Latest / Bloomberg Intelligence / Inflation, Investing, And The Latest On Omicron

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Inflation, Investing, And The Latest On Omicron · 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: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. We got a FED
• 0:22
  Speaker 1: meeting on Wednesday. A lot of folks will be paying
• 0:26
  Speaker 1: very close attention to that. Let's check in with Sylvia Jablonski,
• 0:29
  Speaker 1: chief investment officer and co founder of Defiance E t
• 0:32
  Speaker 1: F S. Sovia, thanks so much for joining us here.
• 0:35
  Speaker 1: You know, a lot of folks are saying, boy, these guys,
• 0:38
  Speaker 1: these folks are gonna be very hawkish here come Wednesday.
• 0:42
  Speaker 1: What are your expectations? Hi, good morning. Well, I think,
• 0:46
  Speaker 1: like everyone else, I'm very curious to see what what
• 0:50
  Speaker 1: FED share Powell will will have to stay on Wednesday.
• 0:53
  Speaker 1: You know, the recent meetings have given us an indication that,
• 0:57
  Speaker 1: you know, the tone is a little bit more hawkish,
• 0:59
  Speaker 1: and we're talking about perhaps doing you know, sort of
• 1:02
  Speaker 1: more tapering more quickly, and um, you know, perhaps there's
• 1:06
  Speaker 1: a debate about rate hikes whether or not they will
• 1:09
  Speaker 1: come sooner than we expected. So you know, I'll just
• 1:11
  Speaker 1: be kind of listening in to see, um, you know,
• 1:14
  Speaker 1: what what the tone is and whatnot. But you know,
• 1:17
  Speaker 1: all in all, if we take a step back from it,
• 1:19
  Speaker 1: I think that, you know, we do have this senslation issue,
• 1:22
  Speaker 1: but we also have an expanding economy. We have, you know,
• 1:25
  Speaker 1: just a massive surplus of equidity in the markets, and
• 1:28
  Speaker 1: I think, you know, the point here for the fat
• 1:31
  Speaker 1: is that the economy is sort of strong and on
• 1:34
  Speaker 1: the way off. We had this this good unemployment number
• 1:36
  Speaker 1: four point two percent. Perhaps it is appropriate to sort
• 1:38
  Speaker 1: of pump the brakes because we don't need as much
• 1:40
  Speaker 1: riscal and monetary stimulus. So um, you know, there's two
• 1:44
  Speaker 1: sides to that too. How much can the economy take
• 1:47
  Speaker 1: in terms of rate hikes. I mean, I don't mind, um,
• 1:50
  Speaker 1: if the market is telling us with the flat yield
• 1:53
  Speaker 1: curve that inflation goes away. But I don't want growth
• 1:57
  Speaker 1: to go away. Yeah, I don't want grows. I don't
• 2:01
  Speaker 1: want growth to go away either, So you know, I
• 2:04
  Speaker 1: I think though that if you if you look at
• 2:07
  Speaker 1: some of the top growth companies, UM out there right
• 2:10
  Speaker 1: now and look at the amount of sort of cash
• 2:13
  Speaker 1: that they have on the balance sheet, you know, and
• 2:16
  Speaker 1: you sort of like think about where we've been in
• 2:19
  Speaker 1: the last couple of years, and you know, some of
• 2:21
  Speaker 1: the issues in terms of like the economy being hit
• 2:24
  Speaker 1: and you know, massive part of the economy still haven't
• 2:26
  Speaker 1: recovered supply chain issues. I just wouldn't expect the FED
• 2:30
  Speaker 1: to sort of come crashing in and do aggressive rate
• 2:32
  Speaker 1: hikes really quickly. I would anticipate that they would be
• 2:35
  Speaker 1: slow and steady. And and if they are sort of
• 2:38
  Speaker 1: slow and steady, you know, in that case, the growth
• 2:40
  Speaker 1: growth firms are you know, they're they're well capitalized, are
• 2:43
  Speaker 1: well founded, they have balance sheets, so I don't think
• 2:45
  Speaker 1: it's going to be a huge impact for them if
• 2:47
  Speaker 1: it goes in an orderly fashion. So, so you've given
• 2:52
  Speaker 1: that background background for the FED for rising rates, for
• 2:55
  Speaker 1: inflation transitory maybe not. What is your kind of bag
• 3:00
  Speaker 1: eas case outlook for how are you approaching this new year? Yeah,
• 3:04
  Speaker 1: so I actually project that two is going to be
• 3:07
  Speaker 1: a positive year. I think the consumer is strong. There's
• 3:10
  Speaker 1: that you know, there's tillions of dollars of savings on
