Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
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Speaker 1: YouTube search Bloomberg Global News. Talk about a wicked wild
Speaker 1: ride bitcoin today, Tim, Yeah, whip sigh. I mean it
Speaker 1: was down down just north of thirty thousand dollars at
Speaker 1: one point round nine o'clock this morning, shooting back up
Speaker 1: to dollars just a little later in the day. If
Speaker 1: you bought at the lows and just kind of wrote
Speaker 1: it up today, not a bad day. Hey, listen. It's
Speaker 1: something I talked about big time with Arc invest Kathy Wood.
Speaker 1: We're going to hear from her a little bit later
Speaker 1: on on our show at the top of the hour. Meantime,
Speaker 1: looking at the crypto market always for us. Mike mclogan
Speaker 1: Commodity Strategies at Bloomberg Intelligence, sitting right now to me
Speaker 1: in our interactive broker studio. Where do we begin? How
Speaker 1: do we tell this story in a smart way? Well,
Speaker 1: your interview with Kathy nailed it. I thought, Stowe, this
Speaker 1: is a big picture theme. Let the traders beat themselves
Speaker 1: up and this is what's happening, and stops the speculators.
Speaker 1: And this one lesson I learned in trading bits. I'm
Speaker 1: doing my mini violin right now. There's just no no,
Speaker 1: you know, hey, this is what happens. You hit the stops,
Speaker 1: you flush out the speculators, and you create great levels.
Speaker 1: And I think that's what happens. Sure, Bitcoin got little
Speaker 1: bit too expensive, and I think thing we're going to
Speaker 1: look at from the future is dose coin marked the
Speaker 1: peak and all the froth and markets and now we're
Speaker 1: getting back to good support in bitcoin. But let's look
Speaker 1: forward fundamentally. To me, this is a really billion the
Speaker 1: blocks for fundamental support and bitcoin. I E. What's happening.
Speaker 1: We're seeing every yes of today is down exceptional one
Speaker 1: gold and why because it got too cheap? And what
Speaker 1: I think it's happening now. Is the market's looking forward?
Speaker 1: Is this finally a sign of froth coming out of
Speaker 1: the stock market. If that's the case, that means much
Speaker 1: more fetal reserve easing, much more stimulus, which supports golden
Speaker 1: bitcoin and bonds. And I think that's market's gonna be
Speaker 1: looking forward to. Like, how do you explain just the
Speaker 1: massive drop that we saw this morning? There were two
Speaker 1: of them. One happened during the seven o'clock hour and
Speaker 1: what happened going into the nine o'clock hour Wall Street time.
Speaker 1: I means it realistic to think that that could have
Speaker 1: been some sort of whale offloading positions. Oh sure, well
Speaker 1: it's it's it's called hitting stops. And as far as
Speaker 1: who's doing it, I try not to go there because
Speaker 1: I in my whole career I've noticed people trying to
Speaker 1: beat themselves up and figure out executive it is, and
Speaker 1: by time you figure it out, it's too late. So
Speaker 1: I fully expect it was just the massive, the the lleged,
Speaker 1: the the overweighted longs getting heading stops. As far as
Speaker 1: a whale, most I sense from these whales is they
Speaker 1: don't really care, they don't sell, they don't buy they
Speaker 1: just told and that's the big picture one. So people
Speaker 1: usually claim there's just too few walts, but a lot
Speaker 1: of times these are exchanges holding wall almo for all
Speaker 1: their customers because it's trading around. One criticism of a
Speaker 1: bitcoin has been it's very highly concentrated among a small
Speaker 1: number of people, less so than do you hear that
Speaker 1: hits the tape and it gets readership and people like
Speaker 1: to hear. But the fact is one exchange might have
Speaker 1: one wall with dozens, I mean hundreds and maybe thousands
Speaker 1: of customers in that one wallets, so it's different. One
Speaker 1: exchange could be one and there are tons of people
Speaker 1: trading it out, so that's I think less important. And
Speaker 1: then the biggest wall in the world is so Tosi
Speaker 1: Nakamoto Nakamoto or that's so called pseudonym, and he has
Speaker 1: a million coins that we understand that I have never traded,
Speaker 1: so that would be something to look forward to. But
Speaker 1: a lot of times what I see in this is
Speaker 1: a good way to create demand in the market is
Speaker 1: reduced prices, and that's what I think we just did.
