Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaylie. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. Great guest joining Katie,
Speaker 1: Matt and I now David Cotal, the co founder and
Speaker 1: CEO of Cumberland Advice is David had a perfect guest
Speaker 1: to do what I've been doing with guests through much
Speaker 1: of this week, which is just the lesson of one
Speaker 1: as we approached twenty two before we run away from
Speaker 1: this year, David and get deep into twenty two. What's
Speaker 1: the number one lesson for you? If there's a lesson
Speaker 1: for me, it's the ignoring of the history John of pandemics.
Speaker 1: They are different. You were talking about the head I
Speaker 1: listened to the show this morning in all week, and
Speaker 1: the morning session that you do in the seven o'clock
Speaker 1: hour is the one that's you're putting the status of
Speaker 1: this pandemic. When you hit the history of all pandemics,
Speaker 1: they are a lesson. This is not a business cycle.
Speaker 1: That's typical and that's being missed here. We're too much
Speaker 1: in the weeds, and we have lots of historical evidence
Speaker 1: for to guide us, especially with the Federal Reserve. I
Speaker 1: went back and looked at every pandemic I could find,
Speaker 1: and there's indicators of impacts on wages, on labor forces,
Speaker 1: on prices, on interest rates, all the way back to
Speaker 1: the time of Athens and Sparta. What's missing in the
Speaker 1: conversation now is the impact. I read Milton Freeman's treatise,
Speaker 1: I read Alan Meltzer's treatise. They talk about the FED,
Speaker 1: they don't even mention a pandemic, and that it's a
Speaker 1: whole different characterization of global economics. So the big takeaway
Speaker 1: for the year, as far as I'm concerned, is missing
Speaker 1: the big picture of a pandemic shock. But David, when
Speaker 1: we look at it from a corporate perspective, profits have
Speaker 1: held in there. They've done actually quite well. They've continually
Speaker 1: surprised to the upside. Do you not buy into the
Speaker 1: idea that you can look through the pandemic and the
Speaker 1: economic impact which seems to be waning of each individual wave.
Speaker 1: You can look through the normalization of monetary policy so
Speaker 1: long as earnings growth remains there, Kelly, I agree with
Speaker 1: that earnings growth to spectacular and it will continue. I
Speaker 1: agree with Paulson's estimate. Are you Inny's estimate? Are the
Speaker 1: other ones? Eight ten, twelve? And makes no difference. It's powerful.
Speaker 1: Why do we have the earnings growth? We have a
Speaker 1: shock that's demographic. We have people dead a million more
Speaker 1: in the United States than traditional trajector rate. We have
Speaker 1: people disabled, not able to get to work, and we're
Speaker 1: not finished with this. So what do you get? You
Speaker 1: get a substitution from labor to capital. When you do that,
Speaker 1: you get productivity gains, whether it's a robot or telemedicine,
Speaker 1: and you get something else. You get a fall in
Speaker 1: the real interest rate. Every pandemic in history has a
Speaker 1: fall in the real interest rate and a substitution of
Speaker 1: capital for labor. Those are the macro pieces, by the way,
Speaker 1: j Pal understands this, and I believe the composition of
Speaker 1: the border governors will also reflect it if it's the
Speaker 1: nominees we're seeing being proposed and vetted now in the
Speaker 1: public area. So big picture, pandemic shock, not business cycle,
Speaker 1: earnings will be good. Stock market will go higher interest rates,
Speaker 1: but a little inflation will roll over back to the
Speaker 1: two three level, and it will happen faster than people
Speaker 1: thinks as the shock adjustment rolls out. Well, you mentioned
Speaker 1: the empty seats that are still remaining at the FED,
Speaker 1: and depending on who sits them, do you think we
Speaker 1: could be looking at a different, different trajectory of policy
Speaker 1: moving forward. Well, if we look at the three names
Speaker 1: that are surfaced in the Wall Street Journal yesterday, they
Speaker 1: lean center, but they are accepting of a changed FED
Speaker 1: structure that also looks beyond narrow monetary policy. To our academics,
Speaker 1: we know what they've written and said. They have some experience,
Speaker 1: and Raskin is a known quantity, but they're all confirmable.
Speaker 1: They are all young enough to hold these positions, and
Speaker 1: obviously they've been able to deal with the financial restraint
Speaker 1: because the FED governor doesn't get paid very much compared
Speaker 1: to other positions. So I think policy stays in the middle.
Speaker 1: That's great for markets, great for the investor class, it's
Speaker 1: great for the country. What we don't want is shocks.
Speaker 1: I'm in the camp they should not reduce the balance
Speaker 1: sheet at the same time they raised the interest rate
Speaker 1: It's hard enough for a central bank to do one
Speaker 1: thing at a time in a pandemic. Doing two things
Speaker 1: and trying to get them both right is virtually impossible.
Speaker 1: So my it's good is that one point at a time,
Speaker 1: do one thing at a time and get it right.
