Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily
Speaker 1: we bring you insight from the best in economics, finance, investment,
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Speaker 1: And this is the joy as we consider this terrible
Speaker 1: pandemic and all of us at Bloomberg Surveillance have done
Speaker 1: everything we can to bring you experts. David Ricks is
Speaker 1: out of Purdue. He runs a shop called Eli Lily
Speaker 1: in his Indiana and they are dominant in our history
Speaker 1: of finding solutions, whether it's insulin arythemias, and particularly what
Speaker 1: Lily did on polio vaccine in nineteen was absolutely original,
Speaker 1: absolutely historic. The phrase from that time is safe, effective, impotent.
Speaker 1: That is the great hope right now for all of us.
Speaker 1: Dave Ricks, how close are we too? Safe, effective and potent? Well,
Speaker 1: thanks for having me on. It's obviously a time when
Speaker 1: the importance of our scientists work is is at a high.
Speaker 1: Um as you mentioned back to our days with the
Speaker 1: polio vaccine, that's really in our blood here at Lily
Speaker 1: has to respond to these public health crisis is um
Speaker 1: we're working on the medicine side UM and I think
Speaker 1: we are close to understanding that treatment with monoclonal antibodies,
Speaker 1: which we're making and others are early in the disease,
Speaker 1: can make a significant difference. We not STATA earlier in
Speaker 1: October regarding that, and we've got an application at the
Speaker 1: FDA reviewing that that very data which therapy has the
Speaker 1: best outcome where we can say we have a vaccine.
Speaker 1: Peter Hotez at Baylor Medicine is saying simply, we need
Speaker 1: something cheap in old school. John spoke with Nevarties this morning.
Speaker 1: There's modern all the rest of them. Which is the approach,
Speaker 1: Mr Ricks, It seems to be the one that will
Speaker 1: get us to a societal vaccine. Well, I think on
Speaker 1: the vaccine side, the good news is there's lots of
Speaker 1: approaches being tried. You know, in our business, we need data.
Speaker 1: I don't think it makes sense to guess um at
Speaker 1: which would would be the most effective. The good news
Speaker 1: is will know that, and we'll know that pretty soon.
Speaker 1: The early ones, as you pointed out, of the m
Speaker 1: R and a UM a new technology that's never produced
Speaker 1: a human vaccine before, but looks pretty promising in terms
Speaker 1: of the ability to generate our own antibody response, and
Speaker 1: that's a good sign I think for defeating the virus
Speaker 1: or preventing infectious spread. We don't know how long that
Speaker 1: will last. There's other approaches that have produced vaccines, modified
Speaker 1: virus UM, taking different viruses and mounting elements of the
Speaker 1: covid virus on them UM, and those are more proven.
Speaker 1: They are a little harder to scale, but they also
Speaker 1: may produce a good response. Mostly, I'm confident because we
Speaker 1: have so many shots on goal um really an unprecedented
Speaker 1: number so quickly. So I think science will win in
Speaker 1: the end. It's just hard to pick the winner at
Speaker 1: this point in the horse rage, John, that's a hockey
Speaker 1: phrase there. That's not a soccer phrase, because there's so
Speaker 1: few good soccer that's a hockey phraser from this. You
Speaker 1: don't know what Dave meant. I'm just going to interpret
Speaker 1: it as a soccer phrase. It still makes sense. Think
Speaker 1: you mentioned the word scale, scale, and I want to
Speaker 1: return to antibody therapies and please help me understand how
Speaker 1: difficult it is to scale something up quickly in large amounts.
Speaker 1: As soon as you get the green light yeah, it's difficult.
Speaker 1: Because it's so difficult. We actually started commercial manufacturing in
Speaker 1: the first week in July, so we had to basically
Speaker 1: aim at a target that hadn't arrived at its point yet.
