Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Clovel News. Dr Michael Blavi's chief medical
Speaker 1: officer at Anna Vasi Diagnostics, joining us once to count
Speaker 1: on the phone from Atlanta. Doctor, thanks for sticking around
Speaker 1: with us as we we heard from the president. Uh.
Speaker 1: Your immediate immediate reaction to to what we heard from
Speaker 1: the president. It wasn't necessarily a different message than we've
Speaker 1: been hearing from him for months. Oh, it's a consistent message. Uh.
Speaker 1: The theme is everybody has to pitch in to try
Speaker 1: to control the pandemic spread. And now more of a
Speaker 1: focus on the fact that booster shots immunization will protect
Speaker 1: you from getting very sick going to that I see
Speaker 1: you possibly dying, uh, But infection probably has to occur still,
Speaker 1: and the only way we can control it is isolating
Speaker 1: ourselves when are positive. So the theme of testing right right,
Speaker 1: and this is something you guys. You are developing your
Speaker 1: own um at home test and I know that is
Speaker 1: still working its way through in terms of towards an
Speaker 1: emergency use act and stuff. How how do you see
Speaker 1: kind of the testing situation as we speak And I'm
Speaker 1: I'm guessing these kinds of tests will be with us
Speaker 1: for a long time. Yes, the tests that will keep evolving.
Speaker 1: Others will put the high accuracy tests on the market
Speaker 1: in miniature form like we're doing. But it's interesting a
Speaker 1: lot of tests are out of stock when you go
Speaker 1: to your grocery store pharmacy, the home kits are out
Speaker 1: of stock, and I are not in big time for
Speaker 1: those radio acquire my friends. Absolutely. And then also at
Speaker 1: the same time that DA has started to make a
Speaker 1: list of tests that may not be so accurate for
Speaker 1: el macron and we're likely to see that in the
Speaker 1: future even more with additional mutations because tests uh main
Speaker 1: target the wrong area in a macron now an area
Speaker 1: that is mutated from delta. So more and more concerned
Speaker 1: about that. Wait wait what yeah? Can those tests like Okay,
Speaker 1: so let's say you know some tests that are common
Speaker 1: by nax now, for example, from Abbot Labs. Could it
Speaker 1: tests like that be altered? Do Look? Could it tests
Speaker 1: like that be altered by Abbott to pick up different
Speaker 1: variants in a better way? And how quickly? Absolutely? Absolutely? Uh,
Speaker 1: you know, someone like Abbott could work that out very quickly,
Speaker 1: But then they'll have to go through the emergency Youths
Speaker 1: authorization procedure again. So realistically you're talking about several months
Speaker 1: in most cases, which is light speed compared two years ago.
Speaker 1: But absolutely Abbott could make that adjustment, so could others,
Speaker 1: and others probably will have to do that in the future. Um,
Speaker 1: it's an interesting world. Tim and I were also talking
Speaker 1: about the cost of tests. I mean, they're not an
Speaker 1: expensive certainly they at home test and I do let's
Speaker 1: just be honest. You texted me, Carroll texted me last
Speaker 1: night at PM's what I bought mine? And she said,
Speaker 1: I found some tests at this drug store near the office.
Speaker 1: I went this morning and I picked up for we
Speaker 1: have like an and thank you Creedy because she's the
Speaker 1: one who's like, hey, you gotta check out this pharmacy.
Speaker 1: So it's been like a little network inside of our
Speaker 1: our offices. Um, so we do find it, but I
Speaker 1: do worry about people who need to work can't afford
Speaker 1: these tests. Maybe your vaccinated fingers crossed they are. I mean,
Speaker 1: we need to just get test house. I think over
Speaker 1: in the UK, one of our colleagues said, at the
Speaker 1: National Health Services, you know, just supplies them. Yeah, and
Speaker 1: the same the same thing was done in Switzerland where
Speaker 1: every family was given five tests per family member for
Speaker 1: each month they could test regularly. And as a physician,
Speaker 1: one of the greatest challenge just we had an emergency department.
Speaker 1: Are low income folks that are working, they can't afford
Speaker 1: the tests, and they also can't afford to stop working
Speaker 1: when they're sick or feeling sick. That means they in
Speaker 1: fact others. It's a really difficult position to deal with.
Speaker 1: So how how does this how does this pandemic end?
Speaker 1: We're entering year three of it, doctor, and I'm I'm
Speaker 1: just you know, this is a pretty exasperating time. I
Speaker 1: think for a lot of people especially those with young
Speaker 1: kids who are not in school as a result of
Speaker 1: this and are concern because those kids can't be vaccinated yet.
