
<v Speaker 1>to work in more for some of those eleven million

0:13:03.200 --> 0:13:06.079
<v Speaker 1>job openings get filled. What do you say, given the

0:13:06.120 --> 0:13:08.040
<v Speaker 1>fact that that has been the regime we have been

0:13:08.040 --> 0:13:13.199
<v Speaker 1>in for decades. Well, we certainly will see supply pressures attenuate.

0:13:13.320 --> 0:13:15.920
<v Speaker 1>That will help, But let's remember there's been a lot

0:13:15.960 --> 0:13:19.000
<v Speaker 1>of goose sing of demand. FED had been buying back

0:13:19.040 --> 0:13:21.559
<v Speaker 1>mortgage backed securities when the housing market was on fire.

0:13:21.679 --> 0:13:25.520
<v Speaker 1>We've been very accommodated fiscal and monetary policy, so those

0:13:25.600 --> 0:13:27.719
<v Speaker 1>really have to adjust. I don't think we can think

0:13:27.760 --> 0:13:30.080
<v Speaker 1>it's just going to roll back on its own. You know,

0:13:30.160 --> 0:13:34.480
<v Speaker 1>consensus for PC next year will be about three c

0:13:34.679 --> 0:13:38.840
<v Speaker 1>p I, more than four. The FED really has overshot

0:13:38.920 --> 0:13:41.800
<v Speaker 1>in the manner it's suggested in its new framework. It's

0:13:41.800 --> 0:13:45.000
<v Speaker 1>still time to adjumpt. Well, glad you mentioned fiscal policy there,

0:13:45.000 --> 0:13:47.679
<v Speaker 1>and Michael McKee when talking about these jobless claims, the

0:13:47.720 --> 0:13:49.839
<v Speaker 1>idea that maybe people went back into the labor market

0:13:49.840 --> 0:13:52.240
<v Speaker 1>as they've had to start drawing down their savings that

0:13:52.280 --> 0:13:54.240
<v Speaker 1>they built up over the course of the pandemic things

0:13:54.240 --> 0:13:57.120
<v Speaker 1>in part to fiscal policy. What do you think happens

0:13:57.600 --> 0:14:00.360
<v Speaker 1>as that winds down, and what happens especially to can humors,

0:14:00.400 --> 0:14:04.040
<v Speaker 1>tolerance of some of the higher prices that they're facing. Well,

0:14:04.040 --> 0:14:07.000
<v Speaker 1>I think we will start to see people re entering

0:14:07.040 --> 0:14:09.160
<v Speaker 1>the labor force, but there's still a lot of excess

0:14:09.160 --> 0:14:12.920
<v Speaker 1>savings out there, albeit there unevenly distributed in the in

0:14:12.960 --> 0:14:17.160
<v Speaker 1>the population. I think a bigger issue may be consumers

0:14:17.200 --> 0:14:21.080
<v Speaker 1>and households workers fears of going back to work, and

0:14:21.120 --> 0:14:23.320
<v Speaker 1>I think that will have to sort its out out

0:14:23.360 --> 0:14:26.360
<v Speaker 1>with the vaccine more than with physical calls. Well, and

0:14:26.400 --> 0:14:28.840
<v Speaker 1>we're seeing return to office plans push back for some

0:14:28.920 --> 0:14:31.880
<v Speaker 1>Wall Street banks for the likes of Lift. What is

0:14:31.920 --> 0:14:34.360
<v Speaker 1>the economic consequence? And John was alluding to this earlier,

0:14:34.400 --> 0:14:36.240
<v Speaker 1>the idea that if people aren't going into the office

0:14:36.240 --> 0:14:37.920
<v Speaker 1>in the cities, they're not going to visit their coffee

0:14:37.920 --> 0:14:42.040
<v Speaker 1>shops or their lunch places. Do you see a risk

0:14:42.120 --> 0:14:44.640
<v Speaker 1>of us reverting if we do go back to a

0:14:44.720 --> 0:14:47.640
<v Speaker 1>kind of work from home environment as we move forward

0:14:47.680 --> 0:14:50.960
<v Speaker 1>throughout the winter and into two Well, I think most

0:14:51.000 --> 0:14:54.920
<v Speaker 1>large employers want to avert that for simple reasons that

0:14:55.360 --> 0:14:59.520
<v Speaker 1>having people together can improve collaboration and productivity. But of

0:14:59.560 --> 0:15:01.320
<v Speaker 1>course the down us to be safe, and so the

0:15:01.400 --> 0:15:04.160
<v Speaker 1>real issue is to focus on the public health and

0:15:04.200 --> 0:15:07.480
<v Speaker 1>get people back to work for all the reasons you suggest.

