How the Pandemic Is Impacting Parenting

Business Week on iTunes, SoundCloud, blo Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. Jina Martin Adams back with us. She is Bloomberg Intelligence Chief Equity Strategists, alongside Dave Wilson, Bloomberg Stock Editor, of course, the author of the chart and Stock of the Day. Dave, let me start briefly with you, what's the most important thing we

need to understand about this market today. Well, it looks like the headline about the travel is getting at least a little bit of attention from stock investors. The S and P five is at its higher the day. Now you're talking up three tents and or percent. So that's just the kind of day it's been, not a whole lot of direction. And you look at the eleven main industry groups, you see communications services as a standout, and

that's really Facebook in large measures. Shares are up six percent at the moment, so people are getting a little bit excited about that company. And then beyond that, Viacom CVS they had results out and they went over pretty well, unlike the figures that we saw from some of the company's media appears, uh Fox and Discovery Communications notably, those shares were down yesterday in the wake of their results.

Viacom getting a much better reception. The shares are up three the moment, and from what I understand to the airlines are moving as well. On that news. American Airlines now up about four percent UM, so we're definitely seeing some reaction, no doubt about it, in that group as well. Delta's up about two point three percent. Hey, Gina, come

on in on this conversation. I am curious to get your perspective because I feel like um increasingly so much of the Wall Street investment community is commenting on things like the elections, commenting on a vaccine approval and what it could mean for the financial markets. What's your analysis on this? Those are the things that are likely driving stacks.

I mean, it's it's odd to be in the midst of earning season, the second heaviest reporting week in earning season, and see reactions to earnings as muted as they've seen so far. When we look at the earning season as a whole, we've had more than of SMP companies b reporting day earnings estimate targets. That's the best we've seen on record, our record since and yet the one day price action in excess of the index in response to

those earning speeds is about half of average. So it does seem that, you know, even though we're beating expectations, even though we've honestly seen forward estimates start to move higher as well as we clearly had baked in maybe a little too much economic constraint in the earnings outlook,

it doesn't seem that earnings are actually driving driving stocks. Um. I think it fits and starts that's been the case, But I do think that that's the reason why many analysts have started to focus on things like the upcoming election focus on the perspentage chances of getting a vaccine anytime soon. Uh. Certainly the fiscal policy efforts underway in Washington or are a huge question mark, but the market does seem to be anticipating some resolution to that in

the positive sometime soon. So there does appear to be a lot of other things that are really driving stocks right now, even though we're in the midst of a really important earning season. Frank right right, Well, and this data dump that we're seeing, I mean, this is typical. It was all scheduled around. Uh. Employment also seems to be very front of mind. You. Yeah, I think that the economic numbers are are interesting as well, especially the

initial claims numbers. I'm not surprised to see the market kind of thinking, well, what do we really make of these initial claims numbers in the midst of all this turmoil around fiscal policy claims? So is that merely just sort of gaming the system with respect to the fiscal policy expiration or the the extended unemployment claims expiration. And I do think to the markets sort of waffling around here trying to figure out, you know, where do we

really go from here? And frankly, for the last couple of months, we've we've had to price in better economic data. So the sort of the impetus that the economic data is able to give the market at this stage, you have to have a really, really strong be to expectation in order for the market to really absorb that and move higher. All right, Jina Martin Adams, thank you so much, Chief Equity Strategies for Boom Re Intelligence. This is the

busiest time of the quarter for you. We know because of all those earnings that you mentioned, Because regardless of whether investors are swinging one way or the other, you guys are doing a huge amount of work on it. So we really appreciate you taking sometime. Dave Wilson are thanks to you as well. Looking forward to the chart of the day, I've been looking at it, Carolin, trying to figure out like that there's a king element to it. So it could it be a Tom Petty situation, could

be Elvis? Could it be Elvis. We're gonna see, We're going to see, could it be the Lion King? Continue? You are Disney exactly. We are a little Disney obsessed these days, and by we I mean me. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. I gotta say, Jason and I always look forward to this next guest because he's definitely one of the voices we look forward to when it comes to talking about COVID. Nineteam Back with Us is Dr

