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Speaker 1: no doubt about it. We've also got a new edition
Speaker 1: of Bloomberg Business Week magazine coming out online on the
Speaker 1: Bloomberg and on newstands tomorrow officially sooner than you think.
Speaker 1: Issue and one of the stories gets into the one
Speaker 1: million Americans tims still without high speed internet access and
Speaker 1: how now may be their best shot in a generation
Speaker 1: at getting it. Yeah. Austin Cars a technology reporter for
Speaker 1: Bloomberg News. He joins us on the phone from l A.
Speaker 1: Austin It's I was actually traveling to a rural air
Speaker 1: of h well, it's not even that rural. The Cat
Speaker 1: Skills over the weekend, uh, and my friends who live
Speaker 1: up there just got broadband internet access for the first
Speaker 1: time in the last couple of years. And this is
Speaker 1: an area that many people go to and many people
Speaker 1: rely on because certainly people rely on broadband if they're
Speaker 1: doing remote work, if they need to apply to jobs.
Speaker 1: And it's still just mind boggling that so many Americans
Speaker 1: do not have access to broadband. Take us into your
Speaker 1: story and what Washington is doing to get these million
Speaker 1: Americans who do not have high speed internet access access.
Speaker 1: So yeah, that's what Tim. What you witnesses in the
Speaker 1: Cat Skills is exactly what I witnessed reporting in rural Arkansas,
Speaker 1: which is it's just a different world than uh, the
Speaker 1: Internet have have experienced versus the Internet have not. You
Speaker 1: where I went to in the Arkansas Delta, which is
Speaker 1: about you know, a couple hours outside of Little Rock,
Speaker 1: very remote, very rural parts, high poverty rates, low density population,
Speaker 1: and you know, only recently one of the internet providers
Speaker 1: I talked with had just turned off their dial up
Speaker 1: internet which they had been you know, charging fifty cents
Speaker 1: per hour. It's just a different world. You don't realize
Speaker 1: that they can't stream Netflix there, they can't do Zoom,
Speaker 1: they can't book a COVID appointment if they don't have
Speaker 1: internet access. And so what I want to show with
Speaker 1: the story is what it looks like on the ground
Speaker 1: as Washington considers tackling this digital divide with the infrastructure
Speaker 1: or spending bill, which is making its way through through
Speaker 1: Congress right now, is through the House as well, and
Speaker 1: they're considering spending tens of billions of dollars on broadband
Speaker 1: deployment subsidies and giving us potentially the best shot in
Speaker 1: many years that a really narrowing the gap. And the
Speaker 1: big debate is how do we actually do that, what
Speaker 1: technologies do we invest in? Uh, what's the best bang
Speaker 1: for our buck? And the story shows what it's like,
Speaker 1: what the reality is like in places like World Arkansas,
Speaker 1: and what you saw in the cat Skills of how
Speaker 1: much it takes to actually close that divide with a
Speaker 1: structure on the ground, Well, how much does it take?
Speaker 1: Because in order for my friends and I'd actually spent
Speaker 1: a lot of time Saturday night talking to them about
Speaker 1: this because this is the first time I had visited
Speaker 1: them in the seven years that they've lived up there
Speaker 1: that they had high speed internet. Every other time they've
Speaker 1: relied on a satellite to actually get them internet access,
Speaker 1: and they were capped at fifteen gigs a month, which
Speaker 1: is really nothing. I mean, people use fifteen gigs a month,
Speaker 1: uh in a day if they're streaming something high definition,
Speaker 1: or in a couple of days. Uh. And and I
Speaker 1: wonder about the way that technology has changed because they
Speaker 1: actually got cable laid down, which is very expensive. But
Speaker 1: you see companies like Starlink Elon Musk's satellite company being
Speaker 1: able to offer potentially lower cost solutions. So what's the
Speaker 1: technology needed here and how much has it cost? So
Speaker 1: in the Arkansas Delta that the big debate is how
Speaker 1: much do you spend on fiber, which is the gold standard,
Speaker 1: that's what you have with every high speed internet pretty
Speaker 1: much and every your wealthier urban part of America at
Speaker 1: this point, or do you invest in sort of a
Speaker 1: riskier technology like Elon Musk's Starling satellites which orbit uh
Speaker 1: lower part over the Earth and zap coverage from space.
