Pfizer Starting U.S. Trials for Experimental Vaccine

on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio. It's Got a gut Check with Drew Armstrong's team leader for US Healthcare for Bloomberg, leading our coverage here in the United States on this working closely with colleagues all around the world. Drew joins us on the phone from New York. So, Drew, there's so much to talk about. And I guess where I would

start is what's top of mind for you? What's the most important thing you think we need to know since you have of you over all of this, you know, I think the thing that everybody is watching right now is you know what I would almost think about is kind of the second days of um, experimenting with how

we control this disease. You know, we in in February and March, we went through a period of saying, Hey, we're going to put in place all of these measures, let's see if they work to stop to control the spread of this thing. And now we're entering this phase of reopening gradually now that we've learned a great deal more about the disease, and saying what's going to happen next. And I think both of these decisions were made it at the times with a great deal of uncertainty, without

perfect information, UM. And you know, entering into the unknown has been sort of the theme of this entire entire outbreak. UM. And we're kind of watching a a great, a giant set of experiments, UM, public health experiments being played out in the United States right now with uncertain outcomes. Right. I feel like it's the one thing in terms of the race for a vaccine where we've actually see some global cooperation and sharing of information to try and to

try and get something as soon as possible. I do wonder, though, Drew, what worries you the most the time is going to take for a vaccine. What about this internal US government projection that shows the nation's coronavirus outbreak, you know, accelerating by June to more than two thousand new cases per day. Is it the idea that you know, we get a second wave here and it's really tough. What worries you

the most? You know, on this day here we are May five, We've gone through a lot, But I just would the first thing I want to do is actually touch on that projection. I think, you know, I know

that was widely reported on yesterday. We you know, we wrote about it as well in the in the White House and some of the health agencies that whose names on it, and it appeared to be involved that we're not particularly helpful in creating um and providing any context around you know, what was what assumptions went into that, you know, into that projection, and what actually was going

on there. Um. We have subsequently been told that, you know, those numbers were attached to you know, if there was no control at all on spread, no mitigation and so on and so forth. So I think, you know, there's some big scary numbers there. But I think some big scary numbers that probably don't reflect reality on the ground. Um. I think we are going to continue to obviously see new cases and see um thousands of additional deaths around

the country. But I think in terms of the you know, two hundred thousand new cases a day figure, I think not a lot of people are currently projecting that to be to be to be totally clear, And I think it's important to to emphasize that, just because I know that did catch a lot of people's attention. UM. You know, moving on to your question about some of the some

of the vaccine work, UM. You know, I think there are great, great hopes, UM, that that this effort will be successful, UM, and that some of the drug companies are working on this m on their own will be successful. But you know, there is there is not a long history UM, for any history in the world of being able to move move that quickly. UM. And I think some of the hope is that we get therapeutic options.

You know, drugs are effectively treating the disease and the severe patients who need it, not you know, the mild people who don't. UM. That alleviate some of that burden and reduce some of the risk to society and to the health system. So Drew, I want to go back to something you said at the beginning, because I think it's really important this this sort of new phase we're living in, which is which feels like living with this

for for some amount of time. And you know, you touched on the vaccines as you look across this and the reopening and you know, the sort of staggered reopening that we see depending on where you're looking at in the country. Ultimately, ultimately we are Bloomberg. We we look at businesses in the economy. What do you see out there that that you think is most important for us to understand in terms of what we're learning about the

economic aspects of this. You know, I think you know, when you talk to people and you and you read some of the reports coming in from another country, people really and I figure out a new way of doing business. I mean, you look at some of the poll numbers where people think, you know, there is public concern about

lifting measures too soon. And if there's public concerned about lifting measures too soon, those same people are all the folks who are likely to say, well, you know, maybe I'm not gonna go out to a restaurant just yet, even if it's open um or maybe um, you know, even if they open the movie theaters back up, I

won't be the first person in there. I think, you know, one of the ways that I've been thinking about this is that we you know that there's there's this this for a long time in advance of this, we're kind of operating on the default of duty. Really have to close everything down, you know, Really the right thing to do is this, you know. I think the default was towards not doing anything, and it was a surprise when

we did. We've not switched, i think societally for a lot of people into a default mode where it's, well, we've really let you to open things back up them I really going to go back out and do all the things that I was. I think a few people anticipated that big of a shift in mindset um to happen thatically and sport to be um that in scott Now it could be that in three weeks, you know, the sun is out and shining, people want only set

