WEBVTT - Surveillance: Omicron Response With Hotez 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa A. Brawnowitz Jaily. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:29.320 dot Com, and of course, on the Bloomberg terminal. Right now, 0:00:29.400 --> 0:00:32.040 Kaylee Lines and I with our conversation of the day, 0:00:32.120 --> 0:00:35.400 and it's with a gentleman, Peter Hotez uh All, the 0:00:35.440 --> 0:00:38.800 dean of a National School of Tropical Medicine at Baylor College. 0:00:38.800 --> 0:00:41.440 But far more than that, someone who has fought the 0:00:41.520 --> 0:00:47.320 virology and virus wars in the parasitology wars for decades. 0:00:47.720 --> 0:00:53.320 The differences Peter Hotez understands a tropical medicine of Africa, 0:00:53.800 --> 0:00:58.160 the challenges of the geography of Southern Africa that we 0:00:58.240 --> 0:01:01.480 don't understand. Peter, to me that so much. The mystery 0:01:01.520 --> 0:01:05.280 here is how ignorant we are about what needs to 0:01:05.400 --> 0:01:09.800 be done in Southern Africa. We don't understand it's larger 0:01:09.840 --> 0:01:15.200 than America on a geographic basis. Yeah, you're absolutely right. 0:01:15.240 --> 0:01:18.440 If you actually were to superimpose a map of the 0:01:18.560 --> 0:01:21.600 United States and the African continent, it would barely register. 0:01:21.760 --> 0:01:26.039 I mean, the African continent is vast geographically and unfortunately, 0:01:26.440 --> 0:01:29.279 m the what we've the one lesson we've learned about 0:01:29.840 --> 0:01:32.399 the worst variants that we have is they arise out 0:01:32.400 --> 0:01:36.640 of large unvaccinated populations. The alpha variant arose out of 0:01:36.680 --> 0:01:41.560 an unvaccinated population in the UK and Delta out of 0:01:41.560 --> 0:01:46.120 an unvaccinated population in India. One What did people think 0:01:46.200 --> 0:01:49.640 was going to happen allowing Africa, the African continent to 0:01:49.680 --> 0:01:53.120 go completely unvaccinated. This is not a hookworm. And you've 0:01:53.160 --> 0:01:55.920 been leading on this for decades. You did your PhD 0:01:55.960 --> 0:02:00.640 thesis at Rockefeller on the horrific tropical diseases, the parasites 0:02:00.720 --> 0:02:04.480 and and all that. If you know the terrain, what 0:02:04.720 --> 0:02:08.320 holds the rich guys back from helping the poor guys? 0:02:08.720 --> 0:02:12.360 Is it? Is it an economic constraint, a financial constraint, 0:02:12.639 --> 0:02:17.120 or is it a moral constraint? It was, you know, 0:02:17.200 --> 0:02:20.240 the way I see it, Tom, was a science policy failure. 0:02:20.880 --> 0:02:23.880 Um The G seven countries there were so fixed when 0:02:23.880 --> 0:02:27.919 this virus hit on speed and innovation that they all 0:02:28.040 --> 0:02:30.400 ran like a little kids soccer game where the ball 0:02:30.440 --> 0:02:33.280 goes in one direction. It was all about mrn a 0:02:33.480 --> 0:02:37.240 technology and new, new and exciting. You know what I 0:02:37.320 --> 0:02:40.720 sometimes say in my frustration, shiny new toys that that 0:02:40.840 --> 0:02:43.239 no one ever gave thought. As any you know, first 0:02:43.320 --> 0:02:46.160 year engineering student will tell you that when you have 0:02:46.320 --> 0:02:49.200 rely exclusively on a brand new technology, there's a learning 0:02:49.240 --> 0:02:52.600 curve before you can go from zero to nine billion 0:02:52.720 --> 0:02:55.560 doses and or nine billion of anything, whether it's widgets 0:02:55.639 --> 0:02:58.839 or mRNA vaccines, if it's a brand new technology, there's 0:02:58.840 --> 0:03:01.760 a learning curve. And so there was never the situational 0:03:01.800 --> 0:03:04.119 awareness among the G seven leaders to say, hey, wait 0:03:04.120 --> 0:03:07.160 a minute, we also need to balance the portfolio with 0:03:07.160 --> 0:03:10.080 an older technology that we know we could scale in 0:03:10.160 --> 0:03:13.720 places like India and Bangladesh and and Indonesia on the 0:03:13.720 --> 0:03:16.359 African continent. And that's what we did. So we've