Speaker 1: I'm speaking about myself. How does this end sure? I
Speaker 1: think probably we learn to live with the virus and
Speaker 1: it's different, different mutations. Hopefully we get more mutations like O.
Speaker 1: Macron that don't make people quite as sick. Overall, the
Speaker 1: immunization or immunity and the air in the community and
Speaker 1: the society goes up and we have more very highly
Speaker 1: effective medications, so that one day in the future O.
Speaker 1: Macron is a little bit more like the flu. There
Speaker 1: are susceptible people, they get extra immunizations if you get
Speaker 1: the flu. We actually may have more effective medications against
Speaker 1: a macron than the flu, and I think that will
Speaker 1: absolutely be the case in the near future. Dr Blavis
Speaker 1: just got about a minute or under a minute left here.
Speaker 1: What's the outlook in terms of UM I know you
Speaker 1: guys are working on submitting your COVID test for FDA
Speaker 1: authorization under the Emergency Use Act. Any update on that. Yes,
Speaker 1: we just started in rolling patients. We're hoping to be
Speaker 1: done in rolling patients by the middle of this month,
Speaker 1: maybe the third week and then if all goes as planned,
Speaker 1: we'll get the emergency use authorization by the FDA to
Speaker 1: start selling on approximately March one. All right, well, good
Speaker 1: to know, and we wish you good luck with it. Certainly,
Speaker 1: it seems like the world is just appreciative of the
Speaker 1: more tools that we have to deal with this. Dr
Speaker 1: Michael Blavis, he's chief medical officer at Anna Vass Diagnostics,
Speaker 1: joining us once again on the phone from Atlanta. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Carol, you had a BlackBerry.
Speaker 1: I did. I loved it. How many years do you
Speaker 1: think you had at my crackberry? Yeah? A few years
Speaker 1: to remember, and I did quite get it until I
Speaker 1: got one, and then I was like addicted. And then
Speaker 1: as soon as the iPhone came along. What happened? First
Speaker 1: I didn't love it? Yeah, and then you wanted that
Speaker 1: old keyboard back right? You wanted that physical keyboard? Did you?
Speaker 1: Did you have one? I did have a BlackBerry, but uh,
Speaker 1: yeah it was fine. I mean, but I went to
Speaker 1: iPhone pretty quickly, and you can do them out so
Speaker 1: much more with a smartphone. Yeah, you really can. It's
Speaker 1: a lot different, but it's certainly fair to say that
Speaker 1: it ushered in a new era when it came to
Speaker 1: smartphones and personal technology. Well, it's the end of the
Speaker 1: road for BlackBerry. Piece. It's the BlackBerry operating system. We
Speaker 1: should know the point. We should note that you can
Speaker 1: still get Blackberries that are powered by Android. Joining us
Speaker 1: now to talk all about it is John Butler, senior
Speaker 1: Telecom Services and Equipment analyst for Bloomberg Intelligence. He joins
Speaker 1: us on the phone from New Jersey. John, how how
Speaker 1: many people are is this going to affect? Blackberries? Are like,
Speaker 1: they're like unicorns, right? You see him in the wild
Speaker 1: and you're wow, BlackBerry. I don't you know. I was
Speaker 1: listening to you guys talk. I had a BlackBerry as well.
Speaker 1: I don't see a lot out in the wild anymore.
Speaker 1: I'm not sure it's really going to affect many people
Speaker 1: and BlackBerry years ago. Our name is Carol, and I
Speaker 1: have a BlackBerry. It's like, you know what I mean,
Speaker 1: what if people hide it? Right, John, there's a few
Speaker 1: of us out there. But I I switched to the
Speaker 1: iPhone pretty quickly too. But um, you know, it was
Speaker 1: one of those corporate libel phones, like companies paid for
Speaker 1: your cell phone and gave you. In my case, I
Speaker 1: had a rim page or if you remember the old
Speaker 1: name research in Motion, and you know, you eventually moved
Speaker 1: to two phones. And people love BlackBerry so much that
Speaker 1: they ended up hanging onto the Blackberries for a long time.
Speaker 1: And honestly, three or four years ago, I used to
Speaker 1: see a lot of Blackberries out in the y else
Speaker 1: so to speak, and I'm just not seeing them anymore. So, Carol,
Speaker 1: to answer your question, I don't think there's a lot
Speaker 1: of users at this point that are still hanging on.
