Latest / Bloomberg Intelligence / Big Take: Covid Delivers Reality Check To The World

Transcript

Big Take: Covid Delivers Reality Check To The World · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
0:06
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. All right, well, we're
0:21
Speaker 1: getting some news that at three pm Wall Street time
0:24
Speaker 1: today to CDC will have a press conference presumably some
0:27
Speaker 1: being some reports that perhaps some man mask mandates will
0:31
Speaker 1: be reintroduced for certain populations. Will certainly bring that to
0:34
Speaker 1: you later today. But it just shows the long tale
0:38
Speaker 1: of this COVID pandemic, if you will. And there's obviously
0:41
Speaker 1: there's regional differences. But let's get the latest with Bob Langreth,
0:44
Speaker 1: healthcare reporter for Bloomberg News. He's got his big take
0:47
Speaker 1: story today and Bob again the news today about a
0:51
Speaker 1: CDC perhaps uh rein instating some form of a mask
0:55
Speaker 1: mandate for certain populations. Again, it just highlights this thing
0:59
Speaker 1: ain't going away for all, is it absolutely not? I mean,
1:02
Speaker 1: and the US health officials and CDC is going to
1:05
Speaker 1: be returning reporting to tighter guidelines. They use some masks
1:08
Speaker 1: and will be advising where fully vaccinated visual individuals where
1:12
Speaker 1: they're in public indoor settings and places where the virus
1:14
Speaker 1: is spreading rapidly. So yeah, they are going to tighten
1:17
Speaker 1: back and kind of dial back that guy and while
1:19
Speaker 1: still recommending that teachers and students returned to school but
1:24
Speaker 1: wearing masks UH indoors. That's what reporting reporting. So they're
1:28
Speaker 1: gonna dill backs and what they said before, but definitely
1:31
Speaker 1: on the worldwide basis the kind of this there's in
1:33
Speaker 1: this tendency. Our report in unit to try to wanted
1:36
Speaker 1: to clear this is over before it's over, and you know,
1:39
Speaker 1: and really the virus is to some extent in control
1:43
Speaker 1: of this, UH and we'll only know when it's over
1:45
Speaker 1: in retrospex, and it's becoming increasingly clear there's going to
1:48
Speaker 1: be a kind of long tale to this UH virus pandemic.
1:53
Speaker 1: While the worst may be over in the US and
1:55
Speaker 1: New York, we're gonna be dealing with this, you know,
1:57
Speaker 1: for quite some time to come. For sure, you know,
2:00
Speaker 1: of them. I mean it's over for me and Paul
2:02
Speaker 1: because we're fully vaccinated and uh, you know, the worst
2:06
Speaker 1: that could happen to us, I guess is the worst
2:08
Speaker 1: that could likely happen to us, as we get something
2:11
Speaker 1: that's worse than a cold and better than a hangover.
2:13
Speaker 1: But clearly there are billions of people around the world
2:17
Speaker 1: for whom it isn't And what worries me, Bob, is
2:20
Speaker 1: that the unvaccinated are going to um, you know, house
2:26
Speaker 1: this thing and allow it to mutate into something that
2:30
Speaker 1: even me and Paul can't fend off. Is that a
2:33
Speaker 1: concern among scientists as well? Well, it's definitely a concern
2:37
Speaker 1: that they're longer this there's this virus kind of hangs
2:40
Speaker 1: around and transmitting on you know, just a massive scale
2:43
Speaker 1: in so many places. The more chances that gives the
2:46
Speaker 1: virus to continue to mutate into new forms that we
2:49
Speaker 1: haven't seen before. And already this delta variant obviously is
2:52
Speaker 1: turning out to be We've kind of underestimated that deltas
2:56
Speaker 1: are very just how transmissible it is, uh, and you know,
3:00
Speaker 1: it's kind of the perfect variant for a kind of
3:02
Speaker 1: party vaccinated world. Can you know, just keep keep going.
3:06
Speaker 1: But just to be clear, Bob, in terms of the
3:08
Speaker 1: delta variant, I mean I was out to dinner with
3:10
Speaker 1: some people on Friday who were freaking out about it.
