Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg
Speaker 1: dot com, and of course on the Bloomberg terminal US.
Speaker 1: Now from Pimcoe, the author of the Strategic Bond invest Attorney.
Speaker 1: Let's start here the shape of this cycle, how fast
Speaker 1: it's going to move, and how easy it is to
Speaker 1: keep up or run the how difficult it is. Can
Speaker 1: you run me through that? Nat Tony, I'll think of
Speaker 1: last Well, first of all, thanks for having me here today. Um,
Speaker 1: think of the unemployment rate at least Friday in the
Speaker 1: United States four point two percent. What is full employment?
Speaker 1: It's there's a question mark about that. The Federal Reserve
Speaker 1: and it's summary of economic projections in September said the
Speaker 1: longer run full employment rate is four So it seems
Speaker 1: around the cost of reaching full environment. Perhaps we're there
Speaker 1: because of a large outflow of people are retiring, and
Speaker 1: this brings about a so called late cycle dynamic, which
Speaker 1: is what we're all talking about. Which is an acceleration
Speaker 1: and inflation of reduction in monetary accommodation through reduction in
Speaker 1: on purchases and of course potential for rate increases. This
Speaker 1: is what you get in the late cycle part of
Speaker 1: the cycle, the late portion of the cycle, and something
Speaker 1: that investors have a think about. Two. The final comment
Speaker 1: is that the job was rate. Next year most project
Speaker 1: will be somewhere in the threes, probably three and a
Speaker 1: half percent, matching the low pre prodemic, and so that's
Speaker 1: a different type of investment scenario. Tony, you're one of
Speaker 1: the most qualified people in the world for this question.
Speaker 1: Do you perceive smooth functions, smooth movements of yield, movements
Speaker 1: of price, or should we genuinely fear jump conditions? You
Speaker 1: probably should not fear jump conditions, in partly because the
Speaker 1: fettlers are over full years. Is built up an enormous
Speaker 1: amount of respect for its ability to reign in inflation.
Speaker 1: That hard one credibility is something it is not likely
Speaker 1: to give up, and it can use its words. Ben
Speaker 1: Bonanki famously said that monetary policies two percent action communication
Speaker 1: with a few words, and think of Mario Dravi in
Speaker 1: two thousand twelve with its so called butterfly speech, when
Speaker 1: he said whatever it takes that that set Europe off
Speaker 1: to the races, so to speak. It turned it around
Speaker 1: so with a few words, because of built up credibility,
Speaker 1: the idea of jump risks with worries about inflation is low,
Speaker 1: and we see finally, final comment is that inflation expectations
Speaker 1: broadly look for detame And final final comment is isn't
Speaker 1: this what the Federals are sought after the global financial
Speaker 1: prices to get rid of that disinflation deflationary mindset. It's
Speaker 1: a huge success, hasn't gone too far? Probably not, because
Speaker 1: again it has forty years of success to build on. Tony.
Speaker 1: There's a jump condition, indicated by rhetoric from the Federal Reserve.
Speaker 1: There's also a jump condition from liquidity, especially as if
Speaker 1: FED stopped soaking up as much of the off the
Speaker 1: run Treasury is not to get all geeky, but a
Speaker 1: lot of people have pointed to a lack of liquidity
Speaker 1: and some of the distortions that we're seeing. How much
Speaker 1: can we get a clear read on the yield curve,
Speaker 1: on some of the dynamics in a bond market beset
Speaker 1: by all of these liquidity issues. It's a great question, Lisa,
Speaker 1: and it's important question to be thinking about this decade
Speaker 1: because it's a lot different than other decades. The so
Speaker 1: called principal agent model is broken, which is to say
Speaker 1: that it's difficult in the bond markets finded into mediary
Speaker 1: to transfer risk, whether that be to to gain it
Speaker 1: or to to lose it. Here's one quick example of
Speaker 1: the primary dealers, those that are the in goo between
Speaker 1: the intermediaries, large investment firms. They held three billion of
Speaker 1: corporate bonds at two seven. Today they hold less than
Speaker 1: ten billion, despite that that corporate bondom market doubling in size.
Speaker 1: In other words, uh, the intermediaries aren't willing or able
Speaker 1: to hold inventories like a game of hot potato every day.
