WEBVTT - Surveillance: OECD Raises Growth Forecast 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm toom Keene along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Brownwitz Jaileye. We bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg dot Com 0:00:23.920 --> 0:00:30.000 and of course on the Bloomberg terminal. Let's bringing Lawrence 0:00:30.000 --> 0:00:32.280 bourn Shall we obviously the chief economist out with that 0:00:32.360 --> 0:00:35.519 forecast earlier this morning. Lawrence, fantastic to catch up with you. 0:00:35.600 --> 0:00:38.320 Can we just start right there the degree to which 0:00:38.680 --> 0:00:40.920 this stimulus plan, this relief plan down in d C, 0:00:41.360 --> 0:00:44.519 has shaped your forecast for the year ahead. So actually 0:00:44.520 --> 0:00:47.960 we're revising our forecast up words for two reasons. First, 0:00:48.440 --> 0:00:51.440 you know, countries managed a little bitter the pandemic. Some 0:00:51.520 --> 0:00:54.800 of them are even vaccinating that can reopen their economy. 0:00:55.240 --> 0:00:57.640 And it is the one thing which has changed compared 0:00:57.720 --> 0:01:00.880 with December is the one point nine true and U 0:01:01.040 --> 0:01:04.200 S stimulus on top of the nine d billion in 0:01:04.240 --> 0:01:08.679 December WITHINK that we lift and global GDP growth by 0:01:08.720 --> 0:01:12.760 about a full percentage point. Lawrence, Good morning, Tom King 0:01:12.880 --> 0:01:15.160 in New York, thank you so much for joining us. 0:01:15.400 --> 0:01:20.560 I'm fascinated, Lawrens of the diffusement of the US prosperity 0:01:20.600 --> 0:01:24.160 over the China. Do you lift China up in step 0:01:24.280 --> 0:01:28.280 with America? So you know, China had gone out of 0:01:28.520 --> 0:01:32.520 the pandemic a little earlier than the US, and it's 0:01:32.520 --> 0:01:35.920 still going fast. You know, it has has been efited 0:01:35.920 --> 0:01:41.040 actually from the demand for medical product, for I T product. Now, 0:01:41.560 --> 0:01:44.680 there's one thing which hadn't changed in our projections. There 0:01:44.680 --> 0:01:49.240 were tension in trade, you know, related to intellectual property rights, transfer, 0:01:49.400 --> 0:01:54.560 technology support to state enterprises and there and with the 0:01:54.600 --> 0:01:59.200 renewed the multilateral um where today with the new head 0:01:59.240 --> 0:02:02.080 of the w T, within this this issue with start 0:02:02.200 --> 0:02:06.480 being addressed. So there's a question about whether this really 0:02:06.480 --> 0:02:08.600 will benefit the rest of the world. In the sort 0:02:08.639 --> 0:02:12.000 of reflationary mood that a lot of people were talking about. 0:02:12.080 --> 0:02:14.960 If you do get the US driving growth, you get 0:02:15.040 --> 0:02:18.680 a stronger dollar. Typically that is not necessarily positive for 0:02:18.720 --> 0:02:20.760 a lot of the developing world. How do you see 0:02:20.760 --> 0:02:24.000 that playing out and shifting the landscape for growth going forward. 0:02:24.840 --> 0:02:27.440 So there's one thing we say in our projections is 0:02:27.480 --> 0:02:31.400 that the recovery is very uneven across the world. We're 0:02:31.440 --> 0:02:36.839 seeing divergencies widening um. That has to do in particular, 0:02:36.960 --> 0:02:40.640 I mean, in some instances with what's happening on commodity prices. 0:02:41.000 --> 0:02:44.480 But in most cases, you know, the driving factor of 0:02:44.680 --> 0:02:49.440 the driving force and engine of this of this outlook 0:02:49.600 --> 0:02:53.280 is really what's happening on the headphont. So the divergencies 0:02:53.320 --> 0:02:56.560 that we are seeing across countries today, they have to 0:02:56.720 --> 0:03:00.440 do with health management, with the pace of vaccination and 0:03:00.440 --> 0:03:03.560 and with how many sectors and how large a shell 0:03:03.639 --> 0:03:08.000 of employee cannot work because of the health situation. I 0:03:08.000 --> 0:03:10.639 think we should really remain focus on this. That's how 0:03:10.720 --> 0:03:13.600 main message. Other gir let's go