Speaker 1: This is Bloomberg Business Week. I'm Carol Masser. Every day
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Speaker 1: us too on YouTube by searching Bloomberg Global News. Well,
Speaker 1: I gotta say this surprised me and I actually should
Speaker 1: go back and check out the most read because you know, Paul,
Speaker 1: I always like to check where our daily virus updates
Speaker 1: on the Bloomberg sit among our most read stories on
Speaker 1: the Bloomberg. I had to actually go to page the
Speaker 1: second page to find it exactly exactly, which I thought
Speaker 1: was kind of interesting considering our enquirement. Yeah, maybe that's
Speaker 1: it right, And we've got a bunch of headlines out.
Speaker 1: We've got worldwidecast cases thanks for passing thirty nine million,
Speaker 1: the U S reporting the most daily infections in two
Speaker 1: months total cases near an eight mill and so some
Speaker 1: of the headlines definitely jarring. Let's bring in Dr Ian
Speaker 1: LUs Beder. We go to him every week for an
Speaker 1: update for some clarity and perspective on the viruses, Clinical
Speaker 1: Associate Professor of Medicine at n y U Land Good
Speaker 1: Medical Center, and he joins us on the phone in
Speaker 1: New York. Um, Dr LUs bed are good to have
Speaker 1: you back with us. How are you doing this week? Okay,
Speaker 1: thank you, Carol and Paul hope you guys are doing
Speaker 1: well and definitely uh, a very busy news week and
Speaker 1: certainly on the on the COVID front as well well.
Speaker 1: Tell us what you're seeing in terms of the virus.
Speaker 1: I'm curious, UM. I was actually a doctor's office today
Speaker 1: and I'm like, are you guys seeing in an uptick?
Speaker 1: And they're like, nope, we're not yet, but we know
Speaker 1: that there's pockets around New York City. Where are you
Speaker 1: seeing UM in your You know, certainly when you're at
Speaker 1: the hospital or in your private practice. So certainly in
Speaker 1: private practice, we are seeing a lot of the post
Speaker 1: COVID syndrome and a lot of the long haulers. UM,
Speaker 1: We're not really seeing a big surge in cases, although
Speaker 1: a lot of those are really more were in the
Speaker 1: in the Midwest. I mean, we certainly know nationally are
Speaker 1: cases are up over fifty thousand a day of positive tests. Now,
Speaker 1: obviously not everyone is ill and not everyone has so
Speaker 1: does poorly, but certainly the number of cases increasing. And
Speaker 1: in the New York City area we certainly have a
Speaker 1: few pockets where uh there is uh kind of a
Speaker 1: surge in cases. We're not seeing a lot of that
Speaker 1: in the office yet, at least in with my colleagues,
Speaker 1: and the hospitals too seem to have, you know, not
Speaker 1: zero cases, but certainly not the surge that we saw previously.
Speaker 1: So will it come hard to know? We're certainly in
Speaker 1: Europe and around the world we're seeing really that second
Speaker 1: or third wave hit. So that is the challenge. So
Speaker 1: dr at n y U Landgoing Medical Center, a huge
Speaker 1: medical center, UM, one of the finest obviously in New
Speaker 1: York City. How have you in the hospital as they're
Speaker 1: kind of starting to prepare yourself what might be a
Speaker 1: second wave? That first wave that we all experienced back
Speaker 1: in March and April was so jarring for sin for
Speaker 1: the medical facilities. What changes have been made? Well, it's
Speaker 1: deferently a challenge because we're now beginning to really see
Speaker 1: over the last month or so, all of those patients
Speaker 1: that were afraid to come in, so elective surgery and
Speaker 1: colonoscopies and stress tests and uh, you know, all of
Speaker 1: their general medical care is really surged two pre COVID levels,
Speaker 1: which is good news. People are getting taken care of
Speaker 1: everyone for sort and certainly um, whether it's surgery or
Speaker 1: some cases, uh, they get swabbed to make sure everyone
Speaker 1: to all the patients are in a COVID free zone.
Speaker 1: But there's certainly awareness among hospital leadership that a similar
Speaker 1: strategy may have to be implemented where the hospital has
Speaker 1: more beds and more areas available if if those COVID
Speaker 1: patients come back. And certainly in terms of treatment, it's
Speaker 1: a very dynamic area. There were just some studies that
Speaker 1: really questioned how effective ramdesivie is. UM. There was a
Speaker 1: w h O study and and so that is part
Speaker 1: of the standard cocktail. President Trump got that certainly alone,
Speaker 1: that may not be that effective. So it's really a
Speaker 1: dynamic landscape where we're trying a number of things and
Speaker 1: things are not completely proven. But you know, there's good
Speaker 1: news as well. Fiser uh, coming to the end of
Speaker 1: their Phase three study and may be able to get
Speaker 1: vaccine approval. We're not hearing a lot of complications from
Speaker 1: the vaccines. Now again they don't publicize all of that.
Speaker 1: Eventually that we'll all have to go through the FDA,
Speaker 1: But we're not hearing a lot of problems. So I'm
Speaker 1: encouraged by the vaccine, although it certainly is going to
Speaker 1: be months away before everyone starts getting it right, especially
Speaker 1: when you se about the ramp up right, like we've
Speaker 1: we've got some stories on the Bloomberg just now. States
Speaker 1: are figuring out like there isn't one one version where
Speaker 1: the federal government says, hey, guys, here's how we're going
Speaker 1: to roll out the vaccine. It's states are kind of
Speaker 1: scrambling to figure out how to do it right. Well, first,
Speaker 1: you know, they have to be approved and if you
Speaker 1: know approved and the data reviewed, and you know, there's
Speaker 1: some concerns, are they really rushing it? And this is
Speaker 1: a record time because it's not even a year. It's amazing,
Speaker 1: you know, February March is when the first cases came
Speaker 1: out and we're now in you know, October, so it
Speaker 1: is really quite amazing to have developed it and with
Speaker 1: unique technology that messager r n A, you know, Majorna Fiser.
