Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
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Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Let's get into where we are,
Speaker 1: because Texas is closing bars. They are coping with a
Speaker 1: record number of new cases really around the country, is
Speaker 1: what we're seeing. So let's get into with Dr Ian
Speaker 1: LUs Beata, clinical Associate Professor of Medicine at n y
Speaker 1: U Landgo Medical Center, on the phone from New York City.
Speaker 1: I'm kind of jumbled too, because I'm trying to keep track,
Speaker 1: to be quite honest, in of all the headlines that
Speaker 1: have come down just on this Friday, alone own. Um,
Speaker 1: Florida's governor says alcohol suspended at ours, So how do
Speaker 1: you make sense of kind of where we are is
Speaker 1: the rest of the country kind of where New York
Speaker 1: was back in March. Yeah, I think that's a pretty
Speaker 1: good analysis. By a happy Friday, Carol and Jason by
Speaker 1: the way, and thanks for having me of course. Um yeah,
Speaker 1: And by the way, Jason had been in the office
Speaker 1: every day since January. So it is a shock. But
Speaker 1: some of us have been slogging through it. I know.
Speaker 1: And I have to say I before you answer, like
Speaker 1: I have such huge I have renewed admiration for everybody
Speaker 1: who has been going in our team included, um, just
Speaker 1: given what it feels like, and I know it feels
Speaker 1: better than it did uh two months ago. So I
Speaker 1: really it's remarkable what what you guys have done dealing
Speaker 1: with this. And I think that's one of the reasons,
Speaker 1: if I may editorialize for a second, why I think
Speaker 1: Carol and I are a little upset seeing what's going on,
Speaker 1: uh in the rest of the country, given everything we
Speaker 1: know from talking to you know, friends and colleagues like you,
Speaker 1: You've you've been doing it been through right, So I
Speaker 1: think the task force, like you, is concerned about the dramatic,
Speaker 1: really spike in cases across the Sun Belt, and and
Speaker 1: they all Um vice Version and Pense and Dr burkeson FACCY,
Speaker 1: I think really had sort of a fairly uniform expression
Speaker 1: of concern, which is that we're really having, um this
Speaker 1: paradigm shift from previously just testing people who seem to
Speaker 1: have symptoms or or being ill to really asymptomatic testing now,
Speaker 1: and as that's happening, we're really seeing a spike in
Speaker 1: the number of cases. And I think the press conference
Speaker 1: today was really focused on enlisting young people to really
Speaker 1: have more social responsibility. As much as they want to
Speaker 1: go out, as everyone wants to go out and have fun,
Speaker 1: there really is a social responsibility to continue to flatten
Speaker 1: the curve, which I think, Um, the Northeastern states did
Speaker 1: you know reasonably well, it certainly is not zero by
Speaker 1: any means, but it certainly did flatten the cases. And
Speaker 1: part of that is to prevent this hospital surge where
Speaker 1: you overwhelm the ability of the hospitals to take care
Speaker 1: of people. You may not necessarily reduce the total number
Speaker 1: of cases. We don't have. Medications are vaccine to prevent cases,
Speaker 1: but even if you slow the spread, you're able to
Speaker 1: kind of protect hospitals so that when God forbid, when
Speaker 1: people need ventilators or need access, you know, that's available.
Speaker 1: And I think that was their emphasis today and I
Speaker 1: think it it makes a lot of sense because we
Speaker 1: are seeing such a spike in cases and part of
Speaker 1: that are asymptomatic young people, as they say, under forty
Speaker 1: under thirty five who are carrying and transmitting uh COVID
Speaker 1: nineteen source CoV two uh and feel perfectly fine. And
Speaker 1: that really is the conundrum that's put you. You know,
Speaker 1: I have to say, you know, we kind of had
Speaker 1: a little bit of a run in this weekend with
Speaker 1: a younger individual who was not wearing a mask, you know,
Speaker 1: and repeatedly kind of reminding um as we were kind
Speaker 1: of out and about um, you know, in a social situation.
