Speaker 1: This is Bloomberg Business Week. I'm Carol Masser. Every day
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Speaker 1: New York City's mayor getting ready uh two looks like
Speaker 1: halt indoor dining. He says, it's just a matter of time.
Speaker 1: We also have US COVID hospitalizations near eighty thousand as
Speaker 1: records are toppled daily, And then we also had on
Speaker 1: the flip side, moderna vaccine production. It's gearing up that
Speaker 1: according to its partner and Oxford to study confirming it's
Speaker 1: astra Zeneca COVID shot response in elderly specifically, there's been
Speaker 1: a lot of the kind of yin and yang when
Speaker 1: it comes to COVID nineteen news this week, let's talk
Speaker 1: about it. Dr Daniel Salmon is Director of the Institute
Speaker 1: for Eccine Safety and Professor of International Health at the
Speaker 1: Johns Hopkins Bloomberg School of Public Health. The Johns Hopkins
Speaker 1: Bloomberg School of Public House supported by Michael R. Bloomberg, Founder,
Speaker 1: Bloomberg LP, and Bloomberg Philanthropies. Dr Salomon joins us on
Speaker 1: the phone from Baltimore. Good afternoon. Nice to have you
Speaker 1: here at Good afternoon. Thanks for having me. So, tell
Speaker 1: me a little bit about when you look at the headlines,
Speaker 1: I do feel like it's you know, a step forward
Speaker 1: as a couple of steps back, and when it comes
Speaker 1: to progress on a vaccine, but we know that's still
Speaker 1: going to take a while. And then of course we
Speaker 1: continue to see the numbers going up here in the
Speaker 1: United States and really globally. How would you assess the
Speaker 1: situation at this point, Well, from an issue of COVID disease,
Speaker 1: I mean, we're seeing huge amounts of disease, and as
Speaker 1: you've described in your preamble, there's you know, increases in
Speaker 1: hospitalization solve really concerning and uh, it's likely to get
Speaker 1: worse before it gets better, you know. The vaccine side, well,
Speaker 1: it seems to be good news but their press releases,
Speaker 1: this is based on so very very few people have
Speaker 1: seen the data. I haven't seen the data, and the
Speaker 1: press releases sound great, but we really need to see
Speaker 1: the data. We need to see how effective it is
Speaker 1: among whom and what exactly is effective in is it
Speaker 1: preventing any disease? Is preventing serious disease? Does the effectivenesssary
Speaker 1: by population? Doesn't prevent transmission of disease? And presumably the
Speaker 1: safety profile looks good if they wouldn't or they wouldn't
Speaker 1: have put out a press release. But so we really
Speaker 1: need to see the data. I mean this is these
Speaker 1: are press releases. Yeah, well, I think that is like
Speaker 1: a brilliant point because listen, they are most of them
Speaker 1: publicly health companies. I think all of them are publicly
Speaker 1: health companies, and so they can't certainly make statements that
Speaker 1: might financially alter what investors see or you know, if
Speaker 1: they promised too much so and so forth. Right, there's
Speaker 1: rules when it comes to putting this stuff out. But
Speaker 1: as you say, data is data, there's a lot of
Speaker 1: data that we are still we've collected but still need
Speaker 1: to collect. When it comes to COVID nineteen, it's impact
Speaker 1: on different populations, but also how you treat different populations
Speaker 1: and how those treatment you know, impact different populations. Yeah,
Speaker 1: so I think that's all true. And likewise, there's a
Speaker 1: lot of data on these vaccines that we haven't seen.
Speaker 1: I mean, when we evaluate a vaccine, it's not based
Speaker 1: on press releases. So the next step is that FDA
Speaker 1: has an advisory committee called bur PACK, the Vaccines and
Speaker 1: Related Biologic Product Advisory Committee, and these data are going
Speaker 1: to go in front of a pack and you're gonna
Speaker 1: have external, independent scientists that are really going to carefully
Speaker 1: review the data and then make a recommendation f d
Speaker 1: A and those meetings are open to available to the public.
Speaker 1: And that's a really important step because that's an opportunity
Speaker 1: for the scientific and the clinical community to see the
Speaker 1: data and to have independent experts wig in on it.
Speaker 1: And it's also a chance for the public to see
Speaker 1: how this all works and based their views not on
Speaker 1: things they meet on the internet or or press releases,
Speaker 1: but by having signed it take or that's transparent after
Speaker 1: go ahead. No, I was gonna say, you know, and
Speaker 1: I've said this a couple of times on our air,
Speaker 1: that we you know, as a public are are seeing
Speaker 1: how this problem. Normally, yeah, yeah, we hear about a
Speaker 1: drug and it's approved and it's years of testing, and
Speaker 1: we don't really pay as much attention right until the
Speaker 1: doctor says, here, here's a prescription for x y Z.