Speaker 1: I mean, there are a variety of techniques and all
Speaker 1: of them are really much faster than the traditional methods.
Speaker 1: And it's amazing to be, you know, in these phase
Speaker 1: three studies, which is really sort of the before approval
Speaker 1: and release. And I think it's encouraging if you have
Speaker 1: thirty patients. Granted it's not millions or hundreds of millions,
Speaker 1: but if we're not really seeing significant side effects, I
Speaker 1: think that that's encouraging. So I do want to ask
Speaker 1: you Ian, you know, so goes Europe? Does so go
Speaker 1: the United States? And I asked that because I've been
Speaker 1: talking with some folks over in Asia and they're like,
Speaker 1: if you want clues of kind of maybe what happens
Speaker 1: next for you in the US, just look at what's
Speaker 1: going on in Asia. But we know it's not apples
Speaker 1: to apples, whether it's Asian in the U S or
Speaker 1: Europe in the US. So when we see those rising
Speaker 1: numbers in Europe, what should we take from that, potentially
Speaker 1: as US citizens or nothing? Maybe? You know, I I
Speaker 1: agree with you. I think globally we're certainly seeing another wave.
Speaker 1: And in South America and certainly in Europe France, uh
Speaker 1: almost declaring a state of emergency is a things borderline
Speaker 1: and both student seasonal factors. As the weather gets cooler,
Speaker 1: there's less outdoor distancing, there's more indoor meeting. Um until
Speaker 1: it's not uncommon. We sold this in with very as
Speaker 1: waves of the H one N one Spanish flu. Well,
Speaker 1: I did not see that at did not memory. Uh right,
Speaker 1: so uh so, and without a vaccine and without effective treatment,
Speaker 1: it's not totally shocking to see that. It is a
Speaker 1: little hard to explain country by country variations that are
Speaker 1: part of that is habits and mask wearing and social distancing.
Speaker 1: Part of it may also relate to underlying health. In
Speaker 1: other words, there are some countries that are thinner, healthier,
Speaker 1: and we do know that diabetes, high blood pressure, elevated weight,
Speaker 1: and unfortunately, in the United States, we have an epidemic
Speaker 1: of obesity, we have an epidemic of type two diabetes,
Speaker 1: We have an epidemic um of a lot of those
Speaker 1: health issues, and that makes us more vulnerable to the virus.
Speaker 1: So when when people who are not in in optimal
Speaker 1: health get exposed to the virus, higher complication rights, higher hospitalizations,
Speaker 1: and higher death rates. So individually we need to take
Speaker 1: care of ourselves and and do smart things like mass scoring.
Speaker 1: I certainly agree. I think we we have a good
Speaker 1: consensus alone, that's probably not enough. And certainly people need
Speaker 1: to get their diseases under control of better diet, lose weight,
Speaker 1: exercise more. Should we make sure we get like the
Speaker 1: normal flu shot things like that, just to make sure
Speaker 1: we're not kind of, you know, more vulnerable in terms
Speaker 1: of health. Yeah, Carol is usual, You're you're on the case,
Speaker 1: and yeah, absolutely want to minimize co morbidities or the
Speaker 1: worst thing would be getting flu and COVID, and most
Speaker 1: we think that that double virus hit would have a
Speaker 1: much higher morbidity and mortality. So while we're waiting for
Speaker 1: approval of monoclonal LANDI buddies, and while we're waiting approval
Speaker 1: for messenger RNA and other um vaccines, we have to
Speaker 1: be very vigilant, you know, with mass scoring and handwashing
Speaker 1: and and some people feel Tony Faucci Vitamin D supplementation.
Speaker 1: You don't want to take too much, you don't want
Speaker 1: to take too little. You know, you can find your
Speaker 1: find your levels and of course diet exercise, so weight loss.
Speaker 1: We've seen a lot of increased in weight by people
Speaker 1: staying indoors and eating poorly and gaining weight. So, you know,
Speaker 1: we have to take individual control while we're waiting for
Speaker 1: some technologic breakthroughs, which I think are coming. I mean
Speaker 1: they're they're they're here in a few months. All right, dr,
Speaker 1: let's go there. Vaccines, We've got a lot of companies
Speaker 1: working on them. Let's say we do, in fact to
Speaker 1: get some vaccines, you know, late this year, maybe first
Speaker 1: half of next year. What are your patients telling you
Speaker 1: about they're willing us to take a vaccine? Yeah, another
Speaker 1: good question. Certainly all the health care professionals I speak to,
Speaker 1: they are ready to take those vaccines. I'm certainly ready
Speaker 1: to do that because we're exposed every day. Uh, the
Speaker 1: patients really are. Some of them are afraid that we've
Speaker 1: rushed this. Uh. Some of them are afraid to take
Speaker 1: any vaccine, including what we recommend, you know, tetanus, pneumonias,
Speaker 1: shingles vaccine. So there are some not anti vaxxers, but
Speaker 1: people who are a little afraid to you know, to
Speaker 1: take vaccines. So it may be a challenge to get
Speaker 1: everybody on board with a COVID vaccine, and if only
Speaker 1: a small percentage of people take it, it's obviously going
Speaker 1: to be less effective. So I think if the first
Speaker 1: wave of people, perhaps helf care professionals and or elderly
Speaker 1: people in nursing homes take it, and they seem to
Speaker 1: do well, hopefully that will encourage everyone uh to line
Speaker 1: up and get on board in really quickly seconds. Are
Speaker 1: you surprised or comforted by New York schools that it
Speaker 1: seems to be for the most part, going fairly well. Yes,
Speaker 1: I I think there are a lot of reasons to
Speaker 1: get back. I think if it's done carefully, UH, it
Speaker 1: should be successful. This is Bloomberg Business Week with Carol
Speaker 1: Masser from Bloomberg Radio. So, Paul, kind of amazing. We're
Speaker 1: just seventeen days. I was going to ask you, because
Speaker 1: you're always good with how many days left? Seventeen days
Speaker 1: and I've got a clock up on my computer. I'm serious. Well,
Speaker 1: good for you, that's what we need. I mean, And
Speaker 1: last night was just compelling, you know, the dueling uh
Speaker 1: town halls, different networks, just crazy. Yeah, it's actually seventeen days,
Speaker 1: ten hours eleven minutes twenty nine seconds. That's how how
Speaker 1: much it's like the debt clock that we used to see.
