Travel Rebound Hindered by Delta Variant

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YouTube search Bloomberg Global News. You know, I just said to Tim, I'm looking at We've got a bunch of screens, TV screens up different networks and just different headlines when it comes to this delta variant and the spread, you know, whether or not you've got the vaccine, it's very hard to make sense of what is the true story it is And I'm afraid, like Dr Adlga told us earlier this week from John's Hopkins, that there are there's not

widespread agreement in the medical community with the way that the CDC has done and about face, you know, and he was a lot more aggressive about like you don't need to wear your masks if you're vaccinated. And yet a colleague of his, who I also heard on Bloomberg this morning, dr Andy Pekash, talked about I'm wearing my mask. That just shows where the experts are right now, a lot of confusion waiting for the data. Well, we have

another expert for you, dr Ian las bad Or. He's clinical professor of medicine at n y U land On Medical Center. He is back with us on the phone from Long Island. Uh. Ian, nice to have you back with us. It is kind of a confusing time. We all felt so safe and secure having gotten our vaccine, and now it's we're trying to say, well, wait, I have to put my mask on. How do you explain it to patients who probably have a million questions for you? There are happy for the guys, Thanks for having me

as usual, Yes, people are. There's definitely a lot of turmoil in the air from UH, from patients and and just people out there. And part of that it's because we are seeing people who have been vaccinated coming down with delta. And we do know from Israel, for example, that a significant percent of patients who have been vaccinated uh twice with the Fiser vaccine have come down with

the delta infections. So clearly we're seeing that there's this breakthrough and that the vaccines also very helpful are not And that's really the same story with masks. UM. The reason there's a bit of a debate is because there are different kinds of masks. There are these surgical masks and of course the N nine masks which seal very close to the face. But a number of different studies do show that masks seem to reduce respiratory droplets. We think the way the delta and and all viruses and

bacteria for that matter, transmit are through respiratory droplets. When people call for sneeze or talk hi. There are these droplets that aren't caught by some masks, even cloth masks UM although the viral particles themselves are very tiny and you know, go right through any mask really other than an and that's effective. So a lot of these studies show masks seems to block about these respiratory droplets. Not it does seem to reduce the risk in that range

of fifty. So they're not perfect, but they're really one arm of presntion and treatments strategy. Uh that's really why they have been debates. And you know, the virus is accelerating, it's really galloping faster than we can vaccinate people. And so are you seeing in your hospital? Are you seeing at your hospital? No, you know New York we are seeing an increase, but really in the Northeast, I think we're really very close to her immunity. Uh so, I

think we're not seeing that same volume. But what I am seeing are people who have been vaccinated coming down with a delta. A small percent, maybe ten percent, is kind of in the range that we're seeing tends to be mild up respiratory coughs, sneezing, you know, sore throat um. But clearly the vaccines are not They're not. But what we do know is they prevent severe illness and they prevent death. And the vast majority of people who are hospitalized with COVID with the delta variant that CDC has

said those people are unvaccinated. I do wonder though about long COVID dr LUs Vader do we know anything about do we have any data about the way that people who have been vaccinated do end up getting infected with a breakthrough infection, it's perhaps not severe. Do we know anything about long COVID and to what extent they could

suffer from it? Tim Those are all excellent points. So one point you know that you made is that the vaccines, despite some data about um, you know, potential side effects a small number of patients, we don't have really long term data, but we certainly know that they are really one of the most effective tools we have since we don't have great anti viral treatment. The vaccines do seem

to be very helpful in preventing severe disease. The vast majority of patients who are hospitalized have not been vaccinated, which is another uh bit of data you know. And long COVID is something that we worry about both in patients who have had it. It's estimated up to a third of people who have had COVID have ongoing symptoms chest pain, costs, uh, brain fog, fatigue. So, uh, that's a real problem and we don't really know how that's going to play out over a longer period of time.

