Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: on YouTube search Bloomberg clovel News. Alright, let's get back
Speaker 1: to uh, some of what we're seeing in the world
Speaker 1: of COVID and vaccines. The Biden administration we mentioned offering
Speaker 1: drug manufacturers. We're talking about fives or Maderna UH funding
Speaker 1: to expand annual production domestic production, specifically of Messenger RNA
Speaker 1: vaccines by a billion at the b a billion doses
Speaker 1: by the second half of next year. That's significant. That's
Speaker 1: government support, right, very significant. I mean you look to
Speaker 1: doses is what we're supposed to get, at least for
Speaker 1: our first set of doses. But if you think about
Speaker 1: each American needing three, uh, then that covers each American
Speaker 1: and ongoing perhaps. Yeah, well that's the question, right, how
Speaker 1: many boosters are we going to need? Yeah? And meantime,
Speaker 1: we've got new infections in Germany rising to a record
Speaker 1: and death. Let's just get to it though our deli
Speaker 1: check on COVID. Let's bring a pediatrician. Dr Peter Antal.
Speaker 1: He's chief medical officer at the Behavioral Health Solution Company.
Speaker 1: It's specifically geared for kids, teens, their families. He joins
Speaker 1: us on the phone in South Lake Tahoe. Dr Antal,
Speaker 1: Nice to have you here with us. How are you, thanks, Carol.
Speaker 1: It's it's great to be here, and I'm doing great well, great, sure,
Speaker 1: thanks for bringing me on. Well, it's great to have
Speaker 1: you here. Not doing so great though, are certain areas
Speaker 1: of the world when it comes to COVID. We're still,
Speaker 1: you know, keeping an eye on kids. We're seeing it
Speaker 1: rollout for certain kids here in New York City and elsewhere. Um,
Speaker 1: how do you see what's going on with COVID, especially
Speaker 1: with the population you deal with, which is a younger population. Yeah, yeah, absolutely,
Speaker 1: you know, we we we we don't tend to focus
Speaker 1: on children when we're talking about COVID because they don't
Speaker 1: tend to get usually as sick as as older adults
Speaker 1: do unless they have a chronic condition. Um. But but
Speaker 1: you know, children are spreaders of disease, and uh, children
Speaker 1: still do get COVID, they still do get hospitalized. And
Speaker 1: I think the last number I saw, they've been sediatric
Speaker 1: deaths due to COVID since the pandemic began. So it's
Speaker 1: still a serious issue. I think that you know, we're
Speaker 1: we're excited that the vaccines are now being tested and
Speaker 1: proven to be effective and safe down to at least
Speaker 1: for the Fiser vaccine, now down to age five, so
Speaker 1: it gives us an opportunity to try to better protect
Speaker 1: the children. It is a serious issue. It's also can
Speaker 1: be very disruptive to people's lives. And I'm speaking as
Speaker 1: a parent of a nearly three year old who's home
Speaker 1: from nursery school right now because school is canceled until
Speaker 1: at least Friday, because one of the parents of one
Speaker 1: of the kids in my son's class has a breakthrough case.
Speaker 1: And I wonder, we don't know if anyone else has COVID,
Speaker 1: and likely they don't, fortunately, and everybody's healthy, but it
Speaker 1: certainly is disruptive to a lot of families out there
Speaker 1: right now. I'm I'm wondering, dr antal when we can
Speaker 1: expect to have vaccines available for the youngest in our population,
Speaker 1: those under the age of five. You know, it's a
Speaker 1: good question, and it's it's hard to put a timeline
Speaker 1: on that, you know, I think both are all of
Speaker 1: the vaccine manufacturers, of course, started with with adults and
Speaker 1: then are marching down in in age groups and testing serially.
Speaker 1: Um so, the testing, uh is ongoing. I think we
Speaker 1: should expect vaccine availability down to at least age six
Speaker 1: months sometime and I would hope and then in the
Speaker 1: next year or so. Okay, well that's not bad. Well,
Speaker 1: and I'm gonna let you play with this tim because
Speaker 1: I feel like you've got a younger one. I've got
Speaker 1: an older one. She's vaccinated, she can get her boosters
Speaker 1: and things like that. Um well, since around top of
Speaker 1: mind for you especially, it's it's it's basically like, this
Speaker 1: is our life right now, and we're choosing again not
Speaker 1: to fly with our son to see family, and for
Speaker 1: the second year in a row, we haven't been back
Speaker 1: to visit my parents in California. We have been able
Speaker 1: to see them, but you know, he hasn't been there
Speaker 1: since gosh twenty Yeah, and I just wonder if this
Speaker 1: is I turned to my wife the other day and said,
Speaker 1: this is our life, for the for the for this
Speaker 1: is like how we're thinking about things now. I mean,
Speaker 1: this is kind of the new normal right now, and
Speaker 1: I'm wondering, uh dr ante if it goes back to
Speaker 1: what we had before, not being concerned about this. Yeah, well,
Speaker 1: you know, I think what we don't know right now
Speaker 1: is what what what's the future going to look like?