Speaker 1: It's a good point. And I also appreciate your point
Speaker 1: that we need eyes that aren't too narrowly focused. I
Speaker 1: think of your very liberal education. I know you studied
Speaker 1: not only economics but also organizational dynamics and philosophy, right,
Speaker 1: probably reading a lot of favor and fuco um. How
Speaker 1: how how confident are you that this FED is really
Speaker 1: in touch with the human effects of the pandemic and
Speaker 1: their policy actions, especially when looking at something like COVID
Speaker 1: and the effects of long COVID. Well, Matt, I think
Speaker 1: j Pal gets it. There's a community system in the FED.
Speaker 1: It's got thirty six members to it. I know one
Speaker 1: they publish their results. They are looking at the entire
Speaker 1: population of three million Americans and looking at the impacts
Speaker 1: of the various component parts. It seems to me the
Speaker 1: point gees who are being vetted now publicly, uh Cook,
Speaker 1: Jefferson and certainly Raskin have the characteristic to look beyond
Speaker 1: the narrow. I hope the FIT looks beyond the narrow.
Speaker 1: If it's strictly money and velocity and multiplier and not
Speaker 1: looking at full impact in the agendas we face in
Speaker 1: the Nited States and the rest of the world, we're
Speaker 1: in trouble. But j Pals seems to get it. I
Speaker 1: applaud what he did as chairman and continues to do so.
Speaker 1: I'm an endorser. Now. If the politicians will leave the
Speaker 1: FED alone and let it do its job, that would
Speaker 1: be much better. Independence of the FIT is always threatened
Speaker 1: by politics. I want to I want to get to
Speaker 1: politics and a sense here kind of rip up the
Speaker 1: script Tom Kean style. Um, David, and I look at
Speaker 1: your resume. UM, as I think about build back better
Speaker 1: and the chances it won't pass, as I think about
Speaker 1: my personal concerns that the salt deduction cap won't be lifted. UM,
Speaker 1: I look at your resume. You were the commissioner of
Speaker 1: the Delaware River Port Authority. You serve on the Treasury
Speaker 1: transition teams for Keen and Whitman. Um. You were a
Speaker 1: board member of the New Jersey Economic Development Authority. I've
Speaker 1: been asking myself a lot lately. Why do these states,
Speaker 1: especially New Jersey and New York, how such high taxes
Speaker 1: compared to other states? You know, it seems to only
Speaker 1: matter the the the UH the salt cap to the
Speaker 1: Tri state area. If if we don't get that, what
Speaker 1: else can be done to lower these tax burdens that
Speaker 1: are incredibly heavy on a lot of working families in
Speaker 1: those in those states. Well, it takes a shock, and
Speaker 1: it hasn't happened yet, And I totally agree with. Our
Speaker 1: company used to be headquartered in New Jersey where now
Speaker 1: in Florida. So we've got it. Change not the only
Speaker 1: driver of the reason to make the change. We were
Speaker 1: on airplanes flying to Florida because of the migration of
Speaker 1: wealth here. Now, I will tell you during a pandemic,
Speaker 1: Florida is not such an easy place because we don't
Speaker 1: have mitigation. Should we have a Florida which is playing
Speaker 1: this differently? And two in maya opinion that there is
Speaker 1: a detriment to that. My office is now extending it's
Speaker 1: closing to February and doing a rolling month. We've had
Speaker 1: COVID cases in our staff among our clients, so we
Speaker 1: see a direct negative business impact when there is no mitigation.
Speaker 1: That's not an advocacy for a lockdown, it's an advocacy
Speaker 1: for thoughtful policy. M David got to leave it there, buddy,
Speaker 1: But we appreciate your friendship, your partnership with this program
Speaker 1: through the year, and we look forward to doing the
Speaker 1: same through twenty two. Thank you, David. Co talk there
Speaker 1: of couble of advises with us now in place to say,
Speaker 1: as Jim Pulson, chief investment officer at the Loophole Group, Jim,
Speaker 1: you've got a year end price target on the SMP
Speaker 1: of five thousand. I'm trying to work out if that's
Speaker 1: this week or next year, which one, Jim, it's it's
Speaker 1: next year. I really think, Jonathan, we're gonna have a
Speaker 1: very violatile year ahead of us, and I think we're
Speaker 1: gonna end up, you know, margly, not not near as
Speaker 1: much as we've been used to have late, but I
Speaker 1: would argue that, um, it's probably gonna be the best
Speaker 1: in the first half of the year. I I know
Speaker 1: we're up here. A lot of people think we might
Speaker 1: give some of this back as we enter the new year.