• 3:14
  Speaker 1: the sidelines that will either come into spending or will
• 3:17
  Speaker 1: come into the market. UM. I think that we're sort
• 3:20
  Speaker 1: of learning how to live with the various variants. They'll
• 3:23
  Speaker 1: probably with be with us going forward, but you know,
• 3:26
  Speaker 1: we've sort of adapted. I think that some of the
• 3:28
  Speaker 1: supply chain issues will sort of shake out, and you know,
• 3:30
  Speaker 1: companies are flesh with cash as we said, and they're
• 3:33
  Speaker 1: spending it. We have UM, you know, a record level
• 3:35
  Speaker 1: of buybacks coming back in capital expenditures. UM. The you know,
• 3:40
  Speaker 1: employment numbers good. So I think that you know, you're
• 3:43
  Speaker 1: going to see a lot of growth, particularly in some
• 3:45
  Speaker 1: of these hot new disruptive sectors. So I think that
• 3:49
  Speaker 1: for example, quantum computing, UM and and the metaverse are
• 3:52
  Speaker 1: going to be to sort of hot topics that people
• 3:54
  Speaker 1: are going to invest in and investing in that means
• 3:57
  Speaker 1: looking at things like you know, semiconductor, is cloud computing, cybersecurity,
• 4:02
  Speaker 1: ai A, are you know e TPX or single stocks
• 4:04
  Speaker 1: that sort of play in those different spaces. Five G
• 4:07
  Speaker 1: is going to be something that has a huge opportunity
• 4:10
  Speaker 1: as as Washington continues to invest there. I think the
• 4:13
  Speaker 1: reopen trade that UM you know have has has sort
• 4:17
  Speaker 1: of just like flit along is going to really start
• 4:20
  Speaker 1: to grow, you know, do the delta abicon in the
• 4:22
  Speaker 1: general COVID headwinds, I think that that trade hasn't really
• 4:26
  Speaker 1: worked yet. And you know, travel is about nine trillion
• 4:29
  Speaker 1: of the global economy. Half of that went away during
• 4:32
  Speaker 1: COVID and we're nowhere near that now. So I think
• 4:35
  Speaker 1: that you know, once we sort of see full fledged travel, hotels, casinos,
• 4:41
  Speaker 1: um cruise, ships and airlines will benefit from that. So
• 4:44
  Speaker 1: there's a lot there are a lot of really great
• 4:45
  Speaker 1: places to put your money. And I just think overall,
• 4:47
  Speaker 1: but the market is again just flush with cash and
• 4:50
  Speaker 1: and we'll just generally be be sort of like liquid
• 4:52
  Speaker 1: and the right place to be in terms of equity exposure.
• 4:55
  Speaker 1: Me and Paul are going on a cruise and hopefully
• 5:00
  Speaker 1: we don't see Omega. What about healthcare? What do you
• 5:04
  Speaker 1: think about healthcare? Sylvia? Yeah, so health care I think
• 5:08
  Speaker 1: is UM health care will be a good portfolio diversifier.
• 5:12
  Speaker 1: You know, if we we always advocate for the Barbell approach,
• 5:14
  Speaker 1: right and you want some some level of defensive exposures
• 5:17
  Speaker 1: of portfolio, and I always you know, throw healthcare into
• 5:20
  Speaker 1: that bucket because I think it's something that UM is
• 5:23
  Speaker 1: you know, it's it's sort of consumed whether or not
• 5:25
  Speaker 1: the market pulls back, right, and you have all of
• 5:27
  Speaker 1: these sort of advancements and um, you know, different mergers. Now.
• 5:31
  Speaker 1: You heard about the Deviser murder today, and I just
• 5:35
  Speaker 1: think that there's going to be consolidation. I think there's
• 5:36
  Speaker 1: gonna be sort of better use of cash. You know,
• 5:38
  Speaker 1: we've had this backdrop of like fast track at THEA
• 5:41
  Speaker 1: approvals um and you know, it's it's it's interesting. I
• 5:44
  Speaker 1: have a husband who's deeply involved in research in medicine
• 5:47
  Speaker 1: and has said that, you know, the COVID vaccine is
• 5:49
  Speaker 1: either going to COVID is either going to be looked
• 5:51
  Speaker 1: at as the biggest disaster of our time or you know,
• 5:53
  Speaker 1: an absolute modern miracle in terms of how fast research
• 5:57
  Speaker 1: trials and things came out to pump out vaccines. So
• 6:00
  Speaker 1: you know, we'll see how how much that continues. And yeah,
• 6:03
  Speaker 1: so I do think it's always good to be positioned there.
