Big Take: Covid Delivers Reality Check To The World

at Bloomberg dot com slash podcast. All right, well, we're getting some news that at three pm Wall Street time today to CDC will have a press conference presumably some being some reports that perhaps some man mask mandates will be reintroduced for certain populations. Will certainly bring that to you later today. But it just shows the long tale of this COVID pandemic, if you will. And there's obviously there's regional differences. But let's get the latest with Bob Langreth,

healthcare reporter for Bloomberg News. He's got his big take story today and Bob again the news today about a CDC perhaps uh rein instating some form of a mask mandate for certain populations. Again, it just highlights this thing ain't going away for all, is it absolutely not? I mean, and the US health officials and CDC is going to

be returning reporting to tighter guidelines. They use some masks and will be advising where fully vaccinated visual individuals where they're in public indoor settings and places where the virus is spreading rapidly. So yeah, they are going to tighten back and kind of dial back that guy and while still recommending that teachers and students returned to school but

wearing masks UH indoors. That's what reporting reporting. So they're gonna dill backs and what they said before, but definitely on the worldwide basis the kind of this there's in this tendency. Our report in unit to try to wanted to clear this is over before it's over, and you know, and really the virus is to some extent in control of this, UH and we'll only know when it's over in retrospex, and it's becoming increasingly clear there's going to be a kind of long tale to this UH virus pandemic.

While the worst may be over in the US and New York, we're gonna be dealing with this, you know, for quite some time to come. For sure, you know, of them. I mean it's over for me and Paul because we're fully vaccinated and uh, you know, the worst that could happen to us, I guess is the worst that could likely happen to us, as we get something that's worse than a cold and better than a hangover.

But clearly there are billions of people around the world for whom it isn't And what worries me, Bob, is that the unvaccinated are going to um, you know, house this thing and allow it to mutate into something that even me and Paul can't fend off. Is that a concern among scientists as well? Well, it's definitely a concern that they're longer this there's this virus kind of hangs around and transmitting on you know, just a massive scale

in so many places. The more chances that gives the virus to continue to mutate into new forms that we haven't seen before. And already this delta variant obviously is turning out to be We've kind of underestimated that deltas are very just how transmissible it is, uh, and you know, it's kind of the perfect variant for a kind of party vaccinated world. Can you know, just keep keep going.

But just to be clear, Bob, in terms of the delta variant, I mean I was out to dinner with some people on Friday who were freaking out about it. But we were all fully vaccinated. I mean in terms of the vaccinated, it's nb D, right, I mean if you're vaccinated, no, no big deal. I mean, if if you're vaccine. I just saw stat that ninety nine point five percent of the deaths are among the unvaccinated. Nineties

seven percent of the hospitalizations are among the unvaccinated. So the delta variant isn't necessarily um got a higher case fatality ratio for vaccinated people than the flu. Yeah, so the case fatalitiator in general, the delta variant. There were some arguments that there were you know, somehow more subperiable.

I don't think we've seen like any proof of that. Uh. And you know, more broadly speeching even though the vaccines ethics s they're so early reports in terms of eventing mild cases and those those still could be symptomatic, you know, maybe saving especially the reports that Israel. What what's clear across the board is that all the reports are showing the vaccines are still holding strong against preventing severe cases

and preventing uh, you know, hospitations and depths. But doesn't mean, vaccines aren't perfect, you don't prevent like everything, but clearly they're they're way way better than not having a vaccine. And we're just going to find out in real time, you know, just you know, whether some people need boosters and how long uh, the efficacy lasts. But clearly you need to keep you know, vaccinating as many people as

possible because that will loose the spread. And you know, in terms of the mask mandates, Bob, the concern that we've been talking about with a lot of guests today is not wearing a mask was the carrot, right, That's why a lot of people got vaccinated because we were sick of wearing these masks. And now if you say, okay, even the vaccinated that to put them back on, that presents a problem in terms of removing the incentive for those you know who are hesitant. Yeah, I guess you

