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19% of U.S. Workers Unsure of Taking Vaccine, Survey Says · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
0:04
Speaker 1: with my co host of Bonnie Quinn. Every business day
0:06
Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
0:13
Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. Well, Vonnie is more and
0:20
Speaker 1: more vaccines get into the system, into people's arms. The
0:25
Speaker 1: question and discussions is starting to build. When will people
0:28
Speaker 1: go back to work? Do they want to go back
0:30
Speaker 1: to work? Will they feel comfortable going back to work?
0:32
Speaker 1: With Rebecca Ray, executive vice president of Human Capital for
0:35
Speaker 1: the conference Born Board, joins us here. Uh, you know,
0:39
Speaker 1: Rebecca talked to us about this survey that you guys
0:43
Speaker 1: did in talking to workers and how they feel about
0:46
Speaker 1: going back to work eventually, what did you learn? All right? Well,
0:50
Speaker 1: good morning, um. You know this is part of our
0:53
Speaker 1: continuing series. We reached out a couple of times last
0:56
Speaker 1: fall and it was interesting to see what we thought
1:00
Speaker 1: might be some differences given the advent of the vaccine
1:02
Speaker 1: and set aside for a moment some of the hiccups
1:04
Speaker 1: and distribution, but at least it's available and starting to
1:07
Speaker 1: be distributed. And what we found was that about seventy
1:12
Speaker 1: of the plus respondents said they planned to take it,
1:16
Speaker 1: but there's a good fifth of those respondents who said
1:19
Speaker 1: they were still not decided. So it's it's not quite
1:24
Speaker 1: the panacea I think that we thought it might have been,
1:28
Speaker 1: especially when you think about the fact that of the
1:31
Speaker 1: respondents said that their companies had not communicated a vaccination policy,
1:36
Speaker 1: and just about the same number said that they were
1:39
Speaker 1: their plans to reopen the workplace, we're still unclear. And
1:43
Speaker 1: you know, this is setting aside those who never closed,
1:46
Speaker 1: and but just those who had closed are thinking about reopening.
1:49
Speaker 1: So what about those people who were asked if they
1:53
Speaker 1: would go back if it was made mandatory before they
1:56
Speaker 1: entered their office buildings that they had to have the vaccine.
1:59
Speaker 1: Do the answers changed in that scenario or that ga
2:02
Speaker 1: not really, because what we learned is that of those
2:05
Speaker 1: who didn't know what their companies were going to share
2:08
Speaker 1: as a as a policy, only one percent said that
2:11
Speaker 1: they were man mandating it for for all workers, or
2:15
Speaker 1: only about one percent, so that it would be mandated
2:18
Speaker 1: for some workers. So it's you know, a very very
2:20
Speaker 1: small percentage who are mandating it um, and so most
2:23
Speaker 1: companies have taken the route of, if they're saying anything
2:26
Speaker 1: at all, of not mandating but strongly encouraging there's about
2:31
Speaker 1: What was surprising to us is that a lot of
2:34
Speaker 1: people responded um assume. Not many responded that they were
2:38
Speaker 1: given any kind of incentives. We thought that perhaps more
2:42
Speaker 1: companies would be offering paid time off. We've seen a
2:45
Speaker 1: few of those things in the headlines, or some other
2:47
Speaker 1: kind of incentive to get the vaccine, but that's not
2:50
Speaker 1: what this survey found. And Rebecca, I know some people
2:54
Speaker 1: that are express reloked at to getting the vaccines. For
2:58
Speaker 1: some people that just maybe anti actors. For others, there
3:01
Speaker 1: may be some social reasons. What are some of the
3:04
Speaker 1: key reasons that you found about, you know, maybe some
3:06
Speaker 1: commonalities and folks that really don't intend to take the vaccine. Sure,
3:11
Speaker 1: I think there are still some lingering concerns about the
3:14
Speaker 1: efficacy of the vaccine itself. Um. There are also some
3:18
Speaker 1: people who indicated they were concerned about the side effects
3:22
Speaker 1: of the vaccine itself, and they were also a little
3:25
Speaker 1: concerned that once the vaccine had been administered, how long
3:29
Speaker 1: that was that protection was in place and how often
3:32
Speaker 1: they would need to go through this process. And you know,
3:35
Speaker 1: one of the things we learned earlier on is that
3:39
Speaker 1: satisfied the vaccine or not, many people are very concerned
3:42
Speaker 1: about contracting it, especially women who feel that they may
3:45
Speaker 1: indeed bring it home to those for whom they care.