• 6:06
  Speaker 1: So Villa, thank you so much for joining us and
• 6:08
  Speaker 1: sharing your thoughts. We always appreciate getting your time. So
• 6:11
  Speaker 1: Via Jablonski, chief investment officer, co founder of Defiance et
• 6:15
  Speaker 1: F S the new variant in Town. These days is
• 6:22
  Speaker 1: omikron uh and governments and cities all around the world
• 6:27
  Speaker 1: are trying to figure out and companies, for that mat
• 6:28
  Speaker 1: are trying to figure out how to respond. Let's get
• 6:31
  Speaker 1: the latest from Dr Pervy Perk, pediatric allergist and immunologists
• 6:36
  Speaker 1: at Allergy and the Asthma Network. Dr P thanks so
• 6:40
  Speaker 1: much for joining us here amikron. We've it's been in
• 6:44
  Speaker 1: our midst here for several weeks. Here. What do we
• 6:47
  Speaker 1: really know and how concerned should people be about this
• 6:50
  Speaker 1: new variant? Right right? Thank you for having me so.
• 6:54
  Speaker 1: You know, when news verse broke, there was a lot
• 6:56
  Speaker 1: of concern, you know, given the number of mutations that
• 7:00
  Speaker 1: this variant carries compared to previous ones. But in the
• 7:03
  Speaker 1: last few weeks we've actually had reassuring news, one of
• 7:07
  Speaker 1: which is that, you know, luckily, majority of the cases
• 7:09
  Speaker 1: have been mild um so we haven't been seeing increase
• 7:12
  Speaker 1: in deaths, increasing severe disease or hospitalization. And the other
• 7:17
  Speaker 1: good news is that we have evidence that you know,
• 7:20
  Speaker 1: those who are vaccinated are well protected against the severe
• 7:24
  Speaker 1: disease and hospitalizations, and then those who go on to
• 7:27
  Speaker 1: receive their booster are in even better shapes. You know. Um, So,
• 7:32
  Speaker 1: so we have more information now and this variant maybe
• 7:36
  Speaker 1: more trans transmissible, sorry, transmissible or contagious, But the good
• 7:40
  Speaker 1: news is it doesn't appear so far to be more
• 7:43
  Speaker 1: dangerous and also it appears our vaccines are still very
• 7:46
  Speaker 1: effective against it. Yeah, we were talking this morning with
• 7:49
  Speaker 1: an epidemiologist from the UK who said, um, this this
• 7:54
  Speaker 1: variant doesn't seem to care whether or not you're vaccinated.
• 7:57
  Speaker 1: I mean he wasn't talking about people who are necessarily boosted,
• 8:01
  Speaker 1: but who had the first two shots and assuming okay
• 8:05
  Speaker 1: that was months ago. Um, does it make a difference
• 8:09
  Speaker 1: whether or not you're vaccinated when it comes to the
• 8:12
  Speaker 1: severity of the disease? Right? So that we we still
• 8:16
  Speaker 1: don't know the exact answer to right, because we want
• 8:18
  Speaker 1: to see how many people unvaccinated get this variant versus
• 8:23
  Speaker 1: those who are vaccinated and if there is a difference
• 8:25
  Speaker 1: and the severity and and frankly we just don't have
• 8:28
  Speaker 1: that data yet. Um. But you know, whatever drop in
• 8:32
  Speaker 1: antibodies that we did see and those were fully vaccinated,
• 8:35
  Speaker 1: that it was well compensated for with that booster dose.
• 8:39
  Speaker 1: So um, you know, in different studies have shown difference
• 8:42
  Speaker 1: amounts that have decreased. So I know, one study showed
• 8:45
  Speaker 1: a fortyfold drop in that neutralizing antibody. Another study showed
• 8:49
  Speaker 1: a twenty five fold drop. But the nice thing is
• 8:52
  Speaker 1: with that booster dose that kind of compensated for that drop.
• 8:55
  Speaker 1: And um, you know, everyone talks about these antibodies, but
• 8:58
  Speaker 1: it's so much more than that. You know, our immune
• 9:01
  Speaker 1: system has t cells that help us remember and fight
• 9:04
  Speaker 1: off infections, and it looks like those cells are still
• 9:07
  Speaker 1: quite efficacious and keeping people out of the hospital even
• 9:10
  Speaker 1: with this new variant and preventing death. Um, whether vaccinated
• 9:14
  Speaker 1: versus unvaccinated makes a big difference, we'll find out soon enough.
