Millennials at 40 Are Falling Behind Their Parents

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. Well US infectious disease expert Anthony Fauci saying it was possible the world would never find out the precise origin of the coronavirus pandemic. We know President Biden just last month ordering a new ninety day review from the intelligence community about the possible origins of the virus. To him, we've got that going on.

Then we've got the Bloomberg Big Take about how the world's best hope to end the pandemic really just needs more doses. Yeah, and here to help us dive into all that and more is Darryl Gaskin, Professor of Health Policy and Management at the Johns Hopkins at Bloomberg School of Public Health, joins us on the phone from Maryland. The Johns Hopkins Bloomberg School of Public Health is supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies.

Professor Gaskin, thanks so much for joining us. How are you? I'm doing well and how are you doing doing well? Thanks? How important is it that that we actually find the origins of the coronavirus? Well, I think with regard to UM finding the origins of the coronavirus, it's it's I think it's more important that we know what the virus is and how to treat it as opposed to just

UM finding its origin UM. And I think we've done a pretty good job in terms of gore mapping the DNA of the of the of the virus itself and then developing vaccines to try to combat the virus. So I think that's that's really the major thing that we ought to be doing, and then subsequently learning how to treat virus right exactly, and we know the toolkit has certainly it's a lot more full than it was about

twelve fourteen months ago. Having said that, at the same time, the past year, as you know, Professor Gaskin, that the pandemic really revealed once again all the inequities that are out there in terms of how healthy the U. S population is. Some really healthy, some not. Some have great access to amazing healthcare, some do not. This is something

that you look at really closely. Have we learned enough this past year that we're going to get smarter about making sure that people are healthier going forward, uh, and that people have more people have great access to good health care. Well, I think what the pandemic has done is it's revealed that there are some real problems with health equity in this country, and those problems have persisted

UM for decades. There's a has has historical report by the Heckler, the HECLA Report, which was UM published in the nineties eighties, which which UM documented the UM disparities. And then there's a report that was called Unequal Treatment that was published in early two thousands that documented these disparities. So from a research or standpoint, we've known about it for a while, but I think from the general public standpoints,

they haven't realized how severe the problem is. And then also the impact of this problem that it's just not something in which affects your neighbor, but it really affects our entire society. Well, how do we get to a place where we we learn from the mistakes of our past and actually fixed this on the other side of the pandemic, Because it seems like this could be another instance of us recognizing something, but then the policymakers not

having the political will to actually accomplish something. Yeah, it's it's it's um, really quite a thorny problem. I mean, UM, we should all be sort of just moved by the fact that there are people who are unhealthy through no fault of their own often um, and morally that should be something in which we should be willing to take on.

But not only is it just morally unacceptable, it's also economically it's just just causing our society just a lot of money in terms of taking care of people who are are sicker um who um, And then those individuals their ability to contribute to our society um is curtailed and compromised. And then also the fact that people are not living as long as they should and and so all of these things impose significant costs on our society.

So even if if you're not willing to address these problems because it's morally the right thing to do, we should want to address these problems because it's really sort of a real track on our economy. Exactly. Hey, we just got about a minute or fifty seconds left here, how do you though unwind what's become such a business machine that is our health care program and our health health care industry, to be fair, because there's a lot of money that's to be made when people are sick

versus maybe keeping people from being sick. So how do we unwind that? And just kind of I think it's we have to be willing to say yes and no at the same time. Um, we've spend a lot on healthcare, but we just spend it on the wrong things. I mean, we we really want to spend a lot on tertiary care, but not a lot on primary and preventive care. I mean, there are providers that are providing these services, but if you look at what we pay them relative to what

we pay specialists. And then an addition, we've spent a lot on healthcare, but not a lot on public health and this crisis. If we were much better prepared public health wise, we could have maybe a burden UM hundreds of thousands of deaths if we just were to have had the systems in place to monitor, track and then

um and then isolate. This spiral. Sounds like we can just start working on it for the next one, because most people say that what are concerned about is we won't even have those things in place for the next