3:48
Speaker 1: And you know, we can talk about whether this is
3:50
Speaker 1: right or wrong, but you know, elder care and child
3:52
Speaker 1: care still falls disproportionately on the shoulders of women. But
3:55
Speaker 1: something else we learned, and it's been consistent in these
3:58
Speaker 1: three surveys, is that people don't necessarily have a high
4:02
Speaker 1: level of confidence that their colleagues are going to follow
4:05
Speaker 1: the safety protocols that the companies you know, perhaps thought
4:09
Speaker 1: carefully about and trying to implement. Yeah, that's really interesting,
4:13
Speaker 1: isn't it. And you can't exactly ask straight out, and
4:16
Speaker 1: you can sort of set your own mandates. I mean,
4:20
Speaker 1: I guess companies have been very understanding so far, and
4:23
Speaker 1: they've obviously managed to make work from home something that
4:26
Speaker 1: can be done. Will there come a time, though, Rebecca,
4:30
Speaker 1: when they say, look, this is not on anymore. I mean,
4:32
Speaker 1: we have to minimize this. People have to come into
4:34
Speaker 1: the office. I think that's right. I think there's um
4:40
Speaker 1: I think there's less of an appetite for an all
4:43
Speaker 1: volunteery return. We're starting to see that in a little
4:47
Speaker 1: bit of the shift of the numbers. You know, there's
4:49
Speaker 1: there's over time, fewer are more are uncomfortable at some level,
4:53
Speaker 1: and more are very comfortable. But it's clear that there's
4:57
Speaker 1: going to be some hybrid for some time. But I'd
4:59
Speaker 1: say companies have started to shift away from let's be
5:02
Speaker 1: remote all the time. And we see that from some
5:05
Speaker 1: of our other research, particularly our c Suite Challenge reports
5:08
Speaker 1: that came out last month. You know, we have a
5:10
Speaker 1: lot of people, particularly at the CEO level, who are
5:13
Speaker 1: very concerned about maintaining culture. Absolutely, and Rebecca, these surveys
5:18
Speaker 1: are just phenomenal because it's very hard to actually figure
5:21
Speaker 1: out what people are thinking out there, and of course
5:22
Speaker 1: thinking changes over time and evolves. Rebecca Ray is executive
5:26
Speaker 1: vice president of Human Capital at the Conference Board and
5:29
Speaker 1: thank you. Bitcoin up more than right now. This after
5:35
Speaker 1: Tesla revealed and the filing that it invested one and
5:38
Speaker 1: a half billion US dollars in bitcoin and signaled it's
5:41
Speaker 1: intent to begin accepting the cryptocurrency as a form of payment.
5:45
Speaker 1: Elon Moscow Corpse husband pretty vocal on Twitter about Bitcoin
5:49
Speaker 1: and support for it, and also for some other cryptocurrencies
5:52
Speaker 1: like dodge Coin. Let's bring in Mike mcglan, who can
5:55
Speaker 1: tell us a lot more about this phenomenon and how
5:58
Speaker 1: it might long at might last. My Thegonn is commodity
6:00
Speaker 1: strategist at for Bloomberg Intelligence. So is this run off
6:05
Speaker 1: purely based on Elon Mosque support for Bitcoin? Hello, Bonnie.
6:09
Speaker 1: I think it's definitely big part of it. It seems
6:12
Speaker 1: like this news with Tesla probably flipped the Bitcoin over
6:15
Speaker 1: that inflection point and getting above that forty resistance and
6:19
Speaker 1: probably moves it up to the next key level about
6:21
Speaker 1: fifty thousand. Fifty thou significant because it would be a
6:24
Speaker 1: market cap around one trillion dollars now right now, Bitcoin
6:28
Speaker 1: and Tesla have right about the same market cap, just
6:31
Speaker 1: above eight hundred billion dollars. The unique thing is Tesla
6:35
Speaker 1: kin issue shares and and bonds and with that money
6:39
Speaker 1: by Bitcoin and the the supplies fixed, And that's part
6:43
Speaker 1: of the unique thing about Bitcoin. It's becoming an adopted
6:45
Speaker 1: reserve asset, and it might fail, but I think most
6:48
Speaker 1: entities on the plant. I realized, and well, I better
6:50
Speaker 1: have some of it just in case it does succeed
6:53
Speaker 1: as a global reserve asset. Hey, Mike, I know you've
6:56
Speaker 1: been tracking bitcoin, you know, really since it's inception here
7:00
Speaker 1: and been writing some really unsclightfled research on it. What
7:04
Speaker 1: is your sense of institutional investor adoption? Is this part
7:08
Speaker 1: of the average institutional investors portfolio in terms of asset allocation? Hey, Paul,
7:13
Speaker 1: it's getting there, and I think the average institutional investor
7:16
Speaker 1: realizes if they don't have part of this, the fear
7:19
Speaker 1: of missing out and actually not being part of this
7:22
Speaker 1: new reserve asset is greater than it going to zero.