Speaker 1: But you know, from a corporate standpoint, it's something that BlackBerry,
Speaker 1: BlackBerry needed to move on from that. They really are
Speaker 1: a software maker right now. Um, they've moved into mobile
Speaker 1: software and security software and they sold off that handset
Speaker 1: business years ago. So it's a good point, right They've
Speaker 1: been going through changes, John, So what I don't know
Speaker 1: what how do you see the outlook of the future
Speaker 1: of BlackBerry. So they are still a company and transition,
Speaker 1: and I think a lot of people would have thought
Speaker 1: at this point they would be out of the transition
Speaker 1: and growing better, and they still have to make some move. So,
Speaker 1: speaking of handsets, they had this huge portfolio of intellectual
Speaker 1: property for wireless and they're trying to sell that right
Speaker 1: out a fund R and D to get a bunch
Speaker 1: of new products over the finish line. And we're almost there.
Speaker 1: You know. It's one of those stories. You can see
Speaker 1: it beginning to come together. But they need more funding, uh,
Speaker 1: and they need a little bit more focus, and um,
Speaker 1: you know, my sense with them is I think they'll
Speaker 1: get there. Um, it's hardly a given, but I think
Speaker 1: I think they're on their way. Um. I think it
Speaker 1: was high time they that they finally kind of let
Speaker 1: go of that wireless business. Even a couple of quarters ago,
Speaker 1: they were still reporting what they called service access fees,
Speaker 1: So people who had a BlackBerry would pay a fee
Speaker 1: to get access to their proprietary network for email and
Speaker 1: file transfer and that kind of stuff. And so that'll
Speaker 1: that'll go and it'll free up some cost. Hey, John,
Speaker 1: I wonder if there's any sort of lesson in here
Speaker 1: about business icicles and companies and companies staying on top
Speaker 1: of things that we can learn from the rise and
Speaker 1: fall of BlackBerry, especially the day that after Apple hits
Speaker 1: three trillion dollars in market cap, because if we think
Speaker 1: back to two thousand seven, when Steve Jobs stood on
Speaker 1: that stage and introduced the iPhone, there were a lot
Speaker 1: of people out there who said, there is no future
Speaker 1: for this thing. BlackBerry dominates when it comes to smartphones,
Speaker 1: you know that. I think the lesson learned is, particularly
Speaker 1: in the tech industry, some of these gigantic companies can
Speaker 1: literally disappear and um or they can disappear from a
Speaker 1: given business, as was the case with BlackBerry, but they
Speaker 1: really are a shadow of their former self, if you will.
Speaker 1: But LG just left the smartphone business and they were
Speaker 1: a pretty big player for many years, and so to me,
Speaker 1: I always use BlackBerry as an example of how these
Speaker 1: tech behemoths can really fall from grace and ultimately disappear
Speaker 1: over time. And I think the other lesson, and I've
Speaker 1: learned this over the years as an analyst, is that
Speaker 1: it's important to have the right CEO in place at
Speaker 1: the right time in a company's life cycle. And I
Speaker 1: think Apple is a great example of that. I think
Speaker 1: Tim Cook came in right at a time when Apple
Speaker 1: had reinvented, their product line was set, but they needed
Speaker 1: a logistics guy to really grow it where it is
Speaker 1: today exactly, Tim Cook, I think was the right guy
Speaker 1: to do that. All right, John, Hey, we gotta run.
Speaker 1: Thank you so much. Always appreciate your insight. John Butler,
Speaker 1: Senior Telecom Service and Equipment analyst a Bloomberg Intelligence. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. Obesity is a disease,
Speaker 1: and there are ways to fight it, including prescription drugs
Speaker 1: that work. The problem is most doctors are not prescribing them,
Speaker 1: and insurers won't come for them. Let's get to the
Speaker 1: reasons why. Well. I'm a cord As healthcare reporter for
Speaker 1: Bloomberg News. She joins us on the phone from New
Speaker 1: York City. Her story is going to be featured in
Speaker 1: the upcoming issue of Bloomberg Business Week magazine. You can
Speaker 1: read it now though on the Bloomberg Terminal, also online
Speaker 1: at Bloomberg dot com slash business Week. Joel Weber is
Speaker 1: editor at Bloomberg Business Week. He joins us now on
Speaker 1: the access line from Brooklyn. Joel Carroll mentioned this group
Speaker 1: of drugs. These This group is known as g LP
Speaker 1: one receptor agonists or GLP ones. What do they do?
Speaker 1: It's very catchy, right, yeah, it is for the pharmacyical
Speaker 1: industry really has a way with naming things, right, yeah, exactly.
Speaker 1: But you know, regardless of name, Uh, the science behind
Speaker 1: these shows promise and uh, as Emma goes into in
Speaker 1: the story, um the drugs, and this class of drugs
Speaker 1: is really geared. Maybe not um just you know those
Speaker 1: stubborn five pounds that we'd all like to get off,
Speaker 1: but a whole category of people who really haven't had
Speaker 1: that many many drugs for them before, which is obese
Speaker 1: obset people, and obesity being such an epidemic in the country. Um,
Speaker 1: numbers that are stubborn and and really don't go up
Speaker 1: go down. And yet you know, doctors have the stigma
Speaker 1: around it. It's like it's still in their mind. Can
Speaker 1: be a behavioral problem that science can't necessarily solve. Insurance
Speaker 1: on top of that, looks at this new class of
Speaker 1: drug and they're not necessarily thrown money at it all
Speaker 1: of which you know kind of leaves this solution to
Speaker 1: a big problem someone on the shelf. But but now
Speaker 1: I'm talking on the turn. I don't want to hear
Speaker 1: more from ms Emma, Uh what what what? How did
Speaker 1: this story coming to being and and how what kind
Speaker 1: of potential does this class of drugs really really have? Hi, UM, well,
Speaker 1: thanks so much for having me on and um, I
Speaker 1: hope everyone who listen to me has a chance to
Speaker 1: check out the story. The piece started, there were a
Speaker 1: couple of early threads, but I started hearing about so
Speaker 1: startups that we're trying to treat obesity and help people
Speaker 1: with weight loss using medication and telemedicine, so these like
Speaker 1: virtual doctors visits, and I thought it was sort of
Speaker 1: an interesting approach, and at the same time with hearing
Speaker 1: about pharmaceutical companies trying to develop better obesity drugs and um,
Speaker 1: you know, as I learned more about the space, I
Speaker 1: just kept coming back to this point of like, you know,
Speaker 1: even previous to these GLP one drugs that are starting
Speaker 1: to be developed for weight loss and obesity specifically, they
Speaker 1: would previously been used in diabetes. You know, there have
Speaker 1: been prescription drugs that can help people lose weight that
Speaker 1: are rarely used. Um. You know, and this is going
Speaker 1: back several years, and there's a lot of different complicated
Speaker 1: reasons for that, but I kept kind of just being
Speaker 1: struck by the discrepancy between the fact that you know,
Speaker 1: many people are are obese or overweight UM in the US,
Speaker 1: you know, hundreds of millions of people, UM. And yet
Speaker 1: people are consistently being told to diet to exercise, and
Speaker 1: they're not being told about the other option that's available
Speaker 1: for them. All right, Emma. The thing I find like crazy,
Speaker 1: like blows my mind a little bit is, and you
Speaker 1: write this, the biggest constraint on weight lost drugs remains
Speaker 1: buy in from the broader medical industry. How can doctors
Speaker 1: who potentially see this as something that could really like
Speaker 1: prescribing one of these drugs help one of their obese patients.
Speaker 1: How how are they allowed, you know, as a doctor,
Speaker 1: not to prescribe it. That's a really good question, Carol.
Speaker 1: And I think you know, I quote a doctor and
Speaker 1: obesity doctor and the story who says sort of, you know,
Speaker 1: if you treated diabetes or hypertension in this way, like
Speaker 1: you know, a doctor would lose their their medical license.
Speaker 1: I mean, it's kind of remarkable that, you know, we're
Speaker 1: very comfortable prescribing and by way, I mean doctor is
Speaker 1: prescribing medications for so many different kinds of medical conditions.
Speaker 1: And I think a lot of this helps to do
Speaker 1: with the way OBEs to previously been seen. Right, people
Speaker 1: think of obesity or or being overweight as really being
Speaker 1: a something that you kind of did yourself, right, and
Speaker 1: we kind of get into this more of the piece.
Speaker 1: But you didn't work hard enough to lose weight, right,
Speaker 1: this is your fault, um and UM. As a result,
Speaker 1: this is treated as as a lifestyle condition. If you're
Speaker 1: eating too much, you're not active enough, um. And there's
Speaker 1: some more complicated science that's come out in the last
Speaker 1: several decades that shows that our bodies really do have
Speaker 1: a big influence over how we you know, when we
Speaker 1: stop eating, you know when we're hungry, when we feel
Speaker 1: satisfied after we eat, and and that there's more biologically
Speaker 1: going on than merely sort of you know, refraining from
Speaker 1: getting on the treadmill every day, which is what I
Speaker 1: think a lot of people unfortunately still think, and even
Speaker 1: even doctors and certainly people who struggle with their weight themselves. Well,
Speaker 1: I'm just gonna make one comment because I know Tim
Speaker 1: has a question, but I'm just gonna I wrote a
Speaker 1: note being OBEs is big business, and it supports a
Speaker 1: lot that's out there anyway, that's my that's my pa
Speaker 1: in peace. It doesn't. It's a good I mean, it's
Speaker 1: a good thing for us to be thinking about on
Speaker 1: in the new year, when a lot of people have
Speaker 1: different fitness goals and weight loss goals that are associated
Speaker 1: with the new year. I want to talk a little
Speaker 1: bit more about that m and and obesity because I
Speaker 1: was I was I'm always shocked to see these statistics
Speaker 1: about you know, how many Americans are are obese or
Speaker 1: overweight three and four and estimated two million people. Can
Speaker 1: you talk a little bit though about comorbidities here in
Speaker 1: the dangers of being overweight. They've come to the to
Speaker 1: the to the surface a lot when in discussions of COVID.
Speaker 1: But but beyond that, yeah, yeah, so, um, the big
Speaker 1: kind of concern about having excess weight as obviously that's
Speaker 1: defined by the body mass index UH standard. Right, So
Speaker 1: people who are um obese are at higher risk of
Speaker 1: developing various um medical conditions, including um diabetes. Another respects
Speaker 1: tied to obese is actually all call mortality, so literally
Speaker 1: death by any cause. Um. So we know from some
Speaker 1: of these statistical analogies that you know, when you are
Speaker 1: you carry around extra weight, you are more likely to
Speaker 1: develop some of these other medical problems. And you know,
Speaker 1: it does raise a lot of concerns for doctors and
Speaker 1: medical providers about your health, right are you as healthy
Speaker 1: as you could be? Um? And as a result, it's
Speaker 1: led to a lot of interest in finding rains to
Speaker 1: keep pounds off obviously not just for you know, reasons
Speaker 1: of appearance, but also really health health reasons. So to
Speaker 1: wrap her, Emma, let's talk briefly about the science. How
Speaker 1: does this this class of drugs that we're talking about here, um,
Speaker 1: the gop ones, how how does it? How do they work?
Speaker 1: And Imma just got about thirty seconds. So they do
Speaker 1: a couple of different things. Especially when you're talking about diabetes,
Speaker 1: they actually help pincreas, get the pincreas to produce insulin
Speaker 1: to bring your blood sugar levels down. But when you're
Speaker 1: talking about weight loss specific atale, what's really interesting about
Speaker 1: these drugs is they mimic a hormone called g lp one. Right,
Speaker 1: these drugs are named after the hormone and it actually,
Speaker 1: uh kind of helps tell your brain like you're satisfied,
Speaker 1: you don't have to eat anymore. Um, and that's kind
Speaker 1: of the key to it. It's funny people might think
Speaker 1: of that, you know, they've got hormones, but they actually
Speaker 1: work most potently, it seems, in the brain, which is
Speaker 1: kind of a fascinating thing to think about, this being
Speaker 1: really neuroscience. At the end of the day, all right,
Speaker 1: we're gonna leave it on that note. Listen, guys, thank
Speaker 1: you so much. It's a really wonderful story, I mean,
Speaker 1: troubling story, but you should definitely check it out with
Speaker 1: all its uh details. You can find it at Bloomberg
Speaker 1: dot com and the court there and Chill Weber. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Later this month, We're
Speaker 1: gonna get update on Netflix when it reports it's latest
Speaker 1: quarterly results. This is the company's edging closer to investment
Speaker 1: grade status. It's what you call a rising star, at
Speaker 1: least according to our Bloomberg Intelligent Seen that is about
Speaker 1: the upgrade to their investment grade status. Let's get into
Speaker 1: it with Olivia Raymond, a credit markets and high yield
Speaker 1: bond reporter for Bloomberg new She joins us on the
Speaker 1: phone from here in New York City, Olivia. Great to
Speaker 1: have you with us. UM can help us make the
Speaker 1: connection here between what exactly is going on with with
Speaker 1: Netflix right now on the credit side, and you know
Speaker 1: what we've seen with with Netflix is stock in recent
Speaker 1: years as it's continued to just fly higher. Yeah, so
Speaker 1: thank you so much for having me on. So Netflix
Speaker 1: is poised to become a so called rising star at
Speaker 1: some point this year. And what that means for listeners
Speaker 1: who aren't aware, aren't aware of that phrase, that just
Speaker 1: simply means that a junk graded company is moved into
Speaker 1: investment grade status and all of its debt gets moved
Speaker 1: into investment grade UH indices. So Netflix already has one
Speaker 1: high grade rating from SMP. They upgraded Netflix last October,
Speaker 1: so all it needs is a second rating from a
Speaker 1: second high grade rating from one of the major rading
Speaker 1: rating agencies for it to bump up to that rising
Speaker 1: star status. So tell us about what that means, because
Speaker 1: that means basically what servicing your debt costs less. Yeah, exactly. So,
Speaker 1: So when companies leave junk status and become investment grade UM,
Speaker 1: they can get financed from a deeper pool of borrowers
Speaker 1: at lower rates. So what are the changes that the
Speaker 1: company has made in order to boosts credit rating? How
Speaker 1: has this happened? Yes, so that their credit metrics have
Speaker 1: performed um and have been improving. They have raise an
Speaker 1: ample amount of liquidity, and they've also signaled that they
Speaker 1: are not going to need to take out much more
Speaker 1: debt in the future due to the recent successes that
Speaker 1: they've had, especially over the pandemic. When everyone lives stuck
Speaker 1: at home, watch movies and shows on the streaming circuit
Speaker 1: streaming service excuse me, and m boost its h boosts viewers.
Speaker 1: So so that's helped it UM shore up some money
Speaker 1: and I need to tap the bond market less frequently.
Speaker 1: Well okay, so so just to help me out here,
Speaker 1: because I don't cover the credit market closely at all,
Speaker 1: So you know, I I really focus. I looked to
Speaker 1: a lot of the equity performance and you know here
Speaker 1: so far. You know, Netflix was underperformed the NASTAC but
Speaker 1: finished hired by eleven, it was hired by sixty seven,
Speaker 1: was hired by ninety and twenty seventy. To the credit
Speaker 1: market person about the equity, Yeah, because what I'm saying
Speaker 1: is is that the rating for the credit rating hasn't
Speaker 1: really dissuaded equity investors here, So are they have they
Speaker 1: been stupid? That's what I'm That's what I'm thank you, Carol. No, No,
Speaker 1: what what what I what we're seeing more? Did they
Speaker 1: have foresight? Yeah, what we're seeing is investor foresight here.
Speaker 1: They're anticipating that Netflix fundamentals will continue to improve um
Speaker 1: and that's reflected in the credit rating analysis that the
Speaker 1: major graders send out as well. It's so fair to
Speaker 1: say it's like a lagging indicatory, right, which one the
Speaker 1: equity market, the credit mark, the credit market. But isn't
Speaker 1: the credit market often well? So tell us about right,
Speaker 1: we spend so much time, as you know, Olivia, talking
Speaker 1: about the equity side of things, but the credit markets,
Speaker 1: you know, can often tell you very quickly if a
Speaker 1: company is in trouble. So I'm just thinking about for
Speaker 1: our you know, our audience who watch both things. But again,
Speaker 1: we talked so much about the equity side of things.
Speaker 1: You know, what does this potential upgrade also mean in
Speaker 1: terms of how investors overall look at this company or
Speaker 1: maybe should look at this company, especially when you dig
Speaker 1: deeper into that balance sheet. Yeah for sure. Um. You
Speaker 1: know the important thing there is that, um, what happens
Speaker 1: off and is one of company is upgraded to investment grade,
Speaker 1: they issue bonds very shortly after because they can get
Speaker 1: them at a lower yield um, and so therefore they
Speaker 1: tend to trade better than the broader market. So um,
Speaker 1: according to Bank of America strategists, Um, and this is
Speaker 1: a quote, rising star should be bought as soon as possible.
Speaker 1: And that's not just for Netflix, but for the potential
Speaker 1: hundred and sixty nine billion dollar wave of rising stars
Speaker 1: that we could see this year after we had a
Speaker 1: very large credit rating downgrade during amid the worst of
Speaker 1: the pandemic. Hey, just quickly, and if I think about
Speaker 1: in the equity side, thing we've talked so much about indexing, right,
Speaker 1: are are people who are invested in index funds? Same
Speaker 1: thing though, if you're you know, the credit is upgraded, right,
Speaker 1: you're more likely to be in a lot more corporate
Speaker 1: indexing funds or index funds. So that's exactly what happens.
Speaker 1: Is your company has moved to investment grade status, your
Speaker 1: your debt leaves all high yields and to see is
Speaker 1: and it's moved into investment grade in disease. All right,
Speaker 1: makes sense, good reason to keep an eye on Netflix,
Speaker 1: and always important to look at the credit side of things. Um, Olivia,
Speaker 1: thank you so much. Olivia Raymond. She's credit markets and
Speaker 1: high yield bond reporter on the phone in New York City.
Speaker 1: You can't say you're not a cult person. I'll admit it.
Speaker 1: Look at all this stuff we do. But I you know,
Speaker 1: rising Star that works pretty well for Netflix. It's a
Speaker 1: better trend than maybe it does. It works so well
Speaker 1: for Netflix. It's a show that it's a company that
Speaker 1: is focused on stars. Whether you know that swid game
Speaker 1: or what was that movie, Power of the Dog. Carol
Speaker 1: liked Yeah, Tim recommended it. I'm sorry, I just liked it.
Speaker 1: I lost it was lost on me. Yeah, but you
Speaker 1: let me drive? Oh no, no, no, no, this is
Speaker 1: not a toy. Oh please, I'll do I want to dry.
Speaker 1: It's a good question. This is the drive to the CLOBEO.
Speaker 1: All right, So I I just got about ten minutes left
Speaker 1: in today's trading session. We are driving to the close.
Speaker 1: Let's bringin our guest, Laurie Heinal. She's Global Chief investment officer.
Speaker 1: Excuse me, Global chief investment officer over its State Street
Speaker 1: Global Advisors. They've got three point eighty six trillion dollars
Speaker 1: in assets under management, managing a lot. And she joins
Speaker 1: us on the phone from Boston, Laurie, how are you
Speaker 1: happy New Year? Happy New yor doing great to us?
Speaker 1: Seeing a little bit of fun finally, Oh my gosh, right,
Speaker 1: it feels good. It's un I don't know, it's a
Speaker 1: little gray here, but um interesting first couple of days
Speaker 1: of trading. Two days does not make a trend, and
Speaker 1: yet we're bouncing off our loads here today. What's what's
Speaker 1: on the mind of investors right now is they try
Speaker 1: to make investment bets and maybe kind of set up
Speaker 1: their portfolio for the new year. Well, lots of things
Speaker 1: are on investor's minds right now, but two of them
Speaker 1: are things that have been on our minds for quite
Speaker 1: a while now, COVID and FED, and those two things
Speaker 1: are moving in a little bit opposite directions right now,
Speaker 1: because obviously we have concerns about COVID, particularly a macron,
Speaker 1: but we're also starting to see that perhaps this version
Speaker 1: of COVID takes us to more of an endemic situation
Speaker 1: where it's lots about the pandemic and more about learning
Speaker 1: to live with the virus. On the other hand, we've
Speaker 1: got a FED that seems to have moved quite hawkish,
Speaker 1: quite quickly, so those two things are likely to be
Speaker 1: what will battle it out in the first half of Okay,
Speaker 1: So give us an idea of asset allocation, because we
Speaker 1: spent a lot of last week talking about fixed income
Speaker 1: and whether or not there actually is a role for
Speaker 1: fixed income in portfolios right now with the direction of
Speaker 1: interest rates and where they are now. Uh, do you
Speaker 1: think there's still a role for fixed income? Well, certainly,
Speaker 1: as allocation has not gotten any easier, and there are
Speaker 1: a couple of dynamics at play. First of all, we've
Speaker 1: had pretty lofty valuations in lots of parts of the
Speaker 1: equity markets. But as you note, given that fixed income
Speaker 1: interest rates are just so very low, even with a
Speaker 1: little bit of a back up here, fixed incomes just
Speaker 1: not that attractive. So we've been trying to do a
Speaker 1: couple of things. First of all, look for other opportunities
Speaker 1: with inequities where relative valuations are more attractive. So we've
Speaker 1: recently been repositioning out of US more into Europe, where
Speaker 1: we think they benefit from the cyclical trade and we
Speaker 1: can get more attractive pricing. But we've also looked at
Speaker 1: fixed income places where there's a little bit better yield,
Speaker 1: so looking at credit, looking at emerging markets debt for example,
Speaker 1: and perhaps putting a few other diversifiers in there, including commodities.
Speaker 1: Interesting US though versus the rest of the world. How
Speaker 1: do you see it? Yeah, well, so for many, many years,
Speaker 1: the US has been our core equity position, and we've
Speaker 1: been overweight at times pretty significantly versus the rest of
Speaker 1: the world. But we actually think two is going to
Speaker 1: be a time when you want to pivot and focus
Speaker 1: a little bit more on non US assets. If you
Speaker 1: look at the rotation from kind of growth stocks into
Speaker 1: more clickal sectors, European industries are just much more represented
Speaker 1: in those cyclical section sectors, which should benefit as this
Speaker 1: recovery takes hold. So our trade is really more out
Speaker 1: of US, although not terribly underweight, but more into European
Speaker 1: for more high growth opportunities for investors. So are you
Speaker 1: betting that Europe will outperform the US at the moment.