We also don't have great treatment for long COVID or the long blowlers. There's some evidence that people who have had or who have long COVID when they're vaccinated, have some improvement in their symptoms, which we do see chronic infections epstein bar and other infections that really are chronic after the patient gets over the you illness, that maybe

what we're seeing with long COVID. Charlie Pellet is sharing with me a story from our own Matthew Boyle here on the Bloomberg Walmart, the largest private employer in the USA, is requiring its headquarters in regional staff to be vaccinated by October four, joining Google and instituting a policy that other big companies may seon follow as the delta variant

continues to spread. This has been something we've been hearing debated about whether or not private employers should be forcing or or requiring their's teams and employees to get the vaccine. And if you don't, you don't have a job. And we're increasingly tim saying more that happening. We're seeing it not just in the private sector, but we're also seen in the public sector as well, with President Biden making rules such as those, and then also here in New

York City with Mayri Di Blasio. Let's get right back to Dr Ian LUs Better, clinical Professor of Medicine at n y U Langes Medical Center. He joins us each and every Friday. Today he's on the phone from Long Island. Dr LUs Better, you probably heard Carol and I talking about this medication the FDA certified in is called I'm

gonna let you thank you. We're not we're not doctors. UH. This is this is a medicine though that's right now controversial because the FDA has put out a special warning that you shouldn't use it to prevent or treat COVID nineteen. Bring us all up to speed on what's happening from

the treatment front with this. So there was a recent article op ed in the Wall Street Journal UH calling attention to ivermicton, which has been around UH for a number of years as an anti parasitic drug, certainly used in veterinary medicine as well, and it really highlights the need for us to hopefully do more than just vaccinate people, but have hopefully treatment options. UM. There are a number of physicians, critical care physicians that are very enthused about

this medication and it may have potential. What we're really lacking are large studies that are unfortunately usually funded by drug companies who stand to make a lot of money from these things. And so we have a number of smaller studies from around the world. They've been put together in a meta analysis, and there's some encouraging data on it.

What we really need are controlled, randomized, double blind, controlled studies so that if this medication or other medications that may work in a similar way, Uh, we really need data that would convince people and physicians to use it. At this point, it's certainly if it is being used, it's being used off label. UM. And I think that's highlights that there may be other treatments out there that we do need to pursue. Uh. We do need more studies on this drug and it may turn out to

be very effective. It is used in other countries, uh, and with some encouraging data. But that's that's really all I would say on that, and that's something we need to be aware of. It also highlights to me that we really need a coherent strategy we need when you go to other countries, you have to show a vaccination

record or antibody tighters. You know, we need to have a little better control of our borders so that immigrants, legal illegal Southern border or travelers to our country have some documentation of vaccination or antibodies, or vaccinate them before they come in. We need to have our vaccines approved by the FDA. They're still under emergency use, and I'm sure there's some hesitancy that people have because they're not FDA approved. The FDA needs to step on that. I've

actually heard people say that it's emergency use authorization. When I get full approval, I'll get the vaccine exactly exactly. I think we need to make masks available. And if we really think masks are helpful, and we get just one over the statistics that they can be helpful, let's give people the ninet, you know, better quality masks if

we're in areas perhaps that have higher outbreaks. And we also need better treatments, not just monoclonal antibodies which are limited in number, for drugs like hypermectin, which may or may not be effective. We need to look into that quick question. I think part of the problem with this whole process, to be fair, is that we hear one thing, and then maybe a day later, or a week later, or two weeks later, we hear something that contradicts it.

And I think the news that came out that I think the CDC publishing and I think they put the data or are putting the data out today that the concerns are that the delta variant appears to spread as easily as chicken pox and cause more severe infection. I think the narrative around it has been that it's not more severe. So is this a reminder that there's still things we don't know? Dr les Vader and so that's maybe explained some of the nervousness that's out there and

just got about thirty seconds. Yeah, Look, there's no question this is evolving. The virus is evolving. The good news is that the majority of older Americans are vaccinated. That should provide a lot of protection. We're talking of people over sixty have been vaccinated. It's all good news, um. And I think that the Delta virus certainly is far more infectious, but we are not seeing that it's more deadly.

