Bright Horizons Providing Child-Care Help for Workers

Bloomberg Business Weekend 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. Carol Master along with Tim Stanoviek, we mentioned some of the COVID headlines we know. U S regulators have given emergency approval for people ages twelve to fifteen to receive a third dose of Visor's vaccine. I do feel like all of this stuff is going

to be very helpful, though I don't know that's the question. Yeah, there is always that issue, right. We do know a record ten million people were diagnosed in the seven days through Sunday, almost twice the previous weekly high, as a macron spread across the globe. So we are dealing with those numbers. Um, that's the tough part of another question. Do we still care about numbers? If everyone's gonna get this, do we do we care about case count or do

we care more about hospitalizations and deaths? It's a great question. Let's put that to our next guest. Dr William Hazeltine is back with us, chairman and president of Access Health International. You know who they are there, a nonprofit. They're on a mission to really improve access to high quality and affordable health care for people everywhere. Dr hazel team so

well known in the biotech world. He's founded several biotech companies, including Human Genome Sciences, and he joins us once again on the phone from Connecticut. Doctor Hazel teen, so good to have you here with Tim and myself. How are you very well? And I wish you both a happy Do hear well? Same to you, happy and healthy one to all of yours. Um, what do you what's the number we need to focus on when it comes to

COVID cases versus hospitalizations, versus deaths and so on. It would be a real disaster to give up comedy cases of infection. The reason for that is that's how you allocate resources. You have to know where that detection is. Secondly, uh, it is also going to be an indicator of what's going to happen in the future or what's going to happen with long COVID. Everybody talks about hospitalizations, but you know, in any battle, account that wounded, the hospital and the dead.

It's important account to dead. Of course, it's important to count hospitalizations, but those who are wounded may be seriously wounded for a long time. At least half of those who have mild cases may have two or three months of serious issues, and about ten may have long term, very serious mental issues, issues with the kidneys, needing, transplants, diabetes, heart disease, a lot of really big problems. So it's

really important. It would be a big disaster. You know, we count flue cases as well as clue hospitalizations and death, so I think we have to keep counting cases. It tells us what's happening where. It's also very good gunning for you personally to figure out what you're listed yetting infected. H It's sort of like the weather. It's a weather report. Is it funny, is it rainy, is it a thunderstorm or Tornado. You have to know what the infection rate is in your area. It's a very very big mistake.

I think we should give up case counting. Okay, that's good to know. Hey, Dr Hazeltine, help us understand how you're thinking about the omicron variant a lot. We're getting more and more data each and every day, and the data continue to tell us that perhaps this isn't as doesn't make people as sick as previous variants, including the delta variant. What do we need to know about the

omicron variant? I think that again it's false reassurance. First of all, we know really highly highly transmissible, and that you and I know that we have people who've never been infected before, who are very carefully and triplely vaccinated and even triplely vaccinated and previously affected. We're getting infected and some of them are getting pretty sick. I have friends that have been sick for ten days already with it.

So it's it maybe on the statistical basis putting fewer people in the hospital, and it looks like that's likely to be true, especially if you're fascinated. I think we have very little data on what happens to that large fraction of people who aren't fascinating. Second thing, before we were willing to write this off as mild and therefore

not worry about it. What's happening to our kids. It's putting a lot of our kids and young people in the hospital h three or four times more than any other uh pandemically had of this in any other ways we have in the past. So I think those are really big crushes. And finally, we don't know what this is going to do for the long COVID. So one summary of this was a trodes and horse and inside the little saying uh long trovid. So we really have to take that good look that was the pathogesis is

going to be a says. Responsible attitude is to say it's serious. Let's take it carefully and do what we can to avoid it. Yeah, it's something Tim and I I know talked about. I know we talked about at home. I have a daughter who's eighteen, and she's like my fear knocking for Micah. She hasn't gotten in and she thinks about I'm a young person, what happens if I'm

one of the long haulers. I do wonder to Dr Haseltine you know, we have had members of the medical community on saying you're we're all going to get it, and in some ways that may help it burn itself out. But is that true, Like I do wonder, are we still possibly at risk of a variant that is very contagious and very very virulent at the same time we are And I think that those people who have always said there's always been a tendency for people to say that this is the last one we're going to get

