Biden’s Boost to Competition Promises Long-Run Gains

You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg Global News. It's a bunch of headlines. Tim and I just want to mention before we get into our next guest. The U s c d C updating its COVID nighteen guidance for kindergarten through high school, providing flexibility for local decision makers to determine what's needed

to safely keep kids in the classroom. We are, though, Tim, seeing infections rising across most regions of the world as that delta variant spreads that from the World Health organizations chief scientistic We're also seeing South Africa going through a third wave as it's just battering the country right now. And in Canada, residents in Ontario kulds the vast majority

of restrictions lifted in August. A tale of two different stories when we look around the world when it comes to the vaccine and with COVID, And then there's those late day headlines from Fiser yesterday looking for emergency authorization for a third booster desk. Let's get to it with Dr Ian lust Beta, clinical professor Medicine at n y U Land going on the phone in New York City. I and so good to have you here. Happy Friday. Um, I gotta start with the Fiser headline. We are all

trying to understand what's going on. Do we all need to be all of a sudden now a little worried about when our vaccine is going to wear off? When we need to get a booster. What's the conversations you guys are having at the hospital? Sure? Happy Friday, Thanks guys. So there's no question the Delta variant, the Indian variant, is really becoming a global dominant stream. I'm not surprising. We're really seeing evolution and action here right. The organisms

adapt to a changing environment. They tend to become more fit uh and outcompete other organisms even if they're similar. So what we're really seeing is the virus adapt and change and become more contagious, higher concentrations in sneezing or coughing. At this point, though it seems to be similar risk. In other words, we're not seeing more deaths really as a result of delta other than in people who are

not vaccinated. So for people who are not vaccinated, of hospitalized patients are now patients who have not received vaccines. So this is certainly an argument for the vaccine. The concern is that we are seeing some breakthrough cases. So I've certainly had my share of patients who have received both vaccines and who then become symptomatic with the delta variant.

And a lot of this data is really based out of Israel, where they were vaccinated before we were, and they're beginning to see more breakthrough case says as well. So that's really the concern. Why why is that Is it because of the delta variant? That's a great question. So it's it could be for a few reasons. One is, uh, even though we're seeing antibodies that do slightly decrease over time. I can tell you most of the patients that we check for spike protein, and we try not to check everyone.

I mean, that would be a waste of resources if you're checking antibodies on everyone who's who's been vaccinated UM. But in select people who may be traveling or have other issues, those antibodies are sky high. But it does look like over time, uh, and certainly in Israel UM that antibody levels are dropping. So probably a combination of slightly lower antibody levels and perhaps a more aggressive variant in DELTA is why we're seeing UM these breakthrough infections.

The good news is in terms of hospitalizations, and part of this is our data and part of it is Israel's. You know, we're seeing a range of effectiveness that drops from to about nine. So the vaccines are still very effective. The question is will that begin to wane over time?

The other question that comes up is should we be developing a delta vaccine, which does make sense, but maybe we should put our efforts into vaccinating more people than giving a third dose to people who have already received

you're preaching to the choir. So what's interesting though, is, and we've had this conversation this week, um Dr les Bader is that if you can't get those people to get the vaccine, you can't get to hurt immunity, and that increasingly gives the virus the opportunity to seize on two new hosts to continue to mutate, which could potentially I'm not I'm not a Susie pessimism or pessimistic kind of person, but it's it does open the or to creating a virus that is even more potent, more lethal,

and more contagious, contagious than what we're dealing with right now. Right, that's the reality of it. Right. So the longer the virus replicates globally, the higher the chance of another variant developing. I think it's inevitable that there will be you know, and other variants you know, lambda all the way out to Iota. Um. So we certainly feel that there will be more variants. The question is will they be potentially more lethal? It is an argument to get everyone vaccinated.