It's not killing more people. The vast majority of people and young people who get this really have a bad cold. So I think we need to sort of calm down about everything, and I think we will come out in the end very well, but there's still more we could really do to to get a handle on this, and it's disappointing that we're not being more aggressive in all of these areas. Dr ian A. LUs Better, Clinical professor

of Medicine at n y U Langes Medical Center. He joins us on the phone from Violand each and every Friday. Dr LUs Better, thank you. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, the new issue of Bloomberg business Week magazine. It is out. It's online at Bloomberg dot com. Slash business Week also on the Bloomberg terminal to cover Move Fast and Obey the Party China's tech crack crackdown in

the making of a new model. Let's get into the issue at Bloomberg Business Week at at Ordell Webber on the Access line in Brooklyn. What a great cover story, so timely, there was more news, you know, to titel

about China increasingly the oversight of some of its companies. Yeah, and I said it um when we spoke about it earlier in the week, But I think increasingly this is like one of the most important business stories of the year, and we still don't really have a sense of like where where the football, where the goal post is going

to end? Uth on this right and I think that's the question on investor's mind, is that we've seen basically the upending of the old model and the symblance of a new one, but we still don't quite know what

that's gonna totally look like yet. But there is no doubt about it that China wants a different version of of of of capitalism basically, you know, obviously this is that's a fraught word when we're talking about a communist country here, but like forever, they have been willing to let the West kind of, you know, kind of run the show. And now it seems like there's gonna be a perimeter that the Chinese government isn't gonna let their

own their own businesses exceed Joel. As Carol mentioned, this is probably the timeliest story you could have on the cover right now, and I'm you read through it and you realize though that it it took a lot more than just a few days to actually for the for this to come together. Talk about the timing of this, how you decided on this to be the cover story, and and and kind of like how long you guys were thinking about a story like this, given that it

seems like this is the perfect story for the week. Well, look like this theme has been one that's been percolating for a while. And I mean it all originated back um last year actually with with Jack mor and his comments basically as um as uh as there was about to be an I P O right, and like as that aunt group I PO happened and then um Chinese regulators basically intervened and and you know ended up um scuttling, and we at that moment we knew that something big

had happened. And this effectively are or were still in the reverberations of that end because of the d d Um story and then the education story, like all of these things have been thematically linked. So when the Jack mothing happened, we obviously jumped all over it as a

news organization because that was really significant. But then we kept thinking about it and talking about it internally, and so this was one of those ones that you know, we've been working on it for for weeks really, and and then you kind of just get lucky every once in a while where you're reality catches up to you, to your curiosity really and we were able to basically, you know, do do some modest updates right at the

finish line. So we we were because we work with great colleagues around the world, we were really able to think ahead on this one. All right, there's something in Pursuits which is alcohol infused ice cream, which I feel like, after you read the story about the Amazon rainforest, you need to go and have an ice cream cocktail because it is really sobering. Yeah, although that's not gonna that's not gonna solve the Amazon problem, but it at least

maybe take your mind off of it for a little while. Um, yeah, it's a fun one. We you know, the art team does great art and they showed me this photo a couple uh weeks ago, and I said, you know, that is just the most glorious photo that I could imagine for summer. Let's just make sure that we give it as much real estate as we can give it. So we kind of held it for a second and ends up being like the most perfect summer weekend to be thinking about booze infused ice cream and sort of some

of the creations that you can go with it. And what I loved was like here in New York, you couldn't have done this, um that long ago. This is a new phenomenon that is just now gained the good graces, provided that you're of legal consumption age, of course. Exactly. All right, So talk about the Amazon rainforce story though, I mean that is it's heavy and you know, we