Speaker 1: But we are really learning and seeing this process. I
Speaker 1: want to dig a little bit deeper. I mean in
Speaker 1: terms of the data specifically, what is it that you're
Speaker 1: going to be looking for. Well, I'm going to be
Speaker 1: looking at what outcomes were examined and what the efficacy
Speaker 1: was for those outcomes. So I'm interested in, for example,
Speaker 1: did it prevent disease altogether or did it prevent clinical disease,
Speaker 1: and what's the difference between that. What's the difference. Well,
Speaker 1: we know with COVID that lots of people have sent
Speaker 1: don't have symptoms, but have disease, right, and that's why
Speaker 1: the mass recommendation changed. Um, many infectious diseases, you're not
Speaker 1: infectious to other people until you have symptoms. So initially
Speaker 1: the recommendations were if you don't feel good, stay at home,
Speaker 1: which makes a lot of sense. But then when we
Speaker 1: discovered you have people that have disease and transmit disease,
Speaker 1: but they don't have any symptoms. That's when the mass
Speaker 1: recommendation came in, because if staying at home when you
Speaker 1: feel sick isn't enough. And so whether or not the
Speaker 1: vaccine prevents subclinical disease is important. Um doesn't prevent more
Speaker 1: serious disease, and if so, maybe maybe even more so
Speaker 1: than it prevents disease. I mean, they're talking effectiveness. That's
Speaker 1: very good, But there are vaccines, like for the flu,
Speaker 1: where it's moderately effective in preventing influenza, but it's even
Speaker 1: better at preventing serious disease. That's important. And how long
Speaker 1: does that protection last, that's a really important question. We're
Speaker 1: not going to know. We're not going to know for
Speaker 1: a while. I actually cut up with the Modern CEO
Speaker 1: earlier today for a Bloomberg panel and Bloomberg event, and
Speaker 1: you know, he did point out that he said what
Speaker 1: was significant about their developments was that it was for
Speaker 1: you know, kind of your more serious cases of COVID. Yeah, so,
Speaker 1: I mean that's important, that's helpful. My preference would be
Speaker 1: a vaccine that prevents all disease and therefore prevents any
Speaker 1: transmission of disease, and you get one or two shots
Speaker 1: and it lasts forever um. That's a very high standard
Speaker 1: and doubts any vaccine all of that. Mr Salmon, you
Speaker 1: know you you know about obviously vaccine development, you understand distribution,
Speaker 1: you understand safety, the process that we're happening, even though
Speaker 1: it's happening much more quickly. Do you feel comfortable about it?
Speaker 1: Do you have confidence in it? Yeah, that's a great question,
Speaker 1: and I'm really glad you're asking it because I do.
Speaker 1: And I think there's a lot of this number out
Speaker 1: there because it's called operation warp speed and it's happening
Speaker 1: so quickly that that somehow safety is being short and
Speaker 1: that's not the case. These are very large clinical trials
Speaker 1: and as long as the process continues using our normal
Speaker 1: mechanisms and having external review, I'm very comfortable with the process.
Speaker 1: And it's it's important that people understand this. And I
Speaker 1: think what's also important you started talking about it before
Speaker 1: before the break, you talked about you know, when you
Speaker 1: evaluate a vaccine, you go, you know, it's not on
Speaker 1: the press releases that there will be independent scientists right
Speaker 1: who are going to review this. They will ultimately make recommendations.
Speaker 1: It's not just the company data correct it's not just
Speaker 1: government officials. I mean there are outside independent right. Yeah,
Speaker 1: I'm sorry you cut out for a second. I thought
Speaker 1: you you paused. Um, it's a really important point. And
Speaker 1: we talked about the verpack and FDAs advisory committee, but
Speaker 1: CDC has an advisory committee to that has evolved. Once
Speaker 1: FDA gives approval for use UM and then goes to
Speaker 1: the CDC and they turned to their advisory committee on
Speaker 1: Immunization Practice, and they look at all the data and
Speaker 1: they make recommendations for who should get the vaccine, if
Speaker 1: anybody is contraindicated and they shouldn't get it, and how
Speaker 1: many doses, and what what spacing, and where the prioritization is,
Speaker 1: who should get it first, and all of that, again
Speaker 1: is done by independent scientists, and it's done with transparency.
Speaker 1: Those meetings are open to the public. Now, these advisory
Speaker 1: committees don't make the decision. They make recommendations, and it's
Speaker 1: up to the agencies, the FDA or the CDC to
Speaker 1: accept those decisions, which they usually do. So this is
Speaker 1: a process that's been around for a long time and
Speaker 1: it has a long track history of working well and
Speaker 1: making sure that vaccines that are used widely are very
Speaker 1: safe and at least reasonably effective, that the benefits outweigh
Speaker 1: the risk for those populations that are recommended. So you're
Speaker 1: asking me if I'm comfortable. I'm saying I am, as
Speaker 1: long as it goes through this process, which it is,
Speaker 1: and the public needs to see this. The public needs
Speaker 1: to see that these are decisions that are made on
Speaker 1: evidence and science and viewed by external experts to be fair.