Speaker 1: We didn't know the dose, we didn't know whether the
Speaker 1: drug could work, we didn't know in which setting it
Speaker 1: would work. And today or yesterday we announced a study
Speaker 1: we'd been conducting with the NIH We're gonna pause because
Speaker 1: it's in a later stage of the disease where probably
Speaker 1: these antibodies won't be as effective, whereas in early stage
Speaker 1: of disease looks highly effective. So we already started that process.
Speaker 1: It's about four months from beginning to end best case
Speaker 1: to start manufacturing and have output. And then, on top
Speaker 1: of all that, the global um infrastructure to make monoclonal antibodies,
Speaker 1: which are some of the most complicated and expensive type
Speaker 1: of medicines to make, is limited. We've harnessed actually five
Speaker 1: different sites within our network, collaborating with Amgen and working
Speaker 1: with a large contract manufacturer owned by Samsung actually in
Speaker 1: Korea to sequester a significant amount of volume. Even then,
Speaker 1: we know it won't be enough for all the needs
Speaker 1: based on the current infection rates, So we need to
Speaker 1: work on lower doses and then concentrating these important therapies
Speaker 1: where they can make the biggest impact for us right now.
Speaker 1: We think that's high risk patients right as they're diagnosed. Rick.
Speaker 1: There's also Dave, Dave, excuse me, there's also a question
Speaker 1: of profitability. And your latest earnings report, which just came out,
Speaker 1: as said that you expect to spend four hundred million
Speaker 1: dollars on COVID therapy is exploring what could potentially work.
Speaker 1: And there's a natural cap to whatever you can charge
Speaker 1: for these remedies because there is a public health need
Speaker 1: and benefit right now. How profitable can these therapies actually
Speaker 1: be based on the human interest here? Yeah, so today
Speaker 1: we announced journing. It's a good point. It's why I'm
Speaker 1: on which showed another solid quarter. We grew revenue and
Speaker 1: and profit amidst this u pandemic we're in and real
Speaker 1: I think it shows the resilience of a company like
Speaker 1: ours as we think about pricing and access our first
Speaker 1: priorities that patients pay nothing. We know that if there's
Speaker 1: an out of pocket costs, that that economics will start
Speaker 1: to differentiate who gets the drug. And we think that
Speaker 1: health status should be the only factor considered. So we're
Speaker 1: working with governments to procure and sell our medicines and
Speaker 1: distribute within their markets. In terms of pricing, what we're
Speaker 1: thinking about carefully is is to ship create a price
Speaker 1: that immediately creates value not just for us but for
Speaker 1: the system, meaning it saves money direct costs very quickly,
Speaker 1: and we've demonstrated we can reduce hospitalization risk in high
Speaker 1: risk patients between seventy and eight in the U S.
Speaker 1: A hospitalization stay for COVID is about two dollars per person,
Speaker 1: so there's ample room to share that value. Assuming the
Speaker 1: drug is approved. UM. So we're working on the exact price.
Speaker 1: It won't be as profitable as other products. Certainly, we
Speaker 1: expect to have a modest return for shareholders based on
Speaker 1: our modeling today. UM But I think companies like ours
Speaker 1: were built for moments like this. Our job is to
Speaker 1: invest at risk, use our science to solve tough problems.
Speaker 1: And there's a tough problem at hand right now, and
Speaker 1: that's why we're applying ourselves to it. I think I
Speaker 1: speak for still when I say good luck for the
Speaker 1: year a hand, and that's facility I can appreciate the
Speaker 1: time this morning, said thank you Elon, chairman and CEO.
Speaker 1: You know how this works. I introduced the guests from
Speaker 1: Morkan Stanley. They talk about a V shaped recovery. How
Speaker 1: they were right everyone asked was wrong? At least we'll
Speaker 1: ask some questions about what they might be wrong. In
Speaker 1: a month, two months, three, that's the next five minutes.
Speaker 1: Right here on Bloomberg. Andrew slim And joined us right now.
Speaker 1: Stanley Investment Management Senior portfolio manager Andrew wild Daniel smiling.
Speaker 1: I know they shaped recovery stocks up and all that.
