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The October Consumer Confidence Index · 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 CEOs, market pros, and Bloomberg experts,
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  Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Now, let's turn our attention
• 0:19
  Speaker 1: to the economic data that came out this morning, because
• 0:21
  Speaker 1: consumer confidence is not quite as robust as we might
• 0:24
  Speaker 1: have thought. Consumer confidence for October coming in at one
• 0:29
  Speaker 1: point nine, so not a terrible reading, but not as
• 0:31
  Speaker 1: good as economis are anticipating. On the September number was
• 0:34
  Speaker 1: revised lower. Lynn Franco is Director of Economic Indicators at
• 0:38
  Speaker 1: the Conference Board. Lynn, should we start getting concerned or
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  Speaker 1: is this still healthy reading? It's a healthy reading. What
• 0:47
  Speaker 1: we're really seeing is that there's been sort of no
• 0:49
  Speaker 1: significant traction in consumer confidence. We had sort of a
• 0:53
  Speaker 1: sharp rebound, um, you know, sort of post pandemic, but
• 0:56
  Speaker 1: then we've sort of been moving a little bit sideways here.
• 1:01
  Speaker 1: So Lynn, I mean, I guess it's not surprising that
• 1:04
  Speaker 1: we're moving sideways, as you suggest, given where we are
• 1:07
  Speaker 1: with the labor market and even some of the metrics
• 1:10
  Speaker 1: for the virus on a global scale. Um, what are
• 1:15
  Speaker 1: what are the consumers? What's their outlook? I guess for
• 1:17
  Speaker 1: the near term, Well, what we're seeing right now is um.
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  Speaker 1: You know, it's the labor market that grove both the
• 1:25
  Speaker 1: improvement in the present Situation Index and also the decline
• 1:28
  Speaker 1: and expectations. So while they're telling us that the job
• 1:32
  Speaker 1: market has improved, you know, sort of from the lows
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  Speaker 1: of post pandemic levels, they really don't expect much of
• 1:39
  Speaker 1: that momentum to continue through the end of the year
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  Speaker 1: and into next year. So it's kind of a glass
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  Speaker 1: half empty, half full, where you know, conditions have not improved,
• 1:49
  Speaker 1: but they necessarily haven't gotten much worse either. Yeah. I
• 1:53
  Speaker 1: mean the three months moving average has gone to nine
• 1:57
  Speaker 1: point two, all the way from one seven point re
• 2:00
  Speaker 1: back in March. What's a useful comparison here, Lynn, So
• 2:04
  Speaker 1: obviously March probably isn't the best comparison, even though it
• 2:07
  Speaker 1: looks quite quite the difference. I think the key here
• 2:12
  Speaker 1: is the trend, right, So we've seen your confidence to
• 2:16
  Speaker 1: bounce up, they then bounce down and up and down.
• 2:19
  Speaker 1: So would really like to see it gain a little
• 2:21
  Speaker 1: bit of traction in and upward direction, and that's going
• 2:23
  Speaker 1: to be heavily dependent on what happens in the labor market.
• 2:27
  Speaker 1: And while you know, unemployment claims have have come down,
• 2:30
  Speaker 1: they still remain high. Unemployment is still high, and we
• 2:33
  Speaker 1: expect to you know, softening in the labor market. So
• 2:36
  Speaker 1: we could continue around these levels through the end of
• 2:39
  Speaker 1: the year. And you know, one of the areas of
• 2:42
  Speaker 1: the economy that just it surprises me a little bit
• 2:46
  Speaker 1: how strong it is is the housing market. How does
• 2:48
  Speaker 1: that play into the consumer um given that it can
• 2:52
  Speaker 1: be such a big part of the consumer's net worth. Well,
• 2:56
  Speaker 1: I guess it's probably having a little bit of a
• 2:58
  Speaker 1: positive impact. We did see a slight uptick in the
• 3:00
  Speaker 1: percent of consumers which had the intern intended to purchase
• 3:03
  Speaker 1: home over the next six months. That has to do
• 3:06
  Speaker 1: a lot with low interest rates. But the key is
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  Speaker 1: going to be the labor market and what happens there
• 3:12
  Speaker 1: is really going to determine the direction that consumer competence procedures.
