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The Value Gap To Growth Is About To Close: Federated's Orlando · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. What a market it's been
• 0:21
  Speaker 1: so far in obviously that huge sell off when the
• 0:25
  Speaker 1: pandemic hit, but then a arguably equally impressive rebound off
• 0:30
  Speaker 1: of the bottom, leaving a lot of investors to say, Okay,
• 0:33
  Speaker 1: now what as we look forward? We certainly have somebody
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  Speaker 1: here who can help us answer that question. We have
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  Speaker 1: Phil Orlando, chief equity market strategist and head of Client
• 0:41
  Speaker 1: portfolio Management at Federated at Hermes UH sixty eight billion
• 0:45
  Speaker 1: dollars in equity under management about six hundred billion firm
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  Speaker 1: wide across all assets, joining us on the phone. Phil,
• 0:52
  Speaker 1: thanks so much for joining us here again on the
• 0:55
  Speaker 1: back of the another challenging and disappointing jobs number today.
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  Speaker 1: You know, the bears out there as it relates to
• 1:04
  Speaker 1: the economic recovery have some more ammunition. What do you think, UH,
• 1:08
  Speaker 1: the equity markets are looking at at this moment, Well,
• 1:11
  Speaker 1: the equity markets are actually rallying a little bit in
• 1:15
  Speaker 1: the last fifteen minutes. And let me let me put
• 1:18
  Speaker 1: your your just your left comment there in some context.
• 1:21
  Speaker 1: So today's data was a bit of a mixed bag.
• 1:24
  Speaker 1: The Philly Set index was a bit of a disappointment.
• 1:27
  Speaker 1: You looked at the claims on the surface, the initial
• 1:30
  Speaker 1: claims were higher than we expected, but that was a
• 1:32
  Speaker 1: seasonally adjusted number. If you looked at the raw unseasonably
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  Speaker 1: adjusted number, that number was down around which which was
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  Speaker 1: what we were looking for. The continuing claims have continued
• 1:45
  Speaker 1: to come down. That's good news. And and just at
• 1:48
  Speaker 1: ten o'clock we got a blowout number out of the
• 1:51
  Speaker 1: l EI, the Leading Economic Index. The June reading was
• 1:55
  Speaker 1: revised up from a two percent gain to a three
• 1:58
  Speaker 1: percent gain and I came in stronger than expected at
• 2:01
  Speaker 1: one point four percent. So the bears will certainly look
• 2:05
  Speaker 1: at the fact that the initial weekly claims number was
• 2:09
  Speaker 1: was not where we wanted it to be, but there
• 2:11
  Speaker 1: are some other issues around that that. On balanced, today's
• 2:15
  Speaker 1: data dump wasn't that bad and the market is rallying
• 2:18
  Speaker 1: in the last fifteen minutes or so after we got
• 2:21
  Speaker 1: this l e I number. So, Phil, what do you
• 2:24
  Speaker 1: do on a day like today? Do you try and
• 2:26
  Speaker 1: do some some day trades or do you stick with
• 2:29
  Speaker 1: the plan to may and hold. No, you just you
• 2:32
  Speaker 1: you'd get you drive yourself crazy if you're trying to
• 2:36
  Speaker 1: day trade this market. Just focus upon the bigger trends.
• 2:40
  Speaker 1: And I think Paul laid this out beautifully. At the
• 2:43
  Speaker 1: very beginning, we had the sharpest decline from a record
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  Speaker 1: hid to a bear market in history, down thirty from
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  Speaker 1: mid February to mid March, and then over the last
• 2:54
  Speaker 1: five months the market's up. We've had the most powerful
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  Speaker 1: rebound from a bear market to an all time record
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  Speaker 1: high in history. Um, we still think that our our
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  Speaker 1: target of the SMP this ue was thirty. We're a
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  Speaker 1: little bit under the thirty four hundred level right now.
