Computer, Mathematical Workers Remain at Home

You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg Global News. A lot to get through, Tim and I just talking about Michelle A. Cortez who's got this story about the world may never reach herd immunity against COVID. Meantime, New York cities, museums and cultural institutions they're going to require visitors and staff to be vaccinated.

We got that from Mayor Bill de Blasio. Uh. And then we've got fives from BioNTech saying they have submitted tim phase one trial data to the US FDA for third dose of their COVID nineteen vaccine. There's a lot still going on. Yeah, they're showing that a third dose of the vaccine led to higher levels of protective antibodies when given eight to nine months after the original regiment. Let's get right to it with Dr Tom McGinn, executive

vice president at Common Spirit Health. Common Spirit Health has a hundred forty hospitals and more than one thousand care sites across twenty one different states. Dr McGinn, it's it's great to have you on the show. Give us an update about what you're seeing in Common Spirit Health hospitals right now. What's what's what's the what's the view on the ground. Thanks Tim, and thanks Charlos, thanks for having

us having me on. Well, the view on the ground is that we are seeing as no actual you know, new news to you is that we're seeing a resurgence in our hospitals in almost every market now. Uh. You know, it was isolated, you know, in some of our regions in the Southeast and Texas, but now we're seeing it in the Northwest. Our hospitals are reaching you know, some some real critical moments, but I think we're managing it well.

But we're now seeing pockets in California, in all of the southeast in all of the Texas area, and now we're seeing it in the Pacific Northwest. So you know, we are controlling it, we're managing it, we're you know, we're a lot more nimble. We have a lot more algorithms and treatments that we can offer folks as they come to the hospital. This is fundamentally a hospitalization of

the unvaccinated. While about ten percent are vaccinated, many of those folks are folks with underlying medical conditions and things to that effect. So really, what we're seeing in the severe cases is a resurgence across the board of the unvaccinated. So let me make sure we have this right because data is really important here. Of the hospitalization is roughly that you're seeing in your hospitals across the country. Those

are people who have not been vaccinated approximately. I mean, it could vary from seven to fifteen or seven to twelve percent, But fundamentally, I just said, let's for simplicity sake, let's say, are they younger, are they older? Who are they? What are the demographics? Well, you know they are the hospitalization rates are much higher. The numbers are a little tricky. We're seeing an uptick from baseline of the young folks, it's increase of those getting hospitalized who are young in children,

but however, the baseline was very low. Still, the vast majority of folks are older. Um many of them are, you know, with chronic illnesses, the diabetes, the hypertension, all the things that we learned. I was in New York for the beginning of this phase of the pandemic and did a lot of work on the early predictors of who would have severe COVID. So it's that story still plays itself out. What we're seeing is an uptick of

hospitalizations among young people, no question. We spoke earlier about the fact that vaccines still aren't available as we go back to school around the country to people who are under the age of twelve, what's what's the best way for those young kids to stay safe, the best way for parents to think about risk factors and are we seeing different data play out with younger people under the age of twelves. We can't be vaccinated, so you know,

this is the real challenge. I I heard you speak earlier, and I'm in agreement that we need to get the kids back in the schools and I'm working with several schools across the country, and I think we need to just good old fashion and now what we call old fashioned methods of mask wearing, social distancing, um, you know, handwashing, all the things that we did uh early in that pandemic.

But having kids in the classroom, I think that you know, we can get through this if we continue to follow the basic rules of engagement around mask wearing, that that really is going to be the key to success as we go back into schools. I think as you and I talked about this, and as a primary care physician, I can see the stress, the anxiety, and all the issues that we're creating by not going back to school. So I really think we all need to just face

the facts. Kids are gonna need to wear masks if they're unvaccinated, which they are, and we're gonna have to do a lot of the same social distancing and careful uh you know approach to this as we move into the fall. And I also just want to mention that this fall and excuse me, no, no, no, sorry, Carol, I think that one thing we have to think about, and I'm preparing for this across Common Spirit is the sniffles. Okay, we are coming into what will likely be a regular

cold season, whether or not the flu. Remember, the flu and the cold are two separate things. We've seen an uptick in RSD virus, which is a specific virus that is a harbinger for common colds. So we're anticipating a lot of colds and sniffles mixed in with the potential flu, mixed in with the potential covid. So how do we test for that? How do we carefully, you know, manage that situation is something we are all preparing for right now.