Speaker 1: We're tested that we got to their thirty about where
Speaker 1: we ended last year, and I think this quick bounce
Speaker 1: today is going to bring out Okay, is this the
Speaker 1: global digital reserve asset in the world going digital? I
Speaker 1: think the market are gonna say yes it is. What's
Speaker 1: my risk of not holding? Universes are doing more of
Speaker 1: the same. And by the way, we've seen these kind
Speaker 1: of things for ten years. It's you know, it's keep
Speaker 1: surviving the thousand cuts. This is just another cut. What
Speaker 1: about what we got from China this morning, kind of
Speaker 1: pushing back on global currencies. Dude, what's the role of that?
Speaker 1: It's it's of the new cold ward I think brewing
Speaker 1: first of all, and it's not the world completely. And
Speaker 1: what's right in the center of that digital reserve assets.
Speaker 1: So I'll start with the fact the digitalization of money
Speaker 1: is enhancing dollar dominance on the world's gap, is driving
Speaker 1: China nuts because they hate the doll and also that
Speaker 1: we have an authoritarian, dictatorial economy that is not driven
Speaker 1: by market forces. They can't catch up. That's why they
Speaker 1: have to steal intellectual party. But the news isn't really
Speaker 1: knew it just tweaked, tweaked. What you know was market
Speaker 1: was ready to hit stops. The key thing that to
Speaker 1: see to remember in this space. If the US does nothing,
Speaker 1: the most widely traded cryptocurrency on the planet is tethered.
Speaker 1: It's double the volume today a bitcoin, that's a digital
Speaker 1: doll which trades on Etherium platform, which enhances the value theorum.
Speaker 1: And that's what's happening if the US does nothing. By
Speaker 1: the way, the toothpaste is already out of the bottle.
Speaker 1: In the US. We're not going to cramp down like China.
Speaker 1: But China has to because they need to prevent their
Speaker 1: citizens from getting access to the Internet and getting access
Speaker 1: to outside of their currency. They have to. Versus the US,
Speaker 1: we're free company country. So to me, this is part
Speaker 1: of that that Cold war kicking in and the US
Speaker 1: is already winning. Still a commodity, Oh no, I so
Speaker 1: I look at are you changing because you've called it
Speaker 1: a commodity, right? But bitcoin? Yeah? No, I look at
Speaker 1: bitcoin is a collectible. Yes, it's a collective collect it's
Speaker 1: oh yes, clearly. So that's a key difference about bitcoin
Speaker 1: and every other asset. The rules of economics still favorite
Speaker 1: bitcoin is. You know, the man is still increasing and
Speaker 1: the supplies clearly declining. By code that is incorruptible, there's
Speaker 1: not much you can do about that. Now, that's a
Speaker 1: key difference with the whole broad space, which I'll be
Speaker 1: published on tomorrow. The amount of coins on coin market
Speaker 1: camp dot com is approaching ten thousand. That might have
Speaker 1: hit the number of excess froth in the space, you know,
Speaker 1: unlimited supply, ease of entry. Okay, an index, Bloomberg Galaxy
Speaker 1: cryptol index will have a survivor bias. But Bitcoin is
Speaker 1: the one that's outside of space. It represents the macro
Speaker 1: digital gold and everything else are just speculative ten seconds.
Speaker 1: Are we all going to be dealing in some kind
Speaker 1: of cryptocurrency at some point in our life? Absolutely, unless
Speaker 1: it can't expect that trend to stop, it is probably
Speaker 1: going to axel right, and if we west in Tesla
Speaker 1: or some other companies were already in it, right, Tesla's
Speaker 1: down in here. Bitcoins up on the year. Thank you,
Speaker 1: You're welcome. Claily, appreciate it. Mike mclogan, Commodity strategies at
Speaker 1: Bloomberg Intelligence in our interactive broker student. Right, you got
Speaker 1: to have I'm done. We know everything about bitcoinwa home
Speaker 1: now this is Bloomberg. I want to talk a bit
Speaker 1: about the virus because New York State which we know
Speaker 1: was the original US epicenter of the pandemic, reporting tim
Speaker 1: it's lowest infection rates in September, but in India daily
Speaker 1: deaths reached a record. They did their report new infections
Speaker 1: declining from the highs of early made. That's good to hear,
Speaker 1: but they still have a long way to go. Different
Speaker 1: stories playing out around the world. Keeping track globally, cases
Speaker 1: have passed a hundred and sixty four point two million
Speaker 1: deaths as have exceeded at three point four million. More
Speaker 1: than one point fifty one billion doses have been given
Speaker 1: of the COVID vaccine. So let's get into it with
Speaker 1: Dr Mario Ramirez, an emergency medicine doctor and entrepreneur managing
Speaker 1: director at the nonprofit Opportunity Labs. They are building opportunities
Speaker 1: for children. He, by the way, was the Pandemic and
Speaker 1: Emerging Threats Coordinator at Health and Human Services during the
Speaker 1: Obama administration. Dr Ramirez on the phone from Washington, d C.