Speaker 1: And it's just interesting, UM And I think they make
Speaker 1: a good point. I do also want to bring up
Speaker 1: something or Vince and Neerella um Dr les Better brought
Speaker 1: up at the top of our show. You know, how
Speaker 1: do we what are the numbers that we really need
Speaker 1: to focus? Is it cases? Is it hospitalizations? Like what
Speaker 1: is it that either tells us we're getting back to
Speaker 1: where we were in New York in March, or it's
Speaker 1: a little bit different and maybe perhaps a little better,
Speaker 1: or you know, I don't know how you quantify it
Speaker 1: or qualify it right. Well, as as Dr Fauchi said,
Speaker 1: this is a protean disease and he's never seen it,
Speaker 1: and we've never seen it a disease where you can have, uh, fortunately,
Speaker 1: the majority of people, it seems with really minimal or
Speaker 1: asymptomatic disease all the way to life threatening disease where
Speaker 1: people die, and before that there are a month or
Speaker 1: two on a on a respirator. So it is very
Speaker 1: hard to process and somewhat hard to predict which people
Speaker 1: will crash and burn and which people will have very
Speaker 1: mild cases. And because of this, we have to be
Speaker 1: extra cautious in trying to prevent that. Because although we
Speaker 1: know risk factors and they outline that type one diabetes, obesity,
Speaker 1: you know, hypertension, lung disease, age, we're still seeing young
Speaker 1: people who get sick, and certainly in New York we've
Speaker 1: seen young people who unfortunately die, So we don't really
Speaker 1: have the full picture, and therefore everyone has to really
Speaker 1: be on much more guard hopefully go back to work cautiously.
Speaker 1: It's a real balancing act between damaging and economy and
Speaker 1: having some potential risk to your population. That's a tough
Speaker 1: needle to thread, and that's really what everyone is trying
Speaker 1: to grapple with because we don't have recent history of this.
Speaker 1: Nineteen it was a long time ago and they didn't
Speaker 1: have these issues. All right, We're gonna continue our conversation
Speaker 1: with Dr Ian Lesbater giving us some great context about
Speaker 1: where we are in the virus. And I think, uh,
Speaker 1: probably alongside with us, you know, watching this, uh with
Speaker 1: with a little bit of caution, and I dare say,
Speaker 1: I don't want to put words in his mouth, maybe
Speaker 1: a little frustration of you know, what's going on in
Speaker 1: the rest of the world, because we have lived this,
Speaker 1: we know, and he's lived in far far more intimately
Speaker 1: than we have, Carol and really seen people suffering from
Speaker 1: this disease, and you really would hope that, you know,
Speaker 1: people have learned from what unfortunately we had to go
Speaker 1: through here in the New York metro area in particular,
Speaker 1: and you would hope that it would not be as
Speaker 1: bad or at least headed in that direction. So I
Speaker 1: guess time will tell, Jason, but it certainly is jarring
Speaker 1: the tone that we are feeling really throughout the week,
Speaker 1: to be quite honest, and then of course to see
Speaker 1: that task force back. You are listening to Bloomberg Business Week,
Speaker 1: Jason Kelly and Carol Master here with you. We're back
Speaker 1: with Dr Ian Lesbier, clinical Associate Professor of Medicine for
Speaker 1: ny US Lango and Medical Center, on the phone from
Speaker 1: New York City. So I I have to ask you,
Speaker 1: you know, we're a little bit doom and gloom, maybe
Speaker 1: rightly so about the rest of the country, but we're
Speaker 1: looking at Phase three potentially it's scheduled for July six
Speaker 1: in New York City. How are you feeling about that,
Speaker 1: especially as you see what's going on in the rest
Speaker 1: of the country. Uh, you know, I'm optimistic. I do think. Um,
Speaker 1: from what I see, most people are wearing masks and
Speaker 1: social distancing. We're seeing that, uh in our waiting room.
Speaker 1: Hopefully businesses have had time to prepare and figure out
Speaker 1: ways to bring people back. It's a challenge. We really
Speaker 1: don't know what will happen. It looks as if, at
Speaker 1: least in the Northeast people will be able to return
Speaker 1: using good judgment. Uh. And that's not to disparage people
Speaker 1: perhaps in the sun Belt who felt more comfortable because
Speaker 1: they really were unaware. Are of the number of cases,
Speaker 1: we are probably only diagnosing you know, one in five
Speaker 1: or one in ten uh percent of cases, so the
Speaker 1: total number is almost you have to think of this
Speaker 1: perhaps as ten times more. We have two point five
Speaker 1: million cases. Probably there are twenty five million people who
Speaker 1: are infected, fortunately most asymptomatic. Uh. It may be less
Speaker 1: than that, but certainly we can't be shocked if you know,
Speaker 1: if those numbers grow. And I think people have been
Speaker 1: feeling very confident. You know, there's more treatment. You hear
Speaker 1: less about deaths. But even though many of these things
Speaker 1: like convalescent plasma and deaths of metasone from desiviere don't
Speaker 1: seem to help a bit. But by no means are
Speaker 1: they cures. They they are reducing the death rate. Uh,
Speaker 1: but by no means are we out of the woods.