Of course, there's hesitancy, and rarely we are seeing you know, odd symptoms after people get vaccinated, and you know, you always have to tell patients, look, what is the risk of getting COVID versus the risk of the vaccine. The risk of you know, having a complication from COVID is far greater than the risk of a complication from the vaccine, although we do see a handful of the issues after that. But I agree with you. I think if if we can't get people every vaccinated and someone is willing to

take a third shot, that probably would provide some protection. Yes, yeah, Dr Les, just in twenty seconds, are we gonna be wearing masks again in the fall? You know? I think right now we're seeing people well protected. There's no real urgent concern. The fall is a few months away. I don't see any real concerns. I think we're beginning to de mask. If Delta really takes off for another variant,

we might have to rethink that approach. But right now people are taking their masks off and I think they're doing well. Let's get right back to Dr Ian lesbad Our, clinical professor of Medicine at n y U Land going on the phone in New York City. One more thing on the virus and then we want to move on. Um, what's the end game? You know, in terms of how you think Dr Lesbada, this works out. Is it just a case of a lot of people. I'm thinking of us.

I'm just looking at the U S situation. A lot of people get the vaccine and that helps create some kind of herd immunity. You've got other people who are going to get the virus. They're either going to recover develop their own immunity, or they're going to die off. Unfortunately to be so blunt, and then that's how we get to a better place. Ultimately, Well, this is a global problem, and that even though we like to focus

on the United States, we we really can't. Um at this point, I believe globally, out of eight billion, eight plus billion, people somewhere in the three billion range may have received you know one, one or more vaccines. We don't really have great data from countries like China and Russia, and we also really don't know how effective those vaccines are. They seem to be not nearly as effective as the you know, M R and A vaccines. I think, um, we are going through this for at least another year

or more. We've back in nineteen eighteen it took three years in multiple waves with a Spanish flu um and I think we're going to see a higher death count and higher disability, and it may be even years of post covid or long hal symptoms. Um, this is not a completely benign illness. Even if you get it. Loss of smell and taste and so forth may be transient, but there may be other issues. So we do need to work on things perhaps like ipmecton or other maybe

off the shelf medications or other treatments or preventatives. While we're waiting to vaccinate people, we really have not focused enough on that area of research, and I think we need to do that, and I think we still have kind of enough a rough year or two in the United States. I believe the as we said, UM, we still have a pretty good level of protection, you know, even against the delta variant. But in the areas of the country that are not vaccinated, they're going to have

an increase in hospitalizations and other problems. It's it's look, this is something that we are and we know we're gonna have to be living with for years. And as you mentioned the question of treatment as a question of getting more and more people vaccinated, Dr less bide A, well have you. I want to talk about the heat

wave that is hitting parts of the United States. California bracing for another weekend of heat that could set records temperatures above add ten degrees fahrenheit in some parts of the Central Valley of California. As a doctor, as a medical professional, how do people what do people need to know about surviving these type of heat? Very important? We're definitely seeing some global changes. Uh. Why and for how long?

We don't really know. UM. I do want to mention something called Ariel's Checklist, which people can google a R I E. L. Ariel's Checklist, and it talks about acclimating to the heat, uh, not hiking in the middle of the day, slowly acclimating, hydrating, wearing loose clothing, getting enough sleep UH, and determining the wet bulb globe temperature. In

other words, really what is the ambient temperature? And why this is very important is because, based on your age, health and activity, once the these temperature begins to rise, a lot of problems happen. There can be nausea, headache, dehydration, and once the body's temperature goes above one oh four often it's irreversible. You can have confusion, fainting, seizures UH, and death quite frankly, so once you get irreversible damage to the brain or the heart, uh, it's it's a

real problem. So it's very important for people to understand the difference between heat exposure, heat exhaustion, and heat stroke.

Heat stroke is really the life threatening, you know, condition, and to be very careful to get into cool areas, have some air conditioning, even if that's not available, to minimize your exposure, because this is often undiagnosed and people by the time they're symptomatic or often very far along with with body temperatures and core temperatures that are very elevated beyond what they are aware and people around them should pay attention and see if someone does not look

good when they're outside, respond right away. Don't think they're making this up. It's it's a very lethful uh and often under diagnosed condition. And increasingly we're seeing these hotter temperatures coming earlier and sooner and uh more frequent, uh in places that normally didn't like the Pacific Northwest. Yeah, that was shocking, crazy, crazy, crazy. UM. Thank you so much. Dr Ia los Pader, Clinical Professor of Medicine, m y U Lengo Medical Center on the phone in New York City.

