Pfizer Booster Shot Restores Covid Protection

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. 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. Watching some of the headlines, I have been messaging some of our team about this whole mix and match idea fiser though in bion Tech did come out saying a booster shout of their Kevin nineteen

vaccine restored full protection. They did a large study results that are likely to bolster the argument for giving a third dose more widely in the population. We're also keeping an eye on what's happening in the UK because the country reported the most new cases since July there and they have just under seventy the population vaccinated. Right, so

you're trying to Okay, so how is that? And let's not forget we've got a palle of experts advising the U S c d C meeting today to talk about booster shots, to talk about mix and match so we'll watch for some headlines on that. Let's get to it though,

with Dr g G. Gronville. She's Senior Scholar at the Johns Hopkins Center for Health Security and Associate Professor in the Department of Environmental Health and Engineering at the Johns Hopkins Bloomberg School of Public Health, supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies. She is an immunologist by training, an author, and she joins us once again from Baltimore. Dr Gronville, good to have you back

here on Bloomberg Radio. Help me make sense of some of the headlines that I expect that we're going to get pretty soon, and especially when it comes to mixing and matching vaccines, especially when it comes to getting a booster what's the guided you guys are coming to at Johns Hopkins or concluding that should be the guidance? Sure, So yesterday UM, the FDA announced that UM they that

mixing and matching is the way to go. They didn't uh state of preference for a particular order of vaccine, like say, if you had J J vaccine, which which booster you should choose? UM. The panel that's meeting today may get more specific than that and make some more recommendations along that those lines. But right now, UM, it's looking like at least you can choose which of the

three even if there is no recommendation. Is it a little confusing for someone like me and Tim that we're thinking about the booster so that when we go to sign up, is that then places are going to say, here's what we're offering, you know, I mean, I'm just thinking about the logistics of this, because then if you are if you want to go mix and match, then you want to know if you're going to go somewhere,

what what vaccine you're going to get. Right right now you can you can learn where your vaccine site and what they're offering. UM. If you go to vaccine stack of UM you can or even you can see in the advertisement of whatever pharmacy you're planning on getting vaccinated that they will tell you, UM, if there's if they're offering fiser that day or maderna or J and J UM. So you do you do, You have to ask sometimes,

but but that information is definitely available to you. What was going on before is that you know there was data that was showing that a third shot, if you've got the fiser maderna, for example, a third shot would be beneficial. And especially if you had the J and J vaccine, that a second shot of an MR and A vaccine. So either fiser maderna would be a good idea. And so people were going ahead and doing that ahead of any recommendation. So this will hopefully make those logistics easier.

So what would you advise people who right now are getting emails from wherever they got their first two shots that say, hey, we are open for boosters if you want to come and get a booster. Should they wait for official guidance, should they wait for more guidance or should they just go ahead and get it done and wait for optionality so they can decide if they want to do mix and match. Um, so a few places

are going ahead ahead. I'm not quite sure why they They are ahead of the FDA and CDC on that, but um, I think by the end of this week, you will have that option. UM, the data is pretty clear for people who had J and J vaccine to go ahead and get a fisor Maderna booster. UM. Other than that, it's not UM, it doesn't seem to be

that that. UM, it's great a difference, Okay, because that's you know, we're we're being really specific because we're wondering these are questions that we were talking about last night. I mean, I've I've hit my six months from my second shot, and I'm getting you know, bombarded, to be quite honest, by emails of saying come get your booster, and I'm not pretty sure that I meet all the criteria.

But I'm also thinking, you know, I'm trying to figure out what to do, right I. UM, I haven't gotten bombarded by emails, so I don't know what that says about the pharmacy UM that I go to. Sorry, I think get my original uh show from a mass vaccination site. So maybe that's why, UM, the follow up hasn't been there. But UM, but yes, I think, UM, for people who had Visor and Maderna, there doesn't seem to be much of a difference to get another visor and maderna mixer

match or whatever. I think it's important for people to remember that, you know, these are different approaches, different vaccine companies, but they are still targeting the same virus. Are trying to stimulate your immune system to the same um the same you know, the same virus, the same part of the virus. And so uh, there there wasn't I wasn't expecting to see much of a difference between these UM

mixing matches. Well, Dr Gronwell, in the last minute that we have with you, help us understand what's going on in the UK because for the first time since July COVID nineteen cases in the UK top fifty country certainly seeing a surge there. What's going on. So it's always hard to know exactly what's going on because you know, there's public health is especially as we have all seen with COVID. Uh, you know, there are lots of different