Speaker 1: That's the way we're positioned. And again we think there
Speaker 1: are a couple of things that put a little bit
Speaker 1: of wind in the sales of Europe, as I mentioned,
Speaker 1: a bit more cyclical representation. So those are stocks that
Speaker 1: should that perform as we continue into the growth sector
Speaker 1: or growth engine, if you will, as the economic growth recovers.
Speaker 1: We also think that the central bank there will be
Speaker 1: a bit more dubbish, which should provide a bit more
Speaker 1: opportunity for evaluation expansion. And we also think that Europe
Speaker 1: has a lot of other, um, you know, dimensions, notably
Speaker 1: being willing to have a bit more fiscal stimulus, which
Speaker 1: is something that has not happened in New York really
Speaker 1: for the last decade. How is lori um kind of
Speaker 1: the great decoupling that we might see among global central banks?
Speaker 1: In other words, you know what we see spheres of
Speaker 1: monetary influence, not my words, but our Tom or like
Speaker 1: chief economist at Bloomberg, and he's looking at this great
Speaker 1: decoupling of global central banks where we will see some
Speaker 1: raising rates, some not, or some even cutting rates. And
Speaker 1: you know, certainly when you look at something like China
Speaker 1: versus the US, you could see two giants in the
Speaker 1: global economy pursuing very different monetary strategies. What are the
Speaker 1: implications of that. Well, first of all, I think that's
Speaker 1: spot on. Again. Keep in mind that the backdrop for
Speaker 1: literally the last decade has been to try to stimulate growth.
Speaker 1: There wasn't any inflation that was any of any concern
Speaker 1: to any central bankers, and so they could be much
Speaker 1: more dubbish and their posture in support of markets and
Speaker 1: in support of economies. But now we're in a different
Speaker 1: place where we are starting to see inflation in some
Speaker 1: parts of the the world, notably here in the U S
Speaker 1: where as I mentioned earlier, and the FEDS suddenly gotten
Speaker 1: a lot more concerned about that. We also have different
Speaker 1: growth factors here, so China, for example, has seen their
Speaker 1: growth rate slow pretty dramatically over the last couple of years.
Speaker 1: So it's a combination of inflationary pressures, growth trajectory, and
Speaker 1: also just you know how there are other dynamics like
Speaker 1: the fiscal policy that are going to come into play here. Laurie.
Speaker 1: You know, we talk a lot about inflation, and that's
Speaker 1: certainly being a concern for many strategist going into two.
Speaker 1: When do you think inflation peaks? Uh, Well, we actually
Speaker 1: think that we may have seen the worst of it,
Speaker 1: but that that doesn't mean we're going to go back
Speaker 1: to the two rates that we had enjoyed pre covid um.
Speaker 1: But what's likely to happen in our view is that
Speaker 1: the beginning of two thousand two will still have higher
Speaker 1: than normal inflation, but the inflation drivers will start to
Speaker 1: rotate a bit. So, for example, energy prices were a
Speaker 1: big driver of inflation in one and likely will continue
Speaker 1: a little bit into point twenty two, but suddenly the
Speaker 1: comps on the year over year basis will become a
Speaker 1: lot different. On the other hand, we think that things
Speaker 1: like real estate and owners equivalent rents are likely to
Speaker 1: pick up in the second half of two as we
Speaker 1: start to see some of those rental prices continue to
Speaker 1: grind higher. So so we think we may have hit
Speaker 1: the peak or or very near the peak, but that
Speaker 1: doesn't mean we're going back to that sub two percent level. Uh.
Speaker 1: Jobs and the labor market. Do you think it continues
Speaker 1: to provide some optimism going forward. Just got about twenty
Speaker 1: seconds here, Yeah, we do. We actually think that there
Speaker 1: could be a bit of an upside surprise of a
Speaker 1: consensive number of just over four thousand and maybe more
Speaker 1: in the form of revisions versus the actual print for
Speaker 1: last months. But we do think that manufacturing will hold
Speaker 1: up well here in the service sector, while being a
Speaker 1: little bit challenged right at the moment, is likely to
Speaker 1: be pretty resilient. Right. We did get some optimism from
Speaker 1: the I S M manufacturing. We did see delivery times
Speaker 1: and prices um improving coming down in terms of prices
Speaker 1: in delivery times reducing, which maybe that supply chain constraints
Speaker 1: getting better. All right, Lori, we gotta run Happy new year.
Speaker 1: Laurie Heinel, She's Global Chief Investment Officer at state Tree
Speaker 1: Global Advisors. Tons of money, almost four trillion in assets
Speaker 1: under management, on the phone from Boston. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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