Biden's Challenges Only Get Harder

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Every day, there are many stories about the virus and vaccine rollout. Tim and I just felt like brought you two disturbing ones about long haulers study showing COVID can kill months after the infection, and then Brazil how it's expanding out to younger people. The other thing Tim, you and I've talked a lot about is what's going on in India. Yeah, the rising

cases dramatically. They're especially given that a year ago this was a country that was in lockdown. This is happening so quickly. Yeah, it's really tough to kind of watch. Let's get an update though on COVID nineteen and what we're seeing globally when it comes to the virus. Dr Amos Hidalga is an infectious disease physician Senior scholar at Johns Hopkins Center for Health Security at the Bloomberg School of Public Health, supported by Michael R. Bloomberg, founder of Bloomberg,

Gulp and Bloomberg Philanthropies. Dr Dlja with us on the phone in Pittsburgh. DRDLJA, Nice to have you back here with Tim and myself. How are you? I'm good? Are you doing okay? Doing okay? Although a little bummed out by some of these long hauler stories and also just looking at what's going on in India. Everybody keeps reminding us that unless we get this globally under control, we will not get beyond COVID. How do you see it? I definitely think that's the case that we have a

worldwide pandemic and the world will still be disrupted. The world will not be safe until this virus is controlled in all the countries around the globe, and it's going to take some time, probably well into two So there really needs to be a shift in priorities as we get most of our population vaccinated to trying to came this all over all over the globe, and it's going to be, you know, one of the biggest public health challenges that we face, because it is a really steep,

uphill battle in places like India and Brazil and even Europe and even Canada. What's the right way to do that though? Is it is it with the mr Anda vaccines or is it is it really with these other vaccines, potentially the Johnson and Johnson vaccine, the astros ennica shot, ones that don't need to be stored in such cold conditions, one that don't necessarily need two shots. It's all of the above. It's whatever you can do. So if you have places that can handle the storage requirements of the

astrosenica and fisor vaccines, you can use those. In other places, you're going to need to use the Johnson and Johnson, the mastros ennica vaccines, and there are other vaccines as well that we have some data from that are developed in other countries. But it really has to be anything that you can get into people's arms that has efficacy at preventing seriously, the hospitalization and death needs to be what what occurs. And there are MR and A vaccines

that are in development and don't have those storage requirements. So, for example, there's a German company called cure Vac as an m R and A vaccine that doesn't require that cold temperature storage. That could also be an option. To remember, we've got Novavacs in the wings as well. Their Phase three data should be coming up, so there's likely to be multiple candidates. And I think we just basically have to blanket the world with whatever they can get in

order to stamp out this infection. Well, I just want to push that a little bit further. Was talking to somebody who's from India, was just talking about all the vaccines that they are developing specifically. We don't really hear about it because we're focusing so much at least in the US and some of the vaccines that we directly have access to. But you know, ultimately, as you said, we're gonna need multiple tools. That's been kind of a

story from day one on all of this. Or do you see in terms of getting it really under control globally that companies like Maderna Fiser are really going to have to step up big time Maderna adviser. Are you know? Their vaccines have been proven to be highly efficacious, they have manufacturing capacity, they have not had any major hiccups. They do think that they're going to be a component of how we vaccinate the world, whether or not they're

the major component. With astros aneka and and Johnson and john Us and other vaccines as well as Chinese vaccines, Russian vaccines and other ones that we don't know about, it's likely to be a hodgepodge. But I do think that the vaccines that have the most proven track record tend to be the Fisermadurna vaccines, So those are obviously going to be the ones that people will try to use if they have the ability to to use them in those situations. But I don't think that astras nic

and Johnson Johnsons should be dismissed. I think those are really great vaccines for and I would take those vaccines now. I think those vaccines should be used in the United States as well. But so I really think it's going to be a portfolio approach in each country is gonna have different requirements and different capacities to be able to vaccinate. When do you think J and J that shot could be approved again Friday. I suspect and Friday the puzzle