3:14
Speaker 1: But we were all fully vaccinated. I mean in terms
3:17
Speaker 1: of the vaccinated, it's nb D, right, I mean if
3:22
Speaker 1: you're vaccinated, no, no big deal. I mean, if if
3:26
Speaker 1: you're vaccine. I just saw stat that ninety nine point
3:30
Speaker 1: five percent of the deaths are among the unvaccinated. Nineties
3:33
Speaker 1: seven percent of the hospitalizations are among the unvaccinated. So
3:36
Speaker 1: the delta variant isn't necessarily um got a higher case
3:41
Speaker 1: fatality ratio for vaccinated people than the flu. Yeah, so
3:47
Speaker 1: the case fatalitiator in general, the delta variant. There were
3:50
Speaker 1: some arguments that there were you know, somehow more subperiable.
3:53
Speaker 1: I don't think we've seen like any proof of that. Uh.
3:56
Speaker 1: And you know, more broadly speeching even though the vaccines
3:59
Speaker 1: ethics s they're so early reports in terms of eventing
4:01
Speaker 1: mild cases and those those still could be symptomatic, you know,
4:04
Speaker 1: maybe saving especially the reports that Israel. What what's clear
4:08
Speaker 1: across the board is that all the reports are showing
4:10
Speaker 1: the vaccines are still holding strong against preventing severe cases
4:14
Speaker 1: and preventing uh, you know, hospitations and depths. But doesn't mean,
4:18
Speaker 1: vaccines aren't perfect, you don't prevent like everything, but clearly
4:22
Speaker 1: they're they're way way better than not having a vaccine.
4:25
Speaker 1: And we're just going to find out in real time,
4:27
Speaker 1: you know, just you know, whether some people need boosters
4:29
Speaker 1: and how long uh, the efficacy lasts. But clearly you
4:32
Speaker 1: need to keep you know, vaccinating as many people as
4:34
Speaker 1: possible because that will loose the spread. And you know,
4:38
Speaker 1: in terms of the mask mandates, Bob, the concern that
4:41
Speaker 1: we've been talking about with a lot of guests today
4:43
Speaker 1: is not wearing a mask was the carrot, right, That's
4:47
Speaker 1: why a lot of people got vaccinated because we were
4:49
Speaker 1: sick of wearing these masks. And now if you say, okay,
4:52
Speaker 1: even the vaccinated that to put them back on, that
4:55
Speaker 1: presents a problem in terms of removing the incentive for
4:59
Speaker 1: those you know who are hesitant. Yeah, I guess you
5:04
Speaker 1: could think of it that way. I mean, um, I
5:07
Speaker 1: don't know exactly what the new guy into that you know,
5:09
Speaker 1: come up with. I think, you know, it sounds like
5:11
Speaker 1: it's going to be something about, you know, in places
5:13
Speaker 1: where there's just lots of transmission and a kind of
5:16
Speaker 1: a mix of vaccine on vaccinate that you may want
5:18
Speaker 1: to wear a mask in doors. Uh but uh, I mean, yeah,
5:24
Speaker 1: I guess it could be that way. But the other
5:26
Speaker 1: way you think of it, this is like, you know,
5:27
Speaker 1: one extra step so that the vaccine is kind of
5:29
Speaker 1: like you're you're a three point seatbelt. It's kind of
5:31
Speaker 1: the main thing. But maybe you know, in some cases,
5:33
Speaker 1: you know, there's a lot of transmission and it kind
5:35
Speaker 1: of just may overwhelm the vaccines defenses, and you might
5:38
Speaker 1: want to add in like a sighting back airbag and
5:40
Speaker 1: maybe they mask might be the sighted back airbag. It's
5:43
Speaker 1: just going to add maybe a little bit more, you know,
5:45
Speaker 1: in extra protection in certain circumstances. But where where are we?
5:49
Speaker 1: Where is the industry in terms of these a lot
5:51
Speaker 1: of these developing countries, um that are you know, not
5:54
Speaker 1: receiving adequate supplies of doses? I think kovacs and think
5:59
Speaker 1: things like that. Where are we in terms of trying
6:00
Speaker 1: to ramp that up? Yeah, well, you know outside of
6:04
Speaker 1: the wealthier and middle income countries, you know, we're you know,
6:08
Speaker 1: we're definitely behind. We're not where we need to be.
