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Joining us speaking of is George Ferguson. He's senior Aerospace, Defense and Airlines analyst at Bloomberg Intelligence, and he joins us from Princeton, New York, OURVII headquarters over there in New Jersey.
What did I say, Princeton, New York?
I did?
Yeah, sorry, coffee, coffee.
I haven't had that second cup because it was delayed. I'll get you.
Well, the eleven o'clock hour will be a good hour for me. So Boeing is having a lot of issues. The CEO will be facing leaders in Congress today. There was also Later's whistleblower report that alleged to the planemaker mishandled and lost track of hundreds of faulty parts, some of which had been in may have been installed in
some new seven thirty seven Max planes. George, Well, okay, there's so many questions, but what is Dave Calhoun today going to face from Congress and then in the light of these consistent whistleblower claims.
So my guess is that what Dave Calhoun's going to say today's going to stick to the script. He's going to say they're working on fixing all these problems. He'll probably you know, not be able to confirm or deny sort of individual reports. We saw the report come out, you know, the Boeing They gave us a summary of what they provided to the FAA and their action plan,
you know, for improving the production process. It included things like, you know, making sure they appropriately tracked faulty parts and didn't put them in airplanes. So my guess is there were some situations where this was a problem. But again, I think he's not going to give a lot of specifics today in front of Congress. I think it's he'll stick to the script, is a plan out to fix it, and they'll say, we got the plan and we're going to drive on that plan.
Hey, George, I know from speaking to you in the past and reading some of your research, one of the challenges as it relates to quality is outsourcing. You know, Boeing over the last number of years, ten twenty years, is maybe outsource a little bit more of their production, their parts and so on to third parties, and that may be introducing some more risk into their process. How are they talking about some of their outsourcing strategies.
So in that same report, right, they talk about inspections at suppliers, they talk about monitoring quality at suppliers better.
Yeah.
I just think this is a it's a wholly different industry, right. I think there's a bunch of people that have come to the aerospace world from auto backgrounds and other mass production backgrounds, right, And in those worlds, safety isn't as important. Volume is a lot higher. You can get multiple suppliers to provide products to your production line, you can work cost on the suppliers, and I think that whole game plan is really really difficult to do in aviation. And
I think this is part of what we're seeing. Right. I think you can outsource, but I think if you outsource, you know, you know, to your supplier base, I think it's still got to be you know, a pretty strong relationship with them, not a combative relationship where it's always about price, because it really matters the quality you get
to your line right, safety is dependent upon it. And so I think what we're finding out as this sort of you know, whole Boeing saga unravels, is outsourcing and banging up your suppliers for price just isn't a winning strategy in aviation.
Can have they course corrected enough? Or can they so?
Look, I think they can. Everything can be fixed. I think if you look at their competitors across the pond, Airbus, they're not having these problems. I think Airbus has been less combative with some of their suppliers. They're in the middle of this correction. We know they want to buy Spirit Aerosystems. We're still waiting to hear news on that. There's still you know the challenge of getting some of the other companies that Spirit supplies, to name the Airbus
probably out of the portfolio so they can recover. It's gonna it's gonna take some time. Uh, and it's gonna take a lot of work with our suppliers.
So, George, if I think about, you know, rethinking my strategy with my suppliers and maybe focusing less on price competitives maybe a little bit more on quality, does that imply that Boeing's profit margins will be under pressure going forward.
Yeah, I mean, I think I think for sure, right, I think you're you're not going to receive a return to the Boeing margins you saw at the end of last decade. I'm not gonna say ever, like in time, perhaps they could get back to that, you know, but I think it takes you know, it's it's gonna take a bunch of work here near term to improve the quality, and and that's going to cost money. Plus we already know that some of the business they've put in the books, right,
they had some challenges delivering into China. That was kind of the one two whammy after they had the grounding of the Max and the crashes. We know they probably sold a bunch of airplanes for some pretty good prices
to really core customers like United, like Southwest. So I think that I think both, you know, both on the cost side again, given this correction to improve the supply base, improve production, get get capacity rolling again, as well as some of the pricing they gave away on backfill for orders. Means you're not looking at a Boeing that's going to get those margins free through this decade.
I think if I look at Boeing stock, then I mean it's down from December, it's down thirty four percent. Does that accurately reflect then this tighter profit margin world to sort of revamp and the course correcting that they have to do.