be lift. You'll see lifted. They'll see something similar probably what the E m A did. There'll be a warning label on it saying that there is this side effect risk of clots and that if you are at higher risk for those clots, if you're in that age group that we saw the signal, int haveing to dicussion with your doctors. I suspect Friday, um, and hopefully this will be something that we can resume at the same pace

as before. I don't know if that's going to be the case, because some polling does show vaccine hesitancy has increased with Johnson and Johnson. But it is important that now Johnson and Johnson has unpaused what's going on in Europe, They're going to continue to roll out in Europe, which is really important. Uh, and hopefully we'll see this vaccine return to kind of its place of prominence, I think

where it belongs. Hey, Dr geal Joanes, just the last minute that we have and then we'll come back with you. I'm wondering about what happens if the virus goes uncontained in other parts of the world when the United States does get to so called herd immunity. I know the worst case scenarios that variations developed or variance develop, excuse me,

that can penetrate vaccinations. But does anything indicate to you that that could be a real possibility right now, because these vaccines thus far have have proven really resilient to these variant variations, right these variants exactly. So, I do think variances will continue to occur as the virus french from person to person. But I'm I'm confident that our vaccines will be able to stop what matters, serious disease, hospitalization,

and death, even when it comes to problematic variance. That's what we've seen so far. But but it will be challenging if the world is not if the world is still not containing this virus, because international travel, international trade, all of that is still going to be disrupted for some period of time. Let's get right back to Dr Ames Adulge, a senior scholar an infectious disease physician at the Center for Health Security, I think JOHNS. Hopkins Bloomberg

School of Health. He joins us on the phone from Pittsburgh. Dr adulge. I want to talk with you again about messaging and what a difference a vaccine makes, because we are getting mixed messages from different people about what is safe and what is not safe to do after you get completely vaccinated, tell me what you do now that

you've received both of your shots. I'm basically as close to my normal like as as I can be, and I tend to be a very risk tolerant person, and I was taking calculated risks the entire pandemic even before I was vaccinated. So I may be a bit of an abarition in my field, but I think it's important remember that once you're fully vaccinated, the whole risk calculation that we've had to go through for so long is completely altered because you are now basically protected from serious

disease and hospitalization or death. You're also very unlikely to even develop symptomatic infection, and you're very unlikely to be a spreader of infection. So I do think that while the risk is not zero, it is very close to zero, and it is something to me that I find acceptable, and I think that's what we need to be telling people that, based on your risk tolerance, start to re engage with the world, and that's going to move the needle.

I think on vaccine hesitancy, because there's many people who think that, you know, if the vaccine doesn't change anything, why am I going through all of us? And I think there's been a lot of underselling of this vaccine and we're paying the consequence for it. So what does that mean though for people who have kids? Because kids are still a group that that can't be vaccinated. And this is something I know I'm going through. My friends

are going through. Okay, so we're vaccinated, they're vaccinated, but our kids aren't. So you know, what's safe for for what safe behavior for us? Can we all get together? We don't know. So there's a great article in the New York Times to me by David Leonhardt said, I was quoted in some other colleagues that hockeyes were quoted in the talk directly on this issue. So I recommend that. But in general, this is all going to depend on

your risk tolerance. Children tend to be spared from the severe consequences of disease, children that tend not to be major spreaders of infection, So I think that you can be much more flexible with children. Remember what you did during flu season? What did you do with your children

during flu season? Probably not that much different. But every year, right even with the flu see even with the flu shot, the number of deaths that occur in children, you know in the hundreds every year from influenza, even with the ability of the vaccine. So just remember, just try to risk calibrate. And I'm not trying to minimize what COVID nineteen is overall, but in children, influenza has a more

dangerous illness than than COVID nineteen is. And I think that's that's not the case in adults, but it's not the case overall, But in children, I think you have a lot more flexibility. So I do think that you can as much as your risk tolerance allows do this obvious seem a child that's asmatic, that's a different story, or a child that has special needs or medical problems or lung disease or immunit suppressed, you have to be

much more careful. But if you've got a healthy child that doesn't have those conditions, I think you could be a lot more free with with how you interact once your family is vaccinator, or even before, because many children have been interacting throughout this pandemic. Remember, we've had schools open, we've had daycare centers open, we've had Little League sports, and we haven't really seen major negative effects and children.