7:24
Speaker 1: So look, let's look at the good example. Tesla's the
7:27
Speaker 1: biggest name before it was MicroStrategy, And I like to
7:30
Speaker 1: use this simple example. My son and I did over
7:32
Speaker 1: Super Bowl bet he I want a hundred dollars from him.
7:35
Speaker 1: I said, okay, well you put it in bitcoin. So
7:37
Speaker 1: when we get to Super Bowl eighty, where do you
7:39
Speaker 1: think that will be. I suspect that they're gonna add
7:41
Speaker 1: a lot of zeros to that hundred. But if it
7:43
Speaker 1: goes to you know, if it fails, who cares. But
7:46
Speaker 1: to me, this is what's happening on a global scale,
7:49
Speaker 1: and I don't write this stage. I don't know what's
7:51
Speaker 1: going to take to stop it except higher prices. So
7:55
Speaker 1: what happens with these reditory crowds, I mean with think
8:00
Speaker 1: it now? Obviously Elon Mosk is also you know, having
8:02
Speaker 1: a huge influence over them. Do they just follow the
8:06
Speaker 1: crowd when it comes to who the next great hero is?
8:09
Speaker 1: I mean PSDH persons who are is also on there
8:12
Speaker 1: as you know, as a as a potential target for
8:15
Speaker 1: these guys, and they love you know, they're not looking
8:19
Speaker 1: at people's histories really at all. It seems well for
8:22
Speaker 1: the traders, something like a speculative digital asset like we
8:25
Speaker 1: started off with dodge coin makes sense. But that's clearly
8:28
Speaker 1: that it could easily go to zero and I don't
8:30
Speaker 1: think it has much really intrinsic value like bitcoin does. Um.
8:34
Speaker 1: So I look at bitcoin is a kind of asset,
8:36
Speaker 1: it's it's a um it's a collectible and prudent people
8:41
Speaker 1: should accumulate it because there's a potential future. There will
8:44
Speaker 1: be a major difference between people on it and people don't.
8:47
Speaker 1: It could happen, So why take the risk and the
8:49
Speaker 1: key area that's really starting to show from is from gold.
8:52
Speaker 1: The old time gold. Old allocators who have held it
8:55
Speaker 1: for centuries are now realizing that they have to have
8:58
Speaker 1: some of that money in bitcoin because if they don't,
9:01
Speaker 1: they might miss out in this reserve asset which is
9:03
Speaker 1: replacing the old rock. And what's next potential on that
9:07
Speaker 1: and that iteration is central banks. So I'm wondering what
9:13
Speaker 1: the I mean again, Mike, just uh, you know my
9:16
Speaker 1: call on bitcoin, this is my personal understanding, is relatively
9:19
Speaker 1: fixed supply of this commodity and presumably ever increasing demand
9:25
Speaker 1: from different uses within society. Therefore, that supply demand is
9:29
Speaker 1: the bullish call there. What's the what's the risk to
9:34
Speaker 1: that simplistic investment outlook for for bitcoin? Hya? I think
9:38
Speaker 1: the I think there's two key risks. One, first of all,
9:41
Speaker 1: is what happened last year risk a major risk off
9:44
Speaker 1: event like we had in Q one last year bitcoin
9:46
Speaker 1: drop came back to me, that's a big picture thing
9:49
Speaker 1: that will actually help bitcoin. To me. The most significant
9:52
Speaker 1: risk I see is some kind of something I can predict,
9:55
Speaker 1: some kind of glitchen that technology, some kind of major
9:57
Speaker 1: hack um that I don't know how to predict predict,
10:01
Speaker 1: and some people like Michael Sailor, who are major technology experts, say, well,
10:05
Speaker 1: this is unlikely, partly because it's the most it's the
10:08
Speaker 1: largest decentralized network in the history of mankind, and it's
10:12
Speaker 1: been through so many tests. You know, if it doesn't
10:14
Speaker 1: kill you, it makes you stronger. And that's a key
10:16
Speaker 1: narrative of big coin. It hasn't killed it. It's been
10:18
Speaker 1: through major hacks, major issues, and keeps getting stronger. So
10:21
Speaker 1: that to me is what's happening. And it's it's it's
10:24
Speaker 1: it's mind. There's nodes on a global scale that are
10:27
Speaker 1: completely independent. It's no one else's project or liability reality,
10:31
Speaker 1: which is a very unique thing in a world going digital. Yeah, absolutely,
10:35
Speaker 1: What are the other crypto coins that might make it well?