So I just wanted to put that into think of the child showing up at school with the runny nose, wiping their nose in the middle of the fall. What does that mean? How do we manage that and that stuff we were all trying to figure out. Now you call it a twin demic or potentially a twin demic season, correct, Yeah, I think that, you know, we you know, we could see if influenza comes up, we will see that will be a stress on our hospitals. But I think even

beyond flu, I mean people very confused. I thought, oh I had a bad flu, what they really means sometimes I had a bad cold, and a cold can mask and look a little bit like mild COVID. So how are we going to distinguish that? Um, So we need to really ramp up our testing strategies, particularly in primary care sites, our strategies that are schools, you know, all across the country. Do we have the equipment, Do we have the supplies to do all that right? And that

stuff that we're all working on. Hey, sit tight for a second, um, Dr McGain, We're going to come back and continue the conversation. I also do wonder if we just put masks on again to him down. Many companies doing it right now. You have many companies saying wait a second, even if you're fully vaccinated, if you're coming back to work, uh, you have to wear a mask again, right, and that'll keep hopefully maybe cold to own regular flu down, keep it all down. Yeah. I mean, it doesn't matter

if it's a small bike shop. I was in one yesterday where they're requiring employees to be vaccinated and wear masks, or one of the big banks that announced in the last couple of weeks, even if you're vaccinated, wear that mask. All right. We're gonna come back to Dr Tom McGain he's executive ep a physician enterprise of at Common Spirit Health. Will continue right here on Bloomberg Radio. Let's get right back to it with Dr Tom McGain, executive vice president

at Common Spirit Health. He joins us on the phone from here in New York, a dark Common Spirit Health operates a hundred and forty hospitals and more than one thousand care sites, this across twenty one states. Dr Dr McGinn um. I want to have a realistic, uh idea of how we're going to be living with COVID for the rest of our lives. Is this is this something that we get inoculated against each and every year, like

the flu, and it fades into the background. Yeah, well, you know, I think obviously we will learn, but I do feel that's where we're heading. I think that as we increase our vaccination rates, as we look the variants and we adjust, uh you know, these vaccines, that we will end up learning to live with COVID, just as we learned to live with influenza. But we we are getting better at this, I don't you know. I think a lot of us can get caught up in in sort of this is never going to go away. But

we are managing it. We are learning more every day and I think when this servige goes down, we will continue to be prepared for it and if we need to live with it, we will learn to live with it. Right. As our synthir Coon wrote for Business Week last week, we talked about it on Friday. The vaccine, folks, it works. You know, we need to be reminded with all of these you know worry where some headlines that the vaccine

it actually works. Having said that, um Dr McGinn. Do we need to be smart because as you said, you know we're going to be dealing with colds and the regular flu and COVID come fall that by wearing a max mask excuse me, can we mitigate much of the risk from those three? Well? It was amazing fall last year, wasn't it? The fact that we saw almost no flu. I mean many of us reflect back, Wait a minute, I didn't really have a cold lest floor. How does

that happen? Uh? You know? And I think a lot of it came from the mask wearing, the social distancing, and I think as we go back to school again, I you know, I don't I'm avoiding the whole discussion of the political mandate of a mask, But it really will get these kids through a false season that I guarantee will be complex, and we are preparing for it and we'll manage it. But I do think the mask will reduce cold costs, flues and COVID, so it will

have a multiple effects that will be positive. It's hard to think about this as the parent of a two and a half year old though, as I am, because you know, he wears a mask for five minutes and you know he's been he's been like chewing on it versus a nine year old who could totally keep a mask on when when inside. So how do you make sense of that? No, Well, first of all, I have to say, you know, ChIL John, I have you know two girls there older now their college age, and so

that has its own inherent issues. But I I'm amazed as I work with many schools and watch kids walk around Manhattan with their masks on. Now as you get below you know, three years old, it gets complicated and you do the best you can. I mean all we're asking people to do. Let's do the best you can. You know, this is not you know, something where we're going to force people to do things. You do the best you can under the circumstances. Try to put the mask on, try to be socially distant, try to be

smart about it. On our side, on the public health side, on the health system side. You know, we're a common spirit dedicated to provide care and test and treat and vaccinate in every community throughout this very diverse country that

we live in. And that's our job to figure out, how do we test these kids when they have the sniffles, how do we get them easy access to vaccinations when they're available for the young kids, which I hope will becoming sometime late in the fall, maybe early next year. But you know, you do the best you can with the mask and all of those efforts mitigate every little thing we do mitigates that's bread by a little bit. Well, that's helpful when you edit up hey just quickly thirty seconds.