Speaker 1: There's five G home Internet, which is sort of a
Speaker 1: home based version of what you get from say T
Speaker 1: Mobile or a T n T or Verizon UM or
Speaker 1: their fixed wireless tools, which like citizens Broadband Radio service,
Speaker 1: which is actually what a bunch of the local Internet
Speaker 1: providers in Arkansas are using these days. UH. It's a
Speaker 1: wireless spectrum historically used by the U. S. Navy to
Speaker 1: to sort of beam radar transmissions, and the STEC has
Speaker 1: repurposed that spectrum for commercial youth, allowing local players to
Speaker 1: sort of beam Internet coverage using radio antennas, which sounds
Speaker 1: kind of old school, but it works for up to
Speaker 1: six miles. It's not as fast or reliable as fiber,
Speaker 1: but it gives decent speeds and costs a fraction of
Speaker 1: physically wiring up every home in America. And so that
Speaker 1: that's really comes down to this cost benefit analysis of
Speaker 1: in rural In rural Arkansas, I'm told it can cost
Speaker 1: fifty thou or more to get a fiber optic cable
Speaker 1: uh laid into the ground, and that's not including trenching
Speaker 1: costs or construction, etcetera. UM, And so how much are
Speaker 1: you willing to invest than that versus the far cheaper
Speaker 1: but maybe less reliable technology that might not be relevant
Speaker 1: ten years that might need to be eventually replaced in fiber,
Speaker 1: but will help get more people online tomorrow instead of
Speaker 1: ten years from now. It is still striking how many
Speaker 1: Americans are without high speed internet access because we take
Speaker 1: it for granted, certainly here on the East Coast. So
Speaker 1: the infrastructure build, does that provide enough money to really
Speaker 1: move the needle here? And what specifically, uh you're getting
Speaker 1: into some of the technologies, I mean, what do what
Speaker 1: needs to be the first couple of steps to move
Speaker 1: towards uh, hooking up those twenty million Americans. Yeah, the
Speaker 1: biggest hold back is actually the SEC's data. It's historically
Speaker 1: been incredibly inaccurate because it's based on census blocks. And
Speaker 1: this is something the SEC is acknowledged, just based on
Speaker 1: census block rather than sort of address by address breakdown
Speaker 1: of the Internet access in America. So the SEC estimates
Speaker 1: roughly between fourteen and eighteen million people don't have broadband access,
Speaker 1: whereas outside um analyzes from from different research group estimate
Speaker 1: the number is as much as forty two million Americans
Speaker 1: without broadband access, or as many as a hundred and
Speaker 1: twenty million if you're just talking about people who don't
Speaker 1: have Internet at broadband speeds like like that that what
Speaker 1: you need to stream Netflix. So so the biggest first
Speaker 1: step here is actually just figuring out where to close
Speaker 1: the gap, because you can't narrow the digital divide if
Speaker 1: you don't know where it is. And then the next
Speaker 1: step is just figuring out how much money can we
Speaker 1: afford uh to sort of break down this problem. And
Speaker 1: I think the issue is a lot of critics have
Speaker 1: said that the broadband subsidies aren't likely going to be
Speaker 1: big enough to do a fiber only network across of
Speaker 1: all of America. The Senate bill right now includes about
Speaker 1: forty two billion dollars for broadband deployments, whereas you know,
Speaker 1: some some estimates say it would cost as much as
Speaker 1: two hundred and forty billion at least just to do
Speaker 1: a five or old need network across America. So if
Speaker 1: we're trying to wire up everyone, we're not going to
Speaker 1: be able to afford it. So the question is what
Speaker 1: are these other technologies? Do we use more satellites than
Speaker 1: fixed wireless to wire up the country or do we
Speaker 1: just try to build a much fiber as possible with
Speaker 1: that spending in this spill he Austin, what's the what's
Speaker 1: the other side of this coin here, the the economic
Speaker 1: cost of not having these more than one million Americans
Speaker 1: connected with broadband internet. What is I mean? Yeah, it's
Speaker 1: a it's a tragic cost. I'm not sure if it's
Speaker 1: it must be difficult to quantify, but it's something that
Speaker 1: The reason there's been more emphasis on this subject is
Speaker 1: because the COVID nineteen pandemic um. You know, prior to
Speaker 1: the pandemic um, you know a lot of folks that
Speaker 1: it said that any infrastructure bill that came up, it
Speaker 1: was always about investing in roads or bridges or railroads.
Speaker 1: And when I talked to the Rural Broadband Association, they
Speaker 1: just kept saying, Hey, it's also in addition to roads
Speaker 1: and bridges, it's also broadband. It's also broadband. It's also broadband.
Speaker 1: And that didn't change the Congress's perspective on that didn't
Speaker 1: really change until the COVID pandemic, when suddenly they realized
Speaker 1: employers couldn't have people working from home because they couldn't
Speaker 1: access zoom, or kids couldn't work from home and do
Speaker 1: their homework because they didn't have uh Internet access. When
Speaker 1: I was an orchand saw, I learned that a handful
Speaker 1: of kids were working outside at a local park center,
Speaker 1: a state run park center, because it had public WiFi,
Speaker 1: and they were working outside in ninety degree heat, and
Speaker 1: that the park ranger brought out fans to cool them off.
Speaker 1: So that that's the real tragic costs that you're seeing
Speaker 1: on the ground. I don't know if I have a
Speaker 1: quantified number for you, but that that's why this is,
Speaker 1: this debate is really uh coming to the forefront right
Speaker 1: now in the Infrastructure Bill of trying to solve that
Speaker 1: digital divide, because man, we saw that during the pandemic
Speaker 1: that the US is just not prepared for a remote society. Well,
Speaker 1: a good story, Austin Carr, thank you so much. This
Speaker 1: is Bloomberg. You're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: And we've got some breaking news crossing the Bloomberg terminal,
Speaker 1: a Bloomberg exclusive. Facebook's chief technology officer, Mike Chauffeur stecing
Speaker 1: down the CTEO changes posted internally by CEO Mark Zuckerberg.
Speaker 1: So let's get to it and get some clarification on
Speaker 1: the is again a Bloomberg exclusive with us is Bloomberg
Speaker 1: News Corporate Influence reporter Naomi Nick. She's in our interactive
Speaker 1: broker studio. You are here. What's going on? Yes, So
Speaker 1: Mike Schrepfer will be stepping down next year. He's currently
Speaker 1: UM the chief Technology officer for Facebook, so he handles
Speaker 1: UM a lot of the areas that are actually pretty
Speaker 1: critical to Facebook's growth, like augmented reality, blockchain, virtual reality,
Speaker 1: and UM. So this is a significant departure for Facebook,
Speaker 1: significant departure and also a familiar name to people who've
Speaker 1: been watching Facebook for years. Stepping up bos Facebook's hardware
Speaker 1: boss Bosworth to become CTO next year. Uh, tell us
Speaker 1: about bos In his history at the company and what
Speaker 1: he's going to and what it signals that he's becoming CTO. Well,
Speaker 1: this is you know, it's an interesting move for him
Speaker 1: given how much Facebook has been emphasizing it's push into hardware,
Speaker 1: so it has an ocuous unit. UM. It's also you know,
Speaker 1: just recently released a SMA art glasses. Facebook really sees
Speaker 1: its growth area in in creating hardware devices to be
Speaker 1: kind of the next cell phone. I gotta ask you,
Speaker 1: because Facebook has been in the news a lot. We
Speaker 1: should remind everybody to the stock I think hit a
Speaker 1: four month low in today's session. We've seen some pressure
Speaker 1: here UM the New York Times as reporting that Facebook
Speaker 1: promoted positive stories about itself on users news feeds. We
Speaker 1: know they've come under a lot of criticism in terms
Speaker 1: of blocking misinformation on their platform. Is this that all connected?