developed 0:03:16.360 --> 0:03:20.239 this recombinant protein vaccine. It's been licensed with no patents, 0:03:20.320 --> 0:03:24.960 no strings attached to vaccine developers in India, Indonesia, Bangladesh 0:03:25.000 --> 0:03:28.679 and now with the developer linked to Sub Saharan Africa, 0:03:29.360 --> 0:03:31.560 and we're doing it and we're making it. But if 0:03:31.600 --> 0:03:33.800 we had even a fraction of the help that Madarina 0:03:33.880 --> 0:03:36.840 or visor had gotten from the G seven countries, we 0:03:36.920 --> 0:03:39.800 might have had the world vaccinated by now. Peter, you 0:03:39.880 --> 0:03:44.040 talked about policy failures. Is just imposing travel bands from 0:03:44.160 --> 0:03:49.720 Southern Africa a policy failure? I think it is. We 0:03:49.720 --> 0:03:52.280 we've we've learned that travel bands simply don't work. We 0:03:52.400 --> 0:03:55.120 learned us from the beginning, right. We remember how in 0:03:55.920 --> 0:03:59.640 February of everybody was so focused on travel bands from China. 0:04:00.080 --> 0:04:03.600 Meanwhile the virus had already entered into New York City 0:04:03.640 --> 0:04:09.200 from southern Europe to ignite that horrific epidemic in across 0:04:09.240 --> 0:04:13.120 New York City. So we know that this virus has 0:04:13.120 --> 0:04:16.400 already spread around the world. And that's not because not 0:04:16.560 --> 0:04:19.520 because there's anything unique to O Macron. That's been true 0:04:19.640 --> 0:04:23.040 every variant that we've seen so far. By the time 0:04:23.040 --> 0:04:26.200 we identify a variant, it's already uh, it's already gone 0:04:26.200 --> 0:04:29.640 global and uh. And so I think a lot of 0:04:29.680 --> 0:04:33.760 this is based on optics, where the especially in the 0:04:33.839 --> 0:04:36.880 European Union and now the US, they want to show 0:04:36.920 --> 0:04:40.520 that they're doing something, and unfortunately it's incredibly self defeating. 0:04:40.560 --> 0:04:45.039 It actually impairs our ability to fight the pandemic. Number 0:04:45.080 --> 0:04:48.359 one and number two, it punishes African countries. And number three, 0:04:48.920 --> 0:04:53.039 it hurts the economy because it spreads unnecessary panic among 0:04:53.120 --> 0:04:56.640 investors and and so it's it's a policy failure on 0:04:56.680 --> 0:04:59.359 all accounts. Well, we did see that panic in the 0:04:59.360 --> 0:05:01.880 markets take in shape on Friday. This Monday morning, we 0:05:01.960 --> 0:05:03.480 are getting a little bit of a lift to them. Now, 0:05:03.560 --> 0:05:07.360 is people really understand that we have very little information 0:05:07.400 --> 0:05:11.560 at this point? What information is most critical to ascertain? First, 0:05:13.960 --> 0:05:16.200 there's three three things we need to know. One about 0:05:16.240 --> 0:05:19.159 the severity of the illness, and so far it does 0:05:19.200 --> 0:05:22.480 not look like this variant is producing anything unusual in 0:05:22.600 --> 0:05:27.080 terms of symptoms or severity of illness, but we'll know more. Second, 0:05:27.279 --> 0:05:30.480 we need to know if the vaccines are current vaccines 0:05:30.480 --> 0:05:33.400 will cross protect against the omicron variant. That's what we're 0:05:33.440 --> 0:05:36.400 doing in our labor our laboratories this week with our 0:05:36.520 --> 0:05:39.400 vaccine as is I'm sure Visor and Maderna. And the 0:05:39.440 --> 0:05:41.360 way you do that is you measure, you look at 0:05:41.360 --> 0:05:44.720 antibody responses to your vaccines and show that across is 0:05:44.839 --> 0:05:49.560 neutralized as the omicron variant or what's called the pseudovirus variant. 0:05:49.600 --> 0:05:52.240 And we'll know that in the coming days. I think 0:05:52.240 --> 0:05:55.560 there's a good possibility that with the third immunizations and 0:05:55.920 --> 0:05:59.440 that boost that you'll get enough virus neutralizing untibodies to 0:06:00.360 --> 0:06:02.600 cross protect at least partially. And I don't know that 0:06:02.680 --> 0:06:05.640 for certain, but but that that's the hope. And then 0:06:05.680 --> 0:06:09.279 we really need to understand the transmissibility. We don't know that, Peter. 