Do you anticipate that in terms of an additional booster for the general public, Does that happen before the end of the year. I do think we're going to see that and come out in a process that we just saw some folks who are mean compromise. I would assume healthcare workers sometime soon we started hearing. Hey, they were the first ones back then, they're on the front lines. Do we give them the booster. I think it's going to roll itself out gradually over time. Absolutely. Hey, listen,

thank you so much. Really appreciate it, and I hope we can get you back real soon. Dr Tom Again, Executive Vice President Common Spirit Health, on the phone from New York City. Are you going back to some of the stuff that we were doing before we got the vaccine? Um, yes, I am. I'm wearing a mask now in source. You know, I was to the point where I would go and pick up food and go to the I was always wearing the grocer in the grocery store, I was wearing

a mask. But yeah, even around here in the office. Public transportation, oh yeah, I'm still taking public transit, but I'm wearing a mask. You have to yeah, no, yeah, you don't have to. I would. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So I see it, I hear about it. We know what's happening that despite some of the slowdowns

in an office reopenings because of the delta variant. There are still tim a lot of us back in the office, and yet for a certain subset of the workforce, they're clearly staying at home. Justin Fox is a columnist for Bloomberg Opinion. He writes about it in the upcoming issue of Bloomberg Business Week magazine. You can read it now at Bloomberg and at bloomberg dot com slash business Week.

So Justin who as people some reluctantly go back to the office, UM State Street employees, notwithstanding, we should know, correct in New York, I should say, who's staying home? What did you What does the data tell you? UMS? The group that is most stuck at home is UM people in computer and mathematical operations, which is basically software engineers,

data analysts, that whole world. And it's on level. We know this because it's the Silicon Valley companies, the tech companies that are sort of being the slowest to come back. But these people aren't just working in tech companies. They're at all different kinds of companies, and it just seems like more than any else, it's it's as of July of them reported that they were still working remotely at

least part of the time because of the pandemic. But that doesn't reflect people who were already working remotely before the pandemic. Or you hear a lot about, especially in tech, people getting hired completely remotely. Now. I don't know if they get asked by the Census Bureau whether they're working at home because of the pandemic, they may say, no, I'm just working at home, dude, Right, that's how I

was hired. Hey, Jill Weber's with us of course, editor of Bloomberg business Week magazine, and Joe it is, you know, interesting on a daily basis, we are kind of parsing out what's going on, who's coming back to work, who is, and who can go back to work who can't? Uh, And love that you guys are highlighting this. Well. When I saw um Justin's draft, it reminded me of the ending of Point Break. Uh and if you can place that, the quote is he's not coming back, And that was

totally how I felt about exactly. Oh, you've come out of you and watched Point Break. You know, you're just justin. It's a fantastic one. Oh man, I just want to slap you from here. So you need to be in the office, dude, the virtual slap. I think that the story revealed to me again, but there are certain workers and certain career paths that have ended up kind of

being able to rise above the fraight. So to me, as much as anything, this is a story about this wealth inequality and wealth disparity because obviously these are high paying jobs right justin yeah, I mean that's part of it. And more broadly, you know, white collar workers have been

more able to work remotely than everybody else. But it seems like with this p particular group, yes, they're highly paid, but it's also just kind of the way they do their work has even before the pandemic, been getting increasingly sort of distributed, and lots of times when there's any big sort of software related project, there are teams all over the world working on it. There's already been a lot of outsourcing to freelance workers all over the place.