Speaker 1: And I think it's still in New York City. All right,
Speaker 1: let's get to it with Bloomberg News White House correspondent
Speaker 1: Josh wyn Grove. He's on the phone, Um, and we
Speaker 1: were talking about your story on the Bloomberg the most
Speaker 1: read on the past I think eight hours, Josh about news. Yeah, well,
Speaker 1: I hope your editors are listening. But it talks about
Speaker 1: the president and how he's undercutting the campaign. Yeah, I mean,
Speaker 1: this is this is just the you take the good
Speaker 1: and the bad if you work for Donald Trump, you know. So, Yeah,
Speaker 1: all these poles are showing him trailing. It's narrower in
Speaker 1: the swing states, but pretty much not a lot of
Speaker 1: science of hope and seniors in suburban women or two
Speaker 1: groups that really stick out Trump one seniors in sixteen crucial,
Speaker 1: particularly for states like you know, Florida, Arizona, that kind
Speaker 1: of thing. And now he's losing to Biden by about
Speaker 1: the same margin, a huge swing among the senior vote.
Speaker 1: They're targeting ads and seniors. But uh, and he's as
Speaker 1: I speak, President Trump is giving an address in Florida
Speaker 1: aimed at seniors in particular, but that with that and
Speaker 1: with women, he tends to sort of counteract the message
Speaker 1: that his campaign is giving. In other words, you know,
Speaker 1: he makes fun of Biden for, you know, belonging in
Speaker 1: a nursing home while at the same time trying to
Speaker 1: commence seniors to vote for him. And with women, he's
Speaker 1: sort of has put these please you literally said this week,
Speaker 1: suburban women, will you please like me? As as these
Speaker 1: gender gaps just get wider with Biden. So you know
Speaker 1: that the Trump campaign they're trying to catch up. If
Speaker 1: you believe these polls are anything close to the sort
Speaker 1: of ten point nine point twelve point gap range, then
Speaker 1: you then you acknowledge they've got some catching up to do,
Speaker 1: and they're trying to do this. They kind of got
Speaker 1: work with what the President's only to give them. Yeah, Josh,
Speaker 1: it seems, you know, his campaign strategy seems to be
Speaker 1: these make it America Great rallies. But as I look
Speaker 1: at these rallies on TV, everybody's got the hat on um.
Speaker 1: It seems like there's not too many undecided uh that
Speaker 1: are being impacted by his strategy. Here in his last
Speaker 1: seventeen days. It seems like it's just kind of playing
Speaker 1: to his base and he's already got those folks there.
Speaker 1: There's a preaching to the choir risk for sure, and
Speaker 1: I think it's a little unclear into how big that is.
Speaker 1: The campaigns had to get a lot of data from
Speaker 1: the stuff, right, Like folks sign up for tickets, they
Speaker 1: could to sup phone number. A lot of these folks
Speaker 1: didn't vote in twenty six Some of them are independent,
Speaker 1: some of them are Democrats. That the campaign says, look,
Speaker 1: these rallies, a Trump likes them, and having Donald Trump
Speaker 1: a good mood is crucial if you work for the
Speaker 1: Trumps campaign. But be you know, it's it's about voter
Speaker 1: identification to certain extents. But that's how they're doing it.
Speaker 1: But look, you know, like Donald Trump's own approval rating
Speaker 1: is pretty locked in as well, you know, but they're
Speaker 1: not really backing off on him. In fact, keeps coming
Speaker 1: out every day, it seems, with a rally or two rallies.
Speaker 1: Heel be in Georgia later tonight. Every day. You know,
Speaker 1: it's just like more Trump all the time. So you know, there,
Speaker 1: if they're going to turn this around their banking that
Speaker 1: it's Donald Trump himself will be able to do it.
Speaker 1: And you know, there's there's not a lot of evidence
Speaker 1: in the polls that that kind of path will work,
Speaker 1: and they're early signs that turnout is going to spike.
Speaker 1: I think I think that was concerning to the Trump camp,
Speaker 1: you know, really sores that that. I don't think we'll
Speaker 1: be good news for Republicans. I mean, we've been all
Speaker 1: talking all day on Bloomberg that, you know. I think
Speaker 1: one of the stories I read um or and yours too,
Speaker 1: I think, you know, more than twenty one million Americans
Speaker 1: already participating in early voting. I mean, that's a that's
Speaker 1: a pretty big number. Two quick questions, can can either
Speaker 1: candidate win without Florida? Trump tech the yes. But basically
Speaker 1: Trump needs Florida a lot more than Biden does. Biden
Speaker 1: doesn't really need Florida at all. It'd be mixed to have,
Speaker 1: you know, but if Biden is winning Florida, we're probably
Speaker 1: looking at a blowout as Trump needs Florida and then
Speaker 1: some uh so, so you know, it's a it's a
Speaker 1: very competitive state, but it really you know, they just
Speaker 1: announced that Barack Obama is a campaign in Pennsylvania that
Speaker 1: looks to be the real sort of tipping points state.
