Latest / Bloomberg Intelligence / We Must Start Planning For a Permanent Pandemic: Andreas Kluth

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We Must Start Planning For a Permanent Pandemic: Andreas Kluth · 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
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  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, bring in
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  Speaker 1: Andrea's cluthe right now, a Bloomberg opinion calumnist who says
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  Speaker 1: we must start planning for a permanent pandemic. And um,
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  Speaker 1: Andrea's I want to say, this is getting more and
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  Speaker 1: more understandable by the day. But are you being a
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  Speaker 1: little bit too pessimistic? I mean, you say, recent developments
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  Speaker 1: suggests we may never achieve HERD immunity. Yeah, that's correct,
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  Speaker 1: And that sounds pestimistic. It wasn't meant to be. And
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  Speaker 1: if you read the article, you know the tone is
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  Speaker 1: of anything. I'm trying to be cavalier about it and
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  Speaker 1: in them almost optimistic. Note. I think if this is,
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  Speaker 1: if this is the way it's going, Matt, I think
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  Speaker 1: it's better to be realistic. In fact, you're into planning
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  Speaker 1: and into scenarios as a as a scenario then, UM,
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  Speaker 1: just lying to yourself and and as we believe, as
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  Speaker 1: we have been like, oh, it'll be over next month,
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  Speaker 1: it'll be over in the summer and the fall. We've
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  Speaker 1: been through this a few times, and um, we can
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  Speaker 1: go through the arguments, Matt. But there is a bit
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  Speaker 1: of a consensus some yeah, that that it may be
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  Speaker 1: quasi permanent, which is what Paul Bloomberg opinion columnists have
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  Speaker 1: been saying to me a lot lately. If you read
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  Speaker 1: the article I'm pulling boats out of the middle of
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  Speaker 1: the story, I read it start to finish me too well.
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  Speaker 1: Untry asked you talk about it in the in the
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  Speaker 1: in your piece about the whole concept of herd immunity.
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  Speaker 1: I think I think one of the working hypothesis in
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  Speaker 1: out there is that the combination of people that have
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  Speaker 1: already um had the virus plus those that are vaccinated
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  Speaker 1: will be enough to get us to quote unquote herd immunity.
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  Speaker 1: What's the kind of argument there? The counter argument is, so,
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  Speaker 1: so you're right, so you can get immunity from having
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  Speaker 1: had it and having antibodies and being immune that way,
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  Speaker 1: or from being vaccinated in all the other diseases out there,
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  Speaker 1: including this one. We thought the two to boil the
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  Speaker 1: many arguments down to the two main ones. The first
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  Speaker 1: is we have now evidence for South Africa and Brazil
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  Speaker 1: that having had the disease does not make you immune
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  Speaker 1: to new variance, new mutations of the virus, so that
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  Speaker 1: there is no what they call cross variant immunity that
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  Speaker 1: essentially needs that path to herd immunity isn't may not
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  Speaker 1: be available. That leaves everything on the vaccines, and as
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  Speaker 1: you know, that's going well in some places and others,
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  Speaker 1: but that this isn't about that. The the virus is mutating,
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  Speaker 1: mutating faster. Probably I'm calling it an arms race between
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  Speaker 1: new vaccines for new variants and new variants. But keep
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  Speaker 1: in mind there the evolution happened. It doesn't care where
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  Speaker 1: it happens. If you vaccinate everyone in Israel, which is
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  Speaker 1: about half of the people there, fine, maybe they could
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  Speaker 1: be taked temporarily. But the next door Syria or Palestine,
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  Speaker 1: you know, or in Africa, it is mutating and the
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  Speaker 1: new strain they will be unprotected against. And and that
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  Speaker 1: is that arms race we're in and we may lose.
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  Speaker 1: So I don't know enough about this, and you're the
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  Speaker 1: historian um, which is why we have you on. I
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  Speaker 1: thought that, for example, in the Spanish flu epidemic, which
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  Speaker 1: I know it's probably not PC to call it the
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  Speaker 1: Spanish flu pandemic Um, we saw that virus evolved in
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  Speaker 1: a way that just made it like the common flu
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  Speaker 1: that we all get today. UM. Basically it's still spread
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  Speaker 1: around but stopped killing people. And epidemiologists that we've spoken
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  Speaker 1: with have said that's a possibility with this virus as well.
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  Speaker 1: Why do you not think that's a likely path for
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  Speaker 1: it to take. I'm actually not have stating in opinion
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  Speaker 1: I think this. I'm giving scenarios. First of all, the
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  Speaker 1: normal thing with with pathogens, bacterial, viral doesn't matter is
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  Speaker 1: that the longer they evolved, they will eventually get better
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  Speaker 1: and get more transmissible but weaker, because it's actually the
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  Speaker 1: way it gives you an evolutionary advantage. If you don't
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  Speaker 1: kill your host, you get to propagate longer and hop
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  Speaker 1: onto the next one. But what we've seen, and this
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  Speaker 1: is why the article is coming out now, is what
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  Speaker 1: we've seen in recent months is varying submerging that are
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  Speaker 1: more transmissible but not less severe and there's the math.