Nothing on the scale of what would worry me or what I think is an unacceptable risk if that's difficirom person to person. So we have a great story in Bloemberg Business Week magazine this week. It's the Remarks and it talks about how, since the beginning of the pandemic, exactly when the US might reach her immunity for COVID

nineteen has been furiously debated in congressional hearings. Kind of shorthand for the end of the pandemic dr adage, is herd immunity truly kind of shorthand for the end of the pandemic? Is that the case that if if we get to her immunity, we could stop this virus or it's not so simple. I don't think it's so simple. I think her immunity is an important threshold to think about it, but it's not the holy grail to me.

We get to the end of the pandemic, we get to the end of the public health emergency when we no longer have to fear for hospital capacity concerns, when we've taken away the ability of the virus to cause serious disease, hospitalization, death. And we're going to get there long before we get to her immunity because for for her community, we have to think about vaccinating every person. And remember this vaccine is only emergency a proof for children or people about the age of sixteen. You don't

even include children there. So that's gonna be sometimes what I think it needs to be dispelled, as this notion that COVID nineteen is going to go away, that it's not going to be anything anybody talks about three years from now. That's not the case. Remember there are four other coronaviruses that cause of our common coals. This coronavirus stars kvie two is going to establish itself and has established itself in the human population. It's already infected other animals.

We can't eradicate it or eliminate it. What we're going to have to do is live with it, but live with it in a in a tam or form. Because so many of our high risk individuals will be vaccinated,

but we're still going to have cases. We're still gonna have disruption from what We're still going to have to think about it, but it's not going to be something that's very different from many of the other respiratory viruses that we deal with on a day in and day out basis every year, because the vaccine will have really

just changed what this virus is capable of. All right, Gonna leave it on that note, Dr amish Adaga, thank you so much, Infectious disease Physicians, Senior Scholar at Johns Hopkins Center for Health Security at the Bloomberg School of Public Health. Supported by Michael R. Bloomberg, Founder of Bloomberg LP and Bloomberg Philanthropies. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio.

President Biden Tim getting ready to mark his one day in office that will happen this coming week, and with that in mind, this week's cover story in Bloomberg Business Week magazine takes really kind of a look back, reminding us of all the things that President Biden had to deal with when he took office. The health pandemic, a sacking economy, are reckoning with centuries of racial injustice and the existent threat of climate change. But it ain't over. Yeah,

now comes the hard part. Nancy Cook is white House reporter at Bloomberg News, joining us on the phone from Washington, d C. Nancy, I'm really happy that we're getting to speak with you about this cover story in the latest issue of Bloomberg Business Week. When you think about the first one hundred days, Um, how has Biden done? Like, how has he been able to do this? I think most people would say that Biden has done a pretty

good job. You know, he has a majority of Americans support him and pulling Democrats, even people who wish the Senator Elizabeth Warren or Bernie Sanders had won the nomination. They're really happy with him. Um, And he's even pulling well with Republicans who feel like, you know, he's done a pretty good job handling COVID and so what he walked into chiefly were, you know, a pandemic and low vaccination rates and schools closed and the economy really in

a swamp. And the hundred days has really been about trying to solve those two crises. And they've gotten a lot of that by ramping up the vaccine distribution by getting more people vaccinated, and then passing this sweeping one point nine trillion dollar COVID relief bill which gives money for things like testing and school reopening and so so much of the first one days have just been dealing with crisis and now becomes the hard part where he's

really trying to do something to cement his legacy. Right. Listen, he came into office, I mean, the whole pandemic, nobody had a playbook, but it did feel like they hit the ground running with a playbook in terms of dealing, you know, with the vaccine rollout, in dealing with economic stimulus and a lot of things. What is the playbook for the next one days? What does it need to be?