Speaker 1: You know, is is COVID gonna eventually be conquered and
Speaker 1: go away or are we just gonna have to learn
Speaker 1: to live with it and have to get you know,
Speaker 1: periodic vaccines maybe every few years, uh, something analogous to
Speaker 1: what we do with influenza those, although those are recommended
Speaker 1: of course yearly. Um, we just don't know, and it's
Speaker 1: that that uncertain is just so challenging. You know. It
Speaker 1: feels as though we've we've made progress. We're back out
Speaker 1: and going to restaurants and things like this, many of us,
Speaker 1: but we're still not quite there, and I think, you know,
Speaker 1: I want to turn it to the impact on children.
Speaker 1: You know, imagine, if you're an eight year old, a
Speaker 1: quarter of your life has been in the age of COVID. Yeah, um,
Speaker 1: the impact on their development, the impact on their mental health,
Speaker 1: um is really substantial. Well because a survey a Lurry
Speaker 1: Children's it said, uh of parents are worried about their
Speaker 1: child's mental mental health right now. Yeah. A colleague of mine,
Speaker 1: I remember a few months ago and I'm like, how
Speaker 1: you doing? And hes a young child, and he's like,
Speaker 1: I've got a young child. I think, you know, it's
Speaker 1: probably depressed because I can't play with friends, can't go outside,
Speaker 1: can't do anything, and how do you You know, you
Speaker 1: definitely have to see get some help because this is
Speaker 1: just a really tough on kids. You do. But at
Speaker 1: the same time, we do have vaccines available for those
Speaker 1: kids ages five and up. And I've seen just a
Speaker 1: sea change with my friends with kids those ages who
Speaker 1: have been able to get their kids vaccinated. They are
Speaker 1: so grateful. Right, it's a comfort level. It's just like
Speaker 1: the rest of us. There's some stress that's taken off
Speaker 1: that you can be out in the world. Um. Dr
Speaker 1: Peter Antal, Thank you so much, pediatrician, chief medical officer
Speaker 1: at bright Line. On the phone from South Wake, Tahoe, California.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovich from Bloomberg Radio. So perhaps a
Speaker 1: sign of Tesla's success. We're going to get into that
Speaker 1: in just a moment of validation of the e V
Speaker 1: world in a company though with no sales worth a
Speaker 1: hundred and fifty billion dollars, that is really an automotive
Speaker 1: which shout out of the ip O gate just last
Speaker 1: week doubled in value before dipping back. Just to hair,
Speaker 1: It's still up, Tim, since becoming a publicly held company
Speaker 1: billion dollars in market cap, fewer than one hundred of
Speaker 1: these vehicles sold so far, Joel, would Van be the
Speaker 1: company that it is today without that investment from Amazon, However,
Speaker 1: Editor Bloomberg Business Week, along with Matt Winkler, who is
Speaker 1: of course editor in chief Amritus here at Bloomberg News. Uh,
Speaker 1: the answer to that is a definite no. Um. There
Speaker 1: was one company that basically has has laid an appetite
Speaker 1: for electric vehicles, not only in the US, but globally,
Speaker 1: and that company is Tesla, right, Matt, correct? So can
Speaker 1: you talk about the assignment was let's talk about Rivian
Speaker 1: Ribvians going public. This other company ten years ago went public.
Speaker 1: How did they compare when they went public? Man, So, Joel,
Speaker 1: you are actually the person to answer your own question,
Speaker 1: but I'll do it for you because you said, you know,
Speaker 1: I think this piece really belongs in the technology section
Speaker 1: of Bloomberg Business Week, And I think by that you
Speaker 1: meant really what this is about more than anything else,
Speaker 1: It's less about cars per se and more about technology.
Speaker 1: And what Tesla is about is that back in two
Speaker 1: thousand ten when it went public, uh, it was promising
Speaker 1: something that was completely absent from the automotive industry, and
Speaker 1: that is the zero mission vehicle. And this is at
Speaker 1: a time when not a lot of people yet have
Speaker 1: truly appreciated the existential threat of climate change. The thing
Speaker 1: that happened was that Tesla turned out to be a
Speaker 1: great product from the get go, and that people who
Speaker 1: bought the Model US for example, yours truly included a
Speaker 1: long time ago two thousand fourteen, realized it was every
Speaker 1: bit as competitive, if you like, and comfortable and efficient
Speaker 1: in fact, some ways much more so than an internal
Speaker 1: combustion engine. And Tesla to answer Joel's question with a fact,
Speaker 1: Teslas sold four hundred times four hundred times the average
Speaker 1: annual growth of the automotive industry in a ten year period.