the house and being cooped up. I think we've all seen people wanting to get out and be social um and uh, and be out of their house and and do some of these things. People. I think it very much remains to be seeing how people behave in all of this. We are kind of in an unprecedented time and I think all of those things are are are our factory that flows through to you know, continuely demand

and what people want and how they act. Well. I think it'll be day by day and I think if numbers start to go up in cases start to go up, We're all going to be like, oh okay, we can't play around with this. It's such a good point to arm Strong, team leader for US Health here for Bloomberg. Thank you. I love that framing because he's exactly right that there's this sense and we get this from the government's like people want to get out and then people

are like, I'm not so sure. You know, I am such an amazing It's a really interesting way to frame it in to think about it, and I hadn't thought about it that distilled down so our thanks to drum story. They can build it, they can open it, but will they come exactly exactly. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Well, as we alluded to just a few minutes ago, even amid all of this, we could have a new Stock Exchange.

New Exchange put together by some names that you've heard of. They've gotten the okay, but there is this whole matter of trying to start a new business and a tech heavy business and a people intensive business amid all of this. Lenand Win has the story she's finding supporter for Bloomberg Johinius on the phone from New York City. So, Lenan, this is something that's been in the works for a while. M E m X. I believe it's called or do they say, is there something cool that mems okay? I

figured that was probably um so tell us if that's cool. Well, Jason, one of the challenges of writing this story was that there are so many household names that I can't include all of them in in the actual story. But you know, your Bank of America, Golden Sex, JP, Morgan on the banking side, and then you've got Fidelity Trade on on the kind of a retail side. So we've got a lot of huge financial market players that are invested in

this firm, Virtue Citadel Securities as well. So we've got a really big spectrum of different types of players and they're all kind of getting in on this new exchange and it seems that the exchange has been able to do a lot of work from home. A lot of what they do is cloud based, and so they've been able to write a lot of the code even though they haven't really been able to go physically to the

servers during the coronavirus pandemic. So there's been some delay, but it seems like things are starting to pick up again. Remind us why they want their own exchange. So a lot of these players have been complaining for a long time about the high fees that are charged by the

incoming exchanges. We're talking the New York Stock Exchange and NASDAC, and they've been particularly angry about the high price of market data um and that sounds like a very sort of routine thing, but we're you're talking about firms that trade at increasingly high speeds, you know, at the blink of an eye. The amount of data that they need is very very high, and they get charged high fees

for that. So they've been very very upset about that, and so upset that they decided to start their own exchange. And so, what's a realistic timeline for this to get up and running given everything that's happening in the world.

N So, Jonathan Keill know the CEO, and I spoke this morning and he says they're still very aggressively trying to meet that three Q on target that they've reset for themselves, which means hopefully starting to test the systems this quarter with their participants, you know, doing some of the technology testing and platforms and connecting to the system

and then eventually going for a third quarter launch. So that sounds aggressive, but again they're working super hard and they've got the backing of some very big investors making this Who wins who loses? How does this change kind of the investment world, the trading world as we know it or I have known it for a long time lean in so this is a big question. But I think what the exchange Memics is trying to do is

to put pressure on the incumbents to reduce their fees. UM. I think there is a potential for this exchange to win because they've got so many big backers and obviously, um they're going to be competing on price, and so

they're hoping to drive down prices across the board. So it's possible that the retail investors and any other investors who are in the equity markets will will benefit if they are this exchange is successful in driving down prices because ultimately these are the sorts of fees that end up in some form of fashion with both institutional and as you say, retail investors to write that's right, and so um. You know, the the equity market is a

very complex place. But one of the key sticking points has been that in order to make money in this market, in order to sort of make the maximum profit at lowest costs, you have to drive down the fees. And if your institution is being charged very high fees, then you just can't do that. So everyone is really trying to, you know, push the market to zero here right where, and and even a fraction of whether it's you know, the margins have gotten so tight, and I feel like

so many of these trades, right, so it makes a difference. Potentially, It certainly does. And um, yes, margins are very tight, and that has led to a pretty fractious environment in the equity markets, and it's caused many players to say, forget it, we're going off on our own right exactly, all right, Well, it's an important story. One of the most read not surprisingly on the terminal, given who our audiences and given as you say, Lennan, all the big

names involved in this. Everybody, it feels like, is trying to figure out this new world order. And it does take me back here, and I think you're alluding to this, you know, even the race to zero when you think about commissions and fees with the big brokerage houses, bit suab or uh any of the other big names. All Right, Lennon Win, thank you so much. Finding a supporter for

