Beta Testing Pfizer’s COVID-19 Vaccine

us too on YouTube by searching Bloomberg Global News. You know it's interesting here, uh, Sarah. I think the market is just really focusing on those the fiscal stimulus discussions, and again there is a deadline tomorrow. But I don't know what it's just the field doesn't look that great right here, even though the President is in fact pushing forward right you described as that it as on again,

off again. We could probably add four more on agains and off against to that, but it looks like and I've gone on some emails from investors to set today saying that the packages that have presented still look to be a non starter between the Democat, demo Crats and Republicans and it's just looking a bit unlikely ahead of the election. All right, let's set the business week agenda here, let's kick it off. We can do that with Gina

Martin Adams, chief equity strategist for Bloomberg Intelligence. He joined us on the phone from New Jersey, and Dave Wilson, of course, Bloomberg Stocks Editor UH, also on remote access from the great state of New Jersey. Gina, let's start with you here. You have a fascinating UH piece of research out talking about some of the underperformers and how this third quarter earning season maybe a catalyst. Yeah, I

think it can be. U. First, good afternoon, everybody. Welcome to Monday, and a little bit of a slow Monday so far, but not happy Monday, Happy Monday. You know what we talked about today in our note is a basket of oversold stocks that we follow on a weekly basis. We rebalanced the most oversold stocks in the spire and any given week tend to dramatically outperform over a week's time as they bounce off at very very low levels.

And what we've done in that note is highlighted that there are a few of those key oversold stocks that are due to report earnings this week, and they may have the opportunity to really change what has been a very sour tone um at least from the market response to earnings. So far, We've had tremendous reports out of the financial sector, really really strong beats, more than companies that have reported of beat expectations, and yet the price

action in response to those expectations as the negative. So we're looking for these reporters to potentially change that tone. On our shortlist of Verizon A ten team Las Vegas fans to watch this week, Dave, let's bring you in here because in addition to the names that Gina just named for us, will also hear from Tesla this week. Netflix. Sure, it's been a sour tone, but we are entering the second largest week of earning season of the season. What

are you keeping an eye on this week? Well, I mean, it's just a matter of how forthcoming our company is going to be when it comes to talking about their prospects for this quarter or next year. I mean, certainly one of the stories of is that the coronavirus let a lot of companies to which rather forecast. We've seen some of them come back. Others have been more reluctant to forecast even if, say their third quarter results are

relatively positive. So you know that that's definitely going to be worth watching as we proceed through all these earnings reports do in the next couple of weeks. So, Gina, you mentioned the banks here. What was your takeaway from the banks here? It seems like the numbers were pretty good, but the outlook was perhaps a little bit more conservative. Are you do you expect to hear some of that

going forward with some of these non bank companies. Yeah, I'm hopeful not, because I do think that that's what gotten the way of the banks is. You know, they

did come out and dramatically beat expectations. At a matter of fact, at the start of earning season, financial sector was expected to produce earning and earnings drop of nearly five percent, and just because of the banks that reported last week, that earnings decline is now expected to be less than three percent, So they didn't make a very big ustment to expectations. All of the SMP five is

virtually adjusting expectations higher for a third quarter. But that's where the buck stops, and that's the problem I think that the market is running into is analysts are not taking the cues from an incredible beating the second quarter and now it's looking like a very very strong beating

the third quarter to raise expectations into the future. As a matter of fact, this is what we're writing about for tomorrow is expectations into future quarters have basically just been stagnant and have been for some time because analysts are not taking any sort of confidence boost out of these earnings results. Dave mentioned the guidance has been relatively limited.

The guidance that we have gotten has been very strong, but it's just a handful of companies it's willing to tell us that it's very strong, and those are the companies that have been strong throughout for the most parts. So we need something to change. Um, we need a little bit more visibility to evolve. I think, Uh, if not, we're going to be sort of churning for a while waiting for that visibility to proven to one. I fear, do you know what are the underlying signals of the

market really telling us? Though? At the moment, I look at the NASAC one hundred right now, down about one percent down for a fifth day that's the longest losing streaks since August. But at the same time we have to remember small caps the Russell two thousands up more than eight percent this month. We've also seen some other cyclical areas of the market performing well. Can you take that and run with it as a bullish signal. Yeah.

