The Path Toward a COVID-19 Vaccine

Week on iTunes, SoundCloud, ol Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. Well, our next guest overseas the largest healthcare provider and private employer in New York State. We're talking about north Well Health. The health system has hospitals on Long Island as well as in Manhattan and Queens. It was hard hit by the virus pandemic. So delighted

to have back with us. Michael Dowling, just to check in with him. He's president and see you at Northwell Health. He's also the author of a new book. It's called Leading Through a pandemic, the inside story of humanity, innovation, and lesson learned during the COVID nineteen Um, he joins us on the phone from Long Island. So, Michael, it is good to have you here with Alex and myself. Lots to talk about on this Tuesday. Um, how are

you guys though doing as a health care system. Oh, we're doing quite well and less I'm delighted to be on with you guys again, thank you for the invite and I we're doing quite well today. We have only about ninety patients we'd COVID in all of our facilities. Um, we have only about ten people in I see us and we have nobody and on vents. So we are quite frankly in a very very good position right now.

So what we have to be careful, of course, is not to get complacent, and we have to be you know, very very diligent because um, you know, we can get a surprise if people don't behave and people don't wear masks, and people don't social distance, and business doesn't do what

business should be doing by forcing those standards. Um, we've just got to protect the progress that we've made, As the governors has said, We're doing quite well in New York, and we want to keep it that way and continue to get better so that we can continue to open up the economy. Folks, Michael, you sound cautious, and rightfully so in terms of what you folks in your team have seen on the front line storing these hard hit months in New York. So tell me, are you anticipating

that we're going to see another wave? Are you nervous about schools reopening and if it? If it is, I'm not nervous about any of those things, if they have done properly, if people take the appropriate precautions and be extra extra cautious. Obviously, Um, you're always worried since this is one of those things that is quite invisible and it can bounce back. So this is why we have to, you know, not, as I said at the beginning, to get complacent. We do have plans in place if it

goes combat. We have been organizing our plans, developing cabletop exercises, etcetera, so we know exactly what to do if it comes back. Those plans are very detailed. We're hoping, however, not to have to implement them, but if it does, happen. We are prepared, and I think the public needs to know that. So um So to that point though, to watch through, sorry, to that point, being prepared, what are you missing to

be prepared? Is there anything that you need more of, any more support that would help in that next wave? And I don't nothing major at the moment. I mean, all of the hospital systems are working together Mount Sinai you know, Columbia prayers and my you not. Well, we're

all working together. We talk every week, we coordinate or activities, and of course the governor has put out a lot of guidelines and directions, especially over the last couple of days, requiring that all of us have sudden amount of PPE available, um, that we've planned all of our searche planning, and that we make sure that we have the staff compliments, etcetera. So this is an ongoing process. But you know, we've gone through this and we did learn some lessons, as

I recounted in the book that you just mentioned. So obviously we're in the belt a position today. Then we well, I would say, back in federally when at that time we you know, we thought it would come. We wasn't sure what it was. We didn't know how big it was going to be. Now we know that if it comes back, and it comes back with severe severity, we've just got to be optimally prepared. So we're in a good place right then. Is the public continues to do

what the public should be doing. Yeah, there's definitely, you know, a base of our foundation of knowledge at this point. And I do want to get into your book, Michael, about leading through the pandemic and the COVID nighteing crisis in a moment, But I do want to ask you about some of the news that we got today about Russia registering its first Corona virus vaccine. You know you are talking to drug company, these health care systems, those folks are on the front lines in terms of developing

a vaccine. What is your take on that news this morning? I would be very skepital um. First of all, you you know, you cannot let politics dictate the decisions about when the vaccine is going to be ready, and you cannot let politics tell you whether or not the vaccine. There's advocacy with the vaccine. You've got to let science speak. Kates here. It is too dangerous to the public at large to be jumping ahead to try to be the first out of the gate politically, And we have that

problem in this country. We have you know, national administration. He of talking about while we're gonna have it by the fall, we're going to have it in November. We're gonna have it before the election. This is dangerous. We should let science dictate. Obviously, we need it to be done quickly, but these these vaccines have to be tested in tens of thousands of people for certain periods of time.

