Virus Concerns, Biden's Economic Performance

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. Well Kitty Gratfield and Tim Stanobeck live in the Bloomberg Interactive Broker Studio in New York. Katie, we talked about the World Economic Forum postponing its annual meeting in Davos that had been slated for January, this amid fresh waves of coronavirus across Switzerland and the globe.

Just as you and I were speaking, just now, or as Doug was speaking, I got a notification that more events in my own life have been canceled in the coming days. And it certainly makes sense that we're starting to see that absolutely, And I mean there were the headlines crossing the terminal this morning. That's cool. Closing surging too.

So it's conferences, it's schools, it's workplaces, it's everywhere. All of this happening when we expect millions of Americans to be traveling to see one another for the holidays coming up. Let's talk to about it with Dr Peter alperand vice president of doc Simity. It's a platform for medical professionals. Dr Alburn joins us once again on the phone from Austin, Texas. Dr Alburn, how how are things in Austin, Texas right now? Uh? Well, thanks for having me on the broadcast. You know, things

in Austin are going pretty well. Um, we are seeing an upticking cases, but in general people are being careful. Um. I think people are you know what to do in terms of masking and uh yeah, it's it's not the Christmas we had all hoped for. Um, but you've got to be vigilant. We'll help us understand what it looks like on the ground there because I think a lot of people are really stuck in their universes right now. And if you live in New York City, here's what

you know. You have to wait in line for hours to get a COVID test, and if you want to get a rapid test, you have to go to you try to get one at a pharmacy and they're all sold out. Are you seeing in Austin right now? Yeah, we're definitely seeing pressure on the on the places where you would go to get tests, as well as the home test that you would get in UM in the pharmacy as well as you know, and a lot of people have gone online those are also very much sold out so bad I was going to ask for me

and send him send him my way. Now, I'm just kidding, doctor. I am curious to hear your perspective on the sort of inevitability feeling that is percolating, at least in New York City. I mean, I've heard time and time again over the past few weeks that, oh, well, I'm going to get it anyway. And I mean does the data that we have on this variant stack up against that? I mean we've heard a lot about how much more easily transmissible it is, for example, Yeah, I think, um,

you know, inevitability is a pretty strong word. I'm here's what we know right, we know that on thecron is indeed very contagious and very easily transmissible. UM. The early data seems to suggest that there is the potential that the disease caused by omicron might be a little bit more mild than some of the previous variants, particularly delta. But the the answer is, you know, this variant, we've only really discovered a couple of weeks ago, and we

don't know a ton about it. UM. I think inevitability is strong. Um is probably too strong, because I think we all need to do the things that we know that are helpful. Wearing masks, you know, when you're in a tight group, trying to social distance to the best that you can. And please go out and get your booster shot or your first vaccine if you haven't had one. Yeah, and we're all we are seeing here in the United States a lot of people going out and getting those boosters,

which is some encouraging news. Hey, you mentioned South Africa and the idea that we we learned about this a couple of weeks ago. UM, we did learn today at one pm New York time that infections are slowing in South Africa. Daily coronavirus cases they're almost having amid a fourth wave of infections fueled by the omicron variant. How should we read into that and if course, with the caveat that it's pretty much summer in South Africa, so

it's a different environment than in the United States. Yeah, I think we have to be really careful with that data. I think that, um, first of all, the population in terms of the total number of people vaccinated is very different. The amount of time they're spending outdoors, given that at

summer versus winter is different. Um. And I think that, you know, you've got to be really careful about getting whipsode in multiple directions with the data here, UM, I think it takes some time for us to put together that information. It's certainly um. You know, we see all sorts of discussion on our network as well, with physicians talking about the latest and greatest data on on our

on our news feed that we that we monitor. But I think the bottom line is is that this is a time for us to go back to what we know is no works, which is being you know, just being careful and doing the things that we know to be true and not necessarily you know, I don't know, no one' davocating for the complete return to the lockdowns like we had in April of last year. But we just need to be careful, so maybe not at can

fleet return to lockdown. But you know, as some and I were just talking about, you are starting to see a lot of events get canceled, whether it's you know, school closing or companies telling their workers that they can return home and work from home. I mean, would you expect to see more of that type of behavior in the coming weeks, especially since we are talking on December twenty and a lot of people have holiday travel planned. Yeah, I think we probably will see more of that. You know,

school closures is such a complicated and fraud issue. Um, you know, parents aren't justifiably exasperated and um, you know it's really tough out there, uh for for those families. But I do think you're going to see probably no slightly restrictions around large gatherings of big events where you could see that that would be the first thing. Um. You know, again, like I said, school closures are complicated.