We actually wrote about this in our chart book last Thursday that even though the market is churning, there are some really strong signals of rotation emerging in that churn. One of them is as you correctly identify the small cap index. We've also seen really key constituents of industrials and technology breakout are automated technical pattern recognition software recognized a breakout in Caterpillar as well as Micron last week,

So those are pretty strong indications of a rotation. And then this has been our scene since late August is we think the market is going through a rotation, rotating to potentially stronger earnings growers in the year ahead as opposed to the defensive stories which has really dominated the markets games from the March lows. And that rotation can

mean the market concern sideways for a while. But if we're rotating into supercyclicals, we're rotating into leading indicators or leading stocks, then it probably is a pretty good sign of things to come once we've reached the end of that charning process. Dave, real quick, what are you looking for earnings wise? What's the big one next up? IBM after the Clothes. That's gonna be the one to watch IBM after the closes. We're gonna ana Rona from Bloomberg Intelligence.

He's gonna join us right after the Clothes to kind of give us his quick take of those numbers. Gina Martin Adams, thank you so much for joining us, Chief equity strategist Bloomberg Intelligence, joining us on the phone from New Jersey, and the Dave Wilson, Bloomberg Stocks Editor, also on remote from New Jersey. We've got New Jersey covered. Sarah. I'm in Jersey as well, but you are in the studio. I am in the studio. I must say that it's a little bit more lively in the office today, but

still nothing like it used to be. Obviously, we miss you in here. That's right, we'll be Hopefully we'll get back there soon. This is Bloomberg Business Week with Carol Messer from Bloomberg Radio. We're really in the in that prime testing stage right now where there's a lot of tests going on around the world. Bloomberg News Adventure Capital reporter Ceremony Bride is actually taking part in one of those tests. Let's get a real sense of what we're

looking at their Sarah, thanks so much for joining us. UM. Tell us about what you're doing and why you're doing it well. Um, at the beginning of the pandemic, I just felt awful about everything that was happening, and the worst thing for me was how scared everybody was because nobody really knew what COVID was, how they could catch it, where when. So I just wanted to do something to

try to help the situation. So I thought I would look into vaccine childs and I did a lot of research online, figured out which child would be taking place in the San Francisco area where I live, and UM figured out how to sign up for one of those. And it was tough because even if you know the jug companies that are going to be testing vaccines, I

learned a lot. I learned they outsourced those tests two different clinics, so then you have to figure out which the clinics are doing it and then you have to call them and get in their databases. That eventually I managed to sign up for the Fiser trial. So Sarah, give us some color on what it actually looks like or feels like to be in one of these trials. I mean, how long have you been in it? How often do you have to be checking in? Do you have to go in for in person visits? What does

this all look like? Sure? So um. I went to this clinic in Walnut Creek, California, called the Diabolo Clinic. It was very well run um lots of distancing, uh, very kind of efficient feeling. I didn't you like I was wasting any time, but it was a substantial commitment of time. The first time that I went was probably about two hours, tons of paperwork. I met with a doctor,

I met with a bottomist. They did a COVID test um, but they don't really tell you any of the results because they don't want you to know if you're getting the placebo or the real thing. And also they don't know I have a patient number. All my records are somehow separated from my name, so you know. I asked them do you know what I got? And they said no, we have it all rigged up so we can't tell. And um the actual shot for what was either the vaccine or the placebo came at the end of that

first visit. It was very funny because there was this, you know, all I was being led from room to room for different tests and talks with different people, and then there was a big empty room, empty except for a huge blue chair. It almost looked regal like, look so medical at the same time, and I sat down and they gave me my shots. I felt fine that first time. UM I went back for a booster shot again, either the real thing or the placebo three weeks later.