mitigation measures that are very unevenly applied. UM. But I the vaccination rate for younger people is not good and UM, and so they haven't they haven't. It's even less than the United States, and and so that is where a lot of the cases are coming from. And so we all need to do better for younger populations. UM, because they have they incurred more risks from COVID than they certainly believe that they do. UM and uh. But you know,

hopefully we will see some improvement over those numbers. UM and hopefully next week when children they're see starting to get vaccinated in the coming weeks. Got it, we gotta run. Hey, thank you so much, as always, Dr Gig Gronville or John Hopkins Center for Health Security at the Bloomberg School of Public Health. You're listening to Bloomberg Radio. This is Bloomberg Business Where with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well the Bloomberg Big Take today.

It's also I think it's still the most read story on the Bloomberg in the past eight hours at The story also find online at Bloomberg Business Week. It's about the hidden ways the ultra rich are passing well to their heirs tax free. It's a great story about Phil Knight and yes you know him as the co founder of Nike. UM. We've got our own in house tax expert, Ben Stepherman, his personal finance editor at Bloomberg News. He's with us in the Bloomberg Interactive Broker's studio, Ben. It

is just a great read. I actually got to read it last night on my way home from the airport. Uh, what is film Knight doing? Explain exactly what he's doing with a gret Well, what we really haven't had a view like this ever into how billionaires escaped the state tax. And there's really nothing extraordinary about what film Knight is doing.

It's completely legal. Um. But what we've been able to do is pull together some filings and really true prack them over the years with help from Ander's Melon and Devon and Devin Penalty in my colleagues, and we've really been able to show how these tools, there's three or four of them, that you put them together, these loopholes and billions of dollars can be trans transferred tax free to your heirs. Um. This is you know, the state

tax and gift tax. It's a related thing. They're supposed to toll basically on every generation and it's supposed to be something that fights inequality. Well, I think we could show in this story that it's basically an optional tax. Now, if you hire the right advisors, you don't have to pay it, and it's legal, and he's not alone in doing it totally. Joe Weber, editor of Bloomberg Business Week, here with us as well. So how specifically do I do this when I leave? We're taking this would be

a good problem to have. I don't think you have a joke. So you never know what allowed us to gain you know insights here that you know previously all this stuff has been them, But like as you said that, we haven't seen anybody bring it all together like this. So what helped us get that bigger picture? Usually these things are happening. We know these things are happening because I've talked to the advisors who set them up, but we don't know the dollars and cents attached them because

when these wealthy people do it, it's all secret. What is different in this case is that Phil knight Is is an officer. Well, he's a former chairman of and he's the founder of Nike, a publicly traded company, and um the company is now effectively controlled by a trust that's controlled by his son, who's also on the board. And because of that, they both have the requirement to report their stakes in various entities that they control um

that have Nike stock in them. And so we've been able to track all these trusts and um other transactions that have have involved Nike shares over the last twelve years, and and that really allowed us to tell the story. Okay, so again I'm curious, if I walk out of here, how do I how do? But okay, so not really but not wrong. Um So, if Congress we're going to do something, what would they do? The fixes are just

the simplest things like that. It's just a paragraph of text in the tax law that the problem is not closing these loopholes. It's um you know, legally, it's just the political will to do it. You know. Basically what we have a situation we have a stalemate over the state tax where the Republicans have been trying to repeal it. They really hate the idea of taxing uh wealth at death and they call it the dex death tax. They've

been trying to repeal it. Under Trump, they just kind of gave up and they said, hey, we're just gonna let it be and allow these loopholes to exist. And and therefore it basically becomes this optional tax for the wealthy. So um, but you're asking how do you do it? How do these things work? What's the common denominator? Really, what this is all about is making your wealth look smaller than it really is. Noble. Yeah, so, um, how

does night do that? Well, let's say you hand you hand your airs a really valuable asset, and then they hand you back and I owe you. And according to the law, no actual money was transferred hands there, nothing that wasn't a gift. It's just we're just swapping assets, except the asset that I have is an I owe you. It's not a normal transaction to any smart business person

whatever really make with a counterparty. But you can set up these relationships with trust your heirs or with trust controlled by your heirs, and they're legal, and it would be very easy to ban these these deals. And as a result, then in terms of taxation, how does that kind of Well, let's say I give you what's in this case, I give you Nike stock. Then Nike stock goes up a thousand percent. All those gains can go to your heirs and they're these special uh TOI mentioned grats.