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  Speaker 1: The epidemiological math is interesting and I linked to it
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  Speaker 1: is if you have a virus that mute, that gets
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  Speaker 1: more virulent, worse basically, but not more transmissible, you have
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  Speaker 1: linear growth in cases and debts. But if you have
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  Speaker 1: what we have now of a virus that mutates, becomes
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  Speaker 1: more transmissible and not less severe, you have exponential growth.
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  Speaker 1: And that is this. So, so what I'm saying is
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  Speaker 1: not that we're all doom. No, I'm not. I'm saying
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  Speaker 1: this is a scenario that so many people are taking
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  Speaker 1: very seriously. It just feels like, right now we have
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  Speaker 1: to start planning for it. Andres you you link to
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  Speaker 1: that math from Adam Karski at the London School of
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  Speaker 1: Hygiene and Tropical Medicine, and I'm going to click on that.
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  Speaker 1: I haven't read it yet, but I'm just thinking, like,
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  Speaker 1: it's only been a minute, right, We've only been We're
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  Speaker 1: only a year into this, and the um pandemic lasted
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  Speaker 1: a couple of years before it started to peter out.
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  Speaker 1: So I'm just I guess I'm optimist. I'm hopeful that
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  Speaker 1: we get an end not not only of the pandemic,
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  Speaker 1: but also eventually we get an end to these lockdowns,
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  Speaker 1: and you're allowed to be. Can I say one last thing?
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  Speaker 1: Do we have time? Oh? Yeah? Ye? For me, the
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  Speaker 1: purpose was to make this the curtain raiser, basically a
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  Speaker 1: new premise or a new scenario, which I want to
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  Speaker 1: follow up with lots of other columns if this is
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  Speaker 1: the case, because actually I'm I'm optimistic on how how
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  Speaker 1: resilient we are if this becomes the scenario. What does
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  Speaker 1: that mean for the economy, for politics, for how we work,
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  Speaker 1: how we study and learn the kids, how we exercise,
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  Speaker 1: how we travel, all these other things. Because you will
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  Speaker 1: see amazing changes, and you will see us become the
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  Speaker 1: future us in in this and it will not be
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  Speaker 1: all bad. And by the way the World Happens Index
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  Speaker 1: just came out this week, we're almost as happy as
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  Speaker 1: we've always been, So, you know, not the end of
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  Speaker 1: the world if the pandemic is almost permanent. And I
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  Speaker 1: think that's one of misunderstanding, So that want to clear
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  Speaker 1: that up. So Andrea's just we have about third thirty
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  Speaker 1: seconds here. What are you hearing from the biotech industry,
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  Speaker 1: from a pharma industry about their ability to create vaccines
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  Speaker 1: that may be flexible and in order to handle the
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  Speaker 1: various variants. I guess I'm very bullish on the technology.
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  Speaker 1: I don't talk about companies m RNA, which I've written
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  Speaker 1: about in the previous article, because this is an unbelievable
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  Speaker 1: opportunity for that technology to use messenger RNA to make
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  Speaker 1: any protein we want for the body to create community
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  Speaker 1: against that protein, because those are the vaccine. If we
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  Speaker 1: have a shot in the in the arms race I
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  Speaker 1: described of winning it, it's because of those vaccines. And
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  Speaker 1: once we've built up as we are now doing this
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  Speaker 1: enormous manufacturing and research capacity for that technology, we can
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  Speaker 1: use it against cancer. Cancer that's the next goal, and
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  Speaker 1: that would be definitely reason for optimism. Andreas, thanks very
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  Speaker 1: much for joining us. Andrea's cloth is a Bloomberg Opinion calumnists.
• 8:02
  Speaker 1: He's also the author of Hannibal and Me, and you
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  Speaker 1: can read his work in the work of his colleagues
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  Speaker 1: on the terminal by typing O, P, I and go
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  Speaker 1: this is Bloomberg. Let's talk a little bit about real
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  Speaker 1: estate and what it's gonna look like as we come
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  Speaker 1: out of this pandemic, assuming that we will. Um The
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  Speaker 1: vaccine rollout is going really well in the US and
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  Speaker 1: the UK UM, and I want to bring in Lisa
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  Speaker 1: Kni for that. She's a co leader for National, the
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  Speaker 1: national real estate practice at Eisner Amper and Lisa, it's
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  Speaker 1: really interesting because this morning we saw some headlines about
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  Speaker 1: banks in Hong Kong that are giving up space. And
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  Speaker 1: of course I've spoken to the CEO of Deutsche Bank
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  Speaker 1: who thinks commercial real estate is one place where he
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  Speaker 1: can cut costs and then continue to save money going forward.