could think of it that way. I mean, um, I don't know exactly what the new guy into that you know, come up with. I think, you know, it sounds like it's going to be something about, you know, in places where there's just lots of transmission and a kind of a mix of vaccine on vaccinate that you may want to wear a mask in doors. Uh but uh, I mean, yeah, I guess it could be that way. But the other way you think of it, this is like, you know, one extra step so that the vaccine is kind of

like you're you're a three point seatbelt. It's kind of the main thing. But maybe you know, in some cases, you know, there's a lot of transmission and it kind of just may overwhelm the vaccines defenses, and you might want to add in like a sighting back airbag and maybe they mask might be the sighted back airbag. It's just going to add maybe a little bit more, you know, in extra protection in certain circumstances. But where where are we?

Where is the industry in terms of these a lot of these developing countries, um that are you know, not receiving adequate supplies of doses? I think kovacs and think things like that. Where are we in terms of trying to ramp that up? Yeah, well, you know outside of the wealthier and middle income countries, you know, we're you know, we're definitely behind. We're not where we need to be. I think you know, you're trying to look at the numbers we had in the story or is it some

like you know, dismal. Yeah, the Kovacs initiatives lively just one forty million doses, so for the one point eight billion of names shift early two. And you know, there's one problem, you know, is that there have been those a lot of uh dependents on supplies from India for Kovaks and some of those once the India India had its own served, some of those supplies that were delayed.

So yeah, it's quite far behind. That means there's like gigantic continents that follow people like Africa that has gotten this. You know, there's just you know, a tiny percent of the people's accident. And that means if you just continue to transmit and transmit and spread and spread and spread, and you know, who knows, no one can predict what kind of mutations will produce, you know, if you give

it billions and more chances. Yeah, that's my nightmare that these that the unvaccinated are going to be able to incubate this thing into something else. And on that note, we got a headline for Moderna Crossing just a few minutes ago saying that they're facing delays in producing the vaccine outside of the US, and I think, you know, what what What people fail to realize is you think about your hometown, you think about your own state, but

there are whole countries that have yet to hit. So we've really got to get this vaccine out to the rest of the world. Bob blank Breath writing the Big Take, Check it out on NI Big Take. This is Bloomberg. Are Brandon Lynn Franco now Director of Economic Indicators and Surveys for the Conference Board, And we just had some consumer confidence data that was better than the street had anticipated.

UM came in at one nine the Index Consumer UM, the Conference Board Consumer Confidence Index came in at one nine, spot one. We were looking for one three, spot nine. It was also better than the previous reading of spot three revised spot nine. A lot of numbers there, but the point is consumers are more and more confident LYN even as well, certainly UM, the media and governments are freaked out by the delta variants spread How do you

how do you square that circle? Well, at least for the time being, the delta variant doesn't seem to be having a negative impact on consumer confidence. In fact, we're you know, holding steady, strong and steady, and indications are that the third quarter is off to a solid start, so we're expecting another good quarter of economic growth and consumers expect more of the same in the future. So both in terms of their current assessment and their expectations,

I think we're holding strong and steady. Lynn, talk to us about the labor side of the equation. That's we still have a lot of Americans that are out of work, yet there are you know, almost a record number of job openings out there, and there seems to be jobs for people who want them. Talk to us about how the labor market factors into your index, Well, we take a look at the question. You know, consumers are telling

us right now that they believe jobs are plentiful. We had a little bit of an uptick in that percentage from last month. Um, so it's been going in an upboard trend, and the percentage of consumers telling us jobs are hard to get held steady. And just to put it into perspective, only ten point five percent of consumers in July said jobs were hard to get. That was at twenty two point eight in January. So we're making progress on that front and looking ahead, they do expect

these trends in the labor market to continue. We have an uptick in the percent who said they expect more jobs over there the next six months UM. So that I think boats very well, and not only for consumer confidence, but for spending as well. We know that consumers have saved up or at least on average, the savings rate is higher. Are they ready to spend that down or