0:06:09.400 --> 0:06:12.200 One final question. I really looked at the vaccination trends 0:06:12.200 --> 0:06:14.840 this morning, and I think what we're gonna hear from 0:06:14.839 --> 0:06:17.880 the President is we need to get from vaccinated to 0:06:17.960 --> 0:06:26.800 sixt vaccinated. How quickly is that doable? Well, sixty unfortunately 0:06:26.839 --> 0:06:30.560 won't cut it. We need eight of the US population vaccinated. 0:06:31.240 --> 0:06:34.720 And you know, Tom, we've got this horrific situation in 0:06:34.760 --> 0:06:39.080 the United States where since June one hundred and fifty 0:06:39.120 --> 0:06:45.320 thousand Americans who refused vaccinations needlessly perished from COVID nineteen 0:06:45.640 --> 0:06:49.080 hundred and fifty thousand. So anti science defiance and aggression 0:06:49.200 --> 0:06:52.680 is now a leading killer of young Americans in the 0:06:52.720 --> 0:06:55.400 United States. And as long as we have that defiance, 0:06:55.520 --> 0:06:56.919 it's gonna be hard to see how we get to 0:06:56.960 --> 0:06:59.160 that eighty five percent level. And Peter Hotos, thank you 0:06:59.200 --> 0:07:02.600 for joining us part for your perspective on Southern Africa. 0:07:02.640 --> 0:07:11.040 He's with Baylor College as well. Now Celendas joining us 0:07:11.080 --> 0:07:13.680 now Global head of FA Strategy RBC also help us 0:07:13.720 --> 0:07:16.480 out there. How sensitive will this market be too incoming 0:07:16.560 --> 0:07:22.200 economic data including payrolls Friday? Well, economic data is going 0:07:22.240 --> 0:07:24.800 to be hard to trade off at the moment, just 0:07:24.920 --> 0:07:26.640 given like you said, we're in this wait and C 0:07:26.840 --> 0:07:30.360 mode with respect to omicron um. The early indications that 0:07:30.400 --> 0:07:32.040 came out over the weekend from the chair of the 0:07:32.040 --> 0:07:36.040 South African Medical Association definitely positive, but everybody acknowledging there's 0:07:36.040 --> 0:07:38.600 a lot further to go, and and I think for 0:07:38.640 --> 0:07:42.480 the moment, we're really focused on how markets are trading 0:07:42.520 --> 0:07:45.160 into your end. You know, Tommy, you said earlier people 0:07:45.160 --> 0:07:46.720 have had a really good year so far, and part 0:07:46.760 --> 0:07:48.520 of the reason I think we've seen the pullback we've 0:07:48.560 --> 0:07:50.400 seen is people are just trying to lock in those 0:07:50.440 --> 0:07:52.920 games rather than get too greedy into year end. Do 0:07:53.000 --> 0:07:57.560 you readjust for middle or late two thousand twenty two. 0:07:57.840 --> 0:08:00.520 Is the sense that you have at RBC that all 0:08:00.520 --> 0:08:06.480 of your wonderful team recalibrates. Look, at this stage, we're 0:08:06.560 --> 0:08:10.160 much more focused on the central banks that were about 0:08:10.200 --> 0:08:13.440 to hike and therefore maybe put off by the uncertainty 0:08:13.520 --> 0:08:15.760 you know, to do an albion zed if you will, UM, 0:08:15.800 --> 0:08:17.400 And I put the Bank of England very much in 0:08:17.440 --> 0:08:21.200 that category versus other central banks that didn't have any 0:08:21.240 --> 0:08:24.320 kind of big tightening decisions in the very near term future. 0:08:24.560 --> 0:08:26.000 And I think by the time you get to the 0:08:26.000 --> 0:08:29.040 back half of two things will look very different to 0:08:29.200 --> 0:08:31.280 how they do today. I was sort of surprised also 0:08:31.360 --> 0:08:34.160 lingles a lack of a dollar retreat in the omicron 0:08:34.559 --> 0:08:38.720 news of Friday, and to recalibrate with euro one twelve 0:08:38.880 --> 0:08:43.880 eighty nine, can you call a weaker euro look? I 0:08:43.880 --> 0:08:46.960 think the euro call will very much depend on on 0:08:47.000 --> 0:08:50.880 your Omicron outlook. UM. Typically, euro dollar has been trading 0:08:50.960 --> 0:08:53.160 in line with equities for most of this year, so 0:08:53.200 --> 0:08:55.920 that's