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  Speaker 1: I think the market is going to continue to grind
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  Speaker 1: up over the course of the next couple of months. Look,
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  Speaker 1: the easy money has been made. We're not going to
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  Speaker 1: be up another fifty in between now and the end
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  Speaker 1: of the year. But I think the bias is higher
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  Speaker 1: based upon the fact that the trough of the cycle
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  Speaker 1: was you know, back in March and April, and the
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  Speaker 1: numbers are getting you know, better over time, alright, So Phil,
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  Speaker 1: if there's numbers getting better, the economy is slowly coming
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  Speaker 1: out of that funk we had, that sharp contraction we
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  Speaker 1: had with the pandemic initially hit. What are some of
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  Speaker 1: the sectors that investors perhaps should be looking at here,
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  Speaker 1: you know, let's let's assume they don't own the big
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  Speaker 1: six or seven tech names. So one of the things
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  Speaker 1: that that we did as a firm had federated Hermes
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  Speaker 1: again about two weeks ago, was we're still two percent
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  Speaker 1: overweight stocks overall in our balanced delecation model, but we
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  Speaker 1: took a percentage point out of domestic large cap growth
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  Speaker 1: and added it to domestic large cap value. Value has
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  Speaker 1: underperformed growth by twenty one percentage points since the bottom
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  Speaker 1: of the cycle on Marche. We think that gap is
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  Speaker 1: going to close over the course of the next say,
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  Speaker 1: twelve to eighteen months. So so we still like technology,
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  Speaker 1: but just not the things. There are a lot of
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  Speaker 1: other technology stocks that are still doing well. We still
• 4:39
  Speaker 1: like healthcare, but we think that financial services and industrials
• 4:44
  Speaker 1: and consumer discretionary are going to get some love here
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  Speaker 1: as as the market begins to look at what doesn't
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  Speaker 1: have a name like Apple and Amazon and Microsoft and
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  Speaker 1: Netflix and Google and and maybe hasn't had a valuation
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  Speaker 1: completely exploited. So give me a good reason as to
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  Speaker 1: why it should, because Phil, it feels like, well, I mean,
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  Speaker 1: the value investors at the very least that I've been
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  Speaker 1: speaking to over the last six months to a year
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  Speaker 1: or two more have been waiting for that moment, but
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  Speaker 1: it hasn't come yet. Well, and I think that moment
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  Speaker 1: is now because the reality is that that the five
• 5:21
  Speaker 1: or six Fang stocks, which now account for something like
• 5:26
  Speaker 1: the market cap of the S and P, have had
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  Speaker 1: a phenomenal move. Those stocks have all doubled um. You know,
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  Speaker 1: we have not seen anywhere near that kind of a
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  Speaker 1: rebound in these other sectors that we talked about yet
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  Speaker 1: from an underlying fundamental standpoint, we've got v bottom recoveries
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  Speaker 1: in the housing market and in the auto market. We've
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  Speaker 1: got powerful recoveries we're seeing with a lot of the
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  Speaker 1: financial service companies, a lot of the consumer discretionary companies,
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  Speaker 1: but that's not fully reflected in their share prices. So
• 5:57
  Speaker 1: investors are are going to be sifting through the rubble
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  Speaker 1: here and saying, okay, so maybe the worst the coronavirus
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  Speaker 1: is behind us UH and and where there's still some
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  Speaker 1: attractive valuations left. And I think we've got to conclude
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  Speaker 1: that the thanks stocks have done really well, but those
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  Speaker 1: five or six stocks are not the entire stock market.
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  Speaker 1: There are other companies that deserve to get back to
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  Speaker 1: normal valuation levels over the course of the next twelve
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  Speaker 1: to eighteen months. Phil, it's always a pleasure of speaking
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  Speaker 1: to you, and don't go completely crazy watching this market today,
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  Speaker 1: Phil Orlando federated Herme's investors. I hear him though, Paul,
• 6:37
  Speaker 1: it's a difficult market to trade, you know. I mean
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  Speaker 1: you just you watch the same type of trade happened
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  Speaker 1: day after day after day, and you have there's so
• 6:43
  Speaker 1: much uncertainty out there. Well, today i'm Eastern Migualte leading
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  Speaker 1: index of Economic Indicators and it was better than anticipated
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  Speaker 1: in July, coming in at positive one point four percent.