So, you know, I think when you look at their valuations, you know, their historical valuations, One, they're really high right now, right because earnings are so low, you know, So I think that there is a little bit of investor look through at this point, you know, on the on the on the current problems they have, you know, but the sort of whether or not they're they're properly positioned for
the out years right now. I think it's all a function of if they can you know, if they can quickly improve the build rate so they can improve economies of scale and start to get more profitability back into this business, and that, you know, really remains to be seen.
George, you mentioned China. Where is Boeing in terms of getting the seventy three seven max in the air and China kind of how's that business looking in terms of sales and deliveries.
So their deliveries going into China, right and uh, it looks to us to largely be deliveries that were you know, built, you know, when the seven three seven was grounded, and they're starting to get some of those back into the country. But China's also has this problem now with the flight recorder that's been authorized by other jurisdictions, including the US.
So I mean it feels to me like China is allowing deliveries, but they still, you know, they're still not I don't know, maybe keen on taking a lot of deliveries from Boeing. I haven't seen a bunch of orders come in from China, you know, for Boeing. And so I would say that relationship still, while it's maybe thawing a bit, is nowhere near was it where it was in the last decade. And they have their problems too.
Right now, I think they don't need as many airplanes, their economy isn't growing as fast, air travel isn't growing as fast. But I still think that relationship is not in the right place where it should be, where you'd like it to be. I think for Boeing.
Before I let you go any word yet on and replacement for Dave Calhoun, Like, how's that going?
He laughed?
The answer is laughing.
Yes, what I hear from news reports is picking up steam. But g I mean, I don't know, it's been a while. There's a lot of conjecture. It's a hard job. There's probably a lot of people that just aren't willing to take it. I don't know, you know, they got to the end of the year, and so maybe they're gonna use it all. I don't know.
I mean, and anyone but Larry Cult that you keep hearing about, that's for real.
So I don't really track the people that's you know, that's kind of hard for me. I do know, like it said, it's got to be a rock star manufacturing, you know, sort of CEO. I don't know that there's a lot of them left in America. I think we do a lot of outsourcing now, so maybe that makes it a taller order too. I don't know.
All right, Hey, Georgia really appreciate it.
George Ferguson, Bloomberg Intelligence senior Aerospace, Defense and Airlines analysts joining us in Princeton, New Jersey.
Yes, who would have thunk? Yeah, it was a New Jersey and.
You lovely home of hogi Haven, my favorite sandwich shop.
Also up on that.
Bowing down two percent today, down thirty three percent year to date. You know, it just feels like a stock No one wants to step in and really take a big position here until you see real signs of our turn around there, because it just feels like every day there's something coming out.
And if you just time it out right, like say they do take the rest of the year to get a new CEO, like, let's just game that out for a second, then the new CEO has to come in right. Then it's a plan and it's going to be some kind of restructuring plan in that, like how we're going to manage the business, how we're dealing with suppliers. And then if you they do wind up buying a Spirit Aerospace.
Then you got to integrate that. I mean that how long a process is that?
Yep?
Exactly, So I mean and is there a value here where it just says that I'm being compensated for that risk and that time and I don't know, and it just doesn't feel like it again. Stock down thirty three percent year to date.
We're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
All right, coming up, we're gonna talk to Jill Blanchard. She is president of Enterprise Client Solutions at Abandoned Solutions, and we're going to get the take here on retail sales. So retail sales barely did anything, and the narrative here is that the consumer is strained that they're going to buy stuff, but they're going to buy it on sale.
The rub here is that.
This is mostly a goods report versus what we're going to get when we get consumer spending a little later in the month, where that might be actually a services reports. There's still questions as to as to what the real read through is for the consumer.
Jill, what are your thoughts?
Yes, so hello and thanks for having me back. Yeah, you know, I think I'd lead off with one big word,
and that word is cumulative. And so the effect of inflation, the slow rise and income the high interest rates are really having finally a cumulative effect on the consumer and it's a really big impact there's a big difference between inflation and affordability as well as inflation and high prices, and so as consumers tried to get used to high prices, if wages aren't keeping pace and they're not, it creates
a pretty big gap and drives very different behaviors. So you mentioned promotions before, consumers are really doing a lot of different things. They're still spending, but they are price conscious, they're creative, they're selective. They are and I'm just going to walk through like a myriad of strategies. They're delaying purchases. They're trading down, whether that's a brand or a retailer, or a product or experience. They're shopping promotions, they're price
shopping across retailer somethind of that consolidated trip. They're going to multiple retailers. They are cutting out or reducing discretionary spending. They're looking for larger sized products that have a more economical value. They are sharing bolt grocery shopping. Third of consumers are now doing that. A quarter of consumers are skilled big meals and buying unhealthier options because of high prices. So it's a lot of different strategies that we're seeing come to play.