Speaker 1: Nice to have you here with us. What do you
Speaker 1: think is the COVID or vaccine headline that we all
Speaker 1: need to be paying attention to right now? Well, so
Speaker 1: I think there's two things, Carol, Thanks for having me by.
Speaker 1: So the first you know that you mentioned the top
Speaker 1: of the hour is that you know, the pandemic here
Speaker 1: in the United States is certainly at a different place
Speaker 1: than the rest of the world, where the situation is
Speaker 1: still very tenuous. UM. But I think the top line
Speaker 1: here domestically is that while overall things are going quite well,
Speaker 1: there is a lot of heterogeneity in the information. Um. So,
Speaker 1: we just got some important information from JOHNS Hopkins, and
Speaker 1: we're actually seeing a lot of variability and how the
Speaker 1: vaccine is rolling out, And because of that, we're actually
Speaker 1: seeing pretty impressive differences in coronavirus case counts in those areas. So,
Speaker 1: for example, we have seven states where vaccination rates are
Speaker 1: greater than se the population, and case counts are ten
Speaker 1: percent less compared to the national average in those states.
Speaker 1: But intense states where vaccination rates are less than of
Speaker 1: the population, their counts are higher than the average. And
Speaker 1: so what we're starting to see really is increased fragmentation.
Speaker 1: That really brings home the point of how important it
Speaker 1: is that we try to access those people are really
Speaker 1: hesitant about getting vaccinated. So to what extent do you
Speaker 1: think that opening up and telling those people who have
Speaker 1: been vaccinated, that they don't have to wear masks and
Speaker 1: they can go back to life as as normal before
Speaker 1: the pandemic. To what extent do you think that actually
Speaker 1: helps get hesitant people to get vaccinated. So my hope
Speaker 1: is that it is it is helpful. You know, of course,
Speaker 1: and many people have talked about this, is that we
Speaker 1: do not have a good verification mechanism. Uh. You know,
Speaker 1: we certainly know from game theory and lots of real
Speaker 1: world examples, is that when you when you don't have
Speaker 1: a way to verify uh, you know, someone's story, that
Speaker 1: people have a tendency to cheat, which is what my
Speaker 1: big concern is. Um. Certainly, I think if we continue
Speaker 1: to see regional fragmentation of cases, that will create a
Speaker 1: larger incent for people to get vaccinated. But the other
Speaker 1: thing that I think has a key role here. As
Speaker 1: we start to open more businesses up and you know,
Speaker 1: more entertainment venues, there becomes I think a greater need
Speaker 1: for testing. And this is something that you know I've
Speaker 1: advocated for as we start to reopen, particularly on the
Speaker 1: part of uh, you know, employers in groups like we
Speaker 1: act Alliance of Stress. The importance as we start to
Speaker 1: reopen these places up. Testing and surveillance becomes that much
Speaker 1: more important so that we can have a good handle
Speaker 1: on how these vaccinations are working in the real world. Yeah,
Speaker 1: it's you know, it's interesting as we make progress. And
Speaker 1: I was just talking with a colleague. You know, it
Speaker 1: feels good, and we know that if you've got the vaccine,
Speaker 1: if you do even still get COVID, you're you're in
Speaker 1: a much better position than if you didn't have the vaccine.
Speaker 1: But yet we're still learning a lot. Is that fair
Speaker 1: to say? I think that's true. I mean, the CDC
Speaker 1: certainly felt comfortable, you know, with the data that they've
Speaker 1: seen so far that these vaccines are working well in
Speaker 1: the real world. But the other piece of that writing
Speaker 1: that we can sinue to collect information and we continue
Speaker 1: to learn. And one of the big pieces that I
Speaker 1: think we still need to learn is how long lasting
Speaker 1: or how durable the vaccines are, right, And so I
Speaker 1: think today we've heard Dr Fauci say that, you know,
Speaker 1: he believes that booster is going to be necessary within
Speaker 1: about twelve months after your first dose. That's something that
Speaker 1: we still need to learn a lot more about. And
Speaker 1: I think, you know again that stressed the point of
Speaker 1: continuing to test, and testing rates of course have fallen off.