to say, when equities were rallying, euro dollar tended 0:08:56.000 --> 0:08:58.480 to be hiring vice versa. We saw a break in 0:08:58.520 --> 0:09:00.719 that on Friday, and I'm really glad that's what we 0:09:00.760 --> 0:09:02.920 saw because it makes perfect sense to me. You know, 0:09:03.000 --> 0:09:06.359 with the UCB very much back of the queue lockdowns 0:09:06.360 --> 0:09:08.480 and the impact of COVID already having hurt the EU 0:09:08.600 --> 0:09:11.199 in recent weeks, it made sense that should rotate to 0:09:11.240 --> 0:09:13.800 the dollar. I still have a call for your dollar 0:09:13.840 --> 0:09:16.079 lower into next year. I've had that call since the 0:09:16.120 --> 0:09:18.800 start of the year, not changed it now. But that's 0:09:18.880 --> 0:09:21.320 very much based on the cyclical strength of the US 0:09:21.480 --> 0:09:23.839 versus the your area, and Omicron doesn't change that for 0:09:23.920 --> 0:09:26.079 me at the moment. So we saw the flipping to 0:09:26.280 --> 0:09:29.080 euro strength rather than Euro weakness. On Friday. We also 0:09:29.120 --> 0:09:32.320 saw a massive bid come into the Japanese yend, and 0:09:32.320 --> 0:09:34.880 that was coming off of extremely weak levels. Was that 0:09:35.000 --> 0:09:37.400 just the one off bid for a safe haven or 0:09:37.440 --> 0:09:39.439 do you expect that we actually could see a more 0:09:39.480 --> 0:09:43.400 persistent reversal there. Look at stuff for the yend, because 0:09:43.440 --> 0:09:46.360 I think the closer you get to FED normalization, the 0:09:46.400 --> 0:09:49.560 more you'll anticipate that change in the head ratures of 0:09:49.640 --> 0:09:52.600 Japanese investors. And you know, everybody likes the position for 0:09:52.640 --> 0:09:55.840 that with dollar yen higher, um. But at the moment, 0:09:56.000 --> 0:09:58.440 the yend, the Swiss frank and even to some extent 0:09:58.480 --> 0:10:01.200 the Euro are the very popular, the very clean safe 0:10:01.200 --> 0:10:03.720 havens in FFX. The dollar, like you said, a little 0:10:03.720 --> 0:10:06.120 bit more mixed, actually outperforming against the most of the 0:10:06.120 --> 0:10:08.679 rest of effects, just not the majors. Do you want 0:10:08.679 --> 0:10:11.480 to talk about the problem child in the MFX right now, 0:10:11.920 --> 0:10:14.520 dollar lira also, let's go there. We're here from the 0:10:14.559 --> 0:10:16.880 Turkish leader this morning. We heard from him about ten 0:10:16.920 --> 0:10:20.000 minutes ago, says he will never advocate for a great hike. 0:10:20.520 --> 0:10:22.280 A lot of people see him as the de facto 0:10:22.440 --> 0:10:24.439 leader with a Turkish central bank. How on earth do 0:10:24.480 --> 0:10:26.760 you play that currency if at all? Right now, Elsa, 0:10:29.440 --> 0:10:31.560 I mean, it's a very poise of the question right there. 0:10:32.240 --> 0:10:35.480 All I'll say is that positioning in the lira is 0:10:35.520 --> 0:10:39.160 definitely not crowded. We don't think the market is massively 0:10:39.480 --> 0:10:42.960 long dollar lira UM and I think that if anything 0:10:43.559 --> 0:10:46.480 creates real concerns when the central bank is not willing 0:10:46.520 --> 0:10:48.520 to hike rate A Selena's great to catch up. Do 0:10:48.520 --> 0:10:50.480 you want to us from RBC on this FX market? 0:10:55.000 --> 0:10:57.600 Andrew Slimon joins us this morning as well. How do 0:10:57.640 --> 0:11:00.959 you generate those numbers? What is the core slim and 0:11:01.080 --> 0:11:07.640 religion that generates those stunning performance numbers? Well, good morning. 