When do I don't know if we have any data back this up, are when do consumers get used to this new price level?
Is it?
Because it seems like we've been here for a few years, and you know, when do we get used to it?
Yeah?
That's interesting. So I'd say it's a tale of two economies right now. And so at the macro level, we're seeing in flaten now. But when you really get underneath that, healthier income households, you know, are you know, do do have a healthy spend? They're driving demand, but it's balanced out by by low and mid income households that are
curbing their spending. Now that that does split spending, that's a shift from what we've seen over the past couple of years because spending was really fuel by pandemic era benefits, stockpile savings, the cessation of student loan repayments, and rapid wage increase, so a number of things that are either reduced or actually illuminated now creating a bifurcation in spending amongst income households.
When we take a look at the spending problem, how do we understand it? Because slowing versus falling off a Cliff are different and they're going to have different reaction functions for the FED.
What's the best kind of description.
Slow? I mean nothing's going to happen fast, right, I say, there's two things to consider, you know. One is spending is never going to take a sharp turn in either direction. It's going to slowly turn in either direction. And there are multiple factors influencing that, you know, like the reduction in the pandemic, arab benefits and stockpile savings as well as you know, higher prices as well as a lower wage increases right now, interest rates. So there's so many
things that really affect it. I think that we can, you know, continue to expect to see things happen slowly over time and not be surprised by what it is that we're seeing today. It's it's been building to this for for.
Many many months.
Cicadas, Oh what talk to us about cicadas.
I will talk to you about cicadas. So here's something interesting, and this is you know, partly about cicadas. And I happen to live in a cicada part of the country.
It's brutal out there, the shining.
Well, so here's the thing we've talked about inflation, we talked about the slow rise in income, the high interest rates. Let's talk about the effect of on retail spending of extreme weather, which I know we've talked about before. We saw today that there's going to be record breaking temperatures in the Midwest and the Northeast. So it's it's extreme heat,
it's flooding, it's fires, it's hurricanes, snowstorms, tornados. All of those things curb outside of the home activities, which are typically a soci stated with bigger ticket spending.
So think of.
Things like going to an amusement park or a concert versus watching Netflix, going to a lakehouse for the weekend versus staying home, going out to dinner versus staying home. So the effect the curb on out of the home activities will translate into a different and a less retail spend. So that's somewhat having to do with cicadas. I stay in because it is life as.
Shining, really horrifying.
Where where are you, Jill? Where is this happening?
I am home.
Based in the Chicago market. They're pretty brutal.
Interesting, man, I didn't eve think about the sit here?
Do we know? We do we do.
Yeah, yeah, no, I mean, like not yet, but they're they're definitely gonna come.
Yeah yeah, okay, But to.
Your point about extreme temperatures.
Too, because then you stay home and guess what, you pump the air conditioner because if you don't, you're dealing with one hundred degree heat and that is a huge bill. I mean, already my electricity bill has jumped by what by two just just for May and.
It wasn't even that hot. So that's going to be another impact as well.
Yeah, as well as think about the damage that comes from a flood or hurricane tornado. So yeah, it really drives dollars being spent elsewhere, as well as the fact that it curves outside the home spending.
Talk about then, in terms of how loyal people are to brands, like is it just going to be a pure value trade, like the lowest price that you can give me is what I'm going to buy? Or do you feel like it's going to be very selective and brand loyalty matters.
So I heard somebody call this right now, and I thought it was pretty clever that we're ing that we're entering into the air of brand co miscuity, where we are essentially buying short term loyalty, but we're really creating long term disloyalty. So all those promotions buy today, but they sacrifice tomorrow. Having said that, I'd say that retailers are looking at a number of strategies. So it's not just promotions, it's their amping up their loyalty programs, their
digital offers, their private label offerings. And let's talk a little bit about everyday price, right, So Walmart and Target publicly said that they plan to reduce the everyday price on thousands of items. This is a great trip driving strategy to get the consumer into their stores, especially the consumers that are struggling to buy the basics every day.
And it's a real shift in what we've seen over the past two to three years, and it might mark the beginning of a price war the likes of which we haven't seen since inflation took hold.