Speaker 1: Biden is leading in Michigan, leading in Wisconsin. If he
Speaker 1: wins those and takes Pennsylvania, that will probably do it.
Speaker 1: But there's other paths to get there as well. And
Speaker 1: we'll see. For instance, the President is going to go
Speaker 1: to Michigan and wisconsinin this weekend, Arizona and Nevada as well.
Speaker 1: And what about when it comes to early polling, does
Speaker 1: that usually go more in favor I know we talked
Speaker 1: about this, is Josh Green more in favorite Democrats versus Republicans?
Speaker 1: Or is there something different this time around? We've seen
Speaker 1: the lines. Yeah, yeah, I mean two things. So when
Speaker 1: I wrote about the morning, how Trumps, the notion of
Speaker 1: losing to Biden looks to irk Trump, right. It bothers
Speaker 1: him that he could lose to the joke practice, and
Speaker 1: that's starting to work its way into his speeches these
Speaker 1: last few days. The other thing that's worked its way
Speaker 1: and as he started talking about a red waves, he
Speaker 1: thinks that you know, come voting day, Republicans are going
Speaker 1: to show up in such numbers that they're gonna really
Speaker 1: swamp the high numbers on advanced turnout and that that
Speaker 1: speaks to the reality, which is the Democrats are far
Speaker 1: likelier to vote in advance, either in person, advance or
Speaker 1: by mail than Republicans are UH. And Republicans, conversely, are
Speaker 1: far more likely to vote on the day of and
Speaker 1: show up in person. And so you know, this is
Speaker 1: it's important to bear in mind as we prepare for
Speaker 1: the night of November three, in the morning of November fourth,
Speaker 1: and maybe the night of November four, because this could
Speaker 1: take a while. Every state treat advanced vot a little differently.
Speaker 1: Some are allowed to count them in advance, some are not.
Speaker 1: We are seeing blowout numbers in advanced voter turn UH
Speaker 1: in a lot of states right now. Of course, the
Speaker 1: pandemic is playing a role in it. Hey, Josh, what
Speaker 1: do we know about the future of any debate between
Speaker 1: now an election day? We know, well, they have one
Speaker 1: more schedule for next Thursday, six nights from now. That
Speaker 1: will be the last one, you know, they try. The
Speaker 1: Trump campaign wanted to push the debate that was supposed
Speaker 1: to be last night in its format. Excuse me. The
Speaker 1: Biding campaign wanted to push it until next week so
Speaker 1: they could do that. The Trump campaign wanted to push
Speaker 1: both of them a week. Fiding campaign said no, you
Speaker 1: know a bit of back and forth on that. That's
Speaker 1: why you had those dueling advanced last night. So it
Speaker 1: really all comes down to next week. You know, Traditionally
Speaker 1: it's the people that are trailing campaigns that need debates
Speaker 1: to catch up, right, you know, the leader gets the
Speaker 1: luxury of autopilot, and so we'll see what Donald Trump
Speaker 1: gets on that. Of course, we'll see. I don't know,
Speaker 1: I'm not looking more than the evance at this page.
Speaker 1: Things like things are so fast moving in some way.
Speaker 1: They just got about a minute left here, Josh, or
Speaker 1: about forty five seconds. Did either one come out ahead
Speaker 1: or gain something from last night? Um? I think the
Speaker 1: Donald Trump's answers on Q and on are going to
Speaker 1: resonate a bit, you know, not refusing to do devow it,
Speaker 1: but anything less than you know, a gain or a
Speaker 1: good night for Trump. It's a wing provide. And I
Speaker 1: think we're in that range. You know, we talked about
Speaker 1: not a lot of undecided voters. People have made up
Speaker 1: their minds. You sort of love the president or you
Speaker 1: don't love him. At this point, Uh, there's not a
Speaker 1: lot of evidence of their even early ratings or the
Speaker 1: sort of early reviews that suggest Trump hit a home run,
Speaker 1: and anything doing a home run for Trump is probably
Speaker 1: bad news for him because he needs to catch up.
Speaker 1: I feel like I'm watching like some great movie, you know,
Speaker 1: political movie, you know fiction, and then I'm like, no, no, no,
Speaker 1: this is a this is this is our life, it's
Speaker 1: our reality, right. Um, Josh, thank you so much, really
Speaker 1: appreciate it. Josh wind Grove, he'ss White House correspondent. Definitely
Speaker 1: check out all of his work on Bloomberg. You can
Speaker 1: find him at Josh Underscore. Wind Grove Um just kind
Speaker 1: of wild stuff. Paul, Yeah, wild stuff. And against seventeen
Speaker 1: days to the election, I wonderfu I'm gonna have to
Speaker 1: start counting down also to the Electoral College, you know,
Speaker 1: certifying uh this thing. I see that number out there
Speaker 1: as well. Hopefully this will be a clear enough decision
Speaker 1: on where they are they're on, you know, honor about
Speaker 1: election night, and the country can begin to move forward. Yes,
Speaker 1: this is Bloomberg Business Week with Carol Masser from Bloomberg Radio.
Speaker 1: When you talk to technology investors, two themes come up.
Speaker 1: It just seems time and time again. One is the cloud.
Speaker 1: Everything's going to the cloud, and that's gonna drive spending
Speaker 1: for the Mexican jillion years. And then the second one
Speaker 1: is five G. How this is the future of wireless
Speaker 1: Even Apple it got into the act this week launching
Speaker 1: its iPhone twelve with its five G capabilities. Let's get
Speaker 1: a sense of what this really means. And there's nobody
Speaker 1: better than Craig Moffatt, founding partner and senior analyst at
Speaker 1: Moffatt Nathanson. And if you want to know anything that's
Speaker 1: going on in the t MT space, you have to
Speaker 1: get the research from Moffatt Nathanson. He joins on the
Speaker 1: phone from New York. Craig, thanks so much for joining
Speaker 1: us here. What did you make of Apple, the iPhone
Speaker 1: twelve and just kind of five G in general? First
Speaker 1: of all, thank you for having me back on, Paul.