Bloomberg jinus on the phone from New York City. Yeah, looking forward to seeing how that plays, because I know they've had some dates on the calendar for this year. I think you're trying it all out and and getting it going. So we'll see whether or not the virus somehow um prevents them from doing that, or as they said, everybody's been working at home and they've had time to kind of maybe move ahead on things. This is Bloomberg

Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Well, the virus pandemic has forced the US government to certainly take on a much bigger role in the US economy. It's also kicked off conversations and debates about a new American industrial policy. Sean Donnin covers this in Bloomberg Business Week magazine. The story online at Bloomberg Dot comment on newsstands later on this week, shown of course Bloomberg New

Senior Trade reporter. He's on the phone from Maryland. Also with us is Bloomberg Business Week editor Joel Weber on the phone from Brooklyn. So this is a story, right, we are at an interesting time certainly in our political history, that's right. And you know, one of the things that I think we've been talking about a lot, just at least as a staff, it's sort of like, what are the ways that this is going to start to change things?

And and some of these things are like ones we you know, might not change for the best, and other ones are are I think you get to a more strategic and in some cases almost a nationalistic kind of perspective. And I think that's where Sean came in with this idea. He kind of raised his hand and said, have we have we thought about industrial policy? And like how America's the industrial policy might change out of all this, and that let him down the rabbit hole. Um, Sean where where?

What did you find as you started to think and report this article up? Yeah, So, I mean I've been covering the trade wards for the last couple of years, and if if you think about that, that's been really about defense, putting up tariffs, trying to defend sectors in the American economy. And one of the things that we've seen U as a result of this pandemic is people really thinking about how do you encourage more production at

home and how do you do that. Well, in the past, that's been through this thing industrial policy, which for a lot of Republicans and a lot of the the kind of free marketers of free marketeers uh in in in the US has been in the taboo, you know, we we don't like in the US to encourage or to think that we're picking winners and losers in the private sector. That's certainly been the rhetoric that has come out of

the Republican Party for decades. Well, now when we're having this conversation about what the U. S economy should look like, how prepared it should be to respond to a pandemic, where we should be producing things like masks and other productive equipment or ventilators we're starting to get into the realm of having a real conversation about how government should direct production, industrial production, and and industrial policy. It's worth

saying that, you know, America has been here before. H During the Cold War, we certainly saw ramping up of the military industrial complex. We know that the space race gave us all sorts of great private sector products. We know that the GPS uh that is in our car comes out of, in part, a need for the U. S. Military to have like runic navigation tools uh, and so on. The question now though in the selection year, is is

where are we going to go next? So today, and you know, one of the one of the things that you really focused on in the article is about rare earths, which obviously has become sort of the topic of in part because of the trade war, because we realized how much of this is actually coming from China. So what did you discover when you started to talk to people in that space. Yeah, so rare earth is this? Uh, there's seventeen of them. Uh. There are these minerals that

are using everything from smartphones to ballistic missiles. Uh. And there's only one mine in the United States right now that's up and running and that produces these things, and that's the Mountain Pass mine in California and the Mohaba Desert. Uh. It actually though, has to send what it produces to China to be refined into these actual usable minerals. Uh and then they're sent back to to the U. S.

And UH. The owner of that mind is now saying, you know what, I need some help from the government, and I need the government to do more to encourage the use of this stuff by big domestic manufacturers and that's companies like Tesla, Apple and so on, so that we can get production here in the United States and

it makes sense economically. And Seohn, I love that you name check uh, some well known names in here to frame this debate from a political perspective, because Peter Navarro obviously has come to the four in a number of issues that you were intimately familiar with of the past couple of years when it comes to trade. But we're also looking at some different generations and maybe different political philosophies within the GOP that are all sort of circling

around this. Help us understand that piece of it. Yeah, Look, I mean we are all focused on how Donald Trump has changed the economic conversation on trade and uh even the role of government and its relationship it with business from a Republican Party context. But what's really interesting is is what's going to come after Donald Trump? Even if he's elected to a second term, there will be an