• 9:17
  Speaker 1: I know in South Africa they had some data showing
• 9:20
  Speaker 1: that people who recovered from COVID were more likely to
• 9:23
  Speaker 1: catch this variant if they had not been vascinated versus
• 9:26
  Speaker 1: those who were. So there may be something there and
• 9:29
  Speaker 1: that the vaccine is still more helpful. But we we again,
• 9:32
  Speaker 1: we're building the plane as we're flying it, so hopefully
• 9:35
  Speaker 1: as that data comes in, will have better answers the
• 9:37
  Speaker 1: next few weeks. Doctor is I guess the new normal,
• 9:43
  Speaker 1: at least for the foreseeable future, is that given that
• 9:46
  Speaker 1: there's so much of the world's population that is unvaccinated
• 9:50
  Speaker 1: or not fully vaccinated, that these variants are just going
• 9:53
  Speaker 1: to be a way of life going forward. Yeah, you know,
• 9:57
  Speaker 1: I think we should accept that covid vantine is here
• 10:00
  Speaker 1: to stay, just like so many other coronaviruses. You know,
• 10:04
  Speaker 1: the common cold is a coronavirus, and we don't think
• 10:06
  Speaker 1: twice about you know, getting a cold in the winter
• 10:09
  Speaker 1: time or what have you. Um, So I think it
• 10:11
  Speaker 1: is here to stay. But um, the good news is,
• 10:14
  Speaker 1: I think we have much better tools to deal with it. Uh,
• 10:17
  Speaker 1: and eventually, hopefully we can reach that concept where enough
• 10:20
  Speaker 1: people have been exposed that the virus just continues to
• 10:24
  Speaker 1: become milder and milder, similar to you know, the more
• 10:27
  Speaker 1: common coronaviruses that our bodies have become used to over
• 10:30
  Speaker 1: the last few decades or hundreds of years. Um. But
• 10:34
  Speaker 1: you know, again, I think we're in much better shape
• 10:37
  Speaker 1: than we were two years ago, or we were all
• 10:38
  Speaker 1: naive to this virus. Now we have excellent vaccines and
• 10:42
  Speaker 1: we have excellent therapeutics too. Even if you do happen
• 10:45
  Speaker 1: to get sick. Um, I have been I hate wearing
• 10:50
  Speaker 1: a mask. It gives me, mask me and I don't
• 10:56
  Speaker 1: breathe terribly well in them, etcetera. On silvia. But at
• 11:00
  Speaker 1: the beginning of the pandemic, I thought I was only
• 11:02
  Speaker 1: wearing a master protect others. Now I hear that if
• 11:06
  Speaker 1: I wear a mask, if it's an f FP two mask,
• 11:08
  Speaker 1: and I wear it properly, I'm protecting myself with the mask.
• 11:12
  Speaker 1: Have you have we seen that opinion evolved? Yeah? No, definitely,
• 11:17
  Speaker 1: um so much has evolved, right, but we have now
• 11:20
  Speaker 1: very good studies and data that show that it not
• 11:24
  Speaker 1: only protects others, but the user as well, you know,
• 11:27
  Speaker 1: especially if it's a medical grade math So now I care. Yeah. So,
• 11:32
  Speaker 1: if it's a bandana or like a gator, you may
• 11:35
  Speaker 1: not be providing much protection to yourself, but if it's
• 11:37
  Speaker 1: a surgical mask or higher some medical grade mask, you're
• 11:41
  Speaker 1: actually helping yourself too. And I think that's why we
• 11:44
  Speaker 1: virtually saw no flu cases last year too. You know,
• 11:47
  Speaker 1: in years prior, flu season always crushed our healthcare system,
• 11:51
  Speaker 1: but last year there were almost no cases, and it's
• 11:54
  Speaker 1: because everyone was masked up. Everyone was very proactive about
• 11:57
  Speaker 1: getting their flu shot early on, you know, even before
• 12:01
  Speaker 1: the COVID vaccine was available, So UM, I think you know,
• 12:04
  Speaker 1: the masking can only help, especially in the winter time.
• 12:07
  Speaker 1: You know, when you're indoors and public places outdoors, you
• 12:10
  Speaker 1: don't have to be as stringent, thankfully, because those respiratory
• 12:13
  Speaker 1: viruses don't aren't as contagious outside. Dr what's the latest
• 12:18
  Speaker 1: on therapeutics? Uh? If folks do in fact become sick, Um,
• 12:23
  Speaker 1: what's the latest and what should we be looking for
• 12:26
  Speaker 1: in terms of treatments? Yeah, you know, and now it's
• 12:29
  Speaker 1: exciting because um, you know, we have therapeutics both in
• 12:33
  Speaker 1: injection and pillform. So um Fiser you know, has a
• 12:37
  Speaker 1: tablet that's an anti viral that if you take it
• 12:40
  Speaker 1: within the first three to five days, it can reduce
• 12:42
  Speaker 1: your chances of being in the hospital or being very
• 12:46
  Speaker 1: very ill by over nine which is huge um. And
• 12:50
  Speaker 1: as does mrkum Astra Zeneca. They don't have a pill,
• 12:53
  Speaker 1: but they have UM, you know, an antibody cocktail, which
• 12:57
  Speaker 1: given early enough, can help prevent you from getting ill. Um.
