Biden to Release U.S. Oil Reserves

Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 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. Right now, we're gonna head out to Davidson, North Carolina covers some of the days COVID headlines, which includes deaths in Europe from COVID nineteen expected to reach two point two million by March based on current trends.

That's coming from the World Health Organization putting out a warning as I also pushed for more vaccine nation uh Meantime, Germany's top health official reiterated that the country cannot rule out any measures to contain the fourth wave. So let's get to it with Dr Dave Westerner, Professor Biology at Davidson College. On the phone from David's in North Carolina. Dr Westner and nice to have you here with Ed

Ludlow and myself. So when you see the days headlines, you watch what's going on in Europe, I kind of ask all of our guests, is what's going on in Europe going to happen here in the United States? Can we make that assumption? I think we can, thank you having back again. But yeah, I think we're already starting to see cases go up throughout the United States. We're seeing death scoops at a unlesser rate, but that's going

up also. So yeah, I think that what's happening in Europe now very well could be what we see over the next few months here Western. Do you get any sense that American officials are sort of complacent? You know, you had um Jeff Stains from the White House saying that you know, we have vaccines, we have boosters, we have the therapeutics if we need them, you won't see what's happening in Europe happen here. Why won't we see

it happen here? Well, I think they have the vaccines, they have those those U nctioned belable in Europe as well. I think that's a UM on my optic way of looking at it. Um, Yes, we have the vaccines, we had the boot boosters that we're rolling out. Um but all the all the data suggests that we're going to see the same kind of of an increase here that we're that we're seeing elsewhere. Well, and it's interesting. I guess we all have to figure out as we go

make our way through at this point. Um, It's funny. I saw something I was reading in this morning, Dr Wester, and it's like, well, wait a minute, you're six months after your second vaccine. Does that mean you're not vaccinated anymore? Are you not protected? Yeah? I think we should be clear about that. These vaccines are are really good vaccines. If you go back to a year ago, a year and a half ago, a lot of people were saying if we had a vaccine that was sixty or seventy

percent effective, that would be a win. And we've got a couple vaccines that are much better than anyone anyone anticipated. Initially, the waning immunity that we're seine, but the and Maderna vaccines are certainly concerned. But even six months out, we're seeing vaccines that are seven effective. So it's certainly not the case that six months after your second shot you're functionally unvaccinated. Um, there's still even even without the booster,

there's still a good deal protection six months out. I wonder if there's a weak spot though, right, is it if you're part of the unvaccinated portion of society that you're most at risk. Is it that you know, broadly, we should all still be wearing masks. I think that's I guess broadley is a is a if the term um. I think that a certain circumstances, yes, masks should still be worn. If you're in a crowded indoor setting, it's probably a good idea to have a mask on, even

if you have both the two jobs. You've gotten that that that booster shot recently. Yeah, I think we're at a point now where, yes, we have a lot of interventions that are decreased severe disease, decreasing hospitization, decreasing deaths. But we're not out of the woods, and we shouldn't assume that that we are out of the woods just yet. And what about mixing and matching the CDC's recommendations, UM allow I guess right for mixing match dosing for booster shots.

And certainly I think it's safe to say that many of coming off the J and J one suggests, you know, you get fiser and Maderna. Um, what's your guidance on that or your thoughts on that. Yeah, there's there's no evidence to suggest that mixing and matching is a bad thing. Um, We've seen nothing indicating that if you had two Fiser shots initially, the Maderna shot is going to be disadvantageous in any way. It appears that mixing matching is perfectly visible.

Um in either case if you had the same booster as your original two shots, or if you have one of the others. Um, immunitique goes up dramatically within within a week or two of that about booster shots. So there doesn't see to be any any any downside to mixing and matching the vaccine. Dr Wessner, I'm always curious, you know, you teach biology. I love biology. I wasn't doing this. I might be a doctor. That was something

that was certainly on my radar. UM, but I do wonder how teaching of biology and against a backdrop of the pandemic and the creating of a vaccine, Um, how it's changed or what's the interaction with students, what does

students want to know and understand. It's been really interesting for me in that role because you know, we can we can talk about biology with a real life example that's playing out in real time, which has really been been testing, and I think it makes the the topic that much more real in both the lots of biology we're learning in class and the biology of happening in the real world. That makes it more more real, more

more understandable. Um, I guess. So, yeah, that's really good, an interesting situation to talk about something that's that's happened in real time as we discussing it. Well, Carol makes a good point, which is education essentially right. You know, in general population two people understand the science behind the vaccine. Have they spent the time researching the reasons for taking or whether to wear a mask or not. Are you just kind of concerned that people don't take COVID seriously enough?