do you think consumers are still concerned about a future crisis. Well, we do see a willingness um to spend, right, So are spending intentions, you know, whether it was for homes, autos, or major appliances ticked up. I think the flip side of that is, as we've mentioned, is you know, then you've got some supply issues at hand. You know, whether it's a home prices going up and lumber shortages or you know, shortages of home appliances autos as well. So

there's a willingness there. I don't think the supply is just quite in line with the willingness, but we expect those supply chain issues to dissipate by year end UM. But it looks like, at least from the consumer's point of view, they are already willing and able to spend. So Lynn talk to us about the housing market. It's been so strong through the entire pandemic, but now there's I think an issue. You know, there's just not enough housing stock available. How does how does the housing market

uh factor into the data that you guys look at. Well, we are seeing a bit of an uptick in the percent of consumers who would like to purchase a home over the next six months. Uh. You know, but again, you know, as you mentioned, we're just dealing with sort of you know, housing shortages. There's a price uptick that's you know, pushing some folks into the rental market. Um. So I think until these two get aligned, would probably continue to see housing cool off a little bit, but

still overall remain relatively strong. I'd like to see. My dream scenario is that Paul sells his house, then the bubble bursts exactly, and then I can find one to buy. Um, what are your what's your take on the virus or or we already talked about the fact that consumers aren't letting the delta variant spread concern them right now, but

they surely must be on edge. I mean, after such an unprecedented time to see things like um, you know, mask mandates coming back well, that's sort of is the wild card and all of this, right if we begin to see some you know, return to restrictions, uh, that could dampen the consumer confidence, or it could be very sort of localized. So for instance, you know, we've seen a bit of a downtake and consumer confidence in California, in Florida this month, while New York hit a new

all time high. So it could be very localized and all dependent on what happens with the delta variant. But for the most part right now, it's not negatively impacting consumer confidence. Heylyn, thanks so much for joining us. We appreciate it as always getting your thoughts here on these data points coming out of the Conference board. Lynn Franco, Director of Economic Indicators and Surveys at the Conference Board,

joining us on the phone from New York. And it's interesting that that, you know, it was Lena's mentioned kind of the regional nature of some of the data that they see some of the states that have you rising infection rates seeing a little bit of a hit to confidence. I guess that that makes plenty of sense. On the other hand, New York, who has done you know, quite well with the vaccination effort, seeing high confidence, and I think one I think a lot of Americans forget how

big America is. You know, coming from Europe, where a land mass that is smaller has you know, um, more than a dozen different countries, it's always shocking to get back here and see that, um, this massive country has always thought of as as as one block, especially when you're looking at things like consumer confidence or things like housing.

So exactly right, right now, I want to get over to William Kai, co founder and partner at will Shure Phoenix, to talk about what's going on with commodities and I guess their digital counterparts Will thanks so much for joining us. Let's talk first about gold, because, um, well, I love to talk about bitcoin, but I've noticed that gold is headed for I think it's first back to back monthly drop since it's a it's a rough year for gold eighteen o two and we kicked off the year I

think around nineteen fifty. So um, as inflation concerns build, why isn't the price of gold? Hey guys, thanks for having me on. Definitely, I mean gold, Anything that happened this year is going to tail in comparison to last year, right went when the COVID pandemic and the monetary and fiscal policy of the strong monetary and fiscal and politi has driven the price of gold up. I think currently gold is in especially the first first half of this year,

in a healthy consolidation period. Look, we think the the most of the drivers is still price drivers, still in place to support goals pricing. But the lime light out spotlight is somewhat shifted from gold, and some of the stories and drivers between FFX and US dollars and real interest rate has been has been kind of battling terms of driving the gold price up and down. But we do, we do believe that inflation is here to stay and it's gonna sustain it's price. So let's be patient on

on the goal price. We think if we tests, if it's uh, if it's highs in is, it's still possible in the next several months. All right, So well, let's talk a little bit about Bitcoin here again. It's up, you know, up about one percent today, back above thirty eight thousand. Volatility continues, give us your sense of but so much for the crash, it's so much for the crash. It's got that thirty thousand levels a really good support level. How do you think investors should view bitcoin in the

