Latest / Bloomberg Intelligence / Senate Runoffs Threaten Bullish Market: Federated's Orlando

Transcript

Senate Runoffs Threaten Bullish Market: Federated's Orlando · 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,
• 0:10
  Speaker 1: along with essential market moving news kind 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. After a record setting investors
• 0:22
  Speaker 1: are sitting back here on this January four and saying, Okay,
• 0:26
  Speaker 1: now what do I do in next? Guest has some thoughts?
• 0:31
  Speaker 1: I am sure. Phil Orlando, chief equity market strategist in
• 0:34
  Speaker 1: ahead of the Client portfolio Management at Federated Hermes, joins
• 0:38
  Speaker 1: us here. Phil, thanks so much for joining us once again,
• 0:41
  Speaker 1: boy your spot on with the bullish call in what
• 0:45
  Speaker 1: say you now as we start? Well, um, happy new
• 0:51
  Speaker 1: year by the way, Paul, thanks for having me back on.
• 0:53
  Speaker 1: So the piece, my year end focus piece that I
• 0:57
  Speaker 1: wrote just before Christmas was entitled It's always darkest just
• 1:01
  Speaker 1: before dawn, and and that would suggest that is going
• 1:05
  Speaker 1: to be a pretty good year. Our forecast for the
• 1:08
  Speaker 1: SMP last year was thirty eight hundred. We got close
• 1:12
  Speaker 1: to that about thirty seven fifty, and we think we
• 1:14
  Speaker 1: could get up to about the forty hundred level over
• 1:17
  Speaker 1: the course of calendar. But but two of the key
• 1:22
  Speaker 1: fundamental issues that we're focused on is the coronavirus and
• 1:26
  Speaker 1: the vaccine and sort of issue number one and issue
• 1:29
  Speaker 1: two is divided government. And I got to tell you
• 1:34
  Speaker 1: that over the course of the last couple of weeks,
• 1:37
  Speaker 1: the vaccine distribution has not been as smooth, as not
• 1:42
  Speaker 1: been as widespread I think as a lot of people thought.
• 1:45
  Speaker 1: And that's got to raise some questions and um. While
• 1:49
  Speaker 1: on the Georgia runoffs tomorrow, while the two Republican candidates
• 1:54
  Speaker 1: look like they were in pretty good shape a couple
• 1:56
  Speaker 1: of weeks ago, the polls this morning would suggest that
• 1:59
  Speaker 1: the Democrats have caught up, and uh, they appear to
• 2:03
  Speaker 1: be in the lead right now. And you know, all right,
• 2:07
  Speaker 1: the polls have been horrific over the last four or
• 2:09
  Speaker 1: five years, So how much faith can you put in them?
• 2:12
  Speaker 1: But what it tells us is that we've got a
• 2:14
  Speaker 1: couple of coin flip elections tomorrow which could have a
• 2:17
  Speaker 1: significant bearing on government. Exactly what would it look like
• 2:21
  Speaker 1: in either scenario, What would be the things that would
• 2:24
  Speaker 1: impact markets most in terms of legislation under either scenario. Well,
• 2:28
  Speaker 1: I think if if if this morning's poles hold, let's
• 2:32
  Speaker 1: say the d S win both of those seats, therefore
• 2:35
  Speaker 1: they gain control of the government. And what we can
• 2:39
  Speaker 1: expect out of an incoming Biden administration then is probably
• 2:44
  Speaker 1: higher taxes and and and more spending and more stimulus
• 2:48
  Speaker 1: and more infrastructure. And so I think we're likely to
• 2:52
  Speaker 1: see a sugar high over the course of calendar twenty
• 2:55
  Speaker 1: one in terms of all of those things, but they'll
• 2:58
  Speaker 1: probably be a price to pay somewhere down the cycle.
• 3:02
  Speaker 1: And and maybe that that price to pay is in
• 3:04
  Speaker 1: calendar twenty two. Um. The issue with regard to the
• 3:09
  Speaker 1: coronavirus is, you know, are we gonna be able to
• 3:12
  Speaker 1: pick up the pace and get to a run rate
• 3:15
  Speaker 1: of say twenty five million vaccinations a month, which was
• 3:19
  Speaker 1: our estimate, and frankly we thought we would be conservative,
• 3:22
  Speaker 1: but the healthcare experts were assuring us that we're going
• 3:26
  Speaker 1: to be able to, you know, vaccinate fifty million people
• 3:29
  Speaker 1: a month. We cut that number in half just to
• 3:32
  Speaker 1: be conservative. And and again based upon the expectations and
• 3:37
  Speaker 1: the what's happened over the last couple of weeks, maybe
• 3:40
  Speaker 1: twenty five million a month is way too optimistic. So, Phil,
• 3:44
  Speaker 1: if I've made a mistake in it relates to the markets,
• 3:48
  Speaker 1: that maybe it was just that I was overthinking things.
• 3:51
  Speaker 1: Maybe all I need to know is rates are low
• 3:54
  Speaker 1: and they're gonna stay low. Therefore I buy stocks. Is
• 3:58
  Speaker 1: that still not the call? It's absolutely the call. This
• 4:01
  Speaker 1: is a Tina scenario. There is no alternative. If you've
• 4:05
  Speaker 1: got benchmark ten, your treasury sitting at one percent, which
• 4:08
  Speaker 1: is basically where we are UM. Theoretically, the multiple you
• 4:13
  Speaker 1: should be willing to pay on forward earnings for stocks
• 4:16
  Speaker 1: has got to be at least twenty five times earnings UM.