I think a lot of people don't. Um, yeah, I think a lot of people, you know, will say anecdotally, well, I had a friend who was sick for a couple of days. But but that was that was it. So I think there there has been this um, this attitude among a segment of the population that it's something that we don't have to really take that that seriously. But if you look at the numbers, UM, you all can can think back to the big surge UM in New York. I mean it was the health care system was overwhelmed,

UM and we could get to that point again. I think it's it's very serious disease. It's much more transmissible than the typical insluenda virus is uh. It's a much more serious illness than we see typically within sluenza. UM. So yeah, I think we have to remember that that this is a very serious infectious disease and and we we can't we can't forget that at this point in time. Yeah. I gotta say, in terms of mask wearing, I feel

like I will wear one forever. Uh No, just because it's it's it's interesting in terms of just basic colds and things. Um, I've seen more people getting sick as things have ease, and it's it was really nice to go through a full year and not even have a common cold. Yeah, if you look at the deploya season last year, I mean, BLEU was almost non existent throughout the High States and a large part of that was because we weren't gathering. There weren't large groups of people indoors,

people were wearing masks when they were out. UM, and just generally those precautions are going to prevent the transmission of respiratory diseases. Uh. This year, how do you know that, Carol? You were more more cases of flu certainly, and we

had the past couple of couple of years. UM. And to a large extent, that's because people are gathering, more people are out, more people aren't wearing masks like they like they Well, so maybe maybe things will change permanently after I mean we've seen that before with infections US, that things changed permanently, UM, And maybe some aspect of mask wearing or limited gatherings will be a permanent change. Hey, listen,

I wanted to share with you. A frequent listener and watcher of our show on YouTube, Uh shared with me a story, UM, Ryan, thank you, Uh, and just took a look at what's going on in Michigan right now. The Henry Ford Hill System is seeing COVID nineteen cases store by fifty percent in three weeks, putting a major strain on staff and patients at the Detroit based network of five major hospitals in southeast Michigan. It's uh the latest US hot spots seven day case rate of more

than six D per hundred thousand. That's triple the national average, you know, And so we see this, we often talk about this being a disease of the unvaccinated. UM, what do we finally do to get the unvaccinated to believe the message? In your view, that's a really good question. And there's gonna be some fashion of population that you're not going to reach. I think that's that's becoming clear. UM. But I think in back the eggs point earlier, the

education is key. We have to get the word out that these vaccinities are safe, they've gone through clinical trials, they are extremely effective, UM, and not have people get lost in the noise of oh, immunity wanes over time, so I shouldn't get a vaccine. UM. I think we have to get that that word out to that fague population. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio All right, So let's get to it. Let's see what Dr ellen Wald

has to say. She's back with US, President of transfer All Consulting Senior Fellow at Atlantic Council's Global Energy Center. She wrote the book Saudi Inc. On the history of a Ramco and Saudi Arabia UH, and she has also been a Bloomberg opinion contributor. She's back with us from Jacksonville, Florida. Hey, Ellen, so nice to have you here. I have to ask you about a couple of things the President said. Um, he said that he's making the largest ever release from

the spr will provide the supply that we need? Will it and will it make a difference? Well, that's a very interesting question because, Um, part of part of the issue is do we really need more supply? Uh? Is the reason why prices are higher really due to a lack of supply? And it doesn't seem like anyone is having trouble getting gasoline or getting crude oil, So it's

not clear that the issue is really one of supply. Um. Perhaps the release will have an effect on the market and will encourage the market to to lower prices, although we haven't seen that happening yet. The biggest drop in oil prices actually happened last week, um, in reaction really to the announcement that we were going to see more uh COVID lockdowns in Europe. Today, actually prices rose in response to the spr release. So, um, why are prices up?