one exactly, and we'll go through something very similar. Professor Daryl Gaskin, thank you so much, Professor of Health Policy and Management at Johns Hopkins Bloomberg School of Public Health, with with us of course on the phone from Maryland, the Johns Hopkins Bloomberg School of Public Health, supported by Michael R. Bloomberg, Founder, Bloomberg LP, and Bloomberg Philanthropies. But you do wonder do we learn anything? It is we

have short memories, We really do. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We want to get to the Bloomberg Big Take. It's an exclusive story that you definitely need to know about this one from our Bloomberg Business Week team about the world's best hope to end the pandemic. Tip it comes down to needing more doses. It certainly does. Joe Weber is editor of Bloomberg business Week. Stephanie Baker

is Financial Investigations Senior writer at Bloomberg News. Joel is in the Bloomberg Interactive Broker studios with us. Stephanie is on the phone from London, Joel Kovacs. Maybe, which is maybe a term that not everyone's familiar with, um, But it is a global organization that is in charge of basically getting vaccines to the place that places that would

need them. And that's not always rich countries. In fact, it's usually every other country that doesn't maybe have the resources of the United States of the America's well, it's arguably, as a Stephanie and our colleagues right, the most complex international peacetime operation ever attempted. How is it doing as of now with securing enough doses to distribute to the world. Not well, Um, it's been short on money and doses. And and that's um where we can bring bring Stephanie

in because this is not the they've been saying. This actually for for going on a year now that they're going to need doses and money to to actually get people vaccinated outside of the developed world, and and that messages maybe finally breaking through and and and to what can we attribute that, Stephanie, Well, you know, I think that now that developed economies like the US and Europe um have advanced their vaccination programs, UM, and they are looking at you know, the end, you know, or the

pandemic coming to a close or you know, coming under control. Um, you know, looking around and realizing, you know, the world is not going to return to normal unless we get this pandemic under control in other parts of the world because um, you know, we're not gonna be able to travel. And there's this risk of variant UM being created in countries where the virus is circulating. The more infections you have,

the more likely you're going to have these variants. And it's concerned that, um, you know, they vaccines may not work as well against all these variants. And if that happens, you know that could you know, those variants could boomerang

back and we could be back to square one. In places like the US and the UK that even have high vaccination rates, so you know, COVACS has really been set up to try to at least provide a baseline of coverage for poor countries that can't afford to buy vaccines on their own, to provide protection and immunizations to healthcare workers and the most vulnerable um But obviously it's been underfunded, and I think the main reason why it didn't have enough money early on in the pandemic to

be competing with rich countries that were placing big orders with the promising Vaccine Developers Deputy where they were behind the queue. We were we were talking about your story earlier with Darryl Gaskin over at Johns Hopkins. You know, why wasn't there more planning and consideration upfront to making sure enough vaccines were there for less developed countries, for

those emerging markets. We knew this was going to be a problem, right, And you know the people who set up COVAC, Steth Berkeley, the head of this nonprofit called Gabby, and Richard Hatchett, who won a research and development outfit

called Steppy. They realized that this was coming down the pike, and so they set out to raise money to do those back in May, and the money came in very slowly because countries were continued with their own problems trying to find vaccine for their own populations and really didn't step up early enough. On top of that, we have a global shortage of vaccine manufacturing capacity going into the

pandemic um. You know, before COVID hit, we had about five a capacity to make about five billion jos's vaccines globally, including one and a half billion for flu. So we're now trying to more than double that. So that is part of the problem. And you know, we didn't know which of these vaccines were going to work, and you know, trying to do tech transfers and get manufacturers up to speed is incredibly difficult and complex, especially with new vaccines

could have been developed. How much of an issue in hindsight, and I think we can say hindsight right now in the developed world is hoarding of vaccines. So I interviewed the Prime Minister of Jamaica back in January and he accused Rich nations of hoarding vaccine doses and not making them available to other parts of the world. Well, yeah, and that that is basically what has happened. I mean, the US has ordered I think about three times what they need to cover their population. Um. The UK has