context of diversified portfolio? Absolutely, I mean bitcoin in any other market you call it crash, right, but you know what I was talking about, Gold almost apply here at the bitcoin in terms of consolidation. Um, it's uh, it is a pullback. But what's uh, what investors and everyone should know is that the space itself in terms of crypto and blockchain remains very strong, and you see continuing

adoption by institutional space. The big banks are finally getting here, whether it's goldvin Zachs or JP Morgan and their clients, their clients is is asking for for crypto exposure so well, crypto and bitcoin becoming cycles right, um, and I think, uh, we were will share. We don't provide price targets and you know, the long term, but we think there's a huge long term potential in bitcoin and the crypto space

as overall. With bitcoin, I get the scarcity issue. Um, you know there will only ever be twenty one million tokens. But a lot of the other crypto platforms which looks so promising, you know, like Ethereum, I don't understand why I need to own multiple tokens. Why does it matter if I own a lot of tokens if I can just do everything I want with one on the platform, so big, I guess to to uh to two points.

First of all, if you're as an investor, if you want to get exposure to to the crypto space, for now, getting exposure bitcoin is pretty good because there's still quite high kind of inch interracorrelation between the different assets. Right, so you have exposure to Bitcoin, you probably don't need so much of etherium or light cooin, bitcoin cash and all these outcoins because Bitcoin currently is the dominant asset

and the fell weather for the space. But to your to your question about why do we need so many different different cryptos? There are nuances between the different assets. Um crypto bitcoin was created? No, well know that again. I'm just saying, like, for example, the Internet, uh what's it called the Internet? Um? The Internet? There's ethereum is one platform. There was another one called the Internet company or the Internet platform. I don't know. Don't you over

this alight? In any case system is ipfs potentially, but anyway, still ahead, My point is you've got these the Internet computer. Sorry, I don't know why. I just blanked on that. I loved the idea of the Internet computer, which was basically like spreading the cloud around the world, and it was gonna put a ws and and uh Microsoft out of business. I love the platform idea, I love the technology and um the blockchain, but I didn't get why I would

need to own too many tokens. I don't understand why I care about owning a lot of ether as as long as I have one, I can do what I want with etheriums technology, right, right, right, But this is the same same argument, will be I guess an example before stocks? Right? Um, you argue, why do I just need maybe not company specifically, but let's say no browser.

Why do I need a clone when I already have Internet explore there each of these different platforms, do you pitch himself potentially as different or better or do something else a little better? So we do see competition, So right, there's a bit of healthy competition. Um, just s liking in attech industry and a half different uh intail versus am D and happy Intail. Why do I an m D? Well? Okay, they have different slightly different value proposition, different growth and

funtmentals and support. Hey, well, thanks so much for joining us. Really appreciate it. Will Kai, co founder partner of will Shear Phoenix, talking a little bit of gold, talking a little bit of bitcoin again. Gold up just fractionally right now,

about eighteen hundred dollars per ounced. Bitcoin up again about one percent today, Uh, three and sixty eight points thirty eight thousand, one seventeen four bitcorn Now you were just hearing about ups from Greg Jared sinking further uh this morning in the market, UM on its margin forecast operating margin forecast for the second half, suggesting it's going to be low. We're then the level seen in the second quarter. Alison point Pacqustick joins us. She's director of equity research

for Transportation Industrial Technology over at Wells Fargo. Alison, what do you make of the earnings? Hey, well, good morning and thank you for having me UM. I would say, taking a step back, earnings were solid in the second quarter, and even though the margin performance is slightly below where we were anticipating, it's a still quite a solid outlook

for the back half of the year. UM. Keeping in mind, you know, I would say historically what we have seen as sequentially, you know, a lower margin in the second half. Keep in mind as we're building to the peak shipping season. You know, another thing I think investors are overly focused on here is really the slowing of that B to see the B t C volume at this point in the cycle, you know, as things start to reopen here.