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  Speaker 1: Are we gonna see in San Francisco in New York
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  Speaker 1: a lot of big tenants start to pare down their uh,
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  Speaker 1: you know, their leases. Yes, thank you for having me
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  Speaker 1: this morning. So when you look at real estate overall,
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  Speaker 1: and the story is still being written, and but it's
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  Speaker 1: certainly with the tenants, as you had mentioned um in
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  Speaker 1: your opening description. And so some people believe that the
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  Speaker 1: workers are going to be more productive outside of the
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  Speaker 1: house versus some people's picture is saying, we still need
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  Speaker 1: that corporate culture environment to get innovation and growth, and
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  Speaker 1: so you still need that connectivity of the office, and
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  Speaker 1: that story is going to be with the tenant and
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  Speaker 1: how comfortable they feel bringing their teams back into the
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  Speaker 1: office market. And so we've already seen. Did they have
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  Speaker 1: to do that to the extent that they had them
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  Speaker 1: before the pandemic? I mean, I totally I'm totally down
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  Speaker 1: with everything you just said. But um, isn't there a
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  Speaker 1: new world facing us? Yeah? And by the way, before
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  Speaker 1: the new world faced us New York City and San Francisco,
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  Speaker 1: that same story was being written that people were paring
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  Speaker 1: down space and starting to at alternatives for their office
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  Speaker 1: spake whe whether it was hub and spoke models where
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  Speaker 1: there was no elevators and or or doing working outside
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  Speaker 1: of those main hub cities. So this story was being
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  Speaker 1: written pre pandemic, and it's also being written post pandemic,
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  Speaker 1: and it's going to see who the winners are going
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  Speaker 1: to be post pandemic and saying what are those office
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  Speaker 1: leases going to look like? How are the tenants are
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  Speaker 1: going to say, maybe we're going to take space. It's
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  Speaker 1: going to look a little bit different because we have
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  Speaker 1: to dedentify now when before we were using less space
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  Speaker 1: for a person, now we need to increase that space.
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  Speaker 1: And are we going to ask for shorter term leases
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  Speaker 1: which is going to drive down valuation? And how are
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  Speaker 1: those tenants going to negotiate with the landlords to figure
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  Speaker 1: out what spacing requirements make sense for them. So those cities,
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  Speaker 1: it's still a story that's going to be written, and
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  Speaker 1: again it's going to all depend on that tenant and
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  Speaker 1: that behavior of the people of how they feel when
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  Speaker 1: they want to get back into that office space. So coworking,
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  Speaker 1: which people were saying there's too much on the market,
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  Speaker 1: and how that was going to impact. And I think
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  Speaker 1: in the beginning of the pandemic, people were writing off
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  Speaker 1: in disparaging coworking space, but that actually might tend to
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  Speaker 1: be a solution for some of these larger companies that
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  Speaker 1: are looking to downsize from their bigger office spaces that
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  Speaker 1: they held in these bigger cities. Were you disparaging office
• 11:16
  Speaker 1: spaceball coworking office space? Of course, I'm I'm as soon
• 11:20
  Speaker 1: as I get my job, and the first one is Saturday.
• 11:23
  Speaker 1: I'm back in the Bloomberg. See, I gotta tell you,
• 11:26
  Speaker 1: I gotta tell you both. Um Lisa, right when he
• 11:31
  Speaker 1: started we work, I went to hang out with what's
• 11:34
  Speaker 1: his name now he's um, I can't remember his name's
• 11:37
  Speaker 1: billionaire in the past ran we work. Anyway. I went
• 11:40
  Speaker 1: down there about ten years ago and it was such
• 11:43
  Speaker 1: a cool space to hang out. I thought it was awesome,
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  Speaker 1: but now you're right, people rip on it. Co working
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  Speaker 1: Lisa and I wonder I'd love to get a sense
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  Speaker 1: of valuation in the corporate office space. Have we seen
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  Speaker 1: any transactions, because I wouldn't be surprised to see a
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  Speaker 1: building on Park Avenue or Fifth Avenue trade hands at
• 12:00
  Speaker 1: of what it would have two years ago. Have we
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  Speaker 1: seen anything? So there's been a lot less trading, and
• 12:06
  Speaker 1: cap crates really have been relatively consistent because because there
• 12:10
  Speaker 1: has been a lot less trading, and and there's still
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  Speaker 1: a major disparity between the bid and the ask. So
• 12:16
  Speaker 1: you've seen some deals, but people are really disciplined with
• 12:19
  Speaker 1: their capital right now, which is good um, and so
• 12:22
  Speaker 1: we haven't seen as much trading, and so you're not
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  Speaker 1: really seeing the valuation shifts. And right now, the leases
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  Speaker 1: in place are still long term leases. And again, as
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  Speaker 1: I mentioned before, that story is going to be once
• 12:34
  Speaker 1: those leases are set to expire and the revaluation occurs,
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  Speaker 1: that's really we're gonna We're we're going to see the
• 12:40
  Speaker 1: trend of either the values are able to remain or
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  Speaker 1: they're going to change. By the way, what I like
• 12:48
  Speaker 1: to know, Matt, because when we walk around in New York,
• 12:50
  Speaker 1: what really really jumps out at you because you're at
• 12:53
  Speaker 1: ground level on the street is retail space and the vacancies.