There's these special tools called grats, which are really kind of granta retained annuity trust. Yes, and and they work a little bit like what I just described. But the thing about a grat is if let's say I give you an asset and the investment value goes down over time, don't worry about it. Just scrap up that piece of paper, ripping in half, and you can start over. Nothing ever happened.

You said, some of the ultra rich open one every month. Yeah. Yeah, it's just you keep rolling the dice, rolling the dice, rolling the dice, hope that you can and you don't have to put it, put almost any investment in these things, um, and just hope for the best. How much revenue do we know? Do we know how much revenue the US government misses as a result of a loophole such as this.

Put it this way, Um, only seventeen billion dollars, which maybe sounds like a lot of money, but only seventeen billion dollars comes in from the estate and gift tax. There are Um, they're literally almost to the twenty richest Americans have two trillion dollars almost so um the amount that this should be coming in from this tax if it was actually impost on every transfer of wealthy of the top one point one percent, it would be a

lot lot more. Yeah. Uh And and to that end, we do we have any sense I mean, Phil Knight is a very uh prominent one that the story basically is built around. Do we have a sense of how many other billionaires might be using this exact same playbook? Um, I would hazard to guess of almost every single one are are using something that we describe in this story. Maybe not all of them, maybe not in a sophisticated way.

The thing is Phil phil Knight could have transferred even more money than he did, but he has these charitable intentions. He says he's going to give most of his wealth away eventually. So because if you're going to give money to charity, it just becomes a lot easier to avoid the taxes. And then that's intentional, that's not necessarily a loophole. It's just the government wanted to encourage people to to

give to charity. And again, though, I mean, I feel like it doesn't sound like there's any momentum to change it. Well or is there? Yeah, we might have just created it. We'll see. The House Democrats have a proposal, and um, in a lot of ways they've they've scaled back Biden's proposal tax proposals, but the one exception is this area of the estate tax, and they are actually trying to close a couple of these loopoles. It's gonna say. You

can see the headlines and the controversy over not doing something. Hey, Ben, you and the team reached out to Nike and Phil Knight. Any response. Um, what they've made quear is that all these plans are integrated with his philanthropic goals. But no, they didn't give us many more details than we then. We had all these details in the story came from our own reporting. You do it so well. Thank you. You really do the details. Um, And as we said, it's the most read story on the Bloomberg Find it

at business week dot com. I gotta go. I gotta go. Set up my grap Joe. Maybe we can share lawyer give me that and you know I'll reach out to you from a beach. Sounds so simple, all right, We gotta run, Joel. Thank you so much. Jill Webber, Editor Bloomberg business Week, Ben Steve Verman, personal finance editor at Bloomberg News. As we said, find it online at business week dot com. You're listening to Bloomberg Business Is Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on

Bloomberg Radio. Alright, so top of mine at the Milk and Institute Global Conference. Who had so many conversations there on the West coast. We've got our TV team out there at the coast of outside Los Angeles. Long be right? Just about the supply chain problems? Yeah, I know, I know. The synapsies aren't there the ports, the two ports are very close together, nice together, and together they do account

for a great portion of the traffic. The common theme here is supply chain disruptions and constraints, and we see it big time as companies report their latest quarterly updates and as our Josh winn Grove reports, the clock is definitely ticking in the efforts by the Biden administration to smooth out the bottlenecks. Their tool chest, to Tim a little bit limited. Josh wyn Grove, his White House correspondent

at Bloomberg News. He's with us from the Bloomberg studio in Washington, d C. Josh, what power does the Biden administration have? What tools do they have in order to help fix this law? Jem Well I guess depends on you at on who you ask, But overall it's sort of like Joe Biden is a dad driving a station way and you know, threatening to pull this car over right away if you yeah, people don't behave like they

have got this. Everyone's calling it a bully pulpit power, which is another way of saying, I suppose name and shame. They can either be the referee, they can get people in a room, crack some heads together if needed. And that's sort of the approach they're taking, and that's what led to that deal to move these ports. Seven. Of course that is only marginally uh, making a difference and difference until we get more other things going on. Every time Josh we hear that, we're like, what do you mean,

