1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast 5 00:00:15,560 --> 00:00:18,479 Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:24,240 Speaker 1: at Bloomberg dot com slash podcast. So Cathy would founder 7 00:00:24,280 --> 00:00:27,120 Speaker 1: and CEO and CEE. I oh, and I'm sure she 8 00:00:27,160 --> 00:00:28,960 Speaker 1: has a ton of other titles that will bring to 9 00:00:29,000 --> 00:00:31,840 Speaker 1: you later. At Ark invest has gotten a lot of 10 00:00:31,880 --> 00:00:35,920 Speaker 1: attention lately. Her stellar fund performance has been marred after 11 00:00:36,000 --> 00:00:38,680 Speaker 1: a sell off in Gulf some of their biggest bets. 12 00:00:38,960 --> 00:00:42,920 Speaker 1: Would spoke with Bloomberg's Carol Master and Tim Stenovac on 13 00:00:42,920 --> 00:00:46,760 Speaker 1: Bloomberg Business Week. Here's what she had to say. Well, 14 00:00:46,880 --> 00:00:50,920 Speaker 1: I do believe we we love a wall of worry, 15 00:00:51,040 --> 00:00:53,920 Speaker 1: and we were seeing the wall of worry starts to build. 16 00:00:54,440 --> 00:00:57,720 Speaker 1: I saw it on social media, a lot of chatter, 17 00:00:58,440 --> 00:01:03,800 Speaker 1: some just waiting for our funds in particular to take 18 00:01:03,840 --> 00:01:08,039 Speaker 1: a tumble. Uh. Some maybe to buy, and some happy 19 00:01:08,080 --> 00:01:10,959 Speaker 1: to sell and short and all of that. We love 20 00:01:11,040 --> 00:01:14,560 Speaker 1: the liquidity that this provides us. We think it's very 21 00:01:14,560 --> 00:01:20,080 Speaker 1: healthy and very healthy shakeout. So that's uh. I guess 22 00:01:20,120 --> 00:01:23,600 Speaker 1: she needs no introduction, Carol Masser is what I'm talking about. 23 00:01:23,760 --> 00:01:29,920 Speaker 1: Talking to Cathy wood Um really interesting because she kind 24 00:01:29,959 --> 00:01:32,880 Speaker 1: of marked the bottom there. She bought the dip, and 25 00:01:32,920 --> 00:01:35,440 Speaker 1: so did a number of others. Let's bring it, Eric 26 00:01:35,440 --> 00:01:37,960 Speaker 1: Balcunas to talk about it, senior E t F analyst 27 00:01:38,040 --> 00:01:42,360 Speaker 1: for Bloomberg Intelligence. Is this the most popular um of 28 00:01:42,400 --> 00:01:45,039 Speaker 1: the new E t F s? Eric? I mean, of 29 00:01:45,080 --> 00:01:47,880 Speaker 1: course g l D and j n K and some 30 00:01:47,960 --> 00:01:49,920 Speaker 1: of the sort of plain vanilla ones, But is this 31 00:01:49,960 --> 00:01:53,960 Speaker 1: the most popular special et F? Oh? Yeah, I mean 32 00:01:54,240 --> 00:01:57,200 Speaker 1: this is the fastest growing asset manager in the country, 33 00:01:57,200 --> 00:02:00,120 Speaker 1: if not the world, in terms of percentage growth. And 34 00:02:00,160 --> 00:02:02,680 Speaker 1: it's not growth from like one million to ten million UM. 35 00:02:02,720 --> 00:02:05,880 Speaker 1: It's basically from like four billion to forty fifty billion, 36 00:02:05,960 --> 00:02:09,360 Speaker 1: so it's tenfold over a year. You rarely see that 37 00:02:09,400 --> 00:02:11,760 Speaker 1: kind of growth, and you rarely see it from a 38 00:02:11,880 --> 00:02:14,720 Speaker 1: stock picker. Those have been out of favor and in 39 00:02:14,800 --> 00:02:17,120 Speaker 1: the issuer. There's not much distribution. She didn't have a 40 00:02:17,120 --> 00:02:20,600 Speaker 1: lot of distribution network when she started, and also high cost. 41 00:02:20,720 --> 00:02:23,080 Speaker 1: I mean her funds are seventy five basis points. Any 42 00:02:23,160 --> 00:02:25,679 Speaker 1: one of those three things makes life very difficult in 43 00:02:25,760 --> 00:02:28,440 Speaker 1: the et F industry. She's all three and is now 44 00:02:28,520 --> 00:02:31,040 Speaker 1: basically taking in as much flows as black Rock, and 45 00:02:31,120 --> 00:02:34,080 Speaker 1: it's the story is tremendous. Can't take my ass off 46 00:02:34,120 --> 00:02:36,600 Speaker 1: of it. And obviously the performance is what is driving this. 47 00:02:36,919 --> 00:02:39,520 Speaker 1: You look at her performance and you know, maybe half 48 00:02:39,560 --> 00:02:44,480 Speaker 1: of it is a growth tech the cues, but the 49 00:02:44,520 --> 00:02:46,880 Speaker 1: other half is really a hot hand and that's why 50 00:02:47,000 --> 00:02:49,240 Speaker 1: she's getting the money. And you know, other people who 51 00:02:49,240 --> 00:02:52,880 Speaker 1: are doing well but not that well, are not Eric. 52 00:02:53,040 --> 00:02:56,600 Speaker 1: You know, some criticism of Cathy and of Arc is 53 00:02:56,639 --> 00:02:59,639 Speaker 1: that it's just a derivative play on Tesla's at derivative 54 00:02:59,639 --> 00:03:02,560 Speaker 1: play on maybe Bitcoin and maybe some of the hot 55 00:03:02,680 --> 00:03:05,840 Speaker 1: names Apple, Amazon or whatever. It's really just reflective of 56 00:03:05,880 --> 00:03:09,560 Speaker 1: what's going on in the nastack. What do you make 57 00:03:09,600 --> 00:03:13,000 Speaker 1: of that? I mean, there's this a little truth of that. 58 00:03:13,080 --> 00:03:15,320 Speaker 1: The testa call was major, but then that's about a 59 00:03:15,400 --> 00:03:18,240 Speaker 1: fifth of a r k k's return though, so a 60 00:03:18,320 --> 00:03:20,880 Speaker 1: fifth is major, but it's not it's not nearly it's 61 00:03:20,880 --> 00:03:27,200 Speaker 1: not even close to half. You look, she's got internet stocks, also, biotech, software, 62 00:03:27,880 --> 00:03:31,200 Speaker 1: commercial services, it's pretty it's across the board, and that's 63 00:03:31,400 --> 00:03:34,079 Speaker 1: part of what I think she really tapped into. Back 64 00:03:34,080 --> 00:03:36,560 Speaker 1: in the day, there was a lot of sector ets 65 00:03:36,720 --> 00:03:39,120 Speaker 1: and some industry ets, but she said, you know, I 66 00:03:39,120 --> 00:03:41,960 Speaker 1: don't be locked into a gig sector or an industry here, 67 00:03:42,160 --> 00:03:44,480 Speaker 1: and also don't be locked into rules. So she said, 68 00:03:44,480 --> 00:03:47,440 Speaker 1: we're gonna go after innovation, and she I think really 69 00:03:47,480 --> 00:03:49,960 Speaker 1: tapped into this nature of how stocks are hard to 70 00:03:49,960 --> 00:03:53,840 Speaker 1: classify these days, namely Tesla and Amazon UM. But if 71 00:03:53,840 --> 00:03:55,560 Speaker 1: you look at her performance, so I think it's interesting 72 00:03:55,560 --> 00:03:58,560 Speaker 1: about it is she only has a one percent overlap 73 00:03:58,640 --> 00:04:01,240 Speaker 1: with the S and P five hundred, so is wells 74 00:04:01,280 --> 00:04:03,920 Speaker 1: the SMP has done. She's figured out returns that aren't 75 00:04:03,960 --> 00:04:07,240 Speaker 1: even in those benchmarks, which