WEBVTT - Surveillance: U.S. Inflation Surge 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 0:00:09.240 --> 0:00:13.080 with Jonathan Farwell and Lisa Brownwitz Jay Lee. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg 0:00:23.360 --> 0:00:29.760 dot Com, and of course, on the Bloomberg Terminal. Kathy 0:00:29.840 --> 0:00:32.760 boss gen Stake joins us now head US financial market 0:00:32.760 --> 0:00:35.240 economist at Oxford Economics. Kathy, You've had a few minutes 0:00:35.240 --> 0:00:38.920 to go over this one. Your reaction place. Yeah, John, Well, 0:00:39.000 --> 0:00:42.080 it did come in a touch higher than expect it 0:00:42.200 --> 0:00:45.640 and does it change things materially? I think it just 0:00:45.840 --> 0:00:49.040 keeps um pressure on the Federal Reserve UM. This is 0:00:49.080 --> 0:00:52.840 a very difficult spot for them where seeing if play 0:00:52.840 --> 0:00:55.560 should run far above you know, what they expected in 0:00:55.600 --> 0:00:58.680 the target UM. And yes, there's some signs that maybe 0:00:58.720 --> 0:01:01.080 we'll get easy in the head line number right going 0:01:01.160 --> 0:01:04.360 forward in energy prices, but still the core number, when 0:01:04.400 --> 0:01:07.240 I'm looking at a half a percent almost five percent 0:01:07.319 --> 0:01:10.000 year and year before that is is definitely gonna keep 0:01:10.000 --> 0:01:12.600 the heat on the FED. How much can it rise 0:01:12.840 --> 0:01:14.920 and how much do you need it to fall for 0:01:14.959 --> 0:01:18.800 the Fed to feel like things are under control. Well, 0:01:19.080 --> 0:01:21.480 our view is that, um, it's going to continue to 0:01:21.520 --> 0:01:25.000 stay hot and sticky through the first quarter. UM, and 0:01:25.040 --> 0:01:27.959 you're not going to really get some reprieve until you 0:01:28.000 --> 0:01:30.440 know the second quarter. But even then it's going to 0:01:30.520 --> 0:01:34.119 remain elevated. UM. I think if you see moderation, if 0:01:34.160 --> 0:01:36.600 you do see the year and year rate, let's say, 0:01:36.600 --> 0:01:39.200 gap down a full percentage point or so, it looks 0:01:39.240 --> 0:01:42.319 that way into two, then the Fed can take a 0:01:42.360 --> 0:01:45.920 little comfort there and maybe wait a bit. But it's 0:01:45.920 --> 0:01:48.880 certainly gonna be difficult because we're seeing more and more 0:01:49.000 --> 0:01:51.880 the FED members becoming a bit more worried right about 0:01:51.920 --> 0:01:55.320 inflation and less so about the labor market. What do 0:01:55.320 --> 0:01:58.000 you think is appropriate then? If it does remain hot 0:01:58.000 --> 0:02:00.240 and sticky, as you've been saying through the first quarter, 0:02:00.360 --> 0:02:03.480 what's appropriate in terms of Fed action, Well, we think 0:02:03.520 --> 0:02:06.080 they should be patient. It's gonna be difficult, but we 0:02:06.120 --> 0:02:08.280 do think they're gonna be need to be patient because 0:02:08.280 --> 0:02:11.919 the mix of things you're seeing growth likely to decelerate 0:02:11.960 --> 0:02:15.640 now fourth quarter nearly eight percent, so very hot economy 0:02:15.639 --> 0:02:18.120 as well, but we think it's gonna slow in Q one, 0:02:18.120 --> 0:02:21.400 and don't forget that we have this upsurge in COVID 0:02:21.480 --> 0:02:24.200 which is going to hurt the economy. Um, and we 0:02:24.280 --> 0:02:26.320 have to see how that affects inflation. But if we're 0:02:26.400 --> 0:02:29.520 right and inflation comes down, should give the Fed a 0:02:29.560 --> 0:02:32.280 little bit of patients. But we still see them you know, 0:02:32.360 --> 0:02:35.359 raising rates. You know, later than September this year, are 0:02:35.360 --> 0:02:37.960 we going to start seeing more material wage inflation to 0:02:38.080 --> 0:02:41.560 keep up with the actual inflation that we're seeing. Well, 0:02:41.600 --> 0:02:46.320 that that is the critical point to focus on. Frankly, Um, 0:02:46.360 --> 0:02:51.240 if you start to see wages rise because workers say, 0:02:51.280 --> 0:02:54.600 we're paying a lot more for items of goods and 0:02:54.639 --> 0:02:58.560 services