That hit me pretty hard. You know. I can't say for sure if I got the vaccine or if it was just a coincidence that maybe I got a weird about a twenty four hour flu or something around the same time, but I did not feel good after that. UM. I've been back once more, about a month after that shot, so they could take blood work and so on. I imagine they're testing me for um COVID and antibodies again, and then I will go back three more times over

the course of two years total. So at the end of the two year study, I'll have been to this clinic six times, and I also have an app on my phone, so it's called child Max. I had to download it on my first visit. So after each of those shots, every single day, it would pay me and ask me are you experiencing nausea? As your temperature elevated. There were a bunch of questions, but I would have to go through an answer on that app. Since then, it now buzzes me once a week and just asks

are you experiencing symptoms? And I'm not, so I said no, and then there are no more questions on the app. Thank goodness. I haven't experienced symptoms. If I ever do, I'd imagine the questions again would be more comprehensive on the app. So, Sarah, do I take from this that fiser won't know whether this is this test is effective for two years, as opposed to people talking about weeks

or months trying to get some knowledge from these tests. No. My take, and this is just based on reading a lot of what my colleagues at Bloomberg has been reporting, is they'll have a pretty good idea. And let's say that I went UM and had the test or had the shot and UM I had the second one on September one, so I've already been back once they've measured my blood for antibodies. So let's say I did get

the real shot and not the booster. They already know whether my blood has antibodies in it, so I think they have a good idea. And there are thousand people like me across the country that have been a part of this trial. So they are getting those early results of whether the people who got the early tests have antibodies or not. They are starting to see that right now, and so then over two years they'll be checking for the people who got the real shot. Oh do they

still have antibodies six months later? Do they still have them a yearly? Earth do they still have them two years later? So it's I think that part is testing how long it might be effective, So really quick, just to wrap up, Sarah, is your sense then that the test, the study might not end for two years, but if there are signs that it works, they'll release it to the public before it's over. That's what they've said that

they're planning to do. And again, they'll know whether it's working right now, and then the rest of it is just to see how long it works for. And one more thing, I'd like to say that I felt really sick after that second test, So clear your schedules that once you do get the vaccines, if that was the real thing. Seravic right, thank you so much. We appreciate that. Servic right. Jeez a Vent, your Capital reporter for Bloomberg News, joining us on the phone from San Francisco. This is

Bloomberg Business Week with Carol Messer from Bloomberg Radio. Let's get to that M and A activity, Chronical Phillips buying Concho Resources for about nine point seven billion dollars in stock. That's the largest shale industry deal since a collapse in energy demand earlier this year. Let's get some details. We can do that with a good friend, Fernando Valley, oil and gas analysts for Bloomberg Intelligence. He joins us on the phone from New York City. So, Fernando, thumbs up,

thumbs down? Do you like this deal? And why? All right? Paul glad to be here. Definitely like this deal for for both really, if there are two to the premier players in the shale patch, and for Chronico you're getting an entity that already generates free cash flow has a lot of locations in an area at the Permian basin where you really didn't have any locations beforehand, and if

you're Conto, you're getting all stuck to you. Also, you still capture an eventual upside from an oil prester recovery in the next several years, and you're getting probably one of the few companies that's been all about generating pre cash flow from shale for the past ten years. Conico is really right sized for a lower for longer from the oil price crash. So they came into this downturn all lady prepared for an eventual prolonged weakness, and so

they're in really good shape. And Chronical really also helps lower the corporate declines. Remember, shale declines really quickly at first, and so Conical because they have exposure to l en G oil sands conventional, their corporate decline rates are closer to ten percent as opposed to you you've seen shale. So thumbs up all around from you, Fernando. How does this Conjo acquisition though, change Conco's production profile and strategy,

if at all? It doesn't really change their strategy, mostly because Concho is also being focused on more moderate growth and returns as opposed to some of the players that were growing at fifty to six percent for random and taking on significant leverage. The post post merger profile, they're still gonna be under one and a half times du more so as they captured a five million dollars and synergies they mentioned UM, so they're erg is really complementary.