So what are retailers trying to do here? I mean, are they are they? Are they trying to keep customers? Are they are they just looking at for their own margins? What are retailers strategy here?
Oh? Yes, and yes and maybe even more yeses. It is less today about a pie that's growing and it's more about stealing share versus creating demand. So somebody's win is somebody's loss again, could be a brand, a retailer, or a product choice. And so retailers you know, are trying to are trying to get purchases and consumers that they might not normally get and or have recently lost.
One of the things that we're seeing now that's really interesting is both manufacturers and retailers trying to sell you know, call it non traditional products and non traditional outlets. And so you could expect to see health and beautycare products at a Dick Sporting Good, maybe some more food products at a TJ Max, And so they're really trying to get new avenues and distribution to get those consumers in store.
A flip version of that is if you look at the dollar channel, the dollar channel has traditionally owned that you know, that lower price point or that opening price point, that so many other retailers are now entering into the smaller pack sizes for that opening price point and really getting that volume from the dollar stores.
Wow, that's really interesting. It's true.
As a frequent user of TJ Max, I do notice that there are is more packaged food, the home good store. Oh my god, it's everywhere on the half of it feels like it's food. Now, just to wrap this conversation up as we go to sort of the Fed, let's just pretend the FED cuts one or two times this year?
Did they say one? Market says two?
Does that matter for the consumers that we are talking about. Does that materially change kind of what they buy and how they spend long term?
Yes, near in, not as much as we would think. It will have a little bit of an effect. But again, cumulative is really the word of the day here, and that it takes a while for any of these effects to catch up to the consumer. So what we're seeing today is the effect of what's been happening over the past twelve to twenty four months, and so it will have an effect, but not as big of an effect. Near In.
Hey, Jill, thanks so much for joining us. They really appreciate it. Joe Blanchard, president of Enterprise Client Solutions at Advantage Solutions, on Zoom from Cicada infested Illinois.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Effo Cardplay and then broud outo with the Bloomberg Business app demand wherever you get your podcasts, or watch us live on YouTube.
One other stock we're watching is Lenar, down by almost three percent. So there's a homebuilder and it forecasted that deals in the third quarter.
Missed consensus expectations.
And then Barkley's pointed out that if you take a look at their fourth quarter guidance, it implies a very large ramp up in gross margins in that quarter, and investors are a little skeptical as to whether or not that actually is going to happen. So no one to turn to but Drew reading Bloomberg Intelligence home builder analysts. He joins us now from Princeton, New Jersey. Hey, Drew, I don't know. I thought it was all like, we don't have enough supply.
This is bullish for builders. So what happened?
Well, I think you framed it perfectly. The story with Lenar, why the stock sound? Is it so much about what's happening with the volumes they deliver good orders? They're up nineteen percent, they maintain their four year guidance for eighty thousand home closings. It has to do with their outlook for gross margin, they guided to about one hundred basis points below what the street was looking for, and as you mentioned, that would work quire a ramp in the
fourth quarter to about twenty five percent. So, like you said, there's definitely some skepticism and their ability to meet their four year outlook. The reason for that is because we saw rates move up as high as seven and a half percent during the quarter. You know, they've come back in a little bit, but we're seeing their need to incentivize buyers remain elevated, and that's what's impacting profitability.
So where are we in that activity there? If I'm if I'm looking at a seven percent mortgage, what are they going to do for me?
Yeah, So typically what we're seeing is that the builders will maintain a spread versus the headline rate. So if you're seeing seven and a half percent in the market, typically you're going to get six percent from a builder. You know, there are some other builders and depending on the market, depending on how strong the market is, what demand looks like, they could get you into the fives. But obviously that's going to cost them on the gross
margin line. So the incentives they're using are certainly working, it's just what's the cost.
So that one hundred percent the one hundred bases point miss, but then keeping their guidance for ro's margin for the year, that must imply that they're looking for rake cuts.
Yeah, I think a lot of it has to do with what they're doing on the call side. One of you know, Lenar's emphasis for their business over the last several years has really been running a more efficient manufacturing based business where they're not necessarily just chasing volume, but they're doing it the right way. They're fine tuning their
floor plans, they're pushing back on their suppliers. You have to remember they're one of the second largest builder in the country, but they're one of the only builders who has scale at the national level, so they're able to leverage that and kind of push back a little bit. So certainly some of the benefit that they expect in foro Q, I would assume is going to come from what they're doing on the calls side, as well as
fixed leverage from higher deliveries. But nonetheless that's still going to be the focal point for investors is how do they get there?