• 13:01
  Speaker 1: And of course the regeneration monoclonal antibodies, which you know
• 13:05
  Speaker 1: with the musing for some time. Even our last president
• 13:08
  Speaker 1: used that when he became ill. So the key is
• 13:11
  Speaker 1: early treatment timing is everything um and recently another antibody Cocktails,
• 13:17
  Speaker 1: got a pool for those people who may have had
• 13:19
  Speaker 1: a severe reaction to the vaccine and can't tolerate another dose,
• 13:23
  Speaker 1: or can't tolerate a booster, or let's say they're immune
• 13:26
  Speaker 1: compromise where they took the shot, but they just don't
• 13:29
  Speaker 1: mount as good of a response as someone who's not
• 13:32
  Speaker 1: immune compromised. So there's there's so many options out there now,
• 13:36
  Speaker 1: both preventatively as well as once you're already sick, that
• 13:40
  Speaker 1: we're we're in much better shape now than we were before.
• 13:44
  Speaker 1: Dr perv Peric, thank you so much for joining us.
• 13:47
  Speaker 1: I really appreciate getting your expertise pediatric allergists and immunologist
• 13:51
  Speaker 1: at the Allergy and Asthma Network, also on the faculty
• 13:54
  Speaker 1: as a clinical assistant professor at n y U School
• 13:57
  Speaker 1: of Medicine. So we always appreciate and we can get
• 14:00
  Speaker 1: experts on the air and hope explain all the changes
• 14:04
  Speaker 1: and that this pandemic leads us through. And of course
• 14:08
  Speaker 1: the discussion over the last several weeks and likely coming
• 14:10
  Speaker 1: forward will be the omikron uh and the reactions to that. Right,
• 14:18
  Speaker 1: let's go to Tim Fury, chairman of the Institute of
• 14:21
  Speaker 1: Supply Management i s M, to the insiders. Hey, Tim,
• 14:25
  Speaker 1: this is the time of year and we'd like to
• 14:27
  Speaker 1: chat with you about your forecast. For boy, there's so
• 14:33
  Speaker 1: many moving pieces here. Just give us your top line
• 14:37
  Speaker 1: and then we'll dig in. Yeah, Thanksfaul very much. So yes,
• 14:41
  Speaker 1: twice a year we do a forecast, do comprehensive forecast
• 14:44
  Speaker 1: here in December, we do an update in May. We
• 14:47
  Speaker 1: also look back at the prior year in December to
• 14:49
  Speaker 1: see how well we perform. And we gathered the information
• 14:52
  Speaker 1: both in terms of UH percent change year over year
• 14:57
  Speaker 1: and also the diffusion index that we use on the
• 14:59
  Speaker 1: p M I, meaning anything over fifty is positive, under
• 15:02
  Speaker 1: fifty is contracting. So you know, the headline number here
• 15:05
  Speaker 1: is that our manufacturing revenues for two are expected to
• 15:08
  Speaker 1: be up six point by the end of the year,
• 15:12
  Speaker 1: following a fourteen point one percent growth in one. So
• 15:15
  Speaker 1: that's really strong. Indicates that things will continue on at
• 15:18
  Speaker 1: a pretty good pace holloway through two. The panel said.
• 15:22
  Speaker 1: On the outlook side for the next twelve months, the
• 15:24
  Speaker 1: fusion index of sixty six, which is a strong number.