What do people say it needs to be? Well, I think the playbook that they're trying to do is now that they have I mean, they still have to deal with the pandemic, and there's still a lot of fallout from the economic downturn, so no one in the White House is discounting that. But what they're trying to do now is sort of reshape the economy and propose the big ideas that Democrats have long wanted to do. And so that includes everything from infrastructure to more money for

childcare and elder care. And that's the sweeping set of packages. President Biden is going to unveil this the third one that he's talking about um on Wednesday, this coming Wednesday at the State of the Union. And and those those the most recent two packages, the infrastructure and this upcoming families one. You know, that's more than three trillion dollars

in spending that they are proposing. They want to offset it with tax increases, but again, it's a huge amount of money, and their goal is to really not just bring the economy back to where it was, but also sort of try to make some tweaks to it and reshape it. So obviously it's really ambitious. And the Biden administration and Democrats, well Biden administration, you know, is the

Biden Biden's president. Democrats control the House and Senate, but barely uh and there are some modern modern Democrats who don't support these plans as they are right now. How does Biden sell this and and to what extent does it involve selling the plan to the American pe pole in a way that President Obama didn't do when it

came to Obamacare. That's a great question. So the way that they sold the COVID relief bill, which is the way they're going to try to sell these two bills, was really to try to build public support outside of Washington. So what they have tried to do is to find unity or bipartisanship, not really as Democratic lawmakers and Republican lawmakers on Capitol Hill a green but more to try to promote policies and and put forward ideas that appealed

to the majority of Americans. And so with the infrastructure package, for instance, you know, sevent of Republican voters are in favor of rebuilding roads and bridges, more job training, increasing broad brand access, and those are the things that the Biden White House is going to keep focusing on. These plans that appeal to Democratic and Republican voters, not necessarily just lawmakers on Capitol Hill. That's really the political strategy. Is it a smart strategy? Does it work? Will it work?

It works with a COVID release bill it worked very well, And and I think that they feel like based on what they saw during the Obama administration and how much Obama was tied up with trying to go with after Republicans and WU Republicans who didn't really want to work with him. I think that the Biden administration learned some lessons and felt like they had to go another way and it was a gamble, but it worked for the COVID relief bill, and I think they're going to try

the same thing with these next two packages. So enter two and that's when you know, the mid terms are and I'm wondering how the ambitious goals of the Biden administration has right now I have to get done before

and how that can change the landscape in Washington. Well, really, they feel like they, you know, the midterm elections, the party in power typically loses, and so I think the White House is very focused on the mid terms and they feel like, you know, they have a window of time to try to get these major things done and they're going to go for it. And I think so much of the argument heading into the mid terms for the Biden administration is going to be an economic one.

Are you better off financially than you were two years ago? You know, are you making more money? Um? Is the stock market in a good place where the kids schools reopening? Are there more people in the middle class, and so it's really it's interesting because it's a it's an area where Republicans have so dominated. Typically Republican politicians get higher

polling for their handling of the economy. But what we've seen in recent polling is Biden is getting very high marks for a handling the economy, and so so much of that political argument in two is going to be around that. Nancy, what about though taxes and higher corporate taxes are capital gains taxes, which obviously are skewed towards

the wealthy and corporations. But I do wonder how that might impact you know, you need to pay for what he's trying to do, I get that right, But I mean I do wonder how that might impact something like the mid terms. Ultimately, well, I think it, you know, depends what they can pass through corporus. Um. You know that. That's why I feel like the by An administration is thinking big and proposing what they want and then what asked to Congress is like a whole other reality check,

but also raising taxes on corporations and wealthy people. Right now, polls really well, I think that there's a feeling during the pandemic that wealthy people worked from home, you know, they held onto their houses. They sort of they managed to ride it and they were okay, whereas a lot of other frontline workers, you know, we're put in dangerous positions having to go to work or lost their jobs.