we we talked about it a little bit yesterday. To me is um, it was just a slap across the face because you know, I think inherently that the four stations happening, that's that's a bad thing. It's a bad with the capital b um what you what I didn't appreciate how the policies in Brazil are basically baked in by the government and there it's getting way worse and

we're just seeing absolute devastation. And when you think about this tipping point that we talk about the in the article where that Amazon is about to become Savannah and that it will contribute to global warming rather than what you just inherently think is that it you know, goes the other way, that it's taking carbon out of the environment. The fact that it could become a contributing element everything

we know about climate change. You just sort of sit down and I think kind of have to put your head in your hands when you kind of realize that, you know, we're playing with games that are like wildly beyond our imaginations and things are starting to happen on on levels that you know, makes some of these reverberations just feel like they could get much worse. Yet I'm just a reminder that we're all connected, even if for

thousands of miles away. The role that the Amazon has traditionally played has been one that really is as as we know the lungs of the world. Uh Joel Robin Hood I started trading yesterday. UH shares higher today, although it had a real lack lester day. Yesterday, shares higher by just about three three right now trading at thirty six and and change. Um Annie Moss has a story and here about the I p O bring of the

broker that would the masses full circle. Talks about the incredible growth that Robin Hood saw, especially over the last eighteen months. So we um, you know, knew that uh Robin Hood was gonna I p O this weekend. I just wanted to kind of think ahead about how do we think back about what what robin Hood has changed. And that's really what any did in the story. I think it was a really good story in that you kind of forget sometimes that what robin Hood has accomplished

here over the past decade is pretty remarkable. You know. One of the biggest changes is just everything got free. And when they made it free, it forced the whole ecosystem two more or less match there that that that cost and you know that that cost has been passed on to investors in other ways, um and then the other you know. One of the other things that I thought was really interesting was this idea of fractional ownership where you don't have to go out and buy a

share of anything for that whole dollar amount. If you only have a dollar, you can throw that dollar at an investment, and those are you know, you can't underestimate how big of an influence that those ideas that came from Silicon Valley more than than Wall Street probably have have ended up having, i think, on the whole brokerage model and and has contributed to things like the memestock fevers that we've seen this year. It's a game changer. Hey,

one last story. We just want to highlight the magazine Starbucks the new talent factory powering Corporate America. Who knew? Just got about thirty forty seconds here. Yeah, So we have a great little collection of talent based stories in this because one of the things that in general that we're seeing this race for talent, and we wanted to kind of dive into that. And there's a great story about ge hiring externally. They've not long been known as

a talent factory. The Starbrecks one I thought was really amazing. It turns out that Corporate America news all stars come from Starbucks and basically raids Starbucks, and Starbucks is okay with that because those people go on and do other things and then kind of end up coming back to Starbucks eventually. It's like, it's amazing. And also I got highly recommend I know you pointed this out to us Joel as well, after you've done a spot with us.

The remarks what happens after peak Everything by our Gina Martin Adams. We've been talking so much about peak growth. So it's a great issue, a great summer read. Check it out on newsstands online at the Bloomberg and you can also find it at Bloomberg dot com slash business Week. Alright, til Weber, thank you so much of a great weekend. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So, top story

this weekend on this Friday, the impact of rising COVID cases. Again, Charlie just mentioned that headline more than thousand vaccine breakthrough cases identified in US. We've got a hold right through on the Bloomberg Buyer Drew Armstrong and team, so check that out. Uh. There's also story on the Bloomberg Today Tim talking about the travel industry and how the travel rebound is hitting an air pocket as the delta variant spread.