How much?
I mean, I remember this back in the beginning of the pandemic, lumber went crazy. Where are we in lumber and help? How is that a part of their gross margin?
Sure so, lumbers about ten percent of the cogs for builders, so it's certainly the most important input costs. As you would expect, you know, lumber prices have come back down a lot, so builders have been benefiting on the margin side. I think we've seen more stabilization of late, perhaps a little rise to the upside, but really lumbers not impacting the business in as significant a way as it was over the last couple of years.
So KB home reports after the bell today, right, So what kind of company is KB home versus Lenar and has that set up KB home for today?
Sure so, KB is predominantly focused on the entry level business. It's about fifty percent or more of their total sales. So in addition to just focus on broadly on the entry level, we look at what they're doing from an asp perspective to get a more holistic look. And they're actually one of the more affordably priced builders, particularly when you compare them to the resale market and against you know,
their public peers. So I think from a pricing perspective, they're pretty well positioned, so they'll give us a good sense what's happening on the lower end of the market. With that being said, as you would expect, entry level buyers are much more price sensitive. They're more sensitive to
that monthly payment and what's happening with rates. And we saw that earlier with a low end builder LGI Homes who's looking to take buyers out of a rental situation and put them into a home, and we saw relative weakness there. I think what you see from some of the other builders is maybe a little bit more of a higher end entry level buyer, maybe duel income who's waited a little longer to purchase. So there still has been relative strength, but we'll get a good read on that buyer today.
What are the companies tell you about their expectations for interest rates mortgage rates? What are they think is going to happen?
So I think the expectation broadly is that mortgage rates will start to come in a little bit as we get through the end of the year. I don't think they're managing their business for any you know, significant dropping rates back to you know where we were previously. But I think as a builder from a demand perspective, if we get rates coming back to the six and a half percent range, you know, that's pretty much a sweet
spot for them. You know, we've heard that as you get to five and a half percent, that's really when demand in the market starts to move. So the fact that if we can get to six and a half they're buying down rates one hundred basis points, I think they'll continue to do well. And you know what's interesting is the public builders are kind of at the top
of the food chain as it comes to housing. You have to realize they're generating about fifty percent market share compared to call it thirty eight percent prior to the pandemic, really, so they've really leveraged that lack of inventory in the resale market and the struggles among some of the smaller private piers, and they've capitalized on it.
So when you say we have to the five and a half percent is kind of a nice sweet spot. So that implies the Fed Funds rated six and a half percent, and the home builders still give thee hundred bases point discount. When the Fed Funds rate gets to five and a half percent, do the builders still offer that one hundred basis point discount.
I think it's going to depend on what the broader macro economic situation looks like. If we get a pullback in rates, you know, a modest pullback, and we are still dealing with a pretty solid labor market, I think that, you know, builders will be able to definitely pull back on their use of incentives. I don't know that they'll go away all together, because at this point that's something that buyers are looking to and it certainly made their
product more attractive. If we get a significant pullback in rates and it's because you know, the economic situation has deteriorated further, that's obviously more of a concern and we would see them probably push incentives even harder.
What kind of homes are builders building these days, Drue. Is it the mcmanson where they can get the big profit margin or are they building what the market actually needs, which is some of these entry lever homes.
Yeah, that's a great question, and we've seen one of the primary ways that builders are addressing the affordability equation. It's through smaller square footage floor plans. It's a shift most of them have done. We've seen it over the last couple of years more targeted towards the entry level. Interestingly enough, you even have someone like a Toll Brothers, who you traditionally think of as that luxury builder within the builder space, they've shifted to what they call affordable luxury.
Now it's still not something that the masses are going to be able to afford, but it's certainly a lower price point that, as I said before, is attracting those more well healed, duel income buyers. So every builder has kind of attacked affordability in a different way, but I think square footage has been something consistent across the group.
We only have about like forty five seconds left, But what's a builder that's kind of pulling on all levers correctly right now?
I think Lenar is actually an interesting case, and the while the guidance may have disappointed a little bit, they're really delivering on what they said they're going to do. They're focused on price over pace and they're willing to sacrifice a little bit of gross margin to do so. And the idea is that they're going to generate a ton of cash that they can use to pay down debt return case to shareholders, which is something investors obviously like all right, he Drew.
Really appreciate it, really great stuff.
You're reading a Bloomberg Intelligence joining us on the NARS Earning.