• 4:20
  Speaker 1: So there's uh, there's no other place to be in
• 4:24
  Speaker 1: terms of either getting yield or capital appreciation potential in
• 4:28
  Speaker 1: the equity market given a low inflation, low interest rate environment, Phil,
• 4:34
  Speaker 1: what do you imagine will happen with inflation this year?
• 4:37
  Speaker 1: There is the theme in the market now that it
• 4:39
  Speaker 1: will rise a little bit the ten your inflation break
• 4:42
  Speaker 1: even back up beyond two percent, which hasn't happened since November.
• 4:48
  Speaker 1: Inflation absolutely is going higher. But but let me just
• 4:51
  Speaker 1: say that that J. Powell, the Federal Reserve, they're going
• 4:55
  Speaker 1: to church on Sunday, lighting candles, praying that inflation goes higher.
• 4:59
  Speaker 1: We we went from a two percent run rate on
• 5:02
  Speaker 1: core PC a year ago. We bottomed out sub one.
• 5:07
  Speaker 1: We're in the process of getting that back. We think
• 5:10
  Speaker 1: we'll be back to, you know, the two percent level
• 5:13
  Speaker 1: by the end of this year. That's exactly where the
• 5:15
  Speaker 1: Federal Reserve needs to see it, wants to see it,
• 5:18
  Speaker 1: they're praying to see it. We need to have some
• 5:20
  Speaker 1: inflation in the economy. We're not talking about hyper inflation.
• 5:24
  Speaker 1: Two percent, two and a quarter or two and a
• 5:26
  Speaker 1: half percent. There is exactly what the Fed wants and
• 5:29
  Speaker 1: exactly what the market needs to see. So Phil, I
• 5:32
  Speaker 1: guess the question it real quickly thirty seconds rotation trade.
• 5:36
  Speaker 1: Are you in all in on that rotation trade into
• 5:38
  Speaker 1: cyclicals and small caps and things like that. We're still
• 5:41
  Speaker 1: there international large cap values, small caps, they've outperformed the
• 5:47
  Speaker 1: broad market over the last three or four months. We
• 5:49
  Speaker 1: think that trend continues over the course of twenty one. Well, Phil, Orlando,
• 5:53
  Speaker 1: always a pleasure to speak with you, in particularly the
• 5:55
  Speaker 1: first trading day of one. We look for lots more
• 5:59
  Speaker 1: c means to come throughout the year. Who knows what's
• 6:01
  Speaker 1: going to happen. Certainly we weren't expecting last year's roll
• 6:05
  Speaker 1: out as it happened, and there we got less. We
• 6:08
  Speaker 1: got plenty of news last year. Phil Orlando of Federated Hermes,
• 6:12
  Speaker 1: thank you so much for joining. On Saturday, President Trump
• 6:18
  Speaker 1: had an interesting phone call with Georgia Secretary of State
• 6:21
  Speaker 1: Brad Rappensburger, a Republican and Ryan Germany Rappensburger's General council
• 6:27
  Speaker 1: in the President's continuing efforts to influence the election in
• 6:29
  Speaker 1: that state. Let's take a listen to part of that discussion. So, look,
• 6:35
  Speaker 1: all I wanna do is this. I just want to
• 6:37
  Speaker 1: find uh eleven thousand, seven eight votes, which is one
• 6:45
  Speaker 1: more that we have because we won the state. So
• 6:50
  Speaker 1: so tell me, bred what are we gonna do. We
• 6:53
  Speaker 1: won the election, and it's not fair to take it
• 6:56
  Speaker 1: away from us like this, and it's gonna be very
• 6:59
  Speaker 1: caught late in many ways, and I think you have
• 7:04
  Speaker 1: to say that you're going to re examine it. And
• 7:06
  Speaker 1: you can re examine it, but but re examine it
• 7:08
  Speaker 1: with people that I want to find answers, not people
• 7:11
  Speaker 1: that don't want to find answers. That was President Trump
• 7:16
  Speaker 1: on a phone call Saturday with Georgias Secretary of State
• 7:18
  Speaker 1: Brad Raefensburger and Ryan Jeremany, Raeffensburger's general counsel. To help
• 7:21
  Speaker 1: us parse what this all means, we welcome Timothy O'Brien,
• 7:25
  Speaker 1: senior columnist for Bloomberg Opinion, UH, joining us from Montclair,
• 7:29
  Speaker 1: New Jersey. Tim, there's been so many odd twists and
• 7:31
  Speaker 1: turns to the last four years. Help us put in
• 7:34
  Speaker 1: the context the meaning and the significance of the phone
• 7:38
  Speaker 1: call yesterday between the President and the officials in Georgia.