Speaker 1: Think about that four hundred times now when you think
Speaker 1: that's like eyeballs. Okay, we all get excited about eyeballs
Speaker 1: these days. In technology, Tesla was able to create something
Speaker 1: and that of course paved the way for Ribbyan and
Speaker 1: these other companies. And that's why Ribban has the valuation
Speaker 1: that it has. Okay, but this is no easy feet
Speaker 1: and it's something that Elon Musk tweeted about. He tweeted,
Speaker 1: when Ribbian when public, I hope they're able to achieve
Speaker 1: high production and break even cash flow. There have been
Speaker 1: hundreds of automotive startups, both electric and combustion, but Tesla
Speaker 1: is the only American car maker to reach high volume
Speaker 1: production and positive cash flow in the past one years.
Speaker 1: How does Rivian do this? Well, there's someone called Jeff
Speaker 1: Bezos for one thing, and Amazon, and uh, that's a
Speaker 1: pretty formidable Uh if you like backer big shareholder, biggest shareholder,
Speaker 1: and that is something that makes Ribban very different from
Speaker 1: Tesla when it started. You're absolutely right, or he's absolutely
Speaker 1: right that Musk turns out to be a relative miser
Speaker 1: by comparison to ribbyan um in the spending of money. Uh.
Speaker 1: Certainly in the two years before it went public, Ribban
Speaker 1: has spent far more money, uh Tesla spent of what
Speaker 1: Rivian spent. Having said that, though the world's changed, and
Speaker 1: so the betting is that because the world's changed, and
Speaker 1: because Amazon has already ordered a hundred thousand van, and
Speaker 1: there's some thinking here that vans are really an important
Speaker 1: part of the market that people haven't thought about until
Speaker 1: Rivan came along. And Rivan is going to benefit from
Speaker 1: all kinds of commercial logistics operators. It's not just Amazon
Speaker 1: are going to embrace the electric van, uh, and they
Speaker 1: first move her advantage in that right, they could be
Speaker 1: for sure. I mean, you know, that's where they are
Speaker 1: right now, and that partly explains why they're where they are.
Speaker 1: But coming back to Musk's point, if you're an investor
Speaker 1: and you're a shareholder, you have to take seriously what
Speaker 1: he's saying, because it's true in a hundred years, whether
Speaker 1: you're looking at internal combustion engines or electric Uh. No
Speaker 1: one has been able to get the kind of break
Speaker 1: even cash flow performance that Tesla has, and that makes Tesla,
Speaker 1: you know, stand out for sure. One thing I wanted
Speaker 1: to ask you what's missing Cathy Wood? And I know
Speaker 1: you've covered her a lot. You've talked to her a lot.
Speaker 1: I've talked to her a lot. We've talked to her
Speaker 1: a lot. Um she didn't invest in Rivan, did she know? Right?
Speaker 1: And we did catch up with her um somewhat belatedly
Speaker 1: right after the ribby and I p O. And what
Speaker 1: we really wanted to know was has she changed her
Speaker 1: view in any way? Uh? In her view, of course,
Speaker 1: is she's an unabashed UH supporter of Tesla, remains so
Speaker 1: and believes that Tesla, for example, has billions of miles
Speaker 1: if you like, of memory that is incorporated in the
Speaker 1: Tesla ecosystem that no other EV maker has and that
Speaker 1: is a huge advantage when we get to things like
Speaker 1: automotive uh self driving vehicles, that Tesla has a huge
Speaker 1: advantage over everyone. And she hasn't changed her view there,
Speaker 1: you know, Matt, As long as we're we've got our
Speaker 1: investor hat on here. The one that that the question
Speaker 1: I was wanted to ask you is And this was
Speaker 1: surprising because I think people forget about it when Tesla
Speaker 1: went pub lick did it have products? Because Rivian's gone
Speaker 1: in public and really doesn't have much of anything to
Speaker 1: show yet. Yeah, Tesla actually in two thousand and ten
Speaker 1: had the roadster, and the roadster had been around for
Speaker 1: many years actually and was written up by the Arbiters
Speaker 1: of Automotive Excellence as an excellent vehicle even though it
Speaker 1: was a roadster. So there was a lot of evidence
Speaker 1: to suggest that this electric vehicle that Tesla had created
Speaker 1: was a standout, and of course that paved the way
Speaker 1: for the models in two thousand UM twelve. So take
Speaker 1: away from Rivian and it's blockbuster, IPA, Tesla, You're for real?