Speaker 1: What's the latest call right now, Andrew, how do you
Speaker 1: see the evolution of this call at the House of
Speaker 1: Morgan Stanley that's been pretty spot on for the last
Speaker 1: six months. Well, you know, as a portfolio manager, I
Speaker 1: see the evolution as really the equal wated SMP out
Speaker 1: perform the cap waited, which is namely that, as you know,
Speaker 1: up through September, the cap waited was massively outperforming the
Speaker 1: equal waited. It was massively out for in the small
Speaker 1: cap next and then something happened, and that is that
Speaker 1: we're starting to see more of these economically census stocks
Speaker 1: starting to pick up. So I think the evolution is
Speaker 1: that it's not so much at the market level as
Speaker 1: it pertains the capway to SMP. It's more the unopinions
Speaker 1: of the rest of the stocks in the index that
Speaker 1: I've really allied behind. I think they're starting to price
Speaker 1: some type of reopening. But they did get very overbought
Speaker 1: on a short term basis, so things like yesterday doesn't
Speaker 1: surprise me at all that we had a retrenchment a bit, Andrew,
Speaker 1: the goal here is to have some patients. I want
Speaker 1: you to define a character and color of patients right now.
Speaker 1: How do you counsel patients, say out to January or
Speaker 1: February of next year. Well, I'm counseling patients through next Tuesday, um,
Speaker 1: which is resist the urge to overreact to whatever happens
Speaker 1: in the election that doesn't doesn't fit your you know whatever.
Speaker 1: You're not you, but your political view is because you know, look,
Speaker 1: I got grey hair in this business a long time ago,
Speaker 1: seen so many people. So many people react by doing
Speaker 1: things in their financial portfolio to express their political views
Speaker 1: that never turned out to be right. So I'm trying
Speaker 1: to get people just to you know, look pasty. But
Speaker 1: as it pertains to UM out to next year. UM.
Speaker 1: You know, there's a history of re outbreaks of diseases
Speaker 1: in the fall after the initial outbreaks in you know,
Speaker 1: the winner of spring previous uh, and you don't get
Speaker 1: as much of a pullback in the market because it's
Speaker 1: a known risk. We knew we were going to get
Speaker 1: another re emergence, and so I don't think from a
Speaker 1: financial standpoint it will cause the destruction that we had
Speaker 1: the first go run. And I do think the market
Speaker 1: will begin it's still October, but the market will begin
Speaker 1: to anticipate that we will get through this at some
Speaker 1: point that the comps you know, this is a very
Speaker 1: important point of the comparisons for a lot of companies
Speaker 1: that were shut down this year is going to be
Speaker 1: very very easy next year, and the market won't sit
Speaker 1: around and wait for the reality of that to happen
Speaker 1: next year. It's going to start to anticipate that as
Speaker 1: we get later into this year. So I think we
Speaker 1: get through the election, and it doesn't really matter who's elected,
Speaker 1: that the comparisons are going to be easy for a
Speaker 1: lot of these companies, and I think that's what people
Speaker 1: will focus on. So perhaps ten minutes ago Andrew I
Speaker 1: might have asked you about what happened to the vaccine
Speaker 1: isn't exactly as effective as people think, or the virus
Speaker 1: is spreading up more than expected, But that would make
Speaker 1: me incredibly predictable to Jonathan Farrow, who are already predicted,
Speaker 1: I would ask all of those things. So instead I
Speaker 1: will ask about, theoretically, if someone were in a triple
Speaker 1: leverage cash fund right now and we're looking at and
Speaker 1: we're looking for an entry point, uh, you know what
Speaker 1: they should be buying, how they should be arranging their
Speaker 1: portfolio and equities now for what you're expecting next year. Well,
Speaker 1: if you say now, do you mean at this very moment, look,
Speaker 1: I can tell you that, um, we sold. I trimmed
Speaker 1: yesterday in our portfolio some a couple of financial socks,
Speaker 1: not the big banks, but had gone up a lot, right,
Speaker 1: I trimmed one of our emerging market stocks that have
Speaker 1: gone up a lot. I think you know, there's been
Speaker 1: a lot of risk on since uh you know the
Speaker 1: bottom of this little short term pullback that happened in September,
Speaker 1: and a lot of things to me and looked very overboard.