You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So our tough story on this Friday, of course, present find signing that sweeping executive order. It's all about promoting competition across American industries and in the labor market. He's calling on regulators to take steps to lower drug prices, tough and murder enforcement in tech and banking, give workers more power

to change jobs and negotiate higher wages. There is a lot, I should say, there are a lot moving parts to this. Let's get to it and with what the Bloomberg audience needs to know. David McLachlan is Justice Department of Justice reporter for Bloomberg News, joins us on the phone from Washington, d C. David, this thing is wide ranging, it's far, it's sweeping. What do we need to know about the most important parts of it? Yeah, so it covers about

seventy two different initiatives and and proposals. Um And the basic idea is that, um, you know, competition and a trust enforcement is primarily handled by the Federal Try Commission and the Justice Department they review mergers and and UM

monopoly conduct and that sort of thing. But what the idea of this The idea of this order is to basically say to all government agencies that oversee different industries that you have a role to play in promoting competitions through rules and regulations, and that those agencies should be or could be doing more to promote uh competition in the market that they oversee. So is this about consumers winning? Is this about America winning against the rest of the

rest of the world? Of what is what's the endgame? I'm kind of a payoff kind of girl, Like, what what's the point? Well, what I think this is a response to is a concern that many economists, any trust experts have been raising over the last few years UM about industries UM becoming over the last couple of decades very consolidated. And we see that mostly or maybe primarily in the tech company in the tech industry, with the big tech companies like like Amazon and Google, et cetera.

But really it's an issue that UM many people see happening across the economy and the worry is that UM, it's leading to maybe higher prices, less choice for consumers. UM. There's also this labor market issue. You if you live in a town with fewer employers. This is definitely an issue in rural areas. You know, they have more leverage over you as a worker, and you have um less leveraged bargain for higher wages, which the President mentioned today.

So this is really an effort to go beyond tech the stories that tend to be in the news right now, to cover other industries, UM and help consumers and workers. Okay, that's what you know. It's funny. We were just talking with Till whatever Business Week and Eric Palcunas about David versus Goliath, and it was about engine number one going after x on mobile. Uh, and they had a big win. And is that what it's about, is David versus Goliath?

You know, individuals consumers who in many ways and and and some workers and we saw this play out during the pandemic, right that really got hurt hard and we're left behind. While we know that there were some workers that were able to work at home, there was no really disruption in their lives. Uh. You know, So is that what it's about, like getting to some of those inequities that we really saw big time during the pandemic. Yeah, because there's a plenty of research. Uh. And then then

then some people dispute this, but there is research showing that. Um. So when you when you have a monopoly or dominant firmative market, of course that company may have the power to raise prices and may lead to less choice. But but some people think they are wider macroeconomic effects, effects on productivity, UM and income inequality. Like the superstar companies may pay their workers very well, but others in the economy who may not be working at those companies might

be losing out. And so um, there are worries that that when not dominant firms or just a handful of dominant firms are controlling markets, there are bigger um problems that are being caused. Um. And so I think that's what the White and the White House is trying to get out with. So, David, that what happens now, because as we saw, we were listening to this, we were watching it, it was playing on our YouTube. When Biden signed this executive order, he was flanked by members of

his cabinet, by antitrust officials. What do they go into now in order to put this into action. Well, so a lot of this now gets into rulemaking and regulations, which UM kendy as you know, kind of a long

ruling process because it can involved court challenges. So so for example, one of the UM proposals are directives that is in the order is restoring net neutrality UM the requirements that Internet providers treat Internet traffic, but basically the same UM, and listeners might remember that that was a big fight for many years Obama tried to the Obama administration implemented that neutrality rule. They were challenged in the courts.