Speaker 1: And during periods of stress, it's even worse. And so
Speaker 1: this is an issue that that the Federal Reserve and
Speaker 1: others that that that constructs the architecture of the bondom
Speaker 1: market probably wants to think about should think about, because
Speaker 1: it's it makes things difficult again, especially in times of stress.
Speaker 1: It's any love catching on with you said this morning
Speaker 1: to thank you. We begin equity covers today with that
Speaker 1: yard Danny joining in a bit Lizien Saunders now with
Speaker 1: Charles Schwab. She's had the courage to be in the
Speaker 1: market and informs all of us every morning with her
Speaker 1: team with absolutely brilliant charts sometimes Bloomberg charts out on
Speaker 1: Twitter as well. Listen buy on the DIP. I guess
Speaker 1: it's once more in order. The cliche of Tina. What's
Speaker 1: the most dangerous cliche right now? I don't know if
Speaker 1: it's a cliche, but I think the notion that the
Speaker 1: market has been so resilient throughout the year and the
Speaker 1: face of all the risks that are very well known
Speaker 1: um simply suggests that you're not even peeling the first
Speaker 1: layer of the onion back on. You know. One of
Speaker 1: these off posted charts on on Twitter that I put
Speaker 1: as the draw down table looking at the index level declines,
Speaker 1: which whether it's the SMP, Nastac or Russell have been
Speaker 1: somewhat limited five percent in the case of the SMP,
Speaker 1: only ten percent in the case of the other two.
Speaker 1: But the average maximum draw down at some point this
Speaker 1: year across all stocks in the SMP is minus nineteen.
Speaker 1: It's minus forty two in the case of the Nazdac.
Speaker 1: Now that's a pretty benign way to go through a
Speaker 1: corrective phase via the process of rotation. I think we'd
Speaker 1: all prefer that over the bottom falling out all at once,
Speaker 1: but it does make for a more treacherous environment trying
Speaker 1: to trade around those rotational core actions. Luziens John Farrell
Speaker 1: hasn't treatment a coffee table book called draw Down Meditation,
Speaker 1: which is about the sleepiness of the market. Are we
Speaker 1: guilty right now, liz Enne Saunders of draw down Meditation,
Speaker 1: or we've just become benumbed by this great bull market? Well,
Speaker 1: I think there had been and notice emphasis on had
Speaker 1: a tremendous amount of complacency. We were seeing speculative fraud
Speaker 1: kicked back in even in some of the lower quality
Speaker 1: areas that had dominated trading in the early part of
Speaker 1: this year. But the volatility that started on you know,
Speaker 1: Bleak Friday with the Amicron news really brought a shift
Speaker 1: in behavioral measures of sentiment, and I think that has
Speaker 1: been a factor in why the market is finding a lift,
Speaker 1: because that complacency, that speculative fraud got rung out pretty quickly,
Speaker 1: both in attitudinal measures survey based out like AII, but
Speaker 1: also positioning with a Pook call ratio or other metrics
Speaker 1: that actually look at what certain cohorts of shorter term
Speaker 1: traders are doing, so that's not a bad set up.
Speaker 1: More recently, is that quick reversal in sentiment conditions, Lausanna,
Speaker 1: This is not a time for complacency, as you said, however,
Speaker 1: a very difficult time to hedge given the inflationary expectations
Speaker 1: given the FED. What's your top hedge for potential volatility
Speaker 1: at this point? I don't know that I would call
Speaker 1: it a hedge. I know that term often gets you
Speaker 1: somewhat generically, even when applied to disciplines like diversification. I mean,
Speaker 1: I think true hedging, a lot of that might be
Speaker 1: able to be done in the bixed futures market or
Speaker 1: the options market, but there's no blanket recommendation because it
Speaker 1: depends on what it is you're trying to hedge in
Speaker 1: terms of just trying to protect some downside. In addition
Speaker 1: to the disciplines of diversification, I think one of the
Speaker 1: strategies to consider employing, taking into consideration the increased turnover
Speaker 1: and thing like text implications, is maybe more periodic rebalancing,
Speaker 1: especially for investors that might have taken just a calendar
Speaker 1: based rebalancing approach. They might do it at you're in,
Speaker 1: they might do it at quarter end. Instead, take advantage
Speaker 1: of the swift rotations and maybe up the pace of
Speaker 1: rebalancing so you're more frequently trimming into strength taking profits
Speaker 1: where profits are given to you in some cases very
Speaker 1: significant profits and very condensed period of times, and dealing
Speaker 1: with that flip clop. You're also adding into positions maybe
Speaker 1: that have had short term underperformance. So that's probably the
Speaker 1: best strategy to approach a much more volatile period like now.