• 15:27
  Speaker 1: You know, anything over sixty is really strong, so very
• 15:30
  Speaker 1: positive there. And then from the business comparison standpoint half
• 15:33
  Speaker 1: one to half two, the panel believes that half one
• 15:38
  Speaker 1: will perform at a seventy the fusion index compared to
• 15:41
  Speaker 1: the end of this year, which is really strong, and
• 15:43
  Speaker 1: half two will be a sixty three percent the fusion
• 15:45
  Speaker 1: index compared to half one. So we're gonna be growing
• 15:48
  Speaker 1: as a year goes on, it looks like, but the
• 15:51
  Speaker 1: growth will slow, right, I mean, when we look at
• 15:54
  Speaker 1: the flattening yield curve, it shows us that investors are
• 15:59
  Speaker 1: aren't sor that this inflation and this growth is going
• 16:02
  Speaker 1: to stick around at the same kind of strength that
• 16:05
  Speaker 1: we're seeing it now. Well, you know at sixty two
• 16:08
  Speaker 1: sixty three, I think for the half half two against
• 16:11
  Speaker 1: half one is still pretty strong. Remember over fifties is expanding,
• 16:14
  Speaker 1: so uh, definitely better than half We're going to perform
• 16:17
  Speaker 1: better in half one of two compared to the end
• 16:20
  Speaker 1: of twenty one, and then again in half two of
• 16:23
  Speaker 1: twenty two. It's gonna be a pretty strong period. So
• 16:26
  Speaker 1: on the profit margin side, interesting, we we've forecasted at
• 16:30
  Speaker 1: the end of this year we saw a contraction and
• 16:33
  Speaker 1: profits compared to the first half, but for the first
• 16:36
  Speaker 1: half of two we see an expansion of profits at
• 16:38
  Speaker 1: a fusion index of fifty six. So you know a
• 16:41
  Speaker 1: lot of ups and downs there with labor costs going up,
• 16:44
  Speaker 1: rob till and puts going up, and we collect information
• 16:47
  Speaker 1: on that also. Would you like to hear those numbers? Yeah,
• 16:51
  Speaker 1: they're right, yeah, so uh So on the labor and
• 16:54
  Speaker 1: benefits side, we we forecast that the cost of labor
• 16:58
  Speaker 1: will be up four point seven percent two uh and
• 17:02
  Speaker 1: last year in December one, we thought it would be
• 17:05
  Speaker 1: two point seven So you can see escalating and labor
• 17:08
  Speaker 1: costs and the better just go with that. So that's
• 17:10
  Speaker 1: a headline obviously for in your fashion. On the employment side,
• 17:14
  Speaker 1: we believe that we grew our employment levels three one
• 17:18
  Speaker 1: and we'll grow them a further one. So that's a
• 17:22
  Speaker 1: big question mark because the question really is is it
• 17:25
  Speaker 1: because they only need one percent more people or because
• 17:27
  Speaker 1: they can't get any more than one percent more people?
• 17:30
  Speaker 1: A lot of stuff you can't get right now Before Um,
• 17:33
  Speaker 1: you worked for I s M. You were a rioter
• 17:35
  Speaker 1: before that, I think at Tuson, so you know what
• 17:41
  Speaker 1: the supply chain is like firsthand. Do you think that
• 17:44
  Speaker 1: this issue is gonna work itself out by the end
• 17:47
  Speaker 1: of next year. Well, the transportation has been a big disruptor.
• 17:51
  Speaker 1: Usually it's an enabler when it comes to speeding goods
• 17:55
  Speaker 1: to the next level of assembly. This year has been
• 17:57
  Speaker 1: a disabler because there's so many variables in whole supplies,
• 18:00
  Speaker 1: and as you know, I've been looking very closely at
• 18:03
  Speaker 1: that and the t m I, and we really don't
• 18:05
  Speaker 1: see much recovery before the second half of next year,
• 18:09
  Speaker 1: and the porticians may even continue beyond that through to
• 18:11
  Speaker 1: the labor management negotiations on the next contract for the
• 18:16
  Speaker 1: UH port workers on the West Coast. So it's gonna
• 18:19
  Speaker 1: be interesting. I mean, transportations remaining very disruptive about half
• 18:23
  Speaker 1: of my comments, and the supplier delivery section last month
• 18:26
  Speaker 1: where transportation related the highest I've ever seen, So you know,
• 18:29
  Speaker 1: I think that that destruction level is going to continue. Hey, Tim,
• 18:33
  Speaker 1: thanks so much for joining us. Really appreciate UH chatting
• 18:36
  Speaker 1: with you. Tim Fury, Chairman, Institute of Supply Management Business
• 18:40
  Speaker 1: Survey Committee. UH. They get some really good granular data
• 18:45
  Speaker 1: from all folks in the manufacturing sector, in the services sector,
• 18:49
  Speaker 1: and now increasingly important in the transportation and logistics sector,
• 18:53
  Speaker 1: and then we love getting their survey results, and of
• 18:55
  Speaker 1: course we get the manufacturing and service data from I
• 18:57
  Speaker 1: S M on a monthly basis as well of checking
• 19:00
  Speaker 1: in with Tim Fury. Now, let's get over to Michael Cogino,
• 19:08
  Speaker 1: President and portfolio manager the Permanent Portfolio family of funds,
• 19:12
  Speaker 1: to talk to us about what investors do as we
• 19:16
  Speaker 1: head into a tidal wave of central bank decisions. I
• 19:20
  Speaker 1: guess the feed is clearly UM first and foremost, or
• 19:24
  Speaker 1: at least UH for US investors, the most important thing
• 19:28
  Speaker 1: to watch, Michael, what do you expect from Jerome Powell? Yeah,
• 19:32
  Speaker 1: good morning guys. Um. You know, because of the different
• 19:37
  Speaker 1: directions they have taken over the last few years, pivots
• 19:40
  Speaker 1: or whatever you want to call them, I'm not really sure, um,
• 19:44
  Speaker 1: And and we've positioned our portfolio that way. I mean,
• 19:47
  Speaker 1: the general sense, UM that's been evolving in the last
• 19:51
  Speaker 1: month or so here has been that the FETE is
• 19:54
  Speaker 1: finally recognized that, you know, inflations not just transitory there
• 20:00
  Speaker 1: tapering interest rate hikes may come quicker than everybody expected. Um.