and we need higher wages. And if companies accommodate that, 0:02:58.840 --> 0:03:00.920 then we get into that par ice wage spiral that 0:03:00.960 --> 0:03:04.800 we've you know, watching and everyone's um concerned about. But 0:03:04.960 --> 0:03:07.800 right now we're not quite at that point. Um. We 0:03:07.880 --> 0:03:10.880 have to wait and see. Unfortunately, see the data, um 0:03:11.000 --> 0:03:13.919 indications are right now for us is that the labor 0:03:14.080 --> 0:03:17.839 force participation rates rising. Right, people are being pulled back 0:03:17.840 --> 0:03:21.120 into the labor force. If supply comes on, that helps 0:03:21.200 --> 0:03:24.040 temper some of the wage games. Well, And a lot 0:03:24.120 --> 0:03:26.440 of the reason when I've spoken to other economists that 0:03:26.480 --> 0:03:28.919 I say, how can consumption still be hanging in there 0:03:29.000 --> 0:03:31.520 when consumers are being faced with this kind of inflation, 0:03:31.520 --> 0:03:33.640 when you're not getting the commensurate wage increases. Is that 0:03:33.680 --> 0:03:35.840 there is a ton of savings that have been built 0:03:35.880 --> 0:03:37.920 up over the course of the pandemic. Those are starting 0:03:37.920 --> 0:03:39.960 to be drawn down. Now. Is there a risk that 0:03:40.000 --> 0:03:44.080 the inflation persists beyond where those savings are going to 0:03:44.240 --> 0:03:46.800 last and we start to see a serious hit to consumption? 0:03:47.840 --> 0:03:51.000 That's right, um, you know, and and most of the 0:03:51.000 --> 0:03:53.120 the you know, over two trillion of savings is really 0:03:53.120 --> 0:03:58.480 excused Tom, high income household. So, um, we're gonna wear 0:03:58.600 --> 0:04:02.360 down the bill, the propensity for consumers to suspend, and 0:04:02.440 --> 0:04:06.880 that should be you know, helped put the brakes on inflation, absolutely, Kathy, 0:04:06.920 --> 0:04:08.840 just quickly, then let's round this one out. Are you 0:04:08.920 --> 0:04:12.000 confident this morning, confident enough to say that this is 0:04:12.040 --> 0:04:13.560 as high as it gets, This is as bad as 0:04:13.600 --> 0:04:17.200 it gets. We think it gets a little worse. Unfortunately, 0:04:17.240 --> 0:04:19.760 the year and year rate, we don't really see that peaking, 0:04:20.040 --> 0:04:22.840 especially the core until maybe February, so we've had a 0:04:22.880 --> 0:04:26.520 little bit more upward thrust there and especially on the 0:04:26.520 --> 0:04:28.640 service side. Right, and again I look at the numbers 0:04:29.080 --> 0:04:31.840 core commodities, core goods nine point four percent year and 0:04:31.920 --> 0:04:34.599 year Core services though, are three point four that's also 0:04:34.839 --> 0:04:38.280 putting up with pressure. Kathy, just wonderful, Kathy Bostick that 0:04:38.520 --> 0:04:48.200 of Oxford Economics, after getting the fastest reading the CPI print. 0:04:48.240 --> 0:04:51.480 Going back to two and we've been talking all morning 0:04:51.880 --> 0:04:54.880 with people who are saying inflation is a scary thing. 0:04:54.960 --> 0:04:57.400 It is a scary thing for asset valuations. It is 0:04:57.440 --> 0:04:59.159 a scary thing for the Federal Reserve, it is a 0:04:59.200 --> 0:05:02.760 scary thing for politicians hoping to get reelected. And Stephen 0:05:02.800 --> 0:05:05.440 Dover has a message for that, maybe it's a good thing. 0:05:05.560 --> 0:05:08.360 He is Franklin Templeton Chief market strategist and head of 0:05:08.400 --> 0:05:12.360 Franklin Templeton Investment Institute. Please explain, Steven, how we can 0:05:12.400 --> 0:05:15.520 take a look at this consumer consumer price increase and 0:05:15.560 --> 0:05:21.400 really see what equities are seeing, which is brighter skies. Well, 0:05:21.440 --> 0:05:23.440 when we look at it, I'm not really arguing that 0:05:23.480 --> 0:05:26.560 inflation is a good thing. I'm arguing that inflation is 0:05:26.600 --> 0:05:30.200 a signal um and that inflation is a plural, and 0:05:30.240 --> 0:05:32.160 that there's a lot of different ways we can look 0:05:32.160 --> 0:05:35.720 at inflation. So what can we learn