• 3:17
  Speaker 1: Well in the state of you dive into all sorts
• 3:19
  Speaker 1: of things like when consumers might be planning to buy
• 3:22
  Speaker 1: a refrigerator or a major appliance when there's a vacation
• 3:25
  Speaker 1: intended and it's interesting to see that. Yeah, there's a
• 3:28
  Speaker 1: reading of forty four point six for people intending to
• 3:32
  Speaker 1: vacation within six months, but almost all of those are
• 3:35
  Speaker 1: intending to vacation in the United States, and there's only
• 3:38
  Speaker 1: a tiny number that's a seven point two number looking
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  Speaker 1: to vacation in a foreign country. Absolutely, you know, we
• 3:46
  Speaker 1: did have a pretty good rebound in terms of the
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  Speaker 1: vacation intention to this month, but it's well below fifty
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  Speaker 1: four nine that we saw, you know, back earlier this year.
• 3:55
  Speaker 1: And again we've got a lot of travel restrictions. Um,
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  Speaker 1: you know, there's also pandemic concerns, so we're seeing that
• 4:03
  Speaker 1: people are choosing to vacation locally and the means of
• 4:07
  Speaker 1: travel preferred is an auto. We did see a little
• 4:10
  Speaker 1: bit of an uptick in terms of those willing to
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  Speaker 1: sort of you know, fly to destinations, but it's really
• 4:16
  Speaker 1: sort of more about local vacation. Hey, Lynn, thanks so
• 4:19
  Speaker 1: much for joining us. We appreciate this getting an update
• 4:22
  Speaker 1: on the consumer. Lynn Franco, Senior Director of Economic Indicators
• 4:25
  Speaker 1: and Surveys at the Conference board. Vannie, would you hop
• 4:28
  Speaker 1: on a plane to go on vacation. You know, I
• 4:31
  Speaker 1: wouldn't bull Yeah, yeah, but then I'm not even doing
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  Speaker 1: outdoor dining yet, so not really typical down the middle.
• 4:38
  Speaker 1: All right, you're taking a conservative we I'm coming into
• 4:40
  Speaker 1: Q So I guess there's a few other things too. Yeah,
• 4:43
  Speaker 1: you worry about Yeah, you listen to the airlines of
• 4:45
  Speaker 1: an you know, they're just not seeing that pick up
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  Speaker 1: and demand. And I guess it's probably not surprising given
• 4:51
  Speaker 1: that we're seeing a surgeon cases. So you know, consumer
• 4:54
  Speaker 1: travel leisure continues to be under pressure. Well, Vannie. When
• 4:58
  Speaker 1: I started my career, it was at the Chase Manhattan Bank,
• 5:01
  Speaker 1: and we made big corporate loans to big media companies,
• 5:04
  Speaker 1: and the way we charged interest was libor plus some
• 5:09
  Speaker 1: premium rate, uh, depending upon the credit worthiness of the borrower,
• 5:13
  Speaker 1: so live or the limit. I think it's the London
• 5:16
  Speaker 1: interbank offer rate effect. Can remember back all the way
• 5:19
  Speaker 1: back to my Chase days. Um, that's kind of been
• 5:21
  Speaker 1: the basis of borrowing rates. But that's about the change.
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  Speaker 1: Let's get some color on that with Ira Jersey, chief
• 5:27
  Speaker 1: US interest rate strategist for Bloomberg Intelligence. Ira tell us
• 5:31
  Speaker 1: about libor and what maybe changing UH with that base rate. Yeah,
• 5:36
  Speaker 1: so the base rate is UH basically scheduled to go
• 5:40
  Speaker 1: away at the end of UM at least that's what
• 5:43
  Speaker 1: the Financial Conduct Authority, which is the regulator of almost
• 5:47
  Speaker 1: everything financial in in England. UM. You know, LIBOR was
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  Speaker 1: much aligned during the Great UH financial Crisis back in
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  Speaker 1: two thousand seven to two thousand nine, and starting in
• 5:58
  Speaker 1: two thousand thirteen, there was a real push by regulators
• 6:01
  Speaker 1: to find replacement rates for live war globally and UM
• 6:05
  Speaker 1: and a lot of countries have have different rates, and
• 6:08
  Speaker 1: many of them found different rates that that they're comfortable using.
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  Speaker 1: In the US, the primary rate that a lot of
• 6:14
  Speaker 1: instruments will UH will basically transfer to is called the
• 6:18
  Speaker 1: secured Overnight Financing Rate or SOFA, which is basically UH
• 6:23
  Speaker 1: calculated based on repurchase agreements which are loan secured by
• 6:27
  Speaker 1: treasuries so UM. So that's why you know that there's
• 6:31
  Speaker 1: hundreds of trillions of dollars of these loans outstanding. So
• 6:33
  Speaker 1: this is quite a big deal, and I think it
• 6:35
  Speaker 1: hasn't gotten attention it really deserves by the broader market. Well,
• 6:39
  Speaker 1: and let's just fill in the reasoning why this all happened.