So it just sort of feels like this is a particular area where you know, the default going forward maybe doing it remotely. Well, we were talking with the CEO of Mozilla to who said, we've been doing this for years, like this isn't new to us, but increasingly as every company we're a high tech company, where a media company, but where a lot more than that obviously, But each company, UM justin often has a huge tech component to it. They've got a lot of software engineers, people who are

writing code for one reason or another. Pick your industry, pick your company. Yeah, No, it's spread all over the place. I mean, the BLS does this annual sort of accounting of where people in every pretty arrow occupation, UM, what industries they work in. And so I was going through the list for computer and mathematical operations and I think I found like a Mason reconstruction doesn't have any UM,

but bars. There were fifty of them listed as working in the bar industry can conclude, you know, like a chain of bars or something. Aren't many of those shipping liquor to all of us at home exactly? So it's yeah, it's all over the place. And you know, obviously that will differ by industry. Some industries, you know, another oil and gas industry has tons of UM computer and mathematical occupations. It's going to vary by industry how much they stay

at home. But I just feel like that particular kind of work is going beyond where a lot of the other things that what color people do are going. Okay, justin help us think through some implications of this. Does it Does it mean that companies will save money by having to pay employees who don't live in the Bay Area or in Los Angeles or New York as much money?

Does it mean that, you know, so called in putting this in quotes and air quotes, the second tier, third tier cities are going to see some sort of resurgence because you're gonna have people moving there because the quality of life is higher. I mean, I think what we've seen so far in terms of where people are moving, it's like, yes, more people are moving to Austin, then

also Phoenix. They're not moving to Cleveland or other They're not moving to the second tier cities where you actually get a really big jump up in the kind of house you can buy and the quality of life. So it is. I don't think it's going to be some great equalizer. It's just gonna shift the inequality sort of. You know, it's gonna make things a lot worse in a few towns in Montana um and then in the rest of the country. It's not going to change things

that much. But I think in again, in the computer and mathematical um occupations, it's also just gonna be and this was again already happening, but it's just gonna increase the tendency to think globally. And you're trying to staff up something and and you know, even if companies aren't able to push through that, hey you have to take less pay. If you lived in Bend, Oregon, then if you live in Silicon Valley, they can probably get away

with it saying yes, you take less pay. If you live in Ukraine, then if you live in the US, you know Bend Oregon long ago, justin at the early days of the pandemic, as an Oregon I woke up one morning and in that like little hazy spot before your brain is fully awake, I was like, where in the world would I work if I could work anywhere? And Bend Oregan was the spot that popped into my

brain in that hazy hour. But uh, I also just want to bring up another point that you raised in your story here, which is like, you know, one other element of this work from home conversation with this particular category of jobs is like jobs here are really scarce in this field. Right even before the pandemic, this has been some of the most desirable workers in career path. The workers are scarce, the jobs are not scarce. The

workers are exactly right. And and so I'm wondering as as the pandemic actually exacerbated that, because it's not like the pipeline has been robust and growing right right, and and there hasn't been any you know, like overall employment is still down something like four percent in the computer and mathematical occupations, it's it's up, but not by a

huge amount. But they're they're basically other than really temporarily right at the in the middle of the lockdowns, there was no real decline and employment in the in that area, and no definitely no decline overall in demand for people to do those kinds of jobs. Yeah, and these guys are getting paid well. The meeting hourly wage for all

computer and mathematical occupations of almost forty four dollars. Computer and information research scientists had the highest meeting wage at almost sixty hour perhaps in surprising why you saw a lot of this workout source early for the pandemic. Exactly good stuff, Thank you so much, justin really appreciate it. Yeah, you bet. Check out this. It's a column on the back page of the upcoming issue of Bloomberg Business Week magazine.

Jil Webber and Bloomberg opinion columnist Justin Fox in our studio. This is Bloomberg. This is the Big Take, the best of Bloomberg's in depth, original reporting from around the globe. Well, we have to make sure we do as the economy. What covers is what cut. The data kind of broken down a bit. It's fun to becoming more and more expensive to be looking at for shipping billion dollars for the red entry levels. There's been ways of immigration that have taced a lot of resistance, a lot of color

behind the scenes in a great untold story. How did Bezos really come out on top? It's the cover, says Jeff Wins. He always seems to win the Big Take on Bloomberg Radio. All right, this time for the Bloomberg

Big Take. Happens to be one of our most read stories too on the Bloomberg because you put anything about taxes and the headline in the Bloomberg story and it's among the most red tips, and for good reason, because it is a fantastic deep dive into taxing the rich, winning at poles, but falter us to fix global housing. Joining us now is Natalie Obiquo Pearson, Vancouver bureau chief for Bloomberg News, joining us on the phone from our

Vancouver bureau. Natalie, take us through globally what's happening with governments trying to disincentivize people from leaving apartments empty? Sure, so what do What we tried to do in the story was we did a deep dive into a couple of cities, Vancouver and Melbourne, that imposed empty homes taxes quite early on, so if if property owners left their places empty, they had to pay an annual tax. And uh.