Speaker 1: What's interesting to me, Lausanne, is that you don't talk
Speaker 1: about compositional shifts on sort of a broader scale, whether
Speaker 1: it's increasing two bonds or increasing the duration or necessarily
Speaker 1: anything that's a typical hedge. And I wonder if that's
Speaker 1: new for you or if this has always been your recommendation. Basically,
Speaker 1: the idea that if inflation really is the main threat
Speaker 1: that's going to be a problem for a sixty portfolio,
Speaker 1: that's going to be a problem for traditional balancing. Well,
Speaker 1: the key there in terms of things like the sixty
Speaker 1: portfolio is watching the correlation between bond yields and stock prices.
Speaker 1: We went for about thirty years from the mid sixties
Speaker 1: until the late nineties where that correlation was pretty persistently negative,
Speaker 1: and that's really when a sixty type strategy struggled a
Speaker 1: bit more. It was also an environment that had many
Speaker 1: more supply shocks. Then fast forward to the twenty years
Speaker 1: up until this year, it has been almost exclusively a
Speaker 1: positive correlation environment and an environment where inflation was quite
Speaker 1: low and we were more subjected to demand shocks and
Speaker 1: we were supply shocks. When we first saw the eruption
Speaker 1: inflation in the middle part of this year, that correlation
Speaker 1: dipped back into negative territory popped back out. But to me,
Speaker 1: that is a key to watch heading into two is
Speaker 1: if we move back into negative correlation on a sustained basis,
Speaker 1: I think that suggests we're shifting into a more secular
Speaker 1: inflationary backdrop. That doesn't mean perpetually rising in plation doesn't
Speaker 1: necessarily need stagflation, but to your point, leads a very
Speaker 1: different environment in terms of how to add that diversification
Speaker 1: and what to do on the fixed income side of portfolios,
Speaker 1: which of course is your friend and my friend and
Speaker 1: colleague Kathy Jones is Baileywick. I wonder though, at what
Speaker 1: point people take a look at the behavior of the
Speaker 1: bottom market over the past couple of weeks, they say,
Speaker 1: look at the tenure way back down one point for
Speaker 1: three percent, and that sell off, that negative correlation just
Speaker 1: isn't going to happen, because any kind of turmoil is
Speaker 1: going to lead people back into the long end of
Speaker 1: the treasury curve. Can we make that assumption or is
Speaker 1: it too premature? I think it's premature. We also know
Speaker 1: that throughout the course of the past year, both when
Speaker 1: we saw that ten years spike up too close to
Speaker 1: one in March and then they equally swift retreat back
Speaker 1: down into the one, A lot of that was was
Speaker 1: positioning and short covering, and I think you have to
Speaker 1: sort of take with a grain of salt to some
Speaker 1: degree the messaging back to the what the market in
Speaker 1: areas like that, that doesn't mean disregard what's happening in
Speaker 1: the tenure. I think really key will be elsewhere in
Speaker 1: the credit markets what we see happen out the risk
Speaker 1: spectrum in terms of spreads. I think that's going to
Speaker 1: be a more important tell if and when we ever
Speaker 1: get to a point where we're spreads are signaling a
Speaker 1: more dire message. I think that is the message for
Speaker 1: sure that equity investors want to heat. But I think
Speaker 1: you have to take that short term positioning into consideration
Speaker 1: when looking at moves really across the treasury curve all
Speaker 1: the way out to the long end. Just an awesome
Speaker 1: saying I've schwab Kathy Jones over unfixed income, Liz An
Speaker 1: Saunders on equities Liz, and thank you for being with
Speaker 1: us today, list and Saunders that swab. I've got eight
Speaker 1: ways to go here, John. We had did this earlier
Speaker 1: with Liz and Saunders of Charles Schwab, and we're now
Speaker 1: thrilled to extend the conversation to give you global Wall
Speaker 1: Street perspective with wear Your Denny. He's founder and chief
Speaker 1: investment strategists at Your Denny Research. Long ago high above
Speaker 1: Cayuga's waters, he knew double digit inflation and then on
Speaker 1: department at Yale University, and I thought, there we go.