Speaker 1: Is that kind of the takeaway? Year? Uh? If you
Speaker 1: asked Cathy would she would say? Yes, everything, um that
Speaker 1: you see from Tesla is definitely real, and only more
Speaker 1: so than it's only gonna it's only going to increase
Speaker 1: in just twenty seconds or thursdays. What does it mean
Speaker 1: for Rivian then, well, you know at this point it's
Speaker 1: almost rising tide lifts soul boats, um We're not just
Speaker 1: talking about Ribby. And there's Lucid, which is another highly brod. Look,
Speaker 1: here's the thing, here's the takeaway. More than two thirds
Speaker 1: of the top automakers in the world top ten, are
Speaker 1: now electric. Think about that. That was improbable, if not impossible,
Speaker 1: a year ago to say that's a short time That's
Speaker 1: a short time frame for such a big difference. The
Speaker 1: message investors are setting sending is evs are here to
Speaker 1: stay in there the future, and what are we talking
Speaker 1: about every day? Grifvian Tesla, Matt, thank you so much,
Speaker 1: really appreciate Matt Winkler. He's editor in chief Emeritus at
Speaker 1: Bloomberg News. Check him out at Bloomberg dot com. Joel Webber,
Speaker 1: thank you so much. This story in the upcoming issue
Speaker 1: of Bloomberg Business Week magazine. Joe, of course, editor of
Speaker 1: Bloomberg Business Week. That new issue out tomorrow newsstands online
Speaker 1: and oways on the Bloomberg terminal. You are listening to
Speaker 1: Bloomberg Radio. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinovik on Bloomberg Radio. So
Speaker 1: looking forward to this next guest. He and I email
Speaker 1: back and forth. Helas sends me thought thoughtful notes. Uh.
Speaker 1: And when it comes to the economy and some of
Speaker 1: the big trends that are going on, he's got a
Speaker 1: research note doubt and it's entitled It's not the economy Stupid,
Speaker 1: it is vulnerability. Not my words, they are the words
Speaker 1: of Peter Atwater. He's adjunct professor of economics. That William
Speaker 1: and Mary. He's back with us on the phone in Pennsylvania. Peter,
Speaker 1: how are you. I'm doing great. Thanks for having me back.
Speaker 1: So listen. It's great to have you back because Peter,
Speaker 1: you know you listen to us. As I said, you
Speaker 1: send notes and thoughts and observations. We are all talking
Speaker 1: a lot about inflation and supply shortages. The Bloomberg New
Speaker 1: Economy Forum is underway in Singapore. That is certainly top
Speaker 1: of mine on a global level. Um, whether it's tight
Speaker 1: labor markets, we see strong demand. There's like this really
Speaker 1: weird though disconnect because we keep talking about consumer sentiment.
Speaker 1: Everybody is so downtrodden. Um, what is your take on
Speaker 1: all of this? What's really important? So I think what's
Speaker 1: happened is that in the last year we've awakened to
Speaker 1: vulnerability and vulnerability A lot of people talk about it,
Speaker 1: you know, burn a Brown and folks think about it
Speaker 1: in a different way than I do. And I think
Speaker 1: of it in terms of vulnerability is the opposite of confidence,
Speaker 1: that when we don't have certainty, when we don't have
Speaker 1: control in our lives, we somehow feel threatened. Nowhere was
Speaker 1: that clear than with the pandemic last spring. But what
Speaker 1: we've seen since then has been this ebbing and flowing
Speaker 1: of vulnerability. And you know, you mentioned inflation and supply
Speaker 1: chain shortages, and that's that's scarcity. You know that, that's
Speaker 1: how we interpret both of them psychologically. And so I
Speaker 1: think that below the surface of these record markets is
Speaker 1: really growing anxiety that things are not as certain as
Speaker 1: we like them to be, and we're not quite sure
Speaker 1: what to do. So what is the connection between that
Speaker 1: vulnerability that you write about, lack of childcare, the ongoing pandemic.
Speaker 1: How does that manifest in a lack of spending or
Speaker 1: in consumer activity? What's the connection there? So I think
Speaker 1: that you have to look at it by economic strata,
Speaker 1: because you know, when I when I wrote about the
Speaker 1: k shaped recovery last year, it was about this divide
Speaker 1: in in confidence and ability, and so what you're seeing
Speaker 1: for those who do feel confident that there is, you know,
Speaker 1: almost this sense of unlimitedness in terms of what they
Speaker 1: can afford and what they can spend and what they
Speaker 1: are spending and spending on. But as you deep dig
Speaker 1: down deeper into the into different parts of the economy,
Speaker 1: you begin to realize that wage growth isn't keeping up
Speaker 1: and that people are now being forced to make real
Speaker 1: choices between what they can afford. You know, what do
Speaker 1: they need versus what do they want? So wait, Peter,
Speaker 1: So somebody at comes say wait a minute, Peter Atwater.