0:15:07.760 --> 0:15:09.760
<v Speaker 1>Having said that, I don't think the new world will

0:15:09.800 --> 0:15:12.680
<v Speaker 1>look like yold. I think companies will have to adjust

0:15:12.800 --> 0:15:15.680
<v Speaker 1>and be more flexible to work from home, just not

0:15:15.800 --> 0:15:17.840
<v Speaker 1>as extreme as all the time. Glenn, can I make

0:15:17.840 --> 0:15:20.280
<v Speaker 1>a suggestion that those empty shafts behind you, we filled

0:15:20.280 --> 0:15:24.440
<v Speaker 1>them with your new book. We're moving to a new

0:15:24.520 --> 0:15:26.960
<v Speaker 1>campus in a week, so they've just packed up my office.

0:15:26.960 --> 0:15:30.880
<v Speaker 1>I'm not part of the great resignation. Just wanted to

0:15:30.920 --> 0:15:33.720
<v Speaker 1>try and find out, Glenn. As this book release comes

0:15:33.720 --> 0:15:35.760
<v Speaker 1>out early next year, can you walk us through it? Glenn?

0:15:35.760 --> 0:15:38.560
<v Speaker 1>What's in the book? What's the objective? What's the essencelf

0:15:38.600 --> 0:15:41.280
<v Speaker 1>In Sure, it's a book called The Wall in the Branch.

0:15:41.400 --> 0:15:44.479
<v Speaker 1>It's a love letter to Adam Smith across the centuries,

0:15:44.760 --> 0:15:49.760
<v Speaker 1>uh founder of modern capitalism and economics. Basically, we're living

0:15:49.800 --> 0:15:52.720
<v Speaker 1>in a world a big change, and big change means

0:15:52.760 --> 0:15:55.600
<v Speaker 1>good things to a lot of people, but disruption for others.

0:15:56.160 --> 0:15:59.240
<v Speaker 1>Our policy makers on both sides have tended to try

0:15:59.280 --> 0:16:01.960
<v Speaker 1>to build walls on the left and the right to

0:16:02.000 --> 0:16:05.440
<v Speaker 1>protect people betters to go back to small and other

0:16:05.520 --> 0:16:07.720
<v Speaker 1>classical fingers. You wanted to build bridges. How do you

0:16:07.760 --> 0:16:11.400
<v Speaker 1>help people compete? How do you bring communities back? That's

0:16:11.400 --> 0:16:13.840
<v Speaker 1>what the books about, really really thoughtful stuff. And Glenn,

0:16:13.840 --> 0:16:16.520
<v Speaker 1>you're always generous with your time. We appreciate it. So Professor,

0:16:16.520 --> 0:16:25.480
<v Speaker 1>thank you, Glenn over there of Columbia, Dctor, thanks for

0:16:25.480 --> 0:16:28.800
<v Speaker 1>being with us. Dr Chris Bira, Professor the JOHNS. Halkins

0:16:28.840 --> 0:16:31.520
<v Speaker 1>Bloombergh School of Public Health, Dodger. I want to start

0:16:31.520 --> 0:16:33.880
<v Speaker 1>here because yesterday all we talked about was this lamb

0:16:33.920 --> 0:16:36.360
<v Speaker 1>based study from Fire to Beyond Tech. Can you help

0:16:36.480 --> 0:16:39.640
<v Speaker 1>us understand the difference between a lamp based study and

0:16:39.760 --> 0:16:42.920
<v Speaker 1>a real world study. How wide the gap is between

0:16:42.920 --> 0:16:46.920
<v Speaker 1>the two. Well, you know, the lab studies are very

0:16:46.960 --> 0:16:49.640
<v Speaker 1>informative and they're important, but at the end of the day,

0:16:49.640 --> 0:16:52.920
<v Speaker 1>what really matters is what the real world data looks like.

0:16:52.960 --> 0:16:58.000
<v Speaker 1>What we're seeing with infections, hospitalization, serious disease fisor study

0:16:58.280 --> 0:17:02.360
<v Speaker 1>UM was small, fewer than fifty people. It's lab based data.