Speaker 1: Thank you, good morning Cornell on radio. And I want
Speaker 1: to go to the Krugman essay last week where he
Speaker 1: destroyed monitorism and said simply it was a theory, then
Speaker 1: it's not. Now what should we do with our collective
Speaker 1: memory of the ghosts of the seventies the theories of
Speaker 1: Milton Friedman. Well, I think he was right. Up until
Speaker 1: the pandemic. We did see a tremendous amount of quantitative easing,
Speaker 1: zero interest rates, central banks provided a tremendous amount of liquidity,
Speaker 1: and yet there were some very powerful forces that kept
Speaker 1: inflation down. This inflation was the law of the land
Speaker 1: for many, many years following the Great Inflation of the
Speaker 1: nineteen seventies. UM it was things like globalization and technological innovation, aging, demography,
Speaker 1: and too much debt that all were fundamentally disinflationary. But
Speaker 1: the pandemic changed all that because it really put monitorism
Speaker 1: on steroids and speed in the form of modern monetary theory.
Speaker 1: We just had this unprecedented increase in government debt deficits,
Speaker 1: and all of that was to a lot extent financed
Speaker 1: by the central banks. Help us with the distance here
Speaker 1: from Dartmouth College and David Blanche Flower Hanover, New Hampshire
Speaker 1: in the University of Cambridge and Dr l Arian they
Speaker 1: are power opposites on the inflation Guess where do you
Speaker 1: stand on that? Well? I think inflation is persistent obviously
Speaker 1: the word transitory is no longer allowed in our conversation.
Speaker 1: According to J. Powell, so persistent. I think it's going
Speaker 1: to be four to five percent for the consumption deflator
Speaker 1: until the middle of next year, and then I think
Speaker 1: it does he's back down to three to four percent.
Speaker 1: I don't think it's going to go back to two
Speaker 1: percent anytime soon, and I will not be surprised at
Speaker 1: the Fed deals with that by raising the Fed funds
Speaker 1: rate by maybe two maybe three times. But I think
Speaker 1: they might also seriously consider raising the inflation target, moving
Speaker 1: the goal from two percent to three percent. And a
Speaker 1: lot of people are looking at a federal reserve that
Speaker 1: is so responsive to market turmoil that basically, if they
Speaker 1: do signal that they're going to raise rates next year
Speaker 1: and there is some sort of tantrum, they'll step in
Speaker 1: and ease some of the conditions. How much is that
Speaker 1: anachronism at this point, given that there's a very different paradigm.
Speaker 1: I think it is. You're absolutely right, it's a different paradigm.
Speaker 1: And we've had four taper tantrums since two thousand and thirteen.
Speaker 1: We had one in May two thousand thirteen, and then
Speaker 1: we had another one in early two thousand sixteen one,
Speaker 1: and right before Christmas on two thousand and eighteen, and
Speaker 1: then this one. This one is a work in progress.
Speaker 1: It's it's not clear just how it's gonna play out.
Speaker 1: But I think that the big difference is this time around,
Speaker 1: the FED can't give the market what it wants, which
Speaker 1: would be okay, back off, back off, don't, don't, don't
Speaker 1: taper so much, uh, simply because the inflation problem is
Speaker 1: real and the FED has made it very clear that
Speaker 1: they are now concerned about it, so it's going to
Speaker 1: be pretty hard for them to back off. Although I
Speaker 1: do notice in the data there's been a real shift
Speaker 1: over the past few weeks that people are bringing down
Speaker 1: their longer term expectations once again for inflation. It seems
Speaker 1: as if people are convinced that a federal reserve hiking
Speaker 1: rates in the near term will allow growth to revert
Speaker 1: something similar to what we've seen in the past, albeit
Speaker 1: possibly even lower based on the demographics you're talking about.
Speaker 1: Is that a reality in your perspective? Does this give
Speaker 1: them leeway to hike a couple of times, let it
Speaker 1: go and actually have a smooth exit. I hope so.
Speaker 1: I think that's the consensus view. Maybe it's wishful thinking.