And um, the FDA is going to have a major issue in its hand uh over the next couple of months, UM, because they're going to be under enormous pressure to tell the public that we have something that we believe works. They cannot say that. They've got to say we have something and we know it works. That's the difference. So we've got to be very careful. So with the Russian announcement, I would be very I would be quite scaptable. So

I'm assuming you wouldn't take that vaccine just quickly. No, I will not take it right away now, I would. I would wait to see what happens with others. Um, have we learned anything yet about leading through the pandemic or is it too early? What's your takeaway, Oh, I think that we've learned quite a bit. When you go through something like this, which none of us have ever been through before, you learned quickly on you know, as

you go through it. And when we did the book, every every weekend I worked on it with my co auth of Charles Kenny, because it was very fresh in our minds and were it as we were going through it. And each chapter of the book outlines various lessons to

be learned. And the idea was to help other people when there is a crisis, whether it's a pandemic or a hurricane or another major trauma situation, and that there are cuttain things that you've got a plan for, think about, prepare for an advance plan ahead so that you don't get caught unawares when you're in the middle of something that is a major, major crisis. Michael, what was the

biggest thing that you were caught unawares? Um are unaware of? Well, that the speed of the increase in the number of cases at the very beginning, I mean went we went from a couple of hundred cases and in the course of a week or so we got the three thousand, five hundred in patient cases. The acceleration in the number of cases was pretty extraordinary. So, you know, you have a hospital that one day looks like it's you know, everything is on the control, and in twenty four hours

later and you know, you're just completely inundated. And if you don't have a plan in place as to how you're going to deal with that when those situations do occur, you're going to be left flat footed. And the other lesson, of course, is that you've got to spend an awful lot of time focusing on the safety of your staff, enhancing the morale of your staff, inspiring the staff, because what we see happening on a day to day basis during the course of the pandemic was extraordinary in the

compassion and the dedication. But it does require that you the staff needs to know that management is with them, understands their circumstance, and has does everything possible to make sure that their safety is paramount To say, lots and lots of lessons I have to say when they jumped in and you know, we have a little chat at alex and I, you know, just so that we don't step on each other, and she's like, God, I wonder if Michael ever sleeps, and I do wonder, like, how

the heck did you write a book amid all of this. I mean, you know, everybody in the medical community was talking about how exhausted they were, Like I just can't even imagine. Well, I I you know, I don't sleep much in the in the best of times anyway. I mean it's like it's like a broadcasters doctor, isn't it. Like what you're supposed to do is sleep. You need sleep now. I mean, you know, I I have never worked the day in my life. I have enjoyed every

moment of it. So for me, I know, if you want to stress me out, give me time off, you know. I and writing it on the weekends, we were in the middle of it. So when you go home, you you know, you said, today we spent a lot of time talking about employee communication. So you go home and you write it, and as you write it, you think about all the things that you should do. So it was a kind of an evolving process. Um, and I'm

I'm so delighted now that we did it. I mean, there were you know, tense moments trying to you know, get it all done and make sure it was correct, etcetera.

But we interviewed a lot of our own employees, so there's a lot of input from employees and including frontline employees, which is very very very instructed, and hopefully for other people to read it, they will say, oh, that this is a kind of a playbook, as you mentioned earlier, that will help me to prepare for As one of my staff says, how do you prepare to be unbelievably comfortable with the uncomfortable? Yeah, which is and remember health care is we deal with crisis all the time in

health care. We have trauma, we have accidents, we have car accidents, etcetera. So we deal with life and death. This was an intense, long terran issue that that was with us for three months. And if you don't write it down and you don't try to report on it, you eventually will forget about it. Right, And it's also a great lesson of the unexpected. You know, this whole idea of really thinking out of the box about the worst case scenarios and being prepared for it. You know,

we all learned unfortunately, very very harshly sing lesson on that. Michael, thank you so much. Michael Dowling Presidency at Northwell Health. Check out his book Leading Through a Pandemic out this month. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio and a special vaccine issue. Bloomberg Business Week looks at the biggest challenges, promising solutions, and the weirdest science from the molecular level on up. It's

all about the path to a COVID vaccine. As part of the coverage, Bloomberg Business Week Economics editor Peter coy writes about exactly where we are in the process and what's involved to getting a vaccine. He joins us on the phone in New Jersey along with the editor of

the magazine, Joe Weber on the phone from Massachusetts. Joel, this is a must read for really understanding how difficult all of this is the path to a vaccine, right, And that's why we wanted to do a vaccine issue, to really sort of look at this this endeavor from as many different angles as we could possibly look at it. And Peter does such a wonderful job of just helping make sense of whorl of the world of science. Often economics and more and more I feel like I pull

them in to talk about science. And you know, the thing that I just thought really stuck out to me about the introduction that he wrote is just the which is just this wonderful essay is obviously we have many, many different attempts under way here, and it's all an attempt to really just have something that sticks, because the especially in the U S. We have utterly failed at containing this thing, and a vaccine is really starting to

basically be the only way out of this madness. So, Peter, you talked to many, many, many people um for this article, and I'm just curious, like, what were the what were the things that really stood up to you when you spoke to people who who work on vaccines for a living.