Speaker 1: My understanding is his group, UH, is the group that
Speaker 1: UM I think was very much involved in removing content
Speaker 1: that violates its policies like nudity, hate speech, and graphic violence. Yes,
Speaker 1: I mean he does oversee the technology that's central to
Speaker 1: those efforts for Facebook. And yeah, I mean it is
Speaker 1: at a time where the company's really under siege, UM
Speaker 1: from multiple investigations from multiple news organizations spanning you know,
Speaker 1: the fact that UM there might be a legal sales
Speaker 1: of of call, you know, illegal car with stings on
Speaker 1: its Facebook marketplace, to how it handles human trafficking UM
Speaker 1: and so, uh you know it's it's so is he
Speaker 1: a fall guy? And I said New York Times reporting
Speaker 1: Wall Street Journal has done a lot of reporting right
Speaker 1: and others on all of this. Is he a fall guy? Here?
Speaker 1: I wouldn't go that far, but I would say, Um,
Speaker 1: it's at a time where Facebook has seen a number
Speaker 1: of departures for veteran so like Fiji Samomo, who was
Speaker 1: also at Facebook recently left to become CEO of Instacart.
Speaker 1: Carolyn Everson, who oversaw Facebook's businesses with advertisers, she also
Speaker 1: recently departed, and they were both people who were at
Speaker 1: the company for more than a decade. And so this
Speaker 1: is another one of those types of departures I do,
Speaker 1: I go ahead, I just gonna say Facebook down about
Speaker 1: six times of a percent in the after I was
Speaker 1: It was down four percent in the regular trade. Now,
Speaker 1: I mean wondering just about again back to Bobs because
Speaker 1: for for people who've been watching Facebook, Andrew Bosworth closely
Speaker 1: for years a familiar name and internally too, and in
Speaker 1: this coming from an internal posting the company recruiting from
Speaker 1: inside the company, keeping people who've been at the company
Speaker 1: a long time and elevating them even though they got
Speaker 1: they've seen these departures from long time executives very recently. Yeah,
Speaker 1: it's actually an interesting, um, you know move for Facebook
Speaker 1: in particular because the company has gotten criticism that it's
Speaker 1: too insular, and it's thinking that it drinks its own
Speaker 1: kool aid and doesn't accept the perspectives of outsiders enough.
Speaker 1: And so you know, this is one of those moves
Speaker 1: that could invite that kind of scrutiny, you know, in
Speaker 1: the future. And so the question is if they continue
Speaker 1: to recruit within, will they change and be able to
Speaker 1: address the criticisms they're facing. Is their net take away
Speaker 1: from all of this, And I know we're gonna be
Speaker 1: covering this into the Thursday trade, Um, I'm just curious.
Speaker 1: I would say it means that Facebook's leadership is shuffling,
Speaker 1: and the question is will there be more departures, will
Speaker 1: there be more reshuffling at the top, and how to
Speaker 1: that effect the direction of the company? Yeah, a day word,
Speaker 1: Facebook closed down four percent to Naomi over those challenges
Speaker 1: that the company is having with Apple's new UH privacy
Speaker 1: settings as well. Naomi Nicks is social media and corporate
Speaker 1: governance reporter. She joins US Live with the Bloomberg Exclusive.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, our
Speaker 1: next guest has been one of the constant and consistent
Speaker 1: go to voices throughout the COVID nineteen pandemic, having a
Speaker 1: front root seat to the health crisis. Former commissioner of
Speaker 1: the f d A of the United States, He's on
Speaker 1: the boards of a Lumina, Tempest Visor, and more. He's
Speaker 1: a resident fellow at the conservative think tank American Enterprise Institute.
Speaker 1: His new book is Uncontrolled Spread, Why COVID nineteen crushed
Speaker 1: Us and How we can defeat the next pandemic. Great
Speaker 1: to welcome here to Bloomberg Business Week from our FDA Commissioner,
Speaker 1: Dr Scott Gottlieb on the phone from Westport, Connecticut. Dr Gottlieb,
Speaker 1: Great to have you here with him and myself. UM,
Speaker 1: so much to ask you and congratulations on the book.