after Donald Trump. And there is this new generation of rising stars in the Republican Party, people like Marco Rubio, Josh Holly from Missouri, Tom Cotton who's also in the Senate, who all have a more of an economic nationalist event,

and they're into this thing of an industrial policy. In fact, even before the current crisis, Marco Rubio was giving speeches laying out a vision of a new American industrial policy and arguing that that is actually a kind of great American tradition and that's something that the Republican Party should embrace. So Sean, where is corporate America? Where is actually the global corporate world on all of this, Because any CEO that I talked to the plays in the global world.

They are concerned about increased nationalism and focus on your local market, although they're doing more a supply chains in their local markets and more production. But I'm just curious, where does the corporate world fit into all of this. Look, I don't I don't think the business world has ever liked the idea of the government telling it what to do, and I don't think that has changed in any way.

But the business world is kind of stuck right now because there is this this crisis going on, and in the crisis, people start getting back to some pretty basic instincts and they like to see things like domestic production. And I think a lot of people in America UH today would probably not have minded a stronger hand from government in encouraging more domestic production or at least more domestic stock piling of personal protective equipment, which has been

so vital in dealing with this pandemic. We'll see where this all shakes out after the election. It's clear that this is gonna be a big topic of discussion between now November. Whoever wins that race UH in November, is going to come in early next year into the White House, and this is one of the big thing are gonna

have to wrestle with. Well, and interesting on a day where the President is out in Arizona at Honeywell, I mean this fits the narrative in some ways, right John, Yeah, And look and That's the interesting part of this conversation that maybe we don't talk enough about where we all have had this this this fear that too much of uh, you know, that we are too reliant here in the United States on China and overseas production and and these

global supply chains. But one of the really remarkable stories of the last six weeks or so has been how the US manufacturing sector has really ramped things up. You know, we know the big automakers are now producing ventilators, Ralph Lauren is doing a personal protective equipment and and and the hospital scrubs, uh, you know, in the Honeywell, which is one of the big producers of these nine masks,

has been ramping up production as well. So, I mean, we have seen in the last six weeks American in street really jump on this and and take advantage and come to the fort. Would be interesting to see what we learned from that forward when it comes to draft and Pulse. I feel like it will be in the history books and the economic books going forward. It's like we're at that time, all right, Sean Donn and thank you so much. Our thanks to Joel Webber as well

brom A Journal. But you let me drive. Oh no, no, no, no, who's going to drive home? Honey? Please, I'll do the riding drivels me. I want to drive, Just drive baby. The question trying this is the drive to the globe. Thanks, we'll drive us down on Bloomberg Radio or in his time for the drive to the close. Jeff Chang is with US co founder and chief operating Office. They're in charge of product development at cdo E Vest. They've got

over a billion dollars in assets under management. On the phone from mcclaim, Virginia, Jeff, nice to have you here with us on this Tuesday. So tell us a little bit about your world. How you guys a bit impacted. I hope you're safe, your family is safe, your employees are doing it. Okay, thanks for having me. Yeah, I mean we've seen as far as our world. You know, in this market, advisors are still nervous, so they're they're

looking for for downside protection. Uh. So as far as we've seen, um, you know, they're they're looking for for hedges. So we've seen record flows into our buffer protect strategy. So um, like you mentioned before, over a billion dollars a year to date. So these target outcomes. Strategies really allow investors to invest in the market but with built

in buffers to protect against downside losses. UM. So, as an example, our strategy seek to buffer let's say the first ten percent of downside loss of the smp UH and and as an example, if they have some was download it's UH, the strategy will only seek to be down five percent. But the thing is what it was critical for us UH in this market is that with these types of strategies investors were still able to have

upside growth potential up to a cap UH. And we have seen, you know how devastating it is in the past for investors to go to cash during downturns like this and miss the upside recoveries and days like this,