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The Alex Steel and Paul Sweeney were live here in a Bloomberg Interactive Brokers studio, or streaming live on YouTube as well, So just head over to YouTube dot com and search for Bloomberg podcasts. Let's turn our attention to healthcare. How about this. Japan is dealing with rising cases of a disease caused by a rare flesh eating bacteria that can kill people within forty eight hours. Health authorities have
reported over one thousand cases of streptocockle toxic syndrome. How about that as of early June, higher than the record nine hundred and forty one cases reporter for all of twenty twenty three. At the current rate of infection, experts fear the number of cases in Japan can reach twenty five hundred this year. For more on the story, we check out on Meshadalogia, Senior scholar at the Center for Health Security at John Hopkins Bloomberg School of Public Health. Uh,
doctor Adalgia thinks, so much for joining us. Can you tell us about streptococcle toxic shock? What is it?
N by the way I job tell us about it?
So this is just this is Streptococcus is a bacteria that all of us have dealt with. It's the same bacteria that causes strep throat. What can happen though in certain individuals is it can be a much more severe infection where it can cause what we call, you know, necrotizing or flesh eating type of skin infections and then also spread systemically and cause multiple different organ systems to shut down. So that's when we use the kind of
term toxic shocks. And it was said that bacteria basically disseminates toxins throughout your whole body and it's a very serious illness with high levels of morbidity immortality.
Doctor, Is this new or is this always been the case?
It's always been the case. But what's new is that in Japan post pandemic, they've reported at least two years where they've had higher than normal cases and trying to unravel the mystery of why that change in epidemiology occurred is what's getting headlines right now. But streptococcal toxic SHOCKSIM has been around forever. It's just this increase in Japan that people are interested in.
How do the medical professionals, how are they treating this?
So the mainstay is going to be antibiotics, but because it's this systemic toxin disease, we often give other drugs to modulate the immune system, and if there are elements of flesh eating disease going on, they basically have to do extensive surgery to kind of cut ahead of the infection.
Oh my god, this sounds terrible. How quickly does this happen? I mean, you know strep can come on really quickly and it might take you a couple of days to realize that you have it.
Like, what's the cycle for this?
Well, when you get into that toxic shock syndrome spiral, it's very fast. They can be dramatic, you know, even in an hour can be a major difference in a patient. But It's important remember that not everybody that gets a strep infection is going to get it's still rare, and the most people who have a strep infection of their throat or if their skin, it's going to turn out
to be kind of a garden variety infection. But it is important for clinicians to keep in mind that if people are getting worse, if they're not getting better, if they're more concerning systemic symptoms occurring, that they think about this. And it's also important for patients to know that as well, that if they're not getting better in the expected time, or they're taking a turn for the worst when they're already on antibiotics, that this is something where they need to seek care immediately.
Is there any reason why it would be I guess localized in Japan here to anything that is unique to.
That part of the world, not particularly, I mean, we've seen increases in streptococal infections, not necessarily toxic shock, all over all over different countries. For example, the UK had a major issue with this a couple of years ago, and it may be having to do with kind of idiosyncrasies in the immunity in the population in Japan. Remember, we all came through a pandemic where there was a lot of social distancing and many of the ordinary infections
that people get every year were kind of disrupted. And there may have been different disruptions in different parts of the world and different prevalences of these infections, and now they're kind of coming back to their prior levels and there's some catching.
Up to do.
There are people who might not have had as much immunity because they weren't exposed at a low level over the last couple of years, or they just might not have been infected. And there's a certain number that are going to be expected every year in Japan, and because you had a two year lull, now it's coming back to baseline levels and that's what they're noticing. So this
is kind of one of the leading hypothesis. But we don't know quite everything for sure what's going on in Japan, but that's what I think is at play.
What are the sign you mentioned that if you're on antibiotics for strap and you know, get better, but you get worse. What are some other signs that people should be looking out for.
Well, so severe a spreading rash that's getting severe, severe pain if there's a rash where the infection might have been, anything involving low blood pressure, extreme fatigue, not being clear mentally, difficulty breathing, all of those kind of signs that the infection is not localized.
Nic doctor. I remember we used to talk to you all the time during the pandemic. You were very kind to share your time and you know, kind of educate a lot of folks on what this virus was, how doctors and health professionals were treating it, and then ultimately the vaccine and the efficacy of the vaccine. So we
again appreciate all that time you gave us. Now that we've got that in the rear view mirror here, I know one of the themes that came out of that was just the stress on the healthcare system and the people of the healthcare system that doctors and nurses and everybody of the work they had to be in the front lines during those early months and in that year. How are the folks, the good folks at Johns Hopkins that you deal with in the facilities, how are they doing several years on now?