The reason this is important is because a few of other cities around the world who are similarly facing affordable housing crunches, are looked to be potentially following in their footsteps. Los Angeles is planning to put a vacant homes tax on the ballot. For Hong Kong officials are considering taxing condo developers to deter them from hoarding new You and It's Ireland is looking at a couple options, and Barcelona has even gone so far as to threaten to seize

landlord's empty apartments. So it's very sort of you know, of the day, all right, So of the day, does it really make a difference? I mean, if we start doing this, are you telling me that we could knock down those really wealthy homes and then all of a sudden you'd put in lower income housing there. I mean, is that really? Is this? Are we really getting at

the root of the problem, I guess is what I'm asking. Yeah, it's a great question, and I think a really tricky one because some degree you can understand why municipalities do this, and when you have an affordable housing crunch, to see empty homes just not being used as of course you know,

it's it's very difficult for residents to see. But on the other hand, I think, you know, Melvern and Vancouver provide some early lessons and I think the takeaway might be they deal with the symptoms of a housing crisis, but they're not gonna there and there are no panacea. They are not going to fix it. And um by that,

I mean, uh, you know, I'll take is free. What Vancouver, which was the first municipality in North America to implement attacks like this, has seen so to some degree, the tax did seem to encourage condo owners, for example, to put their units into the long term rental supply. So, for example, units that might have been on the airbnb market before had been placed back into long term rentals. Um and uh. You know, the city has also managed to raise a lot more money than it originally expected.

And that's partially because the homes that were less empty were the most expensive homes. Um And I suppose to some degree that doesn't surprise because somebody who can live forward to leave their house empty probably is wealthy to

begin with. Those aren't exactly hitting the rental market right exactly, Like a thirteen million dollar mansion is probably not something that we have more than that like so um so yeah, so you do manage to raise is Vancouver did manage to actually raise a lot more money than it ever expected, and that has gone towards affordable housing initiatives like building rental housing for lower income families. But the vacancy rate in the city is still below one percent. It's been

stuck there for years and rents have continued to rise. Well, you do think about that the wealthier are able to invest in real estate, right and there are tax, you know, positive tax implications or benefits to them by being able to do so that a lot of other people aren't able to tap into. So you do wonder about We'll wait a minute, are we are we really using our land and property in the right way, especially when there

are so many people who need it. Having said that, things like interest rates, um policy, housing policies, um bank access from more, I mean, there's other things that really are at play here that could really move the needle when it comes to fixing some of our global housing problems, right,

and I think that's essentially lee it. I mean, both Melbourne and Vancouver have been seeing an almost unbroken run up in housing prices for two decades and that's very much been tied to things like interest rates, uh, you know, strict zoning laws and restrictions that keep the supply from being built as quickly as it should be. And so those are the real levels that are that are that you need to sort of work with to to to cure the housing crisis, or at least to alleviate it significantly.

I mean, just to put this in perspective, right, Vancouver expected ten thousand properties to be empty in the city in the first three years of the tax, I think about two hundred and some were moved back into the rental supply. I mean that's that's you know, that's a drop in the bucket in a housing market of two hundred thousand properties. So, Natalie, just in the last fifteen seconds that we have do based on your reporting, do you anticipate that this type of policy will continue to spread?

As you point out Lela's planning to put vacant home tax on the ballot for even though the data show that it's not necessarily working. I think one thing we think it's one thing we can stay safely is that for policy makers, if it's politically popular, then it probably will come in. And it just there is a lot of public support for these types of taxes. So probably yes, all right, we're gonna run. Hey, thank you so much. Bloomberg News Vancouver Bureau chief Natalie Obiko joining us on

the phone in Vancouver, our Vancouver bure out. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio for just coming over a peak of the day, but just off our best levels of the day and we've got another record for the S and P five hundred. I believe it's the forty nine record on the S and P that we've seen in So we continue that grind higher. Let's get to