• 20:04
  Speaker 1: We're hearing going into the meeting this week, that they
• 20:07
  Speaker 1: might even be more dramatic than that, um, and quicker
• 20:10
  Speaker 1: on the on the trigger. So I mean, sure, all
• 20:13
  Speaker 1: that's on the table. Um. The biggest issue is is
• 20:17
  Speaker 1: you know, the to the degree that these aggressive actions
• 20:21
  Speaker 1: are taken, it just slams home the point that they
• 20:24
  Speaker 1: were wrong to begin with. And I mean, and and
• 20:27
  Speaker 1: so you know, I don't know how drastic you want
• 20:30
  Speaker 1: to be, because you could easily raise rates too quickly
• 20:33
  Speaker 1: and throw the economy into a recession. Um, But you
• 20:37
  Speaker 1: do have an inflation problem, that's real. I mean, anybody
• 20:40
  Speaker 1: that saw the liquidity creation and the velocity of money
• 20:43
  Speaker 1: over the last year and a half or so, I
• 20:45
  Speaker 1: don't know why anybody would be surprised by what we're
• 20:48
  Speaker 1: seeing right now. And and so the question for investors is, yeah,
• 20:51
  Speaker 1: we all know inflation, we're hearing about it constantly, But
• 20:54
  Speaker 1: what do you do with it to protect your life
• 20:55
  Speaker 1: in your portfolio? Alright? So give us you know, kind
• 20:59
  Speaker 1: of your thoughts there, my as we go into what
• 21:01
  Speaker 1: are you telling your clients? Well, I mean you want
• 21:04
  Speaker 1: to try to be reasonable. Um, you know, inflation at
• 21:08
  Speaker 1: some level is a natural byproduct of economic growth. And
• 21:12
  Speaker 1: and so the question and so are arising interest rates
• 21:15
  Speaker 1: really and so The question is at what point does
• 21:18
  Speaker 1: does that is? What is gradual, what is reasonable, what
• 21:21
  Speaker 1: is sort of a positive from the market growing, and
• 21:25
  Speaker 1: then when when does the turn negative. Our view has
• 21:27
  Speaker 1: always been that part of this inflation story was structural. UM. Yes,
• 21:31
  Speaker 1: part of it is transitory. We would expect inflation to
• 21:34
  Speaker 1: maybe settle down from where it's been going. But I
• 21:37
  Speaker 1: think I still think you're looking at a three or four,
• 21:39
  Speaker 1: you know, five percent number on a longer term basis,
• 21:43
  Speaker 1: and that's a big difference from where we've been for
• 21:45
  Speaker 1: the last you know, X number of years and decades.