So Asia faltering, US growth stalling, Europeans though seeing a comeback in terms of the travel industry that seems to be taking hold of it. Well, somebody who has his hand on the pulse of the travel industry is actual. He for CEO of Tree Vago joining us now on the phone from Germany. Actual. Great to have you back with us. How are you I'm well, I'm well. How are Yeah, We're good. We're good. We're watching the rise

of delta good. We're like freaking out trying to understand what the delta variant because it does feel like we're getting conflicting tends too nice, I'll revise my statement, we're freaking out, Axel, How do you make sense of wear masks, get a vaccine, get a vaccine, don't wear masks. Like you run a company where you have to be making decisions.

How do you see it? So? UM, it's a good question and it's quite complicated, but what we are seeing right now in Europe, basically, I would say two things UM. One is that UM having a high level of vaccinated people helps UM significantly to to avoid severe cases, which is the key objective UM. And the second thing UM that we are seeing is that the delta variant is much more contagious. And so even at this this point in the year where last year infections were very low,

the infections are searching. But so far, at least in in the Netherlands, in the UK with very few receivere cases so mixed. I would say, how quickly does headlines do headlines like this do rising cases? How quickly do those manifest in changing the way that that people are using tree Vago. It's a global hotel and accommodation search platform. So how quickly do you see rising cases or declining cases in a place like the UK or parts of Europe.

How does that manifest itself into what happens on your platform? I mean, the the the key thing is not so much an increase in cases, because I mean, like heading into the autumn, everybody is expecting cases to increase. Again, We've seen it last year and and in a way we are seeing it every winter with with virus um

hitting us. But the thing that is really hurting the interest to travel our traveler restrictions so UM for example spaying now being put on the high risk list in Germany has an immediate impact because if you're traveling with unvaccinated children, you have to quarantine, which has a huge impact in particularly for families. And these kind of travel restrictions are are making travel a lot less predictable, which

is the key problem from a travel industrict prospective. So it's it's it's more about the restrictions less about the way that that people are emotionally digesting this information. Yeah, I mean in a way, I mean the vaccination levels are are now quite high and vaccine is widely available in Europe, so whoever is very concerned about catching the virus can get vaccinated. But there's no way around travel

restrictions even if you're vaccinated and and travel with your family. Hey, actually your earnings came out after the close last night, two Q revenue beating estimates. Commentary included that you saw a strong recovery and travel demand in the second quarter. I am curious, too bad breakdown of leisure versus business business is still not that correct, absolutely so. So it's it's very similar to what we've seen in last year. There is a immediate search in really leisure um and

and beach and mountaindestination. So really the way to think about is whatevery, wherever you would go with your family. I mean, those destinations are very very popular coming out of the lockdown, which is understandable, and business travel is still very limited. We'll talk to us a litt bit more about the trends within leisure because I know we've talked with you in the past and that during the pandemic we saw a play out here in the US.

Either people went to remote places when camping went away from people but they also had to travel local. Is that staying with us? Yeah, I mean there are still I mean locally is very popular and the local destinations that within reach our our book booked out basically, but there is also a return to for the Northern Europeans to the Southern European destinations. Um. The weather is just much better, to be honest, And we are now one

and a half years in the pandemic. Again, vaccination vaccines are widely available, so it is less scary than than a year ago. Um, but obviously it's it's done, not over yet. Actually, does business travel ever come back to what it was pre pandemic? It's a it's it's it's a big, big question and a good question. So so the way we are thinking about it is that there are basically two kinds of business trips. One is is a relationship meeting and relationship trip, and the other one

is more transactional. And the relationship trips we think will will church um at the right point in time, because there's a huge backlog of important business partners that you haven't seen in a very long time, and relationships cannot really be built the same way via video conference on the transactional meetings. They're most companies, will we praise a

certain percentage of those via video conference. And just to give you give your sense, I mean internally, obviously we are talking about the same thing and saying, okay, the our key partners we need to see once a year. But before the crisis, I mean, we've seen them a couple of times a year, and we are now using video companies for the for the other meetings. That's fascinating, right, because you guys are you know, as you run your own company, what you're do in terms of business travel.