And so the idea of, like in polling, raising taxes on corporations and wealthy people is is overwhelmingly popular now and I think the Biden administration is trying to take advantage of that. What's the key metric for us to keep an eye on when we're thinking about the President Biden's effectiveness as a leader? Right, I mean, public polling

is important, certainly, but but what do you look for? Well, I think that some of the key metrics when I talk to administration officials, like the things that they're watching are, um, what does the unemployment rate look like in two years? Um? You know, what does the GDP look like? Um? You know? These are what is when how soon does the country get back to full employment? When does the unemployment rate go? Um,

you know, down to the fours again? And I think that that is something Those are some of the benchmarks that they're looking for in addition to just trying to control the corona very briefly, what a targy sectory, yell and tell you about that. I think that she is closely watching the labor market. Okay, yeah, that's what she likes to do. Nancy Cook, thank you so much, White House reporter at Bloomberg newsroom, Morow Journal. Yeah, but you let me drive. Oh no, no, no no, no, please, I'll

do le. I want to drive. Just drive, baby, it's the questions. Get drying. This is the drive to the globe community. Thanks, we'll try us down on Bloomberg Radio. Is indeed just about ten minutes not and a half, to be exact, left in today's trading session. Let's get to the drive to the clothes. Aaron Kennon is back with US co founder and chief executive officer Clear Harbord Asset Management one billion dollars in assets under management, back

with us on the phone in Stanford, Connecticut. Aaron, nice to have you here. A lot going on. I gotta ask you though, first not market related, but Harvard working. How's it going? Because I still remember when you said we pulled our people, close our offices out of New York. We're going to kind of embrace hybrid and work that way, you're still doing that? How's it going? So we opened up our new headquarters in Stamford back in in July, and we've been rotating UM in and out ever since then,

Carol Um, So we were sort of normalizing. Now. I men every day and really look look forward to seeing my colleagues in the office. We do wear masks when we're out of our individual offices, but certainly feel as though the collaborative environment's adding value. Well, I gotta cut right to the chase here and get to the big news today that Bloomberg and a Boomberg colleagues broke. It's okay, the president eyeing a capital gains taxes high as forty

three point four percent for the wealthy. As soon as that happened, stocks moved lower. Well, as soon as the news report came out, stocks moved lower on the news. Um. Your initial reaction to this right, well, you know, I think as a political calculus, it could make good sense for you know, occurring favor with the Democratic base. But if the goal is ultimately too increased tax revenue, I

think it sort of fails miserably. Uh. It's sort of counterproductive in so many ways because the wealthy um as they do even now, but I think they'll do to an either even greater degree, will just allocate more of their earnings to non for profits more than earnings to

do and advised funds UM. I think they'll hold off on on making those those capital gains sales because of course the tax code allows for stepped up capital gains upon death, and so that basis just steps up after they're passing anyway, So it just doesn't seem to achieve the desired economical and I think it sort of prevents the fluidity of capital moving around the system as it

should in a natural way. I think you could have asset prices trading at at at valuations that are uh, sort of unhealthy uh and and artificial in some nature because there's just sort of a lack of uh an ability or willingness to to make sales well. And it's interesting too, you know, our Mike McKee talked earlier Aaron, and he made reference to when Clinton at present Clinton then raised corporate gains a capital gains taxes too, and he said, you know, we went into a budget surplus.

There are lots of things we need to look at when we're talking about this. But I mean, is there a time in history that you can look back and kind of get an idea of what might happen in terms of the equity markets as a result of a higher capital gains tax. Well, I think you know, you end up it's sort of like the corporate tax, right right, you know, if you if you start nudging that upward.