why weren't they already? Like what is that? Well, there's no point in picking up a thing at three am if therehouse you're taking them two is closed, you know, and the warehouses are closed at that hour. And so these truck drivers, it's important, these truck port truck drivers have a raw deal. I mean, it is not a not a coveted position. And so we're wondering, well, why

aren't there enough truck drivers. Well, gee, they're quitting because the pay and conditions are crumbing, and they're even crumbing or when things are backed up because they're sitting there unpaid, waiting for their things. They talked about that a little bit, Josh, because that's something I learned reading your story that you that that is available at Bloomberg dot com and on the terminal. It's it's not like the it's not like a trucking job for another firm. These are not unionized

and um, like you said, pretty crumbing. Yeah. Then there's been a bunch of suggestions put forward by various industries, you know, either long running regulatory battles that they're picking, the supply chain crisis is a new sort of front

to wage these long running battles. But the only thing the teamsters have said, getting to your question, Tim, is this is they think Joe Biden should help these guys unionize these drivers excuse me, unionized, And Joe Biden hasn't said anything about that, so we'll see what that happens. But essentially, they are the bottom rung of the ladder of the trucking industry. The pay is not great, the trucks are driving, or you know in some cases, you know,

they're very thin margins. Shall we say, you know, let's let's you know, they're they're barely holding on. This is it's a rough job. And if they can get a job sort of either a unionized place or you're working for a bigger company with better conditions, more predictable hours, they're going to take it. It's no surprise. Help me, help me though. Support drivers, how are they different from the long haul drivers we see on the road when

we're on a highway drive or something. What's the difference. Well, they're all treated or typically treated as independent contractors, and that means that they get paid either by the mile or by the shipment, but is opposed by the hour.

So when they're sitting there waiting to pick up you know it's there, it's on their time, it's not on They're not gonna paid for that, and that's not great, right, And so there's not a lot of incentive for someone to hurry them up there they're so they have no choice but to sit there and wait for their their their container, and when they get it, they we don't have enough chassis, which of course is a little essentially trailers that pull these these things around and you know,

you go every step down the ladder, it gets harder. The warehouses are full, the yards are full. We don't have enough of these containers. We don't have containers going back full. In a lot of cases, ships pile up empty containers and you know, hahull butt back to Asia if you will, because they can get more money for filling them there and bring them back to the u S. So a lot of moving parts on this, but it

is a tough one. Tough one to parts in terms of certainly quick fixes, but even structural fixes will take a long time. So they're different from an Amazon driver that we see on the road or a Walmart driver that we see on the road, although many of those drivers, I'm sure in California used to maybe maybe had come up through the ranks of being a port port truck driver. I mean, it is a it's it's it's rough. It is the bottom rung. They have not been treated particularly well.

And that you know now they're sort of even even getting a rare deal because when things are slowing up, the only people are person not getting paid to sit there in the gridlock is that truck driver. The you know, the dock workers getting paid, you know, the railway workers getting paid. The truck driver isn't getting paid well, Josh. As a result of all these challenges that you're describing,

shipping prices have just rise dramatically. It now costs as much as twenty five thousand dollars to import a fort container from Asia. That's up from less than two thousand dollars two years ago, more than ten x in price of shipping. So politically, where does where does the president stand? I mean, you see Republicans coming in with with uh going full full court press on Biden because of these

rising prices. Yeah, and they're you know, tying it in with the inflation issues we're seeing and that that is of course expected. I mean you're like, why am I talking to a white this reporter about this is because it's becoming a problem for Joe Biden, you know, And it's that and so we're gonna see if he can do it now. You know, Look, this is gonna boil down if you watch Fox News, this is going to be the worst crisis of you know, of supply chains ever.

But what it's gonna boil down to is you're gonna wait more for certain goods than others. And it's not so much that there's gonna be a lack of goods across the board. In other words, the toy stores shelves will be full, you just might not be able to get the toy that you want. And that that's going to be, you know, a political issue. So we'll see where that goes. The backdrop for all of us to remember,

we're buying more stuff than ever before. This is not a system that is failing to handle the normal amount of stuff. It is record stuff, even with all this great blocket, his record amounts of stuff for range of reasons, one being the American consumer is more powerful than ever.