• 6:42
  Speaker 1: Lie war was one of the sort of the old
• 6:44
  Speaker 1: guards of finance. It was hilarious. The way it was
• 6:47
  Speaker 1: calculated daily was you just put out a bunch of
• 6:50
  Speaker 1: asks to different banks and you've got a whole bunch
• 6:54
  Speaker 1: back and the top three in the bottom three were
• 6:56
  Speaker 1: mixed together and you've got some kind of the rate
• 6:59
  Speaker 1: and d and then you know this. Well, then it
• 7:03
  Speaker 1: turned out that people were actually manipulating it a little
• 7:05
  Speaker 1: bit give us some background. Yeah, so so the way
• 7:08
  Speaker 1: that that librars calculated it's basically a survey of the
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  Speaker 1: banks within the panel that are all London based banks
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  Speaker 1: and they then take a trim mean And what happened
• 7:17
  Speaker 1: was during the crisis, um there there were um uh
• 7:22
  Speaker 1: banks basically that that put in rates that weren't real
• 7:25
  Speaker 1: that that it wasn't really where they could fund because
• 7:28
  Speaker 1: they're supposed to be basically honest about what what they
• 7:32
  Speaker 1: where they can fund in any given day, and that's
• 7:33
  Speaker 1: the rate they're supposed to submit and they didn't do that.
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  Speaker 1: And what what what regulators found and what even courts
• 7:40
  Speaker 1: found because there were court cases based on this is
• 7:43
  Speaker 1: as well as just regulatory finds that that were passed
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  Speaker 1: out in the tunes of hundreds of millions of dollars UM.
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  Speaker 1: They basically that they found that it was open to manipulation.
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  Speaker 1: So some banks wanted to pull out of these panels
• 7:56
  Speaker 1: to limit their litigation risk um for being part of
• 8:00
  Speaker 1: the Liveboard panel. And as as part of them not
• 8:03
  Speaker 1: pulling out UM, some of the regulators said, well, let's
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  Speaker 1: think about getting getting away from live board at some
• 8:09
  Speaker 1: point in the future, and that date was tagged at
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  Speaker 1: the end of So so this whole transition process has
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  Speaker 1: really started in earnest in two thousand and seventeen, but
• 8:19
  Speaker 1: it's really had to pick up steam because we're we're
• 8:21
  Speaker 1: only you know, we're only fourteen months away from from
• 8:25
  Speaker 1: basically library going away, which like I mentioned and like
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  Speaker 1: like Paul had mentioned before, it's been ubiquitous for the
• 8:30
  Speaker 1: last three generations, right, So, um, this is not an
• 8:33
  Speaker 1: easy task and something that everyone has to pay more
• 8:35
  Speaker 1: attention to. So if I'm holding a bond and it
• 8:40
  Speaker 1: pays me live War plus two and a half percent
• 8:43
  Speaker 1: come the end of what's going to happen? So so
• 8:48
  Speaker 1: that's a good question. So for most instruments, what will
• 8:51
  Speaker 1: happen is live Board will become this secured overnight financing
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  Speaker 1: rate plus a spread and and we estimate, we actually
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  Speaker 1: put this out, uh, just a small wing, we estimate
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  Speaker 1: that that spread will be twenty three basis points at
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  Speaker 1: the end of So basically you're going to be paid
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  Speaker 1: twenty three basis points plus plus whatever SOFA is on
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  Speaker 1: an ongoing basis UM. And so this is a problem
• 9:16
  Speaker 1: for some banks because with a fixed spread or with
• 9:19
  Speaker 1: using this you know, treasury based secured rate instead of
• 9:22
  Speaker 1: a credit based rate like library was supposed to be UM,
• 9:26
  Speaker 1: it changes a lot of the calculus in the way
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  Speaker 1: that UM, in a way that banks fund, and in
• 9:31
  Speaker 1: a way that they're going to make loans going forward.
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  Speaker 1: So if you have a loan, it will still be
• 9:35
  Speaker 1: a floating rate, but it will be more interest rate
• 9:37
  Speaker 1: based as opposed to the credit spread based, which which
• 9:40
  Speaker 1: does have implications for the way that you hedge or
• 9:43
  Speaker 1: the way that you you think about your loans going forward. Yeah,
• 9:46
  Speaker 1: and just full disposure. Bloomberg had actually put in an
• 9:49
  Speaker 1: idea for replacing the librar at the time as well.