Eventually we're undone and so that went on for many years, so the impact was not immediate, and so I think that could be UM. I don't know if every proposal will be fought in the courts, but uh, some certainly will be UM. So it could take some time, but even some agencies like the FTC are already acting to

UM implement some of these ideas. Well. It's interesting when you were kicked off, you said, seventy two new different initiatives and proposals, all government agencies ever seeing different industries. It's all about being more competitive, and I was thinking, yeah, but it's an executive order, which could be overturned in a couple of years if there's a new president in the White House. But I do wonder is this potentially going to create some significant changes in terms of how

US big business operates. Well, that's uh, certainly the hope by by those who want more aggressive UM. Any trust and force countee a lot of problems in in different markets. UM. I mean, I think a lot of the directives in the in the in the order we're telling like the any trust enforcement agencies can get tougher on on mergers and so. Um that's a decision that the agencies will have to make abically based on the facts of specific deals.

But you know what they sort of does is it gives political support to enforcers and other regulators to take tougher action. They're not going to feel like they're out in left field or um, you know, unsupported. If they want to do something right now, they face their their their bossony this on Monday. If it's like, hey, wait a minute, we had that big signing, remember that. Um, yeah, exactly. Thank you so much, Davi McLaughlin for breaking it down

for US. Bloomberg News Department of Justice reporter on the phone from Washington, d C. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. Tim, what are you doing on Sunday? I'm going to be here. I'm going to be hosting, co hosting with that Lolo and Emily Chang, the special Billionaires going to space this one Richard Branson looking forward to

There's gonna be some cool stuff. And you know who's gonna be on the ground there in New Mexica, none other than a Bloomberg News is at Low reporter who's right now on the phone from San Francisco, right in between jumping up a plane getting back from Sun Valley about to getting another plane to head to Spaceport America. Ed. Are you tired yet? I'm tired, but I'm excited. You know, these are not bad gigs, They're great. Hey, So take us through exactly what's going to happen on Sunday morning

at nine am Eastern time. Yeah, that's a good that's

a good way place to start, right. So, the Virgin Galactic Launch System is a two part to imagine an airplane that is dual fuselage with a big wing that connects both sides, and then the actual spaceship is planted in the middle, so it takes off like a normal airplane, climbs and climbs and climbs to a height which is a little bit of a surprise to some people, but around fifty ft THENT and just context, that's about twenty feet higher than like a commercial airliner would fly that

we're crying across the United States, so it is it is pretty high attitude altitude. That's just the stage one. So you hit fifty feet and then then it's release, release, and the rocket part drops from the middle of the wing, and then it's engine ignites, and then it accelerates rapidly on an upward arc to around fifty to fifty miles above Earth's atmosphere, which is the point of controversy because there's a debate about whether that really is going into

space or not. Is it. Well, if you're on NASA, and I think NASA is a pretty good standard, you know to go by. NASA says that anything above fifty miles above the Earth's atmosphere above Earth is space that anyone goes beyond that point is technically an astronaut, but others disagree. The others say that the common line, which is sixty two miles above Earth, the kind of internationally

recognized boundary space, is true space. And Blue Origin you follow them on Twitter, They've been tweeting the differences between their system and their ambitions versus Virgin Galactics, and they say that Virgin Galactic are not going into space. Blue Origin, which is the company owned by Jeff Bezos, says that they simply are operating a high altitude plane. Okay, hold on, what do you think about this? Because here we are. This is not when they'se versus McDonald's duking it out.

That's a really good analogy. Why why is this happening? Because it's not like, you know, this is open to normal people yet, like who cares? This is cool? The last time that the Virgin Galactics CEO, Michael cold Glazier was on bloom Blow Television, he said, this is not about a race between two billionaires. Let's be honest, guys, come on, let's real. Jeff bez Us walked past me yesterday in some valley. I've shouted out to him, Jeff, how are you feeling about Blue Origin? How are you

feeling about July twenty, and he didn't reply. By comparison, Richard Branson has been on international media and TV for week drumming up interesting excitement about this. You know, when they do reach that fifty miles above a height, they will experience weightlessness. There will be six people on board total, two pilots for crew members. They call them crew members. They'll unbuckle and they'll float around for a few minutes.