10:39
Speaker 1: Ethereum is the number two and it has a lot
10:41
Speaker 1: of good oath behind it. I mean it's it's a
10:45
Speaker 1: central coin for decentralized exchanges, um, decentralized finance, and it's
10:51
Speaker 1: a major platform for many many smart contracts and things
10:54
Speaker 1: that you can do in the space where you can't
10:57
Speaker 1: in in in many other areas. So the thing I
11:00
Speaker 1: look about Ethereum is it's not going to be a
11:01
Speaker 1: global reserve acid. It's more reflective to me is of
11:04
Speaker 1: some of these texts fintech stocks in the stock market,
11:08
Speaker 1: and when I get the questions, I get a lot
11:10
Speaker 1: of it, and you see it today. You don't hear
11:11
Speaker 1: about major corporations allocating towards the theorem, or major economics
11:15
Speaker 1: departments asking me about ethereum. They all ask me about bitcoin.
11:20
Speaker 1: So but essential I'm looking at the chart of etheroreum.
11:22
Speaker 1: It's it's a great chart as well. Um. You know,
11:26
Speaker 1: that's supply demand dynamic that's arguably underpinning the move up
11:31
Speaker 1: in bitcoin. I'm just unsure why there couldn't be more supply,
11:36
Speaker 1: why there couldn't be a a perfect replacement for bitcoin
11:40
Speaker 1: in the marketplace. There's eight thousand wannabest Paul, that's the
11:43
Speaker 1: key thing about it, and a year ago there was
11:45
Speaker 1: maybe three thousand. So ease of entry, there's anybody can
11:49
Speaker 1: launch a coin. That's a problem for the wide space.
11:52
Speaker 1: But if you have an index track in its space,
11:53
Speaker 1: index is going to have a survivor bias, which is
11:55
Speaker 1: why I like the Bloomberg galaxy of crypto inext. For instance,
11:58
Speaker 1: it recently kicked out Ripple because of the sec charges.
12:01
Speaker 1: So that is a problem in the broad space. But
12:04
Speaker 1: once you're adopted like gold and there's nothing else like it,
12:07
Speaker 1: that's the key thing about Bitcoin. It's been adopted. It's
12:10
Speaker 1: already won that race. Some kind of major hack is
12:13
Speaker 1: the main issue, but it's already one, the race of
12:16
Speaker 1: robustness and adoption. Got to ask you a quick question
12:19
Speaker 1: about oil because we're seeing w t I at already
12:22
Speaker 1: fifty eight dollars of barrel today. It's been so long
12:25
Speaker 1: since we're even so oil above fifty and suddenly we're
12:27
Speaker 1: very clearly approaching sixty. What absolutely is going on here?
12:32
Speaker 1: It needs a combination of higher stock market reduced sustained
12:37
Speaker 1: discipline from OPEQ that we have to have production costs
12:41
Speaker 1: to decline um and demand to pick up. So to me,
12:45
Speaker 1: oil is really pushing on a string here. For instance,
12:48
Speaker 1: average production costs for U shales dropped alow forty dollars
12:51
Speaker 1: a barrel. That's not good for from higher prices to sustain. Adition,
12:55
Speaker 1: that correlation with oil and crude oil fossil fuels to
12:58
Speaker 1: the stock markets the highest ever we go back to sea.