the drive to the close. Alan Zaffron is back with us, founding partner in co c I CEO at I e Q Capital. He's back with us, Tim on the phone in Foster City, California. So Alan, it seems like the markets, just when you think they're getting a little tired, a little weary, here we are grinding to another record. Carol and Tim, ain't it amazing? So much capitalist flash in the marketplace. You can throw COVID fed, tapering tax pikes, uh,

diplomatic missteps potentially or arguably in Afghanistan. The market nevertheless looks past all that. I think it's still being driven by Tina. There is no alternative when bonds and cash shields so little, it's still the cult of equities that's going to prevail. And that is what we are watching. All risk ansts go up when conventional safe places like cash and bonds paste a little, and capital continues to flow into places to try and find a higher return

on that invested capital. That's the story of this year. Alan do the high price is do earnings justify the high prices? I actually think they do. Again. The complication here is people will argue if we just take the SMP five index, it's traded about sixteen times it's forward looking learnings than the last twenty five years, and if you look right now, depending on how much forecast you know, we're probably trading at about twenty two times forward earnings.

That's a huge premium. The challenge is twofold one. We're in a world much lower interest rates now than we've historically been over the last twenty five years. And secondly, the world today at the SMP five is comprised of companies that are far less capital intensive and generate higher profit margins. The X on mobiles and a T and T s in general, motors of twenty five years and ago are now Facebook and Apple and Amazon, and so arguably a world of better quality, higher profitable businesses in

a world of lower interest rates. Merits are higher than historically average p multiple. Of course, it's aren't more than science, so we don't know exactly what that light multiple is, but I think it's far less overvalued than what people would try and argue when they make historical comparison. It

is a market that has a scratching our heads. I mean, Dave Wilson just came out with this chart of the day and he talks about how financials have you know, turned out to be our best performing group now in terms of our eleven main industry groups in the SMP five hundred years a date, which has you scratching your head. Considering the low rate environment, that is not typically what you see. So I mean, how do you explain that.

Are there disconnects or does it all make sense to you? Uh? Well, it makes sense and like like the world, it makes sense for two reasons. One is you have to look where you started from. Financials were pretty beat up in Financials are basically a leverage bet on economic recovery. So you went from COVID and it disaster's economy to where leveraged businesses like financials would do better out of a recession.

And secondly, it's a bit forward looking. You're hopeful if the economy strengthens, interest rates go up a bit, and those financials are probably forecasting implicitly a somewhat. I don't overstate it, but a somewhat more steep yield curve over the next six to twelve months, and hence financial stocks I think are going up in advance of that base case most likely outcome for the old curve looking forward,

So an anticipation of a more favorable rate environment exactly. Hey, Alan, you you said the acronym tina there is no alternative, but but you do think there is some alternative right now, right for for where you're putting money, Well, I think there are. I mean, so as an example, I'm just

going to talk about rates. Reets are really stocked, but they're tied to real estate, and real estate is another form of income generation besides bond So it's not that much of a stretch to argue if you're a long term investor, and if you're willing to look aside from short term price volatility, which I define as months and years, not days or weeks, as one example, freaks, whether it's in a public or a private format, or another form of tax efficient income that I think if you have

enough long enough time frame, the likelihogens will generate higher rates return to conventional bonds. You can make the same analysis for individuals who are willing to go far enough

to look at privately issued senior floating rate debt. Sounds very complicated, but basically, if you're the senior lender to a company and you have a floating rate debt, surprisingly you can earn without leverage around a six percent return tied to lie Bold typically, and with some leverage you might even get as much as an eight or nine

percent return. Leaves room, although historically have not been allot of defaults, and even leaves room for some handfuls of businesses to default on their debt payments and still earn more than what a conventional bond does. When an investment grade bond is paying you two percent the bars load den why money scoring strategy? Well, I'm looking at two uh dad John's equity Total Return Index. It's up almost year to date, up about th uh in the past

fifty two weeks. I that's the one area the commercial real estate or real estate generally. I am surprised that there hasn't been Alan Moore fallout. Why hasn't there been? Well? Twofold again, what one is? I would argue that you certainly do need to be selective about what kinds of real estate you're investing. Is a big difference between industrial warehouse is servicing Amazon and ups and set X versus your urban office building where half the building is now

