Citi Bonuses and Inflation Worries

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. So shares of Quest Diagnostics they're up roughly almost twenty this year. Company two out with some news today about completion of what it is calling a next generation lab facility in my own home state of New Jersey, which is where the company is based. Here to tell us more about the business outlook is

Steve Roskowski. He's chairman, president CEO Quest Diagnostics. He joins us on the phone from ce Caucus, New Jersey. Hey Steve, nice to have you here with Tim and myself. How are you. I'm doing wealth Care all. Thanks for having us well it's great to have you here. Um let's talk a little about business before we get into your new facility. You did boostlook on the top and bottom lines because of stronger testing volumes, Delta increasing testing demand.

That's certainly one of the big factors. How is business today? Are you starting to see that trail off as we see um us kind of get maybe a little bit more control of the Delta variant. Yeah, So, pierrol Is, as we entered twenty one, we expected that our COVID volumes would come down in the first half, and what

we did see was exactly that. But then in the month of June we started to see it pick up in response to the Delta variant, and we updated our expectation of the back half for COVID and we said at the low end of our outlook that we would expect about forty tests per day in the back off of Is that a lot? Give us some perspective. I have no idea as a huge give an idea of scale.

Back in the the early days of one, we're doing about a hundred thousand tests per day, so we were down considerably coming out of the second quarter, down to about thirty forty thousand tests per day, and that number has come up and we've been approaching thousand tests per day, so some portion of the third quarter. But we do expect as we start to see the infection rates coming down and typically are testing volumes following infection rates, that that will slow somewhat in the back half of the

second half. So so we're saying higher than expected volumes as we entered the year for COVID and we're right in the middle of it in the third quarter. We will now its earnings in October, and we do expect that that number will come down and back after give us that low end of the outlook of forty tests per day. See where does that number stabilize. Where is

that number a year from now. Well, it's a good question because we're watching, you know, the delta variant and and also its relationship UH to the vaccines, relationship to nactual immunity, what's happening elsewhere in the in the world. And when we had our investor day in the spring, what we said is that, yes, we believe COVID will

slow down this year, but it's not going away. We're gonna be seeing this in twenty two and beyond we will we believe it's going to become more flu like and that's going to be you know, a portion of our testing portfolio going forward, and we do believe it's for our diagnostic testing to determine where the COVID or not and we run primarily the PCR test, which is the gold standard, but will also include the whole portfolio that we have brought out and will continue to build

down around strology testing, which tests for the antibodies to determine whether the vaccine is working or whether you have immunity in some form. And what's happened to the menu over time. Hey see, if you have an amazing amount of data, given what you do, you understand where hotspots are emerging. You understand which areas that you have testing facilities in or you get specimens from, are seeing a rise in cases. What do you know before regulators know?

What do you know before public health officials know? And how do you communicate what you find out to them? Yeah, so we have we have a reporting requirement for all infectious diseases that we had in place before COVID, and whether it's HIV or hepatitis B or C. We had to report that data to public health officials and that's around the country in every state. And actually we we reported into about eight hundred different look patients throughout the

country all our results. So when we have a positive PCR test for COVID, we provide that information to public health officials, so they pretty much have that information at the same time that we're seeing and once we resulted because we reported on a daily basis to these reporting entities. So tell us about this new testing facility in New Jersey, my home state of New Jersey. Um, what can you

tell us about it? And I'm curious about Um, it was in the works from what I understand ahead of COVID, but it sounds like you picked up, ramped up getting it done. What does it mean in terms of your productivity, ability to process, diagnostic to taste testing, and what does it mean ultimately for top and bottom lines. Yeah, we were excited about it, So, Carol, we we have been on a march to continuously improve our business and we've

been as a company working on two strategies. One us to continue to build programs that support accelerating and growth, and that's underpinned with a belief that our operations need to continue to get stronger, and we call that operational excellence. And as part of that, we've been striving for three percent productivity improvement per year and our view on productivity improvement and it does not come without improvement in quality and service performance. And so as part of that program,