Speaker 1: One thing we wanted to know if the nation had
Speaker 1: shut down early on in the pandemic, let's say, for
Speaker 1: three months, really shut down, federal mandatory shutdown, would we
Speaker 1: be in a better position today? And I'm just talking
Speaker 1: about the US for a moment. Yeah, I don't know that. Um,
Speaker 1: if we had implemented the stay at home order a
Speaker 1: lot earlier would have made an appreciable difference, and I
Speaker 1: don't think it would have been warranted, certainly once we
Speaker 1: knew that there was very dense spread in cities like
Speaker 1: New York, we should have implemented the mitigation they stay
Speaker 1: at home recommendations earlier than we did, so we were
Speaker 1: a week or too late doing that in cities like
Speaker 1: New York. But the bigger problem was that we didn't
Speaker 1: have the ability to actually diagnose the inspection. We didn't
Speaker 1: have a diagnostic test employed at scale. It was it
Speaker 1: was something we could have done if we had proper
Speaker 1: planning um And because we didn't have a diagnostic test,
Speaker 1: not only did we not know how much spread was underway,
Speaker 1: so we were lying to the scope of the spread,
Speaker 1: and we didn't know the true nature of the threat
Speaker 1: and that's partly why we shut down own late. But
Speaker 1: we didn't know where the virus wasn't there were parts
Speaker 1: of the country where COVID wasn't spreading yet, where we
Speaker 1: didn't have to implement the population wide mitigation, where we
Speaker 1: could still use testing and tracing if we had a
Speaker 1: test employed to try to contain the spread rather than
Speaker 1: telling everyone they had to stay in their homes. Um
Speaker 1: So that the lack of the ability to actually figure
Speaker 1: out where the virus was but also where it wasn't
Speaker 1: led to the wrong policy decisions. Who made the right
Speaker 1: policy decisions at the time, What countries led the way,
Speaker 1: what countries are still leading the way. What's a good
Speaker 1: example of what we should have done. Yeah, at the time,
Speaker 1: South Korea, I think UM had probably the best initial response.
Speaker 1: I mean, every country has gone through waves of infection
Speaker 1: and made mistakes along the way. UM. The US has
Speaker 1: been disproportionately impacted by this. This has been an asymmetric
Speaker 1: risk of the United States. I think We've made a
Speaker 1: lot of a lot of mistakes along the way. But
Speaker 1: South Korea, early on when the virus was first identified
Speaker 1: in China, got together their private industry, their their diagnostic
Speaker 1: manufacturers and promised them in a very efficient process if
Speaker 1: they got into the market, started to manufacture diagnos two
Speaker 1: kids at scale. They promised that they would be purchased
Speaker 1: by the government UH and they also stood up testing sites.
Speaker 1: They started to lay the foundations testing sites, and they
Speaker 1: actually pioneered the use of drive through testing sites. The
Speaker 1: first dry through testing sites were in South Korea, and
Speaker 1: because they were able to deploy diagnostic testing at a
Speaker 1: massive scale, they were able to identify their early infections
Speaker 1: get people isolated, get people in quarantine, uh, and keep
Speaker 1: the country from becoming epidemic. The the epidemic really never
Speaker 1: took off in South Korea. I mean they had subsequent
Speaker 1: waves of perfection one D and one seven, and eventually
Speaker 1: a delta variant started to spread later on. But South
Speaker 1: Korea was on a similar trajectory of Italy and was
Speaker 1: able to contain it. Dr Gotli, Why didn't we treat
Speaker 1: the warnings of a global pandemic that have been out
Speaker 1: there for years, so much so that there was a
Speaker 1: pandemic playbook conceived of during the Bush administration. Why wasn't
Speaker 1: that already in place. You've been on the inside, You've
Speaker 1: been involved in government on and off, I think since
Speaker 1: roughly two thousand three. Why didn't we have the follow through?
Speaker 1: And I'm curious the conversations that you had about this. Look,
Speaker 1: we had a pandemic playbook, and you're right, we had
Speaker 1: prepped um a pandemic contingency. In fact, the government had
Speaker 1: run a stimulation called Crimson Contagion just before COVID struck,
Speaker 1: which was a simulated pandemic. The problem is we had
Speaker 1: always prepped for a pandemic involving a flu. We never
Speaker 1: envisioned that a pandemic could be caused, certainly by a coronavirus.
Speaker 1: We never envisioned anything but influenta And the playbook that
Speaker 1: we had written for flu wasn't fully applicable to a
Speaker 1: coronaus coronavirus or many things that were different about this
Speaker 1: virus and about any coronavirus that don't make the kinds
Speaker 1: of continguencies that you developed for flu um widely applicable
Speaker 1: for so for example, flu has a short incubation period,
Speaker 1: meaning that when you're exposed to it, you get sick
Speaker 1: from it pretty quickly, and typically you're not compagious until
Speaker 1: you develop symptoms. So trying to diagnose people who are
Speaker 1: asymptomatic carriers of the flu isn't as efficient. First of all,
Speaker 1: they're gonna, once they're exposed, are gonna become sick very quickly,
Speaker 1: and you're gonna be all identify them because they're gonna
Speaker 1: have symptoms when they're contagious. They have symptoms with a coronavirus.
Speaker 1: With a on the incubation period, there's more of an
Speaker 1: opportunity to guess someone diagnosed before they go on to
Speaker 1: spread the virus. And we also know that there's a
Speaker 1: lot of asymptomatic transmission with with the coronavirus with COVID,
Speaker 1: so it's more important to have a diagnostic test deployed.
Speaker 1: We're screening the population. So a lot of the things
Speaker 1: that we thought about that we planned for flu weren't applicable.