Just the creativity that's going on now. Vaccines have been around for centuries, really going back to the cow pox vaccine that's stop smallpox, and yet in the last few decades, thanks to biotechnology, genetical engineering, there's just a profusion of new concepts, entirely different ways of producing a vaccine. One of them, I think is so cool. You actually take some of the nucleic acid that produces the the vacs the virus when it reproduces itself and you put that

into the human body. The human body produces a portion of the vaccine, just some of the proteins, which is not harmful but does stimulate the immune system. So the body becomes the factory for making the vaccine. I want to know the question that I can ask Peter Core that he won't know the answer to. Oh no, no, no,

I don't have it. I never have it, right, So, Peter, I guess when we try and look at the vaccine through then the economic lens and through the mark it lens, like what's the reality of one in a company says, hey, this vaccine works in phase three and then all of a sudden, everyone's great and everyone's good and we can travel in life is normal again. Well, today, I guess, if you believe what came out of Russia, we already have a vaccine. Uh well, it hasn't even started phase three,

So maybe we take a pause. Yeah, exactly. So I think we're gonna probably see more of these popping up in different countries around the world. Thing we got one to go out in my Godlin, and we're just gonna have to step back and say is this trustworthy because you really want to see a vaccine go all the way through phase three for both efficacy and safety before you're gonna want to like put it into yourself or your kids or your parents. And that's gonna be months.

That's gonna be month, probably either late this year or early next year. Now, the hope is that there are so many of them that even if no one of them is perfect, they'll collective league give us the amount of protection we need to be back this pandemic. You know, Peter, The part of this that I think, you know goes to what you're saying Alex about you know, a timeline and stuff, is is that there's a cost associated with

the pandemic. And obviously that is what's generating headline after a headline every day, and it's also what's you know, allowing um scientists to sort of expedite some development. And you know, Peter, do you have a big number here which I think, what was it, three hundred and seventy five billion dollars, billion dollars for every month. That is

just an insane amount. So so when you think about the economic implications of this and why vaccine is so relevant, can you kind of help help make sense of that for us. Yeah, So if you're thinking, why should we put money into this looney ideas somebody's got um the answers, you probably should because even if there's only a small chance of its paying off, it's it's enough to justify a fairly big expenditure of the same thing goes for manufacturing.

Why would ever build a factory to make a vaccine if we don't even know if it's going to work well, Because if it does work, you don't want to be having to wait around while the factory gets built. You want to be able to go into production right away. And this whole attitude, I don't think there's quite enough of it. I think the scientists understand, I don't think

funders have fully grasped it. There is some pretty generous funny but we could afford to be doing even more, and it's unleashed, just as I said before, a profusion of creativity. Which this makes this sort of a golden age for vaccinologists. So for everything that we've gotten wrong here in the US, Peter, perhaps the strategy of of actually throwing billions of dollars around it, or millions of dollars at various companies is maybe the right way. Yeah,

it actually it is billions. Uh, it is. It is exactly the right thing to be doing. So that's one case where um, I mean, as I said in the article, someday, when there is a vaccine or actually probably multiple vaccines, assuming that they actually do what they're supposed to do, we're gonna look back on this as these these scientists all over the world, from India to China to the US to Germany, we're going to thank them. We're going to thank them for essentially saving our society. Be a

happy day. Well. I don't want to be a debbut downer, but I mean, you do point out and the magazine, the magazine has talked about this before that we still don't have a vaccine against HIV. So I mean, and this is a complicated virus that impacts people differently. That is so true. All right, So I guess you did kind of bring down the optimism I was trying to inject into the conversation just thirty seconds to to react to that debbut down very true. We still don't have

an HIV vacine. This every other viral diseases for which there are no vaccines. This one is looking though as if it does seem amenable to a vaccine. And uh, in fact, again multiple vaccines using different avenues, So something's probably going to work. Maybe not as well as say a small box actually maybe more like the influenza vaccine, but it will have something probably within a year. Well, it's a must read, and it really walks you through