William Hazeltine. He is chairman and president of Access Health International. It's a nonprofit think tape. It's all about improving access to high quality and affordable health care for people everywhere. He also has this great living e book that came out this year. It's written to address questions about the virus from the perspective of different age groups. It's living because it's constantly being updated with new information. It's called

a Family Guide to COVID. And that our Hazeltine joining us once again and on the phone. Um, nice to have you back with us. Um, where should we start? Like, tell me what you think is most important when we look at what's going on with the virus in the US globally and also the race to find some treatments and a cure, not a cure, bit a vaccine. Well that's a lot. Thank you. Very much. And let me mention that a new book, a new living e book has just arrived. It will be up later today. It's

a COVID um. I got a COVID guide to school, back to school, a COVID Guide to back to school. And uh I mentioned it because that is the topic on Americans minds. Every parent and I'm a grandparent, and grandparents are absolutely upset, concerned, worried about what to do with their children going back to school. The preschoolers, the K through six and the sixth through twelve, and all those are very difficult in different issues. Not to mention

college aid students too. And the shocking thing is is that we don't have guidance nationally and we don't have any consistent way of thinking about it. So what I've tried to do is think through how to give people just the basics for how to make a decision. We just don't have that. It's it's really shocking. The CDC doesn't give any good guidance. I've given you something that really surprised me. Our National Academy of Sciences, which is

a National Academy of Medicine, of engineering. Every academy that we've got put together a panel. They looked at it, and the most shocking thing about that report, as they said, we just don't know and we don't have guidance about what to do. That was our national Academy. It is really upset it. And so what's the first what's the first couple of questions we should be asking as parents? Bill Well, I think the way to look at it is is to try to figure out what your risk is.

And the first ratification for risk is how much infection? How much? How likely or do you run into somebody who's contagious. That's you know, people say transmission, it's really contagious. That's the word you should use. And how likely are you going to run into you or your child going

to run into somebody contagious. And we give a guideline whether you're in green, yellow, orange, or red by how many people for a hundred thousand or in your zip code and the zip codes that they come from to work in your school, and that gives you a guideline of whether you're in a hurricane you should stay home in the basement, whether you're in a thunderstorm and you can stay home and not go out of the rain storm if you go out, if you're heavily equipped, uh,

or it's a light rain and you really have to know where you're going and how well you'll be protected, or if you were lucky enough and there's nowhere in the country, we're really lucky enough. You have to be on a sunny day. If you're on a sunny day, And so that's the first thing. The second thing is

know your personal risk. Aren't there any health issues? First of all, your child has like diabetes, like serious asthma, like obesity, or that you have that the child brings it back, or anybody living with you, like your parents, or they're grand the child's grandparents. And the third and this is a lot harder to judge what that school is doing. And for that you as a parent have to take the initiative and go out and look at what that school is doing. Do you really have confidence

in the people there? What is the plant like is an old, broken down facility as a brand new facility. What's the are handling like? What are they telling you? Are they dividing the kids up into small groups? Do they have face mass protection? Do they separate the children adequately? Those are things you as a parent have a responsibility to do before you said, you're killed out there, because no matter what you're hearing from national news, kids do

get infected. There's something that else that I think we have to demystify about the virus. This is a cold virus. It does a lot more damage than most cold viruses. But it's just like the colds you get every season. In fact, one third of the colds you get a coronaviruses. We know how you get a cold. You send your kid to school when it comes back with a cold.

That's not new. This is and one of those colds, one of the three colds you get every year, is a coronavirus called So that's I think that's basically the story of this book is just trying to give people simple guidance of how to imagine what their risk is and then if the risk is too high, you just don't send your kid to school. Right you are listening to Bloomberg Business Week, Jason Kelly, Carol Master. Let's get

right back to our conversation with Dr William Haseltine. He is chairing president of Access Health International, author of a couple living e books. They are out there and being updated practically hour by hour, it feels like because that's how fast this is moving to your point. Carol One is a Family Guide to COVID Questions and Answers for parents, grandparents, and children, and newly released as of today, a COVID

Back to School Guide Questions and Answers for parents and students. So, Bill, we could talk all day about back to school, but I do want to ask you about, you know, maybe back to work if I can, because these are intertwined. Of course, we need kids to go back to school, we need them to be learning in some form or fashion. But what have you learned is you talk to people about what it's going to take for people to feel

good about going back to the office. You know, it's really surprising that it's almost exactly the same questions that you would ask about sending of your kid to school. You're more concerned about the kid because you think you yourself have more control, but in fact, when you really think about it, you really don't have control of whom

you meet. You have control of what you can do to protect yourself, but you don't know who that other person is, and therefore the same kind of rules apply, which is how much is the infection in your area, what is your personal risk and the risk of those you live with, and then how much is your business doing what it must do given the conditions that there is. I would say there's one area that is driving this epidemic. There is three or four, but one that I'd like

to focus on for just a minute. Is there a lot of people who have to go to work, either their essential workers or they don't. Can't put food on the table if they don't go to work, and they don't have that choice of making the decision that you or I might have about I'm going to stay home, I'm not going to go to work, or have to do this. For those people, it's so important to make

sure their work environment is safe. That's the responsibility of the organization that they work for to make sure that the people that have to work there are safe and that is enforced. I think uh, let's put it say, uh irreproducible across the country. There are some places that are going to be good about that and other places that aren't, and that is going to keep driving the infection.