Speaker 1: Maybe you know, the pessimism about the near term is
Speaker 1: being upset by the perception that the pain now will
Speaker 1: lead to gain later. Uh. Look, first and foremost, I
Speaker 1: don't think this is gonna wind up to be like
Speaker 1: the nineteen seventies. There's some aspects of that going on
Speaker 1: right now, like a wage price firal, which is of concern,
Speaker 1: and we're already seeing some cost of living adjustments being
Speaker 1: put into contracts. But I'm a big believer that productivity
Speaker 1: is making a huge comeback. And the reason for that
Speaker 1: is one of the huge differences between now and the
Speaker 1: seventies is there's no growth in the labor force, so
Speaker 1: that's related to demography, and the companies are just going
Speaker 1: to have to increase productivity to upset the fact that
Speaker 1: the labor shortages are not temporary, their chronic and your journy.
Speaker 1: I want to go to your book and I want
Speaker 1: to say it is a triumph to megan decide the
Speaker 1: London School of Economics where ed Yard Danny Folks writes
Speaker 1: in Praise of Profits, and you begin with a great
Speaker 1: David Ricardo who changed how we think and this underestimation
Speaker 1: of profits. Is the profits now for technology different than
Speaker 1: the profits of just December of two thousand, absolutely, I
Speaker 1: mean in in in two thousand, a lot of the
Speaker 1: profits and technology were based on dot com companies who
Speaker 1: had really no serious business plan, ordering technology and paying
Speaker 1: for it with credit. The big situation back then was
Speaker 1: that you had telecom companies seller financing their their customers.
Speaker 1: So those profits were kind of phony and uh, it
Speaker 1: was a period where there was a lot of manipulation
Speaker 1: of profits. This time around, these are very real profits.
Speaker 1: They're based on very real businesses. And I think technology is,
Speaker 1: uh is the way of the future. It's it always is,
Speaker 1: but it's more so than ever. How do you respond
Speaker 1: to the cry of fifteen years that the profits are
Speaker 1: all going to a few? Well, there there is this
Speaker 1: kind of Marxist view out there that, uh, if if
Speaker 1: a company is profitable, it might must be exploiting somebuddy,
Speaker 1: and it's probably exploiting workers and maybe exploiting consumers by
Speaker 1: not giving them the very best. But I make a
Speaker 1: distinction between two kinds of capitalism and my book, and
Speaker 1: that's entrepreneurial capitalism and chrony capitalism. I actually am and
Speaker 1: in the same camp as a progressive socialists. When I
Speaker 1: when I say that I'm against chrony capitalism, chrony capitalism
Speaker 1: isn't capitalism. It's all about using the political system to
Speaker 1: gain the system. I'm I'm an entrepreneur myself, and I
Speaker 1: can't afford lobbyists. So I think that's really the definite
Speaker 1: distinction between an entrepreneur and a chrony is whether you
Speaker 1: can afford lobbyists or not. I can't, and I've got
Speaker 1: to compete. I've got to get customers the very best.
Speaker 1: So in my book, I also argue that Adam Smith
Speaker 1: did a terrible job of marketing capitalism by telling us
Speaker 1: that it's all about selfishness. It's not selfishness, it's insecurity.
Speaker 1: I'm going to go out of business if I don't
Speaker 1: give my customers the very best of what I have.
Speaker 1: I'm sure that that's a harder sell that capitalism. Go
Speaker 1: for it, because it's based but insecurity. I do wonder though,
Speaker 1: just going into the realm of trading, going into the
Speaker 1: realm of how you position in such a tenuous period,
Speaker 1: given that you do feel overly overall optimistic about productivity
Speaker 1: but a little bit concerned about the FED and how
Speaker 1: that all shakes out. Have we already priced in the
Speaker 1: dynamism and technology the productivity gains that you're expecting, or
Speaker 1: do you think that that will fuel further gains in
Speaker 1: the headline indexes next year? Well, look, I think the
Speaker 1: best is yet to come for us in terms of prosperity,
Speaker 1: in terms of standard of living. I think technology is
Speaker 1: going to solve a lot of our problems. It is
Speaker 1: solving a lot of our problems. But yeah, I mean
Speaker 1: it's We're not going to get double digit increases in
Speaker 1: the stock market anytime soon. Earnings peaked on a year
Speaker 1: over your basis in the second quarter, and that that
Speaker 1: doesn't mean they go down, they just grow at a
Speaker 1: slower pace. So I'm predicting that we go from forty
Speaker 1: eight hundred by year end, So I'm I'm We're getting close,
Speaker 1: but no cigar, just it and then something like dred
Speaker 1: by the end of next year and by the end
Speaker 1: of two thousand and thirty. And those are not spectacular increases,
Speaker 1: their single digits, consistent with single digit increases and earnings
Speaker 1: at looking forward to giving the book and read it's
Speaker 1: on my desk. Thanks for paying with us this morning, buddy.