Speaker 1: But I do Ian, let me ask you a question
Speaker 1: just on that exact point. So if it's ten times
Speaker 1: or or you know, if it's like, should that make
Speaker 1: us feel better? Well? I think it should make us
Speaker 1: feel better as we see the number of cases going up.
Speaker 1: And that goes back to your question, what are we
Speaker 1: going to measure or what what are we go going
Speaker 1: to be concerned about. I think we are going to
Speaker 1: see more cases going up, and that's why the number
Speaker 1: of hospitalizations and why the death rate or case fatality
Speaker 1: rate may be UM somewhat more useful. But I put
Speaker 1: that number out and that's a publicly available UM, you know,
Speaker 1: just so that we're not shocked at seeing more and
Speaker 1: more cases. But it is a reminder that we do
Speaker 1: need to again have that community involvement, as Dr Fauci said,
Speaker 1: with young people being very aware because they're the main
Speaker 1: uh kind of Petrie dish. At this point, there there
Speaker 1: are a big reservoir of asymptomatic disease. When we first
Speaker 1: started out, we were only testing sick people. Now we
Speaker 1: really have the ability, fortunately to test asymptomatic people. So
Speaker 1: I think we should go through with Phase three. We
Speaker 1: do have more testing available. We're seeing in New York
Speaker 1: at least a high serio prevalence rate, probably twenty maybe
Speaker 1: even so that many antibodies antibodies exactly, and we think
Speaker 1: those are preventive antibodies, how long they will last, how
Speaker 1: long they'll prevent recurrence. We don't really know again will
Speaker 1: the virus mutate in the second waiver in the fall,
Speaker 1: But certainly I think based on what we are seeing now,
Speaker 1: cautiously going back makes sense here. But this is very regional.
Speaker 1: Obviously there are areas where it's still rising dramatically. So
Speaker 1: so I'm just saying about our audience listening to this
Speaker 1: and how the week's been and the task force came out,
Speaker 1: so ian you know, is it just a case if
Speaker 1: we start to see hospitalizations go up a lot, is
Speaker 1: that when we all have to say we'll wait a minute,
Speaker 1: we've really got to slow this down. Is that the
Speaker 1: number that we've got to be kind of glued to.
Speaker 1: I think so. And you know there's always that delay,
Speaker 1: right so as you're diagnosing cases, hospitalizations and saddly deaths
Speaker 1: will be delayed two, three, four weeks down the line.
Speaker 1: So we haven't really seen that surge and hospitalizations because
Speaker 1: you're just seeing cases diagnosed now, So there will be
Speaker 1: a delay in and that in some ways gives the
Speaker 1: localities time to prepare. But many community hospitals really don't
Speaker 1: have the resources if there's really a big surge, and
Speaker 1: that was the whole rationale to try and you know,
Speaker 1: flatten the curve. I don't want to say it's too late,
Speaker 1: but there may be areas where that we're not as
Speaker 1: careful and we're seeing more cases, and I think we
Speaker 1: have to expect more hospitalizations and saddling more deaths in
Speaker 1: the next few weeks, because that's just the kind of
Speaker 1: how the numbers go in this scenario. Yeah, it's a
Speaker 1: it's a tricky time, to say the least, in a
Speaker 1: worrisome time. I think, uh as well, all right, Dr
Speaker 1: Ian less Vader, It's always good to end up the
Speaker 1: week with you because I feel like I go into
Speaker 1: the weekend smarter, knowing what I should be thinking about,
Speaker 1: and you know, candidly, when people from a social distance
Speaker 1: asked me what I think is going on, I just
Speaker 1: quote doctor unless better no, I do. I really feel
Speaker 1: like we take everything that's been going on in the week,
Speaker 1: and this day was full of so much and it
Speaker 1: just makes sense out of all of it. So um, yeah,
Speaker 1: I really always appreciate he being one of our go
Speaker 1: two voices when it comes to the virus. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Jason Kelly
Speaker 1: on Bloomberg Radio. As we mentioned earlier, we did have
Speaker 1: an IPO today. America's second largest supermarket operator, Albertson is
Speaker 1: once again a public company, and the stock right now
Speaker 1: trading at fifteen dollars seventy cents a share. That's below
Speaker 1: it's sixteen dollar a share IPO price. Let's get into
Speaker 1: it with the company's president and CEO, the VACS anchor
Speaker 1: in he joins us on the phone from Boise, Idaho, VCS.
Speaker 1: So nice to have you here with us. Congratulations. Um,
Speaker 1: it wasn't an easy necessarily I p O to do,
Speaker 1: considering kind of the market backdrop and just kind of
Speaker 1: the world at large. Oh, Carol, you're right, it's um.
Speaker 1: You know, it's so hard to predict what happens to
Speaker 1: the market ever, but we as a company, we've been
Speaker 1: so ready preparing the company, strengthening it for this day.
Speaker 1: We feel so confident about what we're going to do
Speaker 1: in the future. So, but I talked to us about
Speaker 1: the world we're living in right now, even outside of
Speaker 1: the financial markets. When it comes to your stores, you've
Speaker 1: obviously had to do some some retrofitting, some remodeling, like
Speaker 1: everyone else has had to do. Where are you in
Speaker 1: that process? So we did. We started out very early
Speaker 1: in February and March Perplexi Glass, Dickcales, new cleaning procedures,
Speaker 1: one way ailes, et cetera. One of the things we've
Speaker 1: learned is you can never stop innovating on that front, right,
Speaker 1: you can never get complacent, never stopped innovating, and we
Speaker 1: continue to look for new ideas. Sometimes it's a new
Speaker 1: technology that might count the number of people coming into
Speaker 1: a store and exiting the store. Sometimes it's about new
Speaker 1: thermoscan reading temperatures as people come into our factories. So
Speaker 1: we're always innovating. So what do you do with something
Speaker 1: like a salad and soup bar? Do you just get
Speaker 1: rid of it? Yeah? For now we have, Right, it's
Speaker 1: what we do. Instead you you were able to go
Speaker 1: to a salad bar and make your own salad or
Speaker 1: pick the pick the half a dozen chicken wings you wanted.
Speaker 1: Now we package it and a lot and provide it.
Speaker 1: We still provide it for our customers, and customers still
Speaker 1: want it. They can't customize it like they did before. Right,
Speaker 1: it will come over time, but I don't think it's
Speaker 1: the right time yet. So I think, if I've got
Speaker 1: my numbers right, only about a quarter of your stores
Speaker 1: feature online order pick up, well below many of your peers.
Speaker 1: So how do you play catch up with your rival,
Speaker 1: especially when it comes to e commerce because folks have
Speaker 1: had to do it because of the shutdown, and a
Speaker 1: lot of people are saying, even those who hadn't done
Speaker 1: it before, I like it and are probably going to
Speaker 1: continue in the future. So how do you play catch up?
Speaker 1: You're so right we were building it. This last few
Speaker 1: months have been an incredible catalyst for us to go
Speaker 1: even faster and and and the fact that we don't
Speaker 1: have it in so much of our footprint is so
Speaker 1: much upside for us. I can tell you this though.
Speaker 1: Every time we opened it in a new store, we
Speaker 1: get a whole set of new customers starting to shop
Speaker 1: with us. And the customers are already shopping with us
Speaker 1: shop even more. And I think it's because we we
Speaker 1: provide such a fabulous, fresh assortment and a more complete
Speaker 1: assortment than many um and so so I just think
Speaker 1: customers say, I've got a great store, and I now
Speaker 1: have the convenience of omnichannel with it. So in terms
Speaker 1: of catching up, is it just because you guys are
Speaker 1: going to focus on it and just ramp up your
Speaker 1: efforts to catch up or what? Yes? That is And
Speaker 1: we're also catching up in different ways, you know, we're
Speaker 1: we're we've got new technologies that we're putting in place
Speaker 1: that that can enable faster picking in stores. So we're
Speaker 1: doing it in different ways, and we're adapting to some
Speaker 1: new stuff that's coming from the coming onto the market.
Speaker 1: And So when you think about the competitive landscape EVCT,
Speaker 1: even beyond e commerce from a pricing perspective, what do
Speaker 1: you see in terms of pressure from some of the
Speaker 1: you know, lower price or the so called hard discount
Speaker 1: formats I'm thinking about like Aldi and others, and and
Speaker 1: even with the dollar stores who are pushing deeper into grocery.
Speaker 1: How do you combat that side of the equation. Yeah,
Speaker 1: you know, the way I see it is competition is
Speaker 1: a wonderful thing. It keeps us all sharper. We learn
Speaker 1: from things, We learn from them all the time. Uh,
Speaker 1: and we play the game a little differently. Right, you
Speaker 1: can go to some of those stores and you won't
Speaker 1: get the full assortment you want to come to our store,
Speaker 1: you get the full assortment you want. And the great
Speaker 1: thing about our country is there's you can Different customers
Speaker 1: want different choices, UM. And and so the key is
Speaker 1: to find a way to compete that's different and right
Speaker 1: for our customer. And we believe we do that very well.