Speaker 1: And I just because you understand this a whole lot
Speaker 1: more than I do. Um, the the process has gone
Speaker 1: from a decade to essentially a year right before you know,
Speaker 1: give or take a few months or so before it
Speaker 1: kind of rolls out to everyone. What is the risk
Speaker 1: in that you don't have maybe ten years of study,
Speaker 1: or you don't have years after someone's been given a
Speaker 1: vaccine to kind of track what the longer term impact is.
Speaker 1: Do we need to be at least a little cautious
Speaker 1: about something like that? Well, I think we need to
Speaker 1: be very cautious about everything, and a lot of the
Speaker 1: ways that this is speed had been sped up doesn't
Speaker 1: cause any concerns. Scientifically, we did very large studies of
Speaker 1: multiple products at the same time, and we put tremendous
Speaker 1: resources into recruiting people for those studies. So the fact
Speaker 1: that that's done faster, as long as it's done well,
Speaker 1: it's fine. One of the biggest ways that we've of
Speaker 1: time is that the vaccine has been manufactured prior to
Speaker 1: the results of the phase three studies. That is a
Speaker 1: big financial risk. Normally, you see the results of phase
Speaker 1: three studies and if it looks good, you build manufacturing capacity.
Speaker 1: In this case, that capacity was built earlier, so there's
Speaker 1: financial risk there, but there's not risk of there being
Speaker 1: a problem. If the vaccine turns out to be not
Speaker 1: suitable for use, then you've wasted all that money, but
Speaker 1: you haven't hurt anybody. So these these processes I think
Speaker 1: are very solid. Um. One of the questions you asked was, well,
Speaker 1: what about something that has a long term safety problem?
Speaker 1: And you know right now the standard is that people
Speaker 1: have to have been studied for at least sixty days,
Speaker 1: and most adverse reactions that happened after a vaccine happened
Speaker 1: in the first sixty days. But there is some possibility
Speaker 1: if it's something that took six months to develop, Well,
Speaker 1: you're not going to find that out until you wait,
Speaker 1: so at the end, you have to balance risks and benefits,
Speaker 1: and known risks and known benefits. And we're, as you've described,
Speaker 1: in the pandemic situation where disease is increasing quickly, the
Speaker 1: hospitalizations are increasing, and pretty soon the deaths are going
Speaker 1: to start increasing. Economy has had major hits, so you
Speaker 1: have to make the decision based on the best developble evidence.
Speaker 1: What matters is that the science is driving the decisions,
Speaker 1: that it's free from politics, free from other factors, that
Speaker 1: this is evidence based decisions. We're gonna leave it on
Speaker 1: that note, because that's a great way to wrap it up.
Speaker 1: Dr Salmon, Thank you so much, greatly appreciated. Dr Daniel Salmon,
Speaker 1: Director of the Institute for Vaccine Safety and Professor of
Speaker 1: International Health at the Johns Hopkins Bloomberg School of Public Health.
Speaker 1: This is Bloomberg Business Week with Carol Messer from Bloomberg Radio. Well,
Speaker 1: this is among our most read stories, uh and it's
Speaker 1: one reporter for Bloomberg Business Week. It's about something that
Speaker 1: we were all trying to get back in the spring.
Speaker 1: We're talking about lisol and how there seems to be
Speaker 1: more than ever but guess what, it's still not enough
Speaker 1: for the US. So let's get into it with Bloomberg
Speaker 1: Business WEE get it or Joe Webber. He's on the
Speaker 1: access line from Brooklyn, also with US Bloomberg News team
Speaker 1: leader for US Healthcare. He wrote it. Drew Armstrong. He's
Speaker 1: on the phone in New York City, Joel, I gotta
Speaker 1: tell you back in the spring, I could not get
Speaker 1: Lisolf for nothing. Yeah, you weren't alone. I don't think
Speaker 1: anybody else could. And when you could, when you did
Speaker 1: see it, you you know, immediately hoarded it and it
Speaker 1: was one of the great hoarding items. Um. And you know,
Speaker 1: back then, there were a couple of stories like that
Speaker 1: that I was really interested in. And you know, one
Speaker 1: was three m you know, how do you make how
Speaker 1: do you make more? In masks? Yesterday? And we did
Speaker 1: that one as a cover story, and the lights on
Speaker 1: one just stuck with me because I was like, boy,
Speaker 1: I'm really curious how you make more Lisol? And Drew
Speaker 1: Armstrong actually happened to have that same kind of urge
Speaker 1: and came back with a fully realized story that is
Speaker 1: one of my favorites from sort of pandemic times, Drew,
Speaker 1: how do you make more Lisol? So, yeah, I start
Speaker 1: ask that question, UM earlier this year, you know, for
Speaker 1: exactly the same reason you guys, because I couldn't find
Speaker 1: it anywhere. And you know this company that makes a record,
Speaker 1: UM Ben Keyser. It's a London company. They are a
Speaker 1: big consumer conglomerate. And one of the things you find
Speaker 1: from UM reading about this is that you know, there's
Speaker 1: this massive company with huge resources, but you know, they
Speaker 1: have this relatively thin, delicate supply chain that's stretched all
Speaker 1: over the US and all over the world. And when
Speaker 1: the pandemic really you know, did two things. One just