done you know, similar orders. UM. So it's it's they occupying places in the manufacturing q UM and that creates problems for other countries trying to strike deal. So um, you know obviously that is happening now. The hope is that, you know, once we get surplus, the surpluses start to come through, those dose sharing arrangements will increase. I mean in the US you have a gap of about seventy million now between doses delivered and doses administered. There's a

lot of vaccines in the US. Biden has just announced that helps share twenty five million doses of vaccines globally, most of that through kovacs, but in the Queen scheme of things, that's like a drop of the ocean. They need a lot more. Kovacs is a hundred million doses short where they hoped to be by June, and that is mostly because they were hoping and relying on the world's largest vaccine manufacturer in India to make uh, you know,

hundreds of millions of doses. And now India, because of its second Waves, has put export controls on the vaccines produced there, and that is left the world with a

huge supply gas. I think that Biden news is actually significant because it underscores sort of the whole point of Stephanie's story, which is Kovac has been under resourced, underfunded from day one, and then you know, a meager gesture of you know, better than zero, which was what was there before, but it's still you know, just millions and millions off of what Kovax is going to need. Yeah, and I guess I just assumed, well, you know, it's interesting.

You do wonder about the pharmaceuticals, the major pharmaceuticals role in all of this. And again I know that there were production uh, you know, limitations, but you know, I guess I would have expected Stephanie that the big farmer companies would have been maybe a little bit more helpful. You know. The thing that has always struck me is um that the tow leading developers Fire and Maderna deals with Kovacs very late. Um deal was very small, forty

million in January. Maderian has only came in May um and most of those doses will only be delivered to Kovacs towards the end of this year and next year. And I can't leave neither of them have just given doses pro bono to this effort, right, given how much they are making off of these vaccines, and I'm surprised people haven't called and out for that. Well as someone in your story. Uh, there's a quote, it's a global pandemic. We need a global solution. That's the only way we

get beyond it. Great stuff, Stephanie Baker, it's our Bloomberg Big Take. It's a Business Week story. She's Financial Investigation senior writer on the phone from London. Jill Weber, editor of Bloomberg Business Week in her Interactive Broker studio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. All right, this is a little depressing. It is our second most read

story on the Bloomberg in the past eight hours. Millennials at the age of forty, Tim, they are falling behind their parents in every way. Is this your group? This is not only is this my group? But I felt personally attacked when I saw the term geriatric millennial in this piece. It's been telling my story because that is me. I am a geriatric millennials that is like a mean term.

It's an official term, all right, But listen, this talks about though, um, how millennials at the age or the older the geriatric millennials really running out of time to build up wealth. Let's get to it with Katarina Survive as she's Bloomberg News Federal Reserve and Economics reporter on the phone in Dallas. As I said, one of the most read stories on the Bloomberg. Katarina, tell us what you guys uh sought out to do in this story

and what you found out? Hi? Yeah, So, um, you know, we thought it was really interesting that this this the older UM millennials are turning forty this year. Of course, these are folks born in UM ninety one, and this generation has been you know, talked about a lot in the past ten years or so. Um. You know, there's been a lot of kind of thankst about whether all millennials are still living with their parents and so forth.

So we thought it would be kind of interesting to take a look, and um, we looked at a variety of kind of wealth statistics and and just number around this and and really found that this generation is very far behind UM where their parents and grandparents were in terms of things like home ownership, UM, debt levels, UM, kind of these key elements to wealth. Why is that specifically? Is it because of when we graduated from college into the a few years later, the great recessions because college

was so expensive for us? Is it because wages haven't grown as much as they were growing when our parents were our age? Is it all of the above? Yeah, I mean it really is all of the above. It's a lot of different factors coming into play. And yeah, like what you're saying, I mean, college was a good