Speaker 1: So the bec I do wonder? So you are you
Speaker 1: guys are now, as we said at the top, a
Speaker 1: publicly held company trading on the New York Stock has changed.
Speaker 1: This is after fourteen years of private ownership by Cerberus Capital. UM.
Speaker 1: I do wonder, though, are you disappointed with the I
Speaker 1: p O? Sixteen dollars was below and expected range? There
Speaker 1: was talk of you know, you guys raising more than
Speaker 1: a billion dollars in this I p O. Are you disappointed, Carol?
Speaker 1: You know, we are actually elated that we could conduct
Speaker 1: an IPO in one of the most difficult environments we
Speaker 1: have all seen in our lifetimes, UM, in so many
Speaker 1: different ways, and that so many investors had confidence to
Speaker 1: put their money with us. And and we are always
Speaker 1: long term oriented. You said it, our owner, Our investors
Speaker 1: have been with us since two thousand and six. Okay,
Speaker 1: and uh, it's a long term orientation and that's what
Speaker 1: we have every day here and so that when you
Speaker 1: think about your employees too, and the workforce. I mean,
Speaker 1: what a change it has been from an incredibly tight
Speaker 1: labor market that we had earlier in the year to
Speaker 1: record unemployment. Now, tell us about your workforce and how
Speaker 1: you see that changing, growing, shrinking in the short and midterm. Yeah,
Speaker 1: we've had to add so many people to our stores.
Speaker 1: Distribution centers are omni channel business. So in the last
Speaker 1: the first few months, we recruited more than fifty thou people.
Speaker 1: We had a base of two seventy people. You know,
Speaker 1: our workforce, Um, there's there's so many who have been
Speaker 1: with us for so long and who are so service oriented,
Speaker 1: in service centric that you know, we we celebrate our
Speaker 1: workforce and we spent a lot of time keeping them safe,
Speaker 1: making sure they're paid right, especially through this crisis, and
Speaker 1: we think this will continue for a while, that we'd
Speaker 1: be able to we need this level of workforce. Um.
Speaker 1: And I don't know how things changed how so hard
Speaker 1: to predict it, but but you know we are on
Speaker 1: a good trend on that front. So I've got to
Speaker 1: just quickly ask you what's going to be the relationship
Speaker 1: with Cerberus going forward. They still have a sizeable steake
Speaker 1: in you guys, and you still have a fair amount
Speaker 1: of debt. I think it was eight point seven billion
Speaker 1: at the end of the last fiscal year. How do
Speaker 1: you get rid of it? And just got about a
Speaker 1: minute left. Yes, it's it's a lot lower now, it's
Speaker 1: only two point five times. I read a little shift
Speaker 1: of seven billion dollars and and we recognized the Cerberus
Speaker 1: and four other investors who have been with us. They'll
Speaker 1: continue to stay with us. They've been fabulous. They've invested
Speaker 1: in this company to make it stronger, and we've decided
Speaker 1: that there they continue to stay with us. All right,
Speaker 1: We're gonna leave it there. They ve center and thank
Speaker 1: you so much, President, CEO of Albertson's newly public certainly
Speaker 1: accompany to watch. Can I say one personal thing, Carol
Speaker 1: about Albertson's please. They owned the Randall's Garcia Searchain. My
Speaker 1: first job in East Texas, the rand Randall's flagship. If
Speaker 1: Debbie Kelly is listening, she would check out. You know
Speaker 1: what I wanted to be a because this was a
Speaker 1: it was a fancy grocery store in uh In the
Speaker 1: neighborhood where we lived in Houston, and so you took
Speaker 1: people's groceries out to the car. And even though it
Speaker 1: was Houston and it was hot as all get out,
Speaker 1: that was the job you wanted because you got tipped.
Speaker 1: I couldn't get one of those jobs. Those were all tickets,
Speaker 1: So I was a cashier instead. Um pinstriped apron. It's like,
Speaker 1: would you like would you like your eggs on the bottom? Yeah, exactly,
Speaker 1: But you know you had to worry about like your
Speaker 1: speed and all that. You're listening to Bloomberg Business Week
Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. We
Speaker 1: are obviously tracking so closely what's happening with the virus,
Speaker 1: especially outside of New York City and the rest of
Speaker 1: the country. The headlines are troubling, to say the least,
Speaker 1: and the numbers even more so. Michelle Cortez, health Science
Speaker 1: and Medical Technology reporter is with us from Bloomberg. She
Speaker 1: joins us on the phone from Minneapoli, and Michelle, before
Speaker 1: we talked to you, I want to hear a little
Speaker 1: bit from Dr Anthony Fauci. He spoke earlier today, specifically
Speaker 1: about his advice to young people. Anyone who gets infected
Speaker 1: or is at risk have been getting infected to a
Speaker 1: greater or lesson degree, is part of the dynamic process
Speaker 1: of the outbreak. And I know because I can understand
Speaker 1: when I was at a stage in my life when
Speaker 1: I said, well, I'm invulnerable, so I'm going to take
Speaker 1: a risk. I think what we're missing in this is
Speaker 1: something that we've never faced before, is that a risk
Speaker 1: for you is not just isolated to you, because if
Speaker 1: you get infected, you apart innocently or inadvertently of propagating
Speaker 1: the dynamic process of a pandemic. All right, of course,
Speaker 1: Dr Anthony Fauci, member of the White House Coronavirus Task Force.