Speaker 1: That could happen, but I think we're gonna maybe go
Speaker 1: above five thousand during the first half of the year,
Speaker 1: on excitement that finally maybe moving the COVID from pandemic
Speaker 1: to an epidemic, and on the realization I think increasingly
Speaker 1: that inflation is moderating. But then I think in the
Speaker 1: last half, I think we're gonna see bond yields come up,
Speaker 1: and and the FED tapering tapering, and maybe and raising
Speaker 1: rates more aggressively. I think we could have a bit
Speaker 1: of a struggle in the latter half of the year.
Speaker 1: That's why I think we'll end up around five thousand
Speaker 1: for the SMP. But I think the broader market outside
Speaker 1: of the SMP five it does better this coming year
Speaker 1: than the SP overall. Well, let's talk about the bond
Speaker 1: yields going up, because I know you see the tenure
Speaker 1: at a year end next year, obviously we're about seventy
Speaker 1: five basis points south of that at the moment. Does
Speaker 1: it matter the ultimate rate, how high the rates ultimately go,
Speaker 1: or the speed at which they get there. Do you
Speaker 1: think that is a move that will happen quickly and
Speaker 1: that that is actually what will be upsetting to the
Speaker 1: equity market. Uh, it's a great question, Killy. You know,
Speaker 1: one of the things that I've looked at recently, looked
Speaker 1: back and looked at all the months that we've been
Speaker 1: under a three percent ten year yield, And I got
Speaker 1: to tell you, when you're under three percent ten year historically,
Speaker 1: we've only been there about twenty percent of the time.
Speaker 1: It is a gift to equity investors because the stock market,
Speaker 1: what it does is almost annualized UH annualized monthly returns
Speaker 1: and it and it has negative monthly returns a third
Speaker 1: of the time, third less compared to when above three percent.
Speaker 1: The return when you're above three percent is ten percent,
Speaker 1: but it's one below. So one of the things I
Speaker 1: think it is important for investors to focus on is
Speaker 1: rates are going to go up, but boy tell you,
Speaker 1: until you get back above a three percent level. The
Speaker 1: history on the stock market is awful, encouraging for stock investors. Um.
Speaker 1: That doesn't mean, um that a rate rise of seventy
Speaker 1: five or hundred basis points over a short period time
Speaker 1: won't bring a correction, and I think we might we
Speaker 1: will get that later this later next year. But I
Speaker 1: think it's important to realize not to totally run away
Speaker 1: from stocks, at least until we get back above three percent. Tenure. Well,
Speaker 1: is there no alternative, Jim, I mean, is that part
Speaker 1: of the thesis or uh do you see other places
Speaker 1: to go, especially to hide from inflation? Um? You know, Matt,
Speaker 1: I I UM, I could be wrong, but I really
Speaker 1: think inflation is going to moderate. I think there's already
Speaker 1: some favorable science. Commodity prices have kind of flattened out
Speaker 1: since May break even rates have flattened out since May.
Speaker 1: And I think what I'm most encouraged by is that policy,
Speaker 1: both monetary and fiscal, have been tightening really since March.
Speaker 1: The h M TOO money growth annual growth was twenty
Speaker 1: seven percent year on year in March, it's now thirteen.
Speaker 1: FEDS balance sheet was growing at eight percent in March
Speaker 1: year on year, and it's now under So there's been
Speaker 1: a good degree of monetary at least less stimulus, if
Speaker 1: you will. Uh, fiscal deficit was nineteen percent of GDP
Speaker 1: earlier this year. It's now under twelve percent. So there's
Speaker 1: also been fiscal tightening, if you will. And I think
Speaker 1: that policy leads inflation historically anywhere from twelve to eighteen months.
Speaker 1: And UH that those tightening moves since since really the
Speaker 1: end of the first quarter I think come into play
Speaker 1: next year in moderating inflationary. Fourth, so with the commodity prices,
Speaker 1: which are the leading edge of inflation pre sure already
Speaker 1: showing a roll over, and policy behind that now moderating,
Speaker 1: I think we're gonna be uh. I think it's gonna
Speaker 1: be a good outcome for inflation. And I don't think
Speaker 1: it's going to return to our two percent and FED target.
Speaker 1: In fact, I think it's gonna stay elevated around three
Speaker 1: percent and the balance of this recovery. But I do
Speaker 1: think it's gonna moderate next year, and that's gonna calm
Speaker 1: fears of runaway inflation. Jimmy just said something really really interesting.
Speaker 1: You use the word timing, but then you said that
Speaker 1: the equity market wouldn't get hit until ten your year.
Speaker 1: It's got to say now, I'm trying to work through
Speaker 1: this with you now, jim So bear with me a second.