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  Speaker 1: JUNS reading was revised up to three percent from two percent,
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  Speaker 1: so all told, not too shabby. Let's bring in somebody
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  Speaker 1: from the Conference Board. Atomana Zildrim a Senior director of
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  Speaker 1: Economics and Global Research at the Conference Board and you
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  Speaker 1: can tell us a little bit more about the subcomponents, Adoman,
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  Speaker 1: Thanks for joining. Was there anything in the leading index
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  Speaker 1: that set off alarm bells for you? Hi, good morning,
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  Speaker 1: Thanks for having me on the program. Um. Well, you know,
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  Speaker 1: when you look at the leading index, it is encouraging
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  Speaker 1: news that you know, we've got a third consecutive month
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  Speaker 1: of increase, but that increases coming in at a slower
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  Speaker 1: pace than the sharp increases that we saw in the
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  Speaker 1: previous two months. So that might suggest that the recovery
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  Speaker 1: is going to be losing steam going forward. So we
• 7:44
  Speaker 1: haven't seen sort of the same momentum continuing in the
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  Speaker 1: leading indicators. All right, So, Automan, we also had today,
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  Speaker 1: I had some jobless numbers come in. Uh you know,
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  Speaker 1: still uh north of a million jobless claims here. Talk
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  Speaker 1: just about kind of your view of the labor market here. Yeah,
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  Speaker 1: so the labor markets are obviously the the part of
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  Speaker 1: the economy that are uh showing the most pick up
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  Speaker 1: in leading indicators. Great contributions there, um, but there's still uh,
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  Speaker 1: you know, a lot of fragility in those labor markets
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  Speaker 1: really depending on the measures to contain the pandemic. Um.
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  Speaker 1: You know, when you look at UH. We've done some
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  Speaker 1: analysis across all fifties states. UH. And you know, the
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  Speaker 1: infection rates in about fifteen of those states UM are
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  Speaker 1: in the green zone. They've come down, but the rest
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  Speaker 1: of them are still showing a spreading virus. And those
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  Speaker 1: amounts to about of economic output produced by those states
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  Speaker 1: when you put them all together. UM. So that does
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  Speaker 1: pose a major risk for having to have more furloughs
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  Speaker 1: and layoffs and a fragile states for the labor markets. Yeah.
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  Speaker 1: And of course we already saw the initial doubles claims
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  Speaker 1: take up last week. So there are ten components to
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  Speaker 1: the Leading Economic Index, including things like average weekly hours
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  Speaker 1: from manufacturing, you know, manufacturers, new orders, and then other
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  Speaker 1: things like the leading credit Index. Give us a clue
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  Speaker 1: as to where you're spotting the most fragilities in the subcomponents.
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  Speaker 1: Right in the latest months, UM, the sort of negative
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  Speaker 1: contributions are coming from UM, you know, some of those
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  Speaker 1: indicators of financial conditions UM, and also from new orders
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  Speaker 1: and manufacturing UM. But maybe most importantly is consumers outlook
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  Speaker 1: for business conditions UH. And consumers are really affected by
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  Speaker 1: what's going on in the labor markets of high unemployment
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  Speaker 1: rates and that keeps their confidence level low. And uh,
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  Speaker 1: and that's why you know, at the confer Sport, we're
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  Speaker 1: thinking that the the final months of the year is
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  Speaker 1: going to see a recovery that's losing steam and maybe
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  Speaker 1: even we might see UH negative GDP growth rates continuing. Alright,
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  Speaker 1: So so Automan, I guess the question for a lot
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  Speaker 1: of people is are we still in a recession or
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  Speaker 1: are we in the early stages of a recovery? And
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  Speaker 1: how fragile is that recovery? I guess yeah, Well, as
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  Speaker 1: you know, the recession started in in February, UM, and
• 10:33
  Speaker 1: when you look at the coincident indicators, which are kind
• 10:38
  Speaker 1: of the indicative of whether we're in a recession or not,
• 10:40
  Speaker 1: we see the same type of rebound in those UM,
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  Speaker 1: but they're still showing an economy that's in a deep hole.
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  Speaker 1: There's still a long way to climb out of that.
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  Speaker 1: UM and Uh, I think it it remains to be seen,
• 10:55
  Speaker 1: you know, when we come out of that recession, recession
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  Speaker 1: back into you know, fully posited this uh growth rates.