What it does change is that increases Chronicle is consolidated the climate that I mentioned UM, but it does so in the core of the Permian basin, which is the premier shale basin. When you have the profile in the other asset the Chronicle has, it can be a complementary play. It can be something where they don't they don't need to grow it at thirties, and they can grow more slowly and and really get that cash return on capital that they've been targeting for a really long time and

they needed because their boxing position is dwindling. Their eagle fourth position is also slowing down considerably, so they needed to grow and the place to grow in the US at the current oil priced outlook is really the Permium basis. All right, Fernando, as a former investment banker, this is my next question, are we gonna do more deals in the shale patch? Are we gonna this just just the beginning. I mean the beginning really was Chevanovo and and this

is why, uh, certainly not the last one. We don't think. Uh. There is a need for the industry to right size for a lower for longer or a lower forever oil price scenario, and a lot of the companies were really preparing for sixty five seventy dollars and we just don't see that happening anytime soon. UM. You're either looking to improve your overall drilling locations, you may have produced too much and run out of the really good stuff UM in in your portfolio, or you could have an issue

with your balance sheet. So for Carnico, they were looking for more locations. For Concio, they were looking for a really strong balance sheet. UM. And that that makes sense where we see an issue or the players that have both run through most of its portfolio and also have significant leverage. So we think we'll see mergers in the high quality names, but the lower quality, highly leveraged names

they'll struggle to catch a bid. In this scenario. There's a lot of resources out there, not necessarily a lot of cap So it's really the high quality names that we're going to be looked at. So quick one to wrap it up. Yeah, good, it's a quick one to wrap it up. So if we have forty dollars a barrel lot, we're really lodged here for some time. Are there any other companies out there you see his potential targets? Uh,

there are certainly companies that will look to merge. Whether they are the targets or they are the consolidators, it remains to be seen. Because you could see high quality names like an E O G and Pioneer or Diamond Back Parsley Energy look to merge together with small or no premiums to reduce costs and improved locations. So interesting. All right, now we're gonna have to leave it there, but we're gonna have some more deal activity from you. I am sure. This is Bloomberg Business Week with Carol

Messer from Bloomberg Radio. Fascinating story in the magazine here, Uh coming up. It's um. You know, just as we thought, you're getting back to a little bit of normal in terms of the restaurants and going out to eat cases, particularly in Europe, surging putting the restaurant industry on its back foot again. Joel Webert joins us. He's editor Bloomberg business Week. He joins us from the remote line from Brooklyn. And Robert Vines, chief food critic for Bloomberg News, he

joins us on the phone from London. So, Joel, just when the you know that our friends over in Europe, I'm seeing stories in Paris and London and other cities in Italy as well, just trying to get on their feet again. Then the infections go back up. It's not good for their business, is it. It's a story UM everywhere, you know, and it's like just when you think you're like rounding a corner, Uh, you know, cases sneak back

up and or surge. And you know, restaurants in particular are the ones that have been you know, they were really been just like on the front lines of this UM. And you know, Richard Vines is the one who who came to us from UM London to say, let's let's talk about restaurants here. So so Richard give us a sneak peak of kind of what's been happening in the UK and and London as uh, infections go up and

and restaurants are are caught in the in in the vice. Yes, good evenings for none and well death has doubled in the UK in the past twelve days, so obviously the government's filely concerned. The last month he introduced the ten pm closing time for restaurants. It's quite serious. It's imagining sense want to eat and drink and ten o'quarck have to be out on the streets and that's been bad enough,

but now they just need to use further instrictions. You can't eat at restaurants with people who not in your household or in your group. So I'm single, for example, beings, basically I can't go to restaurants, so quite a serious situation. Just I'm myself at home because where am I going to go? I'm not going down to the pub on

my own. So Richard, I get the sense that last time around the subsidies really helped these restaurants, but obviously subsidies can't be too helpful if there are curfews in play, or if you just can't go out and eat at a restaurant, or there are higher restrictions when you speak with restaurateurs with restaurant owners, especially those that are more so local and mom and pop owned. What's their tone like right now? What's the feel? The tone is of