this whole process. And as uh, you and Alex and Joel mentioned to the economic costs and why we need this badly. Peter Coy, you're the best. We always love reading what you write, Peter Coy, Economic Stator business We can of course our thanks to Joe Weber. You're listening to Bloomberg Business Week with Carol Mazer and Jason Kelly on Bloomberg Radio. Hello everybody, I'm Alex Steele in for Jason Kelly. I can try and do an impression of him, but I don't like sports, so Carol, I don't know

how much I can help you with that. Can you talk fitness, workout, running us? I can do those things and plates and I can pretend a little bit. We're joined now by Jeffrey Cleveland, his chief economist over Payton and a regal talking about how the recession now is significantly different than two thousand and eight, and then I'm assuming the prescription to fix it is also very different. Jeffrey, thank you so much for joining us. As we move out of this, it's sort of like, what do we

what do we do? How do we think about the playbook when there is no playbook to think of? Well, I thought I was going to start with my impression of Jason, so oh, you can definitely please yes, start there. I wouldn't do that. It's just me to be the three of us. Nobody's gonna, you know, we will share it.

I think the biggest danger really for investors is I don't know if it's recency bias or what, but you know, the tendency is to look back to the last recession and then think that this one is going to be like that, and then you should position your portfolio accordingly. And if if you look back to two thousand and eight and you look at the job market, for example, we were shedding jobs for twenty six months I think before we got to the lows, and then it didn't.

It took us another six and a half, almost seven years, to get back to the pre recession levels unemployment, and so that was a really long drawn out affair, and I don't think that's what we're seeing here. I mean, you both may feel otherwise, but I think this has happened much more quickly. We we shed over twenty million jobs and then we've added back now just over nine millions, so we've retraced. If I could steal a technical analysts

terminology there, we've reach retraced of the jobs lost. So this is it's just happening on a much more compressed, quicker time scale. So I think investors shouldn't be positioned for years of slow growth necessarily. Well, that's what I wanted to ask you, okay, because we I know Alex has talked to folks about, you know, when we get back to pre COVID levels in terms of the economy. I have as well, Jason has as well. Um, when do you think we get there? Because I've heard estimates

of a few years, maybe two, three years. Yeah, I think it depends on what you're looking at him. If you look at the g d P level, I think you could make an argument that we won't get back there until two or three. If you're looking at the unemployment rate, Carroll. I mean it's the drop of the unemployment rate is happening much more quickly than I had anticipated. I thought we were going to get up to and

stay there. We we peeked out on that U three measure of the unemployment rate just shy of fifteen percent. We're already back to ten point two. We could very easily be below nine by year end, I think, and um, and then it could again it could take another couple of years to get back to three and a half to four percent. But I think we'll get there, and I don't think it's going to take seven years or

six years. And I know we talked about this all through that period of two thousand nine all the way to and it wasn't really untill we had a great labor market. And I think we can get I can think we can get back quicker. So I guess I'm I'm turning myself into an optimist here. We thank you for for that. Uh, But I mean the big difference also is that the Fed acted so quickly, so fast, and so hugely. I'm just gonna make up that word.

So um. With that in mind, how do they pay for it down the road, how does the government pay for because I think that that's also going to change how we come out of this, Like do we inflate our way out of this? Do we raise taxes to

cover it? Um, that's gonna be a big, a big differentiator. Yeah. Well, I mean keep in mind, we shut everything down and we provided a big amount of treasury relief to help people out in the interim, and then as we reopen, we should need less of that relief, and as people get hired back, we should be less relief. So if it's if it is confined to sort of that one time um, you know middle of relief where we we really blew out the treasury issues, we can pay for that,

we can we can manage that. Uh phenominal you know, debt to GDP will will exceed the post World War two high. Yes, but we can outgrow that. I think in the near term we all we need is phenominal d DP to be faster higher than our tenure treasury yield. And even though I know tenure yields are moving up today, they're still they're still very low. And so I think we're fine. I think we can grow our way out of that. We don't need to inflate our way. We

don't need to do anything special like that, in my opinion. Well, so, how worried though are you about? You talked about, you know, jobs that took what seven years or so to get back to um pre financial crisis levels. That was a long time. We had a story on the Bloomberg I think it was yesterday about you know, concerns about longer term scoring and they even talked about the July jobs report that showed an increase in the duration of unemployment.