her immunity. I think it was clear from the very beginning that there is no such thing as her immunity for coronaviruses. Coronaviruses come back, as told every year, despite the fact you've had it the year before, and they give you another call. Uh, And this thing is going to keep coming back. It has been evolved two bypass our mute defenses. Now we're fortunate that the vaccines seem to reduce hospitalization by about ten folds, which is fantastic. But how long that will hold we don't know. We

just have no idea yet. Whether it's a year, two years, or three years. We're pretty sure it's not going to be forever. But this virus is not. It's never going to be such a thing in my opinion as her community, whether it's induced by vaccine or by UH infection. We have to take this really seriously Europe. Of massive research efforts which we have, we have the capability to do it. Find many ways to stop this, whether it's with drugs

or better vaccines or continual vaccines. We have to take this really seriously, and it's not going to go away. Not going to go away for her community. Hey, Dr Hazeltine, last question, when is this going to be in the rear view mirror for us unpredicted I'm not willing to make that perdition. I don't see in appearing in the mirror. You asked. The question to this combine both transmission and

lethality is yes, it's what we're worried about. My immediate worry is it's going to recombine the delta called the friend of mine calls it Dolment's wrong. I'm a clock. So we might create are a lot of people with both in questions in this country right now, and we know this virus is a master of recombining. So I think we don't. I don't see the rear mirror appearing.

Yet so just when you say that, that whole idea of what you said earlier to about the false sense of security heard people said well it's only to be omicron, it's not so lethal, and that we were having a conversation at home. But it's like, well what if I get it and I actually get from the delta areas, you know, and it's a lot more serious. Um. Doctor Haseltine always good to get some time with you. Please stay safe and healthy. Chairman and president of Access Health International,

joining us once again on the phone from Connecticut. He's also author of cv PTSD COVID related post traumatic stress Disorder, What it is and What to do about it. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Workers we know continuing to work remotely increasingly so with the rise in COVID cases. Meantime, their kids are spending more time in the office. For more on what's going on is Tim.

It's a story you'll find online of Bloomberg Business Week. Let's bring in Jeff Green who wrote the story. He's managing diversity reporter for Bloomberg News. He joins us on the phone from Michigan. Also joining us is Joel Webber, editor at Bloomberg business Week. He is joining us on the remote access line from Brooklyn. Happy New Year to

both of you guys. First, Droll, I want to start with just just for people who don't have kids, maybe they don't understand or or know what Bright Horizons is. So let's start with bright Horizons because that's a central

part of the story. Oh Man, So, bright Horizons has a network of facilities us the country that allow you to basically have a daycare option, and a lot of people and a lot of employeers use that as sort of an emergency safety now, yeah, exactly, it's all part of your E A P program UM and disclaimer, Bloomberg is included in that UM. They also have an in home option that pre pre COVID, like I personally would

take advantage of when things went awry. UM. And you know, as we were, we're working on a series of stories that we were calling the New Rules of Work. Jeff's UMM reporting on the company sort of fascinated us because here's a company that actually has a business model UM that could only become more helpful for employers as we as we deal with these um you know, ongoing school dilemmas, ongoing childcare issues, um. And you know, ohmacrom in some

ways embodies that. So, so Jeff, tell us about what you discovered and what the future holds for the company. Yeah, well it really led me into this is the fact that like the core core of their business is offering on site daycare for people who go to the office.