6:10
Speaker 1: I think you know, you're trying to look at the
6:12
Speaker 1: numbers we had in the story or is it some
6:14
Speaker 1: like you know, dismal. Yeah, the Kovacs initiatives lively just
6:18
Speaker 1: one forty million doses, so for the one point eight
6:21
Speaker 1: billion of names shift early two. And you know, there's
6:24
Speaker 1: one problem, you know, is that there have been those
6:26
Speaker 1: a lot of uh dependents on supplies from India for
6:29
Speaker 1: Kovaks and some of those once the India India had
6:32
Speaker 1: its own served, some of those supplies that were delayed.
6:34
Speaker 1: So yeah, it's quite far behind. That means there's like
6:38
Speaker 1: gigantic continents that follow people like Africa that has gotten this.
6:41
Speaker 1: You know, there's just you know, a tiny percent of
6:44
Speaker 1: the people's accident. And that means if you just continue
6:47
Speaker 1: to transmit and transmit and spread and spread and spread,
6:50
Speaker 1: and you know, who knows, no one can predict what
6:52
Speaker 1: kind of mutations will produce, you know, if you give
6:54
Speaker 1: it billions and more chances. Yeah, that's my nightmare that
6:57
Speaker 1: these that the unvaccinated are going to be able to
7:00
Speaker 1: incubate this thing into something else. And on that note,
7:03
Speaker 1: we got a headline for Moderna Crossing just a few
7:06
Speaker 1: minutes ago saying that they're facing delays in producing the
7:10
Speaker 1: vaccine outside of the US, and I think, you know,
7:13
Speaker 1: what what What people fail to realize is you think
7:15
Speaker 1: about your hometown, you think about your own state, but
7:18
Speaker 1: there are whole countries that have yet to hit. So
7:24
Speaker 1: we've really got to get this vaccine out to the
7:25
Speaker 1: rest of the world. Bob blank Breath writing the Big Take,
7:28
Speaker 1: Check it out on NI Big Take. This is Bloomberg.
7:35
Speaker 1: Are Brandon Lynn Franco now Director of Economic Indicators and
7:39
Speaker 1: Surveys for the Conference Board, And we just had some
7:43
Speaker 1: consumer confidence data that was better than the street had anticipated.
7:48
Speaker 1: UM came in at one nine the Index Consumer UM,
7:53
Speaker 1: the Conference Board Consumer Confidence Index came in at one nine,
7:56
Speaker 1: spot one. We were looking for one three, spot nine.
7:59
Speaker 1: It was also better than the previous reading of spot
8:04
Speaker 1: three revised spot nine. A lot of numbers there, but
8:07
Speaker 1: the point is consumers are more and more confident LYN
8:10
Speaker 1: even as well, certainly UM, the media and governments are
8:18
Speaker 1: freaked out by the delta variants spread How do you
8:22
Speaker 1: how do you square that circle? Well, at least for
8:25
Speaker 1: the time being, the delta variant doesn't seem to be
8:29
Speaker 1: having a negative impact on consumer confidence. In fact, we're
8:32
Speaker 1: you know, holding steady, strong and steady, and indications are
8:36
Speaker 1: that the third quarter is off to a solid start,
8:39
Speaker 1: so we're expecting another good quarter of economic growth and
8:43
Speaker 1: consumers expect more of the same in the future. So
8:46
Speaker 1: both in terms of their current assessment and their expectations,
8:50
Speaker 1: I think we're holding strong and steady. Lynn, talk to
8:53
Speaker 1: us about the labor side of the equation. That's we
8:55
Speaker 1: still have a lot of Americans that are out of work,
8:58
Speaker 1: yet there are you know, almost a record number of
9:01
Speaker 1: job openings out there, and there seems to be jobs
9:04
Speaker 1: for people who want them. Talk to us about how
9:06
Speaker 1: the labor market factors into your index, Well, we take
9:11
Speaker 1: a look at the question. You know, consumers are telling
9:14
Speaker 1: us right now that they believe jobs are plentiful. We
9:16
Speaker 1: had a little bit of an uptick in that percentage
9:19
Speaker 1: from last month. Um, so it's been going in an
9:22
Speaker 1: upboard trend, and the percentage of consumers telling us jobs
9:26
Speaker 1: are hard to get held steady. And just to put
9:28
Speaker 1: it into perspective, only ten point five percent of consumers
9:31
Speaker 1: in July said jobs were hard to get. That was
9:33
Speaker 1: at twenty two point eight in January. So we're making