Speaker 1: Are you saying that we can get inflation down with
Speaker 1: the Federal Reserve doing what it's doing without actually seeing
Speaker 1: tight to financial conditions. I expect bond yields will will
Speaker 1: move up, as I said, to two and a quarter
Speaker 1: percent next year, primarily because I think economic growth is
Speaker 1: going to continue to be to be strong. UM. I
Speaker 1: also think a realization is going to hit us next
Speaker 1: year Jonathan, that we're not returning to the FEDS two
Speaker 1: percent inflation target. I think the Fed may even adopt
Speaker 1: the three is okay uh as an inflation target. They'll
Speaker 1: you know, move their inflation target up and I think
Speaker 1: the bond market is going to respond to that as
Speaker 1: the year progresses. And also expect the Fed to raise
Speaker 1: the FED funder rate over there. And I do think
Speaker 1: that will bring a correction, but a correction that's viable
Speaker 1: in my view because I think the market will recover
Speaker 1: from it and move on to new highs. And I
Speaker 1: really think that the earnings and fundamentals of the economy
Speaker 1: are going to remain very, very strong and that is
Speaker 1: going to continue to drive this equity market. Jim, thank you,
Speaker 1: buddy for everything for today, in for the year so fine.
Speaker 1: Looking forward to looking forward to two to cover that
Speaker 1: with you as well. Thank you, Jim. Jim posting there
Speaker 1: the little good. Sarah House, senior economist, d Wells Fargo
Speaker 1: Securities joining us now. Sarah, I know you think we
Speaker 1: can see a seven handle on inflation early in see
Speaker 1: five percent for the full year. Does the O Macron
Speaker 1: variant provide upside or downside risk to that inflation outlook?
Speaker 1: So I think for inflation O Macron does provides perhaps
Speaker 1: from overall upside when you think of the ongoing pressure
Speaker 1: on goods prices, I think you might get some offset
Speaker 1: in the near term on things like travel related prices.
Speaker 1: So we saw that weekend temporarily with the delta wave
Speaker 1: improved a little bit in November, so I think the
Speaker 1: recovery and travel related prices probably gets pushed back a
Speaker 1: little bit further further to the spring. So there are
Speaker 1: there are some offsets that I think overall, just given
Speaker 1: the pressure we're seeing on supply chains and what that's
Speaker 1: doing two goods inflation, I think O Macron probably does
Speaker 1: does pose a little bit of upside risk to that
Speaker 1: inflation call. And is the upside risk to inflation larger
Speaker 1: than the downside potential impact to growth. So I'd say
Speaker 1: it's it's probably fairly balanced. So I think we've seen
Speaker 1: some give back in terms of activity if you look
Speaker 1: at some of the things like UM restaurant reservation, so
Speaker 1: I think you've seen some some moderate pullback that I
Speaker 1: think overall the the effects of each new wave has
Speaker 1: has had diminishing impacts on both growth and UM to
Speaker 1: some extent, and inflation as well as people are tired
Speaker 1: of of the pandemic, and so I think we have
Speaker 1: seen a great deal of COVID fatigue. People aren't changing
Speaker 1: travel plans UM around the holidays, even in the face
Speaker 1: of this very contagious variant, and so I think with
Speaker 1: that we we are seeing the overall effects on the economy,
Speaker 1: whether it's growth UM and even to some extent defending
Speaker 1: patterns UM is diminishing. When do you see that playing
Speaker 1: out in the data, Sarah, So, I think we will
Speaker 1: probably see some of it in in the December data.
Speaker 1: So I think again see some of that. And when
Speaker 1: you we look at the inflation numbers, I think some
Speaker 1: weakness in areas like UM, like travel services picking picking
Speaker 1: up again UM. I think you'll also see in terms
Speaker 1: of of perhaps in the higher numbers some renewed weakness
Speaker 1: and things like leisure and hospitality, as as perhaps employers
Speaker 1: are or maybe bracing for a little bit of a
Speaker 1: gift back there. But I think it's probably really going
Speaker 1: to be more more present in some of the January
Speaker 1: and perhaps even even February data, So we won't get
Speaker 1: a full sense of the dent from Omicron until probably
Speaker 1: early in the first quarter, but it will likely be
Speaker 1: a dent rather than a major crash, right because I
Speaker 1: look at crude oil for example, still hovering around one
Speaker 1: month hie, it doesn't look like mr Market expects a
Speaker 1: real um ding in demand. Right. And again, I think
Speaker 1: we've seen that this this idea of fatigue and people
Speaker 1: have they feel like the tools to to carry on
Speaker 1: more with their lives than we did this time last year.
Speaker 1: I think suggests that we're not seeing that same degree
Speaker 1: of impact on on activity and to some extent that
Speaker 1: this wave is has the potential to be relatively short lived,
Speaker 1: given how contagiously seems to be a potential for it
Speaker 1: to burn through pretty pretty quickly. And so I think
Speaker 1: our our overall outlook for two is still very much
Speaker 1: on on track in terms of another year of above
Speaker 1: trend growth, even if we get off to a weaker
Speaker 1: start than than maybe envisioned only a month or so ago.