Speaker 1: We also tried to stockpile certain materials like respirators and
Speaker 1: mass um, which didn't which we found out the stockpiles
Speaker 1: weren't well maintained, so we didn't have the equipment that
Speaker 1: we needed. But I do want to push you a
Speaker 1: little bit, Dr Gottlieb about what were the internal conversations
Speaker 1: you were having at your time uh in in the
Speaker 1: government when it comes to hey, folks, we gotta do
Speaker 1: something more serious. We gotta make sure we've got the
Speaker 1: right things in place. Yeah, at the time that I
Speaker 1: was in government, we really didn't have our eye on
Speaker 1: anything but influenza. So how did we miss it? How
Speaker 1: did we miss it? Especially that since there's a lot
Speaker 1: of vaccine hunters that are out there that we've talked
Speaker 1: to a bunch here at Bloomberg, they've been looking at
Speaker 1: this and seeing things are out there that could be
Speaker 1: a significant problems. Yeah, certainly, back in two thousand and
Speaker 1: five when the pandemic planning first began, that's when I
Speaker 1: was involved with it. We were really worried about a
Speaker 1: bird from each five M one. At that point, coronavirus
Speaker 1: has really hadn't emerged. But after Stars and mirrors both emerged,
Speaker 1: we should have had the awareness of the coronaviruses were
Speaker 1: on the march, they were becoming more pathogenic, they were
Speaker 1: starting to threaten humans, and that a more contagious variation
Speaker 1: of stars could come along and threaten the entire globe. Really,
Speaker 1: what we should have been focused on is a broad
Speaker 1: category of viruses. Viruses that replicate through RNA, because the
Speaker 1: virus that replicates through RNA means that it can undergo
Speaker 1: rapid mutation, and viruses that could spread through respiratory droplets
Speaker 1: or aerosols. So those two features, viruses that replicate through
Speaker 1: OURNA and spread through aerosols or what make of give
Speaker 1: a virus the qualities that could create global contagion. And
Speaker 1: if you're looking at it through that lens, you're looking
Speaker 1: at that broad category that includes inuenda for sure, but
Speaker 1: it also includes coronaviruses include nippavirus. It broadens the universe
Speaker 1: of the potential threats that could be the next pandemic.
Speaker 1: Still with us is Dr Scott, former FDA Commissioner, resident
Speaker 1: fellow at the American Enterprise Institute, viser, and Alumina board member.
Speaker 1: He is also a special partner with the venture capital
Speaker 1: from New Enterprise Associates. And let's not forget the reason
Speaker 1: he's here. He's got an interesting and comprehensive new book.
Speaker 1: It's called Uncontrolled Spread. Why COVID nineteen crushed us and
Speaker 1: how we can defeat the next pandemic. I already, Tim
Speaker 1: are thinking about the next pandemic. Yeah, and so is
Speaker 1: Dr Gottlieb. Dr Gotlieb, you dedicate this book to your
Speaker 1: three daughters. Uh, you're a dad, and I think that
Speaker 1: a lot of parents listening right now. I want to
Speaker 1: know about risk tolerance and about the way that you
Speaker 1: are behaving and the way that you want your family
Speaker 1: to behave during a pandemic when perhaps some of kids
Speaker 1: are not vaccinated and some kids are old enough to
Speaker 1: be vaccinated. Uh, what is what are you doing with
Speaker 1: your family right now? What is safe to you? What's
Speaker 1: not safe to you? Yeah? Look, my kids are not
Speaker 1: vaccinated yet, they're not old enough to be vaccinated run
Speaker 1: the age of eleven, they will be vaccinated one they
Speaker 1: may turn twelve and they're eligible. I think a lot
Speaker 1: of the residual anxiety that people feel people who are
Speaker 1: vaccinated feel right now around COVID is the risk that
Speaker 1: they're going to bring in an asymptomatical, modely symtomatic infection
Speaker 1: back into the home, put their children at risk, or
Speaker 1: an elderly um parent at risk, someone that they might
Speaker 1: be caring for who is a more significant risk of
Speaker 1: having a bad outcome from COVID. I think once the
Speaker 1: vaccine can be extended to children, a lot of people
Speaker 1: who are vaccinated themselves and don't feel personally at risk
Speaker 1: and COVID, that they feel reasonably confident that they were
Speaker 1: to get infected, that they're going to be protected from
Speaker 1: a severe outcome. I think they feel more confident about
Speaker 1: going out and about, and that's why I think a
Speaker 1: lot of people are still cautious. People who are vaccinated
Speaker 1: probably overestimate their risk. In some cases, they're probably more
Speaker 1: protected than what they perceived. People who are unvaccinated, quite frankly,
Speaker 1: I think are underestimating their risk. They're probably a much
Speaker 1: more risk and COVID than they perceive. But I think
Speaker 1: a lot of the residual anxiety that people feel around
Speaker 1: the virus is around kids, and hopefully we'll have a
Speaker 1: vaccine for children very soon. Fingers crossed your As we mentioned,
Speaker 1: I f as our board member, do you hair whether
Speaker 1: your kids get a viser booster or vaccine? Excuse me,
Speaker 1: whether it's maderna, whether it's J and J, do you
Speaker 1: have any preferences. I think all three of these vaccines
Speaker 1: are safe and effective. All three of them have demonstrated
Speaker 1: really robust protection, including the Jane J vaccine, and J
Speaker 1: and J is going to be able to produce much
Speaker 1: more vaccine in the months ahead. UM, and that the
Speaker 1: data on that vaccine looks very encouraging when we see
Speaker 1: long term data and the durability of response. And so
Speaker 1: I'm impartial to what vaccine my children received. Probably they're
Speaker 1: going to get the Fiser vaccine because it's successful to me, UM,
Speaker 1: but I'm impartial to what they received. I think all
Speaker 1: three of these vaccines are outstanding, and I have to
Speaker 1: be quite honest with you, Tim and I talked about
Speaker 1: this every day with doctors uh, and the medical community.
Speaker 1: I think there is a feeling like I got the
Speaker 1: Visor vaccine, I got the Madura vaccine, Like there is
Speaker 1: a feeling that one is better than another. You've got
Speaker 1: a huge audience right now, a global audience. I mean,
Speaker 1: what do you say to them, how do we understand
Speaker 1: especially as we continue to see studies out there, officials,
Speaker 1: regulations you know, come in about these uh, these vaccines. Yes,
Speaker 1: it's not what the data shows. When you can pull
Speaker 1: any one study and try to make a claim that
Speaker 1: one vaccine might be slightly more beneficial than another vaccine
Speaker 1: in terms of its long term efficacy or the absolute
Speaker 1: potency of what of the effect and it says delivering.