• 12:57
  Speaker 1: At least it give us a sense of kind of
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  Speaker 1: how retail space is looking on some of these major
• 13:01
  Speaker 1: urban markets. Yeah, and that was struggling before the pandemic,
• 13:05
  Speaker 1: the retail space because the biggest problem in retail is
• 13:08
  Speaker 1: not even e commerce. The biggest problem in retail is
• 13:11
  Speaker 1: that oversupply at the stores. There was just there's too
• 13:14
  Speaker 1: many out there, and so that's going to be the
• 13:16
  Speaker 1: biggest struggle UM and and figure out you need capital
• 13:20
  Speaker 1: to reposition those those retail spaces. And there's really no
• 13:23
  Speaker 1: capital in that marketplace right now. And so retail is
• 13:27
  Speaker 1: gonna has been struggling and probably will continue to struggle,
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  Speaker 1: um post pandemic. That's going to be a really the
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  Speaker 1: biggest concern of that. But remember it was struggling before
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  Speaker 1: we even had this happen. All right, So what's the
• 13:42
  Speaker 1: over the next twenty seconds, I'd love to just get
• 13:44
  Speaker 1: your thoughts here. Are we going to see a rebound,
• 13:47
  Speaker 1: a snap back rebound in real estate? So they're Snappack rebound.
• 13:53
  Speaker 1: So when we look at real estate overall, there's been
• 13:55
  Speaker 1: some real winners and losers with each property sector. So
• 14:00
  Speaker 1: each property sector has been faring um and there's always
• 14:03
  Speaker 1: going to be an outlier within those. So when you're
• 14:05
  Speaker 1: looking at an industrial center, that's been a darling of
• 14:09
  Speaker 1: the industry and that's going to continue to be um.
• 14:11
  Speaker 1: And so people are liking that hospitality, you know, leasure
• 14:15
  Speaker 1: travels coming back. We're reading something in the news every
• 14:17
  Speaker 1: single day about you know, people are ready to start
• 14:19
  Speaker 1: traveling and so large block and convention centers may not,
• 14:23
  Speaker 1: but leisure certainly is. So there is hope for the hospitality,
• 14:27
  Speaker 1: hope for there or at least thanks so much for
• 14:29
  Speaker 1: joining us. Lisa Nick, Co leader of the national real
• 14:31
  Speaker 1: Estate practice at Eisner Amper. We all know the bull
• 14:36
  Speaker 1: case for equities. It's kind of ingrained into our minds now.
• 14:40
  Speaker 1: Persistent low rates, fiscal stimulus, the reopening trade, even some
• 14:43
  Speaker 1: some good earnings. What keeps people up at night that
• 14:47
  Speaker 1: are bullish? Let's talk to Louis Navalier, chairman, founder and
• 14:50
  Speaker 1: c IO of Navallier and Associates based in Renown, Nevada.
• 14:55
  Speaker 1: So Louis the bullish calling equities it's pretty solid. Are
• 15:00
  Speaker 1: you a big proponent of that book call? Yes? The
• 15:04
  Speaker 1: reason is sales and earnings momentum are still accelerate. So
• 15:08
  Speaker 1: the first quarter results are going to be the peak
• 15:11
  Speaker 1: for sales and earnings momentum. And we're gonna have easy
• 15:13
  Speaker 1: comparisons all year because of the pandemic. But the peak
• 15:18
  Speaker 1: of sales earnings momentum will happen in April and May.
• 15:20
  Speaker 1: When we get those first quote results, Well, is it
• 15:25
  Speaker 1: going to bring with it a lot of inflation um?
• 15:27
  Speaker 1: And do you believe that to be transitory? It looks
• 15:31
  Speaker 1: like it's transitory. I think what Wall Street wanted is
• 15:34
  Speaker 1: it one of the Fed to acknowledge that inflation exists,
• 15:37
  Speaker 1: and they when they raise their inflation target this year
• 15:40
  Speaker 1: the two point four um that calm Wall straight down.
• 15:44
  Speaker 1: The other thing is that there's a dollar was week
• 15:47
  Speaker 1: for a while, but since late um February the dollars
• 15:50
  Speaker 1: strengthening here quite a bit. So events like what happened
• 15:53
  Speaker 1: in Turkey earlier this week, all those things to strengthen
• 15:56
  Speaker 1: the dollar, plus all the e t v's money printing
• 15:59
  Speaker 1: and MMT that where they just print endless money so
• 16:02
  Speaker 1: that's that's all helping the strengthen the dollar, plus our GDP.