9:36
Speaker 1: progress on that front and looking ahead, they do expect
9:40
Speaker 1: these trends in the labor market to continue. We have
9:43
Speaker 1: an uptick in the percent who said they expect more
9:45
Speaker 1: jobs over there the next six months UM. So that
9:48
Speaker 1: I think boats very well, and not only for consumer confidence,
9:51
Speaker 1: but for spending as well. We know that consumers have
9:55
Speaker 1: saved up or at least on average, the savings rate
9:59
Speaker 1: is higher. Are they ready to spend that down or
10:02
Speaker 1: do you think consumers are still concerned about a future crisis. Well,
10:06
Speaker 1: we do see a willingness um to spend, right, So
10:10
Speaker 1: are spending intentions, you know, whether it was for homes, autos,
10:14
Speaker 1: or major appliances ticked up. I think the flip side
10:18
Speaker 1: of that is, as we've mentioned, is you know, then
10:20
Speaker 1: you've got some supply issues at hand. You know, whether
10:23
Speaker 1: it's a home prices going up and lumber shortages or
10:27
Speaker 1: you know, shortages of home appliances autos as well. So
10:31
Speaker 1: there's a willingness there. I don't think the supply is
10:34
Speaker 1: just quite in line with the willingness, but we expect
10:37
Speaker 1: those supply chain issues to dissipate by year end UM.
10:41
Speaker 1: But it looks like, at least from the consumer's point
10:44
Speaker 1: of view, they are already willing and able to spend.
10:47
Speaker 1: So Lynn talk to us about the housing market. It's
10:50
Speaker 1: been so strong through the entire pandemic, but now there's
10:53
Speaker 1: I think an issue. You know, there's just not enough
10:55
Speaker 1: housing stock available. How does how does the housing market
10:59
Speaker 1: uh factor into the data that you guys look at. Well,
11:03
Speaker 1: we are seeing a bit of an uptick in the
11:05
Speaker 1: percent of consumers who would like to purchase a home
11:08
Speaker 1: over the next six months. Uh. You know, but again,
11:11
Speaker 1: you know, as you mentioned, we're just dealing with sort
11:13
Speaker 1: of you know, housing shortages. There's a price uptick that's
11:17
Speaker 1: you know, pushing some folks into the rental market. Um.
11:20
Speaker 1: So I think until these two get aligned, would probably
11:24
Speaker 1: continue to see housing cool off a little bit, but
11:27
Speaker 1: still overall remain relatively strong. I'd like to see. My
11:31
Speaker 1: dream scenario is that Paul sells his house, then the
11:34
Speaker 1: bubble bursts exactly, and then I can find one to buy. Um,
11:40
Speaker 1: what are your what's your take on the virus or
11:43
Speaker 1: or we already talked about the fact that consumers aren't
11:45
Speaker 1: letting the delta variant spread concern them right now, but
11:48
Speaker 1: they surely must be on edge. I mean, after such
11:51
Speaker 1: an unprecedented time to see things like um, you know,
11:55
Speaker 1: mask mandates coming back well, that's sort of is the
12:00
Speaker 1: wild card and all of this, right if we begin
12:02
Speaker 1: to see some you know, return to restrictions, uh, that
12:07
Speaker 1: could dampen the consumer confidence, or it could be very
12:11
Speaker 1: sort of localized. So for instance, you know, we've seen
12:14
Speaker 1: a bit of a downtake and consumer confidence in California,
12:18
Speaker 1: in Florida this month, while New York hit a new
12:22
Speaker 1: all time high. So it could be very localized and
12:26
Speaker 1: all dependent on what happens with the delta variant. But
12:29
Speaker 1: for the most part right now, it's not negatively impacting
12:32
Speaker 1: consumer confidence. Heylyn, thanks so much for joining us. We
12:35
Speaker 1: appreciate it as always getting your thoughts here on these
12:38
Speaker 1: data points coming out of the Conference board. Lynn Franco,
12:41
Speaker 1: Director of Economic Indicators and Surveys at the Conference Board,
12:44
Speaker 1: joining us on the phone from New York. And it's
12:46
Speaker 1: interesting that that, you know, it was Lena's mentioned kind
12:48
Speaker 1: of the regional nature of some of the data that
12:51
Speaker 1: they see some of the states that have you rising
12:54
Speaker 1: infection rates seeing a little bit of a hit to confidence.