bit more expensive for millennials. Um, They therefore incurred a lot more student debt, and that debt has really stayed with them and prevented them in many cases from doing things like buying a home, which is such a key way to build wealth. And then, like you're saying, um, wages really haven't risen that much during millennials adult years, UM, not nearly as much as for their parents. And then conversely,

things like home prices have really shot up. So it's really created kind of this um, much more uneven environment for millennials. Yeah, it's pretty staggering some of the stats that you have come out there, but you also talk about I love there's like a cover page to all of this. A year of college for millennials was I guess,

on average twenty four thousand, six hundred. For boomers it was less than half that UM cost of a home three thousand versus two hundred sixteen thousand for boomers UM middle aged net worth ninety one thousand for millennials hundred thirteen thousand for boomers. It doesn't feel like in some instances, though, Katerina, that much. But we have to remember that wealth creation, even a few thousand dollars over time, adds up to

a lot. Yeah, exactly. It's kind of like this multiplier effect, right, UM, and especially with the way with what home prices have done in the past few decades. UM, the earlier or that the sooner you're able to get in, the better because it's just going to multiply and multiply. UM. Also, things like you know, stock ownership savings rates in general, these things are it's all lower. So when you add it all up together, it creates UM you know, a

bit more of a dismal picture. So based on on your reporting who you spoke to UM and you know you've done so much reporting on this, Katerina, what is what is the message for policymakers here? What is the way to prevent this generation my generation from um from a faith that's not so good? Yeah, I think it's

going to be really interesting. I think you know that this is why we're seeing some politicians talk about like student loan forgiveness, UM, things like that, because I think you know, they're seeing the effect that this is having on kind of holding back some folks in in the millennial generation. Um. So it's it's things like that, you know, perhaps thinking about solutions for this death burden. Um, it's also thinking about retirement and what's going on with social security.

I mean, if you have fewer savings, um, you know when you get into retirement age, I mean you're probably going to be more dependent on things like social security. So what is that going to look like when millennials start to retire? Well, and Karine, if we break it down even you know, go deeper into this in terms of racial variances, right, it gets even tougher if you're what a black millennial or a brown millennial. Yeah. Absolutely, And the millennial cohort is much more diverse than the

ones that came before, Right, the country, population growth is happening. Um. You know, there's more population growth among minority groups in this country. So every generation, every new generation is going to be more and more diverse. And we know that black and brown people, especially in the US have much less wealth than their white counterparts. So you know, it's it's really has implications for the US economy and growth

going forward. You go ahead here. You know, you know what I think was interesting what you said about policy implications, because this is going to be a voting block, right, a pretty pig size voting block, and you do wonder what that might mean, what kind of policies that they would to ultimately vote in favor of. Ye Katerina just want to end in our last minute. But you talking about the wider economic consequences or implications of generation like

this not having the wealth that previous generations had. I mean that has serious implications for growth. Yeah, exactly. And and we obviously, you know, we want to grow the economy so um and and certainly to deal with our debt, you know, our national debt burden, which has of course only grown in the past year. You know, we need that, we need an engine of growth, and if you have people with fewer means to spend and and and less ability to kind of um to do things like that

and buy homes for example. Um, it just really puts the economy in a more precarious date. Yeah, that is really something important to think about, you know, because you do think as people retire, maybe they don't spend as much, but a lot of them do have a fair amount of money to spend. But if this group does not, what does that mean in terms of economics? Not good?

All of sten we talked about the aging of the of the economies, whether it's Japan, whether it's here China seeing it, they just um boosted how many kids you can have in terms of a family. So people are looking at this seriously. Yeah they are. Katerinus rav A, Federal Reserve and Economics Report, Bloomberg News. Thank you for joining us. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio.