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  Speaker 1: How much of the answers to all of those questions,
• 11:05
  Speaker 1: Ottoman depend on stimulus further simulus UM, Well, uh, we
• 11:13
  Speaker 1: are seeing sort of the the earlier rounds of stimulus
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  Speaker 1: waning and looking ahead, you know, unless uh more stimulus
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  Speaker 1: comes to households to keep their uh spending sustained. UM,
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  Speaker 1: I think it will figure in into uh the risk
• 11:32
  Speaker 1: about this outlook going forward, and I would say, uh
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  Speaker 1: quite a bit depends on the stimulus as well as
• 11:40
  Speaker 1: how how the pandemic kind of fair is going forward
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  Speaker 1: into the next few months. Automan, just quickly about thirty seconds,
• 11:47
  Speaker 1: what is the conference boards GDP call here for? Yeah,
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  Speaker 1: so for on an annual basis, for UM, we're estimating
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  Speaker 1: about almost uh five sent decline in the economy over
• 12:02
  Speaker 1: twenty UM and going into one UM the economy can
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  Speaker 1: recover back into about its long term growth, which we
• 12:13
  Speaker 1: estimate to be about about two percent, so slightly below
• 12:17
  Speaker 1: that long term potential growth UM and uh again, you
• 12:21
  Speaker 1: know a lot of that really depends on, you know,
• 12:23
  Speaker 1: how the pandemic continues, whether we get a resurgence, sustained
• 12:28
  Speaker 1: resurgence that leads so lockdown or not. Automan, thanks so much,
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  Speaker 1: as always, always appreciate you giving us your opinions and
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  Speaker 1: sharing the data from the conference board. Automan also DRUM
• 12:40
  Speaker 1: Director of Economic Research and Global Research chair for the
• 12:44
  Speaker 1: Conference Board joining us on the field better than expected
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  Speaker 1: numbers four July Annie, but some caution for their mainer. Yeah,
• 12:51
  Speaker 1: you're hearing it from all the economis out there. We
• 12:53
  Speaker 1: came off such low levels that even you know, beating
• 12:58
  Speaker 1: these estimates really doesn't mean all that much. And if
• 13:00
  Speaker 1: you look at pre pandemic numbers or year over year number,
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  Speaker 1: is it's really almost you know, almost apprising. Yeah, it's interesting.
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  Speaker 1: So again it is that create more pressure for fiscal
• 13:11
  Speaker 1: studias out of Washington. One of the most read stories
• 13:17
  Speaker 1: on the Bloomberg terminal today is about New York City
• 13:21
  Speaker 1: landlords aggressively calling tenants in the financial industry and other
• 13:25
  Speaker 1: initiaties saying, hey, get your people back to work. It's
• 13:28
  Speaker 1: a fascinating story. It's a Bloomberg exclusive, and we have
• 13:31
  Speaker 1: one of the reporters with us. Natalie wong Us, commercial
• 13:35
  Speaker 1: real estate reporter for Bloomberg News joins us. So not likely,
• 13:38
  Speaker 1: just a fascinating story. Here, give us kind of the
• 13:40
  Speaker 1: the the key takeaways that you uh and shree not rodging,
• 13:44
  Speaker 1: your co author. Other reporter on the story reported, Hi,
• 13:49
  Speaker 1: thanks for having me. Um. Yeah, so we've been making
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  Speaker 1: some calls in the past few weeks basically to top
• 13:55
  Speaker 1: New York City real estate landlords and to you know,
• 13:58
  Speaker 1: some of the finance executives and lots of people in
• 14:01
  Speaker 1: the city who are kind of counting on a return
• 14:03
  Speaker 1: to the offices. And what we're hearing is that even
• 14:05
  Speaker 1: though the offices have been opened for quite some time now,
• 14:09
  Speaker 1: a lot of them are still quite empty. Um And
• 14:12
  Speaker 1: basically the argument that a lot of these landlords are
• 14:15
  Speaker 1: making is that it's basic pacific duty to have these
• 14:19
  Speaker 1: big companies start to bring the back their workers in
• 14:22
  Speaker 1: a more aggressive way because a the buildings are safe.
• 14:25
  Speaker 1: But the most importantly or the argument that they're making
• 14:27
  Speaker 1: is that a pacific beauty because if there's no office
• 14:31
  Speaker 1: workers and a lot of central business district areas in
• 14:34
  Speaker 1: New York City are not going to thrive. And a
• 14:37
  Speaker 1: lot of the small businesses that prop up these areas,
• 14:40
  Speaker 1: but the retailers and ellis, the coffee shops, etcetera, they're
• 14:43
  Speaker 1: not going to survive and they're they're going to die
• 14:46
  Speaker 1: and there's gonna be nothing to come back to. So
• 14:48
  Speaker 1: it's the main argument that they're making. So these major
• 14:51
  Speaker 1: landlords and developers are saying we love our city. They're
• 14:54
  Speaker 1: not saying pay us rent again, no, not not not
• 14:58
  Speaker 1: not not for this angle. If they're speaking with basically
• 15:01
  Speaker 1: their you know friends, some of their biggest tenants, UM,
• 15:05
  Speaker 1: the people that have the ability to bring black hundreds,
• 15:07
  Speaker 1: if not thousands of workers into the city. We're talking
• 15:10
  Speaker 1: about the golden stacks of blackstones, the black rocks, UM.