vacated or we're going to be less occupied. So I get that, but but i'd also argue again, when you on one, you're back those those those rates were really beaten up, and so some of that is bounced back. And then the other issue is I think the demise of real estate is actually overstated. I think i'd rid world, you're gonna be a hybrid world, but you're still going to have even people occupying businesses, occupying offices, They're still gonna need to pay for the rent, even if they're

only in there three days a week. I don't think it's an all or non proposition. It's interesting that you say that because just today and among the most read on the Bloomberg terminal, and we were talking about this earlier with State Street closing, it's abandoning its New York City offices, and look, it's not based in New York. But do you think that's an exception rather than the norm moving forward? I think it is an exception because I don't think everybody has the capacity to with state

streets has done. I definitely think there's diminished demand to a degree for office space, but to a degree to which prices fell overstates the degree on a on a

national basis. Just with that demise and the diminishment of cash flows will be so again, when I'm buying GEFs, I'm looking for sustainable dividends, and I suspect even when I have reduced office demand, because that's really where the pressure is hotels in office, there's going to be enough cash flows still remaining to more than offset them out bo which prices have fallen. I wouldn't put all my

money in there. But when my again my investment great bond has given me a two percent return and attack eve them bonds is less than one percent, I can afford handfuls of defaults or missteps and still beat those via comfortable margins. That's why the capital is flowing there. That's an interesting way to think about it in terms of the equity market. What do you like within the

equity space right now? Well, I do actually still think we are in a slower than average grinding economic economy, which we're going to get up right where we were before COVID. In fact, COVID may even persist this. You have to look at growth. You have to stick with the businesses that have high quality earnings generation. They can grow in a low economic growth environment. So the cult of growth equities outperforming value stocks that is likely to persist.

And so that's sort of a coded way of saying technology, biotechnology, other businesses that have persistent competitive barriers of entry and real mean business models that are really able to sustained earnings growth, How capital will continue to be there? How long does that persist for? Probably until we get through the next recession, because I just don't see how we're

going to grow our economy quickly. If anything said is going to be taking the set on the sort off the pedal economic growth will again slowed down again the seat of not going to ramp it up again until you go through another recession cycle. And I don't think there's at seven A recession cycles coming anytime since. But I think growth stocks will persist out performance probably for the next couple of years. How much are you starting

to think about what comes out of Jackson Hole? And I bring that up because we did see uh Dad Jones reporting about how FET officials are nearing agreement to begin scaling back their easy money policies in about three months if the economy recovery continues. It doesn't feel like to me that that's a lot of new messaging, because that's I feel like it's safe to say that that's what the FETE has been saying all along. J. Powell

and others. They're watching the data points in particular, and if things you know, significantly and substantial really improve on an economic basis, well yeah, they're gonna pull off, right. Yeah. No, I think about it a lot. And the reason I think about a lot is I work with a lot of human beings as clients, and no matter how much I argue be long term investors don't time the market.

Inevitably everybody wants an entry point, so inevitably everybody wants to hold back from cash and wait for the pullback that just does not happen. And so I'm kind of this is sound ironic in a way. I'm hoping the said comes out and surprises people and says they're gonna paper bond purchases and raise rates more quickly the inspect and create this ten percent hope for pullback, which will let all of my clients cash magically flow into the

stock market at the perfect time. Of course, probably won't happen, but I think about it constantly because I sit and think about what's going to cause the correction. And the problem is, you and I both know the things that can cause a correction and higher tax rates, Afghanistan, fed papering, COVID. But you and I both know it's what we don't know that actually happens that will cause the correction. So I worry about it. I can't control it, and I

don't know what it's going to do. I think the FEDS and everything they can to signal their intentions, and now the market will have to digest it as best it can. Alan Why do you think the market, at least the equity market hasn't has ignored the spread of

the delta variant because I was a twofold one. As I believe everyone's looking at the charts and thinks our pattern of experience on the delta variant is gonna parallel things that happened like in the UK, where it looks like if you match what's happened in caseloads here in the UK, we've already peaked right about now, the market already looking path what's already the peak of this variant. There might be another variant to follow. That's part of it.