total desolation and depression. I'm afraid Corbyn and King which one of the big restaurant groups in London. They own a place called the wolves Ley which is known internationally. When the latest restrictions came in, they had two thousand cancelations in twenty four hours. And the British government has actually even very help and supportives to restaurants or to businesses in general, paying for wage for SAPO further and

so on. But those that subsidies easing down now and it looks like restrictions are coming back on more seriously. Whales just that it's on Friday's introducing total lockdown. Scotland introduced match strict measures and London, as I say, has come in the strict to measures. So I'd say the movie is quite depressed. And a group of restaurants, chefs and restaurants were demonstrating outside Parliament's day banging their pots and pans. But I don't think anyone really thinks that's

going to help. And Richard, what about the pub scene which has been. You know, it's obviously like a staple of English life in a way that that Americans envy and probably normal times. Um, what's what's that seem like? Now that um, you know the restaurants are are closed, what's the pub situation? Well, the pep situation is very bad because perhaps usually can stay open late. And now that again the ten first first ten o'clock closing is depressing. The thing is in U K's you can stand out

and drink on the street, which you can't to New York. Right, so that's something super go outside, whether drinks still have a good time, but generally businesses down seriously and pups of closing all the time. Alright, So Richard, give us a sense as to the um the density issue, like in art can can a restaurant be open and seed acent? Or is it because it's we have some limitations here in the States, Yeah, people, they are a limitation. It

depends on the place and so. But the main thing is the distancing between in the UK's distancing between different tables. So in in Copenhagen, for example, it's another since you've been looking at they've got maximum people fifty in the restaurant here, it's more requestioning distancing between tables, which means places can't generally can't operate much beyond sixty seven cent of capacity, which you know, when people are spending this

and then just a fewer customers and then going home. Eva, of course the numbers don't really add up. And Richard, what about delivery since that's become such you know, like at least here in the US, restaurants have just gone all in on it. It is, or take out for that matter, it's just sort of the new the new normal. Um howur is how our restaurants managing to pivot? And is it a permanent shift or or have they found their footing in a in a short term kind of way.

I think it's a permanent shift. It's really surprising some of the restaurants that are doing it. Daniel Hamm, the chef Madson Park, is doing home delivery from Marriages Hotel in month, which is something that would have been completely unthinkable before the virus, right down to Maple Japanese restaurants. So I've been hearing of one. He said they were a bit precious about their food, wasn't super put home delivery.

But now everyone's got to do it because people are eating at home, and this is restaurants have to get all the business they can. I think this is going to be a partnershift, but certainly in the short term it's a very extreme shift. It really is amazing to see how some of these restaurants have reacted. I know in New York City, just seeing the dining on the sidewalks, which is more so relevant in Europe in normal times.

But it's just amazing to watch. But I want to get your sense if these restrictions last or if they get worse over in Europe, do you have any sense of how long the average restaurant can last they can wait this out. I think a lot of restaurants will announced closure in the next month or two. Actually, I think it's it's going to be a fairly short term thing. Restaurants in the UK had a holiday on their their

rents during a lot down this on. Those bills are coming to you now, so rests are trying to operate with bow reduced income, new reserves and then facing huge bills. So I'm personally very pessimistic restroom past to say, even though I want everyone to do well, I think only the very best sort of people. The biggest pockets are going to survive deepest pockets Richard Vines, thank you so much for joining us. Just a fascinating piece there and uh,

you know our Hearts Guide. We really feel for the folks uh in Europe that are experiencing this surge and how it's impact in their lives, including on the restaurant business. Richard Vines, chief food critic for Bloomberg News, joining us on the phone from London, and of course Joel Webber, editor of Bloomberg Business Week on the remote access line from Brooklyn, thank you so much for joining us. And Sarah, that's a big issues we head into these colder months.