• 16:06
  Speaker 1: You know, they're in a double differcession in Europe and
• 16:08
  Speaker 1: uh we're recovering, so Louis, you know, there's been a
• 16:13
  Speaker 1: question of kind of do I stick with the tried
• 16:16
  Speaker 1: and true big tech growth names that have worked so
• 16:18
  Speaker 1: well for me really since the financial crisis, or do
• 16:21
  Speaker 1: I play this uh you know, kind of pivot trade
• 16:23
  Speaker 1: this uh this reopening trade, if you will, and maybe
• 16:27
  Speaker 1: go to some more economic sensitive areas. How are you
• 16:31
  Speaker 1: thinking about your portfolio allocation? You right here? Well, I'm
• 16:36
  Speaker 1: a growth manager and we got off to a very
• 16:39
  Speaker 1: strong start to share, mostly from international e d rs,
• 16:43
  Speaker 1: and obviously we got caught up in that NASAC capiculation
• 16:47
  Speaker 1: a few weeks ago, but I'm very happy with how
• 16:50
  Speaker 1: things are coming back. Now. I'm not gonna be find
• 16:52
  Speaker 1: the financials because that's a valued managers thing, but the
• 16:57
  Speaker 1: c Bilker is greater financials. Okay. As far as energy
• 17:01
  Speaker 1: is concerned, we are starting to pick up some energy stocks,
• 17:03
  Speaker 1: especially midstream, and so uh you know, obviously the that
• 17:09
  Speaker 1: that's starting to look look a little more growthy, although
• 17:12
  Speaker 1: technically that's a value stock as well. And then of
• 17:15
  Speaker 1: course we have the chemical shortages. We have the plastic
• 17:18
  Speaker 1: shortage in America and the big freeze in Texas, so
• 17:21
  Speaker 1: that those are showing up on the energy side. So
• 17:24
  Speaker 1: there's the markets broughtening out here and that's a that's
• 17:26
  Speaker 1: a good thing. So this whole value surge we had
• 17:30
  Speaker 1: is a good thing. But every time you go on
• 17:31
  Speaker 1: earning season, you're gonna have to buy the value stocks averagage.
• 17:37
  Speaker 1: Why do you like or why were you buying a
• 17:41
  Speaker 1: d R s at the beginning of the year. Is
• 17:43
  Speaker 1: that something that you do? Um at the value and
• 17:47
  Speaker 1: associates especially well, we have a lot of foreign A
• 17:51
  Speaker 1: d rs. We've always had a lot of Itsraeli A
• 17:53
  Speaker 1: d R because you know, Israel's got a great silicon
• 17:55
  Speaker 1: vallee a lot to get bought out. But we've had
• 17:58
  Speaker 1: Chinese a d r s for some time than our
• 18:00
  Speaker 1: perception was. Is that, for lack of a better word,
• 18:03
  Speaker 1: China one the election and uh and we need to
• 18:06
  Speaker 1: beat them or join them and um so um we
• 18:09
  Speaker 1: joined them all right, Louis, So I know you growth
• 18:14
  Speaker 1: and there's obviously tech is part of that. Are you
• 18:17
  Speaker 1: concerned about regulatory risk? Or how concerned are you about
• 18:20
  Speaker 1: regulatory risk for big tech. We're gonna have uh, some
• 18:23
  Speaker 1: of the big tech CEOs Zuckerberg and so on in
• 18:26
  Speaker 1: front of Congress again tomorrow. I'm pretty immune to that.
• 18:30
  Speaker 1: My biggest check would be like a navidio UM so
• 18:34
  Speaker 1: that's just a chip stock. And obviously there's a chip
• 18:36
  Speaker 1: shortage and uh so the semi conductor space is very healthy.
• 18:40
  Speaker 1: But yeah, I'm not a major holder of of of
• 18:43
  Speaker 1: the check that is restricting Jane censorship and all that stuff.