• 9:52
  Speaker 1: There was a sort of a request out there for
• 9:55
  Speaker 1: public commentary, and I believe that Bloomberg had one POTENTI
• 10:00
  Speaker 1: chill replacement for a library. So so fur then, I mean,
• 10:04
  Speaker 1: is it still going to be you know, London banks
• 10:06
  Speaker 1: based or I mean if I'm if I'm paying a
• 10:08
  Speaker 1: mortgage in Wisconsin and my credit is not particularly high,
• 10:10
  Speaker 1: am I still going to be you know, basing my
• 10:13
  Speaker 1: repayments on on what some bankers and London thank you
• 10:15
  Speaker 1: so so no, so SOFA is based on an actual market.
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  Speaker 1: So it's based on the the way that that banks
• 10:21
  Speaker 1: and and hedge funds and um and broker dealers basically
• 10:26
  Speaker 1: trade and and lend treasury securities to each other within
• 10:29
  Speaker 1: the US. So it's it's a very very liquid market.
• 10:33
  Speaker 1: There's over nine billion dollars of transactions every day. It's
• 10:37
  Speaker 1: one of the most liquid markets in the world. So
• 10:40
  Speaker 1: um so so basically you're you're at the whim more
• 10:43
  Speaker 1: of dealer balance sheets and bank balance sheets than you
• 10:46
  Speaker 1: are worrying about, you know, whether or not you know,
• 10:48
  Speaker 1: in London, there's enough dollars for Barclay's Bank to the
• 10:53
  Speaker 1: fund themselves, which is what happened during the during the
• 10:56
  Speaker 1: financial crisis. So so it's it's a it's a big
• 10:59
  Speaker 1: shift and it's a change of mentality because um, you
• 11:02
  Speaker 1: won't be paying more if banks find find it hard
• 11:05
  Speaker 1: to fund. Um, you'll be paying more if uh um,
• 11:09
  Speaker 1: basically if there's too many treasuries out there for the
• 11:11
  Speaker 1: amount that people can lend. I thank you so much,
• 11:15
  Speaker 1: Ira Jersey of Bloomberg Intelligence. They're a chief interest rate
• 11:19
  Speaker 1: strategists explaining everything to do with s O F or sofer.
• 11:25
  Speaker 1: Time for Bloomberg Opinion. We're joined by John Author's Bloomberg
• 11:28
  Speaker 1: Opinion columnists covering all things on the markets. He joined
• 11:31
  Speaker 1: us from our Bloomberg Interactive Broker studio out within a
• 11:34
  Speaker 1: very interesting column just about a topic that you and
• 11:36
  Speaker 1: I were talking about just recently. Vanni. It seems like,
• 11:40
  Speaker 1: you know, the numbers are so bad as it relates
• 11:42
  Speaker 1: to the pandemic. Here, some of the numbers, you know,
• 11:44
  Speaker 1: as bad as we saw back in March and April.
• 11:46
  Speaker 1: Yet the markets generally behaving much much better now than
• 11:50
  Speaker 1: they were back in March, and able to get a
• 11:52
  Speaker 1: sense of why that might be. We welcome John John,
• 11:54
  Speaker 1: thanks so much for joining us here. Let's talk about
• 11:56
  Speaker 1: your recent column, Covics nineteen. What are you thinking about?