from these inflation numbers, 0:05:35.720 --> 0:05:37.880 and how does that help us when we're making our 0:05:38.400 --> 0:05:42.839 investment decisions, And this inflation is very is going We 0:05:43.000 --> 0:05:45.680 are in an economy right now that is being reshaped, 0:05:46.360 --> 0:05:48.640 and we're not going to go back to where we 0:05:48.640 --> 0:05:50.560 were in two thousand and nineteen. It's going to look 0:05:50.560 --> 0:05:53.760 different as we go forward. And part of the signaling 0:05:53.839 --> 0:05:57.839 that's going to change our economy and help us reconfigure 0:05:57.839 --> 0:06:01.200 it going forward are these inflation numbers. So what's coming 0:06:01.200 --> 0:06:05.240 out of these inflation numbers is that we clearly need 0:06:05.279 --> 0:06:08.479 more workers, we need to increase our productivity, that we're 0:06:08.480 --> 0:06:10.880 having a shift in where our economy is hot or not. 0:06:10.920 --> 0:06:13.200 If we look under the hood on these numbers, we'll 0:06:13.200 --> 0:06:16.599 see that inflation is much higher, for example, in the 0:06:16.640 --> 0:06:20.600 Midwest in places where people are moving um as they 0:06:20.640 --> 0:06:24.360 work from home. As as our economy changes, um that 0:06:24.400 --> 0:06:26.960 we're going to need more capex, which looks like it's 0:06:26.960 --> 0:06:29.880 going to happen to increase productivity, companies are going to 0:06:29.960 --> 0:06:33.239 have to look If we're looking at increases in labor 0:06:33.279 --> 0:06:36.279 costs going forward, which we almost certainly are, companies are 0:06:36.279 --> 0:06:39.240 going to have to look at ways to increase productivity. 0:06:39.640 --> 0:06:42.600 Cap X is likely to increase. So all that thaying 0:06:42.839 --> 0:06:47.359 that UM, yes, UM, we've had a miss in terms 0:06:47.360 --> 0:06:49.760 of inflation has been higher than it is. But let's 0:06:49.800 --> 0:06:52.320 look at it from what it signals a perspective and 0:06:52.360 --> 0:06:55.920 where we have opportunities. And so, like you said, if 0:06:55.960 --> 0:07:00.560 you know companies are going to face labor cost rushers, 0:07:00.560 --> 0:07:02.880 they certainly already have. You know, if they're going to 0:07:02.920 --> 0:07:06.640 need to increase cap X, how do you translate that 0:07:06.800 --> 0:07:09.800 into a portfolio? I mean, does that lend itself to 0:07:10.520 --> 0:07:13.760 large caps or how do you view that? You have 0:07:13.880 --> 0:07:17.320 to look at companies that are able to transition their 0:07:17.840 --> 0:07:22.400 pricing through UM ultimately to the customer and so keep 0:07:22.440 --> 0:07:25.880 their profit margins up. I think that we're in a 0:07:26.120 --> 0:07:30.400 very interesting place for the equities market right now in 0:07:30.600 --> 0:07:34.360 that UM companies seem to be able to pass through 0:07:34.400 --> 0:07:38.880 their prices because interest rates, despite this inflation number, haven't risen. 0:07:39.160 --> 0:07:42.520 So it's a little bit of a goldilocks UM place 0:07:42.600 --> 0:07:45.560 for stocks right now. We have earnings growth that earnings 0:07:45.560 --> 0:07:48.440 growth in other inflationary periods, and we look back, you 0:07:48.520 --> 0:07:50.880 know where inflation was this high before forty years ago, 0:07:51.280 --> 0:07:54.760 rates were also very high, and that offset UM that 0:07:54.920 --> 0:07:58.040 offset the earnings because companies had to pay higher rates, 0:07:58.080 --> 0:08:01.600 but that's not happening right now. Have low rates, they're 0:08:01.600 --> 0:08:05.840 not they're not hurt even by a modestly rising bond market. 