0:11:07.880 --> 0:11:10.959 You know, Look, I think it's flexibility to being open 0:11:10.960 --> 0:11:14.679 minded to what the market offers. Uh. Last year travel 0:11:14.800 --> 0:11:19.760 leisure socks got absolutely obliterated and we bought those uh 0:11:19.800 --> 0:11:23.240 this year, it's been a little bit more inflation value oriented, 0:11:23.320 --> 0:11:27.000 and it's basically my belief that as much as people 0:11:27.040 --> 0:11:32.320 talk about UH inflation sensitive socks, most people are overweighting 0:11:32.320 --> 0:11:34.480 gross socks, and so this has been a little bit 0:11:34.520 --> 0:11:37.160 more painful. As energy has been the best performing sector, 0:11:37.240 --> 0:11:40.280 financials have done well. Most people talk about that, but 0:11:40.320 --> 0:11:43.000 they're not invested that way. So having that bias has 0:11:43.080 --> 0:11:45.360 really helped us all into the competition. I did a 0:11:45.600 --> 0:11:48.360 Bloomer study andrew off the trading envelope, and I've did 0:11:48.400 --> 0:11:50.880 a fitted standard deviation move and we've had a four 0:11:50.920 --> 0:11:54.120 point six standard deviation move in the last four days. 0:11:54.240 --> 0:11:58.880 Is that a sliming correction? Well, you know, look, on 0:11:58.920 --> 0:12:01.120 the one hand, I do agree with you know what 0:12:01.200 --> 0:12:04.560 Goldman sact saying is, you know, more transmissible, less virulent. 0:12:04.800 --> 0:12:08.080 I do think that people tend to not react the 0:12:08.160 --> 0:12:10.560 same way to the issues over and over, so COVID 0:12:10.720 --> 0:12:13.960 as a reaction is less so. But then again, there's 0:12:13.960 --> 0:12:16.480 a lot of complacency. The market has done so well 0:12:16.760 --> 0:12:19.280 this year. Yes, I don't see in the markets down 0:12:19.320 --> 0:12:22.480 a lot on Friday, but I saw retail money coming in. 0:12:22.600 --> 0:12:25.599 People are buying the dip and so high levels of complacency. 0:12:25.679 --> 0:12:27.800 So I don't think, you know, we'll get a bounce back, 0:12:27.840 --> 0:12:29.760 but I don't think it's going to be uh, you know, 0:12:30.280 --> 0:12:34.000 dramatic because of that kind of complacency to this issue 0:12:34.080 --> 0:12:37.320 over and over. So if it more into something more serious, 0:12:37.360 --> 0:12:39.480 that that could be a concern. I doubt it. I 0:12:39.520 --> 0:12:42.000 think there's much bigger issues next year than COVID. Well, 0:12:42.040 --> 0:12:44.080 let's talk about those issues now for the first time, Andrew, 0:12:44.080 --> 0:12:46.120 I've got to say this year the first time I 0:12:46.160 --> 0:12:49.439 sent some real hesitancy in your voice around the secondity market. 0:12:49.440 --> 0:12:53.040 Typically it's some convictions and confidence, some bolishness. Andrew, you're 0:12:53.080 --> 0:12:56.079 not in your head? What's happened to that? Look? I mean, 0:12:56.760 --> 0:12:59.960 here's a very simple rule. Draw the third year coming 0:13:00.080 --> 0:13:03.360 off of a bear market or low it's harder. The 0:13:03.400 --> 0:13:06.680 market doesn't do as well. And that's because financial conditions 0:13:06.679 --> 0:13:09.079 start to tighten, because you know, central banks say, hey, 0:13:09.120 --> 0:13:11.240 things are getting better, we don't need this level of 0:13:11.840 --> 0:13:16.600 you know, liquidity. So financial conditions are going to tighten. Uh. 0:13:16.640 --> 0:13:19.960 And I think that will be offset by better earnings 0:13:19.960 --> 0:13:23.320 and expected next year. But the result is you know 0:13:23.400 --> 0:13:26.200 kind of a you know, single digit year, and you 0:13:26.280 --> 0:13:28.000 know as well as I do. With the market open 0:13:28.040 --> 0:13:30.120 as many days, it is every day, and you can 0:13:30.160 --> 0:13:32.400 have a one or two percent move on any day. 0:13:32.559 --> 0:13:35.559 That's a lot of volatility around a single digit year. 0:13:35.679 --> 0:13:39.439 So I suspect that next year is going to be 0:13:39.520 --> 0:13:44.440 a tougher year to make money as long as unless 0:13:44.559 --> 0:13:48.680 you stay kind of focused on fundamentals and buying companies 0:13:48.720 --> 0:13:50.800 that are beating estimates. And I think that would be 0:13:50.800 --> 0:13:54.800 the big story again next year as it was this year. 0:13:54.880 --> 0:13:57.160 The Pity Chair writes a really good point over the weekend. 