It's on all of us to put the pressure on our local governments to make sure that all workplaces are safe, even those places where people have to go to work, like the fire department, despite the fact that there is an epidemic raging. So that's something we all have to work with because it's protecting ourselves. Protecting them is protecting us. Yeah, it goes back to I feel like Bill such a big thing that I guess maybe we're all realizing the

importance of community. Right. It's not just about us as individuals, but it's about taking care of really our community at large, and that's what we need to be thinking about. I have to ask you, though, I am still kind of struck by Governor Cuomo on Monday. I was away for a week, came back and he was very strident, very critical, talking about the potential of basically the federal governments. You need to come out and say we made a mistake, we need to do a redo, we need to shut

down again. Do you would you be in favor of shutting down the country as a whole, like we saw in other countries where they have seemed to get ahead of the virus better than the US. Would you be in favor of that. I'm not in favor of shotting down the whole country, but I would be in favor of showing a place like Houston and most of Texas down, or most of Florida town, or most of California Lesa

southern half of California town. You have to be aware of what's going on, and if you aren't in control, which we're not in control of rising epidemics around the country, you've got to shut things down for five to six weeks. But that's not enough. You have to take a leaf out of what we learned from the Chinese. You know, when there are sixty thousand people a day being infected in America, there are fifty people a day being infected

in China. Let me say that again, sixty thousand Americans get infected on some days and fifty people in China. It can be done, and it's not just shutting things down. It's making sure you contact Grace and then mandatory isolation for all those exposed, not even infected exposed. How to do it. It's not magic. We don't do anything like that, nor does any European country. And that's why when you

look at Europe, they haven't controlled this. You can blow out of control, just like it did here at any moment all throughout all right, Well, always good to catch up with you, and you're totally right. We're learning more and there are some simpler solutions to this, UH, and a lot of it comes down to how we're acting with each other and as a community, as you said, Carol. Dr William Hasl teen, Chair President of Access Health International.

Check out his books, a COVID Back to School Guide, it's out today, Questions and answers for parents and students. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. This is a story that brings so many things that we're interested in together, Carol, totally state of healthcare, private equity, big money, and so many more and not the least of which great journalism and Bloomberg Business Week we're happy to have with us.

Bloomberg News Senior editor John Heckinger on this story along with Bloomberg Business Week under Joel Weber. So Joel t this up for us, so John Um and Sabrina Vener, who wrote the story together. Um UH serviced a little bit ago UM about a network of hospitals for profit hospitals UH primarily in Massachusetts called Steward and when UM

they kind of started doing some reporting. But it was kind of interesting to me for a lot of the reasons that you said, Jason, the one big one being that, um, you know, pretty noteworthy UM uh private equity shop a Cerberusts got involved about a decade ago and what what what what the hospitals look like before and after? That has been pretty remarkable. And obviously the backdrop to all of this is there's a pandemic raging UM and John,

so what what what did your reporting reveal? Well, as as he was saying, these hospitals were struggling back in two thousand and ten when Cerberus, the private equity for bought them UM and what we what we found is that UM, the the for profit chain, did invest a fair amount of money and sort of sprucing up the hospitals, but that many of the workers say that they were kind of short changed on staffing and maintenance and UM so once the pandemic hit, UM, they felt like they were,

you know, even more exposed because they were just so so many patients and not enough nurses. UM. So we talked about the mouth role. That's right, Well, the story begins on morning of May tenth, when a mouse wandered into a transformer and shorted out the electricity and left UM a building largely in the dark, and the nurses it kind of represented kind of the sort of penny pinching ways of the company that had bought their beloved

hospital UM. And so that's kind of became a symbol for many of them about why they were so concerned. And it wasn't just a building, Like keep in mind,

this is early maze. The pandemic is happening. What happened to be there happened to be COVID patients throughout the hospital, and what ensued from there, well, what happened is that because there was no backup power in sort of this uh one unit where they were caring for patients, kind of keeping them separate from the COVID nineteen patients there just had to move those patients, the uninfected patients up into a into an IC that was packed with COVID patients.

And as one nurse told us, they they sort of found it really kind of terrifying, and you know, they felt that I could potentially patients at risk. So I guess what I want to ask you, is, should we blame Servius for all of this? Did they not kind of make the changes, make the investments that one might

have expected or hoped for. Well, I mean, to me, the main sort of one of the themes of the store is is kind of the magic of private equity did um Basically the way it was set up is that Cerberus very early on kind of guaranteed that it would make several times the amount of money that it invested. And whatever happened, whether the hospitals, you know, we're struggling or whether they were succeeding wildly, Um, they would no matter what, make their make their money. And so it's

kind of that's really what we were looking at. I mean, there's no question that that Serbers and Stewart did make investments in the hospital, but at this time, even before the pandemic, they were struggling financially. So you have this contrast between how the hospitals are operating and how much