• 12:02
  Speaker 1: I think we're getting to a point where the market
• 12:06
  Speaker 1: has to accept that the risks of COVID to economic activity,
• 12:14
  Speaker 1: and that's obviously what matters primarily to two markets is
• 12:18
  Speaker 1: how much of an effect it has on stuff being
• 12:20
  Speaker 1: bought and sold, have risen, have returned, and that does
• 12:27
  Speaker 1: need now to be reflected in prices. Now. It's obviously
• 12:32
  Speaker 1: very easy to get very much into big, polarized oppositional
• 12:37
  Speaker 1: discussions on this. It's obvious that the medical community is
• 12:45
  Speaker 1: getting much better at people keeping people alive when they
• 12:47
  Speaker 1: catch this, and it's also obvious that we're all learning
• 12:52
  Speaker 1: how to keep at least a certain level of activity
• 12:55
  Speaker 1: going on, even at points when we're worried about it. Um. So,
• 13:00
  Speaker 1: you know, there's no question as far as I can see,
• 13:03
  Speaker 1: of needing to go down to the kind of depths
• 13:06
  Speaker 1: we saw in March. But if you look at the
• 13:11
  Speaker 1: economic activity data, you can see even in Germany, which
• 13:15
  Speaker 1: is of the you know, the major Western economy is
• 13:18
  Speaker 1: the one that's dealt with the virus best to date,
• 13:21
  Speaker 1: you are seeing an unmistakable tick up in hospitalizations and
• 13:25
  Speaker 1: you're seeing an unmistakable tick down in economic activity, which,
• 13:29
  Speaker 1: unlike in the States, really had just about got back
• 13:33
  Speaker 1: to normal for a few weeks at the end of
• 13:35
  Speaker 1: the summer, and that's obviously likely to be repeated here
• 13:40
  Speaker 1: in the States. It doesn't matter exactly what governors say
• 13:44
  Speaker 1: or mandate. If people are worried about the virus, that
• 13:47
  Speaker 1: that much less likely to go out. It's not like
• 13:50
  Speaker 1: we didn't know this was coming, though, John, I mean,
• 13:52
  Speaker 1: we've known for a long time that we were likely
• 13:55
  Speaker 1: to not get a vaccine this year, at least for
• 13:57
  Speaker 1: for the clubs among us. Sorry, m well, there is that.
• 14:02
  Speaker 1: I think the issue that arises there the administration calling
• 14:07
  Speaker 1: for me. I think the issue that arises there is
• 14:11
  Speaker 1: um that. Uh there was and this wasn't ridiculous. There's
• 14:18
  Speaker 1: a widespread belief within the market that the the the
• 14:22
  Speaker 1: disease had reached what you could call a choke point
• 14:26
  Speaker 1: or even herd immunity either. Once a certain number of
• 14:32
  Speaker 1: the people who are the most connected, who of of
• 14:36
  Speaker 1: necessity on the day to day lives, are the people
• 14:39
  Speaker 1: who come into contact with the most other people once
• 14:42
  Speaker 1: they've got it. The theory, and it's not that bad.
• 14:45
  Speaker 1: Theory was that it would be much harder for the
• 14:48
  Speaker 1: disease to spread again, and so in places like where
• 14:52
  Speaker 1: we are here in New York or other cities where
• 14:56
  Speaker 1: they have been particularly severe outbreaks. The reasonable belief was
• 15:02
  Speaker 1: that it just wasn't going to come back with anything
• 15:04
  Speaker 1: like that amount of force. Now, you could still argue
• 15:08
  Speaker 1: that in most places around the world, cases are picking
• 15:12
  Speaker 1: up worst in areas where they've been least problematic before,
• 15:18
  Speaker 1: such as the Upper Midwest here in the States. But
• 15:21
  Speaker 1: that's beginning to look ever more tenuous that yeah, there
• 15:23
  Speaker 1: there are there is a steady drip of news about
• 15:26
  Speaker 1: cases here in New York. There's a number of the
• 15:28
  Speaker 1: European places that are having problems had already had quite
• 15:32
  Speaker 1: severe outbreaks before. So I think there was a reasonable
• 15:37
  Speaker 1: degree of hope, justified or not, that we really weren't
• 15:43
  Speaker 1: going to get a sign significant recurrence in the places
• 15:46
  Speaker 1: we've had it already. And we're now seeing the markets
• 15:50
  Speaker 1: beginning to retreat from that hope. And John, you know,
• 15:54
  Speaker 1: I think just looking at Europe there seemed to be
• 15:56
  Speaker 1: a little bit of ahead of us again here, and
• 15:58
  Speaker 1: we're starting to see some shutdowns in France and Spain
• 16:03
  Speaker 1: and other areas and the UK and the UK and
• 16:07
  Speaker 1: it's only October, you know, I think it's would it
• 16:11
  Speaker 1: be reasonable for people to say this could get materially
• 16:15
  Speaker 1: worse as we really get into December, January, February. Yes,
• 16:20
  Speaker 1: it would be reasonable to to say that this is
• 16:23
  Speaker 1: a time when people are more likely to stay in anyway,
• 16:27
  Speaker 1: we have the psychological issue of Christmas coming up. In Britain.