to Europe. Then the 0:03:13.760 --> 0:03:16.519 challenges of Europe right now, I know this, that and 0:03:16.560 --> 0:03:18.480 the other thing I know Arounch you very much up 0:03:18.520 --> 0:03:22.320 to speed on this. What is your timeline for prosperity 0:03:22.400 --> 0:03:27.200 for Europe given the pandemic. So in Europe we have 0:03:28.160 --> 0:03:31.120 very revised our outlook. You know, we think that they 0:03:31.400 --> 0:03:36.920 renew with pre pandemic level by about mid twenty two, 0:03:37.600 --> 0:03:40.240 which is roughly a year later than the US UM. 0:03:40.320 --> 0:03:44.440 And that again has to do with how how vaccination 0:03:44.520 --> 0:03:47.680 and the and the and the heath crisis is being managed. 0:03:48.160 --> 0:03:50.520 What we are telling you of is, you know, there's 0:03:50.520 --> 0:03:54.160 a lot on fiscal support which is being done. Economically, 0:03:54.320 --> 0:03:57.600 policies have been fantastic. Policy makers have done the job, 0:03:57.880 --> 0:04:02.160 but on vaccination they need to go much faster. If 0:04:02.160 --> 0:04:05.360 we're at war with the virus. Really, up needs to 0:04:05.400 --> 0:04:09.560 get on the wall footing now. Lauren spin always grit 0:04:09.600 --> 0:04:10.920 to catch out with you. Thanks for being with us 0:04:10.920 --> 0:04:19.039 this morning, obviously chief economist right now, and this is 0:04:19.080 --> 0:04:23.159 a really really important interview. There's something about being in 0:04:23.200 --> 0:04:27.279 the crucible of market economics and market analysis and not 0:04:27.400 --> 0:04:29.359 only getting it right, but getting it right with a 0:04:29.360 --> 0:04:33.000 certain verve. Mark McCormick joins us now from Toronto Dominion Bank, 0:04:33.279 --> 0:04:36.120 their global head of FX Strategy market. I want you 0:04:36.160 --> 0:04:39.120 to revisit how you frame the dollars three months and 0:04:39.240 --> 0:04:41.719 six months ago, and then of course give us the 0:04:41.800 --> 0:04:46.320 now what sure? Thanks, um. It's all about a rotation 0:04:46.400 --> 0:04:50.880 from the liquidity trade to one macro divergen straight and 0:04:51.320 --> 0:04:53.480 so the dollar kind of sitting at the epicenter of that. 0:04:53.520 --> 0:04:56.919 The market was positioned purely on liquidity, purely on low rates, 0:04:56.960 --> 0:04:59.520 low term premium, and that was the benefactor of a 0:04:59.520 --> 0:05:01.640 week er dollars. If you only thought about what the 0:05:01.640 --> 0:05:04.640 FETE could be doing, you you extrapolated that trend into 0:05:04.640 --> 0:05:07.920 a week US dollar for the entire year, behind the scenes, 0:05:08.200 --> 0:05:10.960 growth was diverging, the vaccine campaign was getting off to 0:05:11.040 --> 0:05:13.200 better starts the United States, And if you fast forward 0:05:13.200 --> 0:05:15.640 to where we're at now, we're seeing a much stronger 0:05:15.680 --> 0:05:18.839 dollar reconnecting with real yields because we're seeing more macro 0:05:18.960 --> 0:05:21.800 volatility come through the markets, through the VIX, through the move, 0:05:21.920 --> 0:05:24.760 and through currency ball, and that is flushing out all 0:05:24.839 --> 0:05:27.840 these stale positions right now, what do you respond? How 0:05:27.880 --> 0:05:30.240 do you respond? I should say to the week dollar crew, 0:05:30.320 --> 0:05:33.599 it's clearly consensus. I know they've got to cover that trade. 0:05:33.680 --> 0:05:36.080 But but how do you respond to them and say 0:05:36.120 --> 0:05:39.440 there'll be a resiliency to dollar? Well, I think it 0:05:39.520 --> 0:05:42.440 also depends to it's critical moving forward out of this 0:05:42.480 --> 0:05:46.080 positioning stage or this positioning element behind this transition of 0:05:46.160 --> 0:05:49.039 which basket you're looking at. I absolutely we are still 0:05:49.320 --> 0:05:52.039 very bullish on the dollar versus the euro. But I 0:05:52.080 --> 0:05:54.240 think what you can think about is over the next month, 0:05:54.279 --> 0:05:56.840 after we see this rates move flushed out, there is 0:05:56.880 --> 0:05:59.480 an element where the factors that we're tracking in markets 0:05:59.480 --> 0:06:01.440 that are making in the effects. It's terms of trade, 0:06:01.480 --> 0:06:03.719 so it's linked to the commodity cycle. It's about Carrie. 