I want to get right to it because Ross Gerber is with us because we love to talk Tesla with him. Keep in mind that after Tesla had an off the chart run in very different year. This year, it's fallen more than from its peak in late January obviously had an analysts coming out saying Tesla's globally v market ish

shares falling, and then there's Ellen getting into restaurants. So Ross Gerber, presidency of Gerber Kawasaki Wealth and Investment Managements, on a phone back with us from Santa Monica, California. He is a fan of Tesla Cars, owns cars and the company's stock. So good to have you here. How are you, I'm good, I'm good. How are you doing well? Doing well? Be looking forward to talking to you? Um lower, what's going on? Are you running for the exits when

it comes to Tesla? No, no, definitely not. In fact, you know, at these prices, I'm a buyer anytime the stocks below six hundred, I typically will add it to portfolios, especially once they don't have much exposure to Tesla like newer accounts. But but I think you know, Tesla ran up obviously to a very very high valuation, so part of this is just coming back to some reasonable valuation in here. So you know, by any means, Tesla should probably change trade between five hundred and a thousand over

the short term, you know, period of time. So you know, I don't look at that as a concern to me because we really just follow what the company is doing and what the company is trying to execute, and if they achieve their goals, the stock will follow. Well. But what about market share going down? I think it was Credit Sweets that has a report that is market share fe April. We know China has been pushing back on them.

Then you've got you know, restaurants like get come on ross like don't it when your market shre you can only go down. So that that's a little bit disingenuous, especially coming from Credit Swiss that can't even manage their book. But but I think, um, there there's gonna be other cars, and the e V business is going to expand exponentially

as more and more people get into this business. So we expect our market share to go down, but the actual share of cars that are sold e vs to go up substantially from where they are today, which is just a few percent of all cars sold. So so we really see for all EV makers, whether it be Ford or Tesla, a huge opportunity to go e V. And so we don't describe any value to that. Now, the restaurant thing, I think has to do with the superchargers.

So if you go to a Tesla supercharger, especially some of the new big ones, you know, people hang out for thirty minutes and what most of them, you know, we go into the mall where it is and we get food. You know, that's pretty much what you do. Uh, there's a Nike store and the one up in San Louis, Spispo. That's my hometown. Ross. Oh, it's a great supercharger. Great love Pismo by the way, And and you know, I'm up there and I go shop at Nike, I get my kids shoes, and I come back in the charge.

So so putting restaurants in makes a lot of sense because then they can control the experience around the charger, and and the Tesla community loves hanging out. Um, so I I see that as a net positive. He's not going to be a restaurant tour, you know what I mean. Right, Well, let's go from California to China and the opportunity in China, because the Information has a report out today the tech news site saying that there are concerns about the Chinese

orders dropping by almost half in May. What do you make of That's so it's not the information we have. Our information shows China demand is off the charts for VS and Tesla. The Chinese love Tesla. I can show you photos of like full you know, Tesla stores, show rooms, you know. So how Tesla delivers cars varies by quarter. And one of the issues that I think we need to get to the bottom with with Tesla, which I think has less to do with demand, is how much

are these part shortages affecting supply? Okay, because the models plaid is still not out. Okay, it was supposed to be launched today, Actually now it's postponed in another week. I think it has to do with parts. We had this issue with you know, the seats and you know, and the passenger seat, you know, not having lumbar support button. You know, these are parts issues, and all the car companies are struggling now not only to meet demand, but

to like get all these parts. And we're seeing slowdowns in the factories and all the major car companies. So this is the part I'm trying to get to the bottom of, not really worried about demand at all, is are we having issues with supply. Have you sold any shares in the current quarter? UM. I always buy and

sell shares depending on the clients. So for example, yes, I've sold shares for clients who have been long term investors who have huge overweight positions in and then I've bought shares for clients that are new that don't have big positions in Tesla. So we try to manage to a portfolio allocation. Our allocation to Tesla has gone down over the last I would say six months because it became extremely overvalued in our portfolios, and we manage risk

and balance our our risk rewards with our opportunities. So Tesla has been a wonderful reward for us, and and we did take you know, a considerable amount of profit with that, and but it is still our largest stock position of individual stocks that we own UM, closely followed

by MGM and Disney. What's the typical concentration that you have in a portfolio that's been with you for a while for Tesla right now, it's it's managed at around a six percent allocation, so substantial, but not you know everything, No, you know, listen, I we manage money for lots of different people here, and we manage risk very you know, carefully. My philosophy investment is trying not to lose people any money.