Speaker 1: It's good to talk to you again. You know, I
Speaker 1: would say this, I would say that if anything, UM,
Speaker 1: the Apple five G event, it sort of has been
Speaker 1: a little bit of an uncomfortable reminder for everybody that
Speaker 1: five G is not really fully baked yet UM and
Speaker 1: the the announcement has sort of forced everybody to come
Speaker 1: to grips with the idea that um that right now, UM,
Speaker 1: five G is still very much um a year or
Speaker 1: so away. And and I thought they were all kinds
Speaker 1: of queues about that in the in the Apple launch.
Speaker 1: So is it crazy? Um, high Craig, And I hope
Speaker 1: you're doing well. I do what I do. Wonder you know,
Speaker 1: my husband was up at eight am or before that,
Speaker 1: you know, because he wanted to order his new Apple iPhone,
Speaker 1: I swear to God. And he stayed up till three
Speaker 1: in the morning, you know, because when they open it
Speaker 1: all up, and he's going to order my new phone
Speaker 1: when it comes out, I think in a week or two.
Speaker 1: And so are we crazy? We've been kind of waiting
Speaker 1: for this. Are we crazy? Because five G isn't completely
Speaker 1: built out here? Well, if if five G is the
Speaker 1: reason that you're getting a new phone, then yes, that's
Speaker 1: not that's crazy. Um, it's just not ready yet. There
Speaker 1: are other reasons to get new phones, and if if
Speaker 1: you like the new camera and that sort of thing. Um.
Speaker 1: And and look, the handset cycles have been lengthening for
Speaker 1: a long time, so there are an awful lot of
Speaker 1: old phones out there that need replacement anyway. But five
Speaker 1: G as a rationale. It just isn't very compelling. I mean, here,
Speaker 1: here's the problem, and and sorry if this is a
Speaker 1: little bit technical, but we love technical. If you deploy
Speaker 1: five G on on low frequency spectrum to get the
Speaker 1: coverage of the country, it's no faster than four G.
Speaker 1: If you deploy it in very high frequency spectrum and
Speaker 1: big spectrum blocks, it's very very fast. They demo that
Speaker 1: with Verizon, but it's hardly ever available. It's only available
Speaker 1: in in something like one percent of the time that
Speaker 1: you're going to be on your phone, because the propagation
Speaker 1: distances of those spectrum bands are so short that they're
Speaker 1: only really usable in exceptionally dense cities and inside shopping
Speaker 1: malls and airports and and arenas and stadiums and all
Speaker 1: the places where nobody is anymore because of covid um.
Speaker 1: And so the value proposition right now just isn't there yet.
Speaker 1: You're gonna end up with a phone that is essentially
Speaker 1: uh has a little five G light on it runs
Speaker 1: it about the same speed as fog and drains your
Speaker 1: battery faster for the trouble um. And that's not going
Speaker 1: to be compelling for very many people. So again, there
Speaker 1: may be other good reasons why you want to get
Speaker 1: a new phone, and the new iPhones are great looking.
Speaker 1: But then maybe you like the flat edges instead of
Speaker 1: the curved edges. But but it's not going to be
Speaker 1: because of five G yet. All right, So Craig, given that,
Speaker 1: I'm surprised or are you surprised that Apple rolled it
Speaker 1: out now as opposed to waiting. Typically their strategy has been, hey,
Speaker 1: we don't need to be the first or even the second,
Speaker 1: will be there when there's a market. Well, to be fair,
Speaker 1: they've already waited. Samsung has had five G phones out
Speaker 1: for more than a year. And and also remember that
Speaker 1: this is not just a US story. This is also
Speaker 1: a global story. Um and five G is a little
Speaker 1: bit further along in China and Korea and Japan, using
Speaker 1: the same chip sets by and large. So although interestingly
Speaker 1: the US chips, the US Apple devices are the only
Speaker 1: ones that will actually support millimeter wave spectrum um and
Speaker 1: and that's a real compromise. Um it gives you those
Speaker 1: blindingly fast speeds, but um it's again not available much
Speaker 1: of anywhere except um a little bit of New York
Speaker 1: and a handful of other very dead cities UM in
Speaker 1: the US. But again drains your battery so so fast,
Speaker 1: it generates a lot of heat UM. And so they've
Speaker 1: decided not even not even put that in the handsets
Speaker 1: that they're making for overseas markets. Alright, you popped my bubble.
Speaker 1: And I've got to say Mark German was also writing
Speaker 1: our Mark German here a Bloomberg wrote about, you know,
Speaker 1: Apple getting ready to launch, and then we've got this
Speaker 1: unready US market, so Verizon a T and T T Mobile,
Speaker 1: So as we're waiting for them to kind of really
Speaker 1: roll it out in a big way five G. When
Speaker 1: will they What are we all waiting for? Is it
Speaker 1: just they don't want to make the investment yet? What's
Speaker 1: holding it up? Well, there's a couple of things. But
Speaker 1: I said a minute ago, low frequency spectrum for broad
Speaker 1: coverage UM, but not high speed. High frequency spectrum for
Speaker 1: high speed but but insufficient coverage. That obviously leaves the
Speaker 1: broad medal, and the broad medal predictably is mid band
Speaker 1: spectrum UM. Right now, T Mobile has a huge advantage
Speaker 1: and head start and that they have a very large
Speaker 1: block of midband spectrum that they acquired in the Sprint acquisition.