0:06:03.839 --> 0:06:06.440 So again you'ld pick up is important, but it's critically 0:06:06.480 --> 0:06:09.280 most important. It's all about economic growth. So you can 0:06:09.320 --> 0:06:13.000 see a world where in G ten European currencies underperform, 0:06:13.040 --> 0:06:15.880 but you could also see currencies that are leveraged to 0:06:15.920 --> 0:06:20.120 the global reflation cycle still doing well. So your commodity currencies, 0:06:20.120 --> 0:06:23.560 you're undervalued. Em currencies also em Asia can now perform. 0:06:23.640 --> 0:06:26.120 So it's gonna be I think a mixed dollar in 0:06:26.160 --> 0:06:28.039 the second half of the year. And that's part of 0:06:28.080 --> 0:06:31.320 this washout, this correlations break down, and it's no longer 0:06:31.400 --> 0:06:34.160 dollar up, dollar down. You've used that phrase three times, 0:06:34.680 --> 0:06:36.680 wash out, flush out, and I want to talk about 0:06:36.720 --> 0:06:38.680 it with you right now. This is how you get 0:06:38.720 --> 0:06:42.359 whip sword making big trades. You get sucked into what 0:06:42.480 --> 0:06:44.880 looks like a flush out, then you extrapolate it out 0:06:44.880 --> 0:06:48.120 as the new trend. Mark how complex is that as 0:06:48.160 --> 0:06:50.159 you look at things right now, and how difficult is 0:06:50.200 --> 0:06:52.640 it to actually draw a line between something that's just 0:06:52.680 --> 0:06:54.839 a wash out and something that's the beginning of a 0:06:54.880 --> 0:06:58.120 new trend. Yeah, it's a great question because it's the 0:06:58.160 --> 0:07:01.280 context of the economic cycle. Are rates rising because the 0:07:01.320 --> 0:07:04.320 global economy is doing better, and that's a critical element. 0:07:04.400 --> 0:07:06.840 The Taper tantrum was all about rates rising. We had 0:07:06.920 --> 0:07:10.440 mediocre economic growth through that period. What we see now 0:07:10.640 --> 0:07:12.920 is if we go back to two thousand seventeen, reflation 0:07:13.480 --> 0:07:16.520 rates are rising because economic growth expectations are rising. What 0:07:16.560 --> 0:07:18.920 we absolutely are seeing now is a combination that is 0:07:19.000 --> 0:07:22.240 very similar to that, where rates are rising to validate 0:07:22.680 --> 0:07:25.560 the rising global growth expectations, which is coming through on 0:07:25.600 --> 0:07:28.760 the normalization of economic mobility. We're starting to see the 0:07:28.800 --> 0:07:32.080 breaks between COVID numbers and economic mobility, which is a 0:07:32.160 --> 0:07:36.280 huge element where vaccines have changed the way that people 0:07:36.320 --> 0:07:38.680 can move around the economy more so it's not back 0:07:38.680 --> 0:07:41.400 to pre COVID levels, but there's a higher new level 0:07:41.400 --> 0:07:43.960 of equilibrium, which means we need more of all and 0:07:44.000 --> 0:07:47.040 we need higher real rates. So in the context of that, 0:07:47.120 --> 0:07:50.320 what matters for Marks now is that real rates are 0:07:50.400 --> 0:07:53.640 validating the moving economic growth. And you know, on the 0:07:53.680 --> 0:07:56.480 side of it, there's obviously liquidity and other technical factors 0:07:56.480 --> 0:07:58.679 that are happening in rates, But once this settles down, 0:07:59.160 --> 0:08:01.880 it's a good equal librium for for risk assets, and 0:08:01.960 --> 0:08:05.560 so it's not purely a return to US exceptionalism. It's 0:08:05.600 --> 0:08:08.520 a blending of global reflation and exceptionalism, I think for 0:08:08.560 --> 0:08:10.640 the second half of the year. So another way of 0:08:10.680 --> 0:08:12.760 saying that is there's been a pain trade. It might 0:08:12.800 --> 0:08:15.480 be ongoing for a bit longer, but once that's over, 0:08:15.640 --> 0:08:17.280 the narrative that was at the end of last year 0:08:17.320 --> 0:08:19.960 will continue and reassert