we actually invested in the new facility in Clifton, New Jersey. UH. It affords us an opportunity to consolidate a number of our smaller facilities into one larger facility. It also allows us to harmonize our processes and put in common systems across the company, and it also allows us to put in new automation and in testing capacity. Tasty Um, you're telling us about this new UH next generation lab facility facility. You guys use the word next generation. What makes it

next generation? Yeah, Carol, we're excited about it in many different ways. First of all, it's one of our largest facilities in the country. It's going to serve about seven states, will serve about forty million people, give us capacity of about three hundred thousand tests per day, so it's big. And secondly, is because of the automation and and the ability for us to do more integrated testing. It's going to allow us to even improve the quality and the

service performance and productivity that we have today. So we're quite excited about it coming online. We invested about two fifty million dollars in this project, and actually we started a little bit of the construction before the pandemic, but it was just remarkable how we completed it despite the pandemic, and it's up and running today, so we're very proud of that. Hey, how much of it are increasingly Is it helped me out here? I'm not an expert on this,

you are. How much is automated? Is all of it automated? That not entirely. If you go into a lab environment and you still see a lot of people in a lot of manual labor. But what's happened over time, Carol, is some processes have been automated by some of our suppliers. We actually have over two hundred suppliers that provide equipment in capabilities into this laboratory. So they do some consolidation and automation, and then we bring down bring together some

of those work cells. Because you're doing multiple tests on a common specimen. So when you get inside of a laboratory. You have a common collection area that you sort out those specimens and then you put those in each of their work cells. Each of those work celles have become more automated over time, but I'll share with you, even though we're very proud of what we've done here, there's more of that work we believe we can do going forward. Employees,

are you hiring more? Are you finding it? We brought to be hiring about a thousand people. Some of these people came from our existing UH facilities. We had a large facility interior Borrow that we consolidd over to Clifton, So we're happy that those people will join us in Clifton. But we're also bringing in some more people as well, So about a thousand people. Hey, Steve, I'm wondering about

home testing. There's been a big movement during the pandemic when it comes to home diagnostic testing, and indeed, the Biden administration said recently we'd spend a billion dollars to boost the supply of rapid COVID tests. I'm wondering how you think about the rising home testing now we've seen not just for COVID but for other elements too. Yeah, we um we've been in in the home testing business before the pandemic. We actually developed and implemented a program

called Quest Direct back about three years ago. We're where you offer through our direct platform the capability for a consumer to buy laboratory testing and some of this could

be uh, your standard cholesterol tests. We called it a LIMPID panel or testing for diabetes that standard test aeroby glucose or human globe and able and see and consumers can buy this directly online and we will then guide them through the process of getting there their blood collected, and then we resulted in a smart OPA called my Quest and what we found before the pandemic there was a market, but during the pandemic the market has actually

has grown considerably. And that's for the what we call our base business testing. But on top of this platform, we incorporated what we're doing around covid as well, So the ability for people to get a PCR test or a strology test is on this direct platform as well.

And and with COVID, the gold standard is what we have been discussing, which is referred to as pc are right well, we also are providing antigen testing, which is the is the at home capability where you can do the specimen collection yourself and you can actually do some of the reporting it through some of the applications that are provided. And we do believe there is a place for those antigen tests in the management of COVID going forward,

and we pride those to consumers as well as two employers. Hey, Steve, We've got to run, but really appreciate checking in with you about the new facility and the outlook for your business. De Roskowsky, CEO of our Quest Diagnostics, on the phone in cy Caucus. You're listening to Bloomberg Business Week Karl