Speaker 1: I appreciate it. At Johnny of any Research and author
Speaker 1: of the Praise of Profit. He's out of Notre Dame
Speaker 1: in Michigan, and you know, it's a typical structure that
Speaker 1: you would see for an airline executive in the modern era.
Speaker 1: Can we talk about customer service? Tump in the sky
Speaker 1: right now? That relationship has just broken down between the
Speaker 1: people that work for the allies and the people to
Speaker 1: fly right now. It is broken. Our personal soap opera
Speaker 1: here that Lisa and I are living as well as
Speaker 1: we're catching up with John Farrell. John, you've been living
Speaker 1: this for eighteen months, I'll say, and I've got a
Speaker 1: renewed respect for what you and many others flying on
Speaker 1: a heath throw of had to put up with this
Speaker 1: attention right now between the people who work for the
Speaker 1: airlines and the people who fly on the airlines. Obviously
Speaker 1: away from the extreme stories which are absolutely ridiculous where
Speaker 1: there's been violence on the planes and the absolutely zero
Speaker 1: support from anyone for any of that, but anyone flying
Speaker 1: right now, Tom has fount that tension between the people
Speaker 1: who work on the airlines and with me personally, have
Speaker 1: found it too over the Mastertop very very aggressive over
Speaker 1: themasking and they've been putting a very unfortunate position where
Speaker 1: clearly they feel at risk on the airline themselves, and
Speaker 1: they feel like they also have to enforce these policies too,
Speaker 1: and it just creates this natural tension. Tom fit is there.
Speaker 1: It's kind of the elephant in the room when you
Speaker 1: fly right now. It's just how delicate things seem to
Speaker 1: be between the passenger and the airline stuff the pandemic.
Speaker 1: But I'm going to say, John, this is a real
Speaker 1: leadership exercise, and everybody's got their own anecdotes. I'll give
Speaker 1: a plus plus the delta that happens to be my experience.
Speaker 1: But we were talking about jet Blue earlier, you know, John,
Speaker 1: you and I got in at at least it was
Speaker 1: already cock ob jet Blue because she was in a
Speaker 1: three am. Well, i'll tell you the biggest misconception about
Speaker 1: Jet Blue when he decided the Atlantic and as they
Speaker 1: started that new entry into that corridor, Tom over the
Speaker 1: last few months, the misconception that they aren't like the
Speaker 1: ryanair of American airlines. And I don't think that's Ryan.
Speaker 1: I think that misconception also exists to some degree in
Speaker 1: the United States. Tom, I don't see them as a
Speaker 1: bunch of airline per se. I think they're mint offering
Speaker 1: the mint camping. It's been absolutely fantastic value off of
Speaker 1: Bloomberg surveillance. Hoolene Becker with us a few days ago
Speaker 1: from Cowen with a real great interest in United airlines.
Speaker 1: We are united in the value and I'm a Sodalgio
Speaker 1: has given us. He senior scholar JOHNS. Hopkins and truly
Speaker 1: in the trenches on this pandemic. Ms I began the
Speaker 1: show by suggesting that the lift in the market two
Speaker 1: days in a row, there's this, this, this, this, this, this,
Speaker 1: and it's one single news article that says, I'm acron
Speaker 1: tilts towards being a cold. What say you about the
Speaker 1: present research on a macron? It would be great if
Speaker 1: it tilts towards being a cold, But I don't think
Speaker 1: we can say that with certainty yet. I think there's
Speaker 1: a possibility that that may be the case, based on
Speaker 1: some of the early case series that are coming from
Speaker 1: South Africa, that we're not seeing as many people being
Speaker 1: hospitalized as not many people, not as many people needing
Speaker 1: ICU beds or needing oxygen, and a lot of people
Speaker 1: getting picked up incidentally when they're in the hospital for
Speaker 1: other reasons. That's all reassuring, but we need more data
Speaker 1: to be able to say that with certainty. And we
Speaker 1: also need to see what happens when we extrapolate South
Speaker 1: Africa's experience two countries that are older like the US.