itself. Can you just talk about 0:08:20.000 --> 0:08:22.880 how much further the pain trade has to go? Sure, 0:08:22.880 --> 0:08:24.960 I'd say we we got at least another month. If 0:08:24.960 --> 0:08:27.160 we look at our just our positioning model, think about 0:08:27.200 --> 0:08:29.880 the pain trade, Um, we're still talking about a dollar 0:08:29.960 --> 0:08:32.600 short that's a little under a standard aviation. So we 0:08:32.600 --> 0:08:35.560 are not even close to neutral levels yet. Um So, 0:08:35.640 --> 0:08:37.840 even if you look at some of the valuation models 0:08:37.840 --> 0:08:39.559 that we look at, what we see is that G 0:08:39.760 --> 0:08:43.480 ten currencies are still slightly overvalued. We're e M currencies 0:08:43.480 --> 0:08:46.040 are the one trading at a discount. So we haven't 0:08:46.080 --> 0:08:48.040 seen the full wash out play out in effect, and 0:08:48.080 --> 0:08:51.520 again we still probably have. On the real rates models 0:08:51.520 --> 0:08:54.400 that we look at that are global macro based, we 0:08:54.400 --> 0:08:57.480 could still see another twenty five basis points in real rates. 0:08:57.520 --> 0:09:00.120 So if you see that again within the content, it's 0:09:00.160 --> 0:09:02.720 the FED coming next week, DCB next week. We've got 0:09:02.760 --> 0:09:06.400 all these major central banks. If the moves are allowed 0:09:06.440 --> 0:09:09.440 to progress, suggesting that again that it's the economy is 0:09:09.440 --> 0:09:12.000 doing better, then that means there's more room for the dollars. 0:09:12.000 --> 0:09:14.280 So again it's maybe in broad terms, another one and 0:09:14.320 --> 0:09:18.200 a half two percent again against all major currencies. But 0:09:18.240 --> 0:09:20.720 again Euro is now testing the one A team level. 0:09:20.760 --> 0:09:23.760 We could probably see a marginal breakthrough there. But again 0:09:23.800 --> 0:09:25.719 I would say this is probably about another month to 0:09:26.120 --> 0:09:29.440 six weeks um in terms of this pain trade across effects. Mark. 0:09:29.480 --> 0:09:30.840 I think the point you're trying to make here more 0:09:30.880 --> 0:09:33.040 broadly is that we're always looking for this broad based 0:09:33.080 --> 0:09:35.560 directional trade that we can all just get behind and 0:09:35.600 --> 0:09:37.480 it chucks along through the year. And you're talking about 0:09:37.559 --> 0:09:41.360 nuance and dispersion within the m Walk me through the nuance. Now, 0:09:41.400 --> 0:09:43.360 just to wrap things up, what's the favorite? Is there 0:09:43.400 --> 0:09:46.160 a latam lane is in Mexico? Is it the Paso 0:09:46.280 --> 0:09:48.040 winner off the back of a huge plan in d C? 0:09:48.240 --> 0:09:50.920 What is it? So it's gonna be interesting is because 0:09:50.920 --> 0:09:53.320 each of those baskets gonna trade differently. So if you 0:09:53.360 --> 0:09:55.679 go through Latam, you'd probably want to pick currencies that 0:09:55.720 --> 0:09:58.720 are leveraged to the commodity cycle, leveraged to North American growth, 0:09:59.120 --> 0:10:02.319 and also trade it at cheap valuation. So um R 0:10:02.320 --> 0:10:04.880 e M team like selling dollar max rallies and again 0:10:04.880 --> 0:10:06.640 you can see there's a nice discount. And if we 0:10:06.720 --> 0:10:09.040 get the one triller one point nine trillion in US 0:10:09.080 --> 0:10:13.240 fiscal in a three trillion US infrastructure package, North America 0:10:13.320 --> 0:10:15.760 looks solid. You got the Canadian dollar in the Mexican 0:10:15.760 --> 0:10:20.280 pay so should outperform other currencies across other regions. Um 0:10:20.280 --> 0:10:22.439 and again, if you go to something like the ruble, 0:10:22.520 --> 0:10:24.520 the ruble would do well in that backdrop as well, 0:10:25.080 --> 0:10:28.960 given its link to commodity prices. It's also like quicker, 0:10:29.040 --> 0:10:31.280 we're out of time. I know you're a rate strategist 0:10:31.280 --> 0:10:36.920 as well to the foreigners show up to buy the auctions. Well, 0:10:36.960 --> 0:10:39.040 that's a that's a big element. I think that's a 