• 15:13
  Speaker 1: And they're basically making a plea to say, listen, if
• 15:16
  Speaker 1: you love New York City and we've all done so
• 15:18
  Speaker 1: well UM thriving from New York City, then it's kind
• 15:21
  Speaker 1: of our reponsibility to come back now, UM, to save
• 15:25
  Speaker 1: New York City. So, Natalie, what has what's been a
• 15:29
  Speaker 1: sense of the response they're getting. So what I'm hearing
• 15:33
  Speaker 1: is that it's a little bit mixed. Some of the
• 15:35
  Speaker 1: CEOs that we've talked to UM has said that the
• 15:39
  Speaker 1: response has been sort of lukewarm because obviously there's so
• 15:42
  Speaker 1: much uncertainty around the virus, around potential surging and even
• 15:45
  Speaker 1: schools reopening in the city. UM, So obviously no one
• 15:49
  Speaker 1: wants to go out and make a big gold statement
• 15:51
  Speaker 1: to bring their workers back when there's no certainty of
• 15:53
  Speaker 1: exactly how to do that. UM and on the other
• 15:57
  Speaker 1: side of the coin, we're also hearing that some of
• 15:59
  Speaker 1: the CEO's are agreeing. We had one of our real
• 16:03
  Speaker 1: estate executives say that from the CEOs, he've spoken to you,
• 16:07
  Speaker 1: and he's spoken to well over a hundred tenants UM.
• 16:10
  Speaker 1: It seems like they're going to be making an aggressive
• 16:12
  Speaker 1: push to bring back far more workers between their workforce
• 16:17
  Speaker 1: following Labor Day. So we'll have to see if I
• 16:20
  Speaker 1: actually follows through. I mean, I can see how CEOs
• 16:23
  Speaker 1: want things to be normal. Everybody does. But there's also
• 16:27
  Speaker 1: the health aspect, and there's also the mental health aspect.
• 16:30
  Speaker 1: If people are more comfortable being out of the office
• 16:33
  Speaker 1: and working from home than I also can see why
• 16:37
  Speaker 1: CEOs would be okay with that. Ultimately, it's what you prioritize, right, Natalie.
• 16:41
  Speaker 1: And developers prioritize the places they develop clearly, and if
• 16:45
  Speaker 1: they were developing suburban areas, I'm sure they would be
• 16:48
  Speaker 1: making the opposite phone calls to these CEOs and saying, hey, listen,
• 16:52
  Speaker 1: great opportunity here to have you know, X y Z
• 16:55
  Speaker 1: Town and Upstate New York thrive. But CEOs a bang
• 17:00
  Speaker 1: some major firms, they probably prioritize their workforce and profits
• 17:04
  Speaker 1: in you know, different orders. All right, I think it's
• 17:08
  Speaker 1: a Turkey time for all these different parties. And your
• 17:10
  Speaker 1: right sate Land lads do have a lot riding on this.
• 17:12
  Speaker 1: I mean, over the past few decades. The one that
• 17:14
  Speaker 1: we've spoken to have in buts so much capital into
• 17:17
  Speaker 1: big real estate developments in the city that really rely
• 17:20
  Speaker 1: on the slow of thousands of office workers touris them
• 17:23
  Speaker 1: and the ability of New York City to continue their talent.
• 17:25
  Speaker 1: So if people don't have to come back to the
• 17:27
  Speaker 1: office and some of these you know, vibrant retailer small
• 17:30
  Speaker 1: businesses starts diet, there's a lot less reason for talent
• 17:33
  Speaker 1: to want to come into the city at all. Um.
• 17:36
  Speaker 1: And and that's when that alsman stands to valid. But
• 17:38
  Speaker 1: obviously behind all of this is a big pandemic and
• 17:41
  Speaker 1: major health list um that kind of underlie the reason
• 17:44
  Speaker 1: for many people wanting to stay at home. So what
• 17:47
  Speaker 1: we're hearing now is that CEO is still kind of
• 17:49
  Speaker 1: taking the time it's in August lower time be here
• 17:52
  Speaker 1: to kind of assess exactly how and if they should
• 17:56
  Speaker 1: start um bringing people back and behind all these cumber yeah, yeah,
• 18:03
  Speaker 1: I mean they're not just talking to the videos to
• 18:06
  Speaker 1: They're they're really talking to the Governor's office there, talking
• 18:08
  Speaker 1: to a very influential local coalition for top businesses in
• 18:12
  Speaker 1: New York City and also pushing uh the Mayor's office
• 18:16
  Speaker 1: to really ramp up this return to work, back to business.