12:57
Speaker 1: I guess that that makes plenty of sense. On the
13:00
Speaker 1: other hand, New York, who has done you know, quite
13:03
Speaker 1: well with the vaccination effort, seeing high confidence, and I
13:06
Speaker 1: think one I think a lot of Americans forget how
13:09
Speaker 1: big America is. You know, coming from Europe, where a
13:14
Speaker 1: land mass that is smaller has you know, um, more
13:19
Speaker 1: than a dozen different countries, it's always shocking to get
13:22
Speaker 1: back here and see that, um, this massive country has
13:25
Speaker 1: always thought of as as as one block, especially when
13:27
Speaker 1: you're looking at things like consumer confidence or things like housing.
13:30
Speaker 1: So exactly right, right now, I want to get over
13:34
Speaker 1: to William Kai, co founder and partner at will Shure Phoenix,
13:39
Speaker 1: to talk about what's going on with commodities and I
13:44
Speaker 1: guess their digital counterparts Will thanks so much for joining us.
13:48
Speaker 1: Let's talk first about gold, because, um, well, I love
13:51
Speaker 1: to talk about bitcoin, but I've noticed that gold is
13:53
Speaker 1: headed for I think it's first back to back monthly
13:57
Speaker 1: drop since it's a it's a rough year for gold
14:01
Speaker 1: eighteen o two and we kicked off the year I
14:03
Speaker 1: think around nineteen fifty. So um, as inflation concerns build,
14:08
Speaker 1: why isn't the price of gold? Hey guys, thanks for
14:12
Speaker 1: having me on. Definitely, I mean gold, Anything that happened
14:17
Speaker 1: this year is going to tail in comparison to last year,
14:19
Speaker 1: right went when the COVID pandemic and the monetary and
14:24
Speaker 1: fiscal policy of the strong monetary and fiscal and politi
14:30
Speaker 1: has driven the price of gold up. I think currently
14:32
Speaker 1: gold is in especially the first first half of this year,
14:36
Speaker 1: in a healthy consolidation period. Look, we think the the
14:41
Speaker 1: most of the drivers is still price drivers, still in
14:44
Speaker 1: place to support goals pricing. But the lime light out
14:47
Speaker 1: spotlight is somewhat shifted from gold, and some of the
14:50
Speaker 1: stories and drivers between FFX and US dollars and real
14:56
Speaker 1: interest rate has been has been kind of battling terms
15:00
Speaker 1: of driving the gold price up and down. But we do,
15:03
Speaker 1: we do believe that inflation is here to stay and
15:06
Speaker 1: it's gonna sustain it's price. So let's be patient on
15:09
Speaker 1: on the goal price. We think if we tests, if
15:12
Speaker 1: it's uh, if it's highs in is, it's still possible
15:16
Speaker 1: in the next several months. All right, So well, let's
15:18
Speaker 1: talk a little bit about Bitcoin here again. It's up,
15:21
Speaker 1: you know, up about one percent today, back above thirty
15:24
Speaker 1: eight thousand. Volatility continues, give us your sense of but
15:28
Speaker 1: so much for the crash, it's so much for the crash.
15:30
Speaker 1: It's got that thirty thousand levels a really good support level.
15:33
Speaker 1: How do you think investors should view bitcoin in the
15:36
Speaker 1: context of diversified portfolio? Absolutely, I mean bitcoin in any
15:42
Speaker 1: other market you call it crash, right, but you know
15:45
Speaker 1: what I was talking about, Gold almost apply here at
15:47
Speaker 1: the bitcoin in terms of consolidation. Um, it's uh, it
15:51
Speaker 1: is a pullback. But what's uh, what investors and everyone
15:55
Speaker 1: should know is that the space itself in terms of
15:58
Speaker 1: crypto and blockchain remains very strong, and you see continuing
16:03
Speaker 1: adoption by institutional space. The big banks are finally getting here,
16:09
Speaker 1: whether it's goldvin Zachs or JP Morgan and their clients,
16:12
Speaker 1: their clients is is asking for for crypto exposure so well,
16:19
Speaker 1: crypto and bitcoin becoming cycles right, um, and I think, uh,
16:24
Speaker 1: we were will share. We don't provide price targets and
16:28
Speaker 1: you know, the long term, but we think there's a
16:31
Speaker 1: huge long term potential in bitcoin and the crypto space
16:35
Speaker 1: as overall. With bitcoin, I get the scarcity issue. Um,
16:41
Speaker 1: you know there will only ever be twenty one million tokens.