Speaker 1: But the totality of the data really shows that these
Speaker 1: vaccines are interchangeable and and all of providing durable protection
Speaker 1: and they're all doing their job. They're fulfilling the original premise.
Speaker 1: Remember the original premise of these vaccines with that they
Speaker 1: would protect you against severe disease and hospitalization. And all
Speaker 1: three vaccines are proving very effective at that. I think
Speaker 1: something really frustrating to a lot of people right now.
Speaker 1: Dr Gotlieb is uh, there's still you know, you write
Speaker 1: about the lack of real time testing and available testing.
Speaker 1: Even almost two years into when we first discovered this,
Speaker 1: I still walk into a drug store and I cannot
Speaker 1: get a binance test right one of those from Elliott Labs,
Speaker 1: and I can't order them online. This the availability is
Speaker 1: still not there. So you write about it in your
Speaker 1: book How to Prepare for the Next Pandemic. We're still
Speaker 1: not getting through through this one right now. We're still
Speaker 1: not learning the lessons that we should have learned almost
Speaker 1: two years ago. Now. The problem is that we didn't
Speaker 1: We didn't scale the production of the tests that consumers prefer.
Speaker 1: What consumers want are at home tests that they can
Speaker 1: deploy themselves that are easy to use, where they can
Speaker 1: get a readable result right in the privacy of their home.
Speaker 1: A lot of the tests that are available in the
Speaker 1: market that aren't selling out are the ones that either
Speaker 1: require you to send a swab off overnight so you
Speaker 1: don't get an discontinuous result, or you have to upload
Speaker 1: some data that the test reads out to get a
Speaker 1: result on your iPhone and therefore you're reporting the results
Speaker 1: to an authority. People want to be able to test
Speaker 1: themselves within the privacy of their own home and make
Speaker 1: a determination what they do with that result. And those
Speaker 1: are the binets now tests, to your point, which is
Speaker 1: selling out the Loomera tests which isn't available. So the
Speaker 1: test that consumers want are the ones that aren't available.
Speaker 1: I think companies probably miscalculated and didn't fully appreciate what
Speaker 1: consumer preferences would be. But the reality is that this
Speaker 1: is a completely new category. The whole idea of making
Speaker 1: at home tests available to diagnosed patients for infectious diseases,
Speaker 1: that's a new category that's been created in the setting
Speaker 1: of COVID. Before COVID, FDA winn authorize those tests. Do
Speaker 1: we need a division in the government, Dr Gottlieb that
Speaker 1: is just devoted to pandemics because right now it's a
Speaker 1: lot of hands in the pot. Yeah. I think what
Speaker 1: we need is a reformed CDC. There was an expectation
Speaker 1: that CDC had the operational capacity really to mount a
Speaker 1: national level response to a public health crisis of its
Speaker 1: magnitude surface real time information to inform policymakers do do
Speaker 1: real time analytics to inform consumers on how to reduce
Speaker 1: their individual risk scale the production of a diagnostic test.
Speaker 1: They didn't have the capability to do any of those things.
Speaker 1: It's a very retrospective mindset and new organization. It's a
Speaker 1: high science organization that does deep analytical work but takes
Speaker 1: months to render conclusions. We need a much different mindset
Speaker 1: and capability. But I think we should keep it within CDC.
Speaker 1: To take it out of CDC and just create a
Speaker 1: new agency is going to be too politically difficult. Hey,
Speaker 1: Dr golib, I gotta ask you about f DA because,
Speaker 1: as I was reminded in an NPR article this morning,
Speaker 1: the f d A has been without a permanent leader
Speaker 1: for eight months. Is did you see that as former
Speaker 1: FDA commissioner, do you see that as being an issue
Speaker 1: during the pandemic. I don't think it's an issue during
Speaker 1: the pandemic. The agency has got a very good commission
Speaker 1: in Joanna Woodcock, who I work with around the Drug Center.
Speaker 1: And the reality is I think that Janet has been
Speaker 1: able to function very effectively that organization because she knows
Speaker 1: the organization. If you had brought up politically appointed commissioners
Speaker 1: in the outside who wasn't familiar with FDA, they might
Speaker 1: not have been as effective day one in that organization.
Speaker 1: In the setting of a public health crisis. So having
Speaker 1: an experienced leader I think has actually been a good thing. Hey, listen,
Speaker 1: just got about forty fifty seconds left. Dr Scott Gottlieb
Speaker 1: tell us who you hope reads this book? Well, I
Speaker 1: certainly hope policymakers read it on Capitol Hill. I think
Speaker 1: we need to start having the discussion in earnest about
Speaker 1: how we prepare better in the next pandemic and how
Speaker 1: we make the country more resilient and look at public
Speaker 1: health preparedness through the lent of national security. So I'm
Speaker 1: hoping that this gets picked up in Washington and people
Speaker 1: start to think about how we should engage in better
Speaker 1: planning for the future. Well, there's a lot of information
Speaker 1: for everyone to read about and figure out the next
Speaker 1: playbook so that we are prepared. Dr Scott Gottleib, thank
Speaker 1: you so much. Much appreciation from Tim and myself. Uncontrolled spread,
Speaker 1: why COVID nineteen crushed us and how we can defeat
Speaker 1: the next pandemic. Of course, from the former head of
Speaker 1: the f d A, I'm ro macro journal now, but
Speaker 1: you let me drive no, no, no, drive home, honey, please,
Speaker 1: I'll do the right drivel exprest me. I want to drive, destrive,
Speaker 1: good questions trying. This is the drive to the globe.
Speaker 1: Give me thanks. We'll drying us down on Bloomberg Radio.
Speaker 1: All right, So great coverage by our surveillance team there.