Speaker 1: put their demand through the roof for this product, but
Speaker 1: to you know, just absolutely upset all of the kind
Speaker 1: of global trade and even the U. S trade and
Speaker 1: you know, all the kind of things that you need
Speaker 1: to make stuff in a factory in the world that
Speaker 1: we live in. It it really jumbled their world. And
Speaker 1: so they were they were great about opening the door
Speaker 1: and telling us, you know how they did everything from
Speaker 1: like flying seven seven full of chemicals from Europe to
Speaker 1: the US as they can make more whites and lightsol
Speaker 1: spray UM. At one point they were starting to run
Speaker 1: out of ethanol, which is one of the main ingredients
Speaker 1: of Lysol. So it happened that Americans weren't driving as
Speaker 1: much because they were all staying home. And ethanol the
Speaker 1: important gasoline additive. So they retooled a ethanol plant in
Speaker 1: Nebraska and makes ethanol for gasoline and just shipped Twane
Speaker 1: cars with these, you know, thirty thousand gallons tanks of
Speaker 1: ethanol to their factory in New Jersey. It's just fascinating
Speaker 1: to hear about all the things that they did in
Speaker 1: order to, you know, keep this stuff blowing and still
Speaker 1: have not been at all. This is one of the
Speaker 1: stories man, You know, you could just sit down and
Speaker 1: talk about for a long time because it's just interesting
Speaker 1: facets something we take for granted, right, but you really
Speaker 1: dug into kind of the nuts and bolts of it.
Speaker 1: Tell us though, and I have to say, on our
Speaker 1: planning call this morning, we were all getting into it.
Speaker 1: Tell us about Mr Lysol and Flushing Meadows. Sure. So
Speaker 1: there's a guy at a record called Joe Robino. He
Speaker 1: has been he has worked on Lysol for thirty five
Speaker 1: some years through its previous owners. He's a microbiologist. Um,
Speaker 1: you know, there's a there's a little red banner on
Speaker 1: the Lysol can which says kills nine percent of germs.
Speaker 1: And you know that's that clings. Everyone has to look
Speaker 1: at the chloroxy does everybody makes the same claim. But
Speaker 1: they were actually the first people to do the research
Speaker 1: to show that. And one of the things that they did,
Speaker 1: um in the early days of this product back in
Speaker 1: the in the very early sorry how did the early product,
Speaker 1: but back in kind of his early on in his
Speaker 1: career in the early nineties, they would do stuff like
Speaker 1: cope a toy ball with a harmless virus and put
Speaker 1: it into a daycare and they go around swabbing everything
Speaker 1: to figure out, you know, where did this virus go. Um,
Speaker 1: they did the same thing in hotel rooms with people
Speaker 1: who had cold. They're really trying to understand the microbiology
Speaker 1: aspects of what their products could kill. And one of
Speaker 1: the things that they studied was, you know, just how
Speaker 1: you know, if you have basically a plateful of you know,
Speaker 1: germs to microbes, you know, viruses or bacteria, how much
Speaker 1: does it actually kill? And you know, he was talking
Speaker 1: to me as he was explaining as one of many
Speaker 1: conversations we had, he said, well, we had a you
Speaker 1: know a three log or four log or even a
Speaker 1: five log reduction and what that actually means is nine. UM.
Speaker 1: The marketing folks took a look at that and they said,
Speaker 1: people love the idea of we gotta put this on
Speaker 1: the camp um And that's kind of the history of
Speaker 1: where that number comes from and disinfecting. UM. If they
Speaker 1: were the first to make it, now everybody everybody does
Speaker 1: it actually does a lot more than that. But you know,
Speaker 1: there is a tremendous amount of research, quotes, scientific and
Speaker 1: consumer that goes on behind these products. UM to figure
Speaker 1: it out. You mentioned Flushing Meadows, my favorite place in
Speaker 1: this whole story. Say, light Bulb makes a toilet bowl cleaner,
Speaker 1: and UM, you know, if you make a toilet bowl cleaner,
Speaker 1: you're always changing and tweaking your product. You're introducing new
Speaker 1: you know, formulations, things like that. You have to test
Speaker 1: it and if you sell your toilet bowl cleaner around
Speaker 1: the world, you have to test it in toilets around
Speaker 1: the world. So they have a room. It's Room A
Speaker 1: one five four in Montvale, New Jersey, and there's a
Speaker 1: hundred four toilets brought in from around the world. There's
Speaker 1: a UK road, there's a European Union row, there's an
Speaker 1: American row of toilets, there's an Indian row of toilets,
Speaker 1: and they have a back room where they actually replicate
Speaker 1: the water conditions from around the world to match those places,
Speaker 1: and little robotic arms that flush each toilet on kind
Speaker 1: of the you know, typical home schedule of toilet use
Speaker 1: for say, you know the people in the United Kingdom,
Speaker 1: and you'll be standing in this room and all of
Speaker 1: a sudden you'll hear sixteen toilets, you know from France,
Speaker 1: all flush at once. That is how you test toilet
Speaker 1: bowl cleaner. It's really it was a fascinating, fascinating and
Speaker 1: also probably the best photograph we published all year, just
Speaker 1: to see, you know, a testing a testing center of toilets.