• 18:47
  Speaker 1: We're not part of that. But but you do love
• 18:50
  Speaker 1: the uh Silicon Valley, I mean the original, um, the
• 18:56
  Speaker 1: original definition of that. You began publishing research back in
• 19:00
  Speaker 1: d So I'm guessing you're moved by you know, Andy
• 19:03
  Speaker 1: Grove and and crew, like the the original chip producing
• 19:09
  Speaker 1: UH companies. What do you think about the Intel news
• 19:13
  Speaker 1: today that they're gonna, um start building a couple of
• 19:17
  Speaker 1: new foundries. Well, that's great news, but there's an acute
• 19:20
  Speaker 1: chip shortage. But you know, Intel's biggest problem has been
• 19:23
  Speaker 1: they've been losing out to advanced micro devices. You know,
• 19:26
  Speaker 1: Apple obviously builds their own chips, so Intel is trying
• 19:29
  Speaker 1: to get its mojo back. But you know, worst case,
• 19:32
  Speaker 1: they can just do what Taiwan does and start to
• 19:35
  Speaker 1: make chips are in short supply, by the way, in Taiwan,
• 19:38
  Speaker 1: they gotta drout over there, and that's that's another compilation
• 19:41
  Speaker 1: to a chip shortage. Um, but we own a lot
• 19:44
  Speaker 1: of Taiwan semi conductor and microelk it. Louis just about
• 19:49
  Speaker 1: the thirty seconds. What's kind of your highest conviction work
• 19:52
  Speaker 1: that you guys are doing right now? UM? I still
• 19:56
  Speaker 1: really really like the cloud Okay, so you know, like
• 20:00
  Speaker 1: service now are great. Obviously we like cybersecurity cloudfare. N
• 20:05
  Speaker 1: e T is a good stock. Um. My favorite e
• 20:09
  Speaker 1: V company is actually n i U. It's a Chinese
• 20:12
  Speaker 1: company that makes uh electric bicycles and scooters. Um, that's
• 20:17
  Speaker 1: my far. My favorite d Q, which makes Polly silicon
• 20:20
  Speaker 1: for the solar sales in China is good. Um. We
• 20:24
  Speaker 1: also have, you know, the inverter stocks like N's Energy. Louie,
• 20:29
  Speaker 1: great to get some time with you, and I hope
• 20:30
  Speaker 1: we get to talk to you again a little bit
• 20:32
  Speaker 1: more in depth. Louis Navier joining us there, founder and
• 20:37
  Speaker 1: CEO of Navier and Associates, talking about the tech stocks
• 20:40
  Speaker 1: that he's interested out a Reno, Nevada. This is Bloomberg
• 20:48
  Speaker 1: Craig So you're Auto's team leader for Bloomberg News, and
• 20:52
  Speaker 1: he's got a fascinating story in the new double issue
• 20:55
  Speaker 1: of Bloomberg Business Week magazine entitled the end of Testle's
• 20:59
  Speaker 1: Dominance Maybe closer than it appears. Greg, thanks so much
• 21:03
  Speaker 1: for joining us here. Talk to us about some of
• 21:06
  Speaker 1: the games that are being made by some of the
• 21:07
  Speaker 1: traditional automakers. A lot of noise coming out of Volkswagen
• 21:10
  Speaker 1: in particular. They had a huge week last week, where
• 21:15
  Speaker 1: it really started on Monday with an event that was
• 21:19
  Speaker 1: kind of shamelessly similar to Tesla's Battery Day. Volkswagen called
• 21:24
  Speaker 1: There's Power Day, but they spent two hours talking about
• 21:27
  Speaker 1: their battery strategy, from manufacturing too uh materials to partners
• 21:34
  Speaker 1: uh you know, charging stations as well. They really sort
• 21:37
  Speaker 1: of covered the gamut, and and you know, it's it's
• 21:39
  Speaker 1: interesting because this is a company that really since when
• 21:44
  Speaker 1: they were caught with with the diesel emission scandal, they
• 21:47
  Speaker 1: really sort of knew right off the bat that they
• 21:50
  Speaker 1: needed to make amends. But the auto industry does move
• 21:53
  Speaker 1: in product cycles that are you know, five or so
• 21:56
  Speaker 1: years and so what we're really seeing is is kind
• 21:58
  Speaker 1: of a realization of this you know, change in strategy
• 22:02
  Speaker 1: that they were sort of forced to make away from
• 22:04
  Speaker 1: diesels and toward electric vehicles. And what we're seeing as
• 22:07
  Speaker 1: well is just you know, sort of the initial fruits
• 22:09
  Speaker 1: of that that they are now building on to really
• 22:12
  Speaker 1: try and become you know, actually that they are coming
• 22:15
  Speaker 1: out and saying we want to be the world's biggest
• 22:17
  Speaker 1: electric vehicle maker. By so uh, for those folks who
• 22:22
  Speaker 1: have ever lived in Germany, we have a uh television
• 22:26
  Speaker 1: talk show host called Harold Schmidt. And after David Letterman
• 22:30
  Speaker 1: got really popular in the US, Harold Schmidt, who kind
• 22:33
  Speaker 1: of looks a little like Letterman, said, you know what,
• 22:34
  Speaker 1: I'm just going to do the exact same thing. Where's
• 22:36
  Speaker 1: the suit, where's the sneakers? Has the same mimics, his
• 22:40
  Speaker 1: mimics Letterman's delivery, just as the whole top ten list,
• 22:43
  Speaker 1: the whole thing. But in German is Dee's doing that
• 22:46
  Speaker 1: with musk? You know, It's it's interesting. I think that's
• 22:51
  Speaker 1: a great question that you know, it's it's not quite
• 22:53
  Speaker 1: as bad. I think we had a little fun with
• 22:55
  Speaker 1: this story, you know, mentioning the fact that you know,
• 22:57
  Speaker 1: Deecee is not dating a pop star, He's not going
• 23:00
  Speaker 1: on Joe Rogan. Uh. You know, he is still he
• 23:06
  Speaker 1: is still very German. He is definitely much more buttoned up.