Dr Albn, just in the last forty seconds we have what advice can you give for getting together safely with family and friends and loved ones during the holidays. Yeah, you know, it is important to see your family and UM, we know that it's going to happen. So my recommendations are to do like I said, do the things we

know to be true. Please, please go get vaccinated if you haven't, If you can test yourself for corona before you have that gathering of everybody, that's important, particularly if you're going to be seeing your your grandparents or other people who might be UM you know, more at risk from a severe infection UM. And you know, try to limit it so that it's not a gathering of people.

But maybe you know eight to ten. All right, some very good advice as we do head into the final week before Christmas and of course New Year's as well. Dr Peter Alperin, we love having you on the program, Vice president of dox Simity. It's a digital platform for medical professionals. He's joining us on the phone from Austin, Texas. President Biden's job approval ratings stands at just above forty

three percent. That's according to an average of approval poles from eight In fact, Biden is less popular at this point in his presidency than any other president except President Trump. Going all the way back to President Jimmy Harder. But here's the thing. America's economy improved more in Joe Biden's first twelve months than any other president during the past fifty years, so writes Bloomberg Editor in Chief Emeritus Matt Winkler in a column for Bloomberg Opinion. Matt Winkler joins

us now live in the Bloomberg Interactive Broker studio. Matt, Great to have you you with us. What were the metrics that you used to measure President Biden's first year in office? Great to be with you and their ten And they're known to all of us, gross domestic product, profit growth s and P five hundred performance, consumer credit, non farm payrolls, manufacturing jobs, business productivity, the dollars appreciation, and the SMP relative to UH the benchmarks around the world,

as well as per capita disposable income. And so, Matt, I'd love to hear your thoughts on that mismatch that if you know, you look at those measures, you just lied out that the economy is doing really well. But yet President Joe Biden's approval ratings not as hot. I mean, does that all just boil down to inflation or what's going on. Well, you know what's so often missing in the day to day reporting from everywhere is context, and uh, this is the context which is the most important, you

could argue subject in our lives is the economy. And given that we are in unprecedented circumstances with COVID nineteen, context is easily misplaced or just not available. So if one wanted to understand, okay, where did we come from since Biden was inaugurated, probably the best way to do it, which is what we did at Bloomberg with my colleague Shenpei, is take a look at all of the measures of the economy that are most relevant, give them equal waiting,

and say, how did he do? Now? What motivated us to do that? We did get right away in the Biden administration a very rigorous vaccination program which did a lot of good you could say, in the first three or four months of the year. And then on top of that, there was the unprecedented American Relief Act, which cut the poverty rate in half and put you know,

thirty billion dollars into American households. So you look at those two things, and those were policy initiatives, What did the economy do and as uh you noted, Biden comes out one or two, number one or number two in the ranking all the way back to Carter saved for per capita disposable income and it's not even close. He's way ahead of everybody. You know. The final thing is that since you mentioned inflation, uh, and we're talking about context.

You know, when everybody talks about inflation, nobody mentions the market doesn't agree with them. The bond market is saying, no, we still think it's transitory. The simplest context is to just say the yield on the benchmark ten year treasury is still fluctuating, way below one point seven percent. And you know, back in the seventies, when inflation was very high, the yield, whether it was a tenure or a thirty year,

was over twelve. So we're not there yet. The people with the most at stake and the bond market are saying the Biden economy, so far, so good. So we have the context for for what happened in one and the benchmarks for what is all of this portend though for two, especially on a day like today going into New Year, where we you know, have Senator Joe Mansion yesterday, essentially torpedoing President Biden's Build Back Better program, as well

as rising coronavirus cases throughout the country. COVID nineteen is, without a doubt, the variable that is going to probably befuddle us most because we still don't understand everything there is to know about the pandemic. Having said that, even with this new variant, fewer people are dying if they are vaccinated. That's a fact. We know that, and so

that's cause for some hope. The other part of this is that the Infrastructure Act, which was a bipartisan piece of legislation, is going to benefit the job market, is going to benefit municipalities, UH, states everywhere coast to coast, north to south, east to west, as far as the eye can see. It's not gonna abate anytime soon. In fact,

it's just gonna get going in twenty two. So, uh, those are some good things that should keep things going in as far as the Build Back Better, Biden himself said, look, I'm not done with this. I'm going to come back to it in twenty two. Uh. Larry Summers told David Weston, I think a week ago he thought that whatever does emerge from Build Back Better, whatever you know, Uh, politics are involved, it will be better not worse. So, uh, those are some things we can anticipate. And now you've