It's interesting you say that about the relationship trip. I get that. I mean, we are slowly having some people come in, but it's far and few between. They've got to get tested. But I recently had a meeting with the CEO and the press team, you know, his internal and external press team brought him here so I could meet him and talk with him because it was about

the first time, you know, possibly getting an interview. But it was all about relationship building, tim and that is so different than doing a call over Zoom, doing a call over Microsoft teams are doing a skype and I feel the same way with with colleagues returning to the office because meeting I mean, I've only worked here since October and meeting people for the first time is a lot different than talking to them over over a video

conferencing system. Yeah, it is pretty remarkable. You've been here for eight months and then people walk in the student You're like, you're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio, still with us as Axel, he for our CEO of Travago,

still with us on the phone from Germany. Hey, Axel, what's cool about speaking with someone with you like you is that, first of all, you've got a global perspective and you're seeing a lot in terms of what has been an industry that has been so hard hit it because of the pandemic. So we're getting an idea of, you know, kind of what reopening looks like and where it's going. But you also collect a lot of data and I do wonder about pricing of travel and travel packages.

Are there's still a lot of deals being offered to incent people to actually take a trip. What can you tell us about that? Yes, so so um so money is currently not the key concern. I mean, so when you when the markets opened up, the key concern of almost everybody, I would say, was to get out and uh and to have a nice time and to get to a nice destination. So the top destinations are were

fully booked very quickly. On the other hand, if you're um, if you're if you're basically anti circlical in your behavior, and if you're now going for city trips, you can get very good deals because they're the key cities and business destinations are still completely underutilized and occupancy is low, so it a bit mixed depending on what you're looking for. Um. Uh, So there's no consistent picture. So you mentioned destinations. Top

destinations book pretty quickly. What are the top destinations? Where is everybody going right now? So it's really going going to the beach and to the top mountain mountain destinations. UM. So if you just take Germany as an example, the German coast is pretty much fully booked as it was last year. Um and then close by destinations like never Land again at the coast or the mountains Austria or also in southern Germany are pretty much fully booked, whereas

if you're going to Berlin. UM, A lot of the international and in particularly long haul tourists are not in town. Very few business travelers are there, so a lot of very nice hotels have a pretty attractive deal there. You wrote in your earnings report that you expect revenues to be concentrated in the summer months in one even more so than was the case in years prior to the pandemic. What's a realistic way for investors intree Argo to to

think about a full recovery for your company? What would have to happen and what would a timeline for that look like. I think it will just take time, to be honest now, because the pandemic is not over at a certain point in time, but it's more going in waves than we are seeing an upward trajectory. So it's getting It's got a lot better now in summer like last year, and it's it's almost certain that it will get get worse over over the winter and then in

spring it will get better again. UM. But with every wave we learned better how to deal with the pandemic. Medication is getting better, a number of vaccinated people is hopefully continue to increase. UM and so in a way, the impact of the virus will will diminish over time. Um, but it will take some time for things to normalize, because let's be honest, we've got a delta variant right now.

But as long as there are hundred of millions and billions of people on our planet unvaccinated, it is guaranteed that there will be new variants. So, UM, it will take some time and will you have to be a bit patient if you're in trouble. But on the other hand, um, it's uh, the industry is on an up watch objectory and um it's it's also exciting and opens up a lot of opportunities if you're in an industry that is that volatile. Um, and it's also changing now. I know

it's later there in Germany. You sound pretty tired though, and tell us I know yet earnings. That's right, Tim, good point. But when we talked about it too, it's been very dense and the amount of headlines coming at us, a lot of a lot of movement in our world, and still a fair amount of uncertainty. How do you see the outlook? What? How what do you feel comfortable kind of committing to when it comes to the next six or twelve months. So see, I told you seem tired.