Speaker 1: But while we're talking about the kind of demand side
Speaker 1: and the consumer, obviously you don't necessarily see any risk
Speaker 1: to demand from Amicron. But on the inflation side of
Speaker 1: things as well. When we saw those personal income and
Speaker 1: spending numbers, this data come out last week, real spending
Speaker 1: when you adjust for inflation, was flat. Are we going
Speaker 1: to see a consumer moving forward that is less tolerant
Speaker 1: of higher prices and consumption going to start winding down
Speaker 1: as a result. So I think we are going to
Speaker 1: see greater pushback in terms of the inflation picture in
Speaker 1: the year ahead. So we've seen that over over consumers.
Speaker 1: You know, many businesses just largely price taker seement with
Speaker 1: that and see seemingly insatiable in the end. But I
Speaker 1: think that we are seeing demand. We're expecting demand growth
Speaker 1: to to moderate over the coming year, so still very strong.
Speaker 1: That you don't have as much fiscal support um at
Speaker 1: the backs of consumers, and so I think that does
Speaker 1: lead to more to more moderate growth. And again we've
Speaker 1: just seen these eye popping and inflation rates. I think
Speaker 1: people are um considering thinking twice about about certain purchases.
Speaker 1: And I think the businesses maybe won't quite have the
Speaker 1: same the same degree of pricing power, but I think
Speaker 1: they still have quite a bit. So uh underappreciated in
Speaker 1: all this the spending picture and the inflation picture is
Speaker 1: just how strong demand growth has been. So we're going
Speaker 1: to see that moderate but um but still very strong.
Speaker 1: I almost forgot that I was super excited about the
Speaker 1: Richmond Fed Manufacturing survey, because I I really am. I'm
Speaker 1: looking so excited you forgot. I'm looking at sarah UM,
Speaker 1: the supply chain. I'm trying to figure out when this
Speaker 1: is going to get rolling again, when UM companies are
Speaker 1: gonna start putting inventory back into stores back on dealer
Speaker 1: lot um. And the Richmond Fed survey was good at
Speaker 1: came at the headline number sixteen compared to twelve last month. Economists,
Speaker 1: we survey, we're only looking for thirteen shipments went from
Speaker 1: zero to twelve in a month. UM finished goods inventories
Speaker 1: went back up still to negative seven, but from negative
Speaker 1: twenty three. Does it look to you like these wheels
Speaker 1: are starting to turn again. It's a start, but we
Speaker 1: have a long way to go when we look at
Speaker 1: the inventory picture. So we have seen some positive signs
Speaker 1: UM coming from the Manufacturing Service uh in manufacturing surveys
Speaker 1: of the I s M in addition to the Richmond index.
Speaker 1: But if you look at the retail numbers, so go
Speaker 1: further down the pipeline, the retail inventory to sales numbers
Speaker 1: have have still just really made no headway from the
Speaker 1: outright collapse that we've seen over the past year. And
Speaker 1: so this is this is the start, but I think
Speaker 1: we're still going to be dealing with these supply issues
Speaker 1: for the better part of the upcoming years. There's there's
Speaker 1: a long way way to go in terms of rebuilding
Speaker 1: those inventories. And again, you still have pretty strong demand
Speaker 1: into your head, if not quite as rippling as what
Speaker 1: we saw well, and of course we know that the
Speaker 1: FED can't necessarily do anything about those supply side issues, Sarah,
Speaker 1: but the FED is going to try to do something
Speaker 1: eventually to rein in inflation. Why do you think the
Speaker 1: move isn't going to come until the second half. So
Speaker 1: in our last published forecast that was before we got
Speaker 1: the before we had the December FED meeting, I think
Speaker 1: what we learned from the December FED meeting is that
Speaker 1: their reaction functions maybe a little bit more aggressive than
Speaker 1: what we had anticipated. So I'd say the risks to
Speaker 1: our call are perhaps pulled forward um from UM where
Speaker 1: it might we might see a move perhaps as early
Speaker 1: as as the second quarter. But I think overall, um,
Speaker 1: you know to your point that there is some limitations
Speaker 1: and really where what the FED can do given the
Speaker 1: where a lot of these these inflation pressures are coming from.
Speaker 1: But they certainly can signal that they are attuned to
Speaker 1: these inflation risks, that they are in a better position
Speaker 1: to to tackle them if they should persist through the
Speaker 1: second half of the year, which we think they certainly will,
Speaker 1: and so that should get the FED moving more aggressively
Speaker 1: in the second half of the year two. It helps
Speaker 1: them that and signal that they are on top of
Speaker 1: this inflation quandary that's facing the economy. Sarah, this was
Speaker 1: too serious. The found a question from me, when is
Speaker 1: the Christmas tree come down? When? Yes day? You go
Speaker 1: on New Ys Day? Key? When do you? Yeah, maybe
Speaker 1: maybe a day or two after, given that it's it's
Speaker 1: on a that will have actually say, how can you
Speaker 1: do anything on New Year's Day except for sitting in
Speaker 1: bed with an ice pack on your head watching a movie?