0:10:39.080 --> 0:10:41.720 big part of what pre is UH call is along 0:10:41.760 --> 0:10:43.679 with the US rates team is there is an element 0:10:43.679 --> 0:10:46.240 where supply is going to drive up rates a little 0:10:46.280 --> 0:10:48.760 bit higher in the short run, so the auctions cannot 0:10:48.800 --> 0:10:50.959 go maybe as well as people are expecting, and that's 0:10:51.000 --> 0:10:53.320 part of the continued sell off. We getting rates in 0:10:53.360 --> 0:10:55.880 the next month, um, and that would also you know, 0:10:56.000 --> 0:10:58.839 drive this pain trade Mark. Congratulations on your call. It's 0:10:58.880 --> 0:11:08.000 so out of consensus. Is just wonderful. Right now, we're 0:11:08.000 --> 0:11:11.199 gonna stagger the Minneapolis there was a freeze there. It's 0:11:11.200 --> 0:11:15.400 a gorgeosity sixty seven degrees heading towards New York. James 0:11:15.400 --> 0:11:18.840 Paulson joins us now Chief investment Officer luth Old at 0:11:18.840 --> 0:11:22.720 Wheedon as well. Jim, how do you reclibrate given all 0:11:22.800 --> 0:11:26.400 the turmoil of two thousand twenty into the first three 0:11:26.440 --> 0:11:31.640 months of this year, how do you reset right now? Huh? Well, 0:11:31.720 --> 0:11:34.280 I I just I think I'm just most focused on 0:11:34.320 --> 0:11:37.360 you know, um, you know, in my in my entire career, 0:11:37.400 --> 0:11:40.920 going back to ninety eight three time, UM, my biggest, 0:11:41.000 --> 0:11:43.520 my fastest growth rade I've ever experienced in the calendar 0:11:43.600 --> 0:11:47.600 year was four when it was a little over eight percent. UM. 0:11:47.640 --> 0:11:49.600 I think we got a shot of taking that out 0:11:49.679 --> 0:11:52.920 this year, of having growth that's north of eight. And 0:11:52.960 --> 0:11:55.600 if we do, that's growth that we haven't seen maybe 0:11:56.520 --> 0:11:58.760 only a handful of times in the entirety of post 0:11:58.760 --> 0:12:02.319 war history, and that is the big elephant in the room. Um. 0:12:02.400 --> 0:12:05.520 You can talk about UM inflation coming up a little bit, 0:12:05.600 --> 0:12:08.040 you can talk about interest rates coming up a little bit. 0:12:08.320 --> 0:12:10.760 But if we have anything in that ballpark or growth, 0:12:11.400 --> 0:12:14.120 we're also going to have earnings which are much higher 0:12:14.120 --> 0:12:18.120 than people currently have forecasted for this year, probably more 0:12:18.160 --> 0:12:21.760 like two in the SMP. And with that, at least 0:12:21.760 --> 0:12:24.400 for this year, it's just gonna be hard, I think 0:12:24.440 --> 0:12:28.120 to keep a good equity down long term here over 0:12:28.440 --> 0:12:31.160 the course of this year, very long. If you're going 0:12:31.240 --> 0:12:32.800 to give me that type of growth, and if we're 0:12:32.800 --> 0:12:37.840 also talking like five growth in boy, you know, we 0:12:37.840 --> 0:12:40.199 we could have a lot of interest rate and inflation 0:12:40.240 --> 0:12:43.080 pressure and still have an equity market that could do 0:12:43.120 --> 0:12:45.120 pretty well in that environment. Jim, I think that final 0:12:45.160 --> 0:12:48.320 points the big point two and whether this year ends 0:12:48.320 --> 0:12:50.679 in June and people start thinking about hang on a minute, 0:12:50.760 --> 0:12:53.080 huge growth, we're all position for that. Now, what does 0:12:53.080 --> 0:12:54.920 twenty two look like? What does twenty two look like 0:12:55.000 --> 0:12:59.880 to you? Well? I agree with that, I got Jonathan. 