Speaker 1: You know, everybody keeps talking about we're paying workers more
Speaker 1: and more they're doing okay. We've also done the stories
Speaker 1: that it's not keeping up with inflation. So I mean,
Speaker 1: what is your what is your pushback against that that?
Speaker 1: You know, we do the stories on Wall Street about
Speaker 1: bonuses going up and you know, people jumping firms, Um,
Speaker 1: how do we make sense of that? So I think
Speaker 1: firms have to be really careful in trying to address
Speaker 1: what they think the problem is through money, because what's
Speaker 1: becoming very clear as I talked to businesses and business
Speaker 1: owners as you dig deeper. What they're finding is that
Speaker 1: the thing's employees need go beyond just more you know,
Speaker 1: higher wages. I mean, if you if you look at
Speaker 1: the strikes that are going on. Yes, wages are a
Speaker 1: part of it, but there's a much greater sense of
Speaker 1: working conditions. And you know, what do we do about
Speaker 1: child care? And you know, firms that didn't respond to
Speaker 1: the vulnerability that employees were feeling last year are really
Speaker 1: taking it in the shorts now are there? Is this
Speaker 1: a firm level approach though? Does it? Does it? Is
Speaker 1: that the most effective way to tackle it? Because you
Speaker 1: have Democrats in Washington saying this is the type of
Speaker 1: stuff we need to write into legislation. Yeah. I I'm
Speaker 1: a believer that when it comes to vulnerability, proximity matters.
Speaker 1: You know, every crisis is local, and so policy makers
Speaker 1: want to solve these problems with broad brushes. But whether
Speaker 1: you're Republican or Democrat, the issue is much more localized.
Speaker 1: And so I would much rather see you know, whether
Speaker 1: it's local communities or or businesses themselves, be given the
Speaker 1: tools to deal with this versus some sort of a
Speaker 1: top down approach. The top town takes too long, it
Speaker 1: tends to be too broad in its approach, and honestly,
Speaker 1: when we feel vulnerable, Washington feels very abstract to us.
Speaker 1: It's hard to gain a sense of control when when
Speaker 1: power is far away from you. Peter, you write, the
Speaker 1: great reassessment is not only a reflection, well, let me
Speaker 1: go back. Traumatic events also foster reconsideration for what matters
Speaker 1: and how with whom we wish to spend what we
Speaker 1: view as increasingly precious time. Been there, that's my own
Speaker 1: personal assessment. You go on to say, the great reassessment
Speaker 1: is not only a reflection of that, but a reflection
Speaker 1: of the fact that we never go back to before
Speaker 1: after trauma. Our actions are framed our experience, and we
Speaker 1: move forward looking to eliminate the vulnerability we've experienced. We
Speaker 1: must create new norms, routines, and habits. Will you say, then,
Speaker 1: go as far as as as a society and certainly
Speaker 1: as a professional corporate society. We're not facing up to
Speaker 1: that yet. We I feel like we see it with
Speaker 1: the tug between hybrid not hybrid, going back to the
Speaker 1: office not going back, you know, corporate executives saying, oh yeah,
Speaker 1: we're cool, We're all in on you know, flexibility, and
Speaker 1: yet behind the scenes they're not UM. Yeah. So so
Speaker 1: I really believe that when we don't go back to
Speaker 1: what was, And so I think business leaders who are
Speaker 1: expecting employees to go back are are missing a very
Speaker 1: significant part of this, which is one, you know, the
Speaker 1: longer people are out, the fewer employees will actually come back.
Speaker 1: Just statistically, you know, at this point you're lucky if
Speaker 1: se your folks come back just based on turnover. But
Speaker 1: but I think that the bigger concern here is that
Speaker 1: companies are not hearing the vulnerabilities that people that employees
Speaker 1: have experienced in the last year, and so they need
Speaker 1: to be listening for where do employees feel like they
Speaker 1: don't have control today, whether it's in their workplace or
Speaker 1: at home, and what do they still think is uncertain
Speaker 1: as far as the work environment. With us is Peter Atwater,
Speaker 1: Adjunct Professor of Economics, Everet William and Mary still with
Speaker 1: us on the phone in Pennsylvania. So, Peter, you're talking
Speaker 1: about UM recognizing how the vulnerability that's out there and
Speaker 1: what that is doing to individuals people's confidence. And I
Speaker 1: do wonder what's the significance of the world of companies
Speaker 1: not facing up to that we're not going to go
Speaker 1: back to life as it was before our trauma, which
Speaker 1: was the pandemic. And I guess what I'm getting to
Speaker 1: And my producers know this really well. Like when we're
Speaker 1: booking a guest or somebody says something, it's like, tell
Speaker 1: me why I care? Tell me why as a human
Speaker 1: I care? Why is an investor I care about this?