• 7:42
  Speaker 1: Happy New Year, Paul, Um. You know, I think this
• 7:45
  Speaker 1: is more than just a twist return. I think we've
• 7:48
  Speaker 1: now got a recording of the President of the United
• 7:51
  Speaker 1: States trying to corrupt to state officials and convince them,
• 7:56
  Speaker 1: Um that uh, partaking in a in a political coup
• 8:01
  Speaker 1: is a necessary thing because the President feels that he
• 8:04
  Speaker 1: was treated unfairly. It's an hour long call, but you know,
• 8:10
  Speaker 1: a large dose of it is the President ranting about
• 8:15
  Speaker 1: these myths and fairy tales of election fraud and trying
• 8:19
  Speaker 1: to convince to Georgia officials to buy into that lie.
• 8:23
  Speaker 1: To their credit, neither one of them do, and they
• 8:26
  Speaker 1: both pushed back against him. But I think the larger
• 8:29
  Speaker 1: takeaway from this as well as what does this mean
• 8:34
  Speaker 1: about presidential authority, the sanctity of democracy and UH, the
• 8:39
  Speaker 1: election process and what will the Republican Party do UH
• 8:45
  Speaker 1: in its future posture around what we're seeing as a
• 8:50
  Speaker 1: core element of trump Ism, which is ignoring the rule
• 8:54
  Speaker 1: of law and a willingness to undermine democracy. And the
• 8:57
  Speaker 1: rhetoric is incredible, isn't it? Him? The way he expresses himself,
• 9:01
  Speaker 1: It's quite clear what he is looking for. You know,
• 9:03
  Speaker 1: he says, I only need eleven thousand votes, Fellows, I
• 9:06
  Speaker 1: need eleven thousand votes, and this idea of people who
• 9:09
  Speaker 1: want to find answers, not those who don't want to
• 9:11
  Speaker 1: find answers. But he won't come out and say exactly
• 9:14
  Speaker 1: what he wants in clear language. Why is it that
• 9:19
  Speaker 1: that might be criminal? Well, I think he's pretty clear
• 9:22
  Speaker 1: about what he says here. Funny, you know, at one
• 9:24
  Speaker 1: point in the phone call, he says, what are we
• 9:26
  Speaker 1: gonna do here, folks? I only need eleven thousand votes, Fellas,
• 9:30
  Speaker 1: I need eleven thousand votes, and then he goes on
• 9:32
  Speaker 1: to essentially threaten them with criminal charges if they don't
• 9:36
  Speaker 1: support his claims. So I don't think there's anything murky
• 9:41
  Speaker 1: about what he's doing here. I also think it's entirely
• 9:43
  Speaker 1: consistent with his career. You know, as a developer and
• 9:46
  Speaker 1: a casino magnet, he routinely threatened browbeat, tried to buy off,
• 9:53
  Speaker 1: and corrupt regulators, politicians, competitors, law enforcement authorities. We know
• 10:01
  Speaker 1: that he got impeached for trying to convince Ukraine's president
• 10:05
  Speaker 1: to dig up dirt on Joe Biden, also in a
• 10:08
  Speaker 1: phone call that was I don't think murky at all either,
• 10:12
  Speaker 1: So I think this is all very consistent with who
• 10:15
  Speaker 1: Trump is. I don't think that he engages in this
• 10:18
  Speaker 1: kind of activity should surprise people. I think what should
• 10:21
  Speaker 1: surprise us is what does it mean about how easily
• 10:26
  Speaker 1: he corrupts people around him? And how well do American
• 10:29
  Speaker 1: institutions and processes that we all care about, I think
• 10:33
  Speaker 1: for nonpartisan, non ideological reasons, because they're the bedrocks or
• 10:38
  Speaker 1: our society. How much can those get eroded by this
• 10:42
  Speaker 1: kind of behavior? Tim has the first of all, is
• 10:46
  Speaker 1: there any do you think there's any exposure here for
• 10:48
  Speaker 1: the president from this phone call? Legally, there certainly is.
• 10:51
  Speaker 1: I mean, there's you know, trying to meddle in either
• 10:55
  Speaker 1: a federal or a state election. Uh is are both
• 10:59
  Speaker 1: federal and eight crimes, and they're punishable by prison terms. Um.
• 11:04
  Speaker 1: But there's a very difficult evidentiary hurdle you have to
• 11:08
  Speaker 1: overcome there. You really have to prove clearly prove intent
• 11:12
  Speaker 1: and um. You know that that's that's always a hard
• 11:16
  Speaker 1: standard for prosecutors to overcome. I think it would be
• 11:20
  Speaker 1: very hard in this case for them to prove it
• 11:24
  Speaker 1: beyond the reasonable doubt. But there's no question that there's
• 11:28
  Speaker 1: a lot of traction here should someone choose to pursue
• 11:31
  Speaker 1: criminal charges against the president. Tim Trump Bolsa tweeting this
• 11:35
  Speaker 1: morning that he'll be at the DC March January six.
• 11:38
  Speaker 1: Any concerns for you know, what might happen this week
• 11:41
  Speaker 1: in d C and beyond. Well, again, I think this
• 11:43
  Speaker 1: is this is consistent with what we were talking about.