Speaker 1: But as we get into the fall in the winter
Speaker 1: again and we start to get a sense for when
Speaker 1: that durability is falling off, testing is going to be
Speaker 1: that much more important. Very briefly, is there any indication
Speaker 1: that variants that have developed around the world can can
Speaker 1: break through these vaccines twenty seconds? So far? Not so much.
Speaker 1: We have seen good efficacy of the Fisor vaccine in particular,
Speaker 1: and similar reporting from Maderna against all of the variants
Speaker 1: that we're tracking, both in Brazil, South Africa, UH and
Speaker 1: India as well. Still with US is Dr Mario Ramirez,
Speaker 1: Emergency Physician maaging director at Opportunity Labs, former pandemic an
Speaker 1: Emerging Threats coordinator at HHS during the Obama administration. Station
Speaker 1: during UH, still with us on the phone from Washington.
Speaker 1: I'm rushing because I want to get to you because
Speaker 1: one of the things we want to ask you is
Speaker 1: a headline crossed about no masks for vaccinated at Amazon staff.
Speaker 1: That's gonna think go into effect next week. We at
Speaker 1: our office UH don't have to wear masks. UH, And
Speaker 1: increasingly we're seeing that dr mrs. Are you comfortable with
Speaker 1: that as people kind of go back to quote unquote
Speaker 1: normal and take off the mask, is it okay? Well,
Speaker 1: so I'll say, like a lot of people, the CDC
Speaker 1: recommendations caught me a little bit off guard, you know,
Speaker 1: And I did think that masks were going to be
Speaker 1: the last thing to come down. Um. But I have
Speaker 1: read the data that drove the CDC's recommendations, and I
Speaker 1: think the science is certainly sound. Uh. You know, the
Speaker 1: science certainly suggests these vaccines have good efficacy against the
Speaker 1: different variants that are out there circulating, and we're continuing
Speaker 1: to see improvement across all of the metrics. Uh. And
Speaker 1: so I think, you know, again, the point of where
Speaker 1: in the asks and distancing was to get us to
Speaker 1: a place where we could adequately take care of patients.
Speaker 1: And I think we have approach that point. And so
Speaker 1: it's time to give folks a chance to see that
Speaker 1: real life is coming back. And so I think it's
Speaker 1: a perverse to give us try. Yeah, and we only
Speaker 1: about thirty seconds left, but there's still so many people
Speaker 1: who don't necessarily feel comfortable with that doctor, even if
Speaker 1: they have been vaccinated. Sure, and I you know, I
Speaker 1: think that's okay. Um. You know, like all things in
Speaker 1: this pandemic, it is a learning process, and I think, um,
Speaker 1: it's important for people to observe. What happens with the
Speaker 1: case counts is more and more people take off their
Speaker 1: masks and develop their own sense of comfort. For the
Speaker 1: last year and a half, we've been stressing to people
Speaker 1: how important it is to wear masks and how important
Speaker 1: it is to make sure you're staying distant, and so
Speaker 1: I think we just need to give people space to
Speaker 1: feel comfortable taking down their masks when they think it's appropriate.