0:17:02.560 --> 0:17:07.520
<v Speaker 1>It suggests good antibody responses to O macron with the

0:17:07.560 --> 0:17:11.640
<v Speaker 1>third dose boost in this small number of people UM.

0:17:11.640 --> 0:17:14.119
<v Speaker 1>But there's other data that we're more excited about, like

0:17:14.280 --> 0:17:17.119
<v Speaker 1>the fact that what we're seeing from South Africa is

0:17:17.160 --> 0:17:20.120
<v Speaker 1>that many of the people hospitalized with A macron are

0:17:20.200 --> 0:17:22.959
<v Speaker 1>on room air and don't appear to be as gravely

0:17:23.040 --> 0:17:26.240
<v Speaker 1>ill as people, for example, infective with delta. Dr Buyer.

0:17:26.320 --> 0:17:28.440
<v Speaker 1>I've been asking for a couple of months now, when

0:17:28.480 --> 0:17:32.160
<v Speaker 1>we can transfer from a pandemic to something endemic when

0:17:32.160 --> 0:17:35.880
<v Speaker 1>the illness is not severe enough, whether because of immunizations

0:17:36.040 --> 0:17:38.600
<v Speaker 1>or because of a variant, it isn't as severe to

0:17:38.680 --> 0:17:40.600
<v Speaker 1>allow us to treat it like the cold. Are we

0:17:40.600 --> 0:17:45.000
<v Speaker 1>getting close? Is O macron close to that threshold? Well? Unfortunately,

0:17:45.040 --> 0:17:47.240
<v Speaker 1>you know the world is in a serious delta search.

0:17:47.400 --> 0:17:50.360
<v Speaker 1>So I think right now the answer is no. Infections

0:17:50.359 --> 0:17:52.600
<v Speaker 1>are up in Europe as you know they're up here.

0:17:53.600 --> 0:17:57.600
<v Speaker 1>We are approaching eight hundred thousand American dead. We're going

0:17:57.640 --> 0:18:01.159
<v Speaker 1>to pass that threshold in a few days, is uh.

0:18:01.200 --> 0:18:05.359
<v Speaker 1>And we had a hundred eighteen thousand infections yesterday. Most

0:18:05.359 --> 0:18:08.000
<v Speaker 1>of that or almost all of it is delta. So

0:18:08.480 --> 0:18:11.200
<v Speaker 1>I think the answer so far is no. It does

0:18:11.240 --> 0:18:15.840
<v Speaker 1>appear that O macron is more transmissible even than delta.

0:18:16.160 --> 0:18:18.600
<v Speaker 1>And if it is really true, and we'll know that

0:18:18.640 --> 0:18:22.160
<v Speaker 1>in another week or two, that it's a milder disease. Uh,

0:18:22.400 --> 0:18:26.879
<v Speaker 1>that may be something of attorney, but for right now,

0:18:26.920 --> 0:18:28.879
<v Speaker 1>we're in the middle of a serious delta search. Can

0:18:28.920 --> 0:18:31.600
<v Speaker 1>you elaborate on that this idea that if it is

0:18:31.880 --> 0:18:34.680
<v Speaker 1>four or more times as transmissible as a delta variant,

0:18:34.760 --> 0:18:37.440
<v Speaker 1>is this one Japanese study showed and it is less

0:18:37.520 --> 0:18:40.160
<v Speaker 1>virulence that it could cause her immunity. And I hate

0:18:40.200 --> 0:18:42.000
<v Speaker 1>to use this when it's Tom Keene's birthday, but her

0:18:42.040 --> 0:18:45.639
<v Speaker 1>immunity in a more efficient way. How realistic is that

0:18:45.720 --> 0:18:48.280
<v Speaker 1>possibility among some of the health care professionals that you

0:18:48.320 --> 0:18:53.520
<v Speaker 1>speak with, well, I herd immunity has been elusive, unfortunately, Lisa.