0:08:06.280 --> 0:08:12.320 So that's generally positive for equities, particularly those equities that 0:08:12.320 --> 0:08:16.640 are going to the opening train, the stocks that are 0:08:16.640 --> 0:08:20.800 going to do better as the economy starts to open up. So, Stephen, 0:08:20.800 --> 0:08:24.360 we've talked a lot about equities and how they probably 0:08:24.400 --> 0:08:27.400 are going to continue to perform. Well, what does this 0:08:27.480 --> 0:08:30.360 mean for the sixty forty shift, given that we do 0:08:30.440 --> 0:08:34.359 expect growth to lead to a hiking FED and possibly 0:08:34.679 --> 0:08:39.240 a longer term positive look, Well, I think we have 0:08:39.400 --> 0:08:42.800 to really look at that sixty split. So right now 0:08:42.920 --> 0:08:46.280 our view would be probably to be overweight equities, which 0:08:46.320 --> 0:08:49.920 we've been for for a period of time now UM 0:08:49.960 --> 0:08:53.240 and underweight fixed income, but not moving away from fixed income. 0:08:53.320 --> 0:08:57.520 I think on that of fixed income, you want to 0:08:57.600 --> 0:09:01.640 probably focus on yield or the yield advantage spread products 0:09:01.640 --> 0:09:04.200 if you will. Within that area, you might want to 0:09:04.200 --> 0:09:07.640 look at corporate debt, particularly focusing on sectors that could 0:09:07.640 --> 0:09:10.520 be upgraded or arguing that there is going to continue 0:09:10.520 --> 0:09:12.960 to be growth and so UM, you can get fairly 0:09:13.000 --> 0:09:17.400 significant growth with upgrades. To look at bank loans, emerging 0:09:17.440 --> 0:09:21.280 markets look um, look like there's some good opportunities there, 0:09:21.400 --> 0:09:25.160 and we're also positive on some municipal again looking for upgrades. 0:09:25.480 --> 0:09:28.560 My point being, you can invest in fixed income that 0:09:28.679 --> 0:09:32.920 isn't quite so dependent on changes within interest rates, don't 0:09:32.960 --> 0:09:37.040 just focus on duration. And then also we're more positive 0:09:37.040 --> 0:09:41.640 on alternative investments, particularly private credit, which has had amazing growth, 0:09:42.240 --> 0:09:46.680 has a good yield advantage, and real estate, particularly private 0:09:46.720 --> 0:09:49.920 real estate. A lot of opportunities right now in the 0:09:50.000 --> 0:09:53.840 industrial space, as as we have to have warehouses and 0:09:53.880 --> 0:09:59.360 that type of thing for electronic or online shopping um, 0:09:59.520 --> 0:10:03.880 and we have a gargantuan underweight or or we have 0:10:04.360 --> 0:10:07.840 organs to in shortage in housing right now, we need 0:10:08.440 --> 0:10:11.000 in the United States about one million units a year 0:10:11.080 --> 0:10:12.760 and it's going to take a while to catch up 0:10:12.800 --> 0:10:16.079 with that. Not only that, there's a terrible dislocation as 0:10:16.120 --> 0:10:19.520 people move away from the big urban centers and to 0:10:19.600 --> 0:10:22.640 other places as they work from home. So a lot 0:10:22.679 --> 0:10:26.400 of opportunities there as well. Stephen, does dees crypto count 0:10:26.520 --> 0:10:30.960 as an alternative asset or not yet? I think that 0:10:31.080 --> 0:10:36.560 it's it's very interesting that I think the mainline UM 0:10:36.600 --> 0:10:40.400 investment managers investment allocators haven't got to the point where 0:10:40.440 --> 0:10:43.320 they put that in as a crypto asset. But clearly 0:10:43.360 --> 0:10:48.600 it doesn't have UM the same correlation to other assets, 0:10:48.679 --> 0:10:52.280 and that by definition does yes make it an alternative asset. 0:10:52.720 --> 0:10:54.920 How far do you have to stretch how much out 0:10:54.920 --> 0:10:57.880 of your comfort zone in order to get returns that 0:10:57.960 --> 0:11:03.439 people are looking for to survive after they retire, Well, 0:11:03.800 --> 0:11:07.520 we want to be careful with that. UM. We want 0:11:07.559 --> 0:11:10.600 to be careful to not be in a crowded trade, 0:11:11.480 --> 0:11:14.520 meaning when everybody starts to go in a direction, even 0:11:14.559 --> 0:11:18.400 if they're right, it gets overpriced. And that's where I 0:11:18.440 --> 0:11:23.280 would be cautious about the rush to to investor protect 0:11:23.320 --> 0:11:27.960 for inflation. UM. The University of Michigan outlook for inflation 0:11:28.120 --> 0:11:30.959 still is over the next twelve months about five In 0:11:31.000 --> 0:11:34.200 the next five to ten years, three percent. That seems reasonable. 