Speaker 1: I certainly don't think it harms anyone to wear a mask,
Speaker 1: and so I think if it takes a little while
Speaker 1: longer for some people to get comfortable with that, that's okay. Listen,
Speaker 1: thank you so much for your time. We look forward
Speaker 1: to catching up with you again in the future. Dr
Speaker 1: Mario Ramirez, emergency doctor, imagining director at Opportunity Labs, joining
Speaker 1: us on the phone from Washington, d Seech. So we've
Speaker 1: been talking all week long about the how to issue
Speaker 1: Bloomberg Business Week. It is out. There's so many varied
Speaker 1: in informative, informative pieces of advice in the magazine, so
Speaker 1: I highly recommend you check it out. But there's another
Speaker 1: story we wanted to bring to your attention in the
Speaker 1: new issue. It is this week's Remarks Tim. It's about
Speaker 1: how China is winning the race to vaccinate the world,
Speaker 1: at least for now ye. Joining us now in the
Speaker 1: studio is Joe Webber, editor Bloomberg Business Week, and joining
Speaker 1: us on the phone is John Lawerman, editor at Bloomberg,
Speaker 1: the editor of this piece. China is winning the race
Speaker 1: to vaccinate the world? Joel Um, what is the opportunity
Speaker 1: that China has to use so called soft power when
Speaker 1: it comes to vaccinating the developing world? That that is
Speaker 1: a really interesting term to use, because this is ultimately
Speaker 1: a diplomatic weapon of sorts, or tool, let's call it,
Speaker 1: of who gets who's vaccine? And KOVACS is sort of
Speaker 1: the West version of of a distribution mechanism that can
Speaker 1: get vaccines out in the world. And we're not talking
Speaker 1: about the America is um the United States of America
Speaker 1: so much as Africa, South America, Southeast Asia, a lot
Speaker 1: of places that don't have the science or resources to
Speaker 1: get their own version of it. And what we're now
Speaker 1: seeing is that the Chinese vaccines are basically a huge
Speaker 1: export export tool, and they are flooding the zone and
Speaker 1: basically being an alternative to what US soft power looks like. So, so, John,
Speaker 1: how is that beginning to play out around the world
Speaker 1: now that the WHO has uh, you know, given a
Speaker 1: stamp for one of the two Chinese vaccines. Yeah, hi,
Speaker 1: thanks for having me so, um, how so I think
Speaker 1: we're still we're still in the very early stages of this,
Speaker 1: you know, this is this isn't maybe round one around
Speaker 1: one and a half of a of a battle or
Speaker 1: of a uh you know, a player that's going to
Speaker 1: take quite some time to play out, you know. Shot.
Speaker 1: China has shipped out what is it, two fifty six
Speaker 1: million doses of vaccine to other countries. Now the US has, um,
Speaker 1: you know, committed to ship what is it, eighty millions
Speaker 1: so far, and I don't know, um, whether they've actually
Speaker 1: made any of those donations yet. So China has at
Speaker 1: the same time that they're doing this there they are
Speaker 1: extracting some diplomatic concessions from the countries that they're going to.
Speaker 1: Now they The interesting thing about the WHOSE clearance of
Speaker 1: the of the Sinal Farm vaccine one of the two
Speaker 1: government underwritten vaccine from China is uh that um uh
Speaker 1: that vaccine um is uh sorry, UM, it's it's well there.
Speaker 1: I think there are a lot of wild cards here,
Speaker 1: John and and and one element that really struck me
Speaker 1: with this what was really two things. One the way
Speaker 1: that that it's described as you know, we don't even
Speaker 1: know how how efficacious the vaccine is, especially in the
Speaker 1: long run. But then also this this kind of vaccine
Speaker 1: diplomacy is quote clearly of the hardball variety. To take
Speaker 1: me through what that means. Well, uh, so as they said,
Speaker 1: they're extracting concessions from these countries at the same time, Um,
Speaker 1: they warned Bangladesh uh and some other countries um after
Speaker 1: they had made um, after they've made the vaccine deals,
Speaker 1: um with China, not to engage with the US, not
Speaker 1: to engage with other countries that were offering vaccine. So
Speaker 1: um they've also uh cokes countries to express or recourage
Speaker 1: them to express the port to the one China for
Speaker 1: the you know, the non not recognizing Taiwan. So they
Speaker 1: moved made moves like this. Um. So it's fair to
Speaker 1: say strings are attached. Yeah, yeah, yeah, there are definitely
Speaker 1: strings attacks. It reminds me of you know, all the
Speaker 1: moves that China has done in helping infrastructure and in
Speaker 1: the emerging parts of the world right initiative exactly, and
Speaker 1: then also having access to commodities, right like developing these
Speaker 1: relationships and basically making these emerging economies and countries beholden
Speaker 1: to China. Specifically India, John has got to be watching
Speaker 1: very closely. I mean, India is the place where so
Speaker 1: many pharmaceuticals are manufactured. Yeah, and um, for India is
Speaker 1: an exporting vaccine right now, India was really making any
Speaker 1: you know this, This was not a diplomatic tool for
Speaker 1: them at all. I think, you know, perhaps it may
Speaker 1: have created some favors for them to export vaccines, but
Speaker 1: these were not their own vaccines. These have to China's
Speaker 1: own vaccines, you know, domestically produced, domestic and domestically developed.
Speaker 1: So um, you know these are the vaccines, um from India.
Speaker 1: There was one domestically developed vaccine, but uh, the other
Speaker 1: was from Astra Zenica, so that's where all that technology
Speaker 1: came from. I was by far the more favorite vaccine.