0:18:53.600 --> 0:18:56.560
<v Speaker 1>And one of the reasons why is because one of

0:18:56.600 --> 0:18:59.639
<v Speaker 1>the things we've seen with O macron that's concerning is

0:18:59.680 --> 0:19:03.600
<v Speaker 1>that any of the people infected with omicron have recovered

0:19:03.640 --> 0:19:08.280
<v Speaker 1>from previous infections with coronavirus, So natural immunity does not

0:19:08.440 --> 0:19:12.119
<v Speaker 1>appear to be that protective. What we really need to see,

0:19:12.160 --> 0:19:17.040
<v Speaker 1>of course, is people getting their full immunization and then

0:19:17.200 --> 0:19:20.359
<v Speaker 1>now clearly needing to be boosted. If you look at

0:19:20.359 --> 0:19:24.000
<v Speaker 1>the total US population including children under five, we're only

0:19:24.040 --> 0:19:27.720
<v Speaker 1>at six percent fully immunized, So that is not enough

0:19:27.800 --> 0:19:31.040
<v Speaker 1>to achieve herd immunity in this country for sure. When

0:19:31.040 --> 0:19:33.040
<v Speaker 1>we look at the policy response to this in the

0:19:33.080 --> 0:19:36.200
<v Speaker 1>public sector in the UK, for example, where they're putting

0:19:36.200 --> 0:19:39.280
<v Speaker 1>in massive restrictions on the entire country, or the private

0:19:39.280 --> 0:19:41.200
<v Speaker 1>sector here in the U S where you have Jeffrey

0:19:41.240 --> 0:19:43.440
<v Speaker 1>saying work from home again, lift pushing their return to

0:19:43.480 --> 0:19:47.760
<v Speaker 1>office date out into what is the appropriate policy response

0:19:47.800 --> 0:19:52.120
<v Speaker 1>at this point in the pandemic, given how little we know, well,

0:19:52.600 --> 0:19:55.560
<v Speaker 1>I have to say that I think the vaccine mandates

0:19:55.640 --> 0:19:59.000
<v Speaker 1>are a very important part of this. And by the way,

0:19:59.240 --> 0:20:02.320
<v Speaker 1>as I've said four to you all, they are constitutional,

0:20:02.600 --> 0:20:05.360
<v Speaker 1>at least as far as the five case that went

0:20:05.400 --> 0:20:07.600
<v Speaker 1>to the Supreme Court in the case of the smallpox

0:20:07.680 --> 0:20:11.160
<v Speaker 1>vaccine mandate, and it was determined to be constitutional. So

0:20:11.200 --> 0:20:15.439
<v Speaker 1>I think the workplace employment mandate that President Biden has

0:20:15.480 --> 0:20:19.400
<v Speaker 1>put forward is a really important policy step. In the meantime,

0:20:19.640 --> 0:20:21.679
<v Speaker 1>we are in the middle of a delta surge. We

0:20:21.720 --> 0:20:24.200
<v Speaker 1>are seeing that related to the winter and the cold

0:20:24.280 --> 0:20:27.520
<v Speaker 1>weather and people going inside, and that means that non

0:20:27.640 --> 0:20:31.880
<v Speaker 1>vaccine interventions like indoor mask mandates and people working from

0:20:31.880 --> 0:20:35.960
<v Speaker 1>home are again going to be important. We know now

0:20:36.080 --> 0:20:39.080
<v Speaker 1>the O macron is here in fifty states. We're still

0:20:39.359 --> 0:20:42.840
<v Speaker 1>very carefully following this to see if indeed it's going

0:20:42.880 --> 0:20:45.679
<v Speaker 1>to be less virulent um. But of course in the

0:20:45.680 --> 0:20:49.159
<v Speaker 1>middle of a delta surge, we need to really practice

0:20:49.359 --> 0:20:52.840
<v Speaker 1>the basics of control of coronavirus. Dot gonna catch out

0:20:52.880 --> 0:20:55.400
<v Speaker 1>with you, sir, Dr Chris Biro that at John's helpines.

0:20:56.040 --> 0:20:59.800
<v Speaker 1>This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

0:20:59.880 --> 0:21:03.240
<v Speaker 1>us live weekdays from seven to ten am Eastern on

0:21:03.359 --> 0:21:07.600
<v Speaker 1>Bloomberg Radio and on Bloomberg Television each day from six

0:21:07.720 --> 0:21:12.600
<v Speaker 1>to nine am for insight from the best in economics, finance, investment,

0:21:12.720 --> 0:21:17.720
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<v Speaker 1>Apple podcast, SoundCloud, Bloomberg dot com, and of course on

0:21:21.760 --> 0:21:25.919
<v Speaker 1>the terminal. I'm Tom keene In. This is Bloomberg