16:44
Speaker 1: But a lot of the other crypto platforms which looks
16:48
Speaker 1: so promising, you know, like Ethereum, I don't understand why
16:52
Speaker 1: I need to own multiple tokens. Why does it matter
16:55
Speaker 1: if I own a lot of tokens if I can
16:56
Speaker 1: just do everything I want with one on the platform,
17:01
Speaker 1: so big, I guess to to uh to two points.
17:06
Speaker 1: First of all, if you're as an investor, if you
17:08
Speaker 1: want to get exposure to to the crypto space, for now,
17:12
Speaker 1: getting exposure bitcoin is pretty good because there's still quite
17:15
Speaker 1: high kind of inch interracorrelation between the different assets. Right,
17:21
Speaker 1: so you have exposure to Bitcoin, you probably don't need
17:24
Speaker 1: so much of etherium or light cooin, bitcoin cash and
17:28
Speaker 1: all these outcoins because Bitcoin currently is the dominant asset
17:32
Speaker 1: and the fell weather for the space. But to your
17:35
Speaker 1: to your question about why do we need so many
17:37
Speaker 1: different different cryptos? There are nuances between the different assets.
17:42
Speaker 1: Um crypto bitcoin was created? No, well know that again.
17:46
Speaker 1: I'm just saying, like, for example, the Internet, uh what's
17:49
Speaker 1: it called the Internet? Um? The Internet? There's ethereum is
17:54
Speaker 1: one platform. There was another one called the Internet company
17:56
Speaker 1: or the Internet platform. I don't know. Don't you over
18:00
Speaker 1: this alight? In any case system is ipfs potentially, but anyway,
18:06
Speaker 1: still ahead, My point is you've got these the Internet computer. Sorry,
18:10
Speaker 1: I don't know why. I just blanked on that. I
18:12
Speaker 1: loved the idea of the Internet computer, which was basically
18:15
Speaker 1: like spreading the cloud around the world, and it was
18:19
Speaker 1: gonna put a ws and and uh Microsoft out of business.
18:23
Speaker 1: I love the platform idea, I love the technology and
18:27
Speaker 1: um the blockchain, but I didn't get why I would
18:31
Speaker 1: need to own too many tokens. I don't understand why
18:34
Speaker 1: I care about owning a lot of ether as as
18:37
Speaker 1: long as I have one, I can do what I
18:39
Speaker 1: want with etheriums technology, right, right, right, But this is
18:43
Speaker 1: the same same argument, will be I guess an example
18:46
Speaker 1: before stocks? Right? Um, you argue, why do I just
18:49
Speaker 1: need maybe not company specifically, but let's say no browser.
18:53
Speaker 1: Why do I need a clone when I already have
18:55
Speaker 1: Internet explore there each of these different platforms, do you
18:59
Speaker 1: pitch himself potentially as different or better or do something
19:03
Speaker 1: else a little better? So we do see competition, So right,
19:06
Speaker 1: there's a bit of healthy competition. Um, just s liking
19:09
Speaker 1: in attech industry and a half different uh intail versus
19:12
Speaker 1: am D and happy Intail. Why do I an m D? Well? Okay,
19:15
Speaker 1: they have different slightly different value proposition, different growth and
19:20
Speaker 1: funtmentals and support. Hey, well, thanks so much for joining us.