Speaker 1: But in any case, um, yeah, I think we're gonna
Speaker 1: have to be you know, keeping very close h and Indian.
Speaker 1: Now it looks like we won't be seeing vaccine being
Speaker 1: exported from India until the end of the year, and
Speaker 1: India is one of it had been at least one
Speaker 1: of the major sources of vaccine or lower middle income countries.
Speaker 1: You know. The other thing John that I think a
Speaker 1: lot of people are trying to understand it been all
Speaker 1: this conflicting information about how efficus the Chinese vaccines are.
Speaker 1: How are you making sense of that, especially in light
Speaker 1: of you know, this being a diplomatic tool, but one
Speaker 1: that you know, people in various countries might not want. Yeah, So,
Speaker 1: I mean that's really interesting question. I mean, the the uh,
Speaker 1: the Signifiing vaccine that's been authorized by the w h
Speaker 1: O has uh, you know, actually a pretty good numbers,
Speaker 1: pretty good ethicacine umbers. The other vaccine, the sign of
Speaker 1: Act vaccine that is yet to be authorized by the
Speaker 1: w h O. And that's actually the point is gonna
Speaker 1: make earlier that that has uh lower efficacy numbers, at
Speaker 1: least in some of the trials. And so that's a
Speaker 1: concern because you know, as we we've written about seemed
Speaker 1: um countries like to say shells that when these vaccines
Speaker 1: get distributed, there's a possibility that although maybe you're going
Speaker 1: to see reduction the hospitalizations in depth, because that's what
Speaker 1: these vaccines do, that's what they're tested for, right, but
Speaker 1: you might not be able to actually um uh stop
Speaker 1: the spread of the virus in the community. So in
Speaker 1: other words, you you don't um you don't get the
Speaker 1: same benefits out of it in terms of like feelings
Speaker 1: of public safety or people being able to take off
Speaker 1: their mask or um, you know, just stopping the virus
Speaker 1: from spreading uh locally, So you might not be able
Speaker 1: to get out of the pandemic quite as quickly that
Speaker 1: if this data, you know, there's there's a lot of
Speaker 1: questions you still need to be answered, Like for example,
Speaker 1: in the Stay Sells, we don't know you know exactly,
Speaker 1: there could be other variance or something. It might not
Speaker 1: be the vaccine. That the that the issue the stay sells,
Speaker 1: I think is one that everyone's trying to understand for sure,
Speaker 1: since there's seems to be um you know a lot
Speaker 1: of people who have had a vaccine there, but but
Speaker 1: how many do we think of had the Chinese vaccine there?
Speaker 1: And how how does that play into what what's happening
Speaker 1: in the country, and John really quickly twenty seconds. Yeah.
Speaker 1: I don't know exactly how that breaks out, but I
Speaker 1: think that w RHO is actually starting to look at
Speaker 1: this issue very closely. And I think that you know,
Speaker 1: they're they're going to look at looking at uh, you know,
Speaker 1: the rates, terms, the method of vaccination, etcetera. We're still
Speaker 1: finding so much out as we go. John Lawronman, editor
Speaker 1: at Bloomberg in Boston, Til Weber, Editor Bloomberg Business Week.
Speaker 1: In our interactive Broker studio, check out the remarks journal yaw,
Speaker 1: but you let me drive? No, no, no, rume Honney, please,
Speaker 1: I'll do the right gravel. I want to drive, just
Speaker 1: drive by the question. This is the drive to the globe.
Speaker 1: Give me thanks. We'll try us to dawn on Bluebird Radio.
Speaker 1: All right, just about ten and a half minutes left
Speaker 1: in today's trading session. It has been quite a day
Speaker 1: and I feel like there's been a couple of major
Speaker 1: themes today. Certainly cryptocurrencies, Tim, no doubt about that, watching
Speaker 1: the equity trade and watching some selling pressure earlier on.
Speaker 1: We're off our loads of the day. And then you
Speaker 1: had the fed minutes yeah, the Fed minutes. Really, I
Speaker 1: think the big takeaway from from those was well the
Speaker 1: timing of them and the fact they came, that the
Speaker 1: meeting was actually before the CPI day that we got
Speaker 1: last weekend. Also the brutal jobs are for it for
Speaker 1: April um. But there was concerned that inflation, at least
Speaker 1: in the short term could be pushed up by supply
Speaker 1: constraints and even maybe favoring some taper talk and upcoming meetings.
Speaker 1: And that was before, as you said, those surprising numbers.