Master along with Tim Stanivic and Bloomberg Interactive Broker's Studio. Well, Stephen Miller, fixture in the Trump administration known for being the architect of then President Donald Trump's anti immigration policies, is now bringing that crusade to the court. So let's

get more on what he's doing. It's a story to be in the new issue of Bloomberg Business Week out later this week, online and on the Bloomberg Let's bring in Bloomberg Business wee Get or Chill Weber in our Interactive Broker studio along with Eric Larson, who is US legal reporter at Bloomberg News. He's on the phone in Brooklyn, Stephen Miller. I thought this was really interesting because it's sort of like the rights answer for a c l

U UM. And you know, the central question that I wanted to raise with Eric is like, is this for real or these are is a legal community looking at these cases is something that has you know, real legal merit or is this more of a of a way of you know, drumming up support for Trump and in a in a fundraising sort of sense. Well, to be honest, it seems like it could be a little bit of boats that. Certainly the views that I got from some of the folks that I that I spoke with when

writing this story. You know, it's a brand new group, you know, just started in April and already you know, there's these comparisons to the a c l U, which has been around, you know forever UM and saying that it's this right, the right answer to the A c l U. And uh, they do seem to be making

that that pretty seriously. They you know, like you mentioned, they spiled some lawsuits against the Biden administration right off the bat um you know, there they have several cases pending actually, and they actually got a little bit of traction um in a couple of the cases where injunctions uh were actually that they had requested were granted. UM. And they're finding a lot of Freedom of Information Act requests. You can see it all up on their website. You know,

it's it's pretty NonStop. And of course they're making regular television appearances on Fox News and news Max and O A N so. UM, they're definitely drumming up a lot of supports. Hey, Eric, take a step back and remind people who Stephen Miller is. I mean, people who follow politics closely remember him, but take us back to what he did during the Trump administration, what he was responsible for. Sure.

So Stephen Miller, he's he's very six years old. And during the Trump Trump's term, he was a speech writer, he was a senior White House aid and I think a lot of people have you know, hadn't heard of him before. Um, And all of a sudden he kind of had this fairly prominent behind the scenes job. And as then President Trump was coming out with some of his pretty hardline immigration policies, UM, folks started to backtrack

and look where these were coming from. And they seem to be coming from this guy named Steven miller Um. So he sort of had a long history of being uh, you know anti immigration, very America First you know, becains the name of this organization, America First Legal, and he was the architect of, for example, the Muslim band um that was so contentious and so devisive during the start of Trump's presidency, and also the you know, the child's

family separation policies and things like that. So his fingerprints were on a lot of that. So his efforts is it all about you know, taking all of these matters to the courts or is this about really keeping Trump voters engaged and pumped up? Um? You know again, I think I really do think it's it's both. He is going to courts. Um. They are all of the people involved in this. It's not just you know miller Um

behind this organization. Um. He's also got you know, Matthew Whittaker, who is acting Attorney General under Trump is part of this organization as this. Former Trump Chief of Staff Mark Meadows, and former Office of Management and Budget director Russ Spots. So there's a lot of names behind here. They are definitely you know, doing a lot of fundraising, asking for a lot of money and using these very divisive issues

to try to engage Trump voters. But they are also going to court and trying to you know, as they say it on their website, basically save America from the left. And so what kind of cross pollination are we seeing between Miller's cases and his cause here in the in the Trump fundraising machine. No, I I don't know exactly

because we don't have any insight into their financials. We know that when America First Legal Foundation first you know, launch, their first press release was a quote from Trump praising Stephen Miller personally and saying, what a great organization this is. Uh So, as far as what, you know, how much money they've raised, and how it might compare to how much money Trump has raised, of course huge amounts of money. Um, it's really unclear. I spoke with some people who are

very critical of American First Legal. Of course there are people on on the left who are opposed ideologically, but they say that Miller and these other folks are basically you know, found that this too, you know, get as much money as possible from Trump supporters to sort of get a nice paycheck and wait, for the next election when Republicans might you know, somehow come back into power. Um. So it's very you know, cynical views are out there

of what of what's going on here. But for as much money as they might be raising, like I said, they do seem to be doing quite a bit of work as well. They've they're not just focused on immigration