• 16:33
  Speaker 1: The rule at the present is is no more than
• 16:36
  Speaker 1: six people gathering together in more you know, in indoors,
• 16:42
  Speaker 1: even if they're members of the family in the areas
• 16:45
  Speaker 1: that are most affected, which basically for most extended families
• 16:49
  Speaker 1: means no Christmas dinner, which is a very big families.
• 16:55
  Speaker 1: By the way, well there is there there is that
• 16:57
  Speaker 1: it might it might actually be bad for the marriage
• 17:00
  Speaker 1: its industry, but bad for divorce lawyers. But yet there
• 17:04
  Speaker 1: might be slightly at stress there. But but those are
• 17:07
  Speaker 1: those are significant issues. And also I nearly missed this
• 17:11
  Speaker 1: interview because I was having my flu shot. We are
• 17:14
  Speaker 1: now into flu season, uh, and the symptoms of the
• 17:18
  Speaker 1: two are quite similar to each other, which gives reasons
• 17:22
  Speaker 1: for concern. If you've just had COVID and then you
• 17:25
  Speaker 1: get flu, we don't know what that's going to be like, etcetera. Yeah,
• 17:29
  Speaker 1: that there are I think there are good reasons to
• 17:31
  Speaker 1: believe that this is not going to be as deadly
• 17:34
  Speaker 1: per se as it was before, but it could easily
• 17:37
  Speaker 1: be very disruptive if Biden wins the presidency, Do the
• 17:42
  Speaker 1: markets price out a little bit of the COVID premium
• 17:45
  Speaker 1: or the COVID discount in the sense that it's unlikely
• 17:49
  Speaker 1: that Biden wouldn't implement some federal sort of orders if
• 17:53
  Speaker 1: it came to that, Whereas at the moment we know
• 17:55
  Speaker 1: we're not getting those kinds of orders. I I doubt
• 18:00
  Speaker 1: partly because he's not getting it. He's not getting in
• 18:04
  Speaker 1: until January the earliest um, by which point, even if
• 18:09
  Speaker 1: things are terrible, you would if things are at the
• 18:12
  Speaker 1: very worst, then the precedent of Spanish flu in nine
• 18:16
  Speaker 1: eighteen suggests that by then it would more or lesser
• 18:18
  Speaker 1: blown itself out anyway, So I doubt I doubt it
• 18:24
  Speaker 1: would have that big There are many other reasons why
• 18:28
  Speaker 1: a Biden victory would affect the market. I don't see
• 18:32
  Speaker 1: it's having that big of an effect. And at this point,
• 18:37
  Speaker 1: masks are so politicized. You could have a federal mask mandate,
• 18:44
  Speaker 1: and I'm not sure how big an effect on people's
• 18:48
  Speaker 1: behavior that would have a good point here, So I
• 18:53
  Speaker 1: it just feels like, you know, you could make an
• 18:55
  Speaker 1: argument for uh, you know, some real risk in the
• 18:59
  Speaker 1: near term. On yes, I mean, there are plenty of
• 19:02
  Speaker 1: other reasons for risk in the very near term as well,
• 19:04
  Speaker 1: but people were hoping COVID wasn't one of them, and
• 19:08
  Speaker 1: they're giving up on that type. Hi, John, thanks so
• 19:10
  Speaker 1: much for joining us, and congratulations on your flu shot.
• 19:13
  Speaker 1: Always going to get that out of the way. John Authors,
• 19:15
  Speaker 1: Bloomberg Markets Senior editor, giving us his thoughts on potential
• 19:19
  Speaker 1: for near term volatile I'm looking at the vix here,
• 19:22
  Speaker 1: which is something that Tom Pein loves to call out
• 19:24
  Speaker 1: every morning. The vix is above thirty three. That's a
• 19:27
  Speaker 1: relatively high level, indicating some risky in the market. Well,
• 19:31
  Speaker 1: our next guest has degrees in Russian, Eastern European, and
• 19:35
  Speaker 1: Central Asian studies from Harvard University, so the natural place
• 19:39
  Speaker 1: for her to end up is leading up Third Bridges
• 19:42
  Speaker 1: coverage in therapeutics if you don't mind. Thanks to Jaylan Mamadama,
• 19:47
  Speaker 1: who does lead up the healthcare analysis at Third Bridge,
• 19:51
  Speaker 1: for joining us. Jollen, you know, I was being a
• 19:55
  Speaker 1: little facetious earlier, but it is wonderful to have all
• 19:57
  Speaker 1: of that in the background, because we're dealing with a
• 20:00
  Speaker 1: global pandemic right here, and we're dealing with global companies
• 20:02
  Speaker 1: trying to come up with therapeutics, with vaccines and with cures.