It's all entire they up to me. But but basically what we're saying internally is we need we need to stay optimistic and focus on the positives. And the summer was now very very positive. UM and even with the with the autumn getting getting a bit worse. UM, it is important to then then focus on next summer and

and focus on on the opportunities that are arising. And one thing that that I think we talked about before is we launched a new local travel product that is an opportunity, so there is more demand for local travel. So UM, all of us need to stay positive and really focus focus on the positives and the opportunity. Is it's very easy to be carried away by um a lot of the frustrating things that that we are all facing and have been facing now for quite a while. Yeah.

I know that's a good point. And I think people are really finding travel as a way to just kind of boost their energy and and feel more normal. He just got about thirty forty seconds. Workers. You guys have a global workforce. Are you finding workers that you need? Are you adding enough? Are you are you adding any give me an idea what you're doing with your your workforce. Yes, so there. I mean we've we've always been global, but but running the business um from one location, so just

in Germany. So we've we've even before the pandemic had seventy percent of our colleagues coming from abroad and we continue to do that. But but you're right, Um, depending on where a new colleagues are coming from, sometimes they have to start to work actually from abroad because the immigration process takes longer. Um, if you're in a in a lockdown situation, you can't go ecletally to the embassy, etcetera. So in a way, I think to simplify everything is

more complicated and will stay more complicated. But again that that it is the way it is and and we just need to deal with it. Well. Always great to hear your voice, and I hope you get some time off as well this summer, and let's hope that in terms of travel and reopening, it all continues aspl Heaper,

chief executive Officer of Travigo. I really go to voice for us throughout the pandemic when it comes to the travel industry with us from Germany, all depending on the pandemic recovery, saying it's not going to just be gone right coming in waves. That's what we see exactly. You are listening to Bloomberg Business Week on Bloomberg Radio. I'm roc journal. Yeah, but you let me drive? No, no, no, no's home please, I'll do the right ravel. I don't

want to drive, just drive baby. The question trying this is the drive to the globe. Give me thanks. We'll dry us to dawn on Bloomberg Radio for a week and we're wrapping up the month of over yet. Okay, come on, we have that tenant a half minutes left in today's trading session. But we are getting ready to wrap up quite a trading week, quite a trading month. Stocks are definitely off their highs and lows of the day. Is Charlie just breaking down those numbers. So let's get

to it. The drive to the close. At Jay Hatfield, he see you and founder of Infrastructure Capital Advisors, the Infra Infra Cap Active MLP et f IT invest in Master Limited Partnerships is up about fifty so far year today, he joins us on the phone in New York City. Hey, j how are you good. Thanks for having me on. Well, great to have you on. Uh, we're kind of tired. It's been a really dense week and what's been a

dense month, and what's been already a dense year. How do you see kind of where we are in the market cycle, the economic cycle. Well, we think it's it's a riskier time to invest. We've been extremely bullish since March of last year when the FED intervened. So we are we are saying is follow the Fed, not don't fight it, but follow it. And if you normally, if

you do that, you're you'll be successful. But so now it's much more dicecy because we believe the FED will have to taper, and specifically you can't the um quantity theory of money does is operative at the extreme, in other words, to increase the monetary base or or money about a year, eventually you're gonna have inflation at d

and we've seen that in developing countries like Lebanon. But the US has increased the monetary based so we believe that inflation could be transitory, but only if the FED stops increasing the monetary base at that rate. So you're going to see eventually the Fed take the punch bowl away. That's more likely to happen next year. And then also next year is going to be a big deceleration and inflation well, and and also price inflation. Eventually, eventually that

the normal cycle which we saw No. Seven or eight is you just had acid inflation. Then the FED tapered, and also of course it was a horrible almost a depression worth session since World War Two, but they did taper. My only point is that now that we're in full recovery, they haven't even started tapering. And this KIWI is much larger than the last QWI. So eventually they asset inflation and leads to real inflation, which is what we think