0:12:59.920 --> 0:13:02.559 I I'm pretty confident for this year. And and and 0:13:02.600 --> 0:13:05.400 if we run hard this year, let's say through the fall, 0:13:05.480 --> 0:13:08.480 we could get a big correction at some point two 0:13:08.600 --> 0:13:11.600 is going to be an adjustment year. I think, um, 0:13:11.640 --> 0:13:13.880 where we're gonna have to figure out whether inflation is 0:13:13.920 --> 0:13:16.560 for real or not. And I'm still a little bit 0:13:16.600 --> 0:13:19.640 on the fence on that. We've certainly are police officials 0:13:19.679 --> 0:13:23.400 have done everything they possibly could to create inflation, in 0:13:23.440 --> 0:13:26.280 my book, and we've done more than ever before to 0:13:26.360 --> 0:13:29.320 create inflation. The problem is against that We've got a 0:13:29.320 --> 0:13:32.920 lot of disinflationary force in the world with nasty and 0:13:32.960 --> 0:13:37.640 continued bad global demographics, including here and also the leading 0:13:37.920 --> 0:13:41.360 the leading force of the emerging world story. China has 0:13:41.400 --> 0:13:44.880 worst demographics than any of us. Um, that's a pretty 0:13:44.880 --> 0:13:49.040 powerful displaced force. We've got a technology sector leading the 0:13:49.040 --> 0:13:53.599 world which is nothing but excuse inflation or disinflation everywhere 0:13:53.920 --> 0:13:58.600 and its path and that's going to continue overall. Um, 0:13:58.640 --> 0:14:01.480 We've had falling monitor Harry velocity for more than a 0:14:01.559 --> 0:14:04.040 decade and and uh, you know, so you can maybe 0:14:04.040 --> 0:14:06.199 handle a lot of money growth with without the type 0:14:06.200 --> 0:14:10.240 of velocity we used to have. We have disinflationary mindsets 0:14:10.280 --> 0:14:12.760 in the world after thirty years of disinflation that are 0:14:13.200 --> 0:14:16.240 that are tough I think to uh to change or altar, 0:14:16.640 --> 0:14:19.080 and I think we're gonna get a pick up in productivity, 0:14:19.160 --> 0:14:22.040 because when I look back historically, when you have a 0:14:22.040 --> 0:14:25.480 big run in growth stocks over the last several years, 0:14:25.480 --> 0:14:29.400 you typically that is fouled rather regularly by a pickup 0:14:29.440 --> 0:14:33.240 in productivity. So, my guests, I tell a little bit, 0:14:33.240 --> 0:14:36.160 We're inflation is going to be a burst coming in 0:14:36.200 --> 0:14:38.040 the next twelve months, and then it's going to calm 0:14:38.040 --> 0:14:41.680 back down again and maybe allow this recovery to continue 0:14:41.680 --> 0:14:44.200 over for several more years. Game plans on, Jim, let's 0:14:44.200 --> 0:14:46.240 do it. Then growth is going to be better in 0:14:46.320 --> 0:14:48.160 the middle of this year, inflation is going to pick out, 0:14:48.160 --> 0:14:50.360 the base effects kick in. We know all this, and 0:14:50.400 --> 0:14:52.760 what's amazing, I keep repeating it, Take a bill, take 0:14:52.800 --> 0:14:55.080 a bad agree on the same thing, and at some 0:14:55.160 --> 0:14:57.440 point you start to get a huge tug of wall 0:14:57.480 --> 0:14:59.400 between the people that think is transient and the people 0:14:59.440 --> 0:15:01.560 that think it's all the people who think rights will 0:15:01.640 --> 0:15:03.440 rise in the people that think they won't. If you 0:15:03.480 --> 0:15:05.480 start to get volatility off the back of that tongue 0:15:05.480 --> 0:15:07.960 of war, what's your game plan? How do you step 0:15:07.960 --> 0:15:12.440 into risk or step out? How do you approach that story? Well, 0:15:12.720 --> 0:15:14.680 I think you do a couple of things. I I 0:15:14.720 --> 0:15:17.760 think you want to minimize your exposure to bonds yet 0:15:18.040 --> 0:15:21.320 uh in bonds exposures, UH interest rate exposure. They just 0:15:21.320 --> 0:15:24.080 want to just have that absolutely minimized. I think you 0:15:24.160 --> 0:15:28.760 want to stay uh more cyclically orientated here. UM. And 0:15:28.840 --> 0:15:31.800 I think you want to be away from the United States. UM. 0:15:31.840 --> 0:15:34.720 I grow this is a synchronized recovery, and those markets 0:15:34.720 --> 0:15:37.120 are coming back to that, but they're not gonna feel 0:15:37.120 --> 0:15:39.560 I don't think they're the pressure uh that we're going 0:15:39.600 --> 0:15:42.040 to get here in the United States going into two 0:15:42.160 --> 0:15:45.400 from from overheat pressure. So I would have a good 0:15:45.480 --> 0:15:49.800 overweight away from the United States. Now beyond that, UM, 0:15:49.920 --> 0:15:51.840 I kind of I think it's gonna be really difficult 0:15:51.840 --> 0:15:55.480 to call this correction when it