You know, I'm not sure, I mean people canna be standing outside the pub. Um, So it's really important for these businesses to try to get you know, some to kind of continue their business but in a safe way. Right It's a very big question, Mark one, what your restrictions look like. Also just the weather itself. As you said, I think about dining in the city right now, these restaurants are doing absolutely everything they can and people seem

to be grasping onto it and enjoying it. But if it is sub forty degrees outside and you have a heater. Sure Still, how willing are people going to be to actually go venture outside in a coat and eat outside? Yeah? Exactly right. And for starting to get to that point in the year where the heaters are good? Um, but are they enough here? And you know, when we're standing out there and there's a ten inches so I don't think we're gonna be sitting outside on the street, but

maybe some intrepid diners will see. You're listening to Bloomberg Business Week with Carol Messer on Bloomberg Radio Hi and Paul Sweeney alongside Sarah Panza. Carol will be back later this hour. I mean, Sarah, it's really interesting here. First Jack Ma brought us Ali Baba, the huge Amazon like type of company. Uh. Now he brings us another company called Aunt Financial. It is winding its way through the regulatory process on its way to an initial public offering.

A lot of people don't know that much about Ant Financial, but one person does is Andy Brown. He's editorial director for Bloomberg's New Economy. He joins us on the phone from New York City and he thinks, so much for joining us here. It looks like this I PO might happen relatively soon. What if you could just tell us what is and financial and how big is this thing?

So and financial is huge? Um, you can think about and financial as The Economist put it in its latest vision, as a combination of Apple Pay, PayPal, Venmo, Mastica, JP Morgan I shares with an insurance brokerage thrown in. So it's it's it's it's really it's a blog and it's all,

by the way, in one single app. So and is going public at the end of this month, and it's going to be the biggest I p O in history, way big of in Saudi Aramsa last year billion dollars or more, which would value the company about two eight billion dollars, bigger than any single US bank except JP Morgan. So Andy, as you wrote recently, data wars are the new trade wars clearly as you just described, and has

so much consumer information. Do we expect or already have we seen the US administration want to go after the likes of Aunt, just as we saw earlier this year, which I think we can call it the TikTok saga. Yeah, this is really a battle for the digital future of the world. Chinese companies are scooping up massive amounts of data personal data everywhere. So you think about this and

financial in China. Has it grew out of the payments system Ali pay this you bihooitous payments app that has seven hundred million or more Chinese uses, so basically and knows everything about the spending habits of pretty much everybody

in China. And they're now doing these joint ventures with companies around Asia, India, Thailand, Philippines, um sort of retrofitting that buying into companies, retrofitting them with and technologies, and so they have a lot of insight into into the data of about a billion or more people now around the world, and could easily double that number inside five years. And what's the relationship between the US government and and financial I mean, that's got to be a lot of

concern there. Yeah. So SO essentially has put into the category of national security risk. So Royters has reported that the US State Department under Mike Pompeo is trying its best to derail this this listing UH and um SO. It has proposed, according to Royter's that um and should go onto a blacklist. This entities list have only some

it would have only symbolic importance. Is not like Huawei, which is rarely dependent completely dependent actually on US technology in this case on and it would be largely symbolic. But it would make the listing. Would it would definitely complicate this listing. It would put a cloud of uncertainty around its global expansion. Don't forget, the US is not the holy country in the world that's worried about China

getting control over data. Europe has concerned. India, by the way, also banned TikTok uh not just the US, and as I said earlier, this really is a race for digital dominance around the world. I wonder though not even just the US, as you said, but other countries, how much sway, how much teeth do they actually have? I know Bloomberg Opinion described the TikTok deal as a quote empty threat. Once we saw it finally finished and through and President

Trump had approved it. How much can other companies or other countries, I should say, actually do? I think? I think it really does depend on on the company one and number two, it depends on uh their level of dependency on US technology UM. But also I think it's a lot of it really depends on an overall assessment of Chinese risk. The problem that the private sector in China face is that they are seen as essentially um

handmaidens of, or in throll to the Chinese state. I mean, private companies have an explicit mandate to serve the state. That's fine domestically insofar as it gives access to privileged capital, to protected markets. When they go overseas, they're they're they're trusted about as much as the they're as good as the Chinese state. And as we've seen from PW serve As just in the last week, levels of trust around

the world towards China plunging. So andy, what I mean this this could be a big issue because I know aunts big and obviously China looking at India. What are the US plans strategy given TikTok, given everything that's going on. Yeah, well see, so this is this is a big difference where you have TikTok, which really took the US by storm.