And I've never felt or experienced weight listeners. I would love to believe me, but I personally would take that to be in space, because I'm not sure where else you could do that to a four day I think, I think you know the answer to that question. I do not have the capital to fund my my own space. But that's why I say this is a billionaire's race, because ultimately, you know, the near term ambition to These

two companies are funded by different means. You know, Virgin Galactic is a publicly traded company it was a des back and Blue Origin is bankrolled by Jeff Bezos. But at the end of the day, it's those two men that have made this happen, and they're putting themselves in pole position to be among a few people in history too are going into space, you know, as civilians. Well, this is all about the development of space tourism, right

and you look at Virgin Galactic shares. We've been talking about it this week on air on a tear this year, they've more than doubled. Is there a viable business that these billionaires, these space billionaires are creating and that that will be with us for years to come? So what Virgin Galactics say about this is that their business model and future profitability is based on the efficiency of manufacturing the space craft. Because there's is not a rocket that

just simply shoots straight up. It's a plane. It's more energy efficient. But they basically say that the way they go about building these these planes is that they can do this at volume and they can get regular flights. They say they charged around two hundred fifty dollars for

the first six d people that have signed up. They're not taking orders at the moment, they're not taking bookings, but they're very confident they're going forward that they will be cash flow positive and reach profitability based on the business model. There are others out there to disagree. I think we've discussed this guy that Elon Musk says that launching as a business has a peak of about three billion dollars a year, regardless of the payload that you're

sending up for him. The money's in the data, you know, Starlink, space, Internet, things like that, you know, and Elon Mask with respect is a good authority on this. But virgins Actic is very very confident that this is a viable business model. And Virgin's got Virgin Orbit, which is not connected to Virgin Galactic anymore, but it's still part of the Virgin empire. And you know the satellites, Yeah, it does, and for

for a very similar delivery mechanism. It's basically accustomed seven or seven houseitude and the rocket drops off the bottom and then from the altitude launches on a sort of arc. But same same result, right, They put satellites into orbit and the money comes from the data generated. So two hundred fifty apart for a trip times six hundred, a hundred and fifty million dollars. As your Galactic has almost twelvellion dollar market cap, it's and when went public was

a fraction of that. It's ten dollars a share because it was a fact. I gotta love it. I think continuing space exploration is is an interesting thing and I'm looking forward to that special. Thank you. It's gonna be fun day. I am. I'm bro journal now. But you let me drive? Oh no, no, no, no no home please, I'll do the riding drivel. I want to drive, Just drive, baby, question trying. This is the drive to the globe. Give me thanks. We'll drying us down on Bloomberg Radio. All right,

just about ten and a half minutes to go. We are heading towards Carol. Flies when you're having fun, flies when you're having fun. It has been a fun week and interesting weeks and volatility this week. And let's get to with Natty Level. She is senior US Equity Strategies that US Global Wealth Management. Nattie joining us on the phone in New York City. Nadia, good to have you here. How do you explain this week? We had some selling, we had some buying. It's a risk on trade today.

What do you believe investors are focusing on right now? Yes, it's so great to be here. Thank you for having me. Um. Yeah, So, in terms of the volatility this week, we do think that it has to do with a confluence of the things range and from you know, concerns around peak growth, labor supply shoulders, there's potentially courtailing growth. Obviously, the tels of variance and the emergent lambter variance is given some

pause and concerns around global growth. I do think that dope, that investors should be focused on the overall strong economic growth that we're expected in Q two and that trying to sort of continue into back half of the year and and then we expect to see above TRYD grow into twenties. It's gonna be okay, right at least for the next six months. Absolutely, it's going to be okay. Earnings kick off next week. We are expecting another strong quarter of earnings. And at the end of the day,

what dry at the stock market is earning. And we do think that ARN is a set up to beat. I mean, I'll unpack that just a little bit more for you. Wh we look at you two expectations, we think that they're just too low, right, what do you mean look at too low? But we are expecting growth on the SMP Carol, not enough really, because let's unpack that. You know, when you look at what what expectations are versus Q one is actually expected to decelerate, and so

we don't agree with that. You should not expect you should expect you one to be the lowest quarter of the year in a non recession every year. Right now, consensus expectation is for Q two to decline about eight percent versus Q one, which is just peculiar, given that economic growth into two is expected to be more than three percentage points acceleration from Q one. What drives earning economic growth? So it's economic growth is stronger in Q two.