• 18:20
  Speaker 1: You know, New York's open for business again campaigns um.
• 18:23
  Speaker 1: So it's kind of all across the board. These landlords
• 18:26
  Speaker 1: are really going out of the way to do that now,
• 18:29
  Speaker 1: not just real quickly here. What's your sense is the
• 18:31
  Speaker 1: average when people will be coming back is like a
• 18:34
  Speaker 1: half by the end of the year, maybe by next year.
• 18:37
  Speaker 1: What's kind of the consensus you're hearing. It's really hard
• 18:42
  Speaker 1: to tell. Initially we were hearing that more people were
• 18:45
  Speaker 1: really going to come back after Labor Day. That's kind
• 18:47
  Speaker 1: of what we've heard from that one studeo that I
• 18:49
  Speaker 1: spoke to. But according to a recent survey of top
• 18:52
  Speaker 1: a hundred poty six companies done in New York City,
• 18:55
  Speaker 1: they're estimating that just over a half is expected to
• 18:59
  Speaker 1: return by summer. So it seems like that's continually crushed
• 19:03
  Speaker 1: back and a lot of people are writing on waiting
• 19:06
  Speaker 1: for a vaccine before making that decision. So it seems
• 19:10
  Speaker 1: to be considering there's a lot more in certainty India. Yeah, Natalie,
• 19:13
  Speaker 1: I mean that's basically what Max Nison said as well.
• 19:15
  Speaker 1: He's you know, following all of the vaccine trials and
• 19:18
  Speaker 1: so on, and he's preparing for something sort of you know,
• 19:22
  Speaker 1: well into next year as well. We shall see though
• 19:24
  Speaker 1: there could be some some opening sprouting and perhaps some
• 19:28
  Speaker 1: reclosings as well. Not only long, it's a fantastic story
• 19:31
  Speaker 1: and a real insight into how these developers and and
• 19:35
  Speaker 1: ceo s work and how they think and how they
• 19:37
  Speaker 1: communicate with each other. Do check it out on Bloomberg
• 19:40
  Speaker 1: dot com. It's time for Bloomberg Opinion. We can do
• 19:44
  Speaker 1: that today with Max Knees and biotech, farm and healthcare
• 19:46
  Speaker 1: Calumness for Bloomberg Opinion and actually got a fascinating column
• 19:50
  Speaker 1: out there. It's about perhaps a newer, better, more effective
• 19:54
  Speaker 1: and hopefully fester test for the coronavirus. Tell us about it. Yeah,
• 20:00
  Speaker 1: absolutely so. The column was about an effort developed by
• 20:04
  Speaker 1: researchers at the Yale School of Public Health. Um, it's
• 20:07
  Speaker 1: a saliva test, not not the first one of these.
• 20:10
  Speaker 1: That's been developed. But but the one that's the thing
• 20:13
  Speaker 1: that's unique about this one is that UM instead of
• 20:16
  Speaker 1: requiring a kind of a you know, a complex series
• 20:19
  Speaker 1: of steps and UM expensive reagents that's actually run the test,
• 20:25
  Speaker 1: all it takes is a widely available chemical and some
• 20:28
  Speaker 1: heat UM, and it's it's something that just about any
• 20:31
  Speaker 1: lab can run UM as low as it as the
• 20:33
  Speaker 1: proper equipment and the researchers are Basically it's it's not
• 20:37
  Speaker 1: a test that you have to send to them. It's
• 20:40
  Speaker 1: something that they're licensing out for free that that anyone
• 20:43
  Speaker 1: can run as long as they get the process right.
• 20:46
  Speaker 1: So UM, you know, easier on patients, easier to run UH,
• 20:50
  Speaker 1: and hopefully one of the many tools needed to get
• 20:54
  Speaker 1: to a place where we're testing isn't such a weight
• 20:57
  Speaker 1: around the neck of the response and need states. Yeah,
• 21:01
  Speaker 1: it's pretty insane that this far into it their states
• 21:03
  Speaker 1: out there that aren't even able to test their healthcare
• 21:06
  Speaker 1: personnel max. How reliable will this test be? UM? Quite reliable.