Speaker 1: All right, let's get to it with Ernesto Ramos, the
Speaker 1: Chief Investment Officer of the US at Demo Global Asset
Speaker 1: Manager BMO Global Asset Management, on the phone from Chicago. So, Ernesto,
Speaker 1: good to have you here with Tim and myself on
Speaker 1: a daylight today. What is it that you ultimately, if
Speaker 1: you had a major institutional investor talking to you and
Speaker 1: say what do I need to know about a day
Speaker 1: like today, what do you say to them? Because you
Speaker 1: can have your pick of major stories. I think I
Speaker 1: think the inflation story is show only something that we're
Speaker 1: paying a lot of attention to. Because there's the young
Speaker 1: and the young you can get the strong inflation number.
Speaker 1: You see all of the things that are moving hired,
Speaker 1: like commodities and and uh and uh. But then you
Speaker 1: also have the week labor labor market numbers, and so
Speaker 1: we're but we're playing a lot of attention to inflation
Speaker 1: because even even at the grocery store level, at the
Speaker 1: clothing level, my my wife is a great indicator, tells
Speaker 1: me that things are really moving higher and have been
Speaker 1: moving higher for the last few months. So we're paying
Speaker 1: a lot of close attention to inflation. But but the
Speaker 1: real theme that it's important here is that uh, stay
Speaker 1: focused and not over paying for stocks. And right now
Speaker 1: you saw the junk rally or the junkier part of
Speaker 1: the market that was the value market airlines, hotels and
Speaker 1: all of that go up very substantially. But now it's
Speaker 1: the market is shifting towards rewarding what I call quality
Speaker 1: value companies that are profitable, that had good business models
Speaker 1: that haven't been are trading a significant discourse. For example,
Speaker 1: an auto zone which trades about eighteen times earnings but
Speaker 1: it's been profitable forever, has bobbed back of their stock
Speaker 1: in the last over The last player, is it really
Speaker 1: fun to intels it's fundamental their closest phenomenal, I mean
Speaker 1: it's steady growth. It's not phenomenal growth that in there.
Speaker 1: They're going growing thirty percent of a year. But but
Speaker 1: look at all the trends in the market. Used car
Speaker 1: market is going ballistic here. The presence of used cars
Speaker 1: are going higher, which means that demand is very strong.
Speaker 1: They obviously cared to that market. New cars are suffering
Speaker 1: from the semiconductor shortage, so there's not as many new cars.
Speaker 1: People want cars because they want to get back to
Speaker 1: driving after COVID, so they're going and buying used cars
Speaker 1: and they're going to benefit from that. So all kinds
Speaker 1: of trends are in their favor. And except they're not
Speaker 1: a sexy stock. They're not a thematic stock, and so
Speaker 1: people are not paying a lot of attention, but they're
Speaker 1: they're do you look at their chart, they're having a
Speaker 1: little weakness right now, but they have been moving higher
Speaker 1: pretty steadily. So AutoZone one, I'm giving another example of
Speaker 1: one of these qualities, one of these quality value stocks
Speaker 1: that sort of fits fit's your definition. Well, the financials,
Speaker 1: I mean they look at a company, I mean like
Speaker 1: City Group and now the financials are finally having their
Speaker 1: day in the sun. But I mean city group training
Speaker 1: at less than time ten times earnings JP Morgan not
Speaker 1: not as quite as cheap, but they're they're still doing
Speaker 1: great because in a higher inflation environment, with the where
Speaker 1: the feed is anchoring the low end of the curve down,
Speaker 1: their net interest margin with the steatness of the curve
Speaker 1: goes through the roofs. They do very well. Economic activity
Speaker 1: kicking up that's also very vaorable to them. And so
Speaker 1: they're in the right spot. And you name the financial
Speaker 1: the big the big bank financial and they're they're going
Speaker 1: to be fine. Um Waste Management is another company's not
Speaker 1: as cheap, but very steady, very good, high quality, profitable
Speaker 1: company just deadly going up. And so all these companies
Speaker 1: that are not in the sexy part of the market,
Speaker 1: the growth part of the market that uh, you know,
Speaker 1: the high tech and whatnot part of the market, this
Speaker 1: is what we believe is the right time for them
Speaker 1: to to to take in the market. If I may
Speaker 1: jump in for a second, for how long do you
Speaker 1: do that trade? Because don't I want to want to
Speaker 1: ultimately as an investor be in the growth area of
Speaker 1: the market. If I believe with conviction that the growth
Speaker 1: area of the market is where the growth will be
Speaker 1: for years, even if it gets a little heady. Now
Speaker 1: do I really care what happens over the next six
Speaker 1: or twelve months? Do I? What I really care is
Speaker 1: where we are five years from now? Absolutely, And the
Speaker 1: question is do you how much are you willing to
Speaker 1: pay for that growth? And that's there's nothing wrong with this.