Speaker 1: You care about this because vulnerability is as much a
Speaker 1: cognitive condition as it is anything else. So your employees
Speaker 1: are preoccupied. They're worried about something that happening in their life,
Speaker 1: not what is driving your business. Um And I think
Speaker 1: for employers, they need to recognize that that has a
Speaker 1: real impact on your on their bottom line. That and
Speaker 1: I know from experience, you know, working with managers who
Speaker 1: have found that, you know, it's it's the car trouble
Speaker 1: that that an employee faces that is what is making
Speaker 1: it difficult for them to show up on work and
Speaker 1: to pay attention at work because they're worried about that
Speaker 1: or the child care or these these things that seemingly
Speaker 1: feel minor to many corporate leaders. Is what is preoccupying
Speaker 1: their employees day in and day out. Are the economic
Speaker 1: incentives though aligned for for companies on a broad level
Speaker 1: to take those concerns seriously. And I'm talking about I'm
Speaker 1: not talking about people who our salaried and have four
Speaker 1: oh one case. I'm talking about people who work in
Speaker 1: hourly possessions and you probably work during the pandemic. Absolutely, yeah.
Speaker 1: I I think you're seeing this in healthcare where where
Speaker 1: nurses and emergency room doctors are saying I've had enough,
Speaker 1: and so you're you're seeing people make deliberate um life choices,
Speaker 1: career choices that have significant ripple on effects to to
Speaker 1: the rest of society. And I think that you know,
Speaker 1: where there has been the greatest grievances today on the
Speaker 1: employee front are those who have experienced the pandemic outside
Speaker 1: of the home, those who stood for a living, and
Speaker 1: I think that increasingly they feel unheard, having provided in
Speaker 1: many cases heroic help, you know, in health and food,
Speaker 1: in transportation, and are wondering to what end. So what's
Speaker 1: interesting too, and it's you know, you say um about
Speaker 1: especially Peter in the healthcare area. We talked with dry
Speaker 1: Mona Abos yesterday. She's the CEO of an Incredible Health
Speaker 1: and she works with the nursing industry and helping healthcare
Speaker 1: systems get access to the nurse care that they need,
Speaker 1: and talked about the toll and has taken on these
Speaker 1: individuals UH and how there's a real shortage of nurses
Speaker 1: at this point. So as we look forward and we
Speaker 1: try to figure out what two looks like if we
Speaker 1: underestimate the impact of individuals feeling vulnerable UH and what
Speaker 1: that means in terms of productivity and economic growth, it
Speaker 1: sounds like we are very much at risk of seeing
Speaker 1: a potential slowdown or missing out on signs of a
Speaker 1: policy mistake by missing something like this, that will play
Speaker 1: into and I'm not I'm not trying to be so cold,
Speaker 1: but we'll play into the economic statistics that will, you know,
Speaker 1: bear out maybe later next year. Yeah. I think that's white,
Speaker 1: particularly because in many aces, these are stacked vulnerabilities. And
Speaker 1: on the one hand, you have those who have worked
Speaker 1: outside of the home, you know, day in and day
Speaker 1: out for the past eighteen months. And on the other hand,
Speaker 1: you have stacked confidence, stacked privileges it were, for those
Speaker 1: who have been able to easily navigate the pandemic. And
Speaker 1: I don't think those I think one of the things
Speaker 1: the pandemic has created is blindness and a lack of
Speaker 1: awareness to the condition of those who serve this this
Speaker 1: amazing deliver it any time, day or night to your
Speaker 1: doorstep economy. Yeah, that's not to be underestimated. And we're
Speaker 1: seeing that in the supply chain. You know, it's just
Speaker 1: one one window into it exists. Just to build on
Speaker 1: Carol's question, Peter, do you see a fundamental shift on
Speaker 1: the other side of the pandemic. I think early on
Speaker 1: in the pandemic, we felt this sort of unity, uh
Speaker 1: and in a pre creation for so many of these people,
Speaker 1: And I'm wondering if that has manifested in higher wages
Speaker 1: and an appreciation that is manifested in something tangible, and
Speaker 1: if that sticks on the other side. Yeah, I'm more
Speaker 1: afraid tim of zero sum thinking developing where increasingly because
Speaker 1: people are frustrated, they feel that someone's gain has come
Speaker 1: at their own expense. Yeah. Uh no. It's certainly something
Speaker 1: to kind of absolutely layer on as we look at
Speaker 1: what's going on in the economy and trying to understand.