13:01
Speaker 1: We measure on a twenty four month basis, I view,
13:03
Speaker 1: oil at fifty seven is very risky. Fifty seven is
13:06
Speaker 1: the average price from two thousand nineteen, before the before
13:08
Speaker 1: the um pandemic, so I view this level is a
13:12
Speaker 1: very high risk level of markets should decline from. Hey, Mike,
13:15
Speaker 1: thanks so much for joining us. We always appreciate getting
13:17
Speaker 1: your thoughts on commodities, particularly bitcoin. But what a big
13:20
Speaker 1: move we're seeing here as Elon musk Uh, you know,
13:24
Speaker 1: talks about bitcoin and starts actually buying it. Mike McLellan,
13:27
Speaker 1: commodity strategist for Bloomberg Intelligence. Another green day on the screen,
13:34
Speaker 1: this time small cap stocks really leading the way up
13:37
Speaker 1: one point seven five percent. Talking a little bit about
13:39
Speaker 1: that rotation trade that has been so successful for so
13:43
Speaker 1: many investors since let's call it August September. Kind of
13:46
Speaker 1: rotating perhaps out of some of those big growth names
13:49
Speaker 1: that have worked so well for many investors over the
13:51
Speaker 1: years into some more cyclical, maybe even some smaller cat names.
13:54
Speaker 1: That seems to be the trade working today. David Cat's,
13:57
Speaker 1: chief investment officer from Matrix Asset Virsors join. It's just
14:00
Speaker 1: Matrix has about eight hundred and fourteen million dollars in
14:03
Speaker 1: assets under management. David, thanks so much for joining us here.
14:06
Speaker 1: I'd love to get your thoughts on kind of where
14:09
Speaker 1: you guys are seeing value in the market. Opportunities in
14:12
Speaker 1: the market. Is it with those traditional big cap or
14:15
Speaker 1: top line growth stories that we've grown so accustomed to,
14:19
Speaker 1: or have you actually been rotating into some of those
14:21
Speaker 1: more cyclical names the latter. We think that the best
14:26
Speaker 1: opportunities in the market today are in a number of
14:29
Speaker 1: areas um that would typically fall into value areas, things
14:34
Speaker 1: like uh. The financials are looking particularly attractive. Healthcare stocks
14:38
Speaker 1: are looking very attractive. We think telecom utilities, So if
14:44
Speaker 1: you look at those companies, a lot of them were
14:46
Speaker 1: selling at twelve times to fourteen times earnings. If you
14:49
Speaker 1: look at the market overall, it's at about twenty times earnings.
14:52
Speaker 1: And if you look at those growth stocks, the technology
14:55
Speaker 1: growth stocks that everybody is so excited about, many of
14:59
Speaker 1: them are thirty times earnings. UH, and there are even
15:01
Speaker 1: a number of companies at fifty to a hundred times earnings.
15:05
Speaker 1: So we think that's an odd market. There are lots
15:07
Speaker 1: of areas that are very expensive that we worry about,
15:10
Speaker 1: and there are lots of areas that we think represent
15:12
Speaker 1: great opportunity. Uh, and we do think the market is
15:15
Speaker 1: going to go through a rotation this year from the
15:17
Speaker 1: expensive to the cheap. Uh. You're coming out of a recession,
15:20
Speaker 1: and historically when you come out of recessions, value does
15:23
Speaker 1: very well. So there in lies the opportunity. We think.
15:26
Speaker 1: If you're looking in the rear view mirror, um, you know,
15:29
Speaker 1: you're you're buying the things that did great last year.
15:32
Speaker 1: We don't think it's going to be a repeat in
15:34
Speaker 1: two thousand and twenty one. David, how concerned are you
15:37
Speaker 1: that the rehditor crowd might target one of the stocks
15:40
Speaker 1: that you proceed to be value stalks, because after all,
15:43
Speaker 1: they said game Stoff was a value stalk and that's
15:45
Speaker 1: why they were investing. But we all know that it
15:47
Speaker 1: was you know, only part of the explanation. So we
15:51
Speaker 1: are a long only manager and we're trying to buy
15:54
Speaker 1: companies with really strong fundamentals that sell at ten twelve
15:58
Speaker 1: times earnings, So that really doesn't fall into the reddit
16:01
Speaker 1: area that companies are targeted. You know, game stock might
16:04
Speaker 1: have been uh perceived as value if you were willing
16:08
Speaker 1: to say that they're going to fix their business. When
16:10
Speaker 1: we looked at game stock, Um, you know, it was
16:13
Speaker 1: a company whose time has come and gone. We don't
16:17
Speaker 1: think there is viable in the future. So it was
16:20
Speaker 1: something that we worry about on a valuation basis. But
16:23
Speaker 1: when Reddit has gotten involved, valuation doesn't matter on you know,
16:26
Speaker 1: in terms of a short squeeze on a long only portfolio.