Speaker 1: You have to some day? I wish you children don't
Speaker 1: allow after New Year's After New Year's probably the day
Speaker 1: after New Year's Day coverage. Um no, not really didn't,
Speaker 1: but We're constantly moving from country to country, so we
Speaker 1: don't have any place to really put a tree right now.
Speaker 1: Try Sarah House, thank you, last fungo securities. You want
Speaker 1: to us on the economy and on Christmas trees. I
Speaker 1: believe the actual date, Kley is January six, when the
Speaker 1: Three Kings arrived. Very place to say that joining us
Speaker 1: now is Dr Batti Hansarti, Associate Professor of Emergency Medicine
Speaker 1: at Johns Hopkins. Dodger, I want to talk about your
Speaker 1: experience in just a moment, because you've been need deep
Speaker 1: in this pandemic, particularly over the last couple of weeks.
Speaker 1: The decision that was made this week by the CDC
Speaker 1: to cut the isolation time down from ten days to
Speaker 1: five days, there was a group of people that said
Speaker 1: this was not a scientific decision. This was a business decision,
Speaker 1: a decision about business and happen this economy, get better work, Dodgor.
Speaker 1: What was it for you? I felt like a kick
Speaker 1: in the gut, to be honest, right. I mean the
Speaker 1: problem was that the CDC media release I was released
Speaker 1: to sabate win third was targeted towards healthcare workers and
Speaker 1: they would be fine from a science perspective, right, because
Speaker 1: we think the incubation period and the viarrel application cyclist lower.
Speaker 1: But this idea that you know, because your healthcare working,
Speaker 1: you're needed to support the response, We're going to decrease
Speaker 1: your isolation time UM was released challenging The fact is
Speaker 1: I may be a healthcare worker, but I'm also a mom,
Speaker 1: a daughter. I have other people who are likely in
Speaker 1: my household are going to be sick with COVID that
Speaker 1: I need to look after. Also when I don't feel
Speaker 1: good and I've been through COVID which is extremely terrifying.
Speaker 1: UM and varies and how it responds to individuals, I
Speaker 1: may not be ready to come to work. And I
Speaker 1: think healthcare workers are also humans, so you know, as
Speaker 1: you can talk and the meets me Internet, that healthcare
Speaker 1: workforce did not respond well to that press release UM.
Speaker 1: Based on a scientific perspective, I think we're still trying
Speaker 1: to work out viral replication UM. We need more data UM,
Speaker 1: but it seems that individuals are more likely to be
Speaker 1: asymptomatic and the incubation period is smaller. Don't do you
Speaker 1: do you think the data backs it ups or not?
Speaker 1: I think the data does back it up. Okay, so
Speaker 1: that's a good step forward. How close a way to
Speaker 1: treating this as if it's any normal seasonal virus. Do
Speaker 1: you think we are taking a step towards that. That
Speaker 1: is a million dollar question. I don't think we're that yet.
Speaker 1: When you talk about this thing, Oh, this virus is endemic, right,
Speaker 1: that means it's predictable, the impact on the health system
Speaker 1: is manageable, and that the replication for every person infected,
Speaker 1: one other person is transmitted to We're not there yet, right.
Speaker 1: The virus is evolving. People are still being hospitalized, people
Speaker 1: are still dying from covid um. I also worried that
Speaker 1: when we think of us as a c small virus
Speaker 1: or rub it off as mild, then we'll become complacent.
Speaker 1: And I don't think we have ruled that. You know,
Speaker 1: I can understand perfectly, doctor, you're your emotional response to
Speaker 1: the reduction in um the suggested days. It depends on
Speaker 1: whether you're looking at this as an economist who wants,
Speaker 1: you know, the wheels to start turning in business to
Speaker 1: get back to normal, then you're like, oh, great, five
Speaker 1: days is better. But if you're looking at it as
Speaker 1: a human who is experiencing disease UM, and it's taking
Speaker 1: an emotional toll. You don't necessarily want to go directly
Speaker 1: back to work in five days, regardless of what your
Speaker 1: job is, right, UM. So I just want to say
Speaker 1: I feel you on that. UM. In terms of the hospitalizations,
Speaker 1: I know a lot of people are showing up in
Speaker 1: emergency rooms and hospitals who don't need to be there,
Speaker 1: and that we can say should be discouraged on here
Speaker 1: on internationally broadcast television. But it doesn't seem like, oh,
Speaker 1: Macron is sending people who are severe enough back to
Speaker 1: the hospital as much as Delta or Alpha have. Is
Speaker 1: that the case? So there's two questions here, right is
Speaker 1: a Macron independently less virulent than its predecessors Alpha and Delta?