0:13:57.160 --> 0:13:58.840 I want to read out what he said, Andrew, and 0:13:58.880 --> 0:14:00.320 you can tell me what you think of it. For 0:14:00.360 --> 0:14:02.559 the first time since the pandemic started, we faced to 0:14:02.600 --> 0:14:05.120 sell off where it's unclear what the FED and other 0:14:05.160 --> 0:14:08.040 central banks will do. There is no guarantee of easy 0:14:08.120 --> 0:14:12.319 money going forward. Does that resonate with you? It's so yeah, 0:14:12.520 --> 0:14:14.720 I think for I mean, you know, you've got tighter 0:14:14.800 --> 0:14:18.719 monetary policy coming, you have a potential corporate taxing, it's 0:14:18.760 --> 0:14:22.320 a fiscal policy. Those all things lead to a tough 0:14:22.400 --> 0:14:25.320 you know, maybe multiples come down a bit. My point is, 0:14:25.360 --> 0:14:28.400 I think that will be offset by better corporate fundamentals, 0:14:28.720 --> 0:14:30.240 but it's not going to be a great year. Next 0:14:30.320 --> 0:14:32.400 year it's going to be tougher. So that's why I 0:14:32.480 --> 0:14:35.080 was nodding a year. Yeah, this year has been the 0:14:35.120 --> 0:14:36.880 game has been on, but I think it will get 0:14:36.880 --> 0:14:39.960 tougher next year. So too right here, as we said today, 0:14:40.000 --> 0:14:43.200 I think the travel region stocks will bounce big today, 0:14:43.240 --> 0:14:46.400 but I wouldn't chase them because those are high beta stocks. 0:14:46.520 --> 0:14:48.240 I'm just not so sure you want to have a 0:14:48.280 --> 0:14:50.680 lot of risk in your portfolio as you go into 0:14:50.720 --> 0:14:53.320 next year. Andrew, how much of the tough picture for 0:14:53.400 --> 0:14:56.480 equities is actually predicated on the bond market and potentially 0:14:56.560 --> 0:14:59.880 higher yields and higher reel yields. I think that's part 0:14:59.880 --> 0:15:03.200 of it. You know, the higher rates are are part 0:15:03.200 --> 0:15:05.560 of it, But I think it's tighter financial conditions really 0:15:05.600 --> 0:15:08.480 because at the end of the day, you know, really 0:15:08.520 --> 0:15:10.240 if the ten years at one and a half or 0:15:10.320 --> 0:15:13.320 two percent, I mean you invert that that pe on 0:15:13.400 --> 0:15:16.160 the bondom market is still astronomical. Stocks are cheap relp 0:15:16.240 --> 0:15:19.000 to two bonds. But yeah, I think higher inflation will 0:15:19.040 --> 0:15:22.120 get you know, the Fed nervous, uh and you know 0:15:22.160 --> 0:15:24.000 they may not do anything, but the market is going 0:15:24.040 --> 0:15:26.800 to start to reflect that, and that's that's why the 0:15:27.000 --> 0:15:29.360 third year is a tough for you. And I think 0:15:29.400 --> 0:15:31.720 that's going to be the story of next year. Does 0:15:31.720 --> 0:15:34.320 that mean stay away from growth in two or what 0:15:34.320 --> 0:15:35.840 do you want to own in a year where it's 0:15:35.840 --> 0:15:38.800 harder to make money? Yeah? Sure, I think you know. 0:15:38.840 --> 0:15:41.240 As Again, going back to what Tom said initially, my 0:15:41.400 --> 0:15:46.120 view is investors don't have enough of these inflation sensitive 0:15:46.480 --> 0:15:49.880 stocks in their portfolio. Look at energy, it's the avoid 0:15:49.960 --> 0:15:53.520 it's the unloved sector. So I've learned with energy stocks 0:15:53.920 --> 0:15:57.200 they keep going up until suddenly everyone gets on board 0:15:57.240 --> 0:15:59.560 the abolition. That's when it collapses. And I just don't 0:15:59.560 --> 0:16:03.360 think that the truth there. I see banks, you know, 0:16:03.360 --> 0:16:06.280 they had big sell offs on Friday. I think that's 0:16:06.280 --> 0:16:09.120 a better opportunity to be a buyo today than you know, 0:16:09.440 --> 0:16:12.080 you know, the reopening socks. I don't think you know 0:16:12.080 --> 0:16:15.400 that those we multiples remain really low. So I think 0:16:15.400 --> 0:16:19.680 it's in the inflation sensitive over the growth names. But 0:16:19.840 --> 0:16:22.479 having said that, I don't think we're in a situation 0:16:22.560 --> 0:16:25.320 like two thousand where you know, the megacat tech stocks 0:16:25.360 --> 0:16:29.320 are that particularly expensive, the high octane one boy they've 0:16:29.320 --> 0:16:31.160 