0:11:34.240 --> 0:11:38.160 That seems like what UM what the reserve banks have 0:11:38.240 --> 0:11:40.720 been trying to do for a very long period of time. 0:11:41.200 --> 0:11:44.880 So I don't I think that, especially those who are 0:11:45.400 --> 0:11:49.160 towards a retirement age, need to be quite careful about 0:11:49.200 --> 0:11:52.480 going out too far with risk. I think they need 0:11:52.520 --> 0:11:55.040 to look at their portfolios and really balance at risk. 0:11:55.160 --> 0:11:58.400 That's why um and not not go too far into 0:11:58.440 --> 0:12:00.800 the inflation camp or not go too far away from 0:12:00.840 --> 0:12:05.359 the inflation tent um. So kind of a modest portfolio 0:12:05.520 --> 0:12:08.199 rather than stretching too much. And Steven, I'd love to 0:12:08.200 --> 0:12:10.839 get your thoughts on junk bonds because the Bloomberg Terminal 0:12:11.080 --> 0:12:13.800 had a great story out this week exciting data from 0:12:13.880 --> 0:12:18.679 Fitch Ratings. Just ten US high yield issuers have defaulted 0:12:18.720 --> 0:12:20.880 this year on a total of about six point nine 0:12:20.920 --> 0:12:24.720 billion dollars worth of debt, and there was also a 0:12:24.800 --> 0:12:28.320 one hundred and three day stretch with zero defaults, which 0:12:28.520 --> 0:12:33.120 is an all time long stretch, which is pretty amazing curious. 0:12:33.200 --> 0:12:36.200 You know, when you're examining the fixed income landscape and 0:12:36.240 --> 0:12:40.280 thinking about risk, where do high yield US bonds fall? 0:12:41.840 --> 0:12:45.040 So we definitely look at high yield, but also bonds 0:12:45.120 --> 0:12:47.280 and aren't high yield you are? That was a great 0:12:47.400 --> 0:12:51.000 article and yes, default rates are way down. What a 0:12:51.040 --> 0:12:54.079 little bit more focused on where there might be upgrades 0:12:54.160 --> 0:12:55.920 because if you see an upgrade, you can have a 0:12:56.000 --> 0:13:00.680 significant increase in valuation. The other point I would just 0:13:00.800 --> 0:13:04.680 make about high yield is that you need to look 0:13:04.679 --> 0:13:08.040 at your entire portfolio because high yield is much more 0:13:08.120 --> 0:13:13.000 correlated with the equity markets, certainly than sovereign debt or treasuries, 0:13:13.360 --> 0:13:15.880 and so you want to make sure that you're aware 0:13:16.000 --> 0:13:18.600 of what risks you have in your portfolio. So if 0:13:18.640 --> 0:13:22.160 your overweight equity and overweight high yield, you know you 0:13:22.200 --> 0:13:24.320 have a lot of equity risk in your portfolio, which 0:13:24.320 --> 0:13:26.000 if that's what you want, fine, but you need to 0:13:26.000 --> 0:13:28.360 be aware of it. Stephen Dover, thank you so much 0:13:28.360 --> 0:13:31.320 for being with us. I really appreciate your insights. Stephen Dover, 0:13:31.360 --> 0:13:34.880 Franklin Templeton, Chief market strategist and head of the Franklin 0:13:34.880 --> 0:13:39.160 Templetood Investment Institute. We have been looking at a market 0:13:39.280 --> 0:13:41.880 that very much has priced in six point eight percent 0:13:42.120 --> 0:13:49.959 consumer inflation. Annie Pecos, professor and virologist at the Johns 0:13:49.960 --> 0:13:52.679 Hopkins Bloomberg School of Public Health, and he don't worry. 0:13:52.679 --> 0:13:53.920 I'm not going to ask you a question on this 0:13:55.120 --> 0:13:58.040 this pandemic. I want to talk about this a macron variant, 0:13:58.080 --> 0:14:00.079 and I think this is a really important conversation in 0:14:00.720 --> 0:14:03.360 if it turns out to be much much Milda, but 0:14:03.520 --> 0:14:07.000 far more contagious how do we treat that from a 0:14:07.040 --> 0:14:10.319 policy perspective, from your standpoints set, how do we make 0:14:10.360 --> 0:14:15.280 that change? It all comes down to hospitalization rates and 0:14:15.360 --> 0:14:19.840 severease disease rates. UM. There's preliminary data now suggesting that 0:14:20.200 --> 0:14:22.680 a boost will probably give you a really good immune 0:14:22.680 --> 0:14:26.760 response that protects against a macron. And therefore, if that 0:14:26.840 --> 0:14:30.360 holds true, then the current strategy of getting people boosted 0:14:30.880 --> 0:14:34.880 UH should be able to limit our severe disease cases 0:14:35.240 --> 0:14:38.360 and allow us to keep going without any major changes 0:14:38.760 --> 0:14:43.080 in what's go in our public health intervention policies. But 0:14:43.200 --> 0:14:46.640 you know, we're far away from that because we're certainly 0:14:46.680 --> 0:14:49.840 dealing right now with a delta surge that's really approaching 0:14:50.400 --> 0:14:52.720 UH peak levels that we've ever seen here in the US, 0:14:52.760 --> 0:14:55.080 and so we're really in a bit of a pickle 0:14:55.120 --> 0:14:56.640 here in terms of trying to figure out how to 0:14:56.640 --> 0:14:58.600 deal with the current delta as well as prepare for 0:14:58.840 --> 0:15:01.240 a potential OH macron. There are a lot of issues 0:15:01.240 --> 0:15:03.600 embedded in there. I want to tease out one idea 0:15:03.720 --> 0:15:07.000 of quarantining if you're exposed, because that's been highly disruptive, 0:15:07.080 --> 0:15:09.120 especially for kids who've gone back to school or people 0:15:09.160 --> 0:15:11.280 going to the workplace. And this is one big, a 0:15:11.320 --> 0:15:13.960 big reason why people are worried about bringing people back 0:15:14.000 --> 0:15:18.120 to the offices. How transmissible is somebody who has been 0:15:18.160 --> 0:15:21.200 inoculated three times, who let's say gets a breakthrough infection 0:15:21.280 --> 0:15:25.240 or even twice, Are they as infectious as an unvaccinated individual. 0:15:26.600 --> 0:15:29.520 Data suggests that you still will be more likely to 0:15:30.160 --> 0:15:34.520 not transmit the virus. There are certainly some cases out 0:15:34.520 --> 0:15:36.920 in the literature right now where if someone who's been 0:15:36.960 --> 0:15:40.000 vaccinated gets a strong infection and has a lot of virus, 0:15:40.040 --> 0:15:43.600 they can transmit. But in the for the for most people, 0:15:44.000 --> 0:15:48.920 vaccination will reduce the transmission of the of both delta 0:15:49.120 --> 0:15:51.840 and we assume now for O. Macron um um to 0:15:52.040 --> 0:15:55.120 other individuals. So vaccination still is the route to sort 0:15:55.120 --> 0:15:57.560 of turn the curve here. I think the thing we 0:15:57.640 --> 0:16:00.360 really have to think about right now, particul when it 0:16:00.360 --> 0:16:03.320 comes to a macron is we've seen data that's mostly 0:16:03.360 --> 0:16:07.680 focused on vaccinated people and individuals who are relatively healthy. 0:16:08.080 --> 0:16:12.480 We haven't seen cases of all macron in vulnerable populations, 0:16:12.640 --> 0:16:18.600 the elderly, IMMUNO compromise, people on on cancer therapies. It's 0:16:18.800 --> 0:16:21.920 what O macron does in those populations that don't have 0:16:22.400 --> 0:16:25.360 the protection induced by the vaccine, that it's going to 0:16:25.560 --> 0:16:29.080 be really important to to judge because if those vulnerable 0:16:29.120 --> 0:16:32.320 parts of the population are even more sensitive to severe 0:16:32.320 --> 0:16:34.800 disease with a macron, then we really have to rethink 0:16:34.840 --> 0:16:36.800 some of our public health approaches. But Andy from a 0:16:36.800 --> 0:16:39.800 public health perspective, just going back to vaccinated individuals, if 0:16:39.840 --> 0:16:42.600 they are not that contagious, they don't spread the virus, 0:16:43.040 --> 0:16:46.120 why are they being tested five, six, seven times to 0:16:46.200 --> 0:16:48.600 travel in any way, shape or form. Why is there 0:16:48.640 --> 0:16:53.120 still the surveillance and possible quarantining of them if they 0:16:53.120 --> 0:16:56.600 get exposed and if they get a breakthrough infection. It 0:16:56.680 --> 0:16:59.920 goes down to the layered approach to limit transmission and 0:17:00.040 --> 0:17:02.520 limits spread of the virus. So we never want to 0:17:02.560 --> 0:17:06.840 rely on one thing, and oftentimes the testing combined with 0:17:06.920 --> 0:17:10.159 vaccination status is used as at least two ways to 0:17:10.280 --> 0:17:13.399 make sure that we're catching nine plus percent of people 0:17:13.400 --> 0:17:16.359 who are potentially