has also helped her in 76 00:04:07,360 --> 00:04:10,119 Speaker 1: terms of marketing because she can say, look, you own 77 00:04:10,120 --> 00:04:13,000 Speaker 1: the SMP, you don't need this active manager that has 78 00:04:13,080 --> 00:04:15,880 Speaker 1: basically most of the SMP plus a couple of bets. 79 00:04:16,040 --> 00:04:18,159 Speaker 1: You should go with me. I'm completely different and I 80 00:04:18,200 --> 00:04:21,039 Speaker 1: can head you from the value stock stocks that you 81 00:04:21,080 --> 00:04:23,719 Speaker 1: have in your SMP. And that's a pretty powerful pitch 82 00:04:23,760 --> 00:04:25,800 Speaker 1: in my opinion, that goes even beyond just coming in 83 00:04:25,839 --> 00:04:28,760 Speaker 1: and saying, hey, my return rules. By the way, a 84 00:04:28,800 --> 00:04:30,920 Speaker 1: fifth isn't even half of a half. I wanted to 85 00:04:30,960 --> 00:04:35,400 Speaker 1: point out that's how far away it is. Not the mathematician. Um, 86 00:04:36,880 --> 00:04:39,880 Speaker 1: you know. It's It's funny because when Cathy would when 87 00:04:39,920 --> 00:04:45,520 Speaker 1: the inflows were like supercharged, um, all the critics were like, oh, 88 00:04:45,560 --> 00:04:47,840 Speaker 1: this is bad, she's got too much money. She she 89 00:04:47,880 --> 00:04:51,760 Speaker 1: can't work with such what's such a high amount of inflows? Um. 90 00:04:51,839 --> 00:04:54,160 Speaker 1: So I thought it was interesting that she did say 91 00:04:54,200 --> 00:04:58,320 Speaker 1: this is healthy yesterday. I mean, Um, it's difficult to 92 00:04:58,440 --> 00:05:03,240 Speaker 1: be to have so much firepower, isn't it. Yeah. So, 93 00:05:03,400 --> 00:05:05,839 Speaker 1: on one hand, there's some stocks where she's over a 94 00:05:05,880 --> 00:05:09,479 Speaker 1: ten percent owner, maybe about a dozen or so. That's 95 00:05:09,520 --> 00:05:11,480 Speaker 1: tough because when you see inflows, you're gonna have to 96 00:05:11,480 --> 00:05:13,520 Speaker 1: buy those stocks. People have impact costs, and there's been 97 00:05:13,520 --> 00:05:15,680 Speaker 1: a front running. People know what she holds every day. 98 00:05:16,360 --> 00:05:19,080 Speaker 1: We are in kind of a new world here because 99 00:05:19,080 --> 00:05:20,880 Speaker 1: she's transparent. Back in the day, when you had to 100 00:05:20,920 --> 00:05:23,440 Speaker 1: Peter Lynch or a hot manager, you didn't know really 101 00:05:23,480 --> 00:05:26,880 Speaker 1: what they held. Um. In addition, she shows the holdings 102 00:05:26,880 --> 00:05:28,400 Speaker 1: every day in the trades, and so you can go 103 00:05:28,400 --> 00:05:31,360 Speaker 1: ahead and front run her or at least invest with her, 104 00:05:32,160 --> 00:05:34,040 Speaker 1: But the flows, I think that you know, this is 105 00:05:34,160 --> 00:05:36,200 Speaker 1: part of the issue, which it can create a little 106 00:05:36,200 --> 00:05:38,400 Speaker 1: bit of upward spiral. The flows come in, you buy 107 00:05:38,400 --> 00:05:40,680 Speaker 1: the stocks, stocks go up, you get more flows, and 108 00:05:40,720 --> 00:05:42,480 Speaker 1: it could go a little bit on the downward. However, 109 00:05:42,520 --> 00:05:44,880 Speaker 1: I know she's taken a couple there's a couple of 110 00:05:44,880 --> 00:05:47,200 Speaker 1: things you can do with some megacap names to help 111 00:05:47,200 --> 00:05:49,600 Speaker 1: with cash management. She can do cash and lou there's 112 00:05:49,600 --> 00:05:52,560 Speaker 1: a few tricks there. Her argument as well, I'm investing 113 00:05:52,560 --> 00:05:54,680 Speaker 1: in stocks. They're going to grow a lot anyway. And 114 00:05:54,720 --> 00:05:57,159 Speaker 1: I also think that spacks and I p o s 115 00:05:57,440 --> 00:06:00,600 Speaker 1: are going to replenish the market. So um. I've heard 116 00:06:00,640 --> 00:06:02,520 Speaker 1: some people pushed back on both of those, but that's 117 00:06:02,560 --> 00:06:05,679 Speaker 1: her argument. But largely she said they were built for scale. 118 00:06:05,720 --> 00:06:07,200 Speaker 1: I will say, though, if you look at her small 119 00:06:07,240 --> 00:06:10,240 Speaker 1: cap holdings, they had dwindle down to nothing. Um. They 120 00:06:10,320 --> 00:06:13,359 Speaker 1: used to be about and they are gone. So she 121 00:06:13,520 --> 00:06:15,640 Speaker 1: is going to be forced into large caps a little. 122 00:06:15,680 --> 00:06:18,760 Speaker 1: I think that's the reality of the situation, but it 123 00:06:18,880 --> 00:06:22,000 Speaker 1: certainly hasn't done too much the performance yet. Hey, Eric, 124 00:06:22,320 --> 00:06:24,520 Speaker 1: thanks so much for joining us. Eric. We really appreciate 125 00:06:24,560 --> 00:06:28,280 Speaker 1: that update. Just a fascinating story on Kathy Wooden arc 126 00:06:28,320 --> 00:06:30,760 Speaker 1: and you've been on top of it. From a research perspective. 127 00:06:30,880 --> 00:06:34,960 Speaker 1: Eric valcunis senior E t F analysts for Bloomberg Intelligence. 128 00:06:34,960 --> 00:06:36,880 Speaker 1: I'll tell you, within the whole Bloomberg complex, I don't 129 00:06:36,920 --> 00:06:41,120 Speaker 1: think there's anybody who is smarter uh and more on 130 00:06:41,200 --> 00:06:44,400 Speaker 1: top of this whole ETS funds and the funds flows 131 00:06:44,440 --> 00:06:46,360 Speaker 1: there have just been extraordinary and Eric has been all 132 00:06:46,400 --> 00:06:52,279 Speaker 1: over it, so we appreciate his lots. Daniel DiMartino Boots. 133 00:06:52,279 --> 00:06:56,960 Speaker 1: She's the CEO of Quill Intelligence UH and the former 134 00:06:57,200 --> 00:07:01,240 Speaker 1: FED advisor UM. So we are going to bring her 135 00:07:01,320 --> 00:07:06,000 Speaker 1: in in order to get more on what we heard 136 00:07:06,040 --> 00:07:11,280 Speaker 1: from Powell yesterday and what we expect from FED chair 137 00:07:11,440 --> 00:07:15,960 Speaker 1: Pale today. Danielle Um, what do you think of the chairman? 