16:29
Speaker 1: If you're buying a company that's growing earnings at twelve
16:32
Speaker 1: times earnings, you know, if Reddick gets behind it, you know,
16:35
Speaker 1: we get our valuation much quicker. But we don't think
16:38
Speaker 1: they would try to short valid companies. Yea, what do
16:42
Speaker 1: you guys think of bank stocks right here? They have
16:44
Speaker 1: had to run off the bottom, but still a lot
16:47
Speaker 1: of concern out there given how low interest rates are. Well,
16:51
Speaker 1: there are about six or seven variables with bank stocks,
16:54
Speaker 1: and and five of them are very very good. So
16:57
Speaker 1: short term rates a zero not good for bank Uh.
17:00
Speaker 1: The yield curve steepening and it has been in a
17:02
Speaker 1: very significant way in the last month and a half,
17:05
Speaker 1: is a very significant positive for banks. So the tenure
17:09
Speaker 1: was at point six now it's at one point one six.
17:12
Speaker 1: That's a good thing. The regulatory environment with johnet Yellen
17:15
Speaker 1: at the head of the Treasury is UH. Positive. The
17:18
Speaker 1: fact that the Fed is allowing them to buy back
17:20
Speaker 1: stock again and ultimately is going to allow them to
17:23
Speaker 1: raise their dividends in two thousand twenty one a positive.
17:25
Speaker 1: The new relief package really allows consumers and small businesses
17:30
Speaker 1: to bridge the current recession into better times this summer.
17:34
Speaker 1: So all those things are really good. Uh. Bank stocks
17:37
Speaker 1: have started to perk up, but they've led the market
17:40
Speaker 1: in a huge way in the last year. We think
17:42
Speaker 1: it's a great catch up trade. We think that's going
17:44
Speaker 1: to be a leader ship group this year. So companies
17:47
Speaker 1: like US BANCORPS, JP, Morgan Truest all position to be
17:52
Speaker 1: a lot higher. Uh. And it's an area where you're
17:55
Speaker 1: not taking on your traditional bank risk at the end
17:58
Speaker 1: of a recession, because we do see the credit trends
18:01
Speaker 1: are very good. Dave, are you frustrated at Beatrix? I
18:05
Speaker 1: feel like it's been almost values time for so long,
18:09
Speaker 1: and yet each time it's a head fake. I mean,
18:12
Speaker 1: are you frustrated with Coca Cola? Are you frustrated with Verizon?
18:15
Speaker 1: Are you frustrated with Kellogg? Well, we think value has
18:19
Speaker 1: definitely struggled, and as you said, the last decade value
18:22
Speaker 1: has um land growth and last year some areas of
18:26
Speaker 1: value started to come back in the fourth quarter, but
18:28
Speaker 1: the dividend players have not yet. Uh. As you know,
18:31
Speaker 1: I've been doing this for thirty five plus years and
18:33
Speaker 1: we've gone through lots and lots of cycles, and a
18:36
Speaker 1: lot of what's going on now feels very much like
18:39
Speaker 1: the end of ninet nine and subsequently what happened. It
18:44
Speaker 1: was a great period for value and growth stocks that
18:47
Speaker 1: we're really good businesses didn't do a lot in terms
18:49
Speaker 1: of investment returns for a long time. So having gone
18:52
Speaker 1: through this before, we think we know how this ends.
18:55
Speaker 1: So another six months. Well, because I remember, we think
18:58
Speaker 1: it was just it was Julian Robinson at out right
19:00
Speaker 1: before value hit right, it was it was it was
19:03
Speaker 1: like exactly the worst timing in the world. Yeah, um so,
19:07
Speaker 1: And and Coca Cola is an interesting thing. Coca Cola
19:10
Speaker 1: is going to be a reopening. Play of their business
19:13
Speaker 1: comes from venues like sporting events, uh, concerts, restaurants. So
19:18
Speaker 1: we think that even though it's value and it's paying
19:20
Speaker 1: a great dividend, that as soon as people perceive the
19:23
Speaker 1: economy opening up this summer, UH, that stock should have
19:26
Speaker 1: a really good run up, Kelly, I think you had
19:28
Speaker 1: mentioned been frustrating because their business has been doing very well.