Another one is we're spending money on stuff instead of experiences because of the pandemic, and so were we are force feeding record amounts of stuff through what the Biden administration calls you know, your grandfather's system, like you know, an antiquated, creaky old piece of infrastructure, system of infrastructure and you know, low and behold, it ain't it ain't going very well. Wait wait, hashtag infrastructure perhaps times that's infrastructure.

You know that there is money reports in the Infrastructure bill, which of course is the one of the two bills of Biden is, you know, pushing to get a deal on right now. So as they water down that build back, better build that reconciliation package. The hope is that if they can get both through that there'll be money for money reports in that other one. If Donald Trump gets his social media channel up and going, you know, it will be the most the toughest crisis ever. I mean,

we're all looking forward to that. I'm sure. It makes it interesting. It makes it interesting. Yeah, I got our nef and notifications on my phone. I suppose one more couldn't hurt right. Pilot on Pilot on Josh. Thank you so much, Josh wyn Grove. It's a great story. It's so in depth, explains the supply chain crunch that we're seeing right now. He is Bloomberg News White House correspondent.

There in our night and I want Studio in d C. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. So folks were talking Pinterest. We're talking PayPal, aren't we, Tim? We are? I mean this was a head scratcher to me when our own Leanna Baker and Ed Hammond yesterday broke the news that PayPal was interested in acquiring Pinterest. We saw

pinterest stock shoot up as a result. Jenny Seraine shed some light on what exactly PayPal could do, and it has to do with ambitions to create a super app. China's Ali pay and we Chat. Jenny is with us right now. She's finance reporter for Bloomberg. Knew she's with us in the Bloomberg and actor Broker's studio. So if we look to China and what these Chinese companies have done with these so called super aps, what does that tell you about the paypals potential ambitions if it were

to acquire a Pinterest. Yeah. I think it's so hard sometimes for Americans to really conceive of what China has going on. But it's really a one stop shop. You can do everything. You can do social media, you can go shopping, you can do investing, you can have your bank account. It's it's everything. And so PayPal has actually been really vocal that they want to do something similar here in the US. Um you know, there's CEO Dan Shulman.

He talks a lot about being a destination app. So instead of having fifty or sixty different apps on your phone that you have to go to. He thinks that there's going to be five or six, and he wants PayPal to be one of those five or six that you kind of go to on a daily basis, like an aggregator, right exactly, I think, but but an aggregator. But I think he wants it to all be in the PayPal house. So you know, pinters are no pinters.

I think this is definitely the path they've been on, and we've seen them at a lot of new and interesting things lately. Ahead this is a hard thing to do because this is not new for an American company trying to do this. Years ago. David Marcus, who as ago at Facebook, headed up Messenger when they split off Messenger from Facebook. I'm talking years ago. He talked about wanting to create a super app. Then Jenny and look

at Messenger now it's no super app. Yes, So super apps have come and gone, lots of them in the U S. We've I think we've we're yeah, we're littered with failures on this front um and so we haven't been able to pull it off. And a lot of times folks point to like consumer preferences. Consumers in the U S seemed to really like kind of having their their one app for finance, their one app for social media, they're one app for shopping. Um. So you know, Amazon

has tried, Google has tried. So many folks have tried um and we really haven't seen anything to get pulled off here. Well, is there something that we can learn from looking at the success in China that says, okay, yes, it can be replicated here in the United States, Or are the way Chinese approach maybe things different from how the US approach things. I think it's it's so hard

to say it. I mean, it definitely seems like US consumers have shown their preference so far, but we haven't really seen anyone go at it in the way that PayPal is going at it. So you know, PayPal US have four hundred million users already, UM, and they've just slowly tacked things on. Absolutely, So they've slowly tacked things on. So you've seen them this year get into crypto. You know, you can buy a cell and hold crypto. Um. You've

seen them, you know, talk about adding highled savings. They're gonna get into stock investing, so they're kind of slowly bolting on, and they're starting from that financial services perspective, which you know, a lot of the other times like Messenger for example, or an Amazon, they'd be coming at it from other angles and trying to tack on the finance piece. I think that's harder to do. Um. So we'll see, we'll see what people uh, what people has in its sleeve. But I think, you know, it's an

interesting play. Well, how does Pinterest fit into this? Then? Yes, so Pinterest is a unique among the social media folks, right, So they have and for forty billion dollars, nice healthy premium for those guys. So, but they're unique in the sense that, um, you know, what people talks a lot about is wanting to be at the beginning of the shopping journey. So they don't want to be the thing that you click on at the very end when you're about to check out. They will just come back and