Why are prices up when we do this release. It's been a little bit of a conundrum today. I feel like, yeah, well, I think it has to do a lot with market perceptions because this release has been telegraphed and a lot of people will basically waiting to see, Okay, how much is it going to be and what other nations were going to be involved in this coordinated release. And it's possible that what was announced was not nearly as significant as the market was hoping for. And so that's why

we're seeing this price reaction. Yeah, choreographed, as he said, will telegraphed almost because of that curious reaction in the market. You remember when something that happens, how deeply political the oil market is, you know how sensitive it is domestically for voters. But also one thing we haven't talked about

yet is OPEC plus. You know, they could easily turn around and change their existing plan in terms of their supply into the market, what should be we'll be looking for with OPEC class Oh, absolutely, and and gasoline prices are always something that's political, especially in the US. Seems always seemed to connect higher gasoline prices with the administration that's in office and tend to blame their administration regardless of whether they have any role over it at all.

So it's definitely a political political issue in the United States when it comes to PA plus. Though, it's very interesting because UM the amount that is being released for the amount that has UM that that we've heard as being we still haven't heard from China and South Korea if they're going to be making any releases, is about as much as three months of UM the supply that OPEC would be increasing. So OPEC has been increasing its production by four thousand barrels a day for several months

now and plans to continue that. The interesting twist though, is that OPEC is supposed to meet next week on Thursday to decide if they're going to continue their increases for for January. So some people think that this could potentially throw OPEC kind of for a loop, and will OPEC decide maybe they want to rein it back in. I think that OPEC is really going to be looking

at the market overall. They're going to be looking at our oil stock pile starting to build as opposed to being drawn down, and they will probably look pretty carefully at what's going on in China and um, what Chinese industrial production is like, in Chinese demand and is like they don't make their decisions just based off of gasoline prices. But ellen, if it's not a supply issue, then what's

going on? And the President talked about taking some action on gas gasoline prices unacceptable for gas firms to pocket gains that gap between wholesale and retail gas prices. Is there something fish going on? Just got about forty five seconds or so. Yeah, Yeah, it really doesn't appear to be. Remember, there's more that goes into gasoline than just wholesale gasoline prices. There's the prices ethanol which has gone up. There are the price of other adds which has gone up, and

there's just general inflation. Plus there's just the price of oil which has gone up. So there's a lot that goes into this and it doesn't necessarily mean that there's some kind of anti competitive collusive behavior going on. And also, as Ed pointed out, therey is in London, right, it's expensive. We're seeing it as well. This is a just quickly, Ellen, it's a global issue. It's not just a US issue. Yeah,

it's definitely a global issue. And in some areas it's even more pernount out US gas and places in the US are traditionally much lower than elsewhere in the world, so I'm part of It's also taxes, um, A lot of states have increased their gasolene taxes over recent years. Some really great perspective. Ellen, we knew when we saw the story we wanted to reach out to. So thank you so much. Have a great and safe Thanksgiving. Dr

Ellen wal She's president of Transversal Consulting. Check out our book Saudi Inc. That deals with Saudi Arabia and Oromco. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So, climate change, we know what it's done. It's created flooding, droughts, unusual weather patterns and wildfires. It's a story. Uh, And there's actually a story that digs into this. It can be

found at business week dot com. It looks at how wildfires are getting worse and then one company that has all the chemicals to combat them. That story written by Bloomberg News Technology report to Austin car he's on the phone in Boston and also joining us of our business. We get at a Joel Webber. He's in our Interactive Brokers studio, a company I hadn't heard about and yet

publicly traded and is sort of in a solutions business. Um. And you know, of all the places that we're probably desperate for solutions, it's with wildfires, which seemed to only be getting worse. And here we are in um November and California still is that peak peak wildfire fears? And so so Austin like, tell us what exactly, uh, this company,

Perimeter Solutions, is up to. Sure, Yeah, so you've probably seen on the news during big wildfires all these planes that are making humongous drops of all that red stuff that's all retardant made by this one single retardant maker at the biggest one of the US UH called Perimeter Solutions. And just to give it some context, they actually for US agencies alone produced about fifty million gallons of the

retardants last year. With the fire slaves and booming um, the retardants business is booming as well, and that's why just two weeks ago they went public in evaluation of

about two billion dollars UM. So for this story for Business Week, we spent a lot of time learning about this sole source contractor for the federal government, how they got so big in the retardants business, and a new Stanford engineered chemical that they're putting out that it might end up changing the game for how we address wildfires in the country more so. Um So. Yeah. The the product that you see dropped out of planes is called FoST Check, and it basically boxes all the fires in,