• 20:06
  Speaker 1: And I'm curious as to you know, where you think
• 20:09
  Speaker 1: the first of the the better vaccines. Let's say we'll
• 20:13
  Speaker 1: come out of perfect Thank you so much. Funny and
• 20:18
  Speaker 1: justin starting up with earnings from Lily Merchanciser this morning,
• 20:23
  Speaker 1: he's really key that you're looking at the second half
• 20:26
  Speaker 1: in Q three is to see who's done a better
• 20:28
  Speaker 1: job in terms of weathering the storm. And this comes
• 20:30
  Speaker 1: down to the vaccine conversation. Um. The media has really
• 20:34
  Speaker 1: portrayed us to who's going to come to the market
• 20:36
  Speaker 1: first and our experts. Do you really think fisor biontic
• 20:39
  Speaker 1: and what that maderna will be making up the first
• 20:42
  Speaker 1: generation of vaccines. Now, having said that, we do think
• 20:46
  Speaker 1: that the most important mechanism to look after is them
• 20:49
  Speaker 1: to be the durability for longevity of the efficacy in
• 20:52
  Speaker 1: a mass population, as well as the safety pertaining to
• 20:57
  Speaker 1: the durability mechanism. And what I mean by that is
• 20:59
  Speaker 1: that there's a window of time where the patient isn't
• 21:01
  Speaker 1: client uh to get more infected due to declining antibodies.
• 21:06
  Speaker 1: Now as we were pertain to the RNA vaccine, So
• 21:09
  Speaker 1: both fives are in Maderna. They have historically shown poured
• 21:11
  Speaker 1: your ability and T cell responses, but there are um
• 21:15
  Speaker 1: not too many safety concerns, and looking at the ste
• 21:18
  Speaker 1: Way guideline not being a strict but efficiency and the
• 21:23
  Speaker 1: meeting two months follow up, we essentially see these first
• 21:26
  Speaker 1: coming to market, capturing maybe about fifty percent share, and
• 21:30
  Speaker 1: then leveling off until we see more durable options come
• 21:33
  Speaker 1: out out of the novavaxes, the j and Jason and
• 21:37
  Speaker 1: the Marks and especially also both on the preventative vaccines
• 21:41
  Speaker 1: and on the prophylactic sides like with the oral antivio
• 21:45
  Speaker 1: agents that both fives are working on. So, Jaylen, is
• 21:48
  Speaker 1: it the expectation within the health care community that um,
• 21:52
  Speaker 1: there will be one kind of go to vaccine or
• 21:57
  Speaker 1: will there be kind of a cocktail or uh approach
• 22:00
  Speaker 1: where maybe some people will get one or more of
• 22:03
  Speaker 1: this vaccine and others will get one or more of
• 22:04
  Speaker 1: that vaccine. What's the expectation currently? Yeah, So definitely, although
• 22:09
  Speaker 1: I don't like to talk about this in terms of winners,
• 22:11
  Speaker 1: there will be three four candidates out there, right, and
• 22:14
  Speaker 1: just from the standpoint of of getting the vaccine administrat
• 22:18
  Speaker 1: a mass scale, we are going to need a few
• 22:21
  Speaker 1: of those players now. In terms of considerations on administration,
• 22:25
  Speaker 1: the elderly are the average population and the We saw
• 22:28
  Speaker 1: a recent JAMA article noting that you know, living your
• 22:31
  Speaker 1: technology platforms like the R and AS, there are safety
• 22:35
  Speaker 1: reservations as to the adoption uh in in those you know,
• 22:39
  Speaker 1: older populations. For us, when you look at Mark although
• 22:41
  Speaker 1: much later entrance in the in the game um they're
• 22:45
  Speaker 1: using their established DSc vector platform that has shown amazing
• 22:48
  Speaker 1: efvocacy of the bowl of vaccine. Right, it's also going
• 22:52
  Speaker 1: to be potentially in single dose and oral formulation, which
• 22:55
  Speaker 1: is super convenient and again no reservations when it comes
• 22:58
  Speaker 1: to administration for the elderly, You're absolutely right, they're different
• 23:02
  Speaker 1: age categories that are probably going to adapt to this differently.