comes UM, but we 0:15:55.520 --> 0:15:59.480 can all try. UM. If we really get excited here, Jonathan, 0:15:59.480 --> 0:16:01.600 and we go a lot higher, let's say we blow 0:16:01.640 --> 0:16:05.640 through four thousand, go up to something here. I probably 0:16:05.640 --> 0:16:08.040 would take some octane off in park it in cash 0:16:08.080 --> 0:16:10.280 for a period of time and see if we can't 0:16:10.480 --> 0:16:13.880 get a sentiment correction that could be pretty big and 0:16:13.920 --> 0:16:16.760 pretty nasty. UM. And if if we do have one 0:16:16.760 --> 0:16:19.440 of those, then maybe reevaluate that point, whether I think 0:16:20.000 --> 0:16:22.640 we have a sustainable recovery going on. Part of it 0:16:22.720 --> 0:16:25.320 is more information is going to come. Yet, if we 0:16:25.400 --> 0:16:28.080 get towards this year end and the unemployment rate, you know, 0:16:28.320 --> 0:16:31.720 is heading towards four or something, I have a very 0:16:31.760 --> 0:16:34.120 different approach perhaps going in twenty two two. Then if 0:16:34.120 --> 0:16:36.400 we get there and we're still at five percent or something, 0:16:37.000 --> 0:16:40.480 how tight are the resource markets and looking as we 0:16:40.560 --> 0:16:43.560 head into that uh next year. So I'm gonna let 0:16:43.560 --> 0:16:45.720 some of that play out. But some of this also 0:16:45.800 --> 0:16:48.400 matters about whether the market goes nuts between now and 0:16:48.400 --> 0:16:50.680 then or whether it corrects. So Jim, there's also a 0:16:50.760 --> 0:16:52.760 question about big tech because if you see the longer 0:16:52.840 --> 0:16:55.600 term trend remaining the way it has been, a low inflation, 0:16:56.160 --> 0:16:58.760 slower growth environment, is it time to buy big tech 0:16:59.000 --> 0:17:04.080 on the step? Well, here I'm underweight a big tag. 0:17:04.200 --> 0:17:05.760 I just think it's not so much you have a 0:17:05.800 --> 0:17:07.560 problem with technology. I think they're going to continue to 0:17:07.600 --> 0:17:10.400 dominate the world for over the next five ten years. 0:17:10.440 --> 0:17:13.800 I really do, But I think they're earnings growth at 0:17:13.800 --> 0:17:16.199 this point doesn't look as good as relative to what 0:17:16.280 --> 0:17:19.200 small caps can be doing right now, our cyclical sectors, 0:17:19.320 --> 0:17:23.760 or or even more commodity oriented plays. Um so, but 0:17:23.920 --> 0:17:26.119 I would still own tech, and I still do. I. 0:17:26.280 --> 0:17:29.320 I just have an underway to position. If you're gonna 0:17:29.359 --> 0:17:31.080 win in this market, you've got to be in the 0:17:31.119 --> 0:17:34.640 broader market place, which are more cyclical. Lisa, the problem 0:17:34.680 --> 0:17:37.680 with that is it means that you're gonna be introduce 0:17:37.720 --> 0:17:41.199 yourself to downside draws that could be fairly dramatic. The 0:17:41.240 --> 0:17:43.960 way to balance that is to continue to own technology. 0:17:44.119 --> 0:17:47.639 When this market pulls back on on overheat concerns. I 0:17:47.680 --> 0:17:50.560 think technology holds up a little bit and I'd much 0:17:50.640 --> 0:17:54.000 rather hold that than I would other defensive sectors. Jimmy 0:17:54.040 --> 0:17:56.639 small shop as always great to buy. Jim posting that 0:17:57.480 --> 0:18:06.240 healthwaite and capital management right now on the headline that 0:18:06.280 --> 0:18:09.480 I'm sure all of you saw yesterday from the c 0:18:09.680 --> 0:18:13.560 d C of Atlanta, Amashdalga joins US with JOHNS. Hopkins 0:18:13.560 --> 0:18:17.080 Center for Health Security. Dr Adelga, I remember c DC 0:18:17.359 --> 0:18:20.400 is the cool place to work. A million years ago. 0:18:20.560 --> 0:18:23.120 They did malaria out of World War two and then 0:18:23.160 --> 0:18:27.879 built and built out the excellence of America in microbiology 0:18:27.920 --> 0:18:31.920 and virilogy. That headline yesterday, when you saw it, how 0:18:31.960 --> 0:18:35.040 did you respond? I thought this was something that was 0:18:35.200 --> 0:18:38.040 well anticipated that people wanted to get