I mean it's tens of millions of active users, and financial actually has almost no business in the US unless you count Chinese travelers that are coming over to the US and and using and UH to access financial services back home. So you know, they made a big play in two thousand and eighteen to get to the Chinese market. They wanted to buy money Gram and Syphius. The agency that you know, UH that's foreign acquisitions in the US

turned that down. So that was a big US play which was completely derailed by the by by by the US government. Andy Brown, thank you so much for joining us. We appreciate it. Andy Brown, he's the editorial director for Bloomberg New Economy, joining us on the phone from New York City. And Sarah, this is gonna be interesting. This is gonna be as Andy was just reporting, is going to be potentially the big is IPO on record? Um and this company is just extraordinary. You know it was

once a part of Ali Baba. Just to give you a sense of just how big Ali Baba was before they spun this and financial off right, and Ali Baba does still own a third of and after spinning it out. But like you said, we think about the hype that was really surrounding Saudio Rampco when we saw that IPO. Imagine once this does go public, how much attention this is going to get across financial markets. Not just in

Hong Kong. Yeah, and it's gonna be interesting the again, as we're talking to Andy Brown about this, the relationship, the trade relationship, the tensions between China and the US. UH it played out we saw play out in TikTok on that racial where we ended up there. But this is a company that is even more strategic from both Chinese perspective and perhaps from the US perspective that might warrant UH some you know, closer um oversight by regulators

around the world. We have to see my coel journal now. But you let me drive. No, no, no, he's going to drug home. Please, I'll do the riding drivel lets me. I want to drive, Just drive, baby, question trying. This is the drive to the globe, Timmu. Thanks, we'll drying us down on Bloomberg Radio. All right, So I just got about eleven minutes Paul Sweeney left in today's trading session, and I feel like almost from the get go, it's just been like a rock slowly falling right going down

the hill. We're just off our lows, but nonetheless we're pretty much near it down about one and a half percent about the SMP and Nastack down about one in a third percent on the Dow Jones Industrial average. Let's bring in Michael Cougino. He is president and part the manager at the Permanent Portfolio family of funds approximately two point two billion in assets under management, and he joins us on the phone from San Francisco. Michael, it's good

to have you back with us. How are you not bad? Carl? How are you How are you doing? It's been a while in person, so it's great to be on. I had a thought listening to the montage on driving songs before this segment started. You guys gotta add Gary Newman here in my car. I will let early eighties my age demographic. I will definitely let our producer Paul Brennan

know that. Um, you guys are doing well. You're a Permanent Portfolio fund in the nine percentile for funds in this category of the past five years, and you're up I guess around seven percent on average annually in each of the past five years. What's working right now in this environment? I mean, we know big tech has worked really well, those fang stocks. What are you finding is

working well for you guys? Well? Broadly speaking, we tend to do better when markets are mixed an environment US are mixed, and you know, the last couple of years it's begun to be a more mixed picture than maybe the better part of the last ten years, which was you know, by S and P five hundred and by long bond funds and buying index and you did great, UM, and so you know, I think the next ten years are probably gonna look different. And as a result, I

think the markets have started to reflect that. What's worked for US so far this year has been i would say the growth stocks UM, you know, have come back very strongly in a variety of industries. For US. We were buyers UM in February and March. We were also

buyers recently in September, although not as great. We were nibbling in a lot of areas that we felt cut over sold and in the in the sell off as well as some you know, structurally sell off the areas like energy and materials and and some of the cyclical growth that that really is has lagged. UM. We'll also continue to hold some of our tech UM, and so that's worked well. I mean natural resources of you know, the begun to show some improvement, but they have a

long way to go reats. You know, similar all the issues on the economy coming out of COVID and what's going to happen with UH entities that own assets that need to rent space, whether it's residential or industrial, or office or retail. UM and bonds have been a slight contributor for us UM. We've been you know, low duration, high quality. We've found some opportunities in the short term investment grade credit markets, so we've also gotten some contribution