Speaker 1: They are back in action and we heard from them
Speaker 1: earlier today. So let's bring in Michelle Cortezes Jason said
Speaker 1: Bloomberg News Health Science and medical reporter on the phone
Speaker 1: from Minneapolis. So, Michelle, it's really been a different week again,
Speaker 1: I feel like, and the tone certainly today from the
Speaker 1: task force a bit confusing at times. Um, how do
Speaker 1: you add it all up right now? Where we are
Speaker 1: in terms of a nation when it comes to the virus,
Speaker 1: these things are unusual and hard to follow. So the
Speaker 1: task Force was trying to portray it as a positive
Speaker 1: situation because in fact, we are seeing a decline in
Speaker 1: death rates. Fewer people right now are dying from coronavirus
Speaker 1: then we're dying from it back in April, when we
Speaker 1: were seeing, you know, thousands of people die every day.
Speaker 1: There were a couple of days this week where we
Speaker 1: had fewer than three hundred people die. That being said,
Speaker 1: the number of new cases is skyrocketing. We hit a
Speaker 1: new piece just today with more than forty thousand people infected,
Speaker 1: and we know that deaths do follow um, so that's
Speaker 1: a trailing indicator. So we did have deaths increasing. Also,
Speaker 1: since we're doing a better job of capturing these cases
Speaker 1: than finding them early, it might take longer for people
Speaker 1: to get really sick or die, or perhaps we're just
Speaker 1: finding more people who ultimately won't die. So it depends
Speaker 1: on the framing how you're looking at the outbreak, all right,
Speaker 1: So the framing, I guess Michelle sitting here in New
Speaker 1: York is important. And yet there is a sense of
Speaker 1: sort of like gloom and dread that I feel, at
Speaker 1: least looking at these numbers either validate that feeling or
Speaker 1: tell me that I shouldn't be feeling it. Well, I
Speaker 1: think that again, you're hitting it exactly on the head
Speaker 1: because you have to remember that you're sitting there in
Speaker 1: New York and you probably know someone who was infected
Speaker 1: with coronavirus. Many might have done somebody who got very sick. Right,
Speaker 1: So in many, many parts of the country and in
Speaker 1: many parts of the world, people don't know anyone. I
Speaker 1: don't know anyone who's had coronavirus. I don't know anyone
Speaker 1: who knows anyone who's had coronavirus. And in Minneapolis, and
Speaker 1: so I think that that's the difference. And another thing
Speaker 1: that they talked about at the briefing today is that
Speaker 1: this is really very regional and not regional by state
Speaker 1: by regional by county. There are some areas that are
Speaker 1: incredibly hard hit, and those people are panicked by these numbers.
Speaker 1: That's like people in New York City. You have lived
Speaker 1: this and you know how bad it can be. But
Speaker 1: other people don't understand it, and they think that it's
Speaker 1: maybe not as serious a problem and certainly not a
Speaker 1: problem for them. But across the South now more people
Speaker 1: are sadly joining your club and realizing how dangerous this
Speaker 1: might be. So how do we I don't know, you know,
Speaker 1: here we are, We've got you know, we continue to reopen,
Speaker 1: certainly here on the East Coast, you know, and other
Speaker 1: states are reopening. And yet you have those number of
Speaker 1: cases going up. Michelle, So I don't know, You've been
Speaker 1: smack in the middle of this. How do you what?
Speaker 1: What do you what's your anticipation of kind of what
Speaker 1: comes next? Well, the bottom line is that this is
Speaker 1: this virus is not stopping we Most viruses are seasonal.
Speaker 1: We should have seen a decline in the summer. We're
Speaker 1: not seeing a decline. We know that they're seasonal, they
Speaker 1: increase in the fall, so likely we will see an
Speaker 1: increase from these higher numbers. We know from the prology
Speaker 1: tests that only a tiny fraction of Americans have been infected.