by any stretch. They're going after everything from LGBT rights, transgender rights, uh uh, in healthcare and employment, um, trying to remove protections there, uh and in filing all of these Freedom of Information Act requests, trying to expose what they think is wrong doing related to everything from you know, the closing down the investigation into the origins of COVID to alleged attempts to you know, dismantle ice there all

over the place. As you right, Eric, the group is also challenging pandemic AID that's earmarked for minority owned firms. You spoke to a fourth generation black farmer who's the founder and president of the National Black Farmers Association, John Boyd. Um what is what is the group trying to do and what does he say about Stephen Miller and his groups attempt to do it well? You know, he was really offended. H He his organization intervened in Stephen Miller's

lawsuit against the Biden administration. Um, you know, in that huge pandemic relief bill, there was some large chunks of money earmarked for minority owned restaurants and another provision was for minority owned farmers and ranchers. And Stephen Miller suit saying that no money should be given, they shouldn't be given any preference based on race. That that would literally discrimination, racial discrimination against white people, is how he described it.

And John Boyd, who has been part of this organization for so long, who founded it, he just said it was really offensive and so that there's just been this long history of government discrimination at the federal level and that the Congress was just trying to do a little bit too right that wrong through some equity programs on Stephen Miller sees those equity programs as kind of a dirty word. And he basically encouraged said Stephen Miller should live a day as a black man, he probably wouldn't

hold these views, is what he said. Uh, it's like Miller is like such the perfect boogeyman for for the left, you know, and It's like, I also can't imagine like a more perfect person to be kind of attempting to lead the Trump kind of legal machinations post presidency. It's just like everything you know about Trump in the courts is just like just you know, muck it up and slow it down and make it painful. Um uh, you know, well, I guess we'll we'll have to kind of see how

some of these end up playing out. Where are if there's a case to watch that sort of embodies, um, what Miller's up to? What what do you think that would be? Eric? And Eric really quickly though, Yeah, he the Texas Abortion Band case. His group is now involved in not representing some opponents to abortion. They're like interveners in the case. And he's, uh, I think he's going to be definitely trying to make his voice heard in that lass. You guys, that progresses. The world just gets

more and more interesting. Till Webber, thank you so much. Editor at Bloomberg business Week. Here in our interactive broker studio, Eric Larson check out a story. He's US legal reporter at Bloomberg News. On the phone from Brooklyn. You're listening to Bloomberg Business Week Carol Masser Tim Stinovic coming up one of the most read stories on the Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So this is one

of our most read stories on the Bloomberg today. It's but a little notice change to city groups rewards for top execs, and how it is set off. One of the bank's most prominent detractors, Jenny Seraine, is joining us. She's finance reporter for Bloomberg New She's with us in the Bloomberg Interactive Broker studios. So we're in leather, looking pretty wild, loving it YouTube you can see the leather jacket. I'm loving it. Thank you, You're welcome. Jenny. What is this?

What was this change in the regulatory filing? And and why is Wells Fargo's Mike Mayo drawing attention to it? Yeah, it was interesting because it was very little notice. It

came out on a quiet summer Friday. Um, so that was part of his concern, But I think his bigger concern was really just you know, they're setting up a new bonus program for some of their new CEO Jane Fraser's her top deputies, so um popular Bara he's their head of Institutional Clients group chief fin inch Officer, Mike Mason,

the head of Enterprise Ops and Tech, Mike Whittaker. They're all eligible for five million dollars apiece over the next few years if they can hit some targets around where the stock price goes and what city is doing to clean up the bank. Um but wells Fargo's a big issue with this is just that sad he didn't really disclose what those targets were. So there's you know, a lot of specificity on the money at State, but not

a lot of specificity on the targets themselves. And so he's just calling fresh attention to this, saying they need to do better. I got to read the quote that's like, please, you guys all know what I'm gonna read. He Mike Mayo said in an other client's quote, that's like charging us for dinner before we know if we're getting hot dogs or caviare Well, this is someone who's been a critic our city. Correct. Yes, we'll know Mike Mayo. The Bloomberg audience knows who he is. He was just on