kind of be along the way. So Pinterest would give them that. You know, people go to Pinterest and they're like, I want to buy some cowboy boots, and and they look and see what there is and and then they have added capabilities in recent years where you can click and shop directly from the pins um, so you could see, you know, a somewhat of a synergy there. It's but it's definitely a field. It's it's definitely not what you think of when you think of PayPal. So it would

be a big leap. Is it too fragmented though already with a lot of big players that are actually doing it fairly well, that it would be tough to see the model pivot so significantly different. They're gonna have a lot of convincing to do. They're definitely going to have to teach and and kind of ingrain a new behavior into consumers. Now, they have been super successful at doing that in the online checkout space. They're like buy and

far away the the leader in that space. So they have, you know, a track record in terms of convincing folks to to kind of come around their way of doing things. But this is a big leap, and this is a big change. Well, and then who's the other aggregate or I shouldn't use the word aggregated, but okay, you said that there might be four or five of them than is Google? Is it faced? Like who like? And then

how do we think of the world? I mean, I think all of those folks would love to be a super ab and even if they've you know, tried and failed in the past, I think it's probably still on the table for them. You can't not look at the success that folks like Ali pay and we Chat pay have had um and probably and not think to yourself, I want that. I want I want folks coming to my site, you know, ten twenty whatever times a day, um and doing so many things that are our revenue

generating and all that. So I think they definitely you can't not look at what's going on in China and India and Singapore and not want it. But you just don't have the consumer behavior quite here yet exactly. It's consumer behavior is such a challenge here, right because we're so used to just tapping credit cards or even putting our credit cards on our cards on our phone. And how does PayPal get people Jenny and twenty seconds to use the app to pay for something when using your

credit card or tapping your phone is just as easy. Yeah, it's interesting because the US we were so far ahead in terms of you know, back in the nineties and early two thousands adopting credit cards and it's like put us back almost so now the rest of the world is completely passed us by UM. Tap to pay is totally old, but you know we're just now coming around to that. So well, we talked about that with fintech where I talked about it this pale I didn't milk.

And when it comes to healthcare, that this idea of using the phone and emerging markets to help UM in terms of healthcare access, like they're ahead of us in the thinking. Great stuff as always, Jenny Surraine, she's our financial reporter at Bloomberg News. Check her out on the Bloomberg terminal and at Bloomberg dot com. This is Bloomberg Radio. I'm yeah, but you let me drive. Oh no, no, no no, this is not a travel I want to drive. It's a good question. Good drive is good? Drive to

the globe on Bloomberg Radio. All right, let's get to it. We've done just about timmans left in the today's trading session. We are hovering near our best levels of the session. Looks like a record on the S and P five hundred now still just up about eight points. As we heard from Charlie down on the Dow, we are seeing some pressure thanks to IBM naszac though also an AT performer on a percentage basis, up five times of a percent.

Let's drive to the grows with Chris Zacarelli, chief investment officer at independent advisor Alliance I joining us on the phone from Charlotte, North Carolina. Chris, it's great to have you on Bloomberg Business Week Radio. A month ago we were talking about inflationary worries, and here we are at record highs again. What's going on? Looks like the market is strugging off a little bit of the concerns about

higher interest rates. For now. We're seeing you know, break evens jump a lot higher, but nominal yields, you know, staying staying pretty firm right around. So I think for now, stock investors feel like the inflation that we're seeing so far is going to be manageable by companies and profit margins aren't gonna be squeezed too much. We'll see if that is a is a true forecast or if markets

be a little too sanguine about everything. Well, it's interesting, right, and this is where those earnings reports are so important. I'm gonna share a little bit of a statistics that we've got on the Bloomberg and it says that of the ninety companies and the S and P five hundreds of announced results in the third quarter posted better than expected earnings compared to eight for the whole season a year ago, one year ago. As for revenues topped that

compares to six respective excuse me, a year ago. So I mean, not too shabby. No, companies are doing very well. They're increasing sales, they're maintaining their profit margins. It's boom times for for US corporations. And so the question is, you know, how long will that last? Well, you guys have to make decisions right and figure out investment strategies and portfolio How long do you think it will last. Do you think that these supply chain constraints are going