got some great stats on here on corporate America. One that jumped out to me is that profit margins are around fifteen percent, which is the widest sense. How is the consumer doing in all of this? Though? Consumer is doing great, and we know that because consumer credit is with Biden number one of all the presidents. Now what that means is that Americans are are obviously feeling good,

otherwise they wouldn't be taking on credit. One of the reasons why they are taking on credit is because interest rates, even with the acceleration of inflation, are still relatively low when you compare where interest rates have been over the past fifty years. The reason why corporate America is booming and doing as well as it is is because the debt ratios, that's what you were referring to, which makes it possible for companies to get more out of literally

their borrowing than they ever have before. So their profit margins are much bigger, fatter than it goes all the way back to. So, um, you know, the consumer and uh, corporate America both are in a very good place right now from a historical perspective. It's so interesting though, because we don't we don't see this playing out politically. Either Democrats aren't doing a great job of of of hammering this message, or Republicans are doing a really good job

of essentially comparing President Biden to President Carter. Who. Well, that's our that's our job. It's called news judgment, and journalists are supposed to do more than just simply report what people say and what they do. They're supposed to provide the context and say here's what it means. And unfortunately, our profession just isn't there, which is why we are doing this column. So what what would you I mean, what would you like to see from from news media

when reporting a ren reporting on the president? Well, I think, for one, every time we bring up inflation, it would be nice to see a parenthetical clause everywhere that says yes, But the market doesn't agree with that. And the market is twenty nine trillion of US Treasury securities, you know, it's a big market. It's the market that tells every other market what to do. That's that's a start. At

least that provides some context and understanding that. Why Janet Yellen, for one, the Treasury Secretary, who is arguably, you know, one of the smartest people to be in that position, has said that most of the inflation that we are experiencing still is related to what you would call supply shortcomings bottlenecks that result from UH people being immobilized by the pandemic UM. So, yeah, I mean I think that

it's very important. Is something we do at Bloomberg, which is what does the market tell you that is relevant to whatever people are saying politically. Oftentimes the market is saying something that's very different from what the politics are. And you know, you can expect politicians to say whatever they can because it suits their interests. But the market is not ideological, it's not political. It's just looking for relative value. And I'm curious. I mean, you mentioned the

bond market in terms of what the market is saying. Clearly, the bond market, when you look at those long term rates, doesn't seem too stressed about inflation. When you look across the asset picture and you look at the stock market, do you see a similar message there? Yeah, for the

same reason. Look, when you have interest rates as low as we have UH stocks have been the right investment that's been proven over the past decade or more, and UM, unless that changes, that equation changes, UM, it's likely that stocks will continue to hold their value. Now. One of the other parts of this is, remember when began, very few people thought we would have the vaccine that would prevent UH infection of COVID nineteen, and yet we did

have not just one, but several vaccines. That's called innovation. Innovation is very much a part of the stock market. UM. That's where you've seen companies simply become household names practically overnight because they've created value where there was not. You know, whether it's a Twilio, which is relatively recent, or it's a Tesla or even going back further Amazon, all of these companies are creating value, and that's why the stock

market is so attractive. The column is Biden's economic performance is unbeatable. Matt Winkler as editor in Chief emeritus for Bloomberg News. He wrote this piece for Bloomberg Opinion. Be sure to check it out on the Bloomberg terminal and at Bloomberg dot com. Well. In recent years, we've seen US organizations that have ties to China come under increased scrutiny. Among those in recent years and especially in recent weeks

has been Ray Dalio, of course, and Bridgewater Associates. We're joining us now to talk all about Dahlio's China fascination and when it started. Is Andy Brown, editorial director at Bloomberg New Economy. He joins us on the phone from New York City. Andy, before we get into the history here,

why are we talking about this right now? I think why we're talking about this right now is because Ray Dahio, perhaps more than other Wall Street billionaires, has remained um very publicly and very volubly pro China in his views at a time when political sentiment in Washington, d c. And public sentiment in the United States more broadly has turned decisively anti China. And so it makes it seem as though he is somewhat out of step. And so Andy,

let's dig into that. Why Why is Dahlio, like you say, still probably publicly pro China when a lot of you know, his his peers on Wall Street have taken or at least backed away from their support. Well, I think most fundamentally because China is where the money is and where the opportunities are now for Wall Street giants like Bridgewater,

like black Stone, black Rock and and so on. I mean, there's there's been a lot of very negative focus on the collapsing price of Chinese equities as presidentigen Thing cracks down on property and big tech platforms and after school tutoring and so on. But you know, don't forget the Chinese economy actually is motoring along quite well. Reason that it's reasonably healthy. It's attracted, um, it actually attracted more attracts more direct foreign investment in the United States now,