Speaker 1: In fact, you can make a good case that's really
Speaker 1: the whole reason they bought Sprint was to get that
Speaker 1: spectrum UM that will be the support for the first
Speaker 1: really credible five G network in the United States, and
Speaker 1: T Mobile will have a big advantage that could well
Speaker 1: last for years. Verizon will probably catch up UM at
Speaker 1: least to a degree, when they buy a big chunk
Speaker 1: of spectrum later this year. Everyone seems to be quite
Speaker 1: certain that they will buy what's called C band Spectrum,
Speaker 1: which is going to be auctioned by the FEC in
Speaker 1: December UM, but that will take them a couple of
Speaker 1: years before they get it and then fully deploy it,
Speaker 1: and even then it's probably not going to have quite
Speaker 1: the same reach and coverage that T Mobile will enjoy.
Speaker 1: And the real challenge is going to be a T
Speaker 1: and T R. A T and T s balance sheet
Speaker 1: is in so much trouble that it's just not clear
Speaker 1: they have the money to be able to buy a
Speaker 1: significant amount of spectrum or to build it out at
Speaker 1: the pace that's going to be required to keep pace
Speaker 1: with Verizon and a T and T. You have a
Speaker 1: Verizon and T Mobile crag. We talked about a T
Speaker 1: and T a little bit earlier in the earlier segment.
Speaker 1: When I think about A T and T, now, unfortunately,
Speaker 1: what I think about is their balance sheet here, so
Speaker 1: you know my senses and you noted that as well,
Speaker 1: you know, So as I look at their business, I
Speaker 1: kind of got to start thinking about some asset disposals
Speaker 1: to try to pay down my balance sheet. And the
Speaker 1: thing that jumps at me is Direct TV. Can they
Speaker 1: ever sell this thing and get any remote value out
Speaker 1: of it? Not enough value that it's going to make
Speaker 1: a dent in their balance sheet? You know that that
Speaker 1: that's really the problem, right, I mean, they bought the
Speaker 1: business for all in including the debt that they took on,
Speaker 1: for sixty billion dollars, and New York Post reported last
Speaker 1: week that they're getting offers just four years or five
Speaker 1: years later for between fifteen and sixteen billion dollars, and
Speaker 1: so just a massive destruction of value. And here's the problem.
Speaker 1: It's still probably does something like five billion dollars of IBADA,
Speaker 1: So you're talking about evaluation that's in the range of
Speaker 1: three and a half times. That's their leverage. Remember, their
Speaker 1: their leverage on the balance sheet looks like it's too
Speaker 1: six two point six times UM cash flow, but in
Speaker 1: fact it's it's higher than that because they have all
Speaker 1: those operating leases that the rating agencies count as debt.
Speaker 1: Those are the operating leases for all the cell towers
Speaker 1: that they've got UM. And then you also have unfunded,
Speaker 1: unfunded pension obligations and that sort of thing. So you're
Speaker 1: really talking about a company that's levered three and a
Speaker 1: half times, way outside the norm for investment grade credit.
Speaker 1: And you can't sell an asset at three and a
Speaker 1: half times and de lever it's it leaves you exactly
Speaker 1: where you started UM. And and it's a real problem
Speaker 1: for them be because UM, if they can't find something
Speaker 1: to sell, it's not clear they have the headroom and
Speaker 1: the balance sheet to buy spectrum that they really need.
Speaker 1: So they're in they're in a very real bind here,
Speaker 1: and you can see them trying to sell anything that
Speaker 1: isn't nailed down right now. They're they're trying to sell
Speaker 1: direct TV, they're trying to sell the Warner Brothers Entertainment business,
Speaker 1: which is the video game unit small inside of Warner Brothers.
Speaker 1: There's there's been some talk they might try to sell
Speaker 1: Cartoon Network from inside of Turner UM. They're trying to
Speaker 1: shop the direct TV Latin America business. UM, they haven't
Speaker 1: been able to find any buyers for that. They're trying
Speaker 1: to sell their advanced advertising business. They haven't been able
Speaker 1: to find any buyers for that. And it's they're clearly
Speaker 1: just desperately trying to raise cash. UM. One argument is
Speaker 1: they're trying to do it to prepare for the Spectrum auction.
Speaker 1: Another is that the rating agencies may already be breathing
Speaker 1: down their neck and saying you've got to do something
Speaker 1: to deliver this balance sheet faster. So, Craig, what does
Speaker 1: a T and T want to be when it grows up?
Speaker 1: And I just think about all of the deals that
Speaker 1: it's done, Direct TV, Time, Warner, t C. I. I mean,
Speaker 1: I just think about, you know, the failed purchase of
Speaker 1: T Mobile. UM. They have done so many big things.
Speaker 1: You have activist investors. Certainly we saw that last year
Speaker 1: with Elliott Management. I mean, what do they need to be?
Speaker 1: What should they be? In your view? Well, I think
Speaker 1: they're going to have to pare back eventually to be
Speaker 1: a communications business again. But it's breathtaking just how quickly
Speaker 1: this has happened, right, I mean, remember they were it's
Speaker 1: they've owned Time Warner for less than two years, um
Speaker 1: and and already they're they're looking at unwinding the whole
Speaker 1: strategy that that put the company together. You know, I think, Carl,
Speaker 1: you put your finger on it when you mentioned T Mobile.
Speaker 1: They tried to buy T Mobile in and that would
Speaker 1: have been a perfectly rational strategy. There would have been
Speaker 1: lots of synergies. It would have been horizontal expansion in
Speaker 1: the US telecom market. Everything, everything we've heard since eleven said,
Speaker 1: the d o J told them, not only can you
Speaker 1: not do this deal, remember that deal was blocked by
Speaker 1: the Department of Justice and never happened. Um, but but
Speaker 1: you can't really buy any more telecom in the United States.