• 21:49
  Speaker 1: So that's going to necessitate a change in thinking. Our
• 21:52
  Speaker 1: view would be to stay diversified. UM. Markets are moving
• 21:56
  Speaker 1: around assets, money flows, assets are moving quickly. We would, obviously,
• 22:02
  Speaker 1: UM want to have some hedges against the declining value
• 22:05
  Speaker 1: of money UM I e s A. Gold and silver
• 22:08
  Speaker 1: assets on the bond side. Given the risk of rising
• 22:11
  Speaker 1: rates and volatility, UM, we would be very short duration
• 22:15
  Speaker 1: and we are high quality balance sheets. UM. You know,
• 22:19
  Speaker 1: despite the flattening of the curve, I think the real
• 22:22
  Speaker 1: risk would be that the FED loses credibility, market rates
• 22:26
  Speaker 1: decouple from the feds desires, and investors lose confidence and
• 22:29
  Speaker 1: they start selling bonds. Um. If that occurs, then you're
• 22:32
  Speaker 1: gonna want to be short. And on the equity side,
• 22:34
  Speaker 1: I think there's there's always opportunities and equities, but equities
• 22:39
  Speaker 1: are richly valued as an asset class. And certainly if
• 22:42
  Speaker 1: rates go higher, um, and you're dealing with more inflation,
• 22:46
  Speaker 1: other types of companies are going to do better and
• 22:49
  Speaker 1: some are gonna suffer. Inequities, we would look for companies
• 22:52
  Speaker 1: that have pricing power for their goods and services, and
• 22:55
  Speaker 1: also those that have some control over input costs and
• 22:59
  Speaker 1: say tabor and materials and whatever, because those are the
• 23:02
  Speaker 1: things that are going to have some structural inflation built
• 23:05
  Speaker 1: into them. So in terms of the growth expectation, what
• 23:10
  Speaker 1: do you see going forward? We just talked to Tim
• 23:12
  Speaker 1: Fiori from the I S M and he said he
• 23:15
  Speaker 1: thinks growth is still going to remain very strong in
• 23:18
  Speaker 1: the first half and even in the second half, it's
• 23:20
  Speaker 1: not going to tail tail off too much. Um. Yeah,
• 23:26
  Speaker 1: I mean I don't really have a prediction one way another.
• 23:28
  Speaker 1: That's a reasonable story. Um. The one thing I worry
• 23:32
  Speaker 1: about with respect to growth, I do think you're gonna
• 23:35
  Speaker 1: have a growth story UM, but it definitely is tempered
• 23:39
  Speaker 1: by what goes on with COVID. COVID has been a risk,
• 23:42
  Speaker 1: you know, since it came out, and and I think
• 23:44
  Speaker 1: anybody that uh sort of feels like we're beyond it
• 23:48
  Speaker 1: or we know all the things that come out of
• 23:51
  Speaker 1: it is really being naive. And I think we're seeing
• 23:53
  Speaker 1: that with the most recent omicron and and you know,
• 23:57
  Speaker 1: you're heading into the winter, people getting together vaccine means
• 24:00
  Speaker 1: not being as effective and needing boosters, and you know,
• 24:03
  Speaker 1: there's just all kinds of issues there that potentially have
• 24:06
  Speaker 1: risk economic growth. The other is with respect to UM,
• 24:10
  Speaker 1: you know, cost structure, labor UM, the fact that you've
• 24:13
  Speaker 1: got millions of unfilled jobs UM, and how do you
• 24:16
  Speaker 1: get those jobs filled? Because at some point that's a
• 24:19
  Speaker 1: limit to economic growth. You you sort of limit your upside,
• 24:23
  Speaker 1: you're sealing your capacity. And so I see that as
• 24:26
  Speaker 1: an emerging problem. And and the fact that you have
• 24:29
  Speaker 1: so many unfilled jobs is definitely adding to UM labor
• 24:33
  Speaker 1: costs and wage inflation, and wage inflation is going up
• 24:37
  Speaker 1: higher than income numbers based on the recent dat I've seen,
• 24:42
  Speaker 1: and that's a risk as well. UM, So that could
• 24:45
  Speaker 1: limit economic growth higher interest rates. Interest rate volatility could
• 24:49
  Speaker 1: could impact growth because you're you're lending costs, you're borrowing
• 24:52
  Speaker 1: costs go up um. So there are risks to the
• 24:56
  Speaker 1: just growth story. And I'm not predicting recessions or lower
• 25:01
  Speaker 1: growth stories, but I think you need to think about
• 25:04
  Speaker 1: those in an overall investment strategy. And you do need
• 25:07
  Speaker 1: to worry about things like stagflation, you know, the misery
• 25:10
  Speaker 1: index and all those other things. Not saying they're gonna happen,
• 25:13
  Speaker 1: but you do have them, all right, Michael, A lot
• 25:16
  Speaker 1: to think about their Thanks very much for you taking
• 25:18
  Speaker 1: the time today. We always appreciate that, Michael Caino. He's
• 25:21
  Speaker 1: a president and portfolio manager, a permanent portfolio family of funds,
• 25:26
  Speaker 1: constructive for two. But there are some headwinds out there.
• 25:30
  Speaker 1: Need to be mindful fed. Coming up Wednesday. Thanks for
• 25:35
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 25:38
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 25:42
  Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
• 25:46
  Speaker 1: Miller three. On Fall Sweeney, I'm on Twitter at pt Sweeney.
• 25:50
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 25:53
  Speaker 1: Bloomberg Radio