Speaker 1: So this virus is going to be with us and
Speaker 1: be with us and be with us until we get
Speaker 1: a successful vaccine. I when it comes to vaccines and
Speaker 1: a show, don't tell person, I want to see results.
Speaker 1: We don't even have any phase run results from any
Speaker 1: of these trials yet, so I don't think you can
Speaker 1: count on that. We can hope for it, but we
Speaker 1: can't count on it. What about the Jason and I've
Speaker 1: talked a lot this week about Maderna and the CEO
Speaker 1: coming out and saying I think they're going into phase
Speaker 1: three right or soon? I mean is does that give
Speaker 1: you any optimism in terms of a vaccine. Well, that
Speaker 1: gives me optimism that if there is a successful vaccine,
Speaker 1: if there's a successful trial, which is a huge if,
Speaker 1: we will have product at the end of it. But
Speaker 1: you have to remember that most clinical trials, at least
Speaker 1: initially are not successful. Again, we don't have phase one data.
Speaker 1: We don't have any firm evidence of whether this approach
Speaker 1: is going to work or not. And there are no
Speaker 1: vaccines that work the way this vaccine works. So all
Speaker 1: the science suggests that it's going to be great. All
Speaker 1: the early laboratory work person man numbers, they all look good,
Speaker 1: but we don't have any scientific proup yet. So we're
Speaker 1: we're betting a lot on the fact that, you know,
Speaker 1: all the numbers add up, and now let's go try
Speaker 1: it in the person and see if it's stands. And
Speaker 1: I'm just I'm just you know, show don't tell I.
Speaker 1: I need to actually see the evidence. But What does
Speaker 1: work is masks and social distancing and everyone they see
Speaker 1: doing that and it's just one Again, if you've never
Speaker 1: been personally affected, it's not in your community. You think
Speaker 1: you're crazy for wearing a mask, like an imposter syndrome.
Speaker 1: But people need to embrace it. Alright, Michelle Cortez, you're
Speaker 1: preaching to the choir. Here are award winning journalist Space
Speaker 1: in Minneapolis covering this coronavirus. She's a must read. I said,
Speaker 1: like Tom Keene, it's like raid Michelle Cortez everything she writes,
Speaker 1: but it's totally true. But she explained so much about this.
Speaker 1: But she explained so much right because it you know,
Speaker 1: those people who are in states like I don't know
Speaker 1: anybody I'm okay, versus US who we know lots of people,
Speaker 1: um who have also lost their lives. So it's it's
Speaker 1: not something to play around with. It is time for
Speaker 1: the drive to the close back with us. As Ernesto
Speaker 1: or most he leads the portfolio management and research teams
Speaker 1: for all equity strategies over at Demo Global Asset Management
Speaker 1: in the US. He's got or the firm, I should say,
Speaker 1: has two hundred seventy seven billion in assets under management.
Speaker 1: Ernesta joining us once again on the phone in Chicago, Ernesto,
Speaker 1: good to have you here with us. UM. Curious about
Speaker 1: the last week. We've certainly felt like a tone when
Speaker 1: it a tone has changed in terms of concerns once
Speaker 1: again about the virus. We've had some trade concerns throughout
Speaker 1: the week, and we've seen a plane at play out
Speaker 1: certainly in the equity markets. How do you see it? Well,
Speaker 1: there's no shortage, for sure of things to worry about
Speaker 1: in the equiti market. And the important thing is not
Speaker 1: so much what the absolute level of worrying is. It's
Speaker 1: whether we're actually seeing things improved. And granted, things were
Speaker 1: improving at a batchlor pace, and this week they took
Speaker 1: a hit because of of coronavirus, because of trade. Uh.