but it's not as effective. After it reigns a small amount or when there are tons of high winds, it usually actually goes away and it's not effective after a couple of weeks, and at that point, like you've seen in California, another big fire can just happen again. Um. On the other hand, they have this new chemical called Fortify, which again was engineered by Stanford scientists, and it's this white gel that's applied before the wildfire season and sticks

on places where they're really high risks of ignitions. UM. We actually have uns of data about where fires originate because we happen to have a lot of wildfires now in the US and in places like vegetation around utility polls or highways or railroad tracks. Um, we can apply the solution now with this chemical jael that will last

for months and ideally prevent those fires from happening. As one perimeter UM executive told me, uh, he had said that we'd rather be fighting wildfires when they're just four inches tall rather than forty feet tall. And I think that's the promise that Perimeter is trying to pitch the government on going forward. You're in London right now, but California's your home. You've seen this. Yeah, this story really hit home for me. I enjoyed reading it, not just

because of the products. You know, I've I've experienced the fires and the side effects of the fires. But the great thing about your story is you talk about the people that are using the product, the farmers, you know, the wine growers in Napa Valley. Um. But it seems like this company is the only product in town. Is this thing affordable? Is it? You know? Is this something that everyday landowners can actually get hold of. It is

something that landowners can get ahold of. But I mean it's really a product UM that it's going to take some time to get adoption. And I think the larger market is actually utility giants like P G and D, or insurance companies or railroad companies that you know, they'd rather maybe spend a few million dollars up front on this product rather than billions of dollars and liabilities later on. But in this story, we did interview one local community that had used it uh and for one mile stretch

had cost about thirty thou dollars. Obviously that's an expensive application. But when we talked to local fire departments, what they said is we'd love to use more of it. I talked to one in near San Diego that had seen huge ignitions go from a few dozen in the last couple of years down to zero after they applied the product. But what they basically said is we'd love to use more of it, we just can't afford it. So so

Austin UM, what other products are they? I mean, this company just when public, I mean, do they have two products?

Do they have more? What's under what's in development like and and exactly how competitive of the space is this at this point, since this problem seems to only get worse and worse, So they do this company, Perimeter Solutions, does make a ton of different retardants, whether they're gels or phones, or powder or liquid concentrations, and and they all have different uses by the fire department or private companies and homeowners. Um. But to be honest, they're really

the only game in town. I mean, just to give you a sense, they about half per cent or so of their fire safety products are consumed by the US government in the state of California alone. Um, they're pretty much a virtual monopoly. And that's one of the big criticisms. Uh, they're the only approved, federally approved product that the US Force suit uses for aerial drops those big planes. And I only talked to one competitor in the issue that they said is it takes so many years to get

on that retardants list to be approved. That it is very advantageous for Perimeter Solutions and their primary flagship product, which is that red stuff that drops out of planes, and so we haven't seen much competition. It costs about three dollars a gallon for that stuff they drop out a plane and so far there they continue to be the sole source provider to the US government, have been for almost two decades. All Right, I gotta ask you if you're if you're going to end up spray in

my vegetables and stuff, is it safe? It's a it's a really good question, Carrol, and and and there is a lot of environmental concerns. I will also say just it's it's kind of very on to watch. I went to air bases, I've I've seen this stuff preyed in person. And whether it's the red stuff dropping from planes or the new white chemical fortify, to just see it doused

all over the planet, UM, it's pretty eye opening. And when I talked to the company, they say, look, the stuff that's in here is ammonium phosphate, which is the same stuff that's used in fertilizers. UM. So it actually might make your garden grow a little bit faster. But the downside of it is that it can UH. Studies have shown that it's it's if it's dropped in water areas that can kill fish. UM. It can also spurn algae blooms and invasive plans that can be disruptive to

the natural environment. But the larger truth is there just haven't been enough studies, which is kind of wild. They said in their s one statement when that moment, Yeah, they're just they said in their um uh, there s one statement that the current environmental impact is just current is just not known. There's not enough known about it because it could have larger toxicity impact on the environment

or the animal population. But there have just been a lack of studies over the years, and they've been limited in scope. And so the US government continues to drop tens of millions of gallons on the planet just in America, and it's become popular worldwide, and so there's a lot of questions about environmental impact that still have to be answered. So the most important question of all um From the photos in the story, it looks like, uh, there's a vehicle.