So my initial assumption was, well, this can't be good because you know, nobody's going to the office, But in you know, sort of just just after ten twenty minutes talking to the CEO and then also looking at what was happening, became clear that you know, there's this daycare crisis that we already knew about. Here's a company that offers not just on site decare, but subsidize reduction for the employees for the you know, hundred and twenty kids

whose parents are lucky enough to have this option. Um. And so what could have been a disaster. They had to close like eight hundred and fifty of a thousand centers um right off the bat when the pandemic came. Now they're almost all back opened and you know, people are using it as a retention tool or or a recruiting tool for new employees, saying, hey, you know, come here, we'll pay for your daycare and you can, you know,

have them right here at the office. And if you're not coming to your office, your kids can be here. So it was it was completely not what I expected to hear. I thought I was going to hear the story of shifting completely to another line of business, but it turned out their core was actually positioned well too. You know, Jeff, I think about I feel like for so many years has been to bododle, like even talk

about child care at the office. It's really um. And I don't know whether it's cost of COVID specifically, but things have changed dramatically. Yeah, a lot of people didn't really care if their employees had children or not, except you know, maybe in the HR department. But you start to see them on zoom and you realize, you know, when your own e vps of whatever are on Twitter talking about how rough it is to parent during the pandemic, Suddenly people are like, wow, like a lot of people

have children, and some of those people are struggling. Um children, Yes, exactly. Yeah, and I mean that that the that is sort of it's almost a bitter sweet tale because so many of us, I mean, I shouldn't say us, because we technically qualified for at least the temporary version, but so many, very few people can actually get the full on subsidized on

site daycare that this offers. So for those people who are lucky enough to work for those companies, this is a solution to a problem that for most people still doesn't really seem to have any kind of you know, you know, the building back Better is kind of stalled, which had some money toward it. It's just we don't really see an answer for most people for this problem.

You have to talk a little bit more about this, because you do make that point in the story that this is something that is is really for the luckiest of employees in the United States, a benefit that's really only available to uh in the greater scheme of things, a handful of people. Um, what is the conversation that's happening nationwide and how has that changed in the Biden administration and with the stalling of Build back Better, does that become something in two that's kind of on the

back burner? Yeah, I mean unless the government or somebody is going to come forward and say, hey, everyone who has children, here's subsidized daycare for you. I mean, in some places, your daycare costs more than your rent. So if you want to be a member of the of the workforce, and you know, I mean, you can't just keep your kids at home like we did during the pandemic.

That's not a long term, tenable solution for anyone who's tried to, you know, have a meeting and have a toddler or even a teenager who has you know, things they need to do. It. It works in an emergency, but it's it's not like the solution for for forever. So so speaking of forever solutions, Jeff, Like, the other thing that a CEO of a child care company like this would faces just this ongoing labor shortage UM. And what did you learn on that front, because already, you know,

childcare is not um. Childcare professionals are not getting paid um you know what would even be deemed a living wage for the most part. Right, Yeah, that's one of the other advantages they have being this sort of you know, on site high end partners. They can pay more. They also offer the ability to get into like a higher education degree in child um care or you know, in

child whatever. I mean, you can go you can basically get a college degree by working here and take yourself even farther into this field to a higher level of pay. So it's it's that, but it's still I mean, one of the reasons they don't expect a full return to their margins until maybe later this year or next year, whatever the latest estimate is, is the headwind of having to pay more. I mean that they're not immune to it.

It's just they start from a better position and they're able to maybe attract people with some of the benefits that others just can't offer for the same reasons we've been talking about, it's really hard to have eleven twelve dollar hours kind of the tops for a lot of these teacare providers. Okay, so the other thing that you can do when you're in this business is to not just do childcare and growth for the company looks like what yeah, so, I mean you mentioned the emergency care

really high margins there. Every they added a hundred and fifty at least new customers in that area I think it was, and everyone they add is bringing in higher margin business because that's basically you know, any company, including ours, pays up for a certain number of days and then

also will add days as more needed. Um. And then you have some of these other they bought Citter City, they bought a daycare, I mean a camp provider, which will be you know, loom a lot larger as we come into like with the third summer of a pandemic and people are trying to figure out, you know, where where kids going to go, and you know many of them are back at school, but there all these they basically kind of hedge their bat You can, in theory

use their services everywhere from your toddler to your high school senior trying to find out how to get into college. Um. So it's they've been widening the aperture of like how they approach children. In fact, some of their customers have been demanding it. They wanted you know, they use some of their facilities that were closed as like middle school