• 11:46
  Speaker 1: January six is a significant day because that's the day
• 11:49
  Speaker 1: that Congress certifies, um, the Electoral College results in the
• 11:54
  Speaker 1: in the presidential election, and Trump has been encouraging his
• 11:57
  Speaker 1: supporters to march on the streets of Washington him there's
• 12:00
  Speaker 1: a chance that Uh, you know, peaceful protests could turn
• 12:04
  Speaker 1: into riots and uh and again it shows a willingness
• 12:11
  Speaker 1: to try to torch the Democratic Party, or rather the
• 12:14
  Speaker 1: democratic process, because Trump can't face losing and he wants
• 12:19
  Speaker 1: to suthe his own feelings. Tim, you know Donald Trump
• 12:23
  Speaker 1: better than probably anyone in the media, given your access
• 12:27
  Speaker 1: to him when you wrote your biography. What do you
• 12:29
  Speaker 1: expect Donald Trump to do in the weeks and months
• 12:34
  Speaker 1: after January He go down to Marrow Lago and simply
• 12:37
  Speaker 1: work on his golf game, or to expected to maintain
• 12:39
  Speaker 1: a high profile. He'll do both, Paul. I think he'll
• 12:42
  Speaker 1: he'll go down and play his golf game and watch
• 12:45
  Speaker 1: sports and and and relax, because that's what he does
• 12:49
  Speaker 1: most of the time already. I think in addition, he's
• 12:52
  Speaker 1: going to try to maintain a presence in the media.
• 12:54
  Speaker 1: I suspect he'll try to buy or start a media company.
• 12:57
  Speaker 1: I don't know that a labeled be able to run
• 13:00
  Speaker 1: particularly well, but there'll be a lot of energy around
• 13:02
  Speaker 1: that in the early stages. I also think he's going
• 13:05
  Speaker 1: to try to continue to throw sand into the machinery
• 13:08
  Speaker 1: of Joe Biden's administration and into um fishers he's already
• 13:15
  Speaker 1: created within the Republican Party, and make no mistake about it.
• 13:18
  Speaker 1: I mean, you know, he's millions and millions of people
• 13:22
  Speaker 1: out there would subscribe to a Trump channel rights and
• 13:25
  Speaker 1: that would you know, keep the momentum going and possibly
• 13:28
  Speaker 1: keep him in the public eye until the next go round.
• 13:32
  Speaker 1: That's that's very possible, Vonnie. But you know, as we
• 13:35
  Speaker 1: all know, in this business, you can come out of
• 13:37
  Speaker 1: the gate strong with a new media product, but maintaining
• 13:40
  Speaker 1: people's interests over time requires a lot of hard work
• 13:43
  Speaker 1: and talent. Uh, It's it's easier said than done. And um,
• 13:48
  Speaker 1: he's not a good manager. I would imagine Jared Kushner
• 13:51
  Speaker 1: would run an enterprise like that for him, But Jared
• 13:54
  Speaker 1: Kushner has improved himself to be a particularly good manager either. Um.
• 13:58
  Speaker 1: But there's no question and that that I think it
• 14:00
  Speaker 1: will be easy for him to get funding and a
• 14:02
  Speaker 1: lot of initial excitement around something like that briefly him
• 14:05
  Speaker 1: were out of time. But I'm curious as to what
• 14:07
  Speaker 1: you think will happen in Georgia. I mean, obviously COVID
• 14:11
  Speaker 1: striking there as well, for do not being able to
• 14:13
  Speaker 1: be on the trail for the last few days. Well,
• 14:16
  Speaker 1: you know, it's I think I I think it's hard
• 14:18
  Speaker 1: to say. I think I think it's gonna it could
• 14:21
  Speaker 1: be very hard for both Democrats I think to win
• 14:24
  Speaker 1: their I think they've faced long odds. But um, it's
• 14:28
  Speaker 1: going to be an interesting result to watch for sure,
• 14:31
  Speaker 1: and we'll be covering it right here on Bloomberg Radio
• 14:33
  Speaker 1: over the next couple of days. Tim O'Brien, Bloomberg Opinion
• 14:36
  Speaker 1: senior columnist, thank you for joining his latest column. Trump
• 14:39
  Speaker 1: phone call is what cou fever looks like. Well, the
• 14:45
  Speaker 1: OPEC plus monthly meeting is under way. Sally Radio made
• 14:49
  Speaker 1: some opening statements and so far not too many surprises.
• 14:52
  Speaker 1: Russia looking to increase production, which was anticipated but may
• 14:57
  Speaker 1: not get its way. Let's bring in somebody who knows
• 14:59
  Speaker 1: all about the US and what impact it will have
• 15:01
  Speaker 1: on the oil markets. Mike Mcglonana's comology strategist for Bloomberg Intelligence.
• 15:05
  Speaker 1: So where are we with OPEC supply and what will
• 15:08
  Speaker 1: happen this month? Hivani OPEC is basically fighting a losing battle.
• 15:13
  Speaker 1: The key sometimes you get these ringing bells and markets
• 15:15
  Speaker 1: and the fact that they said that they're going to
• 15:17
  Speaker 1: go on week a monthly meetings NOWS indicative. The big
• 15:21
  Speaker 1: problem of a cartel. A cartel is duty is to
• 15:24
  Speaker 1: limit supply. They're having a hard time doing that and
• 15:26
  Speaker 1: keeping prices up, and they need money. So I view
• 15:30
  Speaker 1: Crudel is a bear market that's simply resuming. It made
• 15:33
  Speaker 1: an all time low last year, but now it's a
• 15:35
  Speaker 1: you know, w t I near fifty is more likely,
• 15:37
  Speaker 1: and gold towards forty and very unlikely to get near sixty,
• 15:41
  Speaker 1: particularly if we see continued increasing voltilling the stock market.