Speaker 1: TV radio simulcast of the FED meeting largely what we
Speaker 1: expected all the out Tim great to say, Carl Master,
Speaker 1: Tim stead of a here on Bloomberg Business Week on
Speaker 1: this Fed Wednesday. It also happens to be I believe
Speaker 1: the first name of no Faul is the first happy fall. Yeah,
Speaker 1: first day of fall. Uh. And we did get some
Speaker 1: clarity when it comes to what the FED might do
Speaker 1: next and when we did it interestingly enough, but we're
Speaker 1: not seeing a significant market reaction either when it comes
Speaker 1: to fixed income markets or when it comes to the
Speaker 1: equity market. And I think it's fair to say that
Speaker 1: that's a win for the FED. Means that they have
Speaker 1: been transparent, that they've been feeding that information right, absolutely, Yeah, exactly.
Speaker 1: So let's see what our guest has to say. We'll
Speaker 1: continue talking about the FED. Let's do a little bit
Speaker 1: more with Megan Hornament. She's director of portfolio strategy at
Speaker 1: the wealth advisory and multi family office firm Verdon's Capital advisor.
Speaker 1: She is with us on the phone from Hunt Valley, Maryland,
Speaker 1: who by the way, if you check out our bio,
Speaker 1: if she was not a financial advisor, she would be
Speaker 1: a coach for the Special Olympics or the Invictus Game.
Speaker 1: So I'm delighted to have you here, Megan. How are you?
Speaker 1: I'm great, How are you good? Good? Good? I do
Speaker 1: wonder if this was an Olympic sport watching the FED,
Speaker 1: what might it be. Yeah, that's a very interesting question. Um,
Speaker 1: I guess it would. You'd have to pick one of
Speaker 1: the Olympic sports that's very slow and steady. Um. That
Speaker 1: is something that they are are definitely articulating to us. UM.
Speaker 1: They don't want to surprise us in any way. UM.
Speaker 1: They're going to be very methodical about how they go about,
Speaker 1: you know, tapering bomb purchases, how they unwind some of
Speaker 1: this non traditional policy, and as you mentioned before, they're
Speaker 1: being very transparent about it. So that's not really surprising
Speaker 1: the markets right now. If if it were figure skating
Speaker 1: or perhaps gymnastics, and judges were holding up numbers and
Speaker 1: giving graides, what grade would you give FED Chair Powell
Speaker 1: at the end of that press conference, I think yeah,
Speaker 1: one to ten, and I he did very well. The
Speaker 1: reason why I think he did very well it is
Speaker 1: because he didn't surprise anybody. I think that there that
Speaker 1: anybody could have expected he was going to come out,
Speaker 1: UM kind of tow the line on both sides where
Speaker 1: he would say, you know, they were acknowledging the fact
Speaker 1: inflations running a little bit hot. They did increase their
Speaker 1: inflation expectations for this year and a little bit for
Speaker 1: next year. But at the same time, the economy is
Speaker 1: not quite ready for them to raise rates, So they're
Speaker 1: able to really satisfy both sides of defense. They can
Speaker 1: um satisfy those people that think that inflation is running
Speaker 1: too hot and they have to do something, and then
Speaker 1: also satisfy those that think it's transitory and there's more
Speaker 1: risk to the economic environment going forward. Hey make it
Speaker 1: as somebody else to determine portfolio strategy at your firm.
Speaker 1: So based on what the Fed does, are you thinking
Speaker 1: about new strategies maybe going into the new year or
Speaker 1: even the remaining months of this year. Um, you know,
Speaker 1: for the remaining months of this year, we're still being
Speaker 1: very patient because I think there's a lot of risks
Speaker 1: still that need to be addressed obviously defended. So what
Speaker 1: does be patient mean? What's your what's your like allocations
Speaker 1: or where do you want to be exposed to? Right?
Speaker 1: So when I say atient is we're being patient with
Speaker 1: some of the overweight cash position that we have. We
Speaker 1: have a modestly slight overweight to cash and that's because
Speaker 1: we think you really need to have dry powder in
Speaker 1: this type of an environment. Even though we've seen volatility
Speaker 1: over the past couple of weeks, you're still looking at
Speaker 1: valuations that look stretched across a lot of areas, specifically
Speaker 1: even here in the US markets. So we're being patient
Speaker 1: to allocate some of that cash the areas that we like.
Speaker 1: Did you allocate on Monday or Tuesday when we saw
Speaker 1: the pull back, No, because if you if you look
Speaker 1: at it from top to bottom, it was only it's
Speaker 1: still about four percent. So we still haven't gotten that
Speaker 1: five percent pullback in the sec um this entire calendar year,
Speaker 1: and that's rare. So I think that some of the
Speaker 1: risks that we are are still monitoring. Obviously seasonality. You know,
Speaker 1: there are a lot of people will mention that we
Speaker 1: are closing down September, but there have been some instance,
Speaker 1: in September and October can be a little bit choppy.
Speaker 1: The other thing is the political situation is very uncertain
Speaker 1: right now, and it seems like while it's taking a
Speaker 1: back sea to some some other news there is um
Speaker 1: it looks like it's kind of there's a lot of
Speaker 1: falling apart there and some of these different deals that
Speaker 1: are supposed to be struck. Especially we have the dead
Speaker 1: selling at the end of this month, and you're hearing
Speaker 1: yelling pics get a bit louder as far as trying
Speaker 1: to get them to come to some form of an agreement.
Speaker 1: And then even if they do punt some of this
Speaker 1: down the road, we're still going to have more in
Speaker 1: fighting and a political standpoint before the end of this year.