Speaker 1: And the challenge in really answering that question clearly is
Speaker 1: that the population right now is different to the population
Speaker 1: that was INFLAYD with a Delta. People that are getting
Speaker 1: sick or a younger less liked to have cobidities, and
Speaker 1: there's a higher propulsion of individuals who are vaccinated who
Speaker 1: are getting a secondary affection. However, yes, when you look
Speaker 1: at the actual number of hospitalizations right now, UM, for
Speaker 1: a hundred thousand. That is way lower than when we
Speaker 1: saw a delta, and the number of deaths assimilarly as low. Well,
Speaker 1: but obviously if more people are getting infected, then that
Speaker 1: will bring the numbers higher just by pure math. Doctor,
Speaker 1: how how quickly do you think that this could spread
Speaker 1: through enough of the population that hospitals can become entirely overrun. Well,
Speaker 1: right now I'm sitting here in the best Maryland. I
Speaker 1: work in Johns Hopkins Hospital in Baltimore, and we are
Speaker 1: entirely overrun. UM. Several hospitals in the d n B
Speaker 1: area have just declared a disaster um declaration, which means
Speaker 1: that we man we had to suspend regular operations. UM
Speaker 1: I was telling you know, folks, yesterday I worked a
Speaker 1: clinical shift. UM. I was not meant to be working.
Speaker 1: Was meant tomorrow one day off with my kiddos, and
Speaker 1: I was called in because we were so overwhelmed with
Speaker 1: a number of patients in our waiting room that we
Speaker 1: need extra staff to come in and try and sort
Speaker 1: out those who are sick opposed to those who can
Speaker 1: go home and wait with their test results. Dontor can
Speaker 1: I just say thank you for everything you do? You've
Speaker 1: just been absolutely brilliant this year, and thank you for
Speaker 1: working with us so closely over the last twelve months.
Speaker 1: Looking forward to doing more of the same through next
Speaker 1: year and hopefully we get some better news. Dr Barti
Speaker 1: Han Santi There of Johns Hopkins, Dan Ives of web
Speaker 1: Bush has a four hundred price target right now ten
Speaker 1: ninety eight. Dan, great to catch up with you, buddy.
Speaker 1: You say Tesla is in a clear position of strength
Speaker 1: China for you at the epicenter of that. Let's start there, Dan,
Speaker 1: Why well, I mean it's about the man. If you
Speaker 1: look at demand in China you started off earlier this year,
Speaker 1: it was rocky. Now going two thousand twenty two, it
Speaker 1: would be about fifty thousand per month run rate. I
Speaker 1: think that could be deliveries for Tesla going into next year,
Speaker 1: and that's a winch pin to the both thesis. Plus
Speaker 1: the supply piece is really key because they're also the
Speaker 1: profitability for cars they sell in China incrementally higher than
Speaker 1: those that they sell in the US and Europe. And
Speaker 1: that is why in our opinion, this is doctor continues
Speaker 1: to move higher in the China story account. The US
Speaker 1: plans disrupt the game. I mean, that's the part of
Speaker 1: this story. I'm excited about. Down the likes that GM ford.
Speaker 1: Let's see what they can do in the next couple
Speaker 1: of years. GM is under a comface. Now walk us
Speaker 1: through that down how GM becomes that disrupted after being
Speaker 1: disrupted over the last several years. Yeah, and it's a
Speaker 1: great point. Look, we don't be this is Zeroor some game.
Speaker 1: It's not Tesla or And there's one winner that was
Speaker 1: really the last few years. Now you look at the
Speaker 1: star Wars and Detroit for GM, I think there's a
Speaker 1: massive rent of sounds of growth and I think these stocks, specifically,
Speaker 1: GM is going to get re rated on the the
Speaker 1: initiatives and if you get conversion of ten in the
Speaker 1: base over the next three to four years, this is
Speaker 1: a stock. And then you look at forward what Farley
Speaker 1: has done. I think that's another story that continues to
Speaker 1: get readed because as me and you've talked about many times,
Speaker 1: I never viewed Tessa as an automotive company. Have you
Speaker 1: as disruptive technology player. I think you're gonna start to
Speaker 1: see those multiples and I think, b W you put
Speaker 1: them in that same bucket. How much does the supply
Speaker 1: chain snap who um that we've seen over last year
Speaker 1: push things back, Dan because I'm pumped to see Farley's
Speaker 1: ethel and fifty Lightning. I can't wait to see Mary
Speaker 1: barras Hummer. But I feel like it's gonna take a
Speaker 1: few years before these things are actually rolling on the
Speaker 1: streets looking at how long it took them to get
Speaker 1: the Bronco out there. Yeah, look, I think it's a
Speaker 1: great point. I do think this is different in terms
Speaker 1: of what we've seen on VS. We're starting to see
Speaker 1: from an engineering perspective, battery perspect I mean, these companies
Speaker 1: are really doving to deep end to the poor and evs.