we see now, and some of its transitory. But if you keep increasing the money supply by eventually we'll get double digit inflation. Otherwise every country in the world would do that because it's a great business. You issue currency and get back, you know, real goods. So there is a limit to it. Obviously US can get away with it more than Lebanon can. But so the FIT is going to have to taper at some point. Even they are saying that now where do you see, where do

you see? Where are you going to see this in the data, where which prices are you going to see increased like that? And at that point, what do you do well? I think that that you know, every that's a good point, like every CPI report is a potential negative at lists. But of course the FETE is saying that it's transitorian that they're going to hold off. So the real issue, we're really more neutral on the market because you do have this billion dollars of liquidity be

inject every month. It has to go somewhere, so we're more range bound in the market. So yes, you know, CPR will probably print hot, market will get a little weak, but then there's so much liquidity you get bid, just like we saw when we went down to the fifty day moving average. That lasted all of you one night and then we were stabilized. So it's not like we're

saying go sell everything. We're really saying it's a good time to be defensive, get into equity, income securities, and maybe not you know, be gambling on on the latest fat whether it be bitcoin or mean stocks or or potentially overvalued tech stocks. Bond market, though it's been an interesting trade where we've often seen both bonds and stocks go up in tandem and rates are still incredibly low

all along the yield curve. And so we've seen the bond market tell us a different story when they don't buy what the fete is saying or buy what the economic data points are saying. So what's your take on where the bond market is. Well, what you saw is in mid May, and it gets back to Tim's question about what are the inflection points. So in mid May you got the April cp I and then there would start a commencement of discussion of taper, and you saw

the inflation implied. Uh, you know in the bond market between tips, the gap between tips and treasuries and the tenure declined by thirty basis points. So that was roughly how much treasuries decline. So we do think that the market, maybe more the bond market than the stock market, is

pricing in stagflation next year. Because it's important to realize this isn't sort of a you know, a crazy forecast of ours and there's going to be we're forecasting eight billion of fiscal deceleration, you know, thirty billionellion from taxes and five from spending. Because you just can't replicate the stimulus that occurred, um, you know, with the three trillions of stimulus that occurred at the beginning of this year.

But that's just it's not gonna happen next year. There's gonna be a lot of spending, but not that kind of spending. So stagflation is by far the most likely case, and we think the bond market is pricing that in maybe a little bit earlier than the stock market. And so that's why we're a little bit cautious about the

stock market. And I think that you know, security is like preferred stock that are senior to common give you some income, probably a better way to play over the next three or you know, during the fall, which is usually a very vaultile time. Uh So, And if you do a great thing about income security, even if you miss a little rally and tech stocks or recovery inflation stocks, you still get paid to weigh. They're great companies like utilities are preferred of utilities, uh reads, and um, you know,

consumer staples. So it's not like you're gonna it's a tragedy if you miss out on a little bit of rally. And the tech sector, well, let's talk a little bit about the tech sector, because you did describe tech companies as being overvalued. Amazon down seven point five percent after a miss on revenue and then the guidance really spooking investors. Um, what what stock specifically do you think are overvalued and

when would you buy into those? Well, I'm not going to get into all the names that clearly the companies the big tech actually is acting more defensive lea than than um you know, any other ethic class really, but we're really talking about the tech stocks that rely on forecasts of earnings five or six or seven years out, and those are the ones that tend to do um the you know, the poorest during any you know, down turns. So that's kind of what we're referring to, not really

the mega caps. I mean, arguably Amazon was just a little bit of ahead of itself. And really, if you dig into the announcement, mean their core kind of secret sauce businesses to have the biggest margins are actually growing very fast. So I wouldn't be surprised if it's kind of finding sound forward support here that it doesn't bounce back forward. And look what happened last year. Now, I expectations were high. It's all perspective here. We gotta run.

Thank you so much, really appreciate it. Have a great weekend. J Hatfield. He's chief executive officer. He is also founder of Infrastructure Capital Advisors, is in for cap Active MLP et F as I mentioned so far uh this year. 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 search Bloomberg Global News