Speaker 1: And it's also the case that the US has more vaccination,
Speaker 1: so this would be a great thing. I think all
Speaker 1: of us are cautiously optimistic it would be. It's interesting
Speaker 1: because it's all seems to be converging upon this consensus,
Speaker 1: and that's a good thing because we're not seeing outliers
Speaker 1: of severe disease yet. I suspect we will, but hopefully
Speaker 1: this is that this is kind of the step that
Speaker 1: the virus takes to become something that we deal with
Speaker 1: more frequently on an annual basis that has the ability
Speaker 1: to get around our immunity but not make us too sick.
Speaker 1: But I think we still have to wait for a
Speaker 1: more time. Is you're waiting to the calendar, to the
Speaker 1: fact that there are waves to the autumn and in
Speaker 1: the winter, whether it's a cold, the flu that we
Speaker 1: would amateurs would call it, what's the waiting of the
Speaker 1: seasonality versus all our other fears. Well, I do think
Speaker 1: that coronaviruses are going to ultimately end up becoming seasonal
Speaker 1: because all of the other ones do. This one just
Speaker 1: takes some time to get to seasonality because there's not
Speaker 1: enough immunity in the population. But I do think we
Speaker 1: will see intensification of spread when it gets colder, when
Speaker 1: people move indoors, and when spread of the virus is
Speaker 1: more efficient. It's just going to take some time to
Speaker 1: see complete that that complete stark seasonality. Right now, we
Speaker 1: do see some seasonality, but there's still transmission going on
Speaker 1: in the summer because there's too much to too many
Speaker 1: people that were not immune. Given what we know about
Speaker 1: omicron and what it can do getting around certain immunizations,
Speaker 1: whether it's vaccinated individuals or people have been previously infected,
Speaker 1: what does it mean to be fully vaccinated? Does it
Speaker 1: mean a booster shot as well? Well? I think you
Speaker 1: have to remember the vaccines are not all are all
Speaker 1: or nothing. It's not an an off switch. There's a
Speaker 1: spectrum of protection that they provide. And even if O
Speaker 1: macron is able to get around some of the immunity,
Speaker 1: which is what likely the case. It's not able to
Speaker 1: get around what matters protection against serious disease, hospitalization, and death.
Speaker 1: And when you think about boosters, to me, the threshold
Speaker 1: has always been preventing serious illness, hospitalization, and death. And
Speaker 1: that's why I'm somebody who thinks boosters belong to people
Speaker 1: that are above the age of sixty five, high risk conditions,
Speaker 1: those who got the J and J vaccine. For the
Speaker 1: healthy population, it's a little bit unclear whether they're needed
Speaker 1: or not, even though the CDC updated their recommendations and
Speaker 1: there is some controversy in the field. There may be
Speaker 1: a need with omicron to make an omicron specific booster,
Speaker 1: and then that's a little bit different. But these first
Speaker 1: generation boosters, I think in a healthy population you're just
Speaker 1: really pushing off a breakthrough infection sometime in the future.
Speaker 1: You're not really giving a great amount of protection in
Speaker 1: terms of what it actually gives you. But if you're
Speaker 1: older or have a high risk condition, yes, it's definitely clear,
Speaker 1: clear thing, clear benefits there, Doctor ADLTA. Before we let
Speaker 1: you go, i'd love you to weigh in on the
Speaker 1: mandate in New York City now that all private sector
Speaker 1: employees get vaccinated. Is this the course of travel that
Speaker 1: you expect not only in New York City but around
Speaker 1: the country and around the world. I think it's going
Speaker 1: to be certain cities that try and do this. It's
Speaker 1: it's interesting because New York City already has one of
Speaker 1: the highest vaccination rates in the country. It would be
Speaker 1: great if that was going on in parts of the
Speaker 1: South where the vaccination rates are low. But what we'll
Speaker 1: find probably is some states that aren't already highly vaccinated
Speaker 1: are going to become more boosted and more highly vaccinated,
Speaker 1: while the rest of the country kind of language is
Speaker 1: at that lower rate of vaccination, like West Virginia fully vaccinated.
Speaker 1: So I think we're kind of still in that two
Speaker 1: track pandemic. But I think that because the Ocean mandate
Speaker 1: predictably got tied up in courts, you're going to see
Speaker 1: local municipalities and states try the same thing. Thank you, Suh.
Speaker 1: Always enjoy catching I'm and even find me love it
Speaker 1: as downy of Jones Help Kids. This is the Bloomberg
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Speaker 1: Tom keene In. This is Bloomberg.