Speaker 1: I want to bring it back to the flagship product
Speaker 1: though you mentioned um ethanol being one of the main ingredients.
Speaker 1: What are the ingredients that go into lysol? And and
Speaker 1: just like, how did is that whole manufacturing side really
Speaker 1: come together? Because they're producing upwards of a million cans
Speaker 1: a day at this point, right, Yeah, So they have
Speaker 1: a plant in a suburb area of New Jersey. They
Speaker 1: actually asked me not to see where it is because
Speaker 1: demand has been so crazy that they were worried that
Speaker 1: people would start showing up outside the plant. They don't
Speaker 1: really have a lot of security there or anything like that,
Speaker 1: and they don't want to have to hire it um,
Speaker 1: but they you know, there's a rail there's a rail
Speaker 1: siding that runs up to the plant, and these rail
Speaker 1: cars that I mentioned, there's these thirty thousand gallons giant, black,
Speaker 1: hulking rail cars. They drop off a hundred twenty two
Speaker 1: hundred and fifty sorry I think hundred twenty thousand gallons
Speaker 1: of ethanol a day. Ethanol is a solvent. What it
Speaker 1: does with a virus like covid, like the coronavirus, is
Speaker 1: it essentially coronavirus is a little bit of genetic material
Speaker 1: in a lipid wrapper o lipid skin. Ethanol gets in
Speaker 1: there essentially tears lipids apart and it renders it inert um.
Speaker 1: There's another chemical called a quat quaternary and aluminium fault
Speaker 1: I believe right. It's another key component. And then after
Speaker 1: that kind of sent they put all this stuff together.
Speaker 1: They call it the juice. They manufacture it, you know,
Speaker 1: met like tens of thousand gallons, thinks. But it goes
Speaker 1: into the cans and a little bit of Chaine as
Speaker 1: a propellant and onto your store. It's pretty amazing. I've
Speaker 1: got to say that we were waiting weeks recently for
Speaker 1: some Lisol wipes and when they came in, it was
Speaker 1: like celebration at our house. It's pretty remarkable, UM threw
Speaker 1: only like you can do. It's a great story, UM,
Speaker 1: and everybody should check it out. I'll put it on Twitter.
Speaker 1: Drew Armstrong, team leader for US Healthcare Bloomberg News along
Speaker 1: we Tell Webber, editor of Bloomberg Business Week. Check out
Speaker 1: the new issue a business Week online, on newsstands and
Speaker 1: of course on the Bloomberg. This is Bloomberg Business Week
Speaker 1: with Carol Masser from Bloomberg Radio. There's one company and
Speaker 1: stuff that we wanted to bring to your attention, especially
Speaker 1: as we get ready for the holiday shopping season. Just
Speaker 1: around the corner. Macy's had quite a swing today. It
Speaker 1: was down ten percent at its lows, up almost three
Speaker 1: percent at its highs. Right now it's up about two
Speaker 1: in the trade, and that's after the company reported its
Speaker 1: latest quarterly results. Let's get into it with Bloomberg Intelligence
Speaker 1: Senior US Retail Alice put him Goyle. She is with
Speaker 1: us on the phone in New Jersey, Pudham. So nice
Speaker 1: to have you here. How are you? I'm good, Thanks
Speaker 1: for loving me, Harol, Well, good to have you here. Um.
Speaker 1: How's Macy's doing. I can't tell from the trade today
Speaker 1: because it was all over the map, it was, you know.
Speaker 1: I think I think macy Is the story is kind
Speaker 1: of the same with everyone else that has recorded so far,
Speaker 1: where you're seeing a marked improvement from where we were
Speaker 1: in March and April. So you're seeing a progression where
Speaker 1: comps have gotten better, stores have opened, but they're still down.