Speaker 1: But we still think that things will be are on
Speaker 1: the on the upswing here in terms of the economic
Speaker 1: growth and the reopening, even though it may be a
Speaker 1: little bit less uh, a little bit more bumpy, a
Speaker 1: little bit less smooth. Um. So in our particular, in
Speaker 1: our portfolios, we are choosing to stay focused on higher quality,
Speaker 1: strong balance sheet companies, companies that can can withstand a
Speaker 1: little bit more of the lower growth and perhaps bumpy
Speaker 1: route that we're that's in front of us, but still
Speaker 1: deliver exposure to equity markets because at the end of
Speaker 1: the day, equity markets right now have I've seen an
Speaker 1: incredibly strong policy response from from the Fed and and
Speaker 1: UH fiscal from the Treasury on the fiscal side. So
Speaker 1: that is a very important component of our bullish on
Speaker 1: equities and call for the US bullish bottom line, bullish
Speaker 1: bottom line bullish yet, but you want to say a
Speaker 1: little bit more on the defensive side, such as the
Speaker 1: stocks and our BEMO Low Voltility Equity Fund which today
Speaker 1: is is down, but is down almost eighty basis points,
Speaker 1: are point eight percent less than the market as a whole,
Speaker 1: simply because of the defensive nature of the stocks and
Speaker 1: the portfolio itself, protecting our clients on the downside, where
Speaker 1: you know, Carol and I love talking about names, and
Speaker 1: one of the names we definitely wanted to talk to
Speaker 1: you about was Kroger. We spoke earlier with the sea
Speaker 1: of Albertson's newly public as you know, talk to us
Speaker 1: about Kroger and the supermarket business. I mean, talk about UH,
Speaker 1: a place that's been important but also disrupted and and
Speaker 1: all sorts of things. Talk about that name well, I
Speaker 1: mean two of the three picks that I sent over
Speaker 1: to you guys, with Kroger and the other one Sprous
Speaker 1: Farmer's Market. They're both are in the supermarket business. They're
Speaker 1: both benefiting from stay at home UH and and UH
Speaker 1: they managed to adapt their businesses to pick ups and delivery.
Speaker 1: So so these are companies they're gonna do well in
Speaker 1: this environment, and we're doing necessarily as well in terms
Speaker 1: of the stock price in a much more risk on
Speaker 1: type environment. On on risk on days they lack. But
Speaker 1: on the day like today, I'm pretty sure Sprouts is
Speaker 1: still up. I'm not sure about Kroger's whether it's that
Speaker 1: that was up a little bit, but not as much
Speaker 1: as Asprout. But this is the exact nature of the
Speaker 1: stocks like that are defensive like this UH that they
Speaker 1: are performing on downdeds and provide a counterweight to the
Speaker 1: to the rest of the portfolio which might not be
Speaker 1: doing as well. So so that's that's why we like
Speaker 1: the like them. We like them for the particular stressful
Speaker 1: tens as we're in. We have stable and and and defensive,
Speaker 1: resilient businesses and so and just going down to level
Speaker 1: on that particular sector of that particular business. Why Sprouts
Speaker 1: and Kroger, what do you get sort of having both
Speaker 1: of them, Well, we own all the kind of consumer staples,
Speaker 1: so that's not that those are not our only two.
Speaker 1: So so the way we built our portfolio is we
Speaker 1: look at the potential return of every stock in the
Speaker 1: university's about thousand stocks, and then we and these stocks
Speaker 1: wearing in the top of our of our of our attractiveness,
Speaker 1: and that is a composite that we create out of
Speaker 1: how stronger the fundamentals of the company, and how much
Speaker 1: are you paying for those fundamentals, and finally, what's the
Speaker 1: sentiment around the stock? And and those those three large
Speaker 1: categories of of of metrics are aggregated from one final score.
Speaker 1: These three companies have relatively strong fundamentals and they trade
Speaker 1: cheaply enough that they make it into the portfolio. And
Speaker 1: then we also build a portfolio with a very strong
Speaker 1: focus and minimizing the risk on the downside. And and
Speaker 1: that's that's also a very critical part of it. So
Speaker 1: these companies have enough attractiveness to make it into a portfolio.
Speaker 1: But most importantly, and this is the reason that we're
Speaker 1: in the portfolio they are they're low risk stocks, stocks
Speaker 1: that will protect you on days when the market is
Speaker 1: down like uh like today for example. Well, and I
Speaker 1: do want to point out Sprouts is up about two
Speaker 1: point two today, it's up so far this year. Krueger
Speaker 1: is down about one third of one percent, so just
Speaker 1: a little bit lower, but it's so far this year.
Speaker 1: So Albertson's which one public today second largest operator of
Speaker 1: supermarkets in the US. Do you are you interested? Are
Speaker 1: you going to look to maybe buy? We we don't
Speaker 1: own it, and uh we we will buy according to
Speaker 1: what I just told you, And off the top of
Speaker 1: my head, I can't tell you what the ranking of
Speaker 1: any start in the thousand universe is right now, but
Speaker 1: when the time comes to take a look at um rebalancing,
Speaker 1: as we call it, our portfolio was definitely pay attention
Speaker 1: to see if if Albertson's coming into the mix interesting
Speaker 1: All right, Well, look forward to catching up with you
Speaker 1: in the future. An Esto Ramos is portfolio manager for
Speaker 1: Demo Global Asset Management, joining us on the phone from Chicago.
Speaker 1: Have a nice weekend, Thanks so much for listening to
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