how much their investors have profited. You know, John, I feel like this is such terrific reporting by you and Sabrina, and it really cuts to the core of one of the biggest issues I feel like we are facing when it comes to Wall Street, when it comes to private equity, when it comes to corporate responsibility in many ways, and I think it's brought to the FORO so much more because of this pandemic that we're living in, which is

essentially at what cost are you making your profit? And I think that's it feels especially true in the healthcare arena because based on reporting you've done, and Sabrina Wilmer, your co author has done, and Heather Prolberg on the private equity team, I mean this is a theme that carries throughout the American healthcare system, which is, you know, private equity sort of coming in and seeing the ability to make money by cutting costs, and in some cases

it feels like cutting corners. And one of the other issues is that, you know, there was there was concern that private equity backed companies were getting a bailout money right and and that and did did in fact happen to hospitals that were backed by private equity, including including Stewart Um. They got something like four hundred million dollars in loans from the package, another hundred million dollars in grants.

And so I think the you know, the question now that sort of Congress is looking at is um you know, you know Wall Street was supposed to be a source of money for you know, for private equity, and should all these companies be getting beginning taxpayer bailouts? John, you know, one thing I just want to kind of bring it back to is ultimately um uh Cerberus was able to to kind of exit uh somewhat and and walk away with what what the where do things stand and how

could things develop um in the months and years to come? Well, Serbs put in about a quarter of a billion dollars and all told, um Cerberuss investors tripled um tripled their money. And over the last in May, um Cerberus sort of started backing away from the investment and gave control to

the doctors who are running the company. But they still have they own a three hundred and fifty million dollar bond UM, so they're getting interest on this on this payment and if in five years when it comes to they could potentially make another three d and fifty million dollars if if the company you know, continues operating, and if the company, uh, the company thrives and does you know the wholes in size, they could make much more than that, so, Um, they basically have already made triple

their money. They could make several times more of that, and as you say, Steward's still remains on a financial knife edge, so their financial situation is still tricky. Um. It's a great read, it's great reporting, as Jason mentioned, Um, and we'll we'll put that out on Twitter two so that we can share it a little bit more with our listeners. John, thank you so much. John Heck and

Jerry's senior editor at Bloomberg News. Really a phenomenal story, joining us on the phone from Boston along with Bloomberg Business Week editor Joe Weber on the phone in Massachusetts. What I mean, you know these guys a lot like the healthcare aspect of this I think is one of the most fascinating because it calls into question, I think, so much of what we talk about about private equity, but also beyond, which is what our company's responsibilities and

they are not just two shareholders. And I think we're coming around to that, but it is slow and it is painful, especially when it comes to the healthcare business. And check out that story. Check out all of Heather prole birds work as well. She's done some phenomenal work. This is Bloomberg Business Week with Carol Masser and Jason

Kelly on Bloomberg Radio. All right, let's do a little business Week economics now, Carol, if we can, because, as we mentioned with Gina Martin Adams at the top of the show, a lot of echo to her this week, some this morning, some yesterday, and a big day tomorrow with that monthly jobs report. We're gonna break it down with Francis Donald, Global chief Economist, head of macro economic strategy for Many Life Investment Management, joining us on the

phone from Toronto. First of all, Francis, how are you. What's going on? What's life like up there? I? Actually I believe you're in Montreal? Right? Do I get that wrong? That's correct? I am correct. I am in Montreal. I am an economist in the middle of the largest economic crisis of our time. So it is both extremely exciting and what we were born to do, and also very overwhelming and a lot of new things to have to think about, things that we've never thought about before in

this profession. Really yeah. And one of which, and we've mentioned this on this program before, one of which is we didn't think about weekly jobless claims very much at all for a long time. And now we literally like have an alarm set on every Thursday morning to look at this number. Tell us what you saw in that number and what it may portend as we you know, that's that's closer to real time data, or it's it's a lesser lag than work what we're going to see tomorrow.

What does it tell us about the employment picture? Well, the headlines I saw on my Bloomberg terminal is that you know, we have the best the best initial jobless claimed since the pandemic started, that we had this beat you know, um and and this to me just was fairly shocking interpretation given that we still have over a million Americans a week who are filing for the first time for unemployment insurance for claim this messaging to me is very concerning because it isn't really the number of

jobless claims or even tomorrow what non farm payroll to figure is that matters as much as the composition of it underneath. And in some ways, these initial jobless claimed, these million every week, are more concerning to me than the multiples of that that we saw in March and April. And that's because we know the people being laid off now are not being laid off because of temporary closures of coffee shops and movie theaters, though they're being laid

off in a more permanent sense. So these job losses are much more sinister and necessarious for the economy than what we experienced in April. The fact that we have a million people a week who are going unemployed should be something that weighs on us heavily. And while we may have beat the economist expectation, that is missing the forest for the trees here, you know, and I do under Francis Man, these numbers are already staggering right when they come out, as you said, one million a week.