It's not maximum return. I've been doing this. This is actually my anniversary, my twenty eight year now coming in Gradua. And you don't make it through all these bear markets. If all you're worried about his maximum return and I missed a MC or something, you know what I mean. And so so we manage race very closely, and I consider six percent allocations pretty heavy. Well, your clients are saying thank you, Ross for you know, trying to minimize

any kind of losses. That's what we hope for. Hey, Ross, always good to check in with you. Ross Garber he is President, chief executive officer at Gerber Kawasaki Wealth and Investment Management. On the phone from Santa Monica owns Tesla's owns the shares as well as you just heard Tesla shares their down about twenty eight bucks in today's trade. This is Bloomberg. I'm rom the journal. Yeah, but you let me drive? No, no, no no, no, all right, please,

I'll do the right mad. I want to drive the question. This is the drive to the Globe Commune. Thanks, We'll drying us to Dawn on Bloomberg Radio. All Right, just about ten and a half minutes left in today's trading session, and we've been bouncing around, but we're definitely off our loads of the session, but also offer our best level still down about one percent on the NASA because you just heard Charlie recapping the numbers. Let's get to with

Brian Jacobson. He's a multi assets strategist at Wells Fargo Asset Management, joining us on the drive to the clothes on this Thursday, six billion dollars in assets under management. On the phone from Milwaukee, Wisconsin. Brian, it is an interesting day, to say the least. We focus on the meme stocks, we've got economic news, we're getting ready for the monthly jobs report. What is it that you have you and your team focusing on right now when it

comes to market fundamentals. Yeah, it seems like you've got to focus on a number of things all at once. Uh. You know, last night and when I checked Bloomberg, looked like the sp futures were in the green. They were positive. And then it seems like after it was announced at the Central Bank in Russia was going to get out of US dollar denominated assets. Things went self from there.

I think that, you know, maybe the market is beginning to get a little worried about some of those geopolitical issues, whether it's you know, human rights issues with China, what that's going to do with the United States relationships, or cyber attacks allegedly coming from Russia. Uh. And then also you've got the said, uh perhaps talking about talking about tapering. Plenty of things to be worrying about. But we're actually

still optimistic. Um, We're still maintaining our pro cyclical stance with our portfolios, you know, watching the data very closely. We do think that this growth and inflation dynamic will resolve itself to be where it is transitory inflation. Uh, and that we could still seek not just decent growth this year, but actually a slightly higher trend rate of

growth coming out of the COVID CIT Wow. So you do you do agree with the Federal Reserve officials who continue to reiterate that they believe this inflation that we're seeing now is transitory. Well, we do, and you know the reason for that is that when we look at a variety of different what we've considered to be leading indicators of inflation a lot of it. To be perfectly honest, I think hinges on two things. Um. One is bank lending coming out of the COVID crisis. How quickly will

that accelerate? Because inflation people think that it's, you know, always and everywhere a monetary phenomenon. That was a famous quote from Milton Freeman. But it's more about credit availability and lending um. And so far, you know, banks haven't really held a lot of additional assets on their balance sheets unless their treasuries. Uh. And so we have to see what happens with bank credit coming out of the

COVID crisis. And then productivity growth. If you actually have strong productivity growth, you can support faster wage growth and yet have declining prices. And so we think that a lot of the UH impulse to the inflation numbers is leading Ultimately, So you said that you think the growth and inflation dynamic, UM, well eventually resolve itself to where you said it is transitory and settle with a higher

trend growth rate. What kind of growth rate? Yeah, you know, coming into the COVID crisis, seems like people were just content with, oh, chugging along it to two and a half percent, but if you actually get that faster productivity growth, that could support something closer to three percent. Now that might not sound like a lot if you go from two and a half to three percent, but you know, multi trillion dollar economy, that does add up. And so we think that that's really the thing that we have