really come down, and I think they can continue to 0:16:31.160 --> 0:16:35.600 come down. But it's really this concept that inflation census 0:16:35.600 --> 0:16:39.440 socks with remain under owned investors portfolios, because that's not 0:16:39.480 --> 0:16:42.320 what's worked the last tenders. Are we going to see 0:16:42.400 --> 0:16:45.880 higher inflation? I mean that's our called. Steve major Over 0:16:45.880 --> 0:16:50.200 at HSBC was heated this morning that longer term duration 0:16:50.400 --> 0:16:53.920 yield shows a bet we will not see a persistent, 0:16:54.000 --> 0:16:58.640 pernicious inflation. Do you agree. I think we're moving into 0:16:58.680 --> 0:17:01.480 pire like the sixties time where we had higher inflation, 0:17:01.640 --> 0:17:04.080 higher growth, because that's what it seems to me that's 0:17:04.080 --> 0:17:07.080 what central bankers want. Uh and so I think this 0:17:07.280 --> 0:17:11.160 dual mandated the fat of stable prices in maximunon's employment 0:17:11.160 --> 0:17:13.520 seems to be tipping more towards max similes employment. And 0:17:13.600 --> 0:17:16.640 that's reminded me a little bit more of the sixties 0:17:17.000 --> 0:17:19.960 than the two thousand and ten in an environment. The 0:17:20.119 --> 0:17:22.960 SMP did fine in the sixties. It was until seventies 0:17:22.960 --> 0:17:27.480 it struggled, but inflation sensuis socks did better. Andrew Slimmon 0:17:27.840 --> 0:17:30.840 right back to the nineteen sixties and nineteen sixty nine, 0:17:30.880 --> 0:17:33.400 John and get back because Andrew and I watched Get 0:17:33.400 --> 0:17:37.560 Back this weekend, the new Beatles documentary. It was phenomenal, 0:17:37.800 --> 0:17:42.200 love that. It was great right about it. It's how 0:17:42.280 --> 0:17:45.240 naked it is and they even say while they're filming 0:17:45.400 --> 0:17:47.919 it that they're not happy that they're filming it. And 0:17:47.960 --> 0:17:51.160 there's some scenes. One scene where George Harrison talks about 0:17:51.240 --> 0:17:54.919 Eric Clapton is just absolutely stunning at the time. Andrew Slimmon, 0:17:55.119 --> 0:17:57.879 Morgan Stanley, where can we watch that film? It's Disney 0:17:57.880 --> 0:18:06.520 plus one thing we will do, John I and Kylee 0:18:06.600 --> 0:18:09.680 will probably and highly look at the data this week. 0:18:09.760 --> 0:18:11.960 We have the right guest for that. Jennifer Lee joins, 0:18:12.320 --> 0:18:16.479 senior economist at BEMO Capital Markets, who probably and highly 0:18:16.960 --> 0:18:22.320 always looks at the economic data. What matters this week? Jennifer, Oh, 0:18:22.359 --> 0:18:24.840 good morning everyone. Um. You know, of course it's going 0:18:24.880 --> 0:18:27.639 to be all about the jobs data. Um, that's always 0:18:27.640 --> 0:18:30.320 the highlights almost every single month. But you know what, 0:18:30.359 --> 0:18:32.280 I'm going to point to the I S M surveys 0:18:32.520 --> 0:18:34.720 as as two surveys I think are going to be 0:18:34.760 --> 0:18:38.000 far more interesting than pain rules because that's where you 0:18:38.080 --> 0:18:41.600 get all those little comments and an inside look basically 0:18:41.600 --> 0:18:44.080 at what purchasing managers are facing. These days, like so 0:18:44.160 --> 0:18:47.080 this is like on the ground news, and we know 0:18:47.200 --> 0:18:50.240 that these supply chain problems they can't last forever. And 0:18:50.280 --> 0:18:52.479 I think these two surveys are probably going to be 0:18:52.560 --> 0:18:55.320 the first place that you can probably glean that things 0:18:55.359 --> 0:18:57.880 are hopefully getting a little bit easier. I was hoping 0:18:57.880 --> 0:18:59.600 to see that last month that we didn't see. It's 0:18:59.600 --> 0:19:03.200 a little what the repondent respondents are saying for November. 