Speaker 1: Bought on a short term basis, risk looks overbought, so
Speaker 1: it doesn't surprise me. We got a pullback, and I
Speaker 1: think that's kind of a short term play. But I
Speaker 1: still think positioning wise, if we get further pullback anxiety
Speaker 1: into the election, when I would say to you, take
Speaker 1: advantage to get out of that UH, you know, cash position,
Speaker 1: because I think it doesn't really matter who's elected. I
Speaker 1: think the market UH is heading higher into next year.
Speaker 1: But again I'm much more confident in the equated than
Speaker 1: the cap weighted indic it's entering on November four. If
Speaker 1: we get any kind of negative dislocation, we know that
Speaker 1: you're a buyer. Well, again, we knew that COVID was
Speaker 1: re emergence was a known risk. We know that dislocation
Speaker 1: that's code for contested election. That's a known risk. We
Speaker 1: didn't know in two thousand about a contested election. Bush
Speaker 1: score was an unknown risk of contest election. We had
Speaker 1: an eight point six percent Pezza trough down pullback in
Speaker 1: that unknown risk. So I don't think this known risk.
Speaker 1: It doesn't mean we can't have a pullback, but I
Speaker 1: just don't think it's going to be as much because
Speaker 1: we're all talking about it. So the question is, what
Speaker 1: are the unknown risks that we're not talking about. What
Speaker 1: happens to the economic accelerates too fast and the FED
Speaker 1: changes policy. What happens if you know, we have another
Speaker 1: FED share next year. I'm just throwing out things that
Speaker 1: people aren't talking about. That's what the market tends to act.
Speaker 1: React more negatively to Andrew right to catch up, sir,
Speaker 1: Thank you. Wasn't quite as I predicted, but it was
Speaker 1: close from morecan Stanley Investment Management, Thank you very much.
Speaker 1: Brand Nick of Newvie says the lack of fiscal stimulus
Speaker 1: is weighing heavily on the market outlook. Those programs have
Speaker 1: all been expired and there's not really a promise for
Speaker 1: any replacement until perhaps the middle of the first quarter
Speaker 1: of next year. And so what we're seeing, I think
Speaker 1: is at least a pause by markets as they kind
Speaker 1: of evaluate what US is going to mean for earnings
Speaker 1: and for the economy as a whole on the fourth quarter.
Speaker 1: That's the take of Brian Nick used to take a
Speaker 1: Chris Watling a long view economics right in the following
Speaker 1: the update on the monthly US household cash flow model
Speaker 1: and the latest money supply data support the contention that
Speaker 1: further stimulus isn't necessary. What's needed is a vaccine that
Speaker 1: would release the full effects of the stimulus. Tom Keane,
Speaker 1: that is a take that Chris Watling doesn't just hold alone.
Speaker 1: That's a take that many people share with him. There's
Speaker 1: no question about it. It really goes back to really
Speaker 1: the foundation of long view economic side of Kazanov. Chris
Speaker 1: Whitling really talking about old normal. I love that idea,
Speaker 1: Chris Whitling, of pushing against the Pimco religion of new normal.
Speaker 1: What is the Whitling old normal and what does it
Speaker 1: mean forward? Well, I mean the old old normal is
Speaker 1: is I mean, if you like, it's kind of what
Speaker 1: goes around comes around. And the thing the thing I
Speaker 1: like about economic theory is it changes all the time,
Speaker 1: and people get stuck on one theory. But the reality
Speaker 1: is the world changes and you need to you need
Speaker 1: to use a different theory to to sort of address it,
Speaker 1: which is kind of what we're thinking about in the
Speaker 1: old normal, going back to where you were. But I mean,
Speaker 1: what it means here is that it's amazing how much
Speaker 1: cash has a masked on balance sheets, and in some
Speaker 1: ways it's amazing. In some ways it isn't. Of course,
Speaker 1: you've had an enormous cash transfer from the government sector
Speaker 1: to the household sector globally. I mean it's been biggest
Speaker 1: in the States, where of course you've had the extra
Speaker 1: twelve dollar checks to but it has the old normal.