UM companies are investing more and more. Despite all the talk about supply chains retreating from China, US companies continue to invest there um and in the Chinese companies were investing more in the United States. So, you know, big picture, there are opportunities plus and here's the decisive things for Wolf Street. China needs the technical expertise. Doesn't necessarily need the money. He's got plenty of money, but what it

needs is expertise to help develop a sophisticated financial uh industry. Well, Andy, there's a great new piece published today on the Bluebirg Terminal by our colleague Catherine Burton that talks about Dahio's China fascination and that it predates ties to Beijing's billions, that is the money that Bridgewater handles for China. So take us back years ago, decades ago to really understand

Dahlio's connection to China. Yeah. Look, I got to say that there's nothing particularly unusual in Ray Dalio's history with China. I mean, it's pretty much par for the course. Is this is what Wall Street billionaires do. Um Over the years, they've invested millions and millions of dollars and charitable good works in China. Ray Dalio himself apparently invests something like, according to our stories, something like a hundred and fifty

million dollars. Well, you know, Steve Schwartzman, founder of black Stone, kicked in a hundred million dollars of his own money into a scholarship program at Chinhua University, which is President che Ching Ping's almintor um. You know, the Gates Foundation over the years has put in four hundred million dollars

to fight disease in China. I mean, this is just what people, what billionaires do in order to win influence, one might say, curry favor with with Chinese uh, leaders and Andy, like you just laid out, I mean across Wall Street, both firms and billionaires courting China. What does that mean for their relationship with Washington? Because if you think of the climate in both parties right now, it seems like the sentiment against you know, money flowing into China,

it's pretty negative right now. Yeah, it sort of puts Wall Street on a collision course with Washington. I mean, the real hoops in Washington d C. Essentially believe that pumping money into China is giving comfort and support to the enemy. Now, the Biden administration, of course, wouldn't go nearly um that far, although it is moving in a generally that direction. It inherited tariffs, trade tariffs on China, it inherited sanctions from the Trump administration, and indeed it's

adding to them. Just the other day, at blacklisted the company d j I, which is the world's largest manufacturer of all drones. So increasingly there is a tension between wool Street's ambition for China and Washington's ambition to put economic relations with China into a ball. Andy, Well, we have you. I don't know if it's gonna be the last time we have you before the end of the year.

Just in the last thirty seconds we have with you, what is the main thing we need to watch between the US and China going into Look, the big issue I think is is Taiwan. Um that you have a lot of uh military activity now in the Taiwan straight and both the Chinese and US leaders to recognize that, um, it's dangerous and UM there need to be Godrail. Andy Brown, editorial director at Bloomberg New Economy, knows all things China,

spent years living in China. Andy, thank you so much for taking the time and joining us on Bloomberg Business Week. Oh no, no, no, this is not a honey Please, I'll do the riding revels to good question. This is the drive to the Globe on Bloomberg Radio, where we are just under ten minutes away from the close of trading on this Monday, December one, Tim Statue and Kitty

grabbed up live in the Bloomberg Interactive Broker studio. Let's get into it with Michael Sheldon, executive director and chief investment Officer at High Tower r d M Financial Group. He joins us on the phone from Westport, Connecticut. High Tower r d M Financial Group has one point two billion dollars in assets under management that as of October one. Michael, how are you good? Thanks very much, appreciate your having me. We'll help us understand what's going on in the trade today.

We are bouncing off of session lows, but still we're seeing a see if red across the screen, a three day to kline uh out to close at a three day declient. I'm wondering if this is more about omicrons fears and the virus spiking, or more about what what's happening and or what's not happening in Washington, d C. Yeah, I think it's a combination of factors. Obviously, the markets are more unsettled than they have been in some time.

I think the main factors are the ones you just mentioned, but to just sort of delve into those, if you look at the FED, the FED has really provided a tremendous amount of accommodation over the past couple of years or so, and they're slowly shifting gears towards removing some of that accommodation. So they're sort of tapping on the

brakes just a little bit. But I think it's also important to keep in mind that historically, at least in the first twelve months when the Fed does start raising rates and there's still some ways away from that, equity markets have posted solid returns in that first twelve month period. So that's that's one thing. And also the Federal Reserve can shift policy, They can adjust policy if need be. Uh.