0:19:03.320 --> 0:19:05.320 But it was interesting though. I will say that last 0:19:05.320 --> 0:19:07.320 month I noticed that a couple of them were mentioning 0:19:07.440 --> 0:19:10.320 some workarounds like because they don't have you don't have X, 0:19:10.359 --> 0:19:12.760 will then will take why. So I noticed that comment 0:19:12.840 --> 0:19:14.960 in like the education sector and in wholesale, So people 0:19:14.960 --> 0:19:17.240 are trying to you know, people are adapting. Our businesses 0:19:17.240 --> 0:19:19.520 are adapting, and they're figuring out ways to get around 0:19:19.560 --> 0:19:22.480 these supply chain issues. If the economy is humming in 0:19:22.520 --> 0:19:25.800 the year in and certainly that's the reports we've received, 0:19:26.240 --> 0:19:28.960 can you gauge with the first quarter of next year 0:19:29.040 --> 0:19:33.159 looks like so right now we have a three and 0:19:33.200 --> 0:19:36.600 a half percent annualized gain for the first quarter. Uh 0:19:36.600 --> 0:19:38.360 and this will be a little bit slower than than 0:19:38.400 --> 0:19:40.960 what we're probably going to see for the fourth quarter. Um. 0:19:41.000 --> 0:19:43.359 But again it's all you know, it's all within within 0:19:43.440 --> 0:19:46.720 the like the trend, it will still be about, you know, 0:19:46.760 --> 0:19:49.560 about four percent above your goal levels. So the gains 0:19:49.560 --> 0:19:52.760 will continue. And this is as we see some um 0:19:52.840 --> 0:19:55.080 some easing I guess of the supply pressures as as 0:19:55.119 --> 0:19:57.359 the year begins. To these full Coast Jennifer now have 0:19:57.400 --> 0:19:59.399 a huge asterisk next to them until we find out 0:19:59.440 --> 0:20:02.200 a little bit more about this new variant that we're 0:20:02.200 --> 0:20:04.560 obsessing over over the last week or so, the last 0:20:04.600 --> 0:20:08.919 few days. Oh, everything I think has an asterix around it. 0:20:09.000 --> 0:20:11.840 But I think there's like I mean, even the weekend. 0:20:11.840 --> 0:20:13.280 I mean, I will admit that I was even trying 0:20:13.320 --> 0:20:15.919 to figure out how to pronounce it um um. But 0:20:16.000 --> 0:20:17.760 I think we have to figure out still there's so 0:20:17.800 --> 0:20:20.160 many unknowns about this new variant, just trying to determine 0:20:20.600 --> 0:20:22.439 how serious it is, you know, and yes, we know 0:20:22.520 --> 0:20:24.800 that it's easily transmissible, but you know, are we're going 0:20:24.840 --> 0:20:26.960 to be back to packs? I c use, you know, 0:20:27.000 --> 0:20:28.720 let's hope not. And so I think that's that's a 0:20:28.760 --> 0:20:30.760 big question mark as well. I mean, this is the 0:20:30.760 --> 0:20:32.840 big difference from last time around, Like last year is 0:20:32.840 --> 0:20:37.480 that you know, we've got around roughly of the population vaccinated, 0:20:37.480 --> 0:20:39.320 and that's the huge difference that whether the or not 0:20:39.440 --> 0:20:41.800 you know it will be effective against this particular variant, 0:20:42.200 --> 0:20:44.359 we will see, but it definitely have helps borrow some 0:20:44.440 --> 0:20:46.080 of those effects. I would think we've got a way 0:20:46.119 --> 0:20:47.800 to find out. And the reason I asked that, Jennifer, 0:20:47.880 --> 0:20:49.480 is you t up the I S M. Typically I 0:20:49.520 --> 0:20:51.520 would too. I'd say the I S M the onto 0:20:51.560 --> 0:20:54.199 pay roles are really important week for economic data for 0:20:54.280 --> 0:20:57.639 many market participants right now. I wonder how sensitive they 0:20:57.640 --> 0:20:59.960 will be to that incoming data. Given the conversation we're 0:21:00.000 --> 0:21:03.400 having more broadly about COVID. When you speak to paper 0:21:03.400 --> 0:21:05.280 in the market right now, how receptive are they to 0:21:05.359 --> 0:21:07.320 this message that you should focus on the I M 0:21:07.359 --> 0:21:11.439 S this week because they're focusing on something else. I 0:21:11.440 --> 0:21:13.320 still think we have to focus in on the data. 0:21:13.359 --> 0:21:15.960 And a lot of this again is just fear, especially 0:21:15.960 --> 0:21:20.960 with with with COVID, and you know everyone is it's 0:21:20.680 --> 0:21:23.440 It's understandable why we would be fearful of something this 0:21:23.600 --> 0:21:25.879