care kind of centers during the pandemic. Well. I also love how they're kind of helping out what they call that Sandwich generation, right, those individuals, because they're looking into also I guess providing elder care. So it's interesting that they are looking to kind of help us at all different levels so that we can actually work, whether it's from home or elsewhere. It is another great story from you, Jeff. Thank you so much. Jeff Green, he's managing Diversity reporter

at Bloomberg News on the phone from Michigan. You can check it out. It is online at business week dot com. Jill Weber, he's editor of Business Week magazine. Uh and of course you can find all those stories online on the terminal, and of course check out the news stands because you can pick up the magazine as well. But it's easy to work from home with a three year old, it's not. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. We've

been talking about already and watching. It's staying near its tides the day. It's Tesla band. It's up more today, Tesla smashing quarterly deliveries with a record of three eight thousand, six hundred cars. I saw Dani Hols article yesterday last night about this. I sent it to my team at quick take Stock and I said, watch Tesla stock tomorrow and see what happens after this. Let's bring her in now,

Dana Holes, technology reporter for Bloomberg Near. She joins us on the phone from San Francisco, Dana, where you've been covering Tesla for years. This number, as you write, surpassing, you know, even the company's own expectations. Were you pretty blown away with it. I mean it was a very strong quarter. It really begs the question like why did

the analysts get it so wrong? I mean, it's just like it's it's like, you know, and it's this expectations game where you know, the analysts put out you know, analysts have their own models, and then Tesla itself sends around its own consensus figures, you know that, which is sort of broader. But I mean they beat by like forty five thousand units, Like it's rare to have a

beat that's quite this large. Um. You know, our bloom were consensus figures were two hundred sixty three and they delivered three six hundreds, I mean three thousand, six hundreds. So I mean that's like a pretty significant beat. And you know, I think I think it's it just shows that despite the semiconductor short shortage, despite COVID despite logistics that there is demand for electric vehicles, and um, you know, I would love more visibility from the company as to

how many of these cars were sold in China. We don't have a lot of visibility into the regional breakdown. Um, but you know this is this is big for TESSI. I mean, we the transition is here and we're just sort of seeing that accelerate quarter after quarter. All right, so already up this year because it's the first day of trading, we've got at one point to a trillion dollar market cap downa you mentioned you'd like more visibility in terms of the geographic breakdowns. Why what are you

looking for specifically? Well, testily just you know, their their report is just very bare bones. It's like, we sold this many cars this quarter in this year, and like we'd like to congratulate everyone on the tensile team, but they don't say where the cars are going. And you can usually find it in the ten Q which will come out after earnings, where they break down what their largest markets are. It's traditionally been the US, then China,

then like Norway or the Netherlands. But but but I mean, I'm just curious like, I mean, is the U s still on top? Has China overtaken the US? I mean, now, you know, we I just don't know. I just really we really don't know and have to kind of piece

together market data from a lot of disparate sources. And given you know that Tesla is the market leader, I just would love it if they would be more transparent about, you know, what is their top market and you know, I think that's just information that everyone would know because people get very hung up on like monthly sales in China. But then because of the logistics of shipping cars, the

monthly sales aren't always super accurate. So I don't know, I would just I would just love more from the company. Maybe we can press on that during earnings. Yeah, I mean Elon Musk might not be on the call, right because he's kind of oh no, oh no, he will be on this call. He tweeted that he's gonna come on the call, you know, so he was I mean, it's so funny, like Elon loves the limelight. So he made this big thing of saying, I'm not going to be on the call unless I have something to say.

He was not on the last earnings call, but the first time in a decade. But then in November he tweeted that he would be back on the call in January with a significant product. So first a year he will be on the call. So be on the call, Danna, What I mean, what do you think? Is it something about a cyber truck. Perhaps that thing still hasn't made an appearance. Yeah, I mean Tesla has not, so I think that I would, Yeah, I would imagine. I mean, you know, Tesla has all these vehicles in the wings,

the cyber truck, semi truck, the next generation roadster. They've talked about making a cheaper car in China. I mean, maybe they'll make a delivery van, you know. I mean, who knows. But but the truck is clearly the next car in their product pipeline. And this is the year of the electric truck. I mean, you have the competitors like Ford and Ribban all coming out with their trucks.