138 00:07:16,000 --> 00:07:20,120 Speaker 1: I thought yesterday was like Goldilocks Powell. He was basically saying, No, 139 00:07:20,280 --> 00:07:23,040 Speaker 1: rates aren't rising because of inflation, it's because of optimism 140 00:07:23,080 --> 00:07:27,840 Speaker 1: for the economy. And that's exactly right, except for what 141 00:07:27,920 --> 00:07:31,520 Speaker 1: Bloomberg Sebastian boyd Uh said a few hours ago that 142 00:07:31,560 --> 00:07:33,840 Speaker 1: I tweeted out. You know, it's all good at rates 143 00:07:33,840 --> 00:07:37,880 Speaker 1: are rising to reflect a reflating happy economy and you 144 00:07:37,960 --> 00:07:40,480 Speaker 1: hear the birdies chirpid in the background, except for that 145 00:07:40,560 --> 00:07:44,680 Speaker 1: fact that the stock market is the economy, and futures 146 00:07:44,680 --> 00:07:47,840 Speaker 1: were down, and so this is this is the ultimate 147 00:07:47,840 --> 00:07:54,320 Speaker 1: trade off and the sensitivity that we're seeing in housing, 148 00:07:54,720 --> 00:07:59,240 Speaker 1: but also what we're seeing in investment grade bonds. You know, 149 00:07:59,280 --> 00:08:00,880 Speaker 1: if you look at the are just E t F 150 00:08:01,200 --> 00:08:04,000 Speaker 1: H y G, it's flat as a pancake. You're to date. 151 00:08:04,920 --> 00:08:07,520 Speaker 1: If you look at l q D, which the Fed 152 00:08:07,920 --> 00:08:12,240 Speaker 1: intervened directly in the largest investment grade E t F 153 00:08:12,640 --> 00:08:14,960 Speaker 1: with its facilities that were shut down at year end, 154 00:08:15,400 --> 00:08:19,600 Speaker 1: it's down more than four percent. So the market is 155 00:08:19,720 --> 00:08:23,960 Speaker 1: telling you where your pressure points are in no uncertain terms. 156 00:08:24,560 --> 00:08:27,680 Speaker 1: And in press conferences in the past, Powell has been 157 00:08:27,760 --> 00:08:32,600 Speaker 1: very articulate about interest rate sensitive sectors. You've you've got 158 00:08:32,640 --> 00:08:36,120 Speaker 1: your Barkley's Commercial Mortgage backed Securities index about to turn 159 00:08:36,360 --> 00:08:41,480 Speaker 1: negative for the years interest rate sensitive sectors. So you 160 00:08:41,559 --> 00:08:44,400 Speaker 1: can have all the reflating you want, you can have 161 00:08:44,480 --> 00:08:49,680 Speaker 1: the vaccine narrative pulled off perfectly, flawlessly, but we still 162 00:08:49,720 --> 00:08:54,520 Speaker 1: have a massively over indebted economy that is acutely sensitive 163 00:08:54,600 --> 00:08:56,920 Speaker 1: to even I won't I won't even say the smallest 164 00:08:57,200 --> 00:08:59,240 Speaker 1: since August the fourth, we've had the yield on the 165 00:08:59,320 --> 00:09:02,360 Speaker 1: tenure trip bowl, and people forget that even though rates 166 00:09:02,360 --> 00:09:05,439 Speaker 1: are very low on an absolute basis, that the delta, 167 00:09:05,559 --> 00:09:08,520 Speaker 1: the starting point matters and to be triple off your 168 00:09:08,559 --> 00:09:11,559 Speaker 1: lows in a matter of months, that that can be 169 00:09:11,679 --> 00:09:16,240 Speaker 1: dramatical markets. So Daniel again, Chairman Pale's message, certainly from 170 00:09:16,320 --> 00:09:18,920 Speaker 1: yesterday is consistent, which is lower for longer as it 171 00:09:19,320 --> 00:09:21,719 Speaker 1: as it relates to interest rates. But is there a 172 00:09:21,800 --> 00:09:23,800 Speaker 1: risk that the markets are just going to pass him 173 00:09:23,840 --> 00:09:29,680 Speaker 1: by and uh it just kind of move on without him. Well, 174 00:09:29,720 --> 00:09:32,040 Speaker 1: that is indeed the risk. And if you go back 175 00:09:32,200 --> 00:09:36,000 Speaker 1: and read what laal brainer It has said about what 176 00:09:36,120 --> 00:09:39,920 Speaker 1: yield curve control would look like. She's talking about the 177 00:09:39,960 --> 00:09:43,360 Speaker 1: short end of the curve. She's speaking about two year paper, 178 00:09:43,440 --> 00:09:48,120 Speaker 1: three year paper, the market has this ingrained thinking that 179 00:09:48,200 --> 00:09:51,040 Speaker 1: the that the fet is referring to the tenure or 180 00:09:51,040 --> 00:09:55,240 Speaker 1: the long bond, that's not what the original narrative, that's 181 00:09:55,280 --> 00:09:58,520 Speaker 1: not what the original game plan was to be. It 182 00:09:58,640 --> 00:10:02,840 Speaker 1: yield curve control was to be implemented. And that's why 183 00:10:02,880 --> 00:10:05,319 Speaker 1: a lot of market participants were paying closer attention are 184 00:10:05,360 --> 00:10:08,800 Speaker 1: saying further out on the maturity spectrum, further out on 185 00:10:08,840 --> 00:10:11,679 Speaker 1: the maturity spectrum for the FED to target long term rate, 186 00:10:12,040 --> 00:10:15,080 Speaker 1: which is why the wheels are falling off. He's not 187 00:10:15,120 --> 00:10:18,360 Speaker 1: concerned about inflation, even though you know, if I look 188 00:10:18,360 --> 00:10:20,760 Speaker 1: at a chart of the five year break evens it 189 00:10:20,760 --> 00:10:25,080 Speaker 1: it almost goes vertical. And the government's about to spend 190 00:10:25,120 --> 00:10:27,880 Speaker 1: another two trillion in stimulus. After that, they're gonna want 191 00:10:27,920 --> 00:10:30,560 Speaker 1: to talk about the next two three four trillion dollar 192 00:10:30,640 --> 00:10:34,760 Speaker 1: stimulus plan. Not I'm not exaggerating with those numbers. Um, 193 00:10:34,880 --> 00:10:39,280 Speaker 1: are you worried about it? So? You know, I mean 194 00:10:39,400 --> 00:10:43,000 Speaker 1: part of this is going to be withdrawing cash from 195 00:10:43,040 --> 00:10:47,040 Speaker 1: the Treasury General account that the government's checking account that's 196 00:10:47,040 --> 00:10:49,800 Speaker 1: housed at the FED stands at one point seven trillion 197 00:10:49,920 --> 00:10:54,520 Speaker 1: right now, exactly, So part of this is already part 198 00:10:54,559 --> 00:10:56,680 Speaker 1: of this check has already been written, if you will. 199 00:10:57,480 --> 00:11:01,040 Speaker 1: But that being said, this massive thing just happened where 200 00:11:01,040 --> 00:11:03,880 Speaker 1: I am in Texas. So you are going to have 201 00:11:04,360 --> 00:11:07,920 Speaker 1: a fundamental source of support for all of the things 202 00:11:07,920 --> 00:11:10,480 Speaker 1: we've been talking about are driving inflation because of the 203 00:11:10,520 --> 00:11:15,200 Speaker 1: supply chain disruption copper, steel, lumber, things that have been 204 00:11:15,679 --> 00:11:19,040 Speaker 1: doing things that are already out of control, expensive that 205 00:11:19,160 --> 00:11:22,920 Speaker 1: the Fed is anticipating as being transitory in nature, are 206 00:11:22,960 --> 00:11:25,920 Speaker 1: going to have a longer impact. To say nothing, a 207 00:11:26,000 --> 00:11:29,880 Speaker 1: freight costs which we anticipate staying very high. And it 208 00:11:29,920 --> 00:11:31,880 Speaker 1: was interesting Bloomberg did a great story a few weeks 209 00:11:31,880 --> 00:11:33,920 Speaker 1: ago about the fact that we talked about all these 210 00:11:33,920 --> 00:11:37,280 Speaker 1: deadhead freighters headed from the West coast ports back to 211 00:11:37,360 --> 00:11:41,440 Speaker 1: Shanghai empty. This is causing a huge disruption in the 212 00:11:41,440 --> 00:11:44,439 Speaker 1: global food chain. You've got sugar that can't get out 213 00:11:44,440 --> 00:11:46,760 Speaker 1: of India, You've got coffee they can't get out of 214 00:11:46,880 --> 00:11:50,880 Speaker 1: Vietnam because there's not there's not enofreighter's out there. So 215 00:11:51,800 --> 00:11:56,120 Speaker 1: my concern for Powell is that that the persistence of 216 00:11:56,160 --> 00:11:59,160 Speaker 1: inflation is going to be look and feel in the 217 00:11:59,280 --> 00:12:02,480 Speaker 1: data be on summer as more than a transitory moment. 