• 15:46
  Speaker 1: So Opex doing the best they can in a very
• 15:48
  Speaker 1: challenging environment. And key thing, remember Crudel is in a
• 15:51
  Speaker 1: bear market before the pandemic. Alright, So Mike, give us
• 15:55
  Speaker 1: a sense of where Russia is these days, because I
• 15:58
  Speaker 1: always just feel like from a supply per factive, they're
• 16:00
  Speaker 1: the you know, kind of the wild card. Yeah, what,
• 16:03
  Speaker 1: Russia is a wild card, and just like every other
• 16:06
  Speaker 1: country in the world dependent on energy production, they need
• 16:09
  Speaker 1: money and there's only gonna be so long they'll be
• 16:10
  Speaker 1: able to last. I mean, they've cut supply a lot,
• 16:13
  Speaker 1: but I view it as OPEC is a big part
• 16:16
  Speaker 1: of but right, you know, w T I and your
• 16:18
  Speaker 1: fifty is the old sixty for shale, they're getting clapped
• 16:21
  Speaker 1: back to supply coming on. And the key thing is
• 16:23
  Speaker 1: globally is that incremental elastic demand that we remember from kids.
• 16:27
  Speaker 1: Isn't this not happening anymore? It just does not happen
• 16:30
  Speaker 1: in this particularly not happening with e v S and
• 16:32
  Speaker 1: the trend towards decarbonization. And then of course we have
• 16:35
  Speaker 1: this little issue with people not driving to work anymore,
• 16:38
  Speaker 1: right exactly, and you know coronavirus impacting everything from the
• 16:43
  Speaker 1: supply chain to the amount of workers and so on.
• 16:46
  Speaker 1: What countries are going to be in trouble if oil
• 16:49
  Speaker 1: demand doesn't recover more. Well, you mentioned the key ones,
• 16:52
  Speaker 1: and I think this is a key issue we need
• 16:54
  Speaker 1: to look forward to. If you're a U S Intelligent agency,
• 16:56
  Speaker 1: look at Saudi Arabia potential for civil and rest and
• 17:00
  Speaker 1: a lot of the opaque countries because they're just not
• 17:01
  Speaker 1: gonna be able to meet and look at the debt downgrading.
• 17:04
  Speaker 1: Potentially Russian maybe less so, but that is key Radar.
• 17:08
  Speaker 1: I think you should expect that in the future as
• 17:10
  Speaker 1: these countries dependent on this revenue they're not getting in anymore,
• 17:13
  Speaker 1: and subsidize their countries big issues, and I just don't
• 17:16
  Speaker 1: see it coming back. And the key think remembers time
• 17:18
  Speaker 1: to kids working against crude oil bowl market, because what
• 17:21
  Speaker 1: do we do with technology, But it's working for a
• 17:24
  Speaker 1: bowl market in metals, gold, silver, platinum, pladium kind of things.
• 17:28
  Speaker 1: So what so, Mike, I mean, the reopening trade is
• 17:31
  Speaker 1: certainly driving equity valuations, and for a long time it
• 17:34
  Speaker 1: seems like they were correlated with oil as well. But
• 17:38
  Speaker 1: you think the equity or the reopening trade is not
• 17:41
  Speaker 1: as big a driver for the oil markets. Um, it
• 17:45
  Speaker 1: isn't because there's just been a permanent paradigm shift in
• 17:48
  Speaker 1: work from home, and you since that even in our office,
• 17:51
  Speaker 1: I mean five percent of our hundred people are so
• 17:54
  Speaker 1: in b are coming back, yet more people should. They're
• 17:56
  Speaker 1: just note I think it's been somewhat permanent. And the
• 17:59
  Speaker 1: key thing is I like to point as incremental demand
• 18:02
  Speaker 1: for liquid fuel in this country was actually in decline
• 18:05
  Speaker 1: and all the reversion estimates were in decline on a
• 18:08
  Speaker 1: global scale before the pandemic. So to me, this has
• 18:10
  Speaker 1: accelerated that process. So as a commodity guy, I just
• 18:13
  Speaker 1: cannot get bullish crude oil. I look over to metals
• 18:16
  Speaker 1: and maybe eggs and then things like bitcoin where you
• 18:19
  Speaker 1: have limited supply and demand. Well, that's the thing. How
• 18:22
  Speaker 1: can you have oil in a bear market on something
• 18:25
  Speaker 1: like bitcoin? You know, just rallying and continuing to rally,
• 18:29
  Speaker 1: as you said, it got over thirty four thousand dollars
• 18:32
  Speaker 1: a coin at the weekend. It's now, well, we can
• 18:36
  Speaker 1: go to bitcoin as much as possible. But just transition
• 18:38
  Speaker 1: from oil, Oil and copper have a high correlation historically,
• 18:41
  Speaker 1: that's breaking down now oil is well supplied, copper is not.