TV passing around popcorn. We'll talk about that later. Yes, So he's very known for his very fiery exchanges with City Group executives for a long long time. Now, UM has been covering this stock for a while, you know, interestingly he has um he's actually overweight on the stock. He's recommending that this is a bye. So you know, there's I think a little bit of good and a

little bit of bad here. He thinks there's a long way for this this company to go, and he seems to believe that their new CEO, Jane Fraser, is a change agent that can accomplish that. But Um, you know, still holding their their feet to the fire on this. So help me out. I mean, this happens, right, I mean a lot of firms, a lot of companies in general, publicly held companies, pick your industry. There are centives that are giving to senior execs to bring about X y

Z at a company. Is it just that it came out late on a summer Friday. What is it that's so different or troubling? I think just the fact that there's not a lot of disclosure around what these targets actually are. Like, what are you hoping your stock price will get to what are they really responsible for in this turnaround at City? You know, it's important to remember City is in the middle of a year's long overhaul of all of their internal systems ordered by regulators late

last year. Uh, this is a really important time for them, and it's important that they have their executives on board and that they have skin in the game and accomplishing that. But they need to be really clear, I think with investors exactly what they're hoping to get out of this. All right, Two things, One would say, that's your job. Why do you need to be incented with a bonus to do it? Secondly, because you're such a great reporter, I'm assuming at some point you've recently reached out to

City about this and said, what's the deal? What are the metrics? Yeah, so we've reached out for comment they declined. UM, and I think, you know, we have an investor day set for next year where I think a lot more information will get shared about this. UM. They just announced that it's gonna be on March second, so that's about a year after Jane took over. UM, so we'll see. I think we're going to get more and more. But

a lot of times with this regulatory stuff. You know, cities hands are really tied in terms of what they can actually say. Their regulators keep it very very tightly controlled. Um. So I do, you know, have a little bit of sympathy for them on the one hand, But on the other hand, we're journalists. We like uh, we like a lot of transparency. So I think there's a little bit of a balancing work that city has to do here. And you know, Mike Mayo is just saying they've come

out on the wrong side on this one. Well characterized for us, Jenny, what the challenges the bank is faced in recent years and what Fraser is trying to do. Yeah, so the consent orders that they got hit with last year were really about a lot of the underlying risk management and internal controls, and so that's the stuff that you know, runs all of the kind of underlying operations and really everything the bank does with our data and

and all this stuff. So this is a big overhaul that's that's going to be in front of them, um. And they do need to have senior leadership buying in and really paying attention, never dropping the ball, and I think that's what they were trying to do with this program, and they've even said, you know, we're naming these three officers, um, but we're going to have this apply to a lot of our top executives. And that's what regulators actually wanted

from them. You know, if you actually read the consent orders, they said, we want you to be making sure that you've got, you know, compensation programs that are tied to this effort. So I think, you know, well, we'll see a lot we won't see a lot um. But the bank has said they're very focused on this and it's a years long process that that's not going to be

easy to solve. I'm not fast enough, but I'm trying to look up Mark Mason, who's the chief financial officer at the City Group, just quickly kind of what his compensation is. And I mean he's already making uh five point nine million dollars in cash six point one million in non cash um. It's a pretty nice salary. And I know people will say no to it. No, And I know folks on Wall Street get paid a lot

of money. But some again going back to the argument that that's your job to make sure the right systems in place, Why do we need to layer something on top to make sure that those systems, the right systems are in place. And and forgive me, I don't mean to single that Mark, I just that's the page I

pulled up on the Bloomberg. Yeah. Well, and you know, Mike mayover, well, the other thing that he kept saying was some of these executives were in charge of these businesses when a lot of these you know, misdeeds were happening. So the idea that they're going to get more money to fix and clean up what maybe they were overseeing when when there was the problem, that's a little hard to square away. But I do think, you know, the great resignation and this whole idea of lots of shifting

folks moving around to different banks. They've got to keep the talent that they have. They need to have these folks clear headed and and kind of really focused on the task at hand. And money does that right, and money definitely does that sort. So I mean, I think you know the prospect that like your bank could just continue to get hit with mean regulatory Mike Mayo is in my right and he's like eating me these loves. I love that. But I mean, I think I think