You know, I do wonder, Jeffrey, about some of those longer term implications of people who don't ever get their jobs back and what that means for economic growth that you know, it's lower for longer. Essentially, what I hear from what you're saying is, you know, concern about permanent job losses, jobs that aren't going to come back online.

And you're in two thousand and eight, you looked at it was seventy percent of jobs that were lost were permanent and much smaller percentage to you know, maybe twenty or thirty percent were temporary job losses. So that's why it took so long. It takes time to retrain too, you know, retooled maybe to re leave the labor force, or time and re enter this time around. I'm still

I still have pretty high hopes here. I mean, initially, I think that first job's report we got, uh in March or April, we had about eight percent of the people laid off. We're listed as temporary. As of Friday's jobs report, off top of my head, I think was about fifty six percent. We're a temporary So we still have a big chunk of people that are on temporary layoff. I have high hope that they will get back, they will get back to work here as as things do

reopen um. But yeah, there is the risk that there will be some some some permanent. But I think, I really think this pales in comparison to oh eight. Oh eight was all all both all permanent job losses. But if ever pals to oh eight, it could still be kind of yucky. It could not. It's not a good technical term, but uh, you know, I'm just saying it could be pretty bad for a lot of Americans. Now, yes, I just uh, you know, yesterday's data, the Jolts data.

I'm really excited about this day. I don't know. This is sort of second or third tier economic data, depending on who you ask. But h I love that report. You know, it comes out with such a leg. So we got the June data yesterday. I'm sure you talked about this, but you look at that report and it's so striking how different things are now compared to oh eight.

I'm looking at hires for example. You know, you get that that monthly hires level and it tailed off in two thousand and eight, calling all the way through the session. This time around, we dropped. We did drop, you know in the month of April, but we spiked all the way back up in you know May, we hit over seven million hires and we got another six six and change million hires. So this is really outstanding compared to

two thousand and eight. Well, you definitely are optimistic. So we're going to check back with you certainly in a month or so, Jeffrey, and see you know, your thoughts, and see kind of where we're going in terms of some of the trend lines. Really appreciate that your inside Business Week Economics today on this Tuesday, Jeffrey Cleveland, chief economists excuse me, at Payton and Regal joining us on the phone in l A. This is Bloomberg Business Week

with Carol Masser and Jason Kelly on Bloomberg Radio. We want to get Alex to this week's edition of Bloomberg Business Week's Small Business Survival Guide, where we take a look uh this week and more lending for small businesses that are stuck really in coronavirus limbo. There are many out there back with us. As Bloomberg News editor Dimitri hessands on the phone in New York City along with

Pat mackerel Uh. He is president CEO Pursuit UH and it is a company that offers lending to small business owners. Pat on the phone in Albany, New York. Demetri set it up for us. You guys have been looking, you know, a week after week at what's going on in the small business world that I really do feel like small businesses just don't have the variety of offerings to access capital like large businesses do. Yeah, Hi, Carol, thanks, I

mean that's definitely true, you know, not the variety. And I mean you really are talking about um, you know, needing to know where access to funds that you need that you're bigger banks, even your medium sized banks sometimes are gonna do it, and community development finance corporations, one of which are really integral to this process, especially once like his business Pursuit, which for for for decades now has been lending to very you know, not we're not

like three hundred five hundred person operations necessarily, but much much smaller and especially minority businesses, and you know, the whole thing continues to be a mess for these businesses. All the process for the loan forgiveness has just started and they're talking about how that's going to be delayed with the way the way the money was given out.

So people like Pat and his business really exist to provide alternatives to help these folks out some you know, the money need and to handle it and manage that process as best they can. Yeah, so I want to bring in Pat. Pat talked us a little bit about

Pursuit and tell us about what you are doing. Uh, Pursuit is we're a variety of companies for affiliated companies that have focused since nineteen strictly on small business lending and strictly on small businesses that could not get capital at reasonable rates in terms from conventional sources like financial financial institutions. Um. Most many of our transactions historically have been referred to us by financial institutions who also support

our operations with you know, potic substantial lines to credit. UM. You know the what was mentioned earlier in terms of access, that is the challenge making you know, making making small businesses feel that they have opportunities to borrow. Uh. You know the comment about at the access to their ability

to access credit. Um. You know, the larger companies also have more preparation and more advisors, and they have top flight accountants and top flight lawyers and internals, you know, financial people that helped guide their way through a loan process. Small businesses don't have this. There's usually one one person who's in charge of all of those departments, which makes it hard when you're also running the business so so