Speaker 1: You're as big as we're going to let you get
Speaker 1: in telecom. And so they were faced from eleven with
Speaker 1: a question, which is, so do you want to go
Speaker 1: outside the United States and buy telecom in Europe or
Speaker 1: the rest of world, or do you want to buy
Speaker 1: something non telecom in the US. And they felt like
Speaker 1: they needed to do a deal to sustain the dividend.
Speaker 1: They ultimately chose be that is, to buy something that
Speaker 1: was essentially unrelated in the United States, UM, direct TV,
Speaker 1: and then they tried to spend a story around it
Speaker 1: to to pretend that it was a strategic acquisition. It
Speaker 1: really wasn't. And when when you start strategy by saying
Speaker 1: what can we buy and then how do we justify it?
Speaker 1: As opposed to saying what are the the assets that
Speaker 1: we need and how do we get them? Um, you're
Speaker 1: starting in the wrong place and it's never going to
Speaker 1: end well. And I think almost immediately Direct TV went
Speaker 1: pear shaped. UM. They should have known it was going
Speaker 1: to go pear shaped. And and because of the burden
Speaker 1: of the dividend, they felt like they had to double
Speaker 1: down and buy something else UM in order to keep
Speaker 1: the free cash flow sufficient to fund the dividend, and
Speaker 1: they bought Time Warner. And in retrospect, Time Warner had
Speaker 1: a lot of the same problems as Direct TV. It
Speaker 1: was a business that was at its at the very
Speaker 1: tail end of its life, at least for the Turner networks. Remember,
Speaker 1: HBO gets all the attention, the movie studio gets a
Speaker 1: lot of attention, but the bulk of what they bought
Speaker 1: is cable networks. UM, and they're at the tail end
Speaker 1: of their useful life, and they're starting a secular decline,
Speaker 1: just like Direct TV was when they bought it um
Speaker 1: and so now they're suffering from the same problem of
Speaker 1: this not only cyclical but secular decline. We could continue
Speaker 1: on and on, so come back, I hope, and I
Speaker 1: love the deep dives. I know pauled us too, So
Speaker 1: thank you so much for it, Craig, and I hope
Speaker 1: you and your family are doing well amid this crazy time.
Speaker 1: Craig Moffatt, founder and senior Alice at Mofatt Nathanson on
Speaker 1: the phone in New York City, Brother, Mac Journal, Now,
Speaker 1: but you let me drive? No, no, no home, honey, please,
Speaker 1: I'll do the right ravel. Let me I want to drive,
Speaker 1: Just drive, baby, good question trying. This is the drive
Speaker 1: to the globe. Give me thanks. We'll drying up to
Speaker 1: dawn on Bloomberg Radio. All right, just got about eleven
Speaker 1: minutes left in today's trading session, getting ready to wrap
Speaker 1: up the trading day and also of course the trading week.
Speaker 1: Back with us in our time for the drive to
Speaker 1: the close is Michael Sheldon, executive director and chief Investment
Speaker 1: Office at R D m I Natural Group, based in Westport, Connecticut,
Speaker 1: and that's where he joins us on the phone. How
Speaker 1: are you Carol, Nice to see you. Um, we're still
Speaker 1: working on the markets, looking ahead and building client portfolios.
Speaker 1: We're still trying to figure everything out. And uh, I
Speaker 1: think you know, it's been an interesting summer. It's been
Speaker 1: an interesting two thousand twenty and we're not done yet.
Speaker 1: We still have an election to get through, a little
Speaker 1: thing called the election. I think, you know, from our perspective,
Speaker 1: I think over the near term we could very well
Speaker 1: see some added volatility in the markets. But I think
Speaker 1: over the intermediate term we're probably in the early stages
Speaker 1: of new economic cycle. And I think one thing that's
Speaker 1: important for investors to realize is that economic expansions typically
Speaker 1: last a number of years as opposed to just a
Speaker 1: number of months. If you go back to, for example,
Speaker 1: when when the UH the government started tracking GDP DAD
Speaker 1: in the late nineteen forties, the average US economic expansion
Speaker 1: has been almost six years, while the contract while contractions
Speaker 1: have been about three months. So you have to sort
Speaker 1: of take an intermediate to longer term viewpoint. UM, we
Speaker 1: are constructive on the markets, but certainly there are a
Speaker 1: lot of companies and industries that have been left behind,
Speaker 1: and only of all the workers that were let go
Speaker 1: have been rehired, so it's sort of a two speed
Speaker 1: recovery at this point. So, Michael, what are some of
Speaker 1: the sectors As you're constructing your portfolio, you're taking the
Speaker 1: outlook called intermediate to longer term. What are some of
Speaker 1: the sectors? Are you brave enough to say I can
Speaker 1: look towards the other side of this and maybe take
Speaker 1: a look at some of those sectors that are fundamentally
Speaker 1: good businesses, like it's leisure or travel, but have been
Speaker 1: knocked down because of this pandemic. Well, for the individual
Speaker 1: stocks that we purchased, we really focus on companies with
Speaker 1: strong balance sheets, industry leaders, companies with good outlooks. In
Speaker 1: terms of our portfolio right now, the way we're sort
Speaker 1: of thinking about things is we have a barbell approach.
Speaker 1: So on the one side, you need to have some
Speaker 1: growth in your portfolio to achieve the long term invest
Speaker 1: and goals to meet your horizon. So we own some technology.
Speaker 1: We have some of the stocks in the communication services
Speaker 1: industry as well. That's sort of an interesting sector. It's
Speaker 1: a mix, but we own some growth there. On the
Speaker 1: other side, we own some companies in the consumer discretionary area,
Speaker 1: as well as some industrials, because we also think we're
Speaker 1: in the early stages of an economic expansion and then
Speaker 1: sort of in the middle. We own some healthcare stocks.