This is on a trailer. They spray it from the back of the trailer. Did you get to spray the gel? You know, I'm not approved yet by the California Fire Department, although I did go through the chemical mixing. I did get my diploma, Jole, So you'll be happy to hear we can add that to my uh my Twitter page. But maybe our maths out of business did go for after the Daquie specialist dach refecialists comes first. Nice. Nice to know if the journalism doesn't work out, you've got

all these other things that you can fall back on, Austin, Uh. Incredible. Read a lot of information in there and check it out at Bloomberg dot com. Happy Thanksgiving to you and to you as well, Joel Joel Weber, editor of Bloomberg Business weekn of course, of course Austin car technology reporter and a man of many talents here at Bloomberg News. You're listening to Bloomberg Radio. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic from

Bloomberg Radio. So we just talked about Best Buy shares plummeting uh, and we're gonna get into that a little bit. We also see Dollar Tree selling the majority of its products for more than a buck. Now there's a lot going on when it comes to retail. And then, of course there are those supply chain rows that we continually

talk about. Lots going on. As I mentioned our Bloomberg Intelligence Senior Alice Putam Goyle keeping track of it all and writing, even with those supply constraints, Americans, they're going to be out there shopping this holiday season, she joins, edding me on the phone in New Jersey. Put them good to have you here first and before we get

into the holiday season. Any thoughts on best Buy. I know you cover a lot of different retail and and this maybe doesn't fall right under some of the companies that you follow, but those criminal groups like I can't you know, it's very odd to have a CEO come out and talk about that, right it is. You know, it must be a really big problem for them to

come out and say that. But it's a scary one because not only is it bad for them on the margin side, but it prevents people from wanting to go to the stores, right um, because you're hesitant about what you'll have to deal with it should you go into the stories, and the employees working there must be scared to want to work there. So it has a lot

to remember. Don't remember what best Buy does as well that I wish we discussed the moment, Carol, But they sell things that we really needed in the pandemic, and we're not buying as much of right now, you know, screens, electronics, all these kinds of stuff. It's kind of like a one to punch. I feel bad for them. I I guess, Punam.

You know, broadly, is demand really good right now? You know, for for Best Buy electronics, for brick and mortar, well, demand is good overall in retail, and we've seen that in the retail sales numbers leading up to UM as recent as you know, recent earnings results that we've seen from the retailers that's said electronics sales, computers, TVs and all of that. You have to remember allapping the pandemic right when they were mostly at home learning for schools.

Now kids are back to school, so the demand has tapered from last year's levels, but it's still higher than it was in No, that's a really good point, I have say, even though on my street I've seen some boxes for people who have obviously just gone out and bought a huge green TV at this point. The other thing is Best Buy did talk about spending more on promotional activity and that really hid into gross margin. All right, so let's talk Punam about retail shopping. You know, my

daughter has already given me her holiday list. It's a little bit toned down, which is kind of nice to see that from your kids. UM tell us though, why it's going to be off the chart. Is it because of higher prices or we're gonna actually be selling more stuff. It's going to be a combination of both. So demand is higher, especially for categories like Harold and toys, um where kids are going out more and people are going

out more, so they want new things. On the sales side, the reason why we're expecting for high single digit or even better games is in part through to higher prices. Yes, prices will be higher because of inflationary pressures, but also discounting will be lower. So while there will be discounts over the coming days and even through Christmas, they won't be as pronounced as they were in past years. Should we should we put everyone in a bad mood and

talk about supply chains. I mean, is my favorite sweater going to be on the shelf this holiday season? The things that I want are they actually going to be there? They will, but how long they'll be there is a

bigger question, and that's how us more everyone? Yeah, so get what you want now, well, it's funny that you say that to go ahead and please, Well, I was just gonna say that in your rese'm I'm being cheeky, But in your research you point out pretty clearly right that the holiday season shopping window is long this year. You know, everyone is going to have every opportunity to go out. You know, why would that give us a boost?