pat so to that. I mean, if I'm a small business and and I can't get access elsewhere to capital and I go to you, I mean, is it really onerous? So the is there the rate owners? Is the payback owners or what kind of limitations do you look at from my end so you protect yourself? Well, UM, you know we have been you know, underwriting small businesses for a long, long time, uh, and you know, have managed

to survive quite well. We basically limit our race to the SPA maximum rate, which is Prime plus two seventy five, So we're at you know, aren't top rate in six uh on most of our loans. I mean, what we really try to do is figure out the management, to figure out how they're gonna instructure of them in a way so that they can be you know, paid back.

I mean, we're not in the online lending space. We're in a space where we offer frequent moratoriums of principles sometimes interest payments, where we offer free business advisory services.

You know, I was just reading a story about one of our clients who was over the moon about a business advisor we put them in touch with in terms of you know, redoing their website to help you know, pandemic operations, all of which we provide to the business for free because we get grants to do business advisory services and provide a lot of things to those businesses. But um, I want to do you know, one thing that is a great asset for small business that is underutilized.

The SBA has a great program called lender Match, and any small business can go on to the SBA website SBA dot gov access lender match, tell them what they want, and the lender match will give them five or six c D F fives. Organizations like Pursue, so they can be in Wisconsin or New Jersey, you know, anywhere, and they're going to line them up with lenders that that are going to be interested in, you know, have expressed

an interest in lending to businesses like that. That's a great tool, and that's a really important point that these are localized, so you do need to do that. What Pats and Jess is very important. He focuses on New York, Pennsylvania,

New Jersey, you know, across the country. This is not something that's a federal sort of approach, so it's very useful to do that, alright, So definitely check out in terms of your local area for opportunities to tap into some lending and some different opportunities, and definitely check out the story in the magazine Our thanks to Pat mccrell, he's presidency of Pursuit on the phone in Albany, New York and Bloomberg News editor Dimitri Kessa Needys on the

phone in New York City. The Journal now, but you let me drive home, Ann please, I'll do the right vel. I want to drive drive the question trying. This is the drive to the globe. Thanks, we'll drying us down on Bloomberg Radio. Hey, I knew that there was Britney Spears in there, so I feel like that was kind of a vandom Alex Steel in for Jason Kelly. Thank you with Carol master At it's time for a drive to the clothes. Joining us now is Kevin Walkush. He's

from Jensen Investment Management. He joins us on the phone from like Oswego, Oregon. Kevin, thanks for joining us, appreciate it. How's it going there? It's great, having a great summer, and uh, thank you for having me on today. A great summer. I feel like that's something I have not heard. It's a really great entire summer. I mean, you guys see the virus at all un or like, how what's your experience our experiences? Yes, we have it, but compared

to other states, it's actually relatively low. UM. And I think you know, our government or our state government got on top of it really quick, um and so was able to help sort of steer us through this. UM. But right now. You know, we're still we're still weathering it like everyone else. We're still you know, in it together, UM, and we're working to really working together as a community. Kind you know, really, UM, stay ahead of this so and you work about it, and you also work for

quality growth investing. And that's the approach to how you're looking to technology investing. You like the names like Microsoft, Apple, Google, UM, how do you see then, maybe like the last few days of market action, irrespective of the last two hours of trading, UM, when we get optimism of a vaccine, we see those names, we see tech not hold up as well, and we see more money flow into value. How do you see it? UM? You know again, I mean there's a lot of speculation, UM in terms of

a round a vaccine as we know. UM. You know, I think a lot of efect names, you know, recently at least through the pandemic UM and where it really started rolling UM. And you know it's sort of the quarantine orders sort of drove that work from home UM. And we really saw was this increased demand of cloud consumption, a lot of the services that these tech companies were providing. UM. As long as we're in sort of that mode where you know, we have high degree or high opportunity of lockdowns.

UM that really sort of drives at work from home. We think that's gonna you know, accelerate UH, and that demand for cloud services in the case of you know, a vaccine, a high success vaccine, which is what we all want UM, that may let the pedal off a little bit in terms of demand for those services in the short term UM. But secularly, from a long term perspective, we're really positive on cloud consumption and services and you know the types of UM value that these companies deliver. Well.