Speaker 1: I mean, we're going back to theory of helicopter money.
Speaker 1: It's it's it's clearly at play, isn't it. And and
Speaker 1: as a result, you've got Americans with over two trillion
Speaker 1: dollars now a sort of extra dash on their balance sheets,
Speaker 1: which is which is really quite something. Well, your research
Speaker 1: now it's extraordinary on that. Whether it goes back and
Speaker 1: you know, you know, M one, M two in the
Speaker 1: series of old or not, we're up to our eyeballs
Speaker 1: in cash. What will be the catalyst for someone to
Speaker 1: find comfort to put that to work. Well, this is
Speaker 1: why I think the biggest stimulus really is the vaccine
Speaker 1: um and the vaccine. Of course, I liken it to
Speaker 1: throwing the match onto the keresine. And the stimulus is
Speaker 1: the kerosine. It's already sitting there, it's waiting for that
Speaker 1: for that match to hit it. And of course you know,
Speaker 1: once you get once you get the vaccine, you begin
Speaker 1: the normalization of spending process, and and all the sort
Speaker 1: of wealthy baby bimits or we're tired or semi we're tired,
Speaker 1: and and and the high income workers who may have
Speaker 1: been sheltering. All these people come out and start spending
Speaker 1: that cash they've been saving, and Chris, get the economy
Speaker 1: going and returning to normal. Chris, A lot of people
Speaker 1: agree with you. I am sitting here listening to you.
Speaker 1: We're all waiting for a vaccine. The question is what
Speaker 1: do you do in the meantime is millions of people
Speaker 1: lose their jobs and don't have any income, and the
Speaker 1: tourism ministry is dead, and you end up with this
Speaker 1: situation where people can't be employed because there are many
Speaker 1: industries simply shut down because there is not a vaccine
Speaker 1: yet and there may not be one in distribution form
Speaker 1: that's effective until the end of next year, even in
Speaker 1: mass So what do you do until then? Do you
Speaker 1: just sort of wait and see how long these cash
Speaker 1: balances can sustain a households? Well, I mean it depends
Speaker 1: on your on your view when the vaccine is coming
Speaker 1: and the judgment on that. It's important if it's I mean,
Speaker 1: if the American administration's plan is truly enacted, and you
Speaker 1: and you get a vaccine next month or two, then
Speaker 1: by April next year, everyone will be vaccinated. So whether
Speaker 1: or not you believe that's important. If you do, then
Speaker 1: maybe you can hold on. If you don't and you
Speaker 1: think it takes longer than sure, you may want to
Speaker 1: bridge that gap. But there's there's a short term versus
Speaker 1: long term playoff here, isn't there. I mean there is,
Speaker 1: there's some real issues. I know people talk about long
Speaker 1: term unemployment and issues there, but I think there's also
Speaker 1: issues of spending in the short term and having some
Speaker 1: fiscal challenges in the in the medium, in medium to
Speaker 1: long term, and I think those need to be considered
Speaker 1: as well in the mix. So personally, I mean, I'm
Speaker 1: an optimist, so I think so much money has been
Speaker 1: thrown at this health problem, there's every chance we're going
Speaker 1: to get a vaccine, and lots of good noises out
Speaker 1: there as well from all sorts of health healthcare CEOs
Speaker 1: and so on, So I you know, I would I
Speaker 1: would think it's almost worth holding on and and pushing
Speaker 1: on through for the next few months. But as a
Speaker 1: political judgment, of course, well, Chris, let's develop this conversation
Speaker 1: just a little bit more. I don't think cash levels
Speaker 1: at the accurate level our reason alone to say we
Speaker 1: don't need a fiscal stimulus plan if you looked at
Speaker 1: the lower income groups that don't have those savings, but
Speaker 1: they do have a higher propensive, higher marginal propensity to spend.
Speaker 1: Let me get my words out, Chris. If we get
Speaker 1: the money into the hands of the lower income groups,
Speaker 1: then you've got some real stimulus, don't you. Yeah, sure,
Speaker 1: I mean that if you look at the low income
Speaker 1: versus the high income, the low income is already basically
Speaker 1: spending back where it was, if you like, if they've
Speaker 1: got the money back where wells from earlier this year.
Speaker 1: Of course, because as you say, they have to spend,
Speaker 1: you know, they have to pay the bills, and it's
Speaker 1: money and money out, so absolutely much higher marginal propensity
Speaker 1: to spend and and and will be helpful in that respect.
Speaker 1: But you know, once it's spent, it's gone, and it's
Speaker 1: on the fiscal it's on the fiscal deficit side and
Speaker 1: the fiscal debt side. So it depends how you want
Speaker 1: to go about things. I mean, the more the more
Speaker 1: you do helicopter money and build up government debton and
Speaker 1: effectively pay for it with nearly created money. The more
Speaker 1: you risk medium term inflation. So there are trade offs,
Speaker 1: and you know, I just think there's not a balanced conversation.
Speaker 1: You need a balanced conversation about all the different trade
Speaker 1: offs that are out there and and a better strategy. Well,
Speaker 1: let's have that now. Let's do that. Now, tend your
Speaker 1: yields right now? Are about any basis points? What's the
Speaker 1: trade off? Well, the tradeoff is, you know, let's let's
Speaker 1: let's take up Dahlio's thesis of the three phases of
Speaker 1: monetary policy in a debt supercycle, and we're into phase three,
Speaker 1: we're into helicopter money. So the tradeoff is, yes, it
Speaker 1: looks cheap at the moment, but I think we're going
Speaker 1: to get the retern of monetary inflation, you know, one
Speaker 1: of the old normals if you like. And it feels
Speaker 1: quite a lot like the late sixties early seventies, not
Speaker 1: that I personally remember it terribly well, um, but you know,
Speaker 1: physical policy to get unemployment down and no no consequences
Speaker 1: and concerns about the monetary growth that's out there, so
Speaker 1: you know, then you get a potential of a repeat
Speaker 1: of the seventies. You get higher above average inflation and
Speaker 1: you get the trade off there in terms of a
Speaker 1: real growth versus inflation and normal GDP, so you know,
Speaker 1: and lower productivity growth as well. So so there's a tradeoff.
Speaker 1: And I don't think Bonnells have pinned here for long.
Speaker 1: I mean, I think Bonnils is probably the great short
Speaker 1: out there. And if you get this accine, I'm pretty
Speaker 1: convinced that's a great way to make money. Where it's
Speaker 1: thirty or ten years or even or even playing pricing
Speaker 1: into a bit of a bit of a great hike
Speaker 1: on the three or four year Fed funds or borneos.
Speaker 1: So you know, I think if we're going to get
Speaker 1: this economic boom next year, which I think is perfectly plausible,
Speaker 1: and you'll get the return of monitory inflation, bonnal a
Speaker 1: one our screaming sell Chris A really bold call right now,
Speaker 1: especially when you have the large houses looking at bonds
Speaker 1: and seeing perhaps they could sell off a little bit,
Speaker 1: yields could rise a bit, but not all that much,
Speaker 1: Which brings me to a question about what you think
Speaker 1: monetary policy will and should be. In other words, will
Speaker 1: the Fed be willing to expand its balance sheet and
Speaker 1: buy more treasuries in order to suppress bond yields going forward,
Speaker 1: in order to prevent that even if inflation increases, you know,
Speaker 1: leading to further negative real yield. Do you think that
Speaker 1: that is an acceptable proposal or a good kind of
Speaker 1: stimulus going forward to help the economic recovery. I suspect
Speaker 1: what we have is the FED um It depends on
Speaker 1: the shape of the growth, and it probably and that
Speaker 1: in part depends on the shape how the vaccine comes
Speaker 1: in the shape of the pandemic, if you like. So,
Speaker 1: if it's my scenario that we expect that strong economic
Speaker 1: growth and a bit of a boom feel to it,
Speaker 1: then I think the FED will be start starting to
Speaker 1: back off and back away from its stimulus, maybe twelve, eighteen,
Speaker 1: twenty four months down the road, but certainly doing that
Speaker 1: rather than engaging in yield curve control because growth will
Speaker 1: look good and healthy and they won't feel they need
Speaker 1: to do that now, and they won't want to sort of,
Speaker 1: you know, stoke up financial market even more with more liquidity.
Speaker 1: But to be honest, wrong and it's pandemic continues, then sure,
Speaker 1: I think there's there's every reason to get yield curve control. Chris.
Speaker 1: One final question which alludes to, as you mentioned, of
Speaker 1: the sixties inflation, and I'm gonna call it Walter Heller inflation.
Speaker 1: So identified there Robert Samuelson with his wonderful book on
Speaker 1: the sixties and inflation. So far, the inflation Easter Crew
Speaker 1: has been wrong, wrong, wrong, wrong. What's different this time? Yeah,
Speaker 1: good question, I mean, yeah, absolutely, it's it's ten years
Speaker 1: of wrong forecast is that. I would say the demographics
Speaker 1: is what's different. I mean monetary inflation. These two things.
Speaker 1: It means high high high money stock, and it needs
Speaker 1: money velocity and the best correlation and drive of money
Speaker 1: velocity we find out there. It's really the growth in
Speaker 1: the working age population, in particular that the younger part
Speaker 1: of that, the twenty to fourty year olds, and you know,
Speaker 1: these guys are starting to to to grow as of
Speaker 1: this year. The baby boom has dominated ten years ago,
Speaker 1: and they were savers then and into retirement. They're now
Speaker 1: sort of in retirement or moving in. And the more
Speaker 1: dominant age group in the States is the millennials, and
Speaker 1: they're starting to get household formations, starting to have babies
Speaker 1: and so my my sort off the cup prediction is
Speaker 1: I think we're gonna have a baby boom next year.
Speaker 1: It seems to be the most logical outcome of the
Speaker 1: lockdown UM. And you know that age group is growing.
Speaker 1: Money velocity should start to accelerate and that should give
Speaker 1: you the full monetary inflation equation if you like, along
Speaker 1: with very high money stock, which is to see what
Speaker 1: Chris right to catch up. Hey, Chris, always appreciate you're inside.
Speaker 1: It's great perspective. Come back soon, Chris, seriously, Chris Wading
Speaker 1: of long View Economics. There's the foreign the international policy uncertainty.
Speaker 1: Tina Fordham studies this at evan Hurst Advisory Services. Were
Speaker 1: thrilled she could be with us with really thoughtful synthesis
Speaker 1: here of tying this all uh together. What does the
Speaker 1: State Department look like, Tina with a Biden victory, Well,
Speaker 1: it might have some people back in it again, Tom
Speaker 1: m The State Department was famously hollowed out during the
Speaker 1: Trump administration UM, and the conduct of US foreign policy
Speaker 1: really was coming, you know, more from from the White House.
Speaker 1: We have a lot of demoralized US diplomats around, and
Speaker 1: so I think what the broad expectation of a Biden presidency,
Speaker 1: as unexciting as it sounds, would be a return to
Speaker 1: the kind of conduct of US foreign policy um that
Speaker 1: we've become used to globally. Regardless of whether there's a
Speaker 1: Republican or a Democrat in the White House, second terms
Speaker 1: are always different. And even know, with no disrespect to
Speaker 1: Mr Trump, it seems all second terms enter jubilant and
Speaker 1: become exhausted more rapidly. Would you suggest a changed foreign
Speaker 1: policy and a second term Trump or just simply more
Speaker 1: of the same. Uh So, as you say, you know,
Speaker 1: one of the facts about being a second term US
Speaker 1: president is your lame duck on the first day, Right,
Speaker 1: you're you're you know, you're you're you're not going to
Speaker 1: be re elected from there. Um. I would say not
Speaker 1: enough time has been spent thinking about what a second
Speaker 1: term foreign policy might look like under President Trump. But
Speaker 1: one thing that I think investors can ca out on
Speaker 1: is the continuation of tough rhetoric towards China. Um. And
Speaker 1: in fact that stands even if you have Joe Biden
Speaker 1: in the White House, so US China trade tensions would
Speaker 1: remain strong. I think a big I think you will
Speaker 1: see for foreign powers actually test a second Trump terms
Speaker 1: for policy right by perhaps being a bit more asserted.
Speaker 1: We started to see this in Turkey from from President
Speaker 1: Erdan for example. Who else might want to test the
Speaker 1: resolve of of President Trump or an incoming President Biden. Um,
Speaker 1: it's a it's a good time in many ways to
Speaker 1: see if if the US is willing to honor its agreements. Tina,
Speaker 1: It's hard to look out past the next seven days.
Speaker 1: There is still so much uncertainty about how this election
Speaker 1: process will unfold in the weeks months afterwards. Among Democrats,
Speaker 1: there is a persistent fear of a twenty sixteen read
Speaker 1: US Hillary and leading in polls, people predicting that she
Speaker 1: had an incredibly good chance of beating Now now President
Speaker 1: Trump and Clinton is sort of taking a backseat and
Speaker 1: not campaigning as robustly in certain key swing states. Now
Speaker 1: Joe Biden doing something similar. Is this all over again? Um? Well,
Speaker 1: Democrats will certainly hope not. For many reasons. Um. First
Speaker 1: of all, Hillary's UM polling lead actually narrowed in the
Speaker 1: final two weeks. Um, which is uh, suddenly they we're
Speaker 1: not seeing yet with with Joe Biden, his lead has
Speaker 1: been pretty consistent, so he has that on his side.
Speaker 1: Other factors, of course, that make this time different is
Speaker 1: far fewer undecided voters, people have been clear much earlier
Speaker 1: on in the race than we're used to in the
Speaker 1: US elections. Uh, And we don't have third party candidates
Speaker 1: that are really helping, you know, divide things further. So
Speaker 1: there there are some important differences between now and but
Speaker 1: for sure it's it remains possible that there could be
Speaker 1: another divided outcome between the popular vote and the electoral college,
Speaker 1: which is why I think the margin is really the
Speaker 1: key variable to to watch for here. Um. President Trump
Speaker 1: of course will be you know, would be hoping for
Speaker 1: another electoral college led victory, and he does have a
Speaker 1: path for that remaining despite the you know, the negatives
Speaker 1: and the headwinds against him in this race. But another
Speaker 1: difference would be that I think, unlike in two thousand,
Speaker 1: for example, uh Bush score, I don't think Democrats will
Speaker 1: roll over quite so easily, um as as they did
Speaker 1: at that time four years later. It's the polling beta
Speaker 1: this time around. Well, this is what my poster friends
Speaker 1: assure me. Um, you know, I'm not a I'm on
Speaker 1: a poster or an election forecaster myself, pollsters really took
Speaker 1: a beating UM when in fact, to be fair to them,
Speaker 1: they were pretty accurate in the in the national polling
Speaker 1: right because Hillary Clinton did win in on that front.
Speaker 1: It was the electoral college polling and it was specifically UM,
Speaker 1: white non college educated men who are under the radar
Speaker 1: screen this time. If anything, I suspect posters will have
Speaker 1: overcompensated for this error. UM. And it's hard to think
Speaker 1: of a kind of hidden pocket of people, cohort of
Speaker 1: people that could appear um that that haven't been factored in.
Speaker 1: And then of course we have the phenomenon of what
Speaker 1: looks like historically UM, huge turnout. Tina. Great to catch up,
Speaker 1: appreciate time this morning. Thank you, Tina Fordham that I
Speaker 1: even hest Advisory Services Head of Global Political Strategy. Thanks
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen
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