19:23
Speaker 1: Really appreciate it. Will Kai, co founder partner of will
19:25
Speaker 1: Shear Phoenix, talking a little bit of gold, talking a
19:28
Speaker 1: little bit of bitcoin again. Gold up just fractionally right now,
19:32
Speaker 1: about eighteen hundred dollars per ounced. Bitcoin up again about
19:36
Speaker 1: one percent today, Uh, three and sixty eight points thirty
19:40
Speaker 1: eight thousand, one seventeen four bitcorn Now you were just
19:46
Speaker 1: hearing about ups from Greg Jared sinking further uh this
19:52
Speaker 1: morning in the market, UM on its margin forecast operating
19:56
Speaker 1: margin forecast for the second half, suggesting it's going to
19:59
Speaker 1: be low. We're then the level seen in the second quarter.
20:02
Speaker 1: Alison point Pacqustick joins us. She's director of equity research
20:08
Speaker 1: for Transportation Industrial Technology over at Wells Fargo. Alison, what
20:11
Speaker 1: do you make of the earnings? Hey, well, good morning
20:14
Speaker 1: and thank you for having me UM. I would say,
20:17
Speaker 1: taking a step back, earnings were solid in the second quarter,
20:20
Speaker 1: and even though the margin performance is slightly below where
20:23
Speaker 1: we were anticipating, it's a still quite a solid outlook
20:27
Speaker 1: for the back half of the year. UM. Keeping in mind,
20:30
Speaker 1: you know, I would say historically what we have seen
20:32
Speaker 1: as sequentially, you know, a lower margin in the second half.
20:35
Speaker 1: Keep in mind as we're building to the peak shipping season.
20:38
Speaker 1: You know, another thing I think investors are overly focused
20:41
Speaker 1: on here is really the slowing of that B to
20:43
Speaker 1: see the B t C volume at this point in
20:45
Speaker 1: the cycle, you know, as things start to reopen here.
20:48
Speaker 1: But overall, we believe EPs is still you know, working
20:51
Speaker 1: on track UM to deliver what CEO to my had
20:55
Speaker 1: put out in terms of that profitability of a revenue
20:58
Speaker 1: here for ups longer term. So Allison, where is the
21:02
Speaker 1: margin pressure coming from here? Where were they really feeling
21:05
Speaker 1: it in their income statement? But you know, we're focused
21:08
Speaker 1: specifically on the domestic margin and as you can imagine,
21:11
Speaker 1: as you're delivering for peak, you know, we've all seen
21:13
Speaker 1: those signs ups looking to hire for delivery expectations in
21:17
Speaker 1: the back half. So I would say partly due to
21:19
Speaker 1: your traditional historical peak build up, you'll see a greater
21:22
Speaker 1: cost pressure for ups, you know. And also much like
21:26
Speaker 1: many other companies that have reported wages have increased rate,
21:29
Speaker 1: they're certainly labor challenges that are out there today that
21:32
Speaker 1: have been well documented in the market. So UM, in
21:36
Speaker 1: terms of the rest of the the industry, we've had
21:39
Speaker 1: a really bullish outlook from airline chief executives, but it
21:45
Speaker 1: doesn't really jibe with the rest of you know, what
21:47
Speaker 1: we're seeing in terms of the delta variant and uh,
21:51
Speaker 1: you know talk of masks coming back. How do you
21:53
Speaker 1: view the economy the reopening play well with the UPS.
21:58
Speaker 1: I would say they benefit both. You know, you look
22:01
Speaker 1: to last year in the midst of the pandemic, which
22:04
Speaker 1: is another reason why the volumes are slowing here in
22:06
Speaker 1: B two C is we were looking to et commerce
22:09
Speaker 1: deliver anything local market toothpiete and such. As the economy reopens,
22:14
Speaker 1: you know, we don't need to do that anymore, right,
22:16
Speaker 1: we can run to the store and grab our toothpaste.
22:19
Speaker 1: But keep in mind that UPS also delivers the retail
22:22
Speaker 1: of rick and mortar, so they will benefit right from
22:25
Speaker 1: that reopening play. In terms of bills variant, I would
22:27
Speaker 1: say we haven't heard too much impact at this point
22:30
Speaker 1: in terms of those demands, and it doesn't appear to
22:32
Speaker 1: be something that UPS is building in in terms of
22:35
Speaker 1: elevating that that B two C. I will never go
22:38
Speaker 1: back to the store to buy toothpaste. I gotta tell
22:40
Speaker 1: you there's there's some stuff I don't know why toiletries
22:44
Speaker 1: seems like, why do I need to get that at
22:46
Speaker 1: the grocery store. You know, I'll get fresh produce, Yeah,
22:50
Speaker 1: but I don't need to pick out my Colgate or Crest.