The second is obviously the virus. We've had a surge in cases over the past several over the past several weeks, and right now there's a lot of uncertainty about what's going on in the viru lens of the virus. If you look at some of the data over the weekend from South Africa, it looks like this virus spreads more easily but may not be as virulent. And then lastly, it's inflation. And obviously we're seeing some of the highest rates in terms of inflation that we've seen in decades.

We think there's going to probably be some moderation inflation as we go through the year. And I would just keep an eye on very simple things like the number of tankers off the coast of California, or for example, the Baltic Try Freight Index, which measures freight rates, and both of those have started to come up. So I think those are the main factors that investors are watching.

And Michael, I'd love to hear your thoughts on what the virus means for inflation and expect expectations going forward, because obviously, if you look at global supply chains already very stressed. I mean, if this adds even more stress, if you have people going back to spending their money on goods, I would love to hear your thoughts on whether that, you know, could cause inflation concerns to even become more of a focus. Yeah, I think it's that's

a great question. And you know what's interesting if you step back for this was this was no we've been a no normal economic sort of cycle. If you go back to early two thousand twenty when the economy shut down, basically people were at home and they were spending money on things like their home, their home office, and their homes and things of that nature. So if you look at goods, spending on goods surged very high. Spending on

services actually came down dramatically. People weren't going out to restaurants, they weren't traveling, and so you had a surgeon spending on consumer goods now. I think what you'll start to see as we get into two thousand twenty two, if we can get past the virus and that starts to settle down, I think you'll start to see a pick up and spending on services and some of the spending on goods, which is really above the historical levels, will

start to cool down. And if that's the case, then you should start to see some of the supply chain is you start to gradually moderate. And we're also seeing a number of people getting back into the labor force. We're not where we were beforehand. We're still several million jobs short, but I think that's heading in the right direction as well. So overall those two, that sort of combination should eventually help to reduce inflationary pressures over time.

I'm wondering what if, and the look I hate to be so dismal here, but I'm I'm wondering what happens if we don't get the variant under control. Well, I think that certainly could be a problem. And I think I'm sorry, go ahead, or there's another variant. Yeah, I think we have to. I think we're living in a world right now where there are going to be variations to the original virus that we had. I think, unfortunately,

that's just the world we're living in. It seems from the science that the more people who get vaccinated and protect themselves, the more the country can sort of get back on track. And we may not be living in the same world we were pre two thousand and twenty, but I think the economy has learned to adapt. And I don't see I don't see closures the way we had them in early two thousand twenty coming back anytime soon. We could have localized shutdowns and closures, but I don't

see anything at a national level. And Michael, how do you position a portfolio around that uncertainty, the uncertainty about what kind of world we will be living income, Well, that's a good question. And importantly to preface that, I would say that, Uh, for investors, it's important to point out that economic cycles typically last a number of years

as opposed to months or quarters. When you have a bear market, a bear market of or more decline in the market, that's typically caused by the Federal Reserve raising rates significantly, and they do that when they have to slow down the economy, or sometimes there's an exogen exogeneous event like a surgeon oil prices, if oil prices were to go up more than over a six to twelve month period. So from our perspective, you know, we are seeing some some choppiness in the markets, and the markets

are lacking a bit of leadership right now. But I think if you look at some of the economic indicators. For example, the Leading Economic Index came out this morning, it's up nine months in a row, and it's up eighteen of the last nineteen months. So I think that suggests that looking ahead over the next six to twelve months, the economy is likely to grow but remain choppy. So to get back to your question, I think you want

to be diversified in your portfolio. UM. I think you want to have some technology in your portfolio, even though um there's been news about the concentration in that. But you need some growth in your portfolio to meet your long term investment objectives. We're looking at healthcare. We think that's one of the forgotten sectors and sort of a

a GARP or growth at a reasonable price sector. And then you also want to have some exposure to the areas that are likely to benefit when the economy eventually starts to reopen. I guess you could call it reopening two point oh as we head through the through the spring into the summer, and Michael, just quickly, I am curious to hear your thoughts on tech when you think about the market in terms of sectors we have you know us about thirty seconds. Yeah, we're big believers in tech.

There is a lot of disruptive technology going on, uh, in areas like the cloud and areas like artificial intelligence and five G. You do want to have some broad exposure in those areas. Uh. These kind of companies are very innovative and they're likely to generate the kind of returns within your portfolio. But you do want to have some very You do want to have some diversification, and you just want to be wary of the the weight

if you have of technology winning your overall portfolio. Michael Sheldon, executive director and chief investment Officer at High Tower r DM Financial Group, joining us on the phone from Westport, Connecticut. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Sarah to Bloomberg Global News