• 18:44
  Speaker 1: And then going in the bitcoin, just like gold, has
• 18:47
  Speaker 1: limited the supply. But the key thing I think about
• 18:49
  Speaker 1: bitcoin is that historic example of a number of many
• 18:54
  Speaker 1: major people in institutions in the world allocating the gold
• 18:57
  Speaker 1: and holding gold and knowingness the story value they know,
• 18:59
  Speaker 1: not that bitcoin. They have to probably hold some bitcoin too.
• 19:03
  Speaker 1: But bitcoin is the new digital version of gold in
• 19:06
  Speaker 1: increasing in digital world now right now, Yes, it's a
• 19:08
  Speaker 1: little bit overdone. Put put ourselves a year or two
• 19:11
  Speaker 1: ahead and ahead if this NASSA technology doesn't fail, which
• 19:14
  Speaker 1: it's not going to and less likely, and that was
• 19:16
  Speaker 1: a year ago. The price has to continue is more
• 19:19
  Speaker 1: likely continue to advance, probably more so than gold. Which
• 19:23
  Speaker 1: brings me to you know, kind of a bitcoin question here.
• 19:26
  Speaker 1: I don't have any or we don't have as investors
• 19:29
  Speaker 1: much historical uh data to look at to get a
• 19:33
  Speaker 1: sense of where are we in terms of relative value?
• 19:36
  Speaker 1: You know, say, you know, gold, I can always look
• 19:38
  Speaker 1: back years. I don't have that with bitcoin. So all
• 19:42
  Speaker 1: I have now from a bitcoin call is limited supply
• 19:45
  Speaker 1: rising demand. Yes, and I'd like to go there, Paul,
• 19:49
  Speaker 1: because I think that's the right way to start. Is
• 19:51
  Speaker 1: people keep claiming bitcoins of store value and I'd say,
• 19:54
  Speaker 1: not yet. It's not yet. It's too young, but it's
• 19:57
  Speaker 1: getting there. So one way to look at it is
• 20:00
  Speaker 1: um market cabin Bitcoin is around just below six billion UM.
• 20:05
  Speaker 1: That's you know, compared to gold which is around UM
• 20:09
  Speaker 1: one maybe ten eleven trillions, So it can double this
• 20:13
  Speaker 1: year and it's still a small portion of more the
• 20:16
  Speaker 1: big space. And to me, that's what's happening is becoming
• 20:19
  Speaker 1: it's getting into this space. Uh. In Another way to
• 20:22
  Speaker 1: look at is let's look at volatively. Bitcoin violatively two
• 20:25
  Speaker 1: sixty day bases, which is annualized is the lowest ever
• 20:28
  Speaker 1: versus gold, versus stock market, in versus the oil, which
• 20:32
  Speaker 1: means this nassaid space is gaining that robustness and oomph
• 20:37
  Speaker 1: to be part of the main mainstream. Michael Blogan, thank
• 20:40
  Speaker 1: you so much. We appreciate it as always trying to make,
• 20:43
  Speaker 1: you know, put bitcoin into some perspective, and it's very
• 20:46
  Speaker 1: difficult for a lot of investors just seeing this thing
• 20:48
  Speaker 1: continue to move ever higher. Mike mclogan, commodity strategist for
• 20:52
  Speaker 1: Bloomberg Intelligence. Somehow we let them get out of the
• 20:54
  Speaker 1: room without talking about pork bellies, but we'll do that
• 20:57
  Speaker 1: next time. Bitcoin seems to be what's of interest to
• 21:00
  Speaker 1: most people now, Vinnie, And it's just extraordinary. You look
• 21:03
  Speaker 1: at that one year chart on the performer or the
• 21:06
  Speaker 1: multi year chart of bitcoin, it's just extraordinary, straight up. Yes,
• 21:10
  Speaker 1: we'll have to see, you know how far this can
• 21:12
  Speaker 1: can can run pull. Yeah, it's just it's just amazing.
• 21:15
  Speaker 1: And the you know, Anthony Scarmucci Skybridge will be coming
• 21:18
  Speaker 1: on our show tomorrow. They're actually starting a bitcoin fund,
• 21:22
  Speaker 1: so that'll be interesting to discuss as well. Well. Let's
• 21:26
  Speaker 1: get the very latest now on the virus, where we
• 21:28
  Speaker 1: are with it, where we are with a new strain,
• 21:30
  Speaker 1: and where we are with vaccination. Mittell Cortez is medical
• 21:34
  Speaker 1: science and tech reporter here at Bloomberg and is always
• 21:37
  Speaker 1: on top of things. Michelle, want to start with the
• 21:39
  Speaker 1: new variant of COVID nineteens. It was detected for the
• 21:42
  Speaker 1: first time last week in the United States. It's now
• 21:45
  Speaker 1: in three states that we know of, Colorado, California, and Florida.
• 21:49
  Speaker 1: But a terrifying thing is something that one of the
• 21:53
  Speaker 1: doctors you talked to said to you, and that is quote.
• 21:56
  Speaker 1: It's a function of if you look for it, you
• 21:57
  Speaker 1: will find it. It is the case that the US
• 22:00
  Speaker 1: doesn't actually test the strains of COVID that people have.
• 22:03
  Speaker 1: It just tests for COVID. Is that changing? That is changing?
• 22:07
  Speaker 1: The CDC has said that it's going to start ramping
• 22:11
  Speaker 1: up it's testing capacity for genetic sequencing of the coronavirus strain.