But I do wonder are you anticipating that we get kind of another drop down. I don't know whether it's in a few months, whether it's the beginning of next year. You know, when companies really have to say there's just no demand out there for our services are certainly not like it was, and we've just got to let go more workers. Well, a lot of what the data is, Michelle says, I don't think a lot of our charts is going to show a double dip or a double

you type of environment. But what I do anticipated that we're going to see a stalling out of the momentum, and actually a lot of our high frequency indicators showed us that that started in early July, and even initial jobless claims are showing us a similar story, which is that we still incrementally recover off of the depression that was March and April, but we certainly don't go back

to streed called at levels. What I find interesting is we were to stabilize, for example, at minus five ton GDP, we might see headlines telling us that's an improvement over the thirty percent drop with SAW on Q two, but it would still be some of the if not the worst economic data that we've seen outside of this pandemic. So we are moving from depression to recession. And if you're a second derivative type gal like I am, of course that's good and markets to react to that as well.

But the fundamental story or is that we are a long way out of the wood, and actually the nature of this recession is going to change quite a bit in the next coming months, particularly if we do not get an extension on unemployment insurance. Top of very very soon. If we don't get that, then August and September is going to be a real tough period for a lot of economic data and for a lot of people too.

I'm gonna pause for a second so that Carol Messer can add that to her list of T shirt names, because I want you to wear a T shirt that says I'm a second derivative kind of gal, because that's brilliant. I love it. Um So Francis. You know, when we think about what's going on in Washington, you know that's another thing that investors are really reacting to, is alright, Congress, maybe they're going to get their act together, maybe the President is going to sweep in with some executive action.

How much can you do you sort of model in a fiscal solution here, given that something we hope is going to get across the finish line, it's the only solution. The Seederal Reserve is preventing a credit crisis and insuring we have plenty of liquidity in the system, but they cannot help everyday Americans get food on the table when

we're in the largest employment shocks of our time. So right now, the big challenges we know April and May and June were substantially bolsters by this bridge created by the Unemployment Insurance top up and other additional forms of support. But that rug is being pulled out from under us. I think when I look at that City Surprise Index that shows us the largest spread between next economic data

UM expectations and the actual data. The reason that we have been overly pessimistic in general as a profession is that we've underappreciated just how sizeable those fiscal transfers have been. And I know there are some who are going to say yes, but the extent of fiscal has disincentivized hiring activity or disincentivized people looking for jobs. But there simply isn't enough hiring activity. As much as we've got initial

job exclaims. This morning, we also saw a five hundred and seventy six percent year over year increase in job cuts, five hundred and seventy six percent increase in challenger job cuts. So there is not a lot of hiring activity happening here. And if we do not have some additional support for Americans UM, even if it's applied retroactively, it takes a couple of weeks to work us way through the system.

I think August is going to be a very challenging my pike, I call August an air pocket where we actually see probably a lot of really difficult, strange distortions in our data. Hopefully they've correct themselves in September and October, but August I think might be one of the toughest months in this recession, even more tough than than the

initial shock of April. Well, a lot of uncertainty out there, but one thing for certain, Frances, I know we're going to be coming back to you a lot because your analysis is just fascinating to hear. And uh, like we said, we're adding you to our T shirt list. We have just a T shirt list of really smart saying so we're gonna keep doing like some of them, like we have the j Pal Lending not Spending Tour of twenty Like I feel like you could pull that one off, Francis.

All right, our thanks to Francis Donald up in many Life asset management really one of our good two voices here, and I always look forward to catching up with her. Carol, and I do want to be a secondary derivative kind of gal, like I feel like you are just studied economics. You're you're a burgeoning Uh that would be an economist in a different life. I think I would. I would be Francis Donald, only in my dreams. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on

Bloomberg Radio. We do to talk a little bit about the E t F world. Ed Rosenberg is back with us, head of ETF that American Century investments ninety billion in assets under management joining us, I believe on the phone from Chicago. Ed. Good to have you back with us. UM, I gotta ask you. Are you in Chicago right now? I am? Yes? Okay, Well, good to know how Chicago going. Chicago's great. I mean it's perfect weather. It's better than when I used to live on the East Coast. I

don't get any of those storms. Tell me about it. Oh god, you don't. You don't know the half of it. I mean that really swept through here. I'd live in Westchester and it knocked out power. I mean it was it was second only to Hurricane Sandy, a distant second, but in terms of knocking everything else. So any kiss, how's the virus situation there? I'm sorry, what did you say,

the virus situation. I mean, you know, in Chicago, I know it's it's pretty rough with what's been going on in but it hasn't from my understand, I haven't grown that much where I live, which as a small town just west of the city, it's really it's quiet here for that um so, I mean, everyone's wearing their masks, doing the right thing, but it's still the spread overall.