infectious. And so that's really the point 0:17:16.400 --> 0:17:19.400 here when it comes to that strategy. I will say though, 0:17:19.560 --> 0:17:23.560 that there are better strategies to do the testing rather 0:17:23.640 --> 0:17:27.800 than our our nasal swab PCRs um an EAGINE testing 0:17:28.160 --> 0:17:30.760 at home testing. These are things that we in the 0:17:30.880 --> 0:17:34.400 US in particular haven't taken advantage of that could make 0:17:34.480 --> 0:17:37.879 this whole process of testing and being certain that you 0:17:37.920 --> 0:17:44.040 can go back to work, back to traveling much more easier. Well. Obviously, 0:17:44.160 --> 0:17:45.879 in the US we do have the advantage that we 0:17:46.000 --> 0:17:48.280 can get access to that testing if we if we 0:17:48.320 --> 0:17:51.320 try hard enough. We also have ample access to vaccinations 0:17:51.320 --> 0:17:53.840 and booster shots, whereas a lot of the world doesn't 0:17:53.840 --> 0:17:56.920 even have a large portion of their population given their 0:17:56.920 --> 0:17:59.240 initial doses yet and the who is saying, hold the 0:17:59.280 --> 0:18:01.640 conversation on boosters, we need to focus on getting more 0:18:01.680 --> 0:18:05.199 of the world vaccinated before we have that conversation. Do 0:18:05.240 --> 0:18:10.960 you think we're misaligning our priorities. It's important to note 0:18:11.000 --> 0:18:17.000 that a global pandemic requires a global response, and certainly 0:18:17.480 --> 0:18:20.760 getting more vaccine to other countries has to be a 0:18:20.840 --> 0:18:24.000 high priority. I realized that there are always interests in 0:18:24.119 --> 0:18:26.720 terms of protecting our own population to the to the 0:18:26.760 --> 0:18:29.639 greatest degree possible. But at the end of the day, 0:18:29.840 --> 0:18:33.760 O Macron is showing us yet again what we can 0:18:33.760 --> 0:18:37.720 expect from stars Covie too. If we don't get even 0:18:37.880 --> 0:18:42.280 better at vaccinating the world, the doses that have been 0:18:42.280 --> 0:18:44.400 given so far to Africa are a great first step, 0:18:44.400 --> 0:18:46.600 but if you think about the population of Africa and 0:18:46.640 --> 0:18:49.399 the doses that have been promised, we're still nowhere close 0:18:49.480 --> 0:18:52.600 to being able to move on that one continent to 0:18:52.680 --> 0:18:55.080 a level of protection in the population that would help 0:18:55.119 --> 0:18:57.440 us really reduce the amount of variants that are emerging. 0:18:57.560 --> 0:18:59.840 And the thank you sir as always into other weekend 0:19:00.040 --> 0:19:08.680 re pecost of Jones, Helpkins jointing us on d c 0:19:08.960 --> 0:19:12.640 andy block ahead of US government offense at Investko. And 0:19:13.040 --> 0:19:15.600 you said it would be the nightmare before Christmas. We 0:19:15.640 --> 0:19:17.399 all want to avoid that. Are we avoiding that? And 0:19:17.600 --> 0:19:20.959 date John, I think we're under the path to do 0:19:21.000 --> 0:19:22.520 that a month ago. If you talk to me, I 0:19:22.560 --> 0:19:24.680 would just say it wasn't gonna be the nightmareber for Christmas. 0:19:24.760 --> 0:19:27.199 You had to get government funding done, you had to 0:19:27.359 --> 0:19:29.600 increase the debt limit, you had to get the bipartisan 0:19:29.640 --> 0:19:32.120 infrastructure bill, and then still at the same time trying 0:19:32.119 --> 0:19:34.400 to get the Build Back Better bill. Well, we've gotten 0:19:34.400 --> 0:19:37.800 by partisan infrastructure bill that's in place. We've agreed to 0:19:37.840 --> 0:19:40.600 fund the government at least till next February, and now 0:19:40.720 --> 0:19:42.520 we've got a deal on the debt limit, which is 0:19:42.520 --> 0:19:46.400 probably the most important things with respect to the markets. So, um, 0:19:46.400 --> 0:19:48.160 we're in a good path and now we're gonna see 0:19:48.280 --> 0:19:50.440 when and how we're gonna get build back better done. 0:19:50.720 --> 0:19:52.480 If we don't get built back better by the end 0:19:52.520 --> 0:19:56.439 of the year, will we ever get it done? Absolutely, 0:19:56.480 --> 0:19:58.200 I think there's a big chance. I mean right now 0:19:58.240 --> 0:20:01.680 we're like a chance we it had done this year. Um, 0:20:01.680 --> 0:20:06.000 but we're probably seventy chance it gets done. I think 0:20:06.040 --> 0:20:09.200 there's a there's a good sense that Democrats want to 0:20:09.200 --> 0:20:11.359 come together and get that done. It's just no matter 0:20:11.359 --> 0:20:13.199 what it looks like right now. And the question is 0:20:13.600 --> 0:20:17.119 when will progressives understand that Center Mansion is only going 0:20:17.160 --> 0:20:19.439 to go so far and cut the deal. That's what 0:20:19.520 --> 0:20:21.320 this is about at this time. Right now, we're going 0:20:21.320 --> 0:20:23.680 through the bird bath this week on the technical things 0:20:23.680 --> 0:20:26.720 to see which of these provisions can survive that, whether 0:20:26.760 --> 0:20:30.040 it's immigration, per crictive prescription drug pricing, or the ev 0:20:30.160 --> 0:20:31.840 tax credit. And then from there we have to go 0:20:31.880 --> 0:20:34.280 into the substance of things that Center Mansion has an 0:20:34.280 --> 0:20:37.159 issue with, including pay family leave, some of the climate 0:20:37.200 --> 0:20:40.359 related issues, and also the extension of the Enhanced Child 0:20:40.359 --> 0:20:42.560 Tax Credit. The reason why I ask Andy is because 0:20:42.600 --> 0:20:44.440 it seems like the more we talk about inflation and 0:20:44.520 --> 0:20:47.360 where we get pushed back to further stimulus as being 0:20:47.359 --> 0:20:49.480 an inflationary at a time and we don't need that. 0:20:49.520 --> 0:20:51.480 In fact, we need some curbs to what we're seeing 0:20:51.480 --> 0:20:53.760 in terms of how much prices are rising. How does 0:20:53.800 --> 0:20:56.760 that color the conversation in terms of policy going forward 0:20:56.800 --> 0:21:00.040 at a time when we hear increasingly protectionist rhetorics the 0:21:00.119 --> 0:21:04.840 likes of Janet Yellen and Gena Raimundo. No, I look, 0:21:04.880 --> 0:21:07.320 I think you're onto something right there. So first, with 0:21:07.359 --> 0:21:12.480 respect to inflation, you can expect Center Mansion to um 0:21:12.720 --> 0:21:15.440 capitalize on the announcement today which we expect the high 0:21:15.520 --> 0:21:17.800 inflation number to say, hey, let's slow down. He's been 0:21:17.800 --> 0:21:20.200 saying that for some time, so that's gonna interject itself 0:21:20.200 --> 0:21:23.080 into the build back better debate. But also with respect 0:21:23.119 --> 0:21:26.760 to what you're talking about about the protectionist angle with trade, 0:21:26.800 --> 0:21:29.080 I think, yes, this is this is an issue that's 0:21:29.119 --> 0:21:32.000 out there. Well, let's talk more about inflation, because we've 0:21:32.040 --> 0:21:35.040 seen the President at least try to be seen attempting 0:21:35.080 --> 0:21:38.159 to do something about it, tapping the Strategic Petroleum Reserve, 0:21:38.280 --> 0:21:41.640 trying to do something about supply chains and and fixing 0:21:41.800 --> 0:21:45.280 ship ship shortage issues. None of that has really helped 0:21:45.320 --> 0:21:48.800 to this point, at least American. The American populace doesn't 0:21:48.800 --> 0:21:52.080 feel that yet. Is Biden's approval reading going to continue 0:21:52.080 --> 0:21:56.399 to be tied to price pressures? So, Kelly, I think 0:21:56.400 --> 0:21:59.600 you're on something really important here. Um. When we look 0:21:59.640 --> 0:22:02.399 at lation, we think from a political standpoint, and we 0:22:02.480 --> 0:22:04.560 look at it from a market standford. From a market standpoint, 0:22:04.600 --> 0:22:07.119 we're looking at the fundamentals. We're looking at housing crisis, wages, 0:22:07.160 --> 0:22:09.879 those things that are sticky going for long term. But 0:22:10.040 --> 0:22:12.399 politically it's really and you've talked about this on the program. 0:22:12.440 --> 0:22:15.680 Already gets gas and groceries, that's what people feel UM 0:22:15.720 --> 0:22:17.760 in their pocketbooks. Now. The good thing for Biden is 0:22:17.800 --> 0:22:20.480