• 22:16
  Speaker 1: Here that want to be doing at least seven hundred
• 22:18
  Speaker 1: and fifty of these tests a week. Realize that this
• 22:21
  Speaker 1: is a process that the US can do. We do
• 22:24
  Speaker 1: test our influenza strains. It's just that there are so
• 22:27
  Speaker 1: many pieces happening at once when it comes to coronavirus
• 22:31
  Speaker 1: that this hasn't been the priority. And Bonnie, if you
• 22:33
  Speaker 1: think about it. We have one case in Colorado, one
• 22:37
  Speaker 1: case in California, one case in Florida. None of them traveled,
• 22:41
  Speaker 1: none of them touched each other, So we know it's
• 22:45
  Speaker 1: you know, it's widespread across the United States, right, one
• 22:48
  Speaker 1: on the east, one in the west, one in the
• 22:50
  Speaker 1: middle of the country. So it's here, yes, here. So Michelle,
• 22:54
  Speaker 1: what do we know about this strain as it relates
• 22:56
  Speaker 1: to transmissibility, Maybe the way it's treated, and most importantly,
• 23:02
  Speaker 1: I guess, uh, the efficacy of the vaccine on the strain. Right, Well,
• 23:07
  Speaker 1: there's good news here and bad news. Will start with
• 23:10
  Speaker 1: the good news, which is that there is all indications
• 23:13
  Speaker 1: of the vaccines that we have will be effective against
• 23:16
  Speaker 1: the strain. The other piece of good news is that
• 23:19
  Speaker 1: it doesn't seem to be more severe or more deadly
• 23:22
  Speaker 1: if you pick up this particular variant. The issue is
• 23:26
  Speaker 1: that it's much more transmissible. So what that means is
• 23:29
  Speaker 1: that even keeping the same level of severity, when you're
• 23:33
  Speaker 1: going to hit more people because it's easier to spread,
• 23:37
  Speaker 1: you will ultimately have more hospitalizations in depth. And that's
• 23:41
  Speaker 1: the piece that we want to get on top of
• 23:44
  Speaker 1: the other thing is that the reason that the vaccination
• 23:46
  Speaker 1: will work is because when you vaccinate someone, you you
• 23:50
  Speaker 1: flare up their entire immune system and you have many
• 23:52
  Speaker 1: antibodies that are working against the virus. Some of the
• 23:56
  Speaker 1: therapeutics that we have are monoclonal antibodies. They only use
• 24:00
  Speaker 1: one or two or three antibodies to go after the virus,
• 24:03
  Speaker 1: and if there has been a mutation on that particular piece,
• 24:07
  Speaker 1: some of those mono colonal antibodies might not work. There's
• 24:10
  Speaker 1: still research underway to see if that's in fact the case.
• 24:13
  Speaker 1: And then the most problematic, the most potentially terrifying piece
• 24:17
  Speaker 1: of this is that when we see the mutations happening,
• 24:21
  Speaker 1: you can get a mutation on top of the mutation.
• 24:24
  Speaker 1: And that's what the scientists are really worried about. Here.
• 24:27
  Speaker 1: We're opening up the virus itself. We have any mutation,
• 24:31
  Speaker 1: it's more transmissible if that version mutates again, because all
• 24:37
  Speaker 1: viruses mutate constantly to become more severe. That's the piece
• 24:41
  Speaker 1: that we're worried about. So it's a building block, you know,
• 24:44
  Speaker 1: one on top of another. We have now had one
• 24:47
  Speaker 1: building block ball. If another mutation happens on top of
• 24:50
  Speaker 1: that variant, that's where we could really get introuble. That's terrifying, Michelle.
• 24:55
  Speaker 1: In the UK, we're seeing cases top fifty thousand a
• 24:58
  Speaker 1: day now again, the you know, Cambinet is in crisis,
• 25:02
  Speaker 1: and it looks like in a speech today at three
• 25:04
  Speaker 1: pm Eastern eight pm London time, it looks like Boris
• 25:07
  Speaker 1: Johnson will announce new coronavirus restrictions, possibly even a third
• 25:11
  Speaker 1: national lockdown. Certainly in Scotland the First Minister appeared to
• 25:14
  Speaker 1: anticipate that move and she is implementing a lockdown from
• 25:17
  Speaker 1: midnight tonight. Is that in the U s is future.
• 25:21
  Speaker 1: There is definitely some indications that the US is going
• 25:25
  Speaker 1: to have to take action in order to stop the
• 25:28
  Speaker 1: spread of this variant. We know that it came out
• 25:30
  Speaker 1: first in the UK, or at least it was widely
• 25:33
  Speaker 1: spreading there, so we can look to the UK to
• 25:36
  Speaker 1: see what's going to happen here in the United States,
• 25:39
  Speaker 1: a very different country obviously than the UK, although more
• 25:42
  Speaker 1: similar to the UK than to China, which just locked
• 25:44
  Speaker 1: everything down right out of the gate. In the US,
• 25:47
  Speaker 1: we've really had a lot of resistance against doing this,
• 25:50
  Speaker 1: and we've allowed governors and mayors to make the decisions
• 25:54
  Speaker 1: for their own localities. So will there be a nationwide lockdown?