Speaker 1: And it's interesting, Peter, considering we've had a lot of
Speaker 1: conversations with CEOs and leaders who are saying they're paying
Speaker 1: attention to the stresses on workers um and trying to
Speaker 1: make sure that they meet their needs. But it sounds
Speaker 1: like there's a lot of gaps in that. Yeah, I
Speaker 1: mean we see that playing out. I think we see
Speaker 1: that playing out on Wall Street right now, certainly, and
Speaker 1: we see it with the pushback and we see it
Speaker 1: particularly with Jane Fraser at City. It's a good point. Absolutely,
Speaker 1: Peter Atwater, thank you so much. I always give us
Speaker 1: UM some things to think about. AGECT Professor of Economics
Speaker 1: Everett william and Mary on the phone from penn Sylvania.
Speaker 1: Can check him out on Twitter at Peter Underscore at Water.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio. All Right, everybody,
Speaker 1: just about nine and a half minutes left in today's
Speaker 1: trading session. Definitely a risk off trade. We've seen yields
Speaker 1: back off. Let's get to it with Alan Zaffron back
Speaker 1: with us founding partner in co CEO and i e
Speaker 1: Q Capital. He is once again on the phone from
Speaker 1: Foster City, California. Alan, how are you well. I'm doing great,
Speaker 1: But there was a four point one earthquake about twenty
Speaker 1: miles from me about an hour ago. So we have
Speaker 1: a little shaken up here on the four. Okay, we're
Speaker 1: doing fine. Wow, But you know, you're a Californian. I'm
Speaker 1: a Californian life. It's a factive life. We were used
Speaker 1: to this stuff, right, Yeah, San Ramon is back on
Speaker 1: the map, check it out four point one. But we're
Speaker 1: doing fine. Well, you know, I feel like that's reflective
Speaker 1: of what's going on in the market. It's then like
Speaker 1: we're falling off a cliff or anything. We're actually still
Speaker 1: kind of near eyes in terms of records on equity averages,
Speaker 1: that's for sure. But sure, but there's definitely some volatility
Speaker 1: in the marketplace. You're allan, yeah, no question, But I
Speaker 1: actually think the markets settling down, and I don't think
Speaker 1: people are totally focused on it. You You know. Well, here's
Speaker 1: here's what I'm saying. You know, the way Gretzky saying,
Speaker 1: you don't skate to where the puck has been, You
Speaker 1: scat skate to where it's going. So many inflation inflation
Speaker 1: Easta's out there worrying inflation is going to be out
Speaker 1: of control if the tenure Treasury is said at one
Speaker 1: point six percent, and it's been here for month after
Speaker 1: month after month, despite everyone worried about inflation. It's telling
Speaker 1: the inflation probably is temporary. It probably isn't going to
Speaker 1: be permanent. And so when you headed the next year,
Speaker 1: you're gonna see growth slowing and growth gonna be slow
Speaker 1: because we're gonna get past this rebound from COVID rates
Speaker 1: being higher, are going to start slowing down growth. You've
Speaker 1: had a really strong US dollar that slows down growth,
Speaker 1: particularly the emerging markets and developed markets. China is slowing.
Speaker 1: All of that slows down this concern about inflation. And
Speaker 1: you know what it does. It sets us up for
Speaker 1: the world we knew before COVID slower growth, the growth stocks,
Speaker 1: the tech names tend to dominate. Again, we're not contracting.
Speaker 1: We still can generate profits and the world will be okay.
Speaker 1: But the world's kind of settling. I think back into
Speaker 1: that scenario. I don't think we're racing up to three
Speaker 1: ten your treasury yields, and therefore I just don't think
Speaker 1: the market is going to be that disheveled. You know,
Speaker 1: barring all kinds of exogenous shocks, you can never predict,
Speaker 1: so you're on trans transitory I do. I'm in the
Speaker 1: transitory set. I think the combination of youth already having
Speaker 1: moved up, oil prices moving up, China's conundrum, and a
Speaker 1: strong dollar all put headwinds, if you will, or pressure
Speaker 1: on global economic growth going fast enough to create permanence
Speaker 1: of inflation at a problematic levels. Problem is, we sit
Speaker 1: and focus on restaurants and leisure travel and nail salons,
Speaker 1: and those things might be part of Main Street, but
Speaker 1: they're actually a very small percentage of Wall Street. That
Speaker 1: ST five or an index is not dominated by commodity
Speaker 1: laden enterprises, and so stocks can go up in this
Speaker 1: world where costs of wages, you know, some of these
Speaker 1: in restaurants and some of the costs of commodities are
Speaker 1: going up a bit, but not enough to stop this
Speaker 1: stock market. Something else is going to have to break
Speaker 1: this market. I don't think it's going to be inflation.