To um, you had your CEO of a Chipotle on just a little while ago, and he didn't want to say it, but but I think he wanted to say was, well, we have we have to raise prices, right, and if we're going to maintain our earnings, we have to raise our prices. So who has to pay more for burrito? It's the consumer. So who's who's kidding who? Right? So I think this is sort of the reality. There's a lot of politics embedded in this. I will um, I will admit that this is probably a first sort of

shot at at goal for for the Biden administration. They know they're probably not going to settle settle at forty three point four percent at the high rate of capital gains. But but it just doesn't make great economic sense either. But you know, the Biden admistry and has some very ambitious plans for for the next two years and the next four years at beyond. It hopes Um, how how does it pay for those? Right, it's already floated, Uh, increasing the corporate tax rate. It's something that Di asked

Brian nicol Cheese, CEO of Chipotle about. But they're gonna have to pay for it in other ways too, And like you said, politically, this may be a way to do it. Yeah, I just don't think the pie expands, and I think that's the challenge here. I think the pie actually shrinks under this proposal, and so we're asking us how do we expand the pie? And I think, you know, a stimulative economic policies can can do that.

On the edges, we are at a in an environment where we've spent massive percentage of our GDP on fiscal stimulus, and that's certainly going to provide growth, but not sustainable sort of growth. I think the secular trend will will rear its unfortunate head and perhaps two thousand, twenty four and beyond, and then we'll have to contend with the massive deficits that we've built up over the last not

just twelve months. Of course, but last many years, and and those headwinds to growth due to the deficits will be you know, another point of concern for for the economy and for earnings. But for now we're seeing record earnings, record growth. We think we'll probably see ten GDP annualized GDP growth next quarter, which will probably be a peak for the cycle. Um and and Europe will probably start to accelerate their growth profile towards the back end of

this year as the vaccine rollout improves there. And I think that's the other story of the moment right now, frankly, which is it's not a synchronous growth story globally. You know, we walked into the beginning of this year and we thought, well, all of the world will have this vaccine rollout at the same time, so we're going to see the synchronous growth. We're not. And I think that has positive ramifications for the inflation story too. That demand side is not occurring

all at once globally. It's happening here and it will roll into Europe and then South America and hopefully India after they consort out their vaccine woes. But unfortunate because it's we really do need to see the vaccine moving more aggressively around. Hey Aaron, though, but so what is your take on the infrastructure plan and the plan by the Biden administration the president specifically, you know about investing in America's future? We see China, do it? I know

these are two different, very two very different countries. But I do wonder as an investor, do we at some point need to give companies a break, give a country a break to invest in the future, whether it's rebuilding the semiconductor industry, whether it's rebuilding you know, alternative energy or building alternative energy, you know, should we not be providing support for that because that's kind of our future?

I do think there are some key um The transportation component of the infrastructure bill has a great deal of merit, right we need we need highway systems, we need bridges, we need WiFi, we need five G in this country. We need to be able to compete heat. But when we're going to compete, we also have to compete on a reasonably level playing ground as as it pertains to taxation. And I guess that's where I sort of go back to,

you know, that point. I think if if, if the Biden administration's objective is to bring back jobs to America. We need to be able to compete with the world to do that because not only is money fungible, but a lot of these goods and services are fungible to and so I think taxation is a critical variable there as it pertains to the decarbonization initiative. I think this is the future in so many different ways in both the United States and around the world, and there are

huge opportunities. Now I'm putting my investment cap on when I say this. There are huge opportunities and tail winds that we believe, you know, one can invest in over long periods of time, whether it's you know, wind and solar or frankliness may sound counterintuitive, but the demand side on the on the metals and mining side of the docket, where opper demand is going to outstrip supply massively over

the next several years. We think by five dred to based on many different research reports of of late between now and two thousand and thirty, and we just do not have the supply online. It takes eight years to build a mind to and what's important about copper, of course, is it's required to build a wind turbine to bring solar on board and and to really decarbonizing entire pactrical grid. Hey, we gotta run. Always good to check in with you.

I really appreciate it. Aaron Kennedy's co founder, chief executive officer at Clear Harbor Asset Management. 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. Sarch to Bloomberg Global News