Well, I think that most healthcare systems around the country have kind of come to a new normal where there's kind of chronic burnout, there are chronic staffing issues where people quite haven't recovered from the way that the pandemic altered hospital operations. And this is going to be one of the long tails of the pandemic. It's not something that you can just bounce back from. There wasn't a lot of resiliency built into the system. There wasn't a lot of kind of slack in it, and the pandemic
ate up all that slack. And I just think that we're in a situation where a lot of people still are carrying those scars around of that time when they were overworked, where there were concerns about personal protective equipment, where hospitals were crashing, and even when you look at the economics of hospitals, we're seeing hospitals closed, rural hospitals
really looking at their financial viability hospital banker. So this was something that took a major toll on the healthcare system, just like we expected and predicted it with And this is why it's so important to incorporate healthcare preparedness, healthcare resiliency into planning for the next infectious disease emergency, whatever it might be. This can't just be something that we think about when there's a crisis, when it's in the headlines.
This is something that needs to be done kind of with a long term eye to the future to make a sustainable way to operate hospitals and make emergency prepared and as part of their core function.
How are we doing with COVID? I mean, COVID loves me. It doesn't love Paul, but it loves me. How are we doing with COVID? What are the cases like? Where are we going to get vaccinations in the fall for fluen covid?
What do you think?
Well, COVID is something that's increased over time in the last several weeks or so. But we've seen is this virus is endemic, but it continues to mutate and spin off new variants that are able to infect us. Right now, all across the country, COVID cases are up, emergency department visits are up, but its ability to cause severe disease, its ability to crush the hospital severely constrained. Because of
the community and the other tools that we have. We will have new vaccines in the fall that are better targeted to what's circulating and that will likely be something that's recommended to high risk individuals that they get right alongside their flu vaccine.
All right, doctor George, thank you so much. We appreciate that as always. Doctor almesh Adology a senior scholar to Center for Health Security at Johns Hopkins Bloomberg School of Public Health. And again, the good folks at Johns Hopkins were so good to us, you know during those early days when we didn't know anything nothing.
I actually want to say, we should get him back when there's not a crisis, just to like learn about stuff that isn't a flesh eating disease, right that comes from strap or like COVID spreading again, just to like learn about the system and like what cool things are in the pipeline to be discovered and what people are treating.
And I mean everyone's living longer, yep.
Right, we're letting people live longer, but then how we support them really fails. And then getting that dynamic from him and be super interesting yep.
I went into a healthcare episodic for the first time yesterday and I can't remember how long and X rays. I mean what I was interesting to see, like how well it was staff, Like are there nursing shortages are there, you know, technician shortage, and it seemed like it was back to normal. There's plenty of folks there, you know, a few masks here and there from some of the healthcare professionals. But it seemed like pre pandemic business as usual. But I get as doctor Dalga was saying, there's some
long tail issues for the industry as a whole. I guess, you know, they were so crushed. I think about the hospitals here in New York City that were so crushed.
You should just see, like the ers are crazy, like they're just overflowing. It didn't take days to get a bed. And yeah, it's just it's it's the healthcare systems and real issues with that.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and royd Otto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa, playing Bloomberg eleven thirty.
I'm Alex Thee alongside Paul Sweeney. This is the Boomberg Intelligence Radio. We bring you all the top news and business and finance live from an interactive Brokers studio right here in midtown Manhattan now for the month of June, Bloomberg Radio is committed to bringing you segments and guests focus on the topic of equality. And today we have the pleasure of speaking with a Lalua Ganga. She's US
Chief investment Officer over at Mercer. She is a rock star in her own right as an investment analyst and a portfolio diversifier and talk about clients and.
All those things.
And also she is in the C suite and also working mom and that's hard, so we can cover both. So can you just tell me a little bit about you know, your career and how you got to where you were.
Well, thank you for having me. I heard the introduction to kind and I just started laughing because my daughter would just be like, that's just.
Mom, Yeah, totally.
I can appreciate that that is what happened.
So, you know, I there are days that I take a step back and I look at my career and I'm I'm even blown away and surprised. Frankly, I've had the privilege of being in the US. I moved here for college. I'm originally from Nigeria. My family's from Nigeria, born and raised both in Nigeria and Botswana, and I moved in nineteen ninety nine. I studied math. Didn't know what I was going to do with it. It was somewhat accidental. I was trying to find a place that gave work visas.