• 23:10
  Speaker 1: His tweets aren't quite as much. I guess fun is
• 23:13
  Speaker 1: a charitable way of putting Musk's Twitter. Um, but you know,
• 23:17
  Speaker 1: I do think that he definitely is getting his message
• 23:20
  Speaker 1: out there. He only just joined Twitter early this year.
• 23:23
  Speaker 1: It was sort of telling that his first post he
• 23:26
  Speaker 1: said something about taking market share from Elon and tag elon. Um.
• 23:31
  Speaker 1: You know, I think he's been active on LinkedIn, but
• 23:34
  Speaker 1: we know that that isn't necessarily the sort of social
• 23:37
  Speaker 1: media network of choice for the mean stock crowd. Uh.
• 23:41
  Speaker 1: So you know, I do think Volkswagen very much is
• 23:43
  Speaker 1: making a concerted effort to get their uh message out
• 23:47
  Speaker 1: there where you know, people who've who've bid Tesla up
• 23:50
  Speaker 1: to the moon are going to see what they're up to. So, Craig,
• 23:54
  Speaker 1: you know, we've heard even some similar language coming out
• 23:57
  Speaker 1: of General Motors, Mary Barros saying, you know, makes a
• 24:00
  Speaker 1: bold proclamations about their growth and their investment in e
• 24:04
  Speaker 1: v s. Here is just just a case of the
• 24:06
  Speaker 1: automakers saying, Okay, now we finally see enough global demand
• 24:11
  Speaker 1: out there where we can make these things profitable. Is
• 24:14
  Speaker 1: that basically what they're all kind of coming to that conclusion.
• 24:17
  Speaker 1: I think that's right. I think you know, people give
• 24:20
  Speaker 1: Tesla a lot of grief for you know, Elon's sort
• 24:23
  Speaker 1: of intricacy, if if you will, But he what he
• 24:26
  Speaker 1: has done is really sort of gotten people excited about
• 24:29
  Speaker 1: electric vehicles. And I think he's also sort of established that,
• 24:33
  Speaker 1: you know, if you make them compelling, people will want
• 24:36
  Speaker 1: to buy them. I think you've also got a situation
• 24:39
  Speaker 1: where the industry was rightfully concerned that battery prices were
• 24:43
  Speaker 1: not u to where they needed to be for this
• 24:46
  Speaker 1: to make economic sense for them. And they may still
• 24:48
  Speaker 1: not be U where where you know they need to be, uh,
• 24:52
  Speaker 1: but but they're getting there. And I think you're seeing
• 24:55
  Speaker 1: the industry sort of acknowledge that, yes, there there is
• 24:59
  Speaker 1: demand if if you really sort of put your your
• 25:02
  Speaker 1: weight behind this effort. And I think you're also seeing
• 25:06
  Speaker 1: a sort of push on the part of the regulatory
• 25:10
  Speaker 1: side of things where they're seeing, you know, Tesla have
• 25:13
  Speaker 1: some success and really using that as as reason to
• 25:16
  Speaker 1: put more pressure on the likes of you know, Volkswagen
• 25:19
  Speaker 1: or General Motors or what have you. I think we
• 25:21
  Speaker 1: will see the US sort of follow suit. We we've
• 25:24
  Speaker 1: seen a lot of action out of the EU and China,
• 25:28
  Speaker 1: and you know, you do have expectations that the Bimen
• 25:31
  Speaker 1: administration is going to sort of go back, uh, you know,
• 25:35
  Speaker 1: more more towards where the Obama administration was in terms
• 25:38
  Speaker 1: of you know, their approach to regulating the auto industry.
• 25:42
  Speaker 1: So Bloomberg readers that are paying close attention um will
• 25:47
  Speaker 1: know that Craig Trudale has more experience covering the global
• 25:50
  Speaker 1: auto sector than I think any other reporter in the world.
• 25:53
  Speaker 1: You've been in Detroit, right, you covered the Big Three there,
• 25:58
  Speaker 1: you went to Asia covered auto makers there, You're now
• 26:02
  Speaker 1: running our coverage here in Europe. Who do you think
• 26:05
  Speaker 1: is best positioned too to claim global dominance in e vs?