Speaker 1: That's that digital is on fire. And and we see
Speaker 1: this across the board, not only a Macy's, where digital
Speaker 1: sales they're now representing roughly forty of total fails and
Speaker 1: that's probably going to accelerate over the holidays as stories
Speaker 1: can handle the higher capacity and the viruses. The cases
Speaker 1: are actually rising. So we think digital is where the
Speaker 1: focus is right now. Macy's is doing kind of everything
Speaker 1: right really at the moment, I would say to get
Speaker 1: customers to shop with it, go figure. And the CEO
Speaker 1: did say that the digital business is growing at quote
Speaker 1: an aggressive rate. So listen, you and I have talked
Speaker 1: so much about the retail sector. You know, macy specifically,
Speaker 1: it's just one of those iconic brands, right, they've just
Speaker 1: been around forever. But we also know retail is going
Speaker 1: through disruption, innovation just you know, like a lot of
Speaker 1: other industries. But you know, we've been overstored, overmauled. Macy's,
Speaker 1: as you said, is doing everything right. So what is
Speaker 1: the retailer that they ultimately need to be to survive
Speaker 1: for another How many years have they been around? Is
Speaker 1: it a hundred years? I don't know, it's a hundred
Speaker 1: and sixty, yeah, okay, So can they be around for
Speaker 1: the next century? And what do they need to do
Speaker 1: to kind of to do that? Sure, I think department
Speaker 1: stores in general need to look at their fleet. Again,
Speaker 1: we've already seen the big foosh on digital and really
Speaker 1: the disruption that we were expecting from digital, meaning going
Speaker 1: from penetration, happened in a matter of six months already.
Speaker 1: So that's happening, and we think it's here to stay.
Speaker 1: We think, you know, higher digital penetration rates will persist
Speaker 1: even past the pandemic and retailers could reach equilibrium, especially
Speaker 1: these department stores where a large portion of their sales
Speaker 1: will come from the online platform. So what does this
Speaker 1: mean for stores? It means that they can have these large,
Speaker 1: oversize you know, bigger stores. Macy stores average over a
Speaker 1: hundred thousands, and they're huge and there's so much in there.
Speaker 1: So consumers they're now looking for, you know, spaces where
Speaker 1: they can go quickly in and out of. They don't
Speaker 1: want to have to run from one department to another
Speaker 1: and kind of shop the way their grandparents shopped, if
Speaker 1: you would say. Um, so they need to work on that,
Speaker 1: and they are. They've made small steps. You know, they
Speaker 1: have their market at Macy stores where they're rolling out
Speaker 1: a new small store format. But at the end of
Speaker 1: the day, as that accelerates, they need to still think
Speaker 1: about their bigger boxes and downside some So let me
Speaker 1: just you know, I'm gonna go back to digital sales
Speaker 1: because I'm just kind of looking through the numbers and
Speaker 1: forgive me, and we kind of covered a little bit
Speaker 1: of this, but I mean digital sales they were up
Speaker 1: versus the same quarter last year, but the second quarter
Speaker 1: they were up fifty year over year. Is that a problem? No,
Speaker 1: not at all, because um, in the second quarter, stores
Speaker 1: were closed, so there was no other outlet to go. Okay, right,
Speaker 1: but if you look at the total sales, total sales
Speaker 1: progression has actually moderated as the year has progressed. So overall,
Speaker 1: it's encouraging time. So help me out because I like
Speaker 1: chopping digitally and I will definitely go I'll try new places.
Speaker 1: I'll go to definitely the places. I know. What is
Speaker 1: Macy's need to do. Who is their customer and how
Speaker 1: do they keep them engaged on a digital platform? Yeah,
Speaker 1: and their customers everyone, So it's all demographics. But where
Speaker 1: they're gravitating towards the younger millennial gen Z customer, and
Speaker 1: you know, traditionally they've had a much harder time attracting
Speaker 1: that customer. But over the past six months, it seems
Speaker 1: that they made a lot of problem growth and part
Speaker 1: of that progress came through their digital efforts that they've
Speaker 1: stepped up. So the rollout of curbside has really boosted
Speaker 1: their image to that millennial customer that probably doesn't want
Speaker 1: to go into a store, but hey, if you want
Speaker 1: things within the next day or even the same day,
Speaker 1: you can just drive off and pick it up. So
Speaker 1: that's been a huge plus for the retailer. Um not
Speaker 1: just Macy's, but even Coals. In fact, Coal said a
Speaker 1: third of their digital demand was picked up at them,
Speaker 1: a third of their pickup demand was picked up at
Speaker 1: the curb. That's pretty promising my kind of shopping. I'm
Speaker 1: gonna say, give me out of the stores. Hey, one
Speaker 1: thing I want to ask you. We think of Macy's,
Speaker 1: we think of the Macy's brand, but Macy's is Bloomingdale's.