Yep, such a big air.
Got to be a big firm, and my family science based. I ended up working at a bank because big hires and they gave visas back in the day, and it was a trading desk, and all I could think I was I did to work really hard to keep this visa, and I learned about markets. I learned about trading. I realized that in order to stay here, I had to in my head work harder than everybody else and just show that I truly wanted it. And I was a
student of markets. I just loved learning. And over time, I was fortunate that folks saw me and gave me a chance and opportunity to do more. I raised my hand and I asked for more, and you know, fast forward, I don't know, twenty something years or more, I'm the chief investment officer at one of the most major prominent
platforms for in Dowmon's Foundation's healthcare pensions. Like the assets and the responsibility that we have blows me away, and I take it very seriously and I'm just truly grateful to be in the seat.
Women in financial services on Wall Street a constant challenge, and in my prior role, I hired a lot of folks coming out of school, and our entering classes were perfectly diverse, perfectly diverse. Ten years later when it came time for the managing director or a partner discussion, not so much yep. So what was your experience going through this whole process? Having spend that much time in the business.
I knew that I had to not think about it. It was a deliberate choice to not think about it, because if I did, and you look at the numbers, like, it's very easy to be discouraged. It's very easy to say I don't see it, So how can I think it and be it? And make no mistake, I did think it very often, but I just had to actively
put it out of my mind. And there are certain points that you have as a woman, your choice of a partner, your choice of having a family, and when you do that, how much time you spend with I have a daughter, she's turning five in a few weeks. There are points that you will be slower in your career as a result of that. It's also a choice and there are times that you have the ability to do it. For me, I found that it's been support and the support system around me.
And you mean like personal or job wise or both both?
Yeah, definitely both. The if the job wise is like you can do this job, and personally it's hard, you have to make that choice. A lot of women are like, I will choose and it won't be you. It won't be you job, it will be the family because that's you know, at the end of the day, when we leave this world, that's what matters the most. So when put in a situation where you have to choose, and many people are in situations whereby they have to choose,
they don't choose work. So how you have the support in place to be able to have both, which you can't have them at the same time at the same intensity. You know you can have it, but you have to stage like sad, my daughter's five are going to be five. So I had children later in life in order to be able to go as fast as I could without making some of those other trade offs, and then having the support system in place while you are doing the worst.
So I love that you brought up support.
I had a dinner last week with a bunch of women in finance, super successful, really great, and eventually it turned to the topic of they couldn't do those jobs, and it either could I without a really supportive partner, and that you learn really fast, particularly when you have kids, how supportive that partner is actually going to be, particularly
when you travel. But that's hard, Like, that's not a given, particularly if you're in a if you're a woman with like a career driven role, and you put that first.
That's not a given in the world, not a given at all.
And you know, in life and in work, there is your ability to work hard, your intelligence, and then there is luck. And I will admit that there's there's a lot of luck that I've had. My husband, I've known since I was eighteen.
Oh my goodness.
So we grew up together.
Essentially it was okay, you go to school, you're working, you're was going it was it was it was trade offs and who's on, who's off, How do we do it and who knew. You know, the stats in this in this country are not necessarily encouraging in that respect, But we communicate a lot, and we have honest conversations. Who's on, who's off, who, who picks up the gap and for how long?
That's interesting.
I think what we learned just real quickly at thirty seconds the childcare and now the elder care in this country. Boy, that's got to change. We learned that. I think during the pandemic, people who weren't aware of it, they got they became aware of it pretty quickly.
Yes, absolutely, and the pandemic was a big equalizer for many family like men and women whatever. It was like everyone had to pitch up and roll up their sleeves. You could have a nanny, but could they come in Nope, right, So that was it. And then you had that plus if you had elderly parents, which my parents are not in this country, my husband had at the time, and how you're navigating that on both sides, you can get pulled, frankly, to be able to do that. During the pandemic, it
was everybody was experiencing that. But if you remove the pandemic and quote unquote normal times, it's hard to be able to have that empathy in place with people that are managing a number of other personal commitments.
I could talk to you for dance, so definitely come back. We can do a little bit of this. We can talk about your market views.
Really amazing. Thank you so much for sharing.
You're speaking a lot of what I hear about all the time and things that I go through too, So thank you for sharing that.
Lalua Ganga. She's US Chief investment officer over at Mercer.
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