Because you get an extra shopping day. So if you look at the time frame from when people really, you know, spend the most time buying gifts and thinking about the holidays, it's between Thanksgiving and Christmas, and this year the calendar lenself one extra day. So an extra day is always an extra shopping day, means extra dollars for the retailers. Yeah,

no doubt about it. It makes a difference. I know that there's been a time where I've really kind of finished my shopping and then all of a sudden, I go out because of an extra day, and I pick up a couple of little things. What's interesting is, so who's going to benefit the most? You you talk about Walmart and Amazon in your recent note. What's interesting is we just talked with our Augustus Arriva, who's looking at the global supply chain, and she's pointing out how everything

is going wrong at the same time. And yet you know there's companies like Amazon that can find alternatives to getting their goods here. Walmart can get and can do the same thing right, whether they reach out to different suppliers or use their own logistical chains to some extent um, they've got depockets to be able to do. So you're absolutely right on that. You know, the resimplified is the

bigger the better at this holiday. So the big retailers really have a competitive because they can afford to pay more to get the goods here. And that also in addition to that, Walmart and Amazon specifically don't have an inventory issue right now. Walmart's inventories were up about at the end of the third quarter, so they've been able to bring goods in. The other thing is they have a large third party market place, both of them, and that helps flow inventory at least online for both tailors

and very quickly. Pum I mean, foot traffic seems to be pretty good, though, doesn't isn't it strong? The number of people actually going into a store they just excited to be shopping in person? It is strong when you look at it versus last year, but the numbers that we're looking at against nineteen it's actually still down. Interesting too.

But you also pointed out an influx of tourists into the US over the coming weeks could drive at least a high single digit retail sales gain over the holiday period. So it's interesting. A lot of different factors that play putam always good to get a gut check on what's going on in retail, especially as we head into the all important holiday shopping season. She is senior analysts for e commerce at Leisure off price retail. That means TJ Max, which I always love, ed love love. Do you go

to TJ Max? Oh? I do? I'm roam. Yeah, but you let me drive? Oh no, no, no no no, this is not a please, I'll do. I want to drive. It's a good question. Good drive for the Globe Radio. All right, just got about ten minutes left in today's trading session. We are driving to the clothes. We're definitely off our best levels of the sessional. THEO, I should say for the Dow Jones Industrial average kind of hovering, uh, just off of it, but certainly little bit different when

it comes to the SNP and the NASTAC. Let's talk about the market trade today. Megan Horneman is director of portfolio Strategy at the Wealth Advisory and Multi Family Office from Britain's Capital Advisers. She's back with us on the phone from Hunt Valley, Maryland. So, Megan, nice to have

you here, just a few days away from Thanksgiving. We're talking inflation, we're talking about supply chains, we're talking about a release from the spr What is top of mind for you and your clients, So I think it's going into your end and you know what's going to happen

with the rally here. That's I think one of the biggest concerns for investors, especially since we're starting to see this back up an interest rates and we have seen that, you know historically, when we see these kinds of movement interest rates, it does challenge the equity market. We're seeing that today, um with specifically those expensive tech names, as well as seeing the volatility index increased today. Yeah, the big news items of the week, of course, the nomination

to the Federal Reserve. And I know that you wrote going into the week that you felt Biden would keep a relatively dubbish f O m C because he wanted to help his spending agenda. Right, how do you think about things now? Yeah, I think you know, obviously, yes, he he wanted to have two things that as someone who's as a relative dub in the market because of the fact that he does have a very aggressive spending agenda.

And if you just look at estimates for the net interest costs for the government or the next decade, they are exposed to skyrocket, So it presents a problem for any of his priorities. Um. But Pal has also kind of been a little bit more towards the center in knowing that we do have some inflationary pressures that need to be addressed. So you see the market now pricing in the potential for two rate hikes in the second

half of the next year. So I think that the other thing that markets like is just a continuity, you know, having someone new. Markets have never really liked that. So having Pal pal the helm again, I think is as keeps that you know, nerves from unrattling. Megan, what's the constructive conversation to have around interest rates right now? I mean, we did see you know, another pop up right in the tenure today and we are seeing certainly coming off

of that FED nomination. However, it's still a long time from here until let's say midyear of next year, when we'll we'll see the FED easing off right in terms of those asset purchases. But easing off does not necessarily automatically guarantee an interest rate hike, especially as we watch kind of what's going on around the globe. If China slows down, there could be some other issues. If the pandemic continues to weigh on the economy. Uh, maybe all

bets are off. Yes, there's a lot of moving moving parts there that that you've outlined, And I think the one thing that we believe that interest rates right now where they are do not justify not only the economic environment, but also the inflation environment. So we do think the

trajectory is higher for interest rates next year. However, all those things that you mentioned are something some of the reasons why we don't think you're gonna see, you know, a massive, massive spike in interest rates over the next twelve months. We still do have a lot of uncertainty around the supply chain disruption. We have a lot of

uncertainty around the labor market. We also have some uncertainty around how sustainable this consumer can be in the face of rising prices at the pump, rising prices on everyday necessities. Can we continue into two thousand to see the sustainability of this consumer. So you're gonna have a little give and take, I think in the interst rate market. But at the end of the day, the FED it should is very warranted to paper. It was an emergency measure.