218 00:12:03,720 --> 00:12:06,080 Speaker 1: He's also talking about just citing some of the commentary 219 00:12:06,120 --> 00:12:09,079 Speaker 1: from yesterday, you know, talking about the vaccines as a 220 00:12:09,200 --> 00:12:13,520 Speaker 1: single best policy. Expects economic activity to bounce back strongly, 221 00:12:13,520 --> 00:12:15,720 Speaker 1: expect especially in the second half of the year GDP 222 00:12:16,160 --> 00:12:20,240 Speaker 1: may grow six. Is that sound reasonable to you or 223 00:12:20,280 --> 00:12:24,520 Speaker 1: is he perhaps a little optimistic? You know, that's the 224 00:12:24,559 --> 00:12:27,040 Speaker 1: remains to be seen. If you do pure math and 225 00:12:27,120 --> 00:12:29,680 Speaker 1: say this amount of money is going to get put 226 00:12:29,720 --> 00:12:31,800 Speaker 1: into the economy, then then you get that at the 227 00:12:31,840 --> 00:12:34,000 Speaker 1: other end. But we have to bear in mind the 228 00:12:34,040 --> 00:12:37,839 Speaker 1: houses have been purchased. Home people even even put out 229 00:12:38,000 --> 00:12:41,959 Speaker 1: a slight morning yesterday that said people might not redo 230 00:12:42,040 --> 00:12:45,280 Speaker 1: their decks again. They just did them. And you know, 231 00:12:45,320 --> 00:12:47,480 Speaker 1: people who were forced to stay at home, they're not 232 00:12:47,480 --> 00:12:51,800 Speaker 1: gonna be pouring as much good spending into the economy, 233 00:12:51,960 --> 00:12:54,040 Speaker 1: and they can't make up for the vacations that they 234 00:12:54,360 --> 00:12:56,199 Speaker 1: that they didn't take, and they can't make up for 235 00:12:56,280 --> 00:12:59,400 Speaker 1: the restaurant meals that they didn't have. So you'll see 236 00:12:59,440 --> 00:13:03,320 Speaker 1: that big bold in service spending, but you'll also see 237 00:13:03,320 --> 00:13:06,000 Speaker 1: an offset as people leave their homes because they're no 238 00:13:06,040 --> 00:13:08,959 Speaker 1: longer going to be you know, basically inside of their 239 00:13:08,960 --> 00:13:11,640 Speaker 1: homes and trapped and saying, God, I've got to redo 240 00:13:11,720 --> 00:13:15,480 Speaker 1: this bathroom. It really is awful. So that that level 241 00:13:15,480 --> 00:13:19,120 Speaker 1: of spending on goods just because there's a vaccine is 242 00:13:19,280 --> 00:13:22,800 Speaker 1: going to take a hit. All right, Daniel, what's the 243 00:13:22,800 --> 00:13:26,120 Speaker 1: biggest concern for you as we think about this reopening 244 00:13:26,280 --> 00:13:28,959 Speaker 1: trade here in the economy. It seems like again We're 245 00:13:28,960 --> 00:13:32,640 Speaker 1: getting some really good numbers the metrics on the pandemic. 246 00:13:32,679 --> 00:13:36,000 Speaker 1: We're getting some really good UH data on the new 247 00:13:36,080 --> 00:13:38,760 Speaker 1: vaccines Johnson and Johnson today, what's some of the what 248 00:13:38,840 --> 00:13:40,800 Speaker 1: are some of the big concerns that you think maybe 249 00:13:40,840 --> 00:13:44,320 Speaker 1: the market's overlooking. So again, I am following credit like 250 00:13:44,360 --> 00:13:48,440 Speaker 1: a hawk. And we've also had the third test failed 251 00:13:49,160 --> 00:13:52,600 Speaker 1: of if you if you add up pandemic and employment 252 00:13:52,600 --> 00:13:56,679 Speaker 1: assistance to non seasonally adjusted state claims, you you may 253 00:13:56,679 --> 00:14:00,400 Speaker 1: recall the Department of Labor change the methodology midway through panic. 254 00:14:00,679 --> 00:14:04,480 Speaker 1: So I add up those two initials every week, and 255 00:14:04,520 --> 00:14:07,800 Speaker 1: we've crossed through one point four million three times in 256 00:14:07,840 --> 00:14:10,920 Speaker 1: a row when we shouldn't be. We should be in 257 00:14:10,960 --> 00:14:14,920 Speaker 1: the process of a slow decline and steady decline in 258 00:14:15,400 --> 00:14:18,280 Speaker 1: jobless claims, and yet we're not seeing that. So I'm 259 00:14:18,320 --> 00:14:22,400 Speaker 1: looking for that to show sustained improvement and get below 260 00:14:22,480 --> 00:14:26,320 Speaker 1: that line and continue to improve. By the way, um 261 00:14:26,440 --> 00:14:30,760 Speaker 1: John Farah was interviewing Brian Deese the other day and 262 00:14:31,880 --> 00:14:34,160 Speaker 1: trying to get trying to get a picture of whether 263 00:14:34,360 --> 00:14:37,560 Speaker 1: or not um Biden has met with Powell. He couldn't 264 00:14:37,560 --> 00:14:40,520 Speaker 1: get an answer out of dees, do you think this 265 00:14:40,640 --> 00:14:43,800 Speaker 1: relationship is going to be a lot different than Powell Trump. 266 00:14:46,520 --> 00:14:48,680 Speaker 1: I don't think that there's anything to suggest that the 267 00:14:48,720 --> 00:14:51,400 Speaker 1: relationship will be in any way, shape or form contentious. 268 00:14:51,920 --> 00:14:54,680 Speaker 1: And we know that Powell has a great working relationship 269 00:14:54,680 --> 00:14:57,920 Speaker 1: with Yellen. So the line of communication is technically wide 270 00:14:57,920 --> 00:15:00,880 Speaker 1: open to the White House. Um, what I would say 271 00:15:01,080 --> 00:15:05,200 Speaker 1: is I am not personally sure that a man of 272 00:15:05,280 --> 00:15:08,880 Speaker 1: his means necessarily wants to sign up for four more years. 