22:52
Speaker 1: So when we see the boxes on the front front yard,
22:54
Speaker 1: that's toothpaste for you. And yeah, well everything that isn't
22:58
Speaker 1: that isn't fresh. I can just order. There's no reason
23:00
Speaker 1: to truck at home. So Allison, it's a are the
23:04
Speaker 1: ups Is of the world are they talking about in
23:06
Speaker 1: the FedEx? Is a a structurally higher kind of cargo
23:12
Speaker 1: you know flow for them unit volume because there are
23:15
Speaker 1: people like Matt who are just you know, maybe during
23:18
Speaker 1: the pandemic became increasingly used to delivery absolutely and there
23:23
Speaker 1: has you know, there's certainly that talk about structural step
23:26
Speaker 1: up and you know the e commerce demand and EPs
23:29
Speaker 1: is certainly benefiting from it. I would say part of
23:31
Speaker 1: it's really just you know, there's it's twofold. It is
23:34
Speaker 1: some of those there are people that are actually going
23:36
Speaker 1: back to the store to get their toothpaste, um, you know.
23:39
Speaker 1: But on on top of that, UPS is being very
23:42
Speaker 1: disciplined right in terms of what volume it wants to
23:45
Speaker 1: take on to its network. Right, going back to CEO
23:48
Speaker 1: tem A's comments on focusing on profitability over just playing
23:51
Speaker 1: revenue and volume. So I think there's two pieces to that.
23:54
Speaker 1: But yes, absolutely the structural will step up and B
23:57
Speaker 1: two C has certainly been noted. I mean, you don't
24:00
Speaker 1: you don't just cover ups. You like Norfolk Southern, you
24:03
Speaker 1: like Canadian Pacific Um. It looks like in general you're
24:08
Speaker 1: bullish on these uh you know, shipping rail um companies
24:15
Speaker 1: that you follow. Absolutely, I'm a big piece of that
24:18
Speaker 1: is you know, we've had that consumer recovery right, that's
24:22
Speaker 1: been noted, but as you seek a step back, industrial
24:24
Speaker 1: has been slower to start, and there's certainly been some
24:27
Speaker 1: noted supply chain challenges, labor challenges. But we see the
24:30
Speaker 1: trend line for an industrial recovery as a net positive
24:33
Speaker 1: and that would benefit certainly the rails and to a
24:36
Speaker 1: lesser extent UPS as well. Hey, Alison, thanks so much
24:39
Speaker 1: for joining us. We really appreciate getting your thoughts on UPS.
24:42
Speaker 1: The stock is down eight point seven percent today, so
24:45
Speaker 1: spooking the market there with their earnings. Alison Plenty Accustic.
24:49
Speaker 1: She's director of equity Research. She covers transportation, industrial technology,
24:53
Speaker 1: all that fun stuff that supply chain the backbone of
24:56
Speaker 1: industrial transportation for Wells, Fargo, Secure Teas and and Matt
25:01
Speaker 1: And My first job on Wall Street was a research
25:04
Speaker 1: assistant doing rails and trucks and all the transportation stuff.
25:07
Speaker 1: So it's a lot of fun and it is literally
25:09
Speaker 1: the backbone of this, you know, US industrial economy. You
25:12
Speaker 1: know what I miss, uh, blimps. I wish blimps would
25:16
Speaker 1: come back. I would travel by blimp, you would travel
25:18
Speaker 1: school when I was a kid, um well it when
25:21
Speaker 1: I was in my early thirties, late twenties, there was
25:25
Speaker 1: a company cargo lifter that would um that was going
25:28
Speaker 1: to try and transport stuff also by blimp. They went
25:31
Speaker 1: bankrupt the course, but yeah, what happened to that? All right,
25:33
Speaker 1: we'll get we'll take take a look at that. Thanks
25:35
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
25:38
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
25:42
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
25:46
Speaker 1: Matt Miller three. On false Sweeney, I'm on Twitter at
25:49
Speaker 1: pt Sweeney. Before the podcast, you can always catch us
25:52
Speaker 1: worldwide at Bloomberg Radio