Mike's points are good ones. I think, um, we'll see a lot from this bank over the next few months as they kind of finish up the initial reports that they owe to regulators. But it's definitely a big time at City. They've they've got a lot of work that has to be done. But Jenny, just in the last thirty seconds that we have a few city reporting earnings, uh eight am on Thursday. What do you keep an eye on? I mean, I think loan growth, that's the big thing we're looking at for all of these banks.

Is it coming back yet? Our people borrowing on their credit cards, our corporations getting back to this? Um? I mean, I don't know that we'll see that this quarter, but I think everybody's going to be listening to these executives, you know, will they see it this year? Is this the next year? Thing? Um? When does that come back? If it's low those numbers, those loan growth is just

say something about the economic outlook the market? Or is it just say that banks are just being incredibly picky Still, I think it's a lot more about the demand side. I think, you know, folks are flush with cash after all this government aid, and so I think it's a lot more about demand at this point. At least that's what the banks keeps saying to us. So good ll leather,

I'm just saying, I'm kind of loving the whole package. Um. Jenny Serene, she's a must read here at Bloomberg and this is, as we mentioned, one of our most read stories on the Bloomberg Jenny is finance reporter here at Bloomberg News. I'm bro oh journal. Yeah, but you let me drive? No, no, no, drive home, honey, please, I'll do the right ravel. I want to drive, Just drive baby, question te drying yea, this is the drive to the globe. I'm commune. Thanks, We'll drying up dawn on Bloomberg Radio.

All right, so just about ten minutes left in today's trading session. Charlie Pellett really summing up up. Well, we're seeing some selling into the clothes, although again we are bottoming out here, but we are near our loads of the session here on the equity trade, let's get to it with Alan Zaffron. He's founding partner and co c I O co CEO excuse me, at I e Q Capital. He's on the phone in Foster City, California. Allen, nice to have you back here on Bloomberg Radio. So we're

watching this market trade. It's gonna be a big week for earnings. Um, what's of interest to you when you look at kind of the churning that's going on, because it's almost an even split if I look at the S and P five ONUND a little bit more selling when you look at the names that are losing ground today versus gaining ground. Carol and Chim, thanks for having me on. I'm glad I'm the chief of many things apparently, Sorry did I add some titles? I love it more.

Congratulations on your promotion exactly. Hr is knocking on the door, Ellen, uh, I got There's two I think major trends impacting the market. One is this question about his inflation going to be transitory or here to today, and that that's an issue we can talk about because if you have inflation, there's a worry rates get too behind. This whole market was built on rates. And then the second thing that's not

being talked about. I just think you have intramarket leadership changing, and what really has happened, we just got through it, I think is the early cycle of the economic recovery, and we're transitioning into what we call the mid cycle. So if you think about it, you know, we have this horrible recession back in March of and all that horrific Cuman loss and all the illnesses and everything, but

coming out of it. From a classic economic perspective, when you have an early early cycle recovery, you get a combination of earnings growth and valuations going up, so multiples expanded and earnings expanded, and we're now kind of past all that. So in the early stages, you're small caps do well, value does well. Now you're you're transitioning into

this mid cycle. And the mid cycle means earnings growth rates are peaking, valuations have peaked, so valuation is going to start going down, but you're still having earnings growth and probably growth enough to beat the compression and ultiples. And so what's happening is there's this battle and typically rotates from the small caps and guy stocks towards the mid caps and Franklin large caps. And now starting with for companies, they're going to grow regardless of economic sensitivity.