273 00:15:09,680 --> 00:15:13,160 Speaker 1: Come next to February, by the way, the birthday, so 274 00:15:13,720 --> 00:15:19,680 Speaker 1: February Powell's birthday, So that may be something that is 275 00:15:19,800 --> 00:15:22,680 Speaker 1: making it to where there is not justification to build 276 00:15:22,680 --> 00:15:26,160 Speaker 1: this wonderful working relationship. Powell himself is not positive he 277 00:15:26,200 --> 00:15:28,200 Speaker 1: wants to sign on for four more years, But again, 278 00:15:28,760 --> 00:15:30,920 Speaker 1: Powell and Yellen have a very close working relationship. I 279 00:15:30,920 --> 00:15:33,320 Speaker 1: wouldn't read too much into it. Hey, Danielle, thank you 280 00:15:33,360 --> 00:15:35,560 Speaker 1: so much once again for joining us. Danielle di Martino 281 00:15:35,560 --> 00:15:39,000 Speaker 1: bout cio and director of Intelligence at QUILL, former advisor 282 00:15:39,040 --> 00:15:42,520 Speaker 1: also at the Dallas Federal Reserve. Right now we go 283 00:15:42,600 --> 00:15:45,560 Speaker 1: to FED Chair Jerome pal testifying before the House Financial 284 00:15:45,560 --> 00:15:48,560 Speaker 1: Services Committee with Chairwoman Maxine Waters kicking off the Q 285 00:15:48,680 --> 00:15:54,400 Speaker 1: and a story. Certainly that's been over the last couple 286 00:15:54,400 --> 00:15:57,520 Speaker 1: of days. FED Chairman poun As testimony in front of Congress, 287 00:15:57,520 --> 00:16:00,680 Speaker 1: and I think the takeaway is lower for longer, but 288 00:16:00,800 --> 00:16:03,480 Speaker 1: the bond market says otherwise. We've had a nice move 289 00:16:03,600 --> 00:16:06,040 Speaker 1: up in yields here the ten years up about five 290 00:16:06,080 --> 00:16:09,560 Speaker 1: basis points just today one point three nine percent. Will 291 00:16:09,560 --> 00:16:11,680 Speaker 1: call it the thirty year up six basis points two 292 00:16:11,680 --> 00:16:15,080 Speaker 1: point to four to help us get some perspective. We 293 00:16:15,200 --> 00:16:18,320 Speaker 1: love chatting with Ted Ravel. He's the chief Tad Ravel, 294 00:16:18,440 --> 00:16:21,960 Speaker 1: chief investment officer for fixed income at t c W. Boy, 295 00:16:21,960 --> 00:16:23,680 Speaker 1: when I went out to l A on my marketing trips, 296 00:16:23,720 --> 00:16:26,600 Speaker 1: t c W was the first meeting you had to 297 00:16:26,600 --> 00:16:28,880 Speaker 1: get on your calendar. Tad, thanks so much for joining 298 00:16:28,960 --> 00:16:32,880 Speaker 1: us here. What do you make of FED Chairman Pal's comments. 299 00:16:33,360 --> 00:16:35,000 Speaker 1: I guess more of the same. Would you say, are 300 00:16:35,040 --> 00:16:38,480 Speaker 1: you reading anything else into it? It was totally more 301 00:16:38,560 --> 00:16:41,840 Speaker 1: of the same. I mean, I think a fair disaggregation 302 00:16:42,120 --> 00:16:45,200 Speaker 1: of where the where the Fed's heads at is that 303 00:16:45,280 --> 00:16:48,480 Speaker 1: they have pretty well committed to KIWI at the current 304 00:16:48,560 --> 00:16:51,840 Speaker 1: pace well through two thousand and say call it this 305 00:16:51,920 --> 00:16:54,760 Speaker 1: year twenty one. It takes at least twelve months to 306 00:16:54,800 --> 00:16:56,800 Speaker 1: tape or if in fact you were going to do it, 307 00:16:56,880 --> 00:16:59,360 Speaker 1: So that takes you through two thousand and twenty two, 308 00:17:00,120 --> 00:17:02,040 Speaker 1: and then um, if there were going to be any 309 00:17:02,120 --> 00:17:05,119 Speaker 1: rate rises, we're looking out into the next year beyond 310 00:17:05,160 --> 00:17:08,160 Speaker 1: that two thousand and twenty three. Obviously, as you sort 311 00:17:08,160 --> 00:17:11,000 Speaker 1: of alluded to, the market may have its own ideas 312 00:17:11,119 --> 00:17:15,280 Speaker 1: about the advisability of a course of action of a 313 00:17:15,359 --> 00:17:18,960 Speaker 1: zero percent policy, a one d and twenty billion per 314 00:17:19,000 --> 00:17:23,320 Speaker 1: month QUEI policy in the face of a fiscal stimulus 315 00:17:23,359 --> 00:17:27,239 Speaker 1: package that is just shy of two trillion dollars, and 316 00:17:27,320 --> 00:17:30,359 Speaker 1: given that the forecasts from the Atlanta Fed and so 317 00:17:30,520 --> 00:17:36,119 Speaker 1: forth have projected actually relatively elevated GDP in two thousand 318 00:17:36,160 --> 00:17:38,720 Speaker 1: and twenty one, and that's probably why you're seeing the 319 00:17:39,440 --> 00:17:42,400 Speaker 1: bond market react the way it is, which is to say, 320 00:17:42,520 --> 00:17:44,800 Speaker 1: the tens and the thirties selling off as hard as 321 00:17:44,960 --> 00:17:48,160 Speaker 1: as they have in the last two to three months. So, 322 00:17:48,359 --> 00:17:50,560 Speaker 1: I mean, one of the things I noticed that Powell 323 00:17:50,600 --> 00:17:55,280 Speaker 1: said yesterday was that it's not inflation driving rates higher, 324 00:17:55,359 --> 00:17:59,480 Speaker 1: it's optimism for the economic recovery. But at the same 325 00:17:59,520 --> 00:18:02,560 Speaker 1: time I look at break evens, it seems like the 326 00:18:02,600 --> 00:18:07,600 Speaker 1: market does anticipate inflation to come back, And I can't 327 00:18:07,600 --> 00:18:10,919 Speaker 1: imagine it's transient either, because you're not going to stop 328 00:18:10,960 --> 00:18:14,480 Speaker 1: needing to buy copper or lumber in the face of 329 00:18:14,560 --> 00:18:18,879 Speaker 1: rebuilding better. Um, what do you think, Dad, Well, I 330 00:18:19,240 --> 00:18:23,880 Speaker 1: think that the discussion about inflation is um is always 331 00:18:24,320 --> 00:18:26,159 Speaker 1: a bit squishy. And this is what I mean by 332 00:18:26,240 --> 00:18:29,800 Speaker 1: it that it can be defined narrowly the way the 333 00:18:29,840 --> 00:18:32,200 Speaker 1: Fed prefers to define it, which is to say that 334 00:18:32,520 --> 00:18:36,720 Speaker 1: inflation is a form of currency debasement with respect to 335 00:18:37,200 --> 00:18:39,920 Speaker 1: goods and services. But it can be defined a little 336 00:18:39,920 --> 00:18:41,800 Speaker 1: bit more broadly. I don't know why it cannot be 337 00:18:42,359 --> 00:18:46,000 Speaker 1: to include asset price and UH inflation. I think that 338 00:18:46,040 --> 00:18:48,119 Speaker 1: if you ask the man on the street, what what 339 00:18:48,160 --> 00:18:50,679 Speaker 1: does inflation mean to me? It means that I have 340 00:18:50,800 --> 00:18:53,399 Speaker 1: to work longer and harder in order to get the 341 00:18:53,440 --> 00:18:56,800 Speaker 1: things that I want. Now. If the if the reality 342 00:18:56,960 --> 00:18:59,720 Speaker 1: is that, uh, the home that you want to live 343 00:18:59,720 --> 00:19:02,040 Speaker 1: in has doubled in price, and you have to come 344 00:19:02,119 --> 00:19:05,840 Speaker 1: up with twice the down payment, depending upon what your 345 00:19:05,880 --> 00:19:08,120 Speaker 1: income and your savings and so forth, it could take 346 00:19:08,200 --> 00:19:11,800 Speaker 1: quite a long number of years. That represents a deterioration 347 00:19:11,840 --> 00:19:15,760 Speaker 1: in your lifestyle. So to ignore asset price inflation and 348 00:19:15,840 --> 00:19:18,880 Speaker 1: to substitute it with the owner's equivalent rent. This sort 349 00:19:18,880 --> 00:19:22,159 Speaker 1: of this wonky construct that looks at the carry costs 350 00:19:22,160 --> 00:19:25,320 Speaker 1: of a house, but not really the primary issue that 351 00:19:25,359 --> 00:19:28,960 Speaker 1: I think confronts particularly first time home buyers, which is 352 00:19:29,080 --> 00:19:31,560 Speaker 1: they can make the payment all right, if someone would 353 00:19:31,560 --> 00:19:35,440 Speaker 1: give them the down. So if we're thinking about currency 354 00:19:35,480 --> 00:19:38,879 Speaker 1: debasement in a larger context, maybe we've already had, you know, 355 00:19:38,960 --> 00:19:43,400 Speaker 1: some measure of inflation. And I also think that FED pronouncements, 356 00:19:43,440 --> 00:19:47,280 Speaker 1: not just FED but central banking pronouncements about inflation are 357 00:19:47,560 --> 00:19:51,159 Speaker 1: are inherently suspect because, first of all, they want they 358 00:19:51,200 --> 00:19:55,200 Speaker 1: are committed to a zero rate policy, and they because 359 00:19:55,240 --> 00:19:59,000 Speaker 1: they have, in the case of the US, a statutory 360 00:19:59,280 --> 00:20:03,359 Speaker 1: um constraint to uh TO to not allow quote unquote 361 00:20:03,359 --> 00:20:06,240 Speaker 1: inflation get out of hand um. Naturally they're going to 362 00:20:06,320 --> 00:20:09,040 Speaker 1: forecast low rates of inflation. But look at their history. 363 00:20:09,440 --> 00:20:13,000 Speaker 1: The history of central banks forecasting inflation is abysmal. It 364 00:20:13,119 --> 00:20:15,600 Speaker 1: is really, it is really bad when you look at 365 00:20:15,840 --> 00:20:19,440 Speaker 1: at the numbers that they have projected versus what's been realized. 366 00:20:19,840 --> 00:20:21,760 Speaker 1: And then if you want to take a slightly academic 367 00:20:21,960 --> 00:20:25,080 Speaker 1: and a longer you, let's say a fifty perspective on it. 368 00:20:25,320 --> 00:20:28,080 Speaker 1: Let's look at it this way. In the sixties, the 369 00:20:28,160 --> 00:20:32,080 Speaker 1: FED and their colleagues said, we know inflation. We got this, 370 00:20:32,160 --> 00:20:35,439 Speaker 1: it's Phillips curves. When unemployment gets too low. Whoops. In 371 00:20:35,480 --> 00:20:37,640 Speaker 1: the seventies you throw that in the trash. So then 372 00:20:37,680 --> 00:20:40,520 Speaker 1: you say, okay, well, it's about monetary aggregates and the 373 00:20:40,560 --> 00:20:43,440 Speaker 1: growth there there too. Well that kind of went out 374 00:20:43,560 --> 00:20:46,040 Speaker 1: at the windows as well. And by the way, M 375 00:20:46,080 --> 00:20:51,760 Speaker 1: two broad monetary aggregates have grown about over the last year. Interestingly, 376 00:20:52,160 --> 00:20:54,960 Speaker 1: now the FED says it's kind of psychological, it's your 377 00:20:55,000 --> 00:20:58,000 Speaker 1: expectations and so forth. I guess my point is is 378 00:20:58,000 --> 00:21:00,400 Speaker 1: that when you have a feat currency, they are all 379 00:21:00,520 --> 00:21:03,640 Speaker 1: kinds of ways that inflation can probably rear. It's it's 380 00:21:03,760 --> 00:21:07,080 Speaker 1: very ugly head, simply because it really just comes down 381 00:21:07,119 --> 00:21:10,360 Speaker 1: to the extent to which people trust the currency and 382 00:21:10,560 --> 00:21:13,000 Speaker 1: trust in its long term stability. If you're going to 383 00:21:13,040 --> 00:21:16,159 Speaker 1: buy an apartment building in dollars today and you have 384 00:21:16,200 --> 00:21:19,080 Speaker 1: a ten year horizon associated with it or lend against it, 385 00:21:19,400 --> 00:21:22,639 Speaker 1: you have to have some faith that, uh, that that 386 00:21:22,760 --> 00:21:25,240 Speaker 1: dollars that you're going to receive or pay ten years 387 00:21:25,240 --> 00:21:28,000 Speaker 1: from now is going to be within spitting distance of 388 00:21:28,200 --> 00:21:33,439 Speaker 1: what you contemplate in today's contract. Yeah yeah, yeah, yeah, 389 00:21:33,520 --> 00:21:35,720 Speaker 1: yeah right, just exactly like bitcoin, which is why you 390 00:21:35,720 --> 00:21:37,879 Speaker 1: can't make a long term contract in bitcoin, because you 391 00:21:37,920 --> 00:21:41,680 Speaker 1: have no idea whether you're gonna um be really unhappy 392 00:21:41,760 --> 00:21:44,360 Speaker 1: or whether your counterparty is going to be really unhappy 393 00:21:44,359 --> 00:21:46,840 Speaker 1: about it. So so anyway, my point is is that 394 00:21:47,000 --> 00:21:48,920 Speaker 1: the FED is going to say what it needs to say, 395 00:21:49,000 --> 00:21:51,879 Speaker 1: which is inflation is well controlled. Even though they don't 396 00:21:51,920 --> 00:21:55,040 Speaker 1: really know what inflation is. They define it narrowly, and 397 00:21:55,080 --> 00:21:59,280 Speaker 1: they have had a terrible history of forecasting it. All right, 398 00:21:59,480 --> 00:22:03,480 Speaker 1: So had the Fed is doing its job, it is, 399 00:22:03,520 --> 00:22:07,679 Speaker 1: you know, keeping rates, keeping liquidity into the marketplace. What 400 00:22:07,760 --> 00:22:09,679 Speaker 1: do you expect or what do you need to see here? 401 00:22:09,720 --> 00:22:11,480 Speaker 1: What do you think the market needs to see coming 402 00:22:11,480 --> 00:22:14,600 Speaker 1: out of Washington? In terms of stimulus, it appears that 403 00:22:14,720 --> 00:22:17,320 Speaker 1: the one point nine trillion is pretty much good to go. 404 00:22:17,880 --> 00:22:20,160 Speaker 1: How are you viewing that? And maybe even a backup 405 00:22:20,600 --> 00:22:25,280 Speaker 1: stimulus on the on the back of that. Right, So, uh, 406 00:22:25,320 --> 00:22:28,000 Speaker 1: you know, I was asked this question, you know recently, 407 00:22:28,080 --> 00:22:31,800 Speaker 1: that doesn't the market response of the last year and 408 00:22:31,800 --> 00:22:36,200 Speaker 1: the Fed's actions sort of prove the people that advocated 409 00:22:36,240 --> 00:22:39,360 Speaker 1: modern monetary theory, weren't they right that basically you can 410 00:22:39,440 --> 00:22:42,320 Speaker 1: just print money and you know, just do helicopter drops 411 00:22:42,600 --> 00:22:45,920 Speaker 1: and there's only benefits associated with it. And I guess 412 00:22:45,920 --> 00:22:49,919 Speaker 1: time will tell. But the the thought that occurred to 413 00:22:49,960 --> 00:22:52,240 Speaker 1: me was if you ask a doctor, what they'll tell 414 00:22:52,280 --> 00:22:56,760 Speaker 1: you is that many medicines become poisonous at higher dosages 415 00:22:56,880 --> 00:23:01,240 Speaker 1: or different dosages. And many poisons or medicines botox for instance, 416 00:23:01,520 --> 00:23:06,080 Speaker 1: if you if you regulate, if you regulate the dosage. Okay, 417 00:23:06,119 --> 00:23:08,800 Speaker 1: so when you're in the middle of a pandemic and 418 00:23:08,840 --> 00:23:11,560 Speaker 1: you dose it the way you did, Uh. I give 419 00:23:11,600 --> 00:23:14,960 Speaker 1: credit to all of the policymakers. They they appeared to 420 00:23:15,080 --> 00:23:19,960 Speaker 1: have have under great darrests actually calculated and done very well. 421 00:23:20,440 --> 00:23:23,240 Speaker 1: So does that mean that you just keep giving the 422 00:23:23,320 --> 00:23:27,280 Speaker 1: patient the medicine because when they were sick, uh, they 423 00:23:27,280 --> 00:23:30,240 Speaker 1: got better and now that they are, you know, looking 424 00:23:30,280 --> 00:23:32,240 Speaker 1: a lot better. In some ways, I don't mean to 425 00:23:32,280 --> 00:23:36,720 Speaker 1: minimize the pain and restaurant industries, hotel industries and so forth. 