to see more evidence of what it seems like. We have early signs that businesses are making the investment in capital expenditures, so property, planting, equipment, COVID forced the a lot of technology adoption on individuals and businesses that they otherwise wouldn't have done or maybe would have done, but over a longer time frame, and that could then actually

result in that faster productivity growth. How much of the productivity growth or economic growth that you see happening this year and even next year, as you mentioned, is priced into markets right now? And what opportunity is there for more gains in the markets because the markets forward looking, So I do and I ask this question all the time. What is priced in and what isn't. Yeah, that's that's the tricky thing. Going into this year. We thought that

we'd probably get around the span encounter some turbulence. That's like pretty much where we are. That's pretty much where we are, yeah, exactly, and so, uh, we've experienced a little bit of turbulence. I don't think anything to really right home about, but you know it's the uh, summer isn't even here yet, so let's let's see what happens um and then you know, making a move higher more in two thousand twenty two towards around forty four on

the S and P five. So you know, maybe the market did get this priced in properly as far as the growth outlook. But where we think that there could be more of a disconnect is in terms of how much better longer term growth could be going forward, and then also the value growth rotation how long that could last. Um. You know, we think that maybe a lot of the large versus small, so the rotation back into small, maybe

that has kind of played itself out. But we think that the given the cyclical exposure within the value side of the spectrum, that's where we think that could actually have some legs. Um corporate taxes, we did see markets seem to get a little bit of a leg up or at least bounce off their loads. When the Washington

Post initially in Bloomberg matching this story as well. The President seems to be offering a major change to tax proposal and offer to get his infrastructure deal through with Republicans. And now we're talking about a corporate tax rate maybe starting with a floor of about fifteen percent. That's very different from what he talked about earlier. How big of a deal could that be? Potentially two companies corporate profits that ultimately play out in the equity markets. Yeah, they

actually think that could be a very big deal. And I mean to be honest, So we thought that his original proposal about bumping up the corporate tax rate was almost just a starting point for negotiations. Uh, you kind of saying, what are the contours around where he wants to go? And then I think it's a testimony to how he wants to get a deal done. Uh. And he's not going to be very doctrinaire about what that

rate needs to be. Maybe it's going to actually be a variety of taxes on high net worth individuals and on corporation. But does it really matter to corporations? Does it really like how much? Does you know? I mean it matters, but we also know the effective are the real tax right that they ultimately pay is often a lot less than what the mandated rate is. It is exactly yeah, I mean that's why they have tax the ternates.

I mean, there's all sorts of different ways. It's also one of the reasons why it tends to hit smaller camp more than large cap just because if you think about number one, the domestic orientation is small caps relative to large caps, but then also the resources that they have as far as doing you know, transfer pricing arrangements and setting up, you know, different vehicles in order to engage in legal tax avoidance. Um, it might not matter

quite as much. Uh. And one of the things that could happen if you increase the corporate tax rate is that it could actually encourage businesses to take on more leverage. I think that a lot of people are already worried about how much leverage businesses have taken on with low interest rates. And if you bump up the corporate tax rate will one way that you can try to shield

that is through the intra tax shield on debt. And so does that then just create some future vulnerability as far as you know, increase financial leverage, Brian, just we have we only have fifteen seconds lunch. We only have fifteen seconds left. I want to know if any of the volatility that we're seeing in the meme stocks AMC down seventeen percent, Express down that, Beth and beyond, does that have any risk of going further into markets? Just

about twenty seconds here. Yeah, we we don't think so, we don't think that it represents any sort of systemic risk. I mean, it's a story that's been around for a while, it's very interesting, but to us, it doesn't seem like it's spilling over into other parts of the markets. It seems like it is concentrated within those uh stocks that are mentioned heavily, and you know, the Reddit boards and things like that. So we don't think they've represents any

sort of financial risk. Got around, Brian. Thank you so much. Brian Jacobson ever at Wells Fargo Asset Management. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on bloom a Radio or watch us on YouTube search Bloomberg Global News. H