Speaker 1: You do think it's gonna be inflation. But when you
Speaker 1: look at the price increases of so many different categories right,
Speaker 1: very broad based in terms of increases, uh, they're pretty significant.
Speaker 1: You see the numbers alone in a bubble, and it's
Speaker 1: hard not to be shocked by them. What's the reality
Speaker 1: of those numbers? Alan, And do they as much as
Speaker 1: they've gone up, do they significantly come down? Yeah? Well,
Speaker 1: the reality is the cost of my Thanksgiving turkey has
Speaker 1: gone up a lot in the Cranberry sauce. The cost
Speaker 1: of my trip vacation this December, if I fly, has
Speaker 1: gone up a lot. But when you look forward, higher
Speaker 1: energy prices, higher borrowing, you'll China's secular shift down and growth.
Speaker 1: That all is gonna weigh on economic growth. And you're
Speaker 1: already starting to see the p m i s, the
Speaker 1: purchasing manager indexes that we, or at least economists focus on,
Speaker 1: they're starting to roll over. And generally inflationary statistics dropped
Speaker 1: three to six months after the p m I s
Speaker 1: have crested, and they've already crested. And that's I think
Speaker 1: why that bond market also is sort of cresting here.
Speaker 1: Did No, I don't think it's recessionary because it's just
Speaker 1: to start in the US, But the US is probably
Speaker 1: the strongest market for the most part, certainly to develop world.
Speaker 1: In two thousand twenty two, you're gonna see greater weakness
Speaker 1: in the Eurozone. That's probably gonna be the weakest major economy.
Speaker 1: China is clearly slowing, the emerging market is gonna be
Speaker 1: pressured by the strong dollar. But here in the US,
Speaker 1: you know, if we're going to grow it close to
Speaker 1: a five percent real GDP growth this year, we're probably
Speaker 1: gonna still grow about four percent next year, but it
Speaker 1: will be faster, or initially will flow over the course
Speaker 1: of two thousand twenty two as we increasingly move away
Speaker 1: from this sugar hive of getting out of COVID and
Speaker 1: getting back to the reality of a world of modestly
Speaker 1: higher prices, modestly higher yields, stronger dollar, all those things
Speaker 1: that slow down growth of it. But the US is
Speaker 1: still going to be a vibrant and growing economy, particularly
Speaker 1: in relation to non US economies for the most part. Okay, Alin,
Speaker 1: So let's let's talk where our audience and where you
Speaker 1: think investors should be putting their money right now? How
Speaker 1: do you trade this environment? Well, first of all, long
Speaker 1: and strong and still remain an optimistic or constructive view
Speaker 1: on equities because in equities are a reasonable inflation and
Speaker 1: once again reassert in a world of low yields, looking
Speaker 1: for other income alternatives and things like real estate oriented
Speaker 1: int come and things like reats make tremendous sense because
Speaker 1: you can still drive real return with an inflation hedges.
Speaker 1: Rents rise relative to conventional bonds. And the reality is
Speaker 1: in lots of real estate sector is like warehouses and
Speaker 1: like apartments, rents haven't rolled over year over year yet
Speaker 1: in some of these, and when they rolled over, the
Speaker 1: rent increases away from earthquake late in California, but anywh
Speaker 1: else in the country, real rent growth is going up
Speaker 1: ten to fifteen percent in markets like Nashville, And so
Speaker 1: what you're getting is rent increases that translate directly into
Speaker 1: value increases most properties. So I still think real estate
Speaker 1: oriented income or other income alternatives, private credit where the
Speaker 1: strength balance sheet strength of private companies is still strong
Speaker 1: and you can buy floating rate in debt so you're
Speaker 1: not caught in the world of modestly hiring rates hurting
Speaker 1: your public fixed income. That's the places to look for
Speaker 1: income beyond dividend paying stocks, Alright, that's the place to be.
Speaker 1: All right, Allan, nice to get some time with you
Speaker 1: on this Wednesday. Alan Zaffron, founding partner and co CEO
Speaker 1: at I e Q Capital, on the phone from Foster City, California.
Speaker 1: He said, just nearby what four point one earthquake? Yeah,
Speaker 1: that's California for you, my my home. Um that said,
Speaker 1: those can be very jarring, Yeah, right, especially if you're
Speaker 1: not if you're not used to or even if you're
Speaker 1: used to it, it's still just a reminder of what's
Speaker 1: going on. I never got used to it, I bet,
Speaker 1: I bet. Thanks for listening to Bloomberg Business Week. Download
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