But overall, we believe EPs is still you know, working on track UM to deliver what CEO to my had put out in terms of that profitability of a revenue here for ups longer term. So Allison, where is the margin pressure coming from here? Where were they really feeling it in their income statement? But you know, we're focused specifically on the domestic margin and as you can imagine, as you're delivering for peak, you know, we've all seen those signs ups looking to hire for delivery expectations in

the back half. So I would say partly due to your traditional historical peak build up, you'll see a greater cost pressure for ups, you know. And also much like many other companies that have reported wages have increased rate, they're certainly labor challenges that are out there today that

have been well documented in the market. So UM, in terms of the rest of the the industry, we've had a really bullish outlook from airline chief executives, but it doesn't really jibe with the rest of you know, what we're seeing in terms of the delta variant and uh, you know talk of masks coming back. How do you view the economy the reopening play well with the UPS.

I would say they benefit both. You know, you look to last year in the midst of the pandemic, which is another reason why the volumes are slowing here in B two C is we were looking to et commerce deliver anything local market toothpiete and such. As the economy reopens, you know, we don't need to do that anymore, right, we can run to the store and grab our toothpaste. But keep in mind that UPS also delivers the retail of rick and mortar, so they will benefit right from

that reopening play. In terms of bills variant, I would say we haven't heard too much impact at this point in terms of those demands, and it doesn't appear to be something that UPS is building in in terms of elevating that that B two C. I will never go back to the store to buy toothpaste. I gotta tell you there's there's some stuff I don't know why toiletries seems like, why do I need to get that at

the grocery store. You know, I'll get fresh produce, Yeah, but I don't need to pick out my Colgate or Crest. So when we see the boxes on the front front yard, that's toothpaste for you. And yeah, well everything that isn't that isn't fresh. I can just order. There's no reason to truck at home. So Allison, it's a are the ups Is of the world are they talking about in

the FedEx? Is a a structurally higher kind of cargo you know flow for them unit volume because there are people like Matt who are just you know, maybe during the pandemic became increasingly used to delivery absolutely and there has you know, there's certainly that talk about structural step up and you know the e commerce demand and EPs is certainly benefiting from it. I would say part of

it's really just you know, there's it's twofold. It is some of those there are people that are actually going back to the store to get their toothpaste, um, you know. But on on top of that, UPS is being very disciplined right in terms of what volume it wants to take on to its network. Right, going back to CEO tem A's comments on focusing on profitability over just playing revenue and volume. So I think there's two pieces to that. But yes, absolutely the structural will step up and B

two C has certainly been noted. I mean, you don't you don't just cover ups. You like Norfolk Southern, you like Canadian Pacific Um. It looks like in general you're bullish on these uh you know, shipping rail um companies that you follow. Absolutely, I'm a big piece of that is you know, we've had that consumer recovery right, that's been noted, but as you seek a step back, industrial has been slower to start, and there's certainly been some

noted supply chain challenges, labor challenges. But we see the trend line for an industrial recovery as a net positive and that would benefit certainly the rails and to a lesser extent UPS as well. Hey, Alison, thanks so much for joining us. We really appreciate getting your thoughts on UPS. The stock is down eight point seven percent today, so spooking the market there with their earnings. Alison Plenty Accustic.

She's director of equity Research. She covers transportation, industrial technology, all that fun stuff that supply chain the backbone of industrial transportation for Wells, Fargo, Secure Teas and and Matt And My first job on Wall Street was a research assistant doing rails and trucks and all the transportation stuff. So it's a lot of fun and it is literally the backbone of this, you know, US industrial economy. You know what I miss, uh, blimps. I wish blimps would

come back. I would travel by blimp, you would travel school when I was a kid, um well it when I was in my early thirties, late twenties, there was a company cargo lifter that would um that was going to try and transport stuff also by blimp. They went bankrupt the course, but yeah, what happened to that? All right, we'll get we'll take take a look at that. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast

platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. On false Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio