Delta Variant Concerns as Kids Head Back-to-School

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. Okay, it's all about when you think about the narrative of this pandemic, how it's evolved, how it's had an arc since the beginning. I think now where we are in the narrative is the delta variant and vaccine nations, getting people vaccinated, getting who vaccinated? How young? How old? Uh, it's now turning towards the

very youngest. We think about getting back to school, and there's lots of discussions and arguments to be made on both sides. Dr Elizabeth med joins US. She's medical director of Pediatric Quality and safety at this Whedish Health Services joining us on the phone from Seattle. Uh dr me, thanks so much for joining us here. I guess you know. Lots of parts of the country are just about going back to school, and California starts a week from Monday. Uh Here on East Coast, it's it's right after a

labor day. But the discussion is who should get vaccinated as we think about back to school, should we be should we be getting kids vaccinated? And how young? You know, I think absolutely. What we recommend is that kids twelve and over who are eligible for the vaccine get the vaccine and get it soon. You know. The reality is that it takes several weeks between the couple of doses and then full immunity two weeks after that second dose.

And so for many kids who haven't gotten the vaccine yet, we're already sort of talking about post going back to school dates for them to be fully fully protected. The cover of the new issue of Bloomberg Business Week is all about In the cover story of today's Big Take, We're going to talk about it in just a few minutes. It's all about vaccine mandates for kids, and there's some

pretty startling. UH statistic in here, UH the rollout of shots to mills of kids ages twelve to seventeen, Although they account for seven point five percent of the U S population, it's really lagged. Only of that group has received their first dose. Why is that, doctor made? Why are we seeing this reluctance from parents to inoculate their kids When we think about vaccines in the early parts of our lives, that's when we get the most vaccines. Yeah,

that's right. You know. I think there are a couple of factors that play into that. And so one of those factors, I think is that we know that older adults tend to get sicker, right, and so we know that although kids can get very thick, can end up in the i C you can die from COVID, can have long COVID, and all those other complications that we think about, the rates of that happening in children and

teens are significantly lower than an older adults. And so I think that for many people who are high risk, you know, they want to get the vaccine for themselves as soon as possible, and they may think differently about

it when it comes to their kids. I think the other factor here is that we know it's hard to make a health care decision for yourself, and it's even harder to make it for someone else, and so people, I think are feeling like they want to make sure they have all of their questions before they proceed with vaccines for their children. So dr me, what do we know about how young we could, uh, we can give this vaccine to a person? How young can they be? Mentioned?

Twelve and older? How about some of the younger kids? Yeah, so at this point it's approved for twelve and over. We anticipate that it will be approved for younger children, probably down to age five, potentially down to age two, by kind of early to mid fall, and I know that a lot of parents are desperately waiting for those

dates to get their younger children vaccinated. And the reality of this pandemic is that, I think even for families where everyone who's eligible has had the vaccine, so everybody twelve and older and then the adults in the household, many of those families still have younger children who are not yet eligible. And so I think it's hard to sort of feel like we can get back to life as normal for our families when we still have one or more young children that aren't yet able to get

the vaccine who are living in our house. Doctor. Back in May, Dr Fauci, the nation's top infectious disease doctor, he said that by the first quarter of two UH we're going to have quote enough information regarding safety and UH immune genicity. You can help me out with that one if you want to be able to vaccinate children at any age. Does do you agree with that timeline that in the first part of next year we're gonna be able to vaccinate newborns to UH to two year olds. Yeah,

I think that rings true for the most part. I mean, um, we know that there are ongoing trials down to age six months for multiple of the vaccines, and so we anticipate having quite a bit of safety data even down to union since I would guess that it will be very similar to the flu shot, and so for the flu shot, we start giving that at six months and older.

So I'm not really convinced that we're going to be vaccinating You weren't against COVID anytime soon, but I think those young infants kind of six months and older will certainly be in the next way. What do we know about dosage I was surprised when when my son got his first flu shot that he got two of them separated a few months apart, whereas I only got one,

and it was that he got double passage. Basically, so for that first year, for any child who's seven or younger, for that first year, we recommend getting two doses a month apart to really kind of stimulate the immune system because for many vaccines, that first sort of primed you, and then that second dose is really what confers the full immunity. And after that we consider that yearly dose sort of a booster. And so it may be the

same with with COVID. You know, we're already talking about potentially having boosters for high risk groups that have already received the two vaccine series, so I think it will be probably fairly similar to that. Dr me just quickly, do you think schools will mandate vaccinations. I don't see that happening personally until they help full FDA approval for the age groups that we're talking about, and so I think at that point we can really have that discussion.

But in my mind, it is unlikely to happen until we reached that milestone, and hopefully that will be in the next few months. So do you think full approval just in the last thirty seconds here, we could see that by next school year, so that next school year

they'll be mandated. I think it's there possible. And you know, so much of this is dependent on what is happening in the United States, and that has been very changeable, so we really have had to be nimble with our guidance and I think that will continue to ring true as we enter of the winter and then spring next year. Dr Mead, We like talking to people who are in hospitals, who are on the ground, who are talking to patients, who are working with patients, just to get an update

from the front lines. Are you seeing younger and younger patients in your hospital than at other points during the pandemic? We really are, you know. I'm a I'm a hospital pedutrician,

so I only work in the hospital. I see newborns up to eighteen who are sick, who are hospitalized, and I will tell you that throughout the pandemic, although the rates are lower than in adults and especially older adults, we have seen young infants, kids, and teens who are hospitalized who are very ill with COVID who are in

the ICU, kids who are having long COVID symptoms. So although the rates are lower, I think it's really important to reinforce for people this is still a disease that can cause really critical illness in newborns all the way through those those children and teenage years. So Dr me, what are when you do see these patients and you know, are most of them unvaccinated? And if so, what are some of the typical reasons that you're finding, uh in

your hospital? You know, the majority of patients that are showing up to the hospital that are very sick, that are ending up in the ice with the delta variant in particular, are on vaccinated. So we know that the vast majority of those statients have not received the vaccine. And I think that's such an important point because we know that although people who are vaccinated can transmit the delta variant, they are vastly less likely to end up with severe symptoms in the hospital, in the i CU

or to die from COVID. Right, So, what we're seeing across the country is that it seems to be the

skewing now to younger people who are not vaccinated. So teams, and all the young adults to people in their twenties and thirties who have not received the vaccine, who are ending up in the hospital and who are very, very very sick on adulta variant in particular, if I think back to how I felt at the beginning of this pandemic and the way that I spoke with friends parents of young kids, we always said to each other, Hey, this could be so much worse. This could be something

that is really a big danger to our kids. And I'm wondering, now, if we've gotten to that point, what do we know about how dangerous the delta variant is two kids? Is it more dangerous than the earlier or or or the earlier versions of COVID nineteen that we saw here in the US and in March April may have last year. You know, the comprehensive data on that really remains to be seen. So we don't have good national data at this point on what the actual sort

of increase in rates of serious illness are. We do know that it is still thankfully more rare in kids and teens, and we're very grateful for that because that's not something we typically see in pediatrics when it comes to infectious disease, right, usually children get much thicker than adults, and so this seems to be different than that, which is good. But we know that rates of infection are skyrocketing. So we had about seventy two pediatric cases in the

last week. That was almost double the number from the prior week, and it was five times the number that we were seeing during the weeks in June. And so as we start to see the numbers of six children and children who are positive for COVID going up, we know that those total numbers of kids who are really sick, who are ending up in the hospital will also go up. So Dr Me just give us a sense of how things are in Seattle. Here in New York City, we're seeing cases go up, even though we have very high

vaccination rates. What's the how are things in Seattle? You know? Unfortunately, across the country, we are starting to see those bed numbers go up. So we're seeing hospitals start to fill again. We're seeing the number of cases go up. We're seeing the number of I see you admissions go up. There's an estimation that there's about fifty thou people across the country getting hospital that's with COVID right now, and so

we are very very concerned. I mean, these are numbers that we were seeing sort of at the height of the pandemic, and we really had gotten better for some time as people started to get vaccinated, and now with the delta variant and that increased contagion and transmitsibility, we're

seeing those numbers go up again. So what I would just say is, we know for certain the absolute best way to protect yourself and the other people who live with you or who you have close contact with from the delta variant is to get vaccinated, because we know that will dramatically decrease your risk of ending up in the hospital or dying from COVID. DR me just in

the last seconds that we have. What do you tell parents who come to you concerned that their kids under twelve can't yet be vaccinated and they're concerned about them actually getting COVID. I have so many parents who have that concern, who are just desperate for the vaccine to

be approved for their younger children. We have a six year old in my house who's not yet eligible, who can't wait until he's able to get the vaccine, and I think that's actually the majority of parents that I talked to is who are really saying, you know, the older kids are vaccinated or I'm vaccinated. I just can't wait until my younger kids can get this so that we can really feel like our whole bottle and our

whole family is protected. And my great hope is that that will happen really within the next couple of months. It certainly seems to be the direction that things are going. Dr Elizabeth Mead, a medical director of pediatric Quality and Safety at Swedish Health Services, joining us on the phone from Seattle. A big thank you for joining us this afternoon. The new issue of Bloomberg Business Wig magazine. It is available on newsstands now and at Bloomberg dot com Slash

business Week. The cover story also Today's big Take. It's all about vaccine mandates for kids. Is it the next big back to school fight? Children have to get vaccinated for less urgent threats and it works, So why not with COVID? That's the big question. Joining us now is Joel Webber, editor at Bloomberg Business Week. He joins us on the remote from Massachusetts. Riley Griffin, his healthcare reporter for Bloomberg News. She joins us from New York City.

Thank you so much for joining us today. UM, I'm Joel. I want to start with you. I I was really surprised to see the lack of vaccine uptake in kids who are ages twelve to seventeen only have received their first dose. What why is that? Yeah, there's definitely, um, a sense of of apathy and it has it's going to have some um, serious implications, I think, UM in the next weeks and months, especially as we're dealing with

this delta surge. You know that apathy is it's sort of multifaceted and and some of that we go into in the story. UM. The fact that kids haven't been quite as susceptible yet is to covid is, I think one of the driving reasons. UM. There's also I think a feeling that the vaccines currently have emergency youth as authorization. They don't have the full f d A blessing. So

I think there's still some vaccine hesitancy around it. UM. And we've seen, you know, other countries even take slightly different approaches to how kids are supposed to be vaccinated. So I think they're that all creates a little bit of a fog that has um led to a slow adoption.

And I think where Riley and Susie King King story goes here is an important one because as we're just seeing now with New York mandating vaccines for for restaurants, friends, in the not so distant future, we could very easily see schools mandating vaccines. And one of the main questions that m Riley, i'd like you supposed to you is, you know, look like kids get vaccinated for all sorts of things that are far less urgent than COVID. So

could we potentially see schools manding meaning that mandating COVID immunization. Absolutely, I mean, I think that's a great question, and it's one that we've seen play out, and there's precedent four. I mean, educators are having a debate on their hands right now as to whether to implement implement mandates requiring COVID nineteen vaccines as they routinely do for measle polio and other diseases, or to punt because of politics and

let parents decide. This has really become so political, um in part because of that emergency use authorization that you described, But once there's a full approval in place. I have no doubt that schools um at the request of states, are going to put similar requirements in place. UM. This is really just a part of the bedrock of our education education system, and any parent listening knows that to

be true. UM. And these mandates persist even though they've been so successful that the risk of contracting some of the illnesses they cover is almost non existent. You know, what I like to put in perspective is that the last US case of polio dates back to nineteen seventy nine, and yet all fifty states in the District of Columbia require kids to get vaccinated with a polio shot before going to school. Riley, You know, I fear that this is going to get really, really ugly, and really personal

and really localized. Do we have any evidence or do we have any precedent here for a COVID nineteen requirement, because we've got a lot of states I'm thinking in the South and the West, they're going back to school. If they're they're not already back, they're going back in the next week or two. Yeah, So what we have right now is a legal vacuum because we've never seen before a mandate put in play ace for an emergency use authorized vaccine. That's not to say states can't do it.

They are just a little hesitant to wade out into those tumultualist waters. But let me take you back into history for a moment, because in nineteen o five, the U. S. Supreme Court ruled to say that mandates are allowed, that states can require vaccination, and that individual liberties are not absolute, that the average person cannot say, hey, in the face of a public health pandemic, we are going to reject a vaccine mandate. And the first mandate actually for school

kids goes back even further to eighteen fifty five. So there's a great deal of precedent um schools themselves to know that this could likely be coming. I've spoken with many administrators who said they're just waiting to get more parents on board. They want to bolster trust and confidence,

especially while we still have that eu A status. How do they tell you, Riley, that they're getting parents on board, because we probably have a lot of parents who themselves are not vaccinated, who are saying, no way, no, how, when this thing becomes available for my kid. Well, one thing they're doing is turning to community organizers, those in the community that people trust. UM. Another thing is going to be waiting for additional data. You've got data on

the under twelve cohort coming this fall. We'll see data from the Sizer BioNTech vaccine to be specific as soon as September. And one thing people have pitched is why not wait instead for that full approval before mandating the shots, So that could push things back a little bit further. I think we'll see this be somewhat of a patchwork

of policies across all fifty states. We're already seeing that, of course, UM play out with masks, but you could see some of the early and more competent states in terms of vaccination come out and say we need kids, at least in that adolescent population where we've already seen an authorization, UM get the shot going into the false

school year. So you know, one thing that really feels like, UM they're leading by but from behind here is the the FDA, really and and it seems like they're kind of they've been slow walking a bit on the on the regular for for adults front, and then that becomes almost UM pivotal for for uptick of vaccinating younger kids. What's going on with the FDA? Why is it taking

so long? So the FDA is saying they've expedited the process for that sixteen plus cohort and that we could know as soon as September really whether or not that group is going to get a full approval. And US health officials all the way up to Biden himself are really hopeful that that's going to sway hesitant adults. Now with kids, they need six months of safety data, So you can't actually even apply for this biologics license that's what it's called in technical terms, until you have that

six months. So we're going to see it take a little bit of time before FISER even makes the approach to get a full approval for younger children. Um, what can they do in the meantime, Again, it's just turned to those community organizers, activists, those at the grassroots level. Riley Griffin, his healthcare reporter at Bloomberg News. Riley's stories on the cover of the new issue of Bloomberg Days This Week magazine. It's available on newsstands and at Bloomberg

dot com Slash Business Week. Also joining us Joel Webber, editor of the magazine. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio.

Will be very fluid right now. We work UH and it's on a daily for the team that's working on it, but weekly from a leadership team, we're looking at making sure we understand the semi conductor situation, and we're allocating chips to our highest demand to take care of our customers and also the vehicles that are in plants that are capacity constraint, and it is especially your full size trucks and suv. That was GM CEO Mary Barra saying that company will be very fluid on allocating trips and

it is currently focused on the highest demand vehicle. She appeared with Bloomberg David Weston earlier today on Bloomberg Surveillance. All right, when we talk autos, Tim, it's best to get in an expert, and we're talking about Kevin Tyney, and he's a theater senior autos analyst from Bloomberg Intelligence joining us on the phone from New Jersey. When I say he's an auto guy, he's the guy that's got like grease under his fingernails. He's always taking a part

cars putting him back together. Like when he bought his house, He's they basically said, I bought a garage that had a house attached to it. So that's kind of you know, he's a real auto geek. Evan so Kevin. So that GM stock us down nine percent today, what gives? Yeah, I'm assuming it's uh, probably more in my eyes, an indictment of what consensus was than really where GM is at. UM. You know, maybe that that little bear's tone uh during the all but you know, I don't think that's that's

something that's specifically to GM. Right, you're still navigating UM supply constraints, you know, chip shortage, whatever it winds up being. But I gotta tell you, you you know, some of the pricing data, that margin data is is pretty incredible. The kind of thing that the industry has probably worked decades to get to is kind of where it is now. And now it's it's a matter of managing it beyond once we get out of you know, post pandemic, post

chip shortage. How they manage the business, How do they do that? How do they navigate through the chip shortage? Like what are they doing right now? Because we heard earlier in the year that car companies were even making changes to how they were building cars because they couldn't get the right chips right. And and I'll tell you him, you know, one of the things that's incredible. And I actually have to go back after this call to check the numbers again. But you know, I think Mary Barr

talked about it. The focus is on the highest revenue and profit can tributing vehicles, and that's going to be full size SUVs and pickup trucks. But I was looking at the numbers for the US for the second quarter

and this really jumped out at me. The average car coop and sedan for General motors was forty two dollars in the US, right, And all that means is that and now granted there was only forty thousand units sold in the quarter, but that's a nine thousand dollar increase from the first quarter sequentially, which basically says that all the low margin, um you know, low price vehicles are

out of the mix. Um the like, the best selling vehicle was Chevrolet Bolt at like forty dollars, and then you have the second best selling was Corvette at eight two tho dollars. And we're seeing this across all the automakers. You know, Ford also Mustang is the best selling car, you know, so you're talking about car prices, you know, as in terms of average transaction that are near where trucks are now because you don't have any of that low profit margins stuff that was being made simply to

hit corporate average fuel economy or missions targets. Are we going to ever? Is it? Is the intry just going to snap back to pre pandemic levels in terms of inventories, in terms of incentives. And I mean because there's really this is the worst time to be out looking for

a car. Yeah, And and the short answer is no, I don't think any automakers, at least our domestic guys right if you had you know, if you look at a Toyota or Subaru or even a Honda in the United States, you know they they're inventory levels historically are way more manageable than what the old Fiat Chrysler now

Stalantis or Ford or General motors run out. So if you figure sixty days historically is considered manageable, our domestic guys would typically be in the seventies to eighties range, and you know, the the high volume Asian brands would be closer to fifty days. So I think I think what you know, Ford and GM have talked out as getting and staying consistently in that fifty to sixty day range. Um, you know, so that's gonna support pricing, that's going to

support margins, uh and get them all discounting. Now, Paul is like less than one percent. Typically it's six, right, so you could walk into a dealership and assume six percent off the sticker price right off the bat. Now it's less than one. Yeah, just the demand is their supply isn't right, Hey, Kevin, we learned yesterday that GM is going to idle some North American truck plants next

week due to chip shortages. Mike McKee pointing out that usually automakers shut plants for retooling during July, but it's been almost forgotten because of distortions that we've seen during the pandemic. How should we read into that move? Yeah, that that would be for the model gear change over tim you know, you would see uh, you know, just machinery updates and and new processes put in place during

that summer shut down. That's normal. You know, as you said that, this is a different kind of world in a different kind of year. So I'm not sure it's it's due to that. Um. You know, if you have and it's like this with any part in a vehicle, right, if you don't have luck nuts, you don't have a car, right, If you don't have a steering wheel, if you don't have a chip, you can't finish it and you can't drive it. So um, so there's probably a little bit

more of that. It's probably only a week or so, um, you know, and then the focus will be back on on the truck side. So you know, there's there's no doubt. We're talking about most manufacturers, retail or in the twenty two thirty days supply, which is just crazy. So, um, I think they'll get it back closer to that fifty sixty, But I don't think we're getting back to eight Kevin, just real quick, thirty seconds, Tim, and I saw that the New York Car Show is canceled. I guess because

of COVID. Is that a big deal for the automostry the car guys? It is? I mean, I I'm in Detroit in another week or two, you know, Pebble Beaches coming up, and I think, really all the car guys are really looking to get back out there and get together and congregate. Uh So I was kind of I was taken aback by that, and I'm hoping that doesn't set off the string for you know, the other events that are scheduled already through the you know, through the

second half of the year. What's what's the material impact on companies though, because this is a time where the companies show media what their cars are, right, it's not that big of a deal. They've been able to survive without them, sure, yeah. And and it is just that in New York was mostly had become the luxury show, in California is mostly the imports show, and Detroit is the domestic show. So yeah, not probably not a huge impact to the bottom line. But I gotta say it's

fun to go to sure. Yeah. Yeah, I've gotten to go a few times. It's a great one. Kevin Tynan, senior autos analyst at Bloomberg Intelli, is joining us from Bloomberg Intelligence Headquarters in Princeton, New Jersey, talking all things GM and autos. Hey paul Um six point six five billion dollars I saw that number. How does that sound to you? That sounds like, you know, the g d P of a you know, relatively small kind tree. But

it's not, it's not. It's in fact, Elon Musk's uh compensation in the year as CEO of of Tesla, and the outside compensation that Elon Musk saw first awarded him a few years ago is increasingly hitting other companies. In the top folks at other companies. Andre's Melon, the wealth reporter at Bloomberg News, writes about that in a story out this morning. He joins us now in the Bloomberg Interactive Brokers studio. I you notice I said compensation, full compensation.

I didn't say salary because this is not his salary. This is his total compensation. Take us through how this has worked, because it's a little complicated. Then, you know, just getting paid six billion dollars, you know, twenty four times a year. Yes, nobody gets that in bi weekly paychecks. Right. What happens is that you get awarded large chunks of equity. CEOs of public parid of companies mostly get paid in equity.

And the special thing about equity is that it rises in value, especially when we're in a bull market, which we've been in for quite some time, except for a brief dip last year. Um, then the pay ends up being worth quite a bit. Ellon got a ton of money three years ago and that sended up being worth just you know, eye popping amounts, Like you said, GDP of a small country almost. So, I like in your story, h one of the folks your chat with cited something

the great Man theory. I mean, what is the great Man theory? And how does it how does it relate to compensation? So in this context, it really goes back to the idea that companies increasingly are staking larger and larger pay packages on just the CEO saying that we're gonna issue this big award that will pay the CEO hundreds of billions, hundreds of millions of dollars or even a billion or two if the company triples in size and value or you know, grows in size and value

by tenfold. And just taking that on on the CEO sort of gets the idea that it's it's just you stake it on one guy, and and that's being done to an extent that we haven't really seen before. What do shareholders think of this? They are largely fine with it um even though some investors are out or many investors have been out there saying that, you know, economy has to work for everybody. It's important that companies take

care of their employees. But when push comes to shove, when it comes to CEO compensation, sort of the mantra that rules among investors is that if there's performance, it's okay with pay. If there's a lot of performance, it's okay with a lot of pay. And if you take that logic and draw it to an extreme, then it doesn't become so crazy to pay a CEO a few billion dollars if the market value increases by say billion,

because it's just a small share of it, right. Crazy part ends up being when you're paying one person this even though he might be in charge of a company that employs ten thousand people, or a hundred thousand people, or half a million people. And that's what the critics are taking aim at, because that goes to the whole income inequality, but really wealth inequality. It just shines a light on it, and we see it every year when proxy statements are filed and we see what some of

these folks are getting paid. But some of these pay packages that you cite in your story there, these are new. These are like you know, hundred million dollar grants of options, you know that can just explode in value. And it's not just the founders that get these. These are just hired guns. That's what's new. I think, Yes, these are people on the payroll, they're hired. Help to put it colloquially, I'm I'm wondering what happens in a bear market and

how this changes. Do CEOs start coming and saying, actually, I'd rather get compensated differently. So it's not just you don't get hired. You don't get to stay CEO if you don't think the cup the stock is going to go higher. So we got a small window of into that last year when the coronavirus took hold of the nation and the markets went haywire and the outlook for many companies changed pretty drastically. Obviously, bonus targets and three year plans for share payouts all of a sudden were

obsolete and and didn't reflect reality. UM if a board then would be um teetotal when it comes to pay for performance and saying that this is ironclad. We're not changing anything, then a lot of CEOs would have lost out on a lot of money. What more than three companies ended up doing was to tweak performance targets, or issue new awards to make CEO's whole, or give them extra opportunities to make their money. So that doesn't necessarily reflect what every company did, but it's at least more

than three d companies did it. So that should give you some idea of the willingness to price the options. That's what you ask for. You walk into your compensation community to reprice my option. PA, I think I's on my media review coming up, so and and and I understand right, I mean if if, if this is someone has value, the board generally is going to cave see that and honors. Just in the fifteen seconds we have left, do we see this spreading even more than I already has.

What we don't see is any counter force that would stop it? Um? I have I have yet to see that. All right, we'll honder. Smelling Wealth, reporter for Bloomberg News. He's with us in the Bloomberg Interactive Broker studio. His news story Elon Musk's outrageous Moonshot award catches on across America. It has Elon Musk's numbers in there in addition to nine other CEOs. How much they got paid last year and it is quite a lot of money. Honors, Thanks so much for joining us a journal. Yeah, but you

let me drive. Oh no, no, no, no, pleasel made I want to drive a ball. Just drive baby. Good questions the drive to the globe community. Thanks, we'll drive us down on Bloomberg Radio. All right, we have the markets pulling back just slightly, but let's face it, folks, we are at or near all time highs. We have a FED that, despite some comments by FED Vice chair Clarida about potential tapering some point in in the future, we have about as accommodative FED as you can ever want.

We've got strong earnings coming through. So what do you do in this market? We'll check in with a professional Michael Sheldon. He's executive director and chief investment officer of High Tower r d M Financial Group. He joins us on the phone from Westport, Connecticut. So, Michael, I've got a friend. He goes by the name of Tom Keane. I'm trying to get him into the market, but he just keeps missing some entry points. What are you doing

with your clients right here, right now. Well, I think it's important we remain generally constructive in our longer term outlook for the markets, and we think the tail winds for that are continued growth in consumer and business spending

along with rising corporate profits. Back in March of this year, the estimate was that this year corporate profits would rise about and now they're up to about on a year of a year basis, and the estimates are for continued growth over the next couple of years, although more moderate than we're seeing this year. So I think ultimately we're likely to see a handoff from monetary and fiscal policy that's what's really helped rejuice the economy and gotten things

going to one that's fueled by the private sector. And we clearly could see a few bumps in the road in an average year. Since nineteen eighty, for example, the we've seen an entry year draw down of about four while the markets have still finished positive about three quarters of the time. So over overall we remain generally positive and there will be some pullback along the way, and that's something investors need to be prepared for. How big of a pullback should we be prepared for are we

talking I mean something like five percent? Are we talking? I think? I think, which is a higher level you just mentioned is more is less likely? Excuse me, because that's the kind of that's really what you what you sort of associate with a bear market, and bear markets typically really only happen if there's some kind of exogeneous event or when we're having a recession. And right now,

the economic data overall is just generally pretty positive. So I mean, over the past twelve months, for example, we've had several pullbacks of anywhere between about four percent and nine percent, So something in that range wouldn't be unheard of. And again just keep in the back of your mind that since we had an average intra year draw down of about fourteen percent, so that shouldn't be I mean,

that's also a possibility as well. Alright, Michael. So there is a debate in the market between those folks that are you know, sticking with the tried and true growth stories, the apples, the Amazons, the one that got them to this party. Some folks really over the last year have really done well with a rotation trade into some more cyclical names. Maybe the banks maybe some energy, maybe some small caps. Where are you in that discussion, that debate,