19:33
Speaker 1: Earnings are good, very good, cash flow, stock hasn't done anything.
19:36
Speaker 1: We think they're going to get a nice boost when
19:39
Speaker 1: people focus on that they the largest fake meat manufacturer
19:42
Speaker 1: in the world. Um so competitive, impossible burger. David, it
19:47
Speaker 1: is always great to speak with you and thank you
19:49
Speaker 1: for your thoughts on value on Reddit and much much more. Today.
19:53
Speaker 1: David Katz's chief investment officer at Matrix Asset Advisors and
19:57
Speaker 1: we always look forward to speaking with him. Renaissance Technologies,
20:04
Speaker 1: I'm sure you've heard of them. They've been around for
20:06
Speaker 1: forty years. Run by Jim Simons, a former colde breaker
20:09
Speaker 1: for the n S. A Well, it's now the world's
20:12
Speaker 1: largest quantitative hedge fund, but in fact it's getting less
20:16
Speaker 1: large clients, pulling five billion dollars since December one. Emma
20:19
Speaker 1: Parmer has the story and can explain to us what's
20:22
Speaker 1: behind these redemptions. Emma, Why are people pulling money all
20:26
Speaker 1: of a sudden from Renaissance. Yes, so Manaissance, as you
20:30
Speaker 1: mentioned this, you know, the biggest quant hedge funds and
20:33
Speaker 1: they're very renowned in the instruy. They were a pioneer
20:35
Speaker 1: essentially of quantitative and investing and have had up until
20:39
Speaker 1: recently a very strong streak of performance. But twenty twenty
20:43
Speaker 1: really hurt Renaissances, public hedge funds, UM and many other
20:47
Speaker 1: quantitative funds which really struggled to produced returns. Manisances funds
20:52
Speaker 1: went down between nine and thirty two percent, which are
20:57
Speaker 1: pretty extreme losses for investors in those that's part of
21:01
Speaker 1: you know, that's that's a large reason as to why
21:03
Speaker 1: we're seeing these kinds of redemption. So him of these
21:07
Speaker 1: quantitative funds, and you point out your piece, it's not
21:09
Speaker 1: just Renaissance, it's too Sigma and others as well. What
21:13
Speaker 1: didn't what did not work with their strategies was a
21:16
Speaker 1: volatility that we saw in some of these um call
21:20
Speaker 1: it Reddit names, just too much. So here's the thing
21:23
Speaker 1: with quantitative strategies is they used historical data. They scour
21:28
Speaker 1: through the data that goes back um decades and they
21:31
Speaker 1: look for signals and patterns that might explain what's happening now.
21:35
Speaker 1: And in the year like twenty when we haven't seen
21:38
Speaker 1: a pandemic in over a century, markets don't seem to
21:42
Speaker 1: be acting in the ways that we typically with things
21:44
Speaker 1: that they do. It really slows these computer models, these
21:47
Speaker 1: algorithms at a whack and nothing, no historical data really
21:51
Speaker 1: can prepare them for what, um, you know what the
21:54
Speaker 1: trading environment is like. And that's why last year really
21:57
Speaker 1: saw the human one funds do very well and the
22:00
Speaker 1: quantitative strategies struggle extremely. It's really amazing because you would
22:04
Speaker 1: imagine that they'd be given a few months or you
22:07
Speaker 1: know that this money would be longer term money. Why
22:10
Speaker 1: our investor is able to pull this kind of money
22:13
Speaker 1: at such short notice? Who are these investors that are
22:15
Speaker 1: doing that? So the way the redemption terms work as
22:20
Speaker 1: that assance is you, um, you need to give one
22:23
Speaker 1: month to notice for the redemptions that you'd like to
22:26
Speaker 1: speak and then you get that money back a month later.