• 21:12
  Speaker 1: It's still a PCR test, so kind of in the
• 21:16
  Speaker 1: more accurate general family and UM, you know, it's probably
• 21:20
  Speaker 1: not quite as accurate as sort of the kind of
• 21:24
  Speaker 1: standard test you know, swab all the way back, you know,
• 21:28
  Speaker 1: halfway through your skull um with that more complicated process.
• 21:31
  Speaker 1: But it's close, and it's it's more than reasonable if
• 21:36
  Speaker 1: you you know, if you need to do mass testing
• 21:38
  Speaker 1: to to accept a little slightly lower potential accuracy, but
• 21:42
  Speaker 1: still you know, a good level in order to potentially
• 21:47
  Speaker 1: expand the number of tests and and the ease of
• 21:50
  Speaker 1: collecting and running them. So you know, they're always trade ups,
• 21:53
  Speaker 1: but this, this seems like a good one to me. Max.
• 21:56
  Speaker 1: Where are we in terms of getting this test as
• 21:59
  Speaker 1: it hasn't been a proved and if so, is this
• 22:01
  Speaker 1: something that can be where are we in terms of
• 22:03
  Speaker 1: distributing making it available? Um? Yeah, so it's it's it
• 22:07
  Speaker 1: got approved over the weekend, and the next step is
• 22:10
  Speaker 1: basically for for labs to kind of you know, get
• 22:14
  Speaker 1: up and start running it, to talk to the researchers
• 22:16
  Speaker 1: and and get their license. Um the license is more
• 22:19
  Speaker 1: or less just conditional on them having the right type
• 22:22
  Speaker 1: of machine and agreeing to charge a low price. The
• 22:26
  Speaker 1: other benefit of this test very very cheap. So it's
• 22:29
  Speaker 1: something that at least theoretically labs should be able to
• 22:32
  Speaker 1: to get up and running very quickly because it's so simple. Um,
• 22:38
  Speaker 1: you know how long that will actually take, we'll see,
• 22:40
  Speaker 1: But but there are many barriers in the way of
• 22:43
  Speaker 1: it being used, you know, quite broadly, quite soon, hopefully, Max.
• 22:49
  Speaker 1: Is anybody in the community talking about what would happen
• 22:51
  Speaker 1: if there were to be a change in administration in November,
• 22:54
  Speaker 1: because you know, I mean, yes, we would love if
• 22:57
  Speaker 1: this all happened sooner, but technically won't a tween months
• 23:00
  Speaker 1: away from that day and and sort of six months
• 23:02
  Speaker 1: away from January obviously when a new administration would take over,
• 23:05
  Speaker 1: if there were to be one, Would it change things materially?
• 23:10
  Speaker 1: I think that it's it's quite evident that it would, um,
• 23:15
  Speaker 1: you know, in terms of just kind of getting back
• 23:17
  Speaker 1: to what I would describe as a more normal response
• 23:23
  Speaker 1: to the pandemic, which is to say, one that is
• 23:26
  Speaker 1: publicly led by public health authorities, with um, a little
• 23:31
  Speaker 1: bit less an injection of politics and and um, you know,
• 23:36
  Speaker 1: strange of diversions, you know, affections for particular medicines, um,
• 23:42
  Speaker 1: less than consistent regard for scientific evidence. UM. So yeah,
• 23:47
  Speaker 1: I think a lot of things will be different on
• 23:50
  Speaker 1: you know, both the kind of communication and policy front. Um.
• 23:55
  Speaker 1: You know, one would hope that because obviously what's happening
• 23:58
  Speaker 1: now isn't going especially Max, give us an update if
• 24:02
  Speaker 1: you would on kind of you know where we are
• 24:05
  Speaker 1: in terms of vaccines. I know there's you know, roughly
• 24:07
  Speaker 1: a dozen entity slash companies groups out there that are
• 24:11
  Speaker 1: you know, their stages. Just give us a kind of
• 24:15
  Speaker 1: lay of the land right now. Sure, so there are
• 24:19
  Speaker 1: a few efforts that are sort of the furthest along,
• 24:23
  Speaker 1: those being Fiser and Maderna's RNA vaccines which which started
• 24:29
  Speaker 1: UM final stage US trials at the end of July.
• 24:32
  Speaker 1: Unclear exactly when data will come on those, but but
• 24:36
  Speaker 1: that's the best hope for for the first um kind
• 24:39
  Speaker 1: of read out something that that you know, getting data
• 24:41
  Speaker 1: that could eventually lead to to an FDA approval. UM.