from bonds there. Hey, Michael, how about on the precious metal side, gold silver, I'm looking at gold here back up above nine announced. How are you doing that right now? You guys like gold? Michael? Right, yeah, you know what and I and I got I get into the stocks and bonds and didn't you know, neglected to mention the precious metals. The number one holding is that the number one holding in your fund gold gold is yes. So you know, I I mentioned industrial medals and and and

and materials. But you know, the alternative currency side of things, the gold and silver of obviously worked for us UM. And I think there's a variety of reasons for that. I mean, you have negative really just rates across the curve starting with the third year and end and um and even worse globally. So that's us, and they look even worse when you look at you know, rates around

the world. You have the uncertain environment with respect to COVID, you have the uncertain recovery, the duration, the length of the strength, the employment pictures mixed. You've got a really a lot of headline risk with respect to the election right now, um, and then what comes after that and so and and COVID really overrides it all given that we've never been through this, we've never shut down the

country before and then tried to bring it back up. Um. And it's uh, you know, it's gonna be two steps forward one step back, which we're not surprised by. But that's it. That is in fact what's transpired, and we expect that to continue. Well, it should gain momentum given pent up demands, slacking labor, slacking capital, I mean, all those things argue for a continued momentum growing situation. When we get a vaccine, when we get a viral, or just if we get hurt immunity or something like that.

So you know, there is an end to all this, and it's gonna be uncertain until we get there. Um. And since we've never been through it before, I really can't trust anybody's predictions about what's going to happen. And that's a big risk factor. But it's a vaccine, right ultimately, I mean, I don't think we expect her immunity to to fix this, so it's stay safe until we get a vaccine essentially, right, Well, that would be the one with the most certainty, but again we're we're dealing with

a lot of unknowns here. And I know people are like to say trust the science, but from my perspective, science has been all over the place, um, and it's probably been just as useful to use common sense, social distance, UM, be smart about how you're interacting and where um, as as pure reliance and any sort of science. I mean, I've seen so many contradicting studies over the last seven months, and it's it's hard to know what works today versus

a month ago. But I think when you use common sense and social distance and use your head, um, you can accomplish a lot. You're not gonna you're not gonna eliminate the risk, but you can minimize it. And uh, and I think the best way, you know it would be a vaccine. The most certain way to sort of snap your fingers and go would be a vaccine. It's an amazing pot. We didn't talk election. How did we

not do that? Fifteen days? Right? Yeah? So Michael continue, could you know, does it does it matter to you who ends up in the White House. I'm not talking about your political preferences, but in terms of the financial markets understood, Um, the I think of the short term no, Um, there's there's pent up demand and the economy. So regardless of who wins in the short term, they're gonna look like a hero. In terms of economic recovery, um and both sides, uh, you know, appear to want stimulus at

some level, whether it's before the election or after. And so from that standpoint, you have, you know, some alignment. What happens is after that, once that's sugar high of the initial recovery to pent up demand, all of that stuff begins to subside, then you have very different policy prescriptions that that really kind of coalesced around more government spending um and and that's going to drive economic growth on the Biden side, or more private sector spending, less regulation.

You know on the Trump side of things, and then it gets into philosophical issues whether you you know which one you believe is better long term, which one do you believe is going to give you the better rate to return? Um? And you know there's there's a lot of evidence, you know, I smart people can construct cases all over the map on that one. I think the other factor, UM would be that how is Congress made up?

We tend to focus a lot on the presidency, um, but the makeup of Congress, who owns which houses by what majority is also going to be issue. Uh So that matters. And I think investors generally have been so wrapped up in in the personalities, the headline, risk, etcetera, that I sense a lot of people haven't focused on policy yet and that may come to that may need need to be done or need to be better priceding going forward. All right, Michael Gugino, thank you so much,

President portfolio manager at Permanent Portfolio family of funds. Say that five times fast on the phone from San Francisco. Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or at Bloomberg dot com, and be sure to check out our daily radio show at two pm Eastern on Bloomberg Radio. And be sure to watch us too on YouTube by searching Bloomberg Global News