Speaker 1: So I think the political standpoint, while we don't trade
Speaker 1: around you short term political events, it is something that
Speaker 1: I think could spook the markets and you could get
Speaker 1: some other buying opportunities. The other thing is just from
Speaker 1: a buying opportunity, a buying opportunity of what a five
Speaker 1: percent decline, a ten percent pullback, what do you consider
Speaker 1: a buying opportunity of Monday wasn't enough, right, So I mean,
Speaker 1: if you look at just some text and some technicals.
Speaker 1: You're still looking at least another seven to ten percent
Speaker 1: from here to to fall out to the two day
Speaker 1: moving average on the S and P five hundred. Uh,
Speaker 1: there was we did bounce off that fifty day moving average,
Speaker 1: so that held a little bit of support there. But
Speaker 1: from um, you know technicals, we'd like to look at
Speaker 1: that two day moving averages. It's kind of been a
Speaker 1: long term support. I think that that would be another opportunity.
Speaker 1: And then I also think that we have to get
Speaker 1: a little bit more clarity from the corporate tax perspective,
Speaker 1: because to be able to look at a value stocks
Speaker 1: and look from a pe multiple perspective, I don't think
Speaker 1: that the earnings estimates are truly pricing in the chance
Speaker 1: for corporate tax hikes. So I think there could be
Speaker 1: some some downward revisions to earnings depending on what magnitude
Speaker 1: of corporate tax kes we get. Even if the corporate
Speaker 1: tax hike is something in the range of me is
Speaker 1: it's really gonna be a problem for companies. She was
Speaker 1: on Quick Take Stock earlier today and she she actually said,
Speaker 1: so fewer by backs, few er, what aren't the big
Speaker 1: You know, Carol, you always say this, the big companies
Speaker 1: find a way to get around it. They do, come on, Megan, right,
Speaker 1: yes they do, and you'r you mentioned the buybacks and
Speaker 1: other things. But there it's going to depend off from
Speaker 1: an international what they do with the international revenues there. Yeah,
Speaker 1: like that's that's because that's some of our bigger companies
Speaker 1: that make up a lot of the earnings in the
Speaker 1: S and p FI hunt it. So there's a lot
Speaker 1: of moving parts here. Um. At the end of the day,
Speaker 1: the one thing that would benefit I think even if
Speaker 1: we do get the corporate tax side, let's say it's
Speaker 1: become more aggressive than than or they get everything. Biden
Speaker 1: gets everything that he originally wanted from the corporate tax perspective.
Speaker 1: Some of the things that it will do is is
Speaker 1: pushed forward cap expending because they haven't really made any
Speaker 1: changes from the depreciation um the part of the Trump
Speaker 1: tax cut. So I think you would get more cap
Speaker 1: expending from companies, especially if they're going to be taxed on,
Speaker 1: whether it's by backs or um, you know, did it
Speaker 1: end go up. I think you'll see more cap expending
Speaker 1: and that's positive for the economy. Megan, I want to
Speaker 1: ask you because from I think I know the answer.
Speaker 1: I think going into this meeting you were constructive and
Speaker 1: liked the financial area. We did see the KBW Bank
Speaker 1: index move up following the vent decision. Yeah, if look
Speaker 1: over the past few months, some of the things that
Speaker 1: have been constraining the financials and and the value there's
Speaker 1: eiqlical types of sectors has been the fact that, um,
Speaker 1: you know, we have the delta variant, which has got
Speaker 1: the people concerned a little bit about that reopening trade.
Speaker 1: But interest rates have stayed low. So every time we
Speaker 1: keep interest rates blow, you tend to see these expensive
Speaker 1: growth type of sectors, your technology, communication services, they tend
Speaker 1: to rally. But what did you see today? You sell
Speaker 1: along end of the curve back up a bit, and
Speaker 1: that's beneficial for financials. We like financials because we think
Speaker 1: that interest rates right now are just there's no justifiable
Speaker 1: reason why they should be this low. Um, when the
Speaker 1: FED does start to taper at some point, they've got
Speaker 1: to go a little bit higher. When would think, right, yes, yes,
Speaker 1: I think that they're they're gonna they're set to go
Speaker 1: higher over the next twelve months, and in that environment
Speaker 1: should be good for financials. That's the question. I mean no,
Speaker 1: it's you know, we definitely saw a play out here
Speaker 1: where don't you want to be just got about thirty
Speaker 1: seconds forty seconds um six income is long term fricks
Speaker 1: income at the short term fixed income. And then also
Speaker 1: I would be very careful around the expensive growth large
Speaker 1: cap areas. I'd rather be looking at most and are
Speaker 1: you sure you want to take that trade because every
Speaker 1: time everybody takes it, we just see more money go
Speaker 1: into it. Yeah, that's true, but then you also see
Speaker 1: days where you see all that money running for the doors.
Speaker 1: So I'd rather not be one trying to squeeze out
Speaker 1: the door. All right, good stuff, Hey listen, thank you,
Speaker 1: Thank you a pleasure. I hope you'll come back real soon.
Speaker 1: Megan Horneman, she's director of portfolio strategy at the wealth
Speaker 1: advisory and multi family office firm Verden's Capital. She's joining
Speaker 1: us from Unt Valley, Maryland. What is speaking of fixed income?
Speaker 1: I did think it was funny and kind of notable
Speaker 1: when Jara Powell was talking about trading activity by FED
Speaker 1: officials and you mentioned that he had munis and traditionally
Speaker 1: it's not something that for a long time. He said
Speaker 1: that portfolio right, it's going to happen right there. Especially,
Speaker 1: you know, these are guys who have lots of money,
Speaker 1: and I've been putting it to work for some time. Uh,
Speaker 1: and so you do wonder about overlaps, specially when it
Speaker 1: comes to policy. Thanks for listening to Bloomberg Business Week.
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