I mean they're already out with their trucks, like the Ribban truck is is out, and so I would yeah, I would imagine that the cyber truck will be a signfic. Get part of that, is this a make or break. Maybe that's stupid to say, but I mean I feel like it's going to be a significant year for evs overall, Danna. And you know when I think about Mercedes, We've talked with them and they've got an EV and we're seeing

that higher end markets certainly get more uh competition increasingly. So, um, how is that going to make things more difficult for Tesla potentially this year? Well, I've sort of argued this for a long time and I'll make the argument again. I think we need to kind of shift the way that we think about competition. The competition if not evs and evs fighting each other, the competition is really evies

bring versus ice vehicles. So it's more and more people make the shift to e v s, the kind of share of the E V pie is going to continue to grow, and that's that's actually good for Tesla. Like the more that EV has become normalized, the better it is for sort of everyone. Um, So I need Tesla might quote unquote lose market share to other EV makers that they will continue to growth sales Europe Europe. That

makes sense. I mean, like they you know, they grew, they grew sales just a phenomenal amount this year, and coming into the new year with two new factories coming online that will be able to continue to do so. So Dana, to that end, I've been asking h the question to other people today. Is there a chance that that Tesla sometimes soon becomes the company that produces more vehicles than any other any other automaker in the world. Well, they have a long way to go to get to that.

I mean, like, if you know, compared to like Toyota and Volkswgen. But but do they make the most evs in the world. Absolutely, Yeah, it's fascinating. There was a column I think too on the Bloomberg that just says, people thinking about their cars, you have to be thinking about if you buy a new car today, what's the resale market in five or six years, when you typically

often sell off a car, how's the battery doing? Well? Well, but not even that, like, are you gonna want to buy an ice right, an internal combustion engine when maybe in five or six years nobody's gonna want them, And so that just kind of pumps up the demand for evs. But there is that battery story too down the hall. She's the best, She's Bloomberg Technology reporter. We love talking all things Tesla and Elon Musk with her. Yeah, but you let me drive. Oh no, no, no, this is

not a twin home. All right, pleas I want to drive. It's good question, dri This is the drive to the clothes on Bluebird Radio. All Right, folks, just about ten minutes left in our trading day. We've got stocks really hovering near their house of the session. I thought they had seen that we could see maybe records? Is it in the S and P five hundred today? Um, but we'll keep an eye on that for you. And by the way, this is still a Santa Claus rally. We

got one more day. Santa's got He's gone back to the north. The technical definition of the Santa Claus Rally includes the first two trading days of the new year. Captain, alright, market captain, all right, Let's get to it with Steve Brown. He's senior portfolio manager at American Century Investments. They've got two fifty billion in assets under management. He's co manager on the company's real estate fund and the Global Real Estate Fund. That latter fund, by the way, beating most

of its peers over the past five years. Reach running on average annually nearly four. He's on the phone in New York City. Hey, Steve, how are you happy New Year? I'm great? Happy New Year to you too. All Right, So some optimism in the markets despite yields moving up. It's been an interesting first day, but the first day does not necessarily make a market year. Um, what are

your expectations as you look at two. Sure, we had a very strong year in two thousand one, and as we step into two, you know, we see a couple of things that are still in place. We see reads were really strong last year, right, I mean, if you look at one measure, I think it was up. I look at the DOWD Jones equity reat total returning decks up last year. That's a big bump. Yes, they were one of the worst performing asset classes in two thousand twenty,

so they did have a bounce back. But in general, a couple of the drivers were strong. Beformance are inflationary trends, a lot of liquidity and demand being stronger than supplied many property types. As we enter twenty two, a lot of those factors are still true today. Demand is great and supply for many property sectors in regions the world, and uh, you know, as you sit here today, inflation is still running you know, five s. The FET is