In the six months that will call it that's been really around, my town has only had a hundred and thirty two cases, So it's been relatively quiet on that front, which is good. Everyone's really doing the right thing in

the town and keeping it from really spreading. And it is interesting to sort of see that play out on an almost micro level, right, I mean in this sense that when you do see a group of people doing you know, what are now widely considered by medical experts to be the right things, mass social distancing, washing your hands and all that, it does tend to work. But

I digress. Uh, you are the head of exchange traded funds ets, as Carol mentioned, talk to us about this moment, especially for E s G. Because it feels like we're in a moment that has only accelerated over the course of fair to say, has been a little bit of a funky year. But but what are you seeing in terms of flows and even just in terms of general interest. So let's start with the general interests with E s G.

I mean, I think it's it's picked up. What's been interesting about this year is companies that are considered more E s G have performed better. Now there's different approaches to e s G. You know, there's there's exclusionary, which tends to be a little bit different, there's impact, and then there's really sort of digging in and finding those

companies that are environmental, social, and governance. And I think when you do the second and third aspect of it, you're really able to find companies that are starting to

be considered quality across the board. And quality in the year like this, when there's been so much volatility, has definitely been rewarded in a lot of ways because if earnings are going to continue, I know, listening to the update of what's driving the Dow, we're driving the stocks today, the companies that were talked about were definitely quality companies and so I think that's really helping E G. As they become more quality and more top of mind for people,

it's going to become more popular as an investment theme. And a company like American Century, you know, just to add this to it being owned by the Star Wars Institute for Medical Research. I mean, we really have a unique understanding of B S G and how we apply it across our board. So one thing I'm curious about ED is where investors are committing money new money right now?

What are the flows that you guys have seen in and out of American Century, And I'm curious if the flows how they have changed kind of as we've moved our way um through for many of us, you know, this work from home, stay at home environment and the impact of the virus. So it's interesting from an overall perspective from ets in general and then American Century. What you saw was you saw a lot of international investing the first part of the year and that has substantially

faded and gone to negative. So money has flown out of that. And where you've seen in money going is I don't want to it's not what I would call a flight to safety, but it's flight to some higher yielding bonds who corporates across the board as well as some area, but the US. It's really been focused specifically

on the US market. And then if you look specifically, it's what you've been what you guys I'm sure have been talking about, which is technology, right, whether it's you know, from fang stocks across the board, people are going into that and even some of our ETFs. We launched a new ETF earlier this year in the middle of the pandemic um just focused dynamic growth, which has some of

that technology exposure. I mean, it's been gathering assets fairly quickly for a new product and quite frankly, it's a new structure for you guys. It's a semi transparent structure, which was the first of its kind just to get out there, and people are drawing interest to that more than anything else that I've launched in a long time.

What does that mean? Semi transparent? So, as you know, with with ets, holdings generally are displayed daily through a function, whether it's called the basket, shows you all the holdings. These semi transparent structures do not show the holdings daily.

That is the only difference. And so what that means basically is the only time the investor can see what's in the fund is either on a monthly basis with the top ten holdings, or from us when we released the quarterly holdings fifteen days after quarter in, they'll see

exactly what's in it just quickly thirty seconds. Why would I want that over a fully transparent Well, if you're really looking for something that has the portfolio manager's best ideas without the fear of front running, so they can really offer potentially an alpha generating portfolio similar to what you'd get in the mutual fund, which you can't get. An Yes, that's exactly why you'd want it. Interesting, Interesting,

all right, Ed Rosenberg, thank you so much. Really good to catch up with you get a view of what's happening there on the ground just outside Chicago. Ed Rosenberg, head of exchange traded funds for American Century Investments. I mean, look this, that corner. I was going to call it the quarter of the mark, Like that side of the market has just exploded when it comes to ets, I was reminded about of that when you were out and hanging out with his scarlet food. When she was with me.

She knows so much about if somebody was treating me like, when are you gonna bring it back? What's it coming back? Scarlett? I know that's her show. It's her show, ma'am. Hopefully soon I'm roam journal. Yeah, but you let me drive? Oh no, no, no, no home honey, please, I'll do the riding drivel. I want to drive all just drive baby, the question trying can this is the drive to the globe. Thanks, We'll drying up on Bloomberg Radio in this time for

the Drive to the clothes. Happy to have back with this. Bill Smee, chief investment Officer, Smead Capital Management. He joins us from the West coast, the Pacific Northwest, the Seattle area to be a little more precise. So, Bill, you know, I listened to Charlie Pellett all day every day, and he pops into our show and he tells us what's going on in the market, and he is increasingly and has been for a while. I guess using the word record to talk about the SMP and certainly to talk