426 00:23:37,000 --> 00:23:40,320 Speaker 1: That is very very very serious and maybe very structural. 427 00:23:40,720 --> 00:23:44,240 Speaker 1: But if it is in fact structural, doing more helicopter 428 00:23:44,320 --> 00:23:47,679 Speaker 1: drops isn't going to solve the problem. You can't. You 429 00:23:47,760 --> 00:23:50,600 Speaker 1: can't stimulate. I mean, I hate to say it, but 430 00:23:50,720 --> 00:23:55,119 Speaker 1: if I could, you can stimulate a hotel that just 431 00:23:55,440 --> 00:23:59,080 Speaker 1: no longer has an economic function, You'll have somebody's has 432 00:23:59,119 --> 00:24:02,400 Speaker 1: to make good the operation a lot zombie hotel. Hey, Tad, 433 00:24:02,640 --> 00:24:04,440 Speaker 1: thanks so much for joining us. We really appreciate it. 434 00:24:04,480 --> 00:24:07,200 Speaker 1: Tad Rovelle, chief investment officer for fixed income at tc 435 00:24:07,680 --> 00:24:12,320 Speaker 1: W Group. Let's talk a little bit about vaccines. We 436 00:24:12,440 --> 00:24:15,720 Speaker 1: just got a story out from Johnson and Johnson. It's 437 00:24:15,800 --> 00:24:20,640 Speaker 1: COVID vaccine was found to be pretty effective. Seventy two 438 00:24:20,760 --> 00:24:24,080 Speaker 1: percent is the mark that they got in an arrow 439 00:24:24,160 --> 00:24:26,920 Speaker 1: when I'm personally thinking like it's got to be eighty 440 00:24:27,000 --> 00:24:28,960 Speaker 1: year ninety or I don't want it. Let's bring in 441 00:24:29,080 --> 00:24:33,199 Speaker 1: Sam Fazeli to uh sent me straight here. He's our 442 00:24:33,240 --> 00:24:37,000 Speaker 1: senior pharmaceutical analyst and head of a media research for 443 00:24:37,000 --> 00:24:40,320 Speaker 1: Bloomberg Intelligence. Sam, I know that actually seventy that's better 444 00:24:40,359 --> 00:24:43,760 Speaker 1: than the typical flu vaccines that that we get every year. Right, 445 00:24:44,640 --> 00:24:47,840 Speaker 1: Oh yes, oh yes, Um, and Matt, I mean these 446 00:24:47,880 --> 00:24:50,359 Speaker 1: are all these vaccines have so far been better than 447 00:24:50,440 --> 00:24:56,840 Speaker 1: the usual typical flu vaccine. Efficacy that you're seeing. So um, yeah, absolutely. 448 00:24:56,880 --> 00:24:58,600 Speaker 1: And also we have to be careful that when we 449 00:24:58,680 --> 00:25:00,520 Speaker 1: look at these things, because we haven't we have to 450 00:25:00,600 --> 00:25:02,840 Speaker 1: dissect away what are we what are we worried about? 451 00:25:02,880 --> 00:25:05,520 Speaker 1: Are we worried about ending up in hospital and getting 452 00:25:05,600 --> 00:25:09,320 Speaker 1: severe disease or are we worried about catching the sniffles 453 00:25:09,400 --> 00:25:12,560 Speaker 1: as they call it some people. So this this certainly 454 00:25:12,680 --> 00:25:16,560 Speaker 1: gets better when you look at just the severe disease. Hey, Sam, 455 00:25:16,960 --> 00:25:19,000 Speaker 1: I know in the UK you guys have had some 456 00:25:19,080 --> 00:25:23,240 Speaker 1: pretty good success with the astra zenica vaccine. My question 457 00:25:23,400 --> 00:25:25,920 Speaker 1: is it's working well for you guys. How come it's 458 00:25:25,920 --> 00:25:28,359 Speaker 1: not approved here in the US. The Germans don't want 459 00:25:28,400 --> 00:25:31,520 Speaker 1: it either. Yeah, well no, And I don't get that 460 00:25:31,680 --> 00:25:34,880 Speaker 1: because wasn't somebody one of the politicians Germany recently said 461 00:25:34,920 --> 00:25:36,920 Speaker 1: I'm going to go and get this astro vaccine or something. 462 00:25:37,000 --> 00:25:38,720 Speaker 1: I mean, they're trying to walk some of that back 463 00:25:38,880 --> 00:25:41,680 Speaker 1: because I think people are realizing that in Europe. And 464 00:25:41,720 --> 00:25:43,119 Speaker 1: I'll come back to you, Paul in a second. In 465 00:25:43,240 --> 00:25:46,040 Speaker 1: Europe they've kind of potentially shooting themselves in the foot 466 00:25:46,080 --> 00:25:50,440 Speaker 1: after having shouted at the company for several weeks about 467 00:25:50,480 --> 00:25:55,160 Speaker 1: supply and contract, and they've this the vaccine so much 468 00:25:55,280 --> 00:25:57,960 Speaker 1: that there's a risk that they're the people will just 469 00:25:58,160 --> 00:26:00,160 Speaker 1: turn the nose up at it. So so there's at 470 00:26:00,160 --> 00:26:03,080 Speaker 1: the risk. But back in the US, of course, we 471 00:26:03,560 --> 00:26:06,160 Speaker 1: you know, they're running a large US toil from which 472 00:26:06,240 --> 00:26:09,480 Speaker 1: we expect data any day, any week, any day, So 473 00:26:09,680 --> 00:26:13,040 Speaker 1: I think the regulator of the USA would require that 474 00:26:13,320 --> 00:26:15,320 Speaker 1: I'll give you the low down here. So what happened 475 00:26:15,440 --> 00:26:19,480 Speaker 1: was the Germans were I think frustrated because they really 476 00:26:19,680 --> 00:26:22,919 Speaker 1: dropped the ball when it came to stocking up on vaccines, 477 00:26:23,480 --> 00:26:25,720 Speaker 1: and they were there were some back and forth with 478 00:26:25,840 --> 00:26:29,640 Speaker 1: astra Zenica. At the same time, Germany's biggest paper, which 479 00:26:29,720 --> 00:26:32,200 Speaker 1: is actually I believe the most widely circulated newspaper in 480 00:26:32,240 --> 00:26:36,200 Speaker 1: the world, the Builds Tongue Um, released a story saying 481 00:26:36,240 --> 00:26:39,560 Speaker 1: the astros Ennica vaccine doesn't work for people over sixty five, 482 00:26:39,640 --> 00:26:42,720 Speaker 1: and they cited a German government source. So it looked 483 00:26:42,720 --> 00:26:44,960 Speaker 1: like the Germans were kind of throwing astro Zenica under 484 00:26:45,000 --> 00:26:47,639 Speaker 1: the bus because of this spat that they were having. 