taking actions to address it. But I think in the first half this year we're gonna continue see inflation relatively strong. And there are a number of property sectors that have been able to raise rents you know, at the same level of inflation. So they have showed some very good, good earnings growth both in two thousand twenty one, and we expect to be that case in two two. Also. Okay, so where does the FED come into this, and where

does monetary policy come into this? Because I know from from your notes that our producers gave us UH that you still expect easy money policies to continue throughout the world, even though we see tightening happening. Sure, My point is that last year we had extremely easy money policies and this year two two, we expect to have easy money policies. So from extremely easy, too easy, still easy yet so there's still a lot of liquidity out there. Rates are

still very low. I mean, the FED once has said for the bond market, has said that the FED may raise the FED funds rate three times this year, you know, maybe up to h bases points or something like that in the ten year. You know, it's it's around, Like you said at the top of the hour, it's about one point six percent right now. You know, if that drifts hired a two percent or so, I mean, that's still a very accommodative environment for economic activity as well

as real estate activity. You have noted as to mention some of the research you guys shared with us and some of the notes that property owners continue to benefit from demand being greater than supply in many markets. You mentioned it earlier. UM reads. There's all kinds of reads, right, there's commercial broadly speaking that but you could break it down into hospitality, you can talk break it down into

office properties, you can break it down into retail. You know, where are we seeing demand and particularly being greater than supply in many markets or even geographical variations. UM, we see generally speaking, demand being granted and supply in rental housing, UM, industrial and self storage to name a couple three. And let me go back to the first one, which would be rental housing. This could be up the apartment, it

could be single family rental properties, or to be manufactured housing. UM. They're all benefiting these property owners, these real estate companies are from demanding grades and supply and ability to raise rents at a higher late rate than inflation. They're also being benefited by high home prices. I mean, home prices are probably a in two one. We don't expect that

type of appreciation in twenty two. But there is still a very good demand for rental housing, and the remains in most parts of the world assured as affordable housing. I know a lot of people who are selling their homes because as they know that you're going to move in the near term or something, and taking advantage of a market that is just silling and renting. Yep, yep. There are those serious tax implications to doing that, right if you take the gains and you don't actually buy

new property. That's true, that's a good point. Yeah, I mean, but we're seeing in general is that it's still relatively cheaper to rent than to buy because of the hurdle putting down ten or deposits. So it really has opened the runway up for continued strength in the rent old apartment market, whether to New York or the sun Bold

or other parts of the country. M Hey, Steve um Let's talk a little bit about retail, and you know, Simon Property Group is among your your top holdings here, and I'm I'm wondering how you're how you're looking at retail in the recovery and retail sure UM retail reads, whether it's Simon or some Shopping to Reach, performed very well in two thousand twenty one. They bounced back from a disastrous two UM as the economy generally reopened, both in Europe, Asia in North America, so the stocks had

a good bounce. UM as we sit today, we're still constructive on them for a couple of reasons. One is, UM there's been a lot of leaking activity in two thousand twenty one and that should flow into two thou into higher outdancy levels. Secondly, UM, there have been very few store closing their bankruptcies and the part of retailers, so I think as we entered the peak store closing season, which is couldly the first quarter of the year, UH,

store closing is gonna be very low. And then thirdly, generally speaking, consumers are in good shape from a balancary perspective, so they have plenty of spending power and so that combination of events you know, rising outencies, lower store closings, and they help the consumer, you know, bode well for both consumers spending, but also for rent growth and then a lot of growth on the part of a Simon Property group or some strip center names like a kink

or quite Realty with you own grocery anchored optic centers. What's your favorite space when it comes to reads or within the commercial real estate market or even residential. Just quickly,

we're still like industrial for a number of reasons. Uh, the man is clearly greater than supply there and the demand drivers of the growth and e commerce generally speaking, and it's not just it's factors to Amazon or Shopify, it's also the traditional players like Walmart and Target, you know, really emphasizing delivering the goods the consumer in a shorter time, and the backup in the ports has put more pressure, more emphasis on getting the goods into the warehouses, so

these retailers can control the desk in a little better. All right, Listen, Steve, thanks so much for joining us. Steve Brown, Senior portfolio manager, American Century Investments. 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