22:29
Speaker 1: So you'll get it back within two months of the
22:31
Speaker 1: date that you say you want is back. Um. We
22:34
Speaker 1: don't know who precisely, uh, these investors are that are
22:37
Speaker 1: asking for money, but we do know that five billion
22:39
Speaker 1: across three months or you know, speak with simple first
22:42
Speaker 1: some of these redemptions are handing through the end of
22:45
Speaker 1: sebil um, but five billion dollars is pretty substantial even
22:49
Speaker 1: for a sixty billion dollar fund so I firm, which
22:52
Speaker 1: is still a giant. UM they will continue to be
22:55
Speaker 1: a giant even after these redemptions. UM. But if so,
22:58
Speaker 1: you know, a pretty significant and chunk of money to
23:01
Speaker 1: be lost so quickly too, SOMMA. We saw, I guess
23:05
Speaker 1: a week or two ago Steve Cohen at point seventy
23:08
Speaker 1: two opened up his fund for the first time in
23:11
Speaker 1: a long time to new capital. Here what's the filling
23:15
Speaker 1: within the hedge fund industry is a look back on
23:18
Speaker 1: and all the volatility, whether it was pandemic, whether it
23:21
Speaker 1: was the Reddit trading has have the hedge funds taken
23:25
Speaker 1: a kind of a you know, kind of a hit
23:27
Speaker 1: to the reputation at all, Well, it depends on the strategy,
23:30
Speaker 1: because actually last year was a very good strategy, very
23:34
Speaker 1: good year performance wise for a lot of the big
23:36
Speaker 1: name human run funds. You saw twenty sometimes even more
23:43
Speaker 1: performance numbers, higher performance numbers last year as human run
23:47
Speaker 1: funds were able to really navigate the space. UM, you
23:51
Speaker 1: saw that steady valley from April onwards. UM. So if
23:54
Speaker 1: you have positioned well in March, and if you were
23:57
Speaker 1: positioned well following March, then you actually did um pretty
24:02
Speaker 1: incredibly as as a number of funds did. Now, you know,
24:05
Speaker 1: as we talked about the computer runch strategies really didn't
24:08
Speaker 1: do as well. UM And so you really do see
24:11
Speaker 1: a bit of a stark divide between the strategies and
24:14
Speaker 1: between who performed and who didn't. Do you have any idea,
24:17
Speaker 1: don't you know? What you're looking at? What the responses
24:20
Speaker 1: are from these quant funds. If some of this money
24:22
Speaker 1: wants to go back in pretty soon, if we start
24:24
Speaker 1: seeing a turnaround and a better, improved even performance from
24:28
Speaker 1: these funds, will they take that money back? You think, Hima? Um,
24:33
Speaker 1: I think it's hard to say. Probably, UM. I would
24:35
Speaker 1: suppose that UM that funds, you know, would be happy
24:39
Speaker 1: to to take money back if they have lost UM.
24:42
Speaker 1: You know, we don't entirely know. We do know that
24:45
Speaker 1: Manissans did tell their investors last year that they were
24:50
Speaker 1: um underheaged going into March Just's collapse and then overheedged
24:54
Speaker 1: when the market valued, so they basically lost on both ends.
24:58
Speaker 1: UM And that's kind of, you know, explained a little
25:00
Speaker 1: bit of why their performance didn't do so well. They
25:03
Speaker 1: were just poorly positioned in both regards missing uh, the
25:06
Speaker 1: opportunity of the dip and then you know, being unprepared
25:09
Speaker 1: and advanced of it. So him, as we see some
25:13
Speaker 1: funds come out, maybe some of the quant strategies, do
25:15
Speaker 1: we know where the money is being redeployed? We don't
25:19
Speaker 1: have any clarity on where the money is being redeployed.
25:22
Speaker 1: Hedge funds are you know, incredibly secretive. UM. They don't
25:26
Speaker 1: have to reveal much of their positioning except when thirteen aps,
25:30
Speaker 1: and even then that's you know, ninety days old UM.
25:32
Speaker 1: And then at a suns UH in particular, they have
25:35
Speaker 1: a fund that's closed to UM to outside investors. That's
25:39
Speaker 1: called Medallion, and that is an extremely secretive UM, a
25:43
Speaker 1: secretive vehicle pool of money. So UM, we don't have
25:47
Speaker 1: that kind of clarity. Himma, thank you so much for
25:50
Speaker 1: joining us. Fascinating story here him A Parmer. She's hedge
25:53
Speaker 1: fund reporter for Bloomberg News. Thanks for listening to Bloomberg
25:58
Speaker 1: Markets podcast. You can subscribe and listen to interviews at
26:02
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn,
26:06
Speaker 1: I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney.
26:09
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
26:11
Speaker 1: can always catch us worldwide at Bloomberg Radio