Speaker 1: We have exposure to healthcare. That's sort of our GARP
Speaker 1: sector or growth at a reasonable price. You don't hear
Speaker 1: that term that often anymore. Just saying that to somebody,
Speaker 1: it's just kind of you're either, Carol, you're either in
Speaker 1: the big growth camp or you're buying deepsical. Yeah, exactly. Well,
Speaker 1: it's interesting that you say that you sound rather optimistic, Michael, No, no, no, no,
Speaker 1: we're no optimism I say, I say, we're constructed. But
Speaker 1: but it is important to point out that again we've
Speaker 1: only recovered all the jobs lost. When you look at
Speaker 1: last week weekly jobless claims, that actually went in the
Speaker 1: wrong direction and it came out closer to nine thousand.
Speaker 1: I think next week's weekly jobs numbers will be really important. Also,
Speaker 1: there's a lot of housing data which has been positive.
Speaker 1: But also next week, investors should keep an eye in
Speaker 1: the Leading Economic Index on Thursday because that tends to
Speaker 1: forecast the direction of the economy over the next six
Speaker 1: to twelve months, and a lot of data recently has
Speaker 1: had a big jump after a we had a really
Speaker 1: big decline in the economy in the second quarter, and
Speaker 1: now we've had a really big bounce back in the
Speaker 1: third quarter. Are thinking is that some of this data
Speaker 1: will start to even out a little bit and we
Speaker 1: see better times ahead over the next twelve to twenty
Speaker 1: four months. But we think it's it's going to be
Speaker 1: a bumpy ride as for some parts of the economy
Speaker 1: as we move forward, can we do it without stimulus
Speaker 1: or another round of stimulus? You see the debate, the
Speaker 1: back and forth, and it's not only just over the
Speaker 1: size at this point, there's a lot of Republicans and
Speaker 1: maybe some others that think we don't really need anything. Yeah.
Speaker 1: I think we're going to get some stimulus no matter
Speaker 1: who the next president is, but at this point it
Speaker 1: seems more likely that it will be in two thousand
Speaker 1: twenty one as opposed to this year. You know, I
Speaker 1: think in terms of the market itself, the two big
Speaker 1: supporting factors for the market right now are stimulus talks,
Speaker 1: which again it seems like this is more of a
Speaker 1: two thousand twenty one issue. But we will likely get
Speaker 1: some stimulus next year, and hopes of a vaccine, which
Speaker 1: we have a number of different trials and Phase three
Speaker 1: trials right now, and it seems like we're likely to
Speaker 1: get a vaccine. Plus you combine that with the fact
Speaker 1: again that we're probably in the early stages of an
Speaker 1: economic cycle, which typically lasts a number of years as
Speaker 1: opposed to a number of weeks or months. So how
Speaker 1: are you factoring it if at all? Again, it sounds
Speaker 1: like you're uh focus on that intermediate to longer term approach.
Speaker 1: But Joe Biden seems to be pretty strong in the polls,
Speaker 1: maybe even strong enough to bring the Senate along with him.
Speaker 1: Would that change your calculus at all? Yeah, that's definitely
Speaker 1: a risk to the to the story. I think one
Speaker 1: of the issues with Joe Biden. Of course, on the
Speaker 1: one hand, he's talked about raising taxes, which you never
Speaker 1: really want to raise taxes, especially during a during an
Speaker 1: economic recovery when things they're not at full speed. On
Speaker 1: the other hand, he's also talked about things like infrastructure
Speaker 1: spending and manufacturing jobs. So and and we're going to
Speaker 1: likely get some fiscal spending and spending on areas which
Speaker 1: could benefit companies and new companies and industries which will
Speaker 1: open up new opportunities. So it's sort of a mixed bag.
Speaker 1: But our thinking right now is that the stimulus spending
Speaker 1: will probably come in the first half of his term,
Speaker 1: and he's while he's certainly talked about raising taxes, it's
Speaker 1: possible that if the economy is not unstable or strong footing,
Speaker 1: he may delay that a little bit until the economy
Speaker 1: gets on better footing and we start to see a
Speaker 1: stronger recovery. So, but of that is something that will
Speaker 1: certainly have to monitor. Where don't you want to be
Speaker 1: in this market environment right now, Michael Well, I think
Speaker 1: over the past ten years or so, we've been overweight
Speaker 1: growth versus value, and we've been overweight the US versus
Speaker 1: foreign and that's worked out pretty well. At some point,
Speaker 1: these things tend to go in cycle. So we're still
Speaker 1: keeping those overweights right now, but at some point we
Speaker 1: probably will rotate into those areas of the market that
Speaker 1: haven't participated, so for example, adding maybe a little bit
Speaker 1: too far and moving more to the middle between growth
Speaker 1: and value and picking up more in some of the
Speaker 1: beaten down cyclical stocks or areas of the market that
Speaker 1: haven't quite participated, but would participate if there's a more robust,
Speaker 1: sustained economic recovery. And Michael, just about thirty seconds, is
Speaker 1: it too early to look at small caps? Well, right now?
Speaker 1: It's interesting more than the small cap market actually doesn't
Speaker 1: make money right now, so um, those are more of
Speaker 1: a risk on sort of trade. So if there is
Speaker 1: a more robust economic recovery, then small caps should participate
Speaker 1: and maybe even lead for a period of time. But
Speaker 1: but you have to keep in mind that a lot
Speaker 1: of those don't make money right now, so the or
Speaker 1: more volatile um depending on your outlook for the market.
Speaker 1: All right, we're gonna leave it on that note, Michael,
Speaker 1: good to check in with. You have a great weekend.
Speaker 1: Michael Sheldon, executive director and chief investment Officer at r
Speaker 1: DM Financial Group. Thanks so much for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud for at
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