We're no longer in an emergency situation, and I think that the next PHASEE to them is to gradually try and normalize interest rates. So we're still calling for that in the second half of next Here I wanted to ask you about the consumer and not just in the context of inflation. How closely are you following the data

around COVID nineteen, particularly in Europe. You have Goldman, sax JP, Morgan, Morgan Stanley all saying the kind of spikes were seeing in Europe, they will be temporary and they don't necessarily think that will come over to the United States by the reopening trade. Is that the way you think about it, Yeah, because we've seen spikes and you know you have some short term kind of reversal in that reopening trade, but then they do tend to to peak and moderate lower.

It's just we don't know when. And I have seen the data out of Europe, specifically in Germany, it's actually um I popping if you look at the chart of what they're dealing with right now. But keep in mind that we are moving closer and closer getting more and more people vaccinated. That's a positive. But the biggest part of COVID that we're going to look out into is the approval of some more therapeutics because those hesitant to get a vaccine, which is a buddy's own personal decision.

If there's a therapeutic that's out there that can reproduce the risk of serious infection, that's almost as good as the vaccine when it comes to the risks and stream we put on the hospitals. And that's what we're concerned

about right now in Europe. You know, it's interesting too, and you you guys deal with highnet wealth individuals, and I do wonder you know, we talked about the initial part of the conversation about some of the things that everybody's talking about, whether it's inflation or supply chain constraints. What would you say, is their number one concern right now because many of these many it is inflation. Okay, because many of these individuals have gotten wealthier, right safe

to say over the last year or two. M. Yeah, absolutely, I still think it's inflation. I can give you the second biggest concerns for our high network individuals, but inflation is the biggest one because it's now visible across so many aspects of the economy. Before when it was just lumber prices, or it was just food um or you know, some of the COVID related things that that we could say may some of that was trans the tree, but

people don't. The one thing people will remember and realize right away is at the gas comp and we've seen more than a dollar increase your date in gasoline prices. That's a big hit to consumer budgets. So that's going to be felt by by all consumers, high networth or not. The second biggest thing would be what will happen with taxes, And the one thing we do know is that we don't think taxes are going to go any lower. It's just what magnitude will that hit highwork network individuals as

well as business owners. How worried or not are we about Biden's commitment with infrastructure. How worried or not are we about what the President was saying today about his you know, efforts in the supply chain. We were speaking to a Bloomberg News colleague a little earlier this hour that all of the bottlenecks and global supply chains that he was saying working to be undone, they're still there. You know, what is going to be the impact of

fiscal policy and government stimulus over the next year. Say so, the infrastructure is done, is not that we can do about that, But over the next year, you know, this is going to be more of an impact into g d p U in the longer run, not necessarily for example, for next year. But when you're talking about so much money, chain thinks, so a few goods because the supply chain is disrupted right now, then you know, any additional spending is really not needed and the only thing that is

going to fix the supply chain disruptions. And some of this, some of these kind of interconnected inflation and pressures, is either a slowdown in demand or an increase in supply. And we know that there will be an increase in supply. It's just not something that's going to turn turnover overnight. I mean, we just understand that there's a lot of ships sitting out support. UM, there are some disruptions, but with so many different staffes of the supply chain that

can't be fixed right away. It's going to take time to fix that. So we need to see some moderation in the demand side. So any additional spending from the government that adds to the pent up demand from the American and consumer, it's just that is a concern and a risk that we see. Hey, Megan, just got about thirty seconds here, just quickly, what's one number one investment that many of your clients tend to ask about. Um, you know, they always want to know about the equity

market and can we continue with this fool market? We do think that is the case, But we would allocate outside of the US as well, because I think next year two two there could be some rotation there. You know, I think the US is going to deliver the same types of returns and then trying to find some you know,

attractively valued inflation hedges. We would lean more towards the infrastructure. UM. You know, there's lots of different investments out there in the infrastructure front that we think will kind of their structure to help you with that as well. All Right, great to get that, uh, and thanks so much. Have a great Thanksgiving. Megan Horneman, she's Director Portfolio Strategy at Verdin's Capital Advisors, joining us on the phone from Hunt Valley, Maryland.

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