• 24:45
  Speaker 1: But you know that that could happen in the in
• 24:48
  Speaker 1: the autumn probably on the later side. It just depends
• 24:50
  Speaker 1: on how quickly they can enroll and how many you know,
• 24:54
  Speaker 1: how how the data accrues. But but the cautionary note
• 24:58
  Speaker 1: there is, you know, getting that that positive data readout
• 25:02
  Speaker 1: doesn't translate to vaccine immediately available UM you know with
• 25:06
  Speaker 1: customer if if it works, still have the kind of
• 25:10
  Speaker 1: mass manufacturing and distribution piece to figure out, which is
• 25:14
  Speaker 1: the substantial effort in its own right on top of
• 25:18
  Speaker 1: you know, the remaining risk that that the trial takes
• 25:20
  Speaker 1: a while, the vaccine doesn't work. So um, you know,
• 25:23
  Speaker 1: very promising progress, but but still a good amount of
• 25:27
  Speaker 1: uncertainty and and wait to come. Luckily with so many
• 25:30
  Speaker 1: programs and others moving towards those large scale trials, Uh,
• 25:34
  Speaker 1: there there's you know, even if something fails, there are
• 25:37
  Speaker 1: plenty of backups. Yeah, I mean, how does it impact
• 25:41
  Speaker 1: the trials and also then the potential for success of
• 25:47
  Speaker 1: one of these vaccine candidates that there will be also
• 25:50
  Speaker 1: the flu vaccine going out soon and you know there
• 25:54
  Speaker 1: will be more doses than ever being administered this year. Yeah,
• 25:58
  Speaker 1: that that's kind of proof. A public health perspective really
• 26:02
  Speaker 1: really important. Um, you want to avoid you know, similar symptoms,
• 26:07
  Speaker 1: similar vulnerable populations. Let's take suy to create a lot
• 26:12
  Speaker 1: of confusion and extra burden on the system. Um. I
• 26:16
  Speaker 1: don't think that those efforts should should necessarily interfere with
• 26:20
  Speaker 1: trial recruitment. Um. If anything, that that could be a
• 26:23
  Speaker 1: good way to you know, people already coming in for
• 26:25
  Speaker 1: a shot to try and recruit more directly and especially
• 26:29
  Speaker 1: target the populations that that are a little bit kind
• 26:32
  Speaker 1: of running behind and recruitment. So I'm hopeful that you
• 26:35
  Speaker 1: know that that effort succeeds and that it can be
• 26:38
  Speaker 1: parlayed into both you know, good vaccination infrastructure for of
• 26:42
  Speaker 1: an eventual COVID vaccine in a way to to maybe
• 26:46
  Speaker 1: get an answer faster on multiple vaccines. Max just going
• 26:50
  Speaker 1: to put you on the spot, but we won't hold
• 26:52
  Speaker 1: you too, as we will never play this again. When
• 26:54
  Speaker 1: are you planning for life to return to a quote
• 26:56
  Speaker 1: unquote normal with yourself and your own family? Oh, it's
• 27:02
  Speaker 1: it's likely to be sometime well into next year. Uh
• 27:07
  Speaker 1: And and my my answer comes from kind of two
• 27:09
  Speaker 1: specific points. One that you know, having enough vaccine to
• 27:14
  Speaker 1: to get some sort of meaningful level of her immunity
• 27:18
  Speaker 1: where you'd be confident enough to to sort of fully
• 27:20
  Speaker 1: get back to normal, that's just going to take a
• 27:22
  Speaker 1: long time because of those manufacturing distribution stuffs. And the
• 27:26
  Speaker 1: second is either the high amount of uncertainty about exactly
• 27:30
  Speaker 1: how effective the vaccine will be, huge range of potential
• 27:34
  Speaker 1: outcomes there if it's only you know, quite modestly effective,
• 27:38
  Speaker 1: you know, just clears the FDA. Bar uh Max. Thank you,
• 27:42
  Speaker 1: Macnis and Bloomberg. Thanks for listening to Bloomberg Markets podcast.
• 27:48
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 27:51
  Speaker 1: or whatever a podcast platform you prefer. I'm Monny Quinn.
• 27:54
  Speaker 1: I'm on Twitter at Bonny Quinn swey. I'm on Twitter
• 27:58
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• 28:01
  Speaker 1: us worldwide at Bloomberg Radio m