• 25:59
  Speaker 1: Will President all to Biden actually enact that once he
• 26:02
  Speaker 1: comes into the presidency. I don't know if he could
• 26:05
  Speaker 1: even do that, right, We've already seen Americans and not
• 26:08
  Speaker 1: abiding by other kind of rules. Don't go to a
• 26:11
  Speaker 1: party on New Year's Eve with thirty thousand of your
• 26:14
  Speaker 1: closest friends, wear a mask. You know, there's we've struggled
• 26:17
  Speaker 1: to do that sort of thing. But in terms of
• 26:19
  Speaker 1: governors and mayors, certainly we're going to be seeing more
• 26:22
  Speaker 1: of that coming our way. And the bottom line is
• 26:25
  Speaker 1: that people are going to have to actually do some
• 26:28
  Speaker 1: of this social distancing much more aggressively in order to
• 26:31
  Speaker 1: slow the set of this virus, or we're just going
• 26:33
  Speaker 1: to have rising deaths and hospitalizations. Michelle, let's pivot to
• 26:37
  Speaker 1: the vaccines. Frustration that they're not getting uh into people's
• 26:42
  Speaker 1: arms as quickly as we would have initially hoped. I
• 26:46
  Speaker 1: guess one of the questions is, even if a batch
• 26:49
  Speaker 1: of vaccines gets delivered to a state, or to a
• 26:52
  Speaker 1: locality or to a hospital, the percentage actually getting into
• 26:56
  Speaker 1: people's arms is shockingly low. And I think that's what
• 26:58
  Speaker 1: surprising people. What are we know well there is a
• 27:02
  Speaker 1: host of things that are happening here right. The issue
• 27:05
  Speaker 1: is is that this is a very complicated process and
• 27:09
  Speaker 1: it involves in every single case, an individual who has
• 27:13
  Speaker 1: to take an action. When it comes to doing something
• 27:15
  Speaker 1: like inventing a test, inventing a vaccine, that type of
• 27:18
  Speaker 1: the thing, you have a small number of people, you know,
• 27:21
  Speaker 1: maybe maybe a few hundred or a few thousand, but
• 27:23
  Speaker 1: it's it's concentrated. When you're trying to vaccinate the entire country,
• 27:27
  Speaker 1: you're going to have to have everyone in the entire
• 27:29
  Speaker 1: country on board, and as we've already just discussed, that's
• 27:32
  Speaker 1: not happening in the United States. So we're struggling with
• 27:36
  Speaker 1: actually getting people to sign up. We know that there
• 27:38
  Speaker 1: are some nursing homes who are only a tiny fraction
• 27:41
  Speaker 1: you know, twelve percent, fifteen percent of the staff members
• 27:46
  Speaker 1: that some of these locations are signing up to get
• 27:48
  Speaker 1: in in eye. So the hesitancy is there, not only that,
• 27:52
  Speaker 1: just the actual process. When you have people signing up
• 27:55
  Speaker 1: and they don't appear for their for their vaccine shots.
• 27:58
  Speaker 1: Should you have people lining up, should you have people
• 28:00
  Speaker 1: waiting in their cards, That process isn't fully in place yet.
• 28:04
  Speaker 1: And I think that because so many things have gone
• 28:07
  Speaker 1: so well when it comes to combating colonnavirus, when it
• 28:11
  Speaker 1: comes to, for example, the benefit of this vaccine so
• 28:15
  Speaker 1: much stronger than anyone expected, people haven't really been anticipating hurdles.
• 28:20
  Speaker 1: But the truth is is that this is a massive
• 28:22
  Speaker 1: public health undertaking and it's going to take a couple
• 28:25
  Speaker 1: of days to get it going. And that's what Dr
• 28:27
  Speaker 1: Fauci was talking about this weekend when he was saying,
• 28:29
  Speaker 1: we can already see that things are getting better, and
• 28:32
  Speaker 1: when you look at next week in the week after,
• 28:34
  Speaker 1: things will be better still. Well, given what you said,
• 28:37
  Speaker 1: I guess the faster is the better rifle. Yeah, absolutely,
• 28:40
  Speaker 1: And hopefully you know, this is some initial stumping blocks
• 28:43
  Speaker 1: that we can pick up at the momentum. Michelle Cortes,
• 28:45
  Speaker 1: thank you so much for joining us. As always, Michelle
• 28:47
  Speaker 1: is a senior health science and medical technology reporter for
• 28:50
  Speaker 1: Bloomberg News, joining us on the phone from Minneapolis. And again, Vannie,
• 28:55
  Speaker 1: I guess you know. Even Merida Blasio here in New
• 28:58
  Speaker 1: York City says that beginning this week, vaccines will really
• 29:02
  Speaker 1: ramp up and will so we'll do so throughout the month. Yes,
• 29:06
  Speaker 1: this is. New York reports today one hundred seventy new
• 29:09
  Speaker 1: deaths and eleven thousand, two hundred nine new cases. Thanks
• 29:14
  Speaker 1: for listening to Bloomberg Markets podcast. You can subscribe and
• 29:17
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 29:21
  Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn,
• 29:25
  Speaker 1: and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
• 29:27
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 29:30
  Speaker 1: Bloomberg Radio