For earn this growth should be even stronger than it was. And Q why do I am a bois can't tell for my voice say so, okay, So how does some how does an investor prepare for this? I think you. We continue to like the value trade. We know we saw some weakness in it over the last couple of weeks. We've seen growth outperformed value. Today is a better day for value. We think that trend would continue because we think that that's where the upside will be in earning.

The more economically sensitive sectors would like consumer, discretionary, financials, even energy, and those sectors tend to be in the value index, and so we expect them to beat on earn instant in coming weeks and that should help to propel those stuffs even further. So those are the sectors that we be looking to to to add to and from a value growth UM standpoint, we're looking to add to the value. Mhmm. So what about the names that

have really provided a lot of momentum? Uh, those big tech names, the big thing stocks have they already had their day in your view. In our view, they have had their moments. And the reason why they've had their moment recently, um is because race has p back right, and so that has allowed like valuations for those high valuation stock right. The discount rate has come down, and so that that caused the rocation in those tech stocks.

We think some of that is going to reverse and and and value will start to outperforming because we do think that interest rates are going to move higher. We're starting to see that again today. We expect that the yield and the tenure will get to two percent by year end, and that is not a favorable set up for how your value staw. So yeah, to see some headwinds. So then what happens to the high flying tech companies.

When interest rates go up like that, we expect them to stall out again as we star earlier in the year. We expect that head went to call back and we'll stall out. And that's why we can see up of our values. You think also economic growth tables. Those values have to sort of growth that we're seeing in value. It's just much higher than what we're seeing in the growth sectors. Two on the ten year by the end

of the year, that's your forecast. But we know the FED is willing to let things go a little hot. Do you think the Fed changes monetary policy significantly before the end of the year, whether it's reducing asset purchases uh and letting things to start to roll off the balance sheet, and do they do anything when it comes

to rates. So yeah, we do expect that this fad will start to mesh the message in the tape or and of the balance sheet at Jackson Hole or in September, and we expect that tape for it to start even in December or early next year. So that would be the change in terms of policy parts in terms of the interest rates and move in short en which we don't think that FAT is going to do that anytime soon.

We're looking for late early a lot of late early four before the FED starts to change rates exactly exactly a long time. That is a long time, and so a lot can happen between now and then. But as we know, the FAT is very focused on economic data, is very data dependent. But we think that we don't see anything on the horizon to do rail the economic growth that we're seeing, and so inflation transitory in your view,

transitory and our vie. Now we'll get we'll get t p I numbers next week, We'll get the producer prices next next week. Don't be surprised if those run hot. We already know that the FED has also agreed with that, and so we do expect them to run a little bit hot. But by the time we get into urine and two, we expect inflation to sort of normalize. So Nodia, what what derails this, this bull market? And when does

that happen? I think what could derail this? It tends to be FAT policy, But I think that the FAT is very careful this time around. Also, this you inflation regime that they have, you know, average inflation of the course of the side gives them a lot more flexibility. And also the fetres very much about the labor market, and so those numbers will be closely watched. So I think the chance of a set policy mistakes that we have seen in the past that tends to derail the

economy and the market, we think that probability is lower. Now. The other thing that, of course that we're all closely locked is these variants. But you got there, this will be managed. You've got you you know. It's it's interesting because everyone brings it up, and I think it just as a reminder that that is on everyone's radar because

that's the big outlier and that's the big unknown. Yes, but even these variants, like I think even there's a little laura probably of that even derail in um the equity market, because I think that wants the sciences by a position to handle it, and also the markets themselves.

We've already seen there's slopha variants. We're already seen farmer companies coming out working on booster shot to help combat specifically the delta variant, and so we think that that's going to happen, and so the market is getting more fustom and also relying on farmer We definitely have a little bit more of the playbook at this point, even though it's still being written. UM so much fun. Thank you, great Friday check in on the market. Thanks for listening

to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News.