So let's talk about specific names because you do like UM names like Microsoft, Apple, Google, Talk to us a little bit about that specifically, Microsoft, Obvious, slee a player when it comes to cloud. I mean, these are the names that we kind of we just talked about with Dave Wilson. We're just watching, you know, the run ups that we've seen. We're watching the valuations. UM tell us

them a little bit about your thinking behind them. Sure, I mean, first and foremost, you know, as a quality investor, fundamentals matter. So company has to deliver UM and so we want to see top line deliver As a reflection

of the strength of the business. In the case of Microsoft, UM it's one of the leaders and cloud as you mentioned UM, we see that as well UM and so from a value standpoint and what we see from an opportunity standpoints, Microsoft is strongly benefited UM through the pandemic UM and even leading up to it, so strong gross it doesn't look like it's really from a fundamental standpoint has skipped a beat in that regard UM. And you see strong demands UM A on enterprise cloud, but then

consumer driven cloud aspects. So you see the man on office, you see demand on UM teams consumption which really supports the office. So that's sort of that collaborations software christeeing people used dramatically more UM and Microsoft has a strong gaming business UM and so from a diversification standpoint, we've really seen them hitting on all cylinders in terms of demand from COVID now, but we also see that sustainable

demand carrying them through going forward. So what I found interesting is this month so far the Russell two thousands having its best month first of the Nastic one hundred and two thousand and sixteen. As I was talking about earlier, that recovery rotation. UM, does that make buying opportunities for you?

Do you also need to diversifying other sort of quality growth areas for when we see these kind of shakeouts or how do you see it UM as far as tech UM, So right now we're about of the portfolio is in tech UM and so in the Russell it's

even higher. It's what's interesting is is, yes, the Russell has done really well UM, but it also has a lot of concentration risk in our opinion UM, and so UM you know a handful of names are really driving incremental value within that and growth from that that benchmark UM. So it's a quality growth investors. So while through the portfolio is tech UM is an other areas that we think are can help us diversify from a wrisk standpoint,

but also balanced out from an opportunity standpoint. So overall, our health scare holdings are about twenty five of the portfolio. We also have a strong UM exposure to consumer staples, which has performed really well UM through the downturn. As we know with all the UH stay at home orders in the pantry stockings so UM, so we've seen we've

seen really good opportunities across the board. Well, and I'm curious how aggressively are you guys were buying Kevin in the sell off before we saw the bounce back where you're doing a lot of buying. We you know, for us, you know, we want to maintain full uh full investment. So let these our cash positions relatively low UM. So we didn't enter it with a large cash position. From a by perspective, what we did was, UM, we did see some opportunities on the tech side, We did see

some opportunities on staples UM. And then we also we have a little bit of discretionary exposure, so we own Nike, t g X, a little bit of Starbucks and df and so we actually took that exposure down. So we took that a little bit off the table and then redeployed it into those areas where we thought we're hiring growth, so such as a Microsoft and Apple. What do you

do if we don't get a stimulus UM. You know, it's interesting, I think we we probably we're not going to change really what we do UM from invest and standpoint, because our focus is on investing in a concentrated, high conviction portfolio of all weather durable names, and so the stimulus certainly is a near term catalyst. UM. I think there's a degree of expectation already built in to the

markets in my opinion by investors UM. But at the end of the day, it kind of comes back to how business executes UM, and we think with or without stimulus, our types of businesses can continue to execute in that regard. So we view the stimulus is great for the overall economy, great care of businesses. But if it doesn't happen, which we believe is unlikely UM, but on the remote chance it doesn't, we still think our businesses continue to generate

that value and that gets recognized in the market. So you're not worried about another kind of dipped lower just quickly, just got about thirty seconds here. Oh, I think the risk is definitely there, and I think from a strong focus on terms of momentum um, momentum has really had a sort of moment in the sun obviously, UM. So we we definitely view the risk of a bullback is

really high UM. And so you know, again that's where I think investors need to kind of maybe reconsider their position, name um, their exposures UM, and maybe consider sort of that risk and likelihood that you know, I think there's a downturn that could potentially come up. Yeah, reminder that you know, things do go down when we're in an upwards an exactly right. That's one of the most read stories.

It's really unbelievable the move that we saw today. UM Kevin Walkers over at gent and Investment Management on the phone from Oregon. Thanks so much for listening to Bluebird Business Week. Download the pot Castle on iTunes, Southcloud, Bloomberg dot com, or wherever you get your podcasts. And of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News.