The second thing is, I think there's a belief we're not going to shut down the economy again barring something extraordinary, and so the actual economic impact is a lot less significant than what we experienced back in February March of two thousand twenty. People are adapting, we have better information today, more people are vaccinated, and so I think the belief is there's a much lesser economic hit so the U. S economy in particular, than we witnessed a year and

a half ago. And so I just don't think, I hate to say it this way, from a pure stock market perspective, it's not a big enough event to matter, right unless we see a retrenchment in the economy, like I do think about this alan. You know, people can't travel again just as we were starting to reopen. That's going to have an economic impact. Disney right their second quarter, it was streaming, but it was also the theme parks which came roaring back in a big way, and that

stock just took off on a tear. So if we start to see a retrenchment again where people aren't traveling so much. Southwest warned about travel they I think, are the biggest carrier that goes into Orlando. So there are there are little pieces out there. The Chinese ports shutdown, They're just little pockets that remind us that, yes, we know how to deal with this, right, we have the playbook that we didn't have a year year and a

half ago. But nonetheless, if I'm not out there going back to store, shop being, my husband will be happy. But you know, it means that's economic momentum that's not happening. If we're not getting on planes, we're not doing business traveling, we're seeing you know, the New York Auto Show got canceled. Like there are big events that would normally attract a

lot of people that creates an economic momentum that's not happening. Um, that's got to be something though that could start to weigh on companies again and impact some of the top and bottom lines and certainly impact some of the economic growth. So I agree with to jazz Fest in New Orleans, one of my scarest events has been canceled as well.

What I'll tell you this though, the things you're talking about travel, uh, leisure, they comprise it actually a somewhat smaller portion of the stock market than technology companies and companies that actually can thrive in an environment that's modestly shut down. What COVID has done is it accelerated the use of technology and productivity in years, in many years of not decades, and that's part of what we're witnessing. This.

We are in the midst of some industrial revolution which probably started with the Internet way back when, or even the creation of the semiconductors, depending how far back you want to measure this. COVID has just re accelerated this process and what you're seeing is durable, sustainable and accelerated earnings growth. As a consequence, what you're describing tarol can in fact sadly happen. It's going to marginalize again restaurant owners.

It's going to marginalize travel agents. It's gonna marginalized resort hotels. But they don't make up the SMP five under an index. But it isn't. It is. It's going to hurt spending in the short run. But like other waves, I hate to say it this way because it's truly a humanitarian crisis, but from a pure financial economic perspective, it's a bump in the road, and the road has just accelerated the speed of which the cars can move because of all

the productivity enhancements. So, if you're going to take a long enough point of view, whatever happens won't be good. But we've actually set ourselves up for faster, more productive, better, more robust and sustainable economic growth going forward. It's a terrible humanitarian crisis in between. But to get to the end, get to the end game economically, we're going to be in better shape. Ironically, to state this way, five year swords like Darwinianism, we forced ourselves to be a more

productive economy, right we listen. We've had tons of conversations with CEOs and other individuals about how the pandemic accelerated trends that you know, institutions, companies were gonna put in place maybe over the next three to five years, and all of a sudden they're like, bam, we got to do it now, and so you don't go back. There's no going back, and that certainly has a lasting impact on our world. So what worries, what what what keeps you up at night when it comes to investing and

investors portfolios. Well, I actually think the past events of the past week have kind of humiliated humiliated the United States in the country a bit, and we're perceived maybe the world's a little less safe for a number of reasons. What's going on in Afghanistan. I actually think candid some degree impact the legislative agenda of the current administration. It might change the dynamics of the political election new year

from now. But I also think you could end up with unintended consequences geo politically, and things like that have a funny way of creating sentiment overhangs on the stock market. I think we actually are in somewhat of a implicit tacit club war with China in a ran with all the cyber securities wars back and forth, things like this are going to come up. I can't tell you when or what or how or why, but that's how you get these intermittent ten percent corrections, which are usually just

corrections that keeps me up at night. That keeps me up at night, right, But we haven't had a five percent correction since late last year, so it's been a long time. Allan, thank you so much. We always are grateful when we get some time with you. Alan Safran, he's founding partner in co CEO at I e Q Capital, on the phone from Foster City, California. A great conversation, always great when Alan joins us. And and look, Carol, going into today, I thought, hey, this is going to

be a day that's actually not a record day. And we look at the SMP five hundred and then down they're eating out games late day rallies exactly. 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 to Bloomberg Global News