So that's that's a good question right now. So we've definitely seen some rotation in the market. UM growth has really generally outperformed value for much of the past decade or so, only every once in a while and maybe for a quarter or a month or so, has grown. Has value outperformed growth. Same thing with foreign The US has outperformed foreign markets for much of the past decade. And over the past uh six to twelve months or so,

we had almost a perfect cocktail. We had a rise in global growth, we had a rise in corporate profit expectations, arise in interest rates and inflation, and that gave us a pretty good bump up in value stocks and foreign

stocks actually started to do better. So now over just over the past few months because of the growth in the delta variant, because of the rise of inflation UM combined with the decline and interest rates as investors worry about potent growth, we've started to see a rotation back into growth. So our thinking is right now that we're sort of in this transition, and we think you really want to have a barbell approach, meaning you want to

have broad exposure to a range of sectors. We do think you want to have growth and you want to have broad exposure at this point, I gotta tell you, Michael Paul Sweeney yesterday talking with Dave Wilson, Uh, they kind of had me feeling like a little fomo with the way the markets have been in recent years and not just in recent years, but really for the past

few decades. Yeah, you made a mention of the Fidelity Contra Fund and just throwing money near four one k in there and looking brilliant, and it makes me think, you know, it's for me and my peers, people who are sort of midway through their careers, how we're how we should be thinking about growth and about how we should be thinking about realistic growth, especially given what we've seen in the last few decades, and whether or not

that sustainable. Well, that's a good point. I'm in the current year right now, we're forecast to see approximately about six and a half GDP growth, which is the fastest growth we've seen in number of decades. And the reasons behind that are because of the incredible fiscal and monetary

support that we've seen to health the economy. First to sort of get out of a downturn in early last year, but by the monetary policy has continued as they fed by and twenty billion of bonds every month, which will start to slow for next year. For reference, the GDP estimate is about four that's still about twice the average of the past ten years or so. So I think

ultimately growth should start to slow somewhat. There are some variables, for example, of productivity growth can rise above historic levels due to things like technology uh and disruptive technology that could help increase the rate of GDP growth. But ultimately, because of all the depth that's out there, economic growth will probably start to slow again. After strong growth this

year and next year. Mike, we mentioned some international I think it's probably an area we probably don't talk enough about. How do you think about allocating capital to international mark kids, whether they be developed or developing emerging markets. Yeah, so that's a great question. Um. You know, as as registered investment advisors, we have to look at our asset allocation on a regular basis, and we've generally been overweight the US versus far in the past decade, which has been

a pretty good decision. But um, these kind of things go in cycles, and historically after a period of outperformance, foreign markets start to perform better. So looking at the environment right now, foreign markets have more attractive valuation levels, they have higher dividend yields, and there's a variety a large number of companies outside the U S which US companies would gain access to by investing in foreign stocks versus US stocks. So the trade really hasn't worked that

well so far this year, especially in emerging markets. But we think investors who have underweighted foreign stocks for much of the past decade or so should start to take a look at their allocation and and if the global recovery continues and the delta variants starts to recede, that should provide a bit of a tail when for foreign markets in period ahead. Is that is that an f to you or a when we think it's a win

not an if? What? What? How concern should we be or how concern should investors be about the spread of the delta variant not just in the United States but around the world. Yeah, I think generally speaking, um, the developed markets around the world have obviously had more vaccinations, and the emerging markets and other parts of the world

have had less access to two vaccinations. UH, the delta variant is certainly one of our near term concerns, and that along with rising inflation and worries about when the Fed will start to remove some of its policy accommodations, along with the fact interest rates have gone down, and a lot of a lot of explicit explanations for why interest rates have started to go down. Um, but those sort of factors all together could lead to maybe a speed bump or a pullback as we head into the

August September October period. But I think more importantly, we think the bigger picture is that economic cycle and the last a period of years as a period as opposed to a period of months or quarters. Michael Sheldon, executive director and a chief investment officer at High Tower r d M, a financial group joining us from Westport, Connecticut, Thank you so much for taking the time. Thanks for

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