Speaker 1: They are Blue Mercury and they're Macy's. Where's the most
Speaker 1: growth Blue Mercury. I mean, that's cosmetics and stuff that's
Speaker 1: got usually really high margins. So I just wonder, where's
Speaker 1: the growth, Where's you know, kind of the future potential
Speaker 1: for them among those brands. Yeah, I think I think
Speaker 1: the highest growth would be within Blue Mercury at Backstage UM,
Speaker 1: which is their off price UM banner that done would
Speaker 1: follow Bloomingdale's and then Macy's. Macy's as their largest and it's,
Speaker 1: you know, the biggest brand that they have and also
Speaker 1: the one that needs the most work. Yeah. Interesting, but
Speaker 1: I mean it's I feel like that whole bloom Mercury
Speaker 1: sophore that is a space that just continues to explode.
Speaker 1: Just got about thirty seconds here. Yeah. Absolutely, As you
Speaker 1: said before, you know, personal care beauty is where people
Speaker 1: are focused, something that they'll always continue to replenish. Our
Speaker 1: buy the traffic driver aspect of a department store, and
Speaker 1: I had the highest margins close to a no more.
Speaker 1: Oh my god. Yeah, I gotta say, to be honest,
Speaker 1: that's kind of what I have spent money on while
Speaker 1: I've been working from home. Is stuff like that. Put hum.
Speaker 1: Nice to hear your voice. Take care of put hum Goyle.
Speaker 1: She's senior US Retail Alice at Bloomberg Intelligence, Rod Macro
Speaker 1: a journal Now, but you let me drive? No, no, no no,
Speaker 1: all right please, I want to drive. Strive the question.
Speaker 1: This is the drive to the Globe community. Thanks. We'll
Speaker 1: drying us down on Bloomberg Radio. It is time for
Speaker 1: the Drive to the close on this Thursday. I'm Carol
Speaker 1: Master in our Bloomberg Interactive Broker's studio and delighted to
Speaker 1: have back with us. Vinny Catalano, chief market strategist at
Speaker 1: Stuyvest Capital Management, also global investment strategist at the Faux
Speaker 1: Red Mount. He joins us once again on the phone
Speaker 1: in New Jersey. So, Vinny, how are you? I'm Wow,
Speaker 1: how are you, Carol? I'm doing well. Um. Also just
Speaker 1: kind of watching the virus numbers, getting a little nervous
Speaker 1: about what it means for my beloved city of New
Speaker 1: York City and the surrounding area. Um, how do you
Speaker 1: see it? How does it impact ultimately what's going to
Speaker 1: happen in our economy? Once again, what it means for
Speaker 1: small businesses, what it smalls for Americans, what it means
Speaker 1: for Americans, and what it means ultimately for our economy.
Speaker 1: Well that's not too much, Okay. Well it's all connected though, right, Vinny?
Speaker 1: I mean it really, You know, you can't talk about
Speaker 1: COVID without or you can't talk about the economy without
Speaker 1: talking about COVID. You can't really talk about Wall Street
Speaker 1: about without talking about the virus, although there is this
Speaker 1: incredible disconnect between Main Street and Wall Street. Well, absolutely,
Speaker 1: and small businesses you've mentioned a moment ago. Uh, small
Speaker 1: businesses clearly have a problem. You cannot run most small
Speaker 1: businesses a capacity. You can't have restaurants half full, you
Speaker 1: can't have bubbles outside of restaurants, and so on and
Speaker 1: so forth. Bars they can't do it. Colleges cannot continue on. Uh,
Speaker 1: in the manner that they have. So you know, the
Speaker 1: vaccine could not come along quickly enough. But between now
Speaker 1: and then, obviously we need some government support and government help.
Speaker 1: And it would be nice if the left hand knew
Speaker 1: what the right hand was doing and they kind of
Speaker 1: cooperator down to Washington. We could we could definitely use that.
Speaker 1: As far as the stock market is concerned, Um, that's
Speaker 1: something where you know, it operates on a on a
Speaker 1: completely different level. Um. One of the elements about the
Speaker 1: stock market that I think many people don't fully appreciate
Speaker 1: is the fact that the stock market has one characteristic
Speaker 1: that a lot of other markets do not have, and
Speaker 1: that's liquidity. Get in, you can get out, and you
Speaker 1: can do it very easily. And in an institutionally dominated market,
Speaker 1: which the stock market is, there is that's you know,
Speaker 1: macho approach to you know, a driver mentality coming down
Speaker 1: the road and you know, playing a game of chicken,
Speaker 1: and well, I can get out quicker than the other
Speaker 1: guy can that kind of thing, and why not? Why not?