So you get you get towards tech and healthcare, you get away from the small caps and get away from the deep cyclical businesses. But it's it's a it's a churn, and this is the ugly churning happening right in the middle of September and October when the world's always russ right in the middle of the big debt site and tax heights. It's just kind of a combination of all

this at once. It's really hard to fathom out. But if you take a step back, you either decide inflations here to stay, or it's transitory and you decide we're in the middle of this transition into a long standing bowl, or yeah, this is the end of the market, the bull market. I don't believe I'm in the first camp work work transitioning into a mid cycle. We're gonna have some ups and downs until it's clear that inflation is transitory, and that might not be clear until the early part

of next year. What are the data that that's telling you that, Alan, Well, what's telling me that is you kind of look at the stuff that's gobbling up the inflation data. A lot of it is these big bulky as ask for things that get stuck in on the on the ships, on the ports, so it's new cars and used cars and rental cars in video, and auto equipment and RVs and sporting equipment and furniture and housing appliances and those kinds of things that are going to

work through the cycle. The question is, are you really seeing um wage inflation that's permanently gonna sit there. I don't think you're gonna see that at all. I think you're going to see continued challenges even even trying to hire people. I still think there's so much productivity growth and there's so much use of technology. I think people are still going to clamor for the good jobs and

we are going to be ultimately find people. And I think where there's the rapid rage games and a lot of it have been in the low weight, low page group, the hospitality workers and leisure workers, where there's a real shortage that's not really going to drive up economic inflation to putting in problem for the market. So I think it's gonna it's gonna diminish when we get into the ladder happen next year. But the big question still out there is if we get some kind of you know,

fourth wave, another variant. I hate to be such a pessimist. It's not who I am, but uh, you know, the pandemic, we thought there'd be a bounce back, We get vaccines and we be all be back to normal. It's not such a straight line. We see that if we continue to have some problems, certainly when it comes to variants or COVID that's gonna covid excuse me, that alan will

continue to impact those supply chains. Maybe workers can't go back to help produce, you know, the necessary products that are in demand, and that as a result, could keep that transitory inflation, maybe still transitory, but transitory a little bit longer. Yeah, I would agree with that. But let's

think about that from the stock market perspective. A market that is marketed, a capitalisation wated meeting, the companies that are largest move the markets most, and those all large cap tech companies that largely grow even in a pandemic driven world. So it's is that's going to be it's going to continue to worsen all this socioeconomic divide. It's probably not going to be that devastating for the stock markets. The big camp large tech names that are growing aren't

going to get that devastated. And so I think you're gonna see a continuation of it worst a sluggish market. Sure you can get brief dropbacks, but there's too much liquidity in the system, and I think it's inevitable that the inflation eventually mitigates away and the risk gas prices in a world of low yields work their way higher. They just do. It's just gonna be sloppy between now and when we have visibility, and that's probably three to six months out, and I think many people would argue

it's a stock pickers market. So just before we let you go in the last forty five seconds that we have, give us some ideas well. Again, I'm gonna harp on the fact we've moved away into this this mid cycle. So I still think it's really early to look at when you get to the inside that you look at utilities and consumer staples, you're way too early for that. On the flip side of that is the even money has been made in the you know, low quality hotels

and restaurants and deep circlical businesses. So play in the middle. Look for mid cap and large cap growth, steady franchise names where there's real earnings growth. The evaluations can be. It's really carp growth at a reasonable price. Right, stay away from the high flyers and stay away from the jump played in the middle of strong franchises. All right, Alan, thank you so much. Great to have you back with us. That's Alan Zaffron, a man of many titles, and I

was giving him a few more. He's founding partner in co CEO at I e Q Capital on the phone from Foster City, California. But I always love it's very thought you know, very thoughtful in terms of the research. He shows with us a ton of research, so I always feel like we go into this knowing a lot and learned so much more when he joins us. 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