Speaker 1: You know, the Microsofts of the worldly Apple so the world,
Speaker 1: there's nothing absolutely wrong with them, U Tesla. It's incredibly thematic,
Speaker 1: it's incredibly based on the personality of one man, and
Speaker 1: she's a genius and doubtedly, but but there priced beyond
Speaker 1: the unbelief. So you want to own those tech companies,
Speaker 1: But right now they're priced too expensively for us. So
Speaker 1: there's there's a price for everything. And right now we
Speaker 1: think that a lot of those tech socks are priced
Speaker 1: beyond what you would want to pay for them. So
Speaker 1: focus right now on what's under priced. And this quality
Speaker 1: is cheap right now, or what I call uh quality value.
Speaker 1: So focus on that right now. There will be a
Speaker 1: time after we have a more a continued correction in
Speaker 1: technology where technology will become the right place to be.
Speaker 1: I'm not saying sell out of all of your technology.
Speaker 1: By the way, you want to have allocation to every
Speaker 1: corner of the market, but you want to be shifting
Speaker 1: money right now more to the quality value part of
Speaker 1: the market at the expense of the more expensive growth
Speaker 1: part of the market. I mean, I know you just
Speaker 1: ket Cathy would the kinds of company shels we think
Speaker 1: are not forised to do so well for the next
Speaker 1: few months because of evaluation. Mostly she's of course got
Speaker 1: her five year time horizon for for those space companies,
Speaker 1: and and you know that's an expectation that she sets.
Speaker 1: It seems like very clearly every time we talk to her, I, Ernest,
Speaker 1: I want to go back to what you said about inflation,
Speaker 1: because you know that is that is like over the
Speaker 1: last two weeks, this is something that we've been talking about.
Speaker 1: It no, not at all well, especially with the data
Speaker 1: that we got last week. I think it really it
Speaker 1: obviously really scared a lot of people. Um and I
Speaker 1: do wonder to what extent you think it And I
Speaker 1: hate to use this term, but transitory. Uh, personally, we
Speaker 1: don't think it's transitory. We're thinking that it's going to
Speaker 1: be stickier than that, because once you get pricing power,
Speaker 1: it's hard to go back. And as long as the
Speaker 1: demand is that, we don't see any slack in the demand.
Speaker 1: I mean, I think the jobs numbers was weak, but
Speaker 1: it was weak for good reasons. A lot of people
Speaker 1: are just not willing to go back to work for
Speaker 1: whatever reason, health concerns, or they're getting paid to stay home,
Speaker 1: but nicely and and and you see it in Chicago
Speaker 1: where we live. We we there's a lot of people
Speaker 1: and a gutally that are looking for workers to come
Speaker 1: to their small businesses that are starting to reopen, and
Speaker 1: they can't find people to come and work out their
Speaker 1: little stores and little shops because whatever you want to
Speaker 1: call it being paid to stay at home or or
Speaker 1: health pards whatever, But there is a very labor market.
Speaker 1: So um, that's that's part of the story there. And
Speaker 1: so but we think the economy is in a very
Speaker 1: strong track right now. We're probably going to hit over
Speaker 1: timper Sentol second quarter g d P grow. So so
Speaker 1: we're on a strong teg Now there are pockets of concern,
Speaker 1: but we have to be watchful, all right, Ernesta, We're
Speaker 1: gonna leave it on that note, Thanks so much for
Speaker 1: your time today. Interest O Ramos, the chief investment Officer
Speaker 1: of the US at Demo Global Asset Management, on the
Speaker 1: phone from Chicago with us so watching the markets quite
Speaker 1: a day. Crypto was a story the Fed minutes where
Speaker 1: a story, Rita was a story. Uh, it's really going
Speaker 1: to set us well for you know, tomorrow's trade to
Speaker 1: see where we go. We are focusing though and getting
Speaker 1: near our highs of the day when it comes to
Speaker 1: the equity trade. Tim Yeah, we certainly are quite the
Speaker 1: difference that just a few hours makes with the day
Speaker 1: like today exactly. If you blank, you kind of missed something.
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