Speaker 1: So that's kind of what's going on, uh in large
Speaker 1: part um and to a large extent that that helps
Speaker 1: explain a lot of the stock market behavior, which goes
Speaker 1: beyond your more traditional way of looking at it. Okay,
Speaker 1: So having said that kind of back at back at me,
Speaker 1: So how do you put that or that thinking into
Speaker 1: kind of practical advice. Well, I think that, Yeah, I
Speaker 1: think the thing that that would help investors to this
Speaker 1: season to be reflective. We're entering in that and so
Speaker 1: it's a good idea to take take a stock of
Speaker 1: where you're at, take a look at the methodology that
Speaker 1: you use, try to understand the nature of the beasts
Speaker 1: that you're dealing with, Understand the nature of how the
Speaker 1: market behaves, and and understand the fact that just like
Speaker 1: a UH Professor Rick Mason's book, it's not complicated. This
Speaker 1: is really about complexity. It's not about complicated systems. It's
Speaker 1: about complexity, and complexity means that you don't have a
Speaker 1: solvable situation. You have a multi level, multifaceted aspect which
Speaker 1: is called the stock market. It's not just you know,
Speaker 1: Grandpa Buffett drinking his your plan is ukulele and drinking
Speaker 1: and sipping his diet coke and investing long time. It's
Speaker 1: also institutional investors doing completion strategies with e T s.
Speaker 1: It's UH risk parity programs that are going on. It
Speaker 1: is algis UH and algorithmic trading. It's a whole hodgepodge
Speaker 1: of different things that are impact in the market. So
Speaker 1: what do you do about that? Try to understand the basics,
Speaker 1: understand the core element of what goes into valuation. And
Speaker 1: I did a little something. I posted it up on
Speaker 1: my LinkedIn page. It's a little diagram. I call it
Speaker 1: the funnel. I think it could help people understand how
Speaker 1: you at least need to understand the basics of investments
Speaker 1: and then you can kind of go from there, but
Speaker 1: at least understand that that some of the core principles concepts.
Speaker 1: Think in terms of concepts as opposed to facts and opinions.
Speaker 1: Well as the point is her video that you know
Speaker 1: the mark it as many different things, right, um, And
Speaker 1: so it's not just you know, one ideology or one
Speaker 1: factor at play. UM. But I do wonder increasingly the
Speaker 1: institutional money, how that often is really impacting the overall trade.
Speaker 1: I feel like in many ways, the institutional trade because
Speaker 1: of algorithms and formulas out there, mathematical formas it often provides,
Speaker 1: you know, kind of a safety net when the market
Speaker 1: goes really low because programs kick in and investors come
Speaker 1: back into the market. Same thing. When it gets too heavy, right,
Speaker 1: some things get hit, some numbers get tripped, and then investors,
Speaker 1: you know, institutional investors get out of the market. But
Speaker 1: it really kind of provides almost you know, this kind
Speaker 1: of calm way of keeping the market in check, well
Speaker 1: for better or worse, for better or work. That's one
Speaker 1: aspect of it, definitely. But here's something that perhaps the
Speaker 1: listeners can take a look into, try and identify, try
Speaker 1: and find the risk the excuse me, the rate galio
Speaker 1: um information piece of this up on the internet in
Speaker 1: several places about risk parity now, and Race talked to
Speaker 1: us a lot. In fact, he was part of our
Speaker 1: Bloomberg New Economy Forum this week, so there's a lot
Speaker 1: of information from Ray on the Bloomberg terminal and at
Speaker 1: Bloomberg dot com. That's right, and try and understand what
Speaker 1: risk parity is all about. And when you look at
Speaker 1: risk parity as one of the let's call it, one
Speaker 1: of the animals and around there that that populate this
Speaker 1: jungle called the stock market, you will be shocked to
Speaker 1: see that that that the approach has little to nothing
Speaker 1: to do just like kind of like a technical analysis
Speaker 1: in a way has little to nothing to do with
Speaker 1: the fundamentals of the companies. And yet at the same
Speaker 1: time you've got that going on, while you have Lauren
Speaker 1: Buffett stuff going on and and his approach, while you
Speaker 1: have a whole range of these other types of beings
Speaker 1: that are in the space that are doing all of
Speaker 1: this stock market stuff. It's complexity, it's not complicated. Is
Speaker 1: complexity and complexity is different than complicated. Are you saying
Speaker 1: retail investors, you don't stand a chance? Just quickly? You
Speaker 1: do if you if you focus in on your risk
Speaker 1: tolerances and your goals and your objectives and then trying
Speaker 1: to learn, try to understand what's going on, up your game, Yeah,
Speaker 1: that type of thing, and be reflective, look at you
Speaker 1: know you really try to be informed, not feel informed. Yeah, no, no, no,
Speaker 1: that's a big distinction and certainly an important one when
Speaker 1: you're investing in the markets. All Right, gotta run, Vinny,
Speaker 1: Thank you so much. People have a good Thanksgiving. Vinny Catalano,
Speaker 1: chief market strategist at Stuyvesant Capital Management, Global investment strategist
Speaker 1: at the Faux Red Mount joining us on the phone
Speaker 1: from New Jersey. Thanks so much for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or at
Speaker 1: Bloomberg dot com, and be sure to check out our
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