Speaker 1: So I think for GM, as opposed to the Snap
Speaker 1: Foods over the last few years, I don't think we
Speaker 1: see that over the coming years. And you know what
Speaker 1: everything Mary and the team are doing, That's why I
Speaker 1: think GM will be that rerating on the thirty models
Speaker 1: coming out over the six seven years and you could
Speaker 1: forward I mean f one fifty In terms on the
Speaker 1: the electric side, I mean that's really going to revolutionize
Speaker 1: the category along with Ribby in and we kind of
Speaker 1: view that pickup truck market overall as a trillion dollar
Speaker 1: market over the next decade for ev S. I'm so
Speaker 1: excited for it. Dan is the market though, big enough
Speaker 1: for all the players. I know it's not a zero
Speaker 1: sum game, but there's so many names out there, Tesla
Speaker 1: and Rivan just um. Rivan is one of the newcomers.
Speaker 1: Lucid is another one. You've got the kind of stranger Lords,
Speaker 1: Town Motors. I don't think they've actually made anything. Nicola
Speaker 1: apparently they're gonna production. You've got Bowlinger playing in the
Speaker 1: pickup truck space, plus all the old school gm Ford Folkswagen.
Speaker 1: Is this market going to be big enough for all
Speaker 1: of them? And by for example, Well, like in any market,
Speaker 1: you're gonna have winners and you don't have losers that
Speaker 1: go by the wayside. That's why I think it's an investor.
Speaker 1: You gotta have a basket way to play it. Test
Speaker 1: To continues to be our favorite. But you look at
Speaker 1: names like Ribbean in terms of what they're doing on
Speaker 1: pick up and ultimately as sort of a vertical integration.
Speaker 1: And then you want to play Europe, you want to
Speaker 1: play China, you want to play Neo x Ping and
Speaker 1: some of those. But you know, I think it's a
Speaker 1: FOURK in the root situation as we in two thousand
Speaker 1: twenty two, because like you said, it's about execution. Any
Speaker 1: of these startups miss execute or have any sort of headwinds.
Speaker 1: I mean, stocks could get the natural split down fifties
Speaker 1: sixty many throwing the white towel. So then you have
Speaker 1: to almost separate in terms of who's going to be
Speaker 1: the winners. And also there's gonna be a lot of
Speaker 1: supply chain players names like life Cycle, charge Point and
Speaker 1: some others. In terms of the infrastructure side, when we
Speaker 1: talk about EVS, Dan Matt was bringing this up earlier,
Speaker 1: how is there a limit to demand growth given that
Speaker 1: the infrastructure isn't necessarily as robust as can support you know,
Speaker 1: every single American having an electric vehicle. I mean today
Speaker 1: it's only three. So if you look globally, three automotive
Speaker 1: is EVS. We think that goes toeptember cent by two
Speaker 1: thousand twenty five. Now, the infrastructure today could support getting
Speaker 1: up to about of autos being evs. Ultimately you're gonna
Speaker 1: have to get charging stations up to about five thousand
Speaker 1: by the end of the decade. But I mean, if
Speaker 1: you look at the growth potential, that's why we view
Speaker 1: it it's a five trillion dollar green tidal wave. In
Speaker 1: terms of the amount of spent over the next decade,
Speaker 1: I think you start to hit some issues in terms
Speaker 1: of from an infrastructure perspective, if we don't see any movement,
Speaker 1: especially in the US in terms of charging stations the
Speaker 1: green it needs upgrades and some things like that, but
Speaker 1: that won't happen till two thousand, two thousand twenty six.
Speaker 1: Between now and then, we see a very very clear
Speaker 1: path the massive growth and of course Europe, you know
Speaker 1: I I think we're really starting to seeing acceleration there,
Speaker 1: which is why they give Berlin factor is so important. Yeah,
Speaker 1: does any but does any other manufacturer do it? Uh
Speaker 1: as big as Tesla. I mean, They're supercharger network is huge.
Speaker 1: But I haven't seen any of the competitors go out
Speaker 1: and do it on their own. They're all waiting for
Speaker 1: the government to come and step in. Well, that's why
Speaker 1: in the EV market it's Tesla's world and everyone's paying
Speaker 1: rent as of now because of the super charger network
Speaker 1: and because of that capacity. And when you look at Berlin,
Speaker 1: Austin and China combined along with Freemaman, they'll have capacity
Speaker 1: about two million units. So just like you're talking about
Speaker 1: Matt with like some of these comings of ad stumbles,
Speaker 1: can they actually get the cars out? That's why Tesla
Speaker 1: continues to sort of own the market, but that's not
Speaker 1: necessarily going to be the keys over the next call it.
Speaker 1: You know, one to two year you have other players Ford, GM,
Speaker 1: Riddy and Lewson and some others really start to you know,
Speaker 1: I think the major beneficiaries v W. Obviously we're very
Speaker 1: bullish on terms of what they're doing Europe. Dan, you
Speaker 1: rowe somebody and I scared a catch up. It's been
Speaker 1: so long. Great to be here. Dan, I stank, you
Speaker 1: said of wet Bush. This is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
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