to be manageable and not go on forever? Well, I would think, you know, by definition, a lot of these supply chain constraints and all out of the inflationary pressures, at some point they are going to resolve themselves. I think a lot of people were hopeful that they would resolve by the end of early two. I think most people in the market are a little bit more cautious. I think that they think that supply chain issues could last possibly for a couple of years. Hopefully on the

transportation side of things it resolves more quickly. But you look at things like, uh, you know, shortages of semiconductors, which are so critical for almost every product in the economy right now, and you know, we're being told that to bring new production online and really ramp up to where we need to be, that could take a couple of years. So we do think that these problems are gonna be with us for longer than many of us

had hoped, even as as recently as six months ago. Well, it's interesting because we're seeing companies like Procter and Gamble take a hit to their bottom line as a result, and companies like Unilever raising prices as a result of this is we do continue to get earnings from more and more companies. Chris, what are you looking for to

see whether inflation is transitory or if it's something that's temporary. Well, for us, you know, we've we've definitely been a little skeptical of the idea that everything was transitory from the from the inflation front. You know, I think we all understand a lot of that dynamics that were caused by COVID that that in and of themselves have to be uh somewhat temporary, but but clearly there's a lot building up into the into the input costs, into the into

the supply chains. And again, like we said, you know things like some may conductors are gonna last a little bit longer. So for us, we are really looking for those companies that are gonna have pricing power. And you just gave two good examples of some companies are able to raise prices. Other companies are having to eat some of those costs. And that's why, you know, everyone will say the biggest clice say in the book, which is

it's a stock pickers market. And as an acting manager, you always want to say that behind those companies, yeah,

you hear it a lot. But to the extent that you can find those companies with pricing power and do have competitive modes around their business, you know, we're really going to see which companies actually do have a moat around their business and which companies may have strong brand names like some of these consumer staples, but don't have as much of a mote as investors thought, or probably

the come themselves thought. That's where the proof and the pudding is going to be over the next few months, if not a few quarters. Hey, Chris, quick question, So what if um? You know, what's interesting is we've got stocks up minus the dow, though we know that a lot of that is because of what's going on with

IBM today. But if I look at the yield curve today, and if I look at what's going on in the ten, five and two, we see yields kind of back up to some of their highest levels, certainly of the day. Got that five year going up to above one point too. That's the hya sins February of twenty. We don't often it's interesting to see higher yields and yet we're also seeing higher equity gains. Is it just okay? On economy is growing, it's manageable. We understand the supply chain constraints

and why that's pushing prices higher. But if this means that the FED tends to raise rates sooner rather than later, what does that mean for the equity markets? Potentially? So if the Fed begins raising rates more comply the market expects, all things being aqual you'd expect that to be a negative. And so I don't know that the market really believes they are going to raise rates so quickly. Clearly the taper is going to be announced next month. It would

be a shock if they didn't do that. And and based on based on most people's base cases and ours included, you figure they wrap up tapering by the end of let's say June of next year's call it somewhere mid the FED if they get their way, they're gonna want to see unemployments just continue to go lower. And I think there's a real reluctance on the part of the FED to begin raising rates even if you heard um, you know, President Memester yesterday and so a lot of

different people who have been speaking. They're really trying to divorce the idea of tapering from rate hikes, and so you know, inflation is what's going to force their hand. That's that's the trillion dollar question, and I wish I had the answer for you today. But if inflation runs hotter than everyone expects, the seed is just gonna happen

to start raising rates more quickly. But if inflation stays somewhat manageable above two percent, but not on a straight path, the five on a continuous basis, I think the fed is gonna want to rate, wait to raise to raise rates, and the market may be surprised that they don't raise rates in to it all and they wait till January three would be a positive surprise record. So Chris, how do you how do you play this environment? Just in thirty seconds? Yep. So the way we're trying to play

it is to have some balance. We've had growth in our portfolios all along. That was great last year, adding some cyclicles, adding some values, which we've done at the end of last year and throughout this year as we've had time, get more balanced than your portfolios. You need to have financials, you need to have materials, you need to have energy, uh, into some extent industrials balance those portfolios out. So many people are overweight technology and that

was great last year. That may not be so good this year or into two. All right, we're gonna run. Hey, listen, Thank you so much, really appreciated. Chris Ecarelli, the chief investment officer at Independent Advisor Alliance, joining us on the phone from Charlotte, North Carolina. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com. And you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch

us on YouTube. Sarah to Bloomberg Global News a m.