• 26:12
  Speaker 1: I think in terms of the company that has the
• 26:16
  Speaker 1: resources and the sort of existing scale and and the wherewithal,
• 26:20
  Speaker 1: it's no doubt about it, it's Volkswagen. I think the
• 26:23
  Speaker 1: question is, you know, sort of how quickly can this
• 26:26
  Speaker 1: company that has a lot of um, you know, sort
• 26:29
  Speaker 1: of factions within it a lot of key stakeholders who
• 26:32
  Speaker 1: don't always agree. How quickly can Herbert Dace kind of
• 26:35
  Speaker 1: get everybody rowing in the same direction. You know, I
• 26:38
  Speaker 1: think we had the hyper Drive newsletter that I'll plug
• 26:42
  Speaker 1: while I'm on here today that you know, took a
• 26:45
  Speaker 1: look at the idea that this is. This is a
• 26:47
  Speaker 1: CEO who just late last year his job status is
• 26:51
  Speaker 1: kind of up in the air because you know, it's
• 26:53
  Speaker 1: really cutthroat in Volfsberg Um and you know, so there
• 26:57
  Speaker 1: there is going to be a challenge of just, you know,
• 27:00
  Speaker 1: how quickly is he able to sort of phase out
• 27:02
  Speaker 1: the combustion era at Volkswagen and really ushering and electric era.
• 27:07
  Speaker 1: And that's going to be the question for me as
• 27:09
  Speaker 1: as to, you know, how quickly can they really give
• 27:12
  Speaker 1: Tesla run for their money. So, Craig, you're based in London,
• 27:17
  Speaker 1: Matt's in Berlin. Let me ask you too, what's this?
• 27:19
  Speaker 1: What's the demand like on the ground in Europe? Generally
• 27:22
  Speaker 1: for evis you see an awful lot. I would be
• 27:25
  Speaker 1: interested to hear what Matt is seeing in Berlin. But
• 27:28
  Speaker 1: walking around London and obviously in these you know, lockdown times,
• 27:31
  Speaker 1: all you can really do is walk around. Uh you know,
• 27:34
  Speaker 1: you do see an awful lot of of cars plugged
• 27:37
  Speaker 1: into lamp posts over here, a lot of um, you know,
• 27:41
  Speaker 1: BMW I three's, which um, you know, I've always thought
• 27:45
  Speaker 1: are are very unfortunate looking, but they are. They are
• 27:49
  Speaker 1: pretty pretty neat little cars evolved on that, you do.
• 27:54
  Speaker 1: I hated them at first, but I actually love them
• 27:56
  Speaker 1: now now that I've lived around them for so long.
• 27:59
  Speaker 1: I think the out Etron looks like it's a pretty
• 28:01
  Speaker 1: dominant player right now. Um, and I think that might
• 28:05
  Speaker 1: be what consumers want. A car that looks more like
• 28:08
  Speaker 1: a regular car, like an Audi A five and Etron
• 28:12
  Speaker 1: looks like that than UM and I three, which looks like,
• 28:15
  Speaker 1: I don't know what, it looks like nothing bon w
• 28:17
  Speaker 1: ever made before, and that could be the key. But Craig,
• 28:20
  Speaker 1: you hit on the one thing that we need more of,
• 28:22
  Speaker 1: and it's charging stations, right Yeah. Absolutely, I think the
• 28:26
  Speaker 1: charging infrastructure issue is still a really big problem. I think,
• 28:30
  Speaker 1: especially you know, you think about city centers and people
• 28:33
  Speaker 1: who who rent and don't necessarily uh you know, have
• 28:37
  Speaker 1: a place to park a garage. So I bring up
• 28:41
  Speaker 1: the lamp post is something that I see a ton
• 28:43
  Speaker 1: in London and did not see around New York obviously.
• 28:48
  Speaker 1: Uh but but I also think, you know, even in
• 28:50
  Speaker 1: rural areas as as well. You know, you you do
• 28:53
  Speaker 1: have obviously the ability for for folks to charge in
• 28:56
  Speaker 1: their garages, which are more common, but charging stations definitely
• 29:01
  Speaker 1: being needed for longer trips, and that being you know,
• 29:04
  Speaker 1: still a concern for people that's going to keep them
• 29:06
  Speaker 1: from from making the jump. Very cool, Craig, thanks so
• 29:10
  Speaker 1: much for joining us. Craig Trudell wrote the story the
• 29:12
  Speaker 1: end of Tesla's dominance may be closer than it appears,
• 29:14
  Speaker 1: a bellegially coming up in Business Week. And of course
• 29:17
  Speaker 1: you can get the hyper Drive newsletter on Bloomberg as well.
• 29:22
  Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
• 29:26
  Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
• 29:29
  Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 29:33
  Speaker 1: at Matt Miller three. On Fall Sweeney, I'm on Twitter
• 29:37
  Speaker 1: at pt Sweeney. Before the podcast, you can always catch
• 29:40
  Speaker 1: us worldwide at Bloomberg Radio