And so how does it work? I mean, it helps us understand the logistics of you know, how you end up sort of picking this and choosing a strategy and choosing elements of this strategy, especially in the market as volatile as this, Jeff Sure, so investors have a lot of choices as far as you know down type risk management UM And I think how investors actually choose our types of strategies because if you really look at the world of risk management, they really have kind of really

largely three kind of options. One is, you know, diversification what we saw in Q one, which was really challenged or largely didn't work because broad equity markets suffered. You know, we had huge drops across all indexes and we even saw investment grade bonds start to lose value even uh you know, it wasn't until the Federal Reserve that came in and started buying bonds did we see uh the seor recovery. So um, that's the first way, um, and that's dependent upon uh the idea that you know, as

the a falls as it be goes up. And what we've seen during times of crisis is that you know, those correlations tend to approach one. Well, let me just jump in for a second because I know you're explaining your strategy, but I do wonder, you know, right, you've got a target outcome, right, so you you've got a return profile, and that's what investors bank on um and risk is you know, there's a certain level of risk

into all of this. But I do wonder in a market like we've seen, you know, how are those investments in those targets impacted by the extreme volatility that we've seen in the market specifically this year, and I think safe to say that many folks think we're not out of the woods yet. When it comes to that, how do how do these types of funds, these target funds that you guys have, specifically Jeff um do in extreme volatility?

That's great questions. So it actually, uh, in the case of extreme volatility, the strategies can tend to benefit um given that we actually get our downside protection uh through exchange traded options. So as volatility starts to rise, it does provide enough an opportunity to for for more upside potential. UM. So in this case, uh, you know, during times of crisis, we actually for for the purpose of getting upside Actually in some in some cases welcome that volatility. Interesting, did

explain that part to me? You you welcome the volatility? Why the ideas because we're buying let's say, UM, let's say take our example of our our strategy. We we we have let's say, at ten percent protection, uh. In a lot of our strategies, we fund that protection by selling, say upside potential in this case by selling a cover call. Now with increase in volatility, that that premium starts to generate more as potential generate more premium as volatility increases.

That means that we could actually have more upside potentials by selling a higher strike call, uh in cases of you know, during periods of higher ball. But does that but does that also mean to the downside you're hurt even more as a result to it in this case as we're also we we get our protection by buying

a put as well as selling a put. So it can impact, but there's somewhat mitigation because we're both long and short options on on the downside protection piece and so so that's a no. So that's a no. It is um but there's obviously more than just i'd say the level of volatility that can affect the price of options. That can also you know, more complex thoughts such such as skew. So I today you know, not not a die hard uh no, because there it's a little bit

more complex than that. So let me change gears a little bit. As you look across what we've heard from companies and this earning season it's been and we started the show on this note, it's been one of the strangest earning seasons to date in part because there's this effectively no guidance at least beyond UH the next quarter, certainly for the year. How does that affect your outlook?

And what do you make of that? Yeah, I mean if you looked at UH because that we have this unprecedented economic and corporate UM, you know, earning impacts from these from these lockdowns, you'll start to see you know, your traditional UM I'd say, you know names that UH that you would expect to have lower volatility, not be insulated from you know, UH from the impacts of let's say that the lockdown and instructions of supply chain. So

what does that mean? That means that buying actual UH insurance are actually hedging UH on your positions, can actually you know, help as far as like you know, in our earning cues. Because the idea is that in this earning season, I think a lot of investors are actually more focused maybe not so much on the earnings, but focusing on financial strength and the stability as opposed to earnings. Because I think investors looking at for for companies with

strong balance sheets, positive cash flows. What are some of the firms that may be able to take advantage of the recovery and are more sensitive to the reopening as opposed to looking at you know, looking at earnings, because because we're really trying to consider the survivability at this point right right right, and that you know, you get into the kind of what these target outcome investments are all about. Hey, listen, um, Jeff, nice to catch some

time with you. Jeff Chang, he's co founder managing director at cbo E vest on the phone from McLean Virginia. But you know, Jason just got less than five minutes to go, and you know, we start taking a leg down. I don't know if you saw that. I mean, the headline just spiked on the balloom, the market side blog picking up that, you know, these tensions with China. We talked about this yesterday with with Indy Brown. I should point out that, you know, this was a situation between

these two countries. The rhetoric has a real effect on market sentiment and it really Yeah, and listen, there's a lot of stuff going on. We continue to see headlines about companies Airbnb cutting its staff. Um, they just continue to cross and that is going to make that economic recovery on this On the other side of this, much tougher. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com.

You can also listen to our radio show every weekday at two pm Eastern, only on Bloomberg Radio