guidance like this, 0:18:38.359 --> 0:18:40.960 and I expected the CDC guidance to be cautious, and 0:18:41.000 --> 0:18:43.760 I think they were pretty cautious. But at least it 0:18:43.840 --> 0:18:47.280 shows people what the future holds. And it's important to 0:18:47.280 --> 0:18:49.879 remember that this CDC guidance is a first iteration. It 0:18:49.960 --> 0:18:52.520 is something that will be that will evolve as more 0:18:52.600 --> 0:18:55.320 data becomes available and as the CDC gets more comfortable, 0:18:55.359 --> 0:18:58.320 So expect this to be revised and and more and 0:18:58.359 --> 0:19:01.199 more guidance changed of those who are vaccinated. And it 0:19:01.240 --> 0:19:03.919 really shows you why vaccination is important, why it will 0:19:04.000 --> 0:19:06.480 change your life and give you your life back. Dr Adulter, 0:19:06.640 --> 0:19:10.600 Why are they being so conservative with their approach. I 0:19:10.600 --> 0:19:13.000 think they're being conservative because they're a big public health agency. 0:19:13.000 --> 0:19:14.879 They're talking about population health. They want to get it 0:19:14.920 --> 0:19:17.800 completely right. They they've had some missteps during the early 0:19:17.800 --> 0:19:20.000 parts of this pandemic and they don't want to relive that, 0:19:20.440 --> 0:19:22.879 so they're going to make a decision that's data driven. 0:19:22.920 --> 0:19:25.880 So once they think enough data has accumulated, for example, 0:19:26.000 --> 0:19:29.159 on asymptomatic spread, maybe from countries like Israel where so 0:19:29.200 --> 0:19:31.560 many people have been vaccinated, they're going to have this 0:19:31.640 --> 0:19:34.040 threshold cross and then they're going to make it make 0:19:34.080 --> 0:19:36.639 a change. So I think it's it's not uncommon for 0:19:36.680 --> 0:19:39.560 public health agencies to be more cautious than what like 0:19:39.680 --> 0:19:42.400 what I, as an individual infectious disease doctor might tell 0:19:42.520 --> 0:19:45.199 my patients who has been vaccinated. So so I do 0:19:45.240 --> 0:19:47.159 think it's it's it's par for the course, that's what 0:19:47.160 --> 0:19:50.639 we expected. That the weight of the risks, though, aren't equal. 0:19:50.720 --> 0:19:52.800 The idea that the more people who get vaccinated, the 0:19:52.800 --> 0:19:55.560 more the transmission mechanisms seems to be broken, and we 0:19:55.600 --> 0:19:57.720 see a decline in the number of cases. Can we 0:19:57.720 --> 0:20:00.240 get a sense of how much the vaccination that have 0:20:00.280 --> 0:20:03.959 already been distributed have already reduced the spread of the virus, 0:20:04.119 --> 0:20:06.160 and if we got it that much more quickly, if 0:20:06.200 --> 0:20:09.600 we'd have that much slower of a spread, that the 0:20:09.920 --> 0:20:13.560 general principle hold, But it's very hard to untangle mask 0:20:13.680 --> 0:20:17.280 wearing social distancing. How much population immunity is around because 0:20:17.320 --> 0:20:20.280 people got infected plus the vaccine. The vaccine component is 0:20:20.320 --> 0:20:22.879 going to increase over time, and each new vaccine that 0:20:22.920 --> 0:20:25.439 goes into someone's arms makes the life of that virus 0:20:25.640 --> 0:20:27.760 very very makes it more difficult because they have less 0:20:27.800 --> 0:20:29.639 people that they can infect. But it's hard to know 0:20:29.680 --> 0:20:32.200 exactly what happens there. But I do think you're going 0:20:32.240 --> 0:20:34.440 to see, for example, if you can gather indoors with 0:20:34.520 --> 0:20:37.280 vaccinated people, what's the difference between doing that and having 0:20:37.440 --> 0:20:39.920 vaccinated people in a restaurant. It's probably not that big 0:20:39.960 --> 0:20:41.920 of a difference. And I think you're gonna see more 0:20:41.960 --> 0:20:45.240 guidance tied to reopenings of certain restaurants and capacity as 0:20:45.400 --> 0:20:47.520 they get more comfortable. As we get more data, we 0:20:47.640 --> 0:20:50.640 might tremendous progress. And some states are already moving forward 0:20:50.680 --> 0:20:53.440