about the NASDAC. Let's talk about the NAZAC if we can. Let's talk about tech stocks, because what a run they've had, and it just defies gravity in many cases, and I wonder what you make of it. Well, Uh, I'm forty

years into being in this industry. And uh. You know, when when you are a long time veteran, you try to train yourself to be excited about meritorious things and wonderful companies that are in the wrong part of their business cycle, uh for one reason or another, and you try to avoid kept getting involved in very strong momentum and popularity among things that are near the top of

their particular industry business cycle. And the COVID thing, obviously has uh exacerbated the misery of some people that were in down cycles, and it has caused an whole layer of additional momentum to those things that were already popular but are benefiting from the kind of voluntary prison that we operate in. All Right, is that your way of saying,

it's tough being a value guy right now? Testing is not the right word now it You know, it was rough and nine that was rough because your next door neighbor was doubling their money on an I p O uh, you know, twice a month, and and you know wondered why you couldn't get them any shares? Uh. And this time, I mean it's literally it's the businesses that virtually everybody

is forced to interact with on a daily basis. And the problem is that it would be a lot like nineteen seventy two, where you you were a Coca Cola drinker and you you recognized how addictive and wonderful of a business that Coca Cola was, and then you bought a bunch of it in nineteen seventy two at about you know, eighty times earnings, and then you woke up ten years later and you you you lost money for ten years, Uh quite a bit, as a matter of fact, and and you got into a different part of the

cycle for stocks and a different part of the cycle for for their particular industry. And uh, it's just hard to visualize that stuff right now. We I, you know, I have swallowed so much Humble Pie that I literally could start a Humble Pie chain. Yeah. It's tough out there, for sure in many ways. And yet the market you know,

you know, continues continues to grind in many ways. So where do you find opportunity here then, especially given all these different headlines coming out as that are part health crisis, part economic crisis, part trade tensions, like all of it seems to be coming at us from every direction every day. Yeah. So, so first off, uh and I love the question. I love your premise there. You're just looking for great long term risk reward relationships when you're us. So I don't

want to mope too much. Uh. I think if you look back at the last ten years, I think we've made something like compounded net of costs for our end investors. Right. So it's like, you know, uh, I'm not here at moment. It's been a great era, and ironically we're fully invested, right We're We're We're not We're not one of these groups that's sitting in cash waiting for armagedd to come. Uh.

Uh So, so we're you know, we're not there. But back to your point, uh, the production of oil in the United States has fallen off a cliff and the rigs are shut down, and it just appears that at some point a year or year and a half from now, that if we get back to of the economy when that lack of supply runs into actual demand, if we're at forty a barrel or forty two of barrel right now, where are we going to be when some kind of demand normalization comes up in a year and a half

or two years, and therefore that looks attractive when Warren Buffett is backing up the truck on Bank America, which is a stock that we've owned since two thousand and twelve and and done extremely well on even though it's corrected sharply and not come back from the from the COVID debacle. Uh Buffett was mortified may one, right. I mean, if you watched the Virtual Annual meeting, he was mortified. And and uh so do you have to ask him the question why did you buy Dominion Energy and why

you're buying Bank America? And and the answer to that would be that a lot of the uncertainties that that that he couldn't really get his arms wrapped around may one, He's more comfortable wrapping his arms around them. Now. You know, we've been talking this week, and I was talking with

a bunch of CEOs about scenario planning. Right. This is something that Shall really created back in the seventies where you start to think through those wild scenarios and then kind of plan your business around that as an investor. What's the scenario planning um bill that we need to be doing right now. I just got about forty seconds.

One of our scenarios is playing out, and actually COVID nineteen has been the positive catalyst, which is we talked to people at dr Heart in a day, people under thirty four bought the new homes they built in the last couple of months. And that is something that most people were not expecting, which is that the millennials would buy houses like prior generations. They're just doing it five to seven years later. Very cool, very interesting. Um, thank

you so much for them. You're right, and we've been watching that housing sector talking a lot about kind of what we're seeing, and those trends have been, you know, really really interesting to follow. Bill Smith, They you so much meat capital market. Bill has really seen a lot of market cycles over his forty years, investing about two point two billion in assets under management, joining us on the phone from Seattle. Yeah, it's a great perspective and

listen that long term view. It's really important to keep in mind because it's easy to get caught up in a minute to minute to take by ticks, certainly in a market like this. Well, we do want to talk a little bit about the E t F world ed Rosenberg is back with US, head of ETF that American Century UH investments ninety billion in assets under management joining US, I believe on the phone from Chicago, Ed, good to have you back with US. Um, I gotta ask you.