485 00:26:47,960 --> 00:26:51,919 Speaker 1: Turns out it was because the newspaper kind of understood 486 00:26:52,000 --> 00:26:55,480 Speaker 1: the facts incorrectly. It was a couple of newspapers and 487 00:26:55,720 --> 00:27:00,240 Speaker 1: so ever since then. Um, here in Germany, people don't 488 00:27:00,240 --> 00:27:02,760 Speaker 1: think it works for the old for the older crowd, 489 00:27:02,880 --> 00:27:06,000 Speaker 1: But the real m, the real facts were that it 490 00:27:06,080 --> 00:27:09,919 Speaker 1: just wasn't tested on the older crowd, right, Sam, that's right, 491 00:27:10,119 --> 00:27:12,040 Speaker 1: that's right. The fact is that there was only like 492 00:27:12,119 --> 00:27:17,200 Speaker 1: six subjects in the sixty plus sixty five plus range, 493 00:27:17,240 --> 00:27:20,080 Speaker 1: So you just don't know the answer. And we know 494 00:27:20,359 --> 00:27:23,880 Speaker 1: that the vaccine in separate trials induced just as good 495 00:27:23,920 --> 00:27:27,160 Speaker 1: as immune response in people of older age than those 496 00:27:27,320 --> 00:27:31,640 Speaker 1: of younger age. Um. Listen. Bottom line air Affinity came 497 00:27:31,640 --> 00:27:34,239 Speaker 1: out today and said the EU is finally ramping up 498 00:27:34,280 --> 00:27:37,760 Speaker 1: its vaccines and if they can get the shots and arms, um, 499 00:27:37,880 --> 00:27:41,960 Speaker 1: we should be to seventy five cent vaccinated by August. 500 00:27:42,240 --> 00:27:46,240 Speaker 1: In the US. I know it's been widely panned, but 501 00:27:46,440 --> 00:27:49,080 Speaker 1: there was one JOHNS. Hopkins professor who said we could 502 00:27:49,119 --> 00:27:52,240 Speaker 1: see her immunity by April. Even if you think he's 503 00:27:52,800 --> 00:27:56,399 Speaker 1: way too optimistic, Sam, are we gonna be good by 504 00:27:56,480 --> 00:28:02,280 Speaker 1: the end of the year in the western world? Okay? Uh, yeah, Matt. 505 00:28:02,359 --> 00:28:05,520 Speaker 1: The answer to that is yes, so long as we 506 00:28:05,640 --> 00:28:08,520 Speaker 1: don't fall foul of the variants. So long as they 507 00:28:08,880 --> 00:28:14,040 Speaker 1: don't end up taking hold in our regions while we're vaccinating, 508 00:28:14,720 --> 00:28:17,920 Speaker 1: and so long as they don't actually prove more problematic 509 00:28:18,000 --> 00:28:21,199 Speaker 1: as regards to the vaccines, and if that ends up 510 00:28:21,240 --> 00:28:23,320 Speaker 1: being the case, then and I think we have a 511 00:28:23,359 --> 00:28:27,520 Speaker 1: possibility that will end up with certainly fewer hospitalizations even 512 00:28:27,560 --> 00:28:29,520 Speaker 1: in that case, but we will need to go back 513 00:28:29,560 --> 00:28:32,760 Speaker 1: and re vaccinate everybody with a booster shot. Sam, Should 514 00:28:32,760 --> 00:28:35,280 Speaker 1: people care which vaccine they get? I'm sending that Matt 515 00:28:35,320 --> 00:28:37,560 Speaker 1: Miller's gonna a little bit of a vaccine snob here. 516 00:28:37,600 --> 00:28:40,440 Speaker 1: He's only going to want the one with the highest efficacy. 517 00:28:40,800 --> 00:28:43,320 Speaker 1: Or should we just whatever they jab in our arms 518 00:28:43,400 --> 00:28:46,640 Speaker 1: will take it? I mean, with the with the current 519 00:28:46,720 --> 00:28:48,800 Speaker 1: story that we have today, if I go into a 520 00:28:48,880 --> 00:28:51,680 Speaker 1: doctor and he says to me, Sam, I've got your vaccine, 521 00:28:51,800 --> 00:28:53,720 Speaker 1: this is it, I'll just take you whatever it is. 522 00:28:54,480 --> 00:28:58,160 Speaker 1: M I have the least confidence in And this is 523 00:28:58,200 --> 00:28:59,960 Speaker 1: not because they come from China. Is because I don't 524 00:29:00,000 --> 00:29:03,080 Speaker 1: in the data that I've seen in the Sino farm 525 00:29:03,200 --> 00:29:06,840 Speaker 1: a sign of act vaccine uh spot Nick five or 526 00:29:06,960 --> 00:29:11,360 Speaker 1: the astrodenic Johnson and Johnson, whatever it is, I'll take 527 00:29:11,400 --> 00:29:14,400 Speaker 1: them old. I'll tell you what for me, this is 528 00:29:14,560 --> 00:29:19,960 Speaker 1: the honest truth, much like um Eric Baucuna speaks gospel 529 00:29:20,000 --> 00:29:21,560 Speaker 1: when it comes to E. T. F S. For me, 530 00:29:21,680 --> 00:29:24,800 Speaker 1: whatever Sam says is what I end up believing because 531 00:29:25,160 --> 00:29:28,120 Speaker 1: I have fun with these crazy conspiracy theories. And yeah, 532 00:29:28,120 --> 00:29:30,680 Speaker 1: I want spot Nick five because of the collectibility of it. 533 00:29:31,080 --> 00:29:32,840 Speaker 1: But at the end of the day, if Sam says, 534 00:29:32,960 --> 00:29:34,640 Speaker 1: just take what they give you, I'm gonna take whatever 535 00:29:34,680 --> 00:29:36,520 Speaker 1: they want, and that's got to give thing. I think 536 00:29:36,560 --> 00:29:38,880 Speaker 1: that's smart. And I've known Sam for twelve years and 537 00:29:39,040 --> 00:29:42,400 Speaker 1: he is the farmer guy out there. He's our go 538 00:29:42,520 --> 00:29:44,440 Speaker 1: to guy, and we appreciate him giving us some time here. 539 00:29:44,480 --> 00:29:48,240 Speaker 1: Sam Fazelli senior Farmer analyst for Bloomberg Intelligence. He also 540 00:29:48,280 --> 00:29:51,120 Speaker 1: has some management duties. He manages all of the European 541 00:29:51,200 --> 00:29:54,720 Speaker 1: research efforts for Bloomberg Intelligence. He's located somewhere in Europe. 542 00:29:54,720 --> 00:29:56,640 Speaker 1: I never know where he is. How cool would it be, though, 543 00:29:56,640 --> 00:29:59,600 Speaker 1: to get spot Nick five, Like, yeah, in your neighborhood, 544 00:29:59,600 --> 00:30:01,040 Speaker 1: you'd probab to be the only one who got it. 545 00:30:01,120 --> 00:30:03,440 Speaker 1: For Shell, the kid who had it. I heard it's effective, 546 00:30:03,520 --> 00:30:05,840 Speaker 1: so I mean, you know, it's interesting. I mean, there's 547 00:30:05,840 --> 00:30:08,600 Speaker 1: a lot of Sam was saying yeah, exactly. I mean 548 00:30:08,640 --> 00:30:10,880 Speaker 1: there's a lot out there. More and more is coming. 549 00:30:11,200 --> 00:30:13,480 Speaker 1: The scientists have really come through. Now it's up to 550 00:30:13,600 --> 00:30:17,520 Speaker 1: the supply chain to get it out here. Thanks for 551 00:30:17,560 --> 00:30:21,000 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 552 00:30:21,120 --> 00:30:25,160 Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform 553 00:30:25,240 --> 00:30:28,560 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt 554 00:30:28,600 --> 00:30:32,080 Speaker 1: Miller three. Put on fall Sweeney. I'm on Twitter at 555 00:30:32,160 --> 00:30:35,000 Speaker 1: pt Sweeney Before the podcast. You can always catch us 556 00:30:35,040 --> 00:30:36,440 Speaker 1: worldwide at Bloomberg Radio.