• 23:05
  Speaker 1: Having said that, um Nova vacs also has a combined
• 23:10
  Speaker 1: potentially combining to the COVID nineteen vaccine with their flu vaccine,
• 23:14
  Speaker 1: so from an administration standpoint, that's going to be much
• 23:17
  Speaker 1: more convenient and those are the players that we're going
• 23:19
  Speaker 1: to be seeing, you know, three or four of those
• 23:22
  Speaker 1: gaining adoption at mass scales, but definitely not not one
• 23:26
  Speaker 1: player that would not be sufficient in terms of UM,
• 23:29
  Speaker 1: in terms of uh mascale adoption, which is really the
• 23:32
  Speaker 1: case with really any other therapeutic indications, Jayleen, At some
• 23:37
  Speaker 1: point we should have several vaccines, I mean hopefully, right,
• 23:40
  Speaker 1: that would be the idea. Do they all stay in
• 23:42
  Speaker 1: existence then or or do some end up with better
• 23:45
  Speaker 1: marks than others. Yeah, that's a really good question. I
• 23:50
  Speaker 1: mean with the RNAs, for example, we do see these
• 23:52
  Speaker 1: phasing out and then the URNA platforms being used in
• 23:55
  Speaker 1: different affections to be duringn oncology indications, right because on
• 23:58
  Speaker 1: fibers partnering with BioNTech um, that's really they're investing in
• 24:03
  Speaker 1: the in the in the platform with COVID nineteen as
• 24:06
  Speaker 1: a starting point. But likely it is going to be
• 24:09
  Speaker 1: faced out when these more durable mechanisms comes to the
• 24:13
  Speaker 1: floor out of you know j J and NOLO vax
• 24:17
  Speaker 1: and MARK and the two areas to really track are
• 24:20
  Speaker 1: both the antibody responses UM as well as the T
• 24:23
  Speaker 1: cell responses. As we are still trying to understand better
• 24:26
  Speaker 1: the passagenesses of of of COVID nineteen UM. Now, the
• 24:30
  Speaker 1: prophylactics options are also going to be interesting to track.
• 24:34
  Speaker 1: UM the merk oral anti viral combination with bridge back
• 24:38
  Speaker 1: bio UM. We're looking out for the safety data out
• 24:41
  Speaker 1: of that. But before we get a vaccine and mass scale,
• 24:45
  Speaker 1: these types of prophylactic options, especially in oral formulation, will
• 24:50
  Speaker 1: will really we're expecting to see why viceprea adoption, especially
• 24:55
  Speaker 1: in skilled nursing facilities. Hey, Jalan, just about the thirty
• 24:58
  Speaker 1: seconds left? UM, how confident is the industry that they
• 25:02
  Speaker 1: can actually produce and distribute this at scale? Yeah, So
• 25:06
  Speaker 1: we were looking at the first hundred million doses by year,
• 25:08
  Speaker 1: and our experts don't think that that is viable. I
• 25:11
  Speaker 1: mean we're seeing visor bions and keep pushing the timeline
• 25:13
  Speaker 1: out further and further. UM, we're probably going to see
• 25:16
  Speaker 1: the first hundred million doses sometime you know, mid next year.
• 25:21
  Speaker 1: And what I mean by that is not just ready
• 25:23
  Speaker 1: to go, but ready to go and administer to the population. UM.
• 25:28
  Speaker 1: In terms of viability, looks the urns are easiest to
• 25:31
  Speaker 1: man a factor right the but then that becomes a
• 25:34
  Speaker 1: little bit more complicated with the two dozing regiments, so
• 25:37
  Speaker 1: anything that single dose will probably catch up to the
• 25:40
  Speaker 1: two dozen regimen vaccines. Hey, Jalen, thanks so much for
• 25:43
  Speaker 1: joining us. We really appreciate your insight getting us updated
• 25:46
  Speaker 1: here on some of the therapeutics and vaccines and the timelines.
• 25:50
  Speaker 1: Jalen Momadoba, global sector lead for healthcare at Third Bridge,
• 25:55
  Speaker 1: joining us to lend her insights into what is the
• 25:58
  Speaker 1: topic of the moment and that is exact see Thanks
• 26:05
  Speaker 1: for listening to Bloomberg Markets podcast. You can subscribe and
• 26:08
  Speaker 1: listen to interviews at Apple Podcasts or whatever a podcast
• 26:12
  Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at
• 26:15
  Speaker 1: Bonnie Quinn. And I'm Paul Sweeney. I'm on Twitter at
• 26:17
  Speaker 1: pt Sweeney. Before the podcast, you can always catch us
• 26:20
  Speaker 1: worldwide at Bloomberg Radio