Are you in Chicago right now? I am? Yes? Okay, Well, good to know how Chicago going. Chicago is great. I mean it's perfect weather. It's better than when I used to live on the East Coast. I don't get any of those storms. Tell me about it. Oh god, you don't know the half of it. I mean that really swept through here. I live in Westchester and it knocked out power. I mean it was it was second only the Hurricane Sandy, a distant second, but in terms of

knocking everything out. So any kiss, that's the virus situation there. I'm sorry, what did you say, the virus situation? I mean, you know in Chicago, I know it's it's pretty rough with what's been going on in but it hasn't from my understand and grown that much. Where I live, which is a small town just west of the city, it's really it's quiet here for that um. So, I mean everyone's wearing their masks, doing the right thing. But it's

still the spread overall. In the six months that we'll call it that's been really around, my town has only had a hundred and thirty two cases. So it's been relatively quiet on that front, which is good. Everyone's really doing the right thing in the town and keeping it

from really spreading. And it is interesting to sort of see that play out on an almost micro level, right, I mean in this sense that when you do see a group of people doing you know, what are now widely considered by medical experts to be the right things, mass social distancing, washing your hands and all that, it

does tend to work. But I digress. Uh, you are the head of exchange traded funds e TS, as Carol mentioned, talk to us about this moment, especially for e s G, because it feels like we're in a moment that has only accelerated over the course of fair to say, has been a little bit of a funky year. But but what are you seeing in terms of flows and even just in terms of general interest. So let's start with the general interest with E s G. I mean, I

think it's it's picked off. What's been interesting about this year is companies that are considered more e s G have performed better. Now. There's different approaches to e s G. You know, there's there's exclusionary, which tends to be a little bit different, there's impact, and then there's really sort of digging in and finding those companies that are environmental, social,

and governance. And I think when you do the second and third aspect of it, you're really able to find companies that are starting to be considered quality across the board.

And quality in the year like this, when there's been so much volatility, has definitely been rewarded in a lot of ways because if earnings are going to continue, I know, listening to the update of what's driving the Dow or driving the stocks today, the companies that were talked about were definitely quality companies, and so I think that's really helping e s G. As they become more quality and more top of mind for people, it's going to become

more popular as an investment theme. And a company like American Century, you know, just to add this to it being owned by the Star Wars Institute for Medical Research, I mean, we really have a unique understanding of e s G and how we apply it across our board. So one thing I'm curious about ed is where investors

are committing money new money right now? What are the flows that you guys have seen in and out of American Century And I'm curious if the flows how they have changed kind of as we've moved our way um through for many of us, you know, this work from home, stay at home environment and the impact of the virus. So it's interesting from an overall perspective from ETFs in

general and that American century. What you saw was you saw a lot of international investing the first part of the year and that has substantially faded and gone to negative. So money's flown out of that. And where you've seen money going is I don't want to it's not what I would call a flight to safety, but it's flight to some higher yielding bonds who corporates across the board, as well as some aggregate but the US it's really

been focused specifically on the US market. And then if you look specifically, it's what you've been what you guys I'm sure have been talking about, which is technology, right, whether it's you know, from fang stocks across the board, people are going into that and even some of our ETFs we launched a new ETF earlier this year in the middle of the pandemic um just focused dynamic growth,

which has some of that technology exposure. I mean, it's been gathering assets fairly quickly for a new product, and quite frankly, it's a new structure for you guys. It's a semi transparent structure, which was the first of its kind just to get out there, and people are drawing interest to that more than anything else that I've launched

in a long time. What does that mean? Semi transparent? So, as you know, with with ets, holdings generally or displayed daily or a function whether it's called the basket, which shows you all the holdings. These semi transparent structures do not show the holdings daily. That is the only difference.

And so what that means basically is the only time the investor can see what's in the fund is either on a monthly basis with the top ten holdings or from us when we release the quarterly holdings fifteen days after quarter in tell they'll see exactly what's in it

just quickly thirty seconds. Why would I want that over a fully transparent well, if you're really looking for something that has the portfolio manager's best ideas without the fear of front running, so they can really offer potentially an alpha generating portfolio similar to what you'd get in a mutual fund, which you can't get an Yeah, that's exactly why you'd want it. Okay, interesting, interesting, all right, Ed Rosenberg,

thank you so much. Really good to catch up with you get a view of what's happening there on the ground just outside Chicago. Ed Rosenberg, head of exchange traded funds for American Century Investments. I mean, look this that corner I was going to call at the corner of the market, like that side of the market has just exploded when it comes to et s, I was reminded about of that when you were out and hanging out

with miss Scarlett food. When she was with me, she knows so much about Somebody was treating me like, when are you gonna bring it back? It coming back? Scarlett? I know that's her show. It's her show, ma'am. Hopefully soon.

Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, Southcloud, Bloomberg dot com, but wherever you get your podcasts, and of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio, or watch us on YouTube by searching Bloomberg Global News