Political 'Mess' Is Clouding Strategy: Federated's Orlando

does it mean? What does the UH president's physical condition? How does this all factor into the calculus ford investor trying to gauge the future performance of the stock market. To get the latest, we welcome Fill Orlando, chief equity market strategists and ahead of the client portfolio management team at Federator Hermes. Sixty eight billion in equity under management, over six billion firm wide, so Federator Hermes is all

over the markets. Phil, thanks so much for joining us here. Again, let's just try to digest what we've learned over the past seventy two hours about the president in his medical condition, what that might mean for I guess just kind of market view view for fiscal stimulus. How are you trying to discount all of this new information into your outlook? Well, in a word, it's a mess. Um. You try to process the news that we got a yes early Friday morning that the President and the First Lady and a

number of staffers had tested positive. What does this mean? Um? Initially you say, well, is he going to be able to execute his duties? If not, then we've got to roll down to you know, the next in the chain and companion UH Pence after him, Speaker Pelosi after him, uh, et cetera. Then it's well, okay. If if he's doing okay, uh, what does that do to his ability to campaign? What does it do for these next two presidential debates coming up on October fifteen and October? Is he going to

be clear to participate? Are they going to have to go remote? Are we gonna have to cancel them? So you've called in a question a number of issues in terms of governing. Are we going to be able to get this phase four fiscal UH stimulus package through the debate the election? Uh? Vice President Biden has tested negative, I believe twice, but you know he's a little out

in years as well. I guess we've got to keep track to him to make sure he stays nice and healthy, so that there's a cloud of uncertainty over the entire process with a month ago ahead of the election, So it's it's, in a word, it's a mess. Well are you and your manager is then Phil spending more time is thinking about what a Biden victory and outright victory was sort of no you know, court action, what that might mean for markets. So we've been focused on that

for for several months. Um and and the key issue is not so much the presidency, uh, but the Senate because the if you had a blue wave, as it were, if if the Democrats ran the table, a legislative mandate would would mean something materially different in terms of the change in fiscal policy and then impact on economic growth, corporate earnings growth, and stock prices as opposed to divided government.

So we've developed a matrix to look at all of these different combinations and permutations and right now, uh, you know, it's a little too early to tell. To that point, there are two conflicting signals that of things that we watch pretty closely that are pointing in completely different directions. On the one hand, you've got the the betting markets, which in the immediate aftermath of President Trump's illness uh,

surged in favor of Vice President Biden. I think there's like a sixty two percent chance that he's gonna win versus a thirty eight percent chance uh that the president is going to win. And and and that's the lowest

number we've seen for the president a cycle yet. On the other signal is the performance of the SMP five hundred itself since the beginning of August, and that indicator right now is up about three and a half percent uh collectively, and historically when the SNP is positive during this period, that that typically signals that the incumbent party is going to win the election. So you've got two different signals pointing in completely different directions. Which one do

we respect? How do we plan? So, Phil, do you expect given this messiness that you characterize as it relates to the president is health and the uh some members of Congress fiscal stimulus? Are you expecting any? Are you just saying this is so our expectations for fiscal stimulus? And you and I talked about this. We're high in July. Uh,

They're they're very low. Right now that that while the numbers are narrowing, the Democrats and House have taken their offered their AFT down or about two point two trillion dollars, the Republicans in the Senator up to about one and a half trillion dollars. But while you can say, okay, well, let's split the difference, let's call it, you know, two trillion dollars and call it a day, that the two sides are very far apart on on three key issues. I think money uh for the cities and the states uh.

The the idea of liability protection for businesses that have done the right thing to protect their their clients and their employees. And and the idea of this six dollar a week unemployment bonus extending that out through the end of January until we get some conceptual movement on some or all of those issues, I just don't see as being anywhere. Yeah, Phil, I suppose it's time to just to sit back and relax and wait, right, you can

do that in the market. Does anybody relax in the market when the positions on All right, Phil, Orlando, thank you so much for joining Federated Herme's chief equity market strategistant head of client portfolio management, and I'm sure he's getting a lot of calls these days. Sixty eight point two billion dollars in equity and six hundred four billion firm wide pole. Yeah, it's just extraordinary. I mean it

feels kind of laying out. You have market risk, which people are are paid to measure, You've got political risk, which is we're really peaking here, and then you've got the whole pandemic risk here. So there's a lot for investors, obviously to try to digest as they try to formulate a plan for the near, intermediate, and longer term. I love where I'm live team says about the treasury market, because of course we didn't see that move to something before.

Basis points they talked about a crowded triasury market do for some social distancing early. There's a lot of short positions and long bond futures, which, just as many areas of New York City may end up getting shut down again. I thought that it was interesting to see some recent housing data and some recent studies that show that Manhattan at least shows prices going up even if inventory is coming on the market and there aren't as many sales.

So let's bring in somebody who knows exactly what's going on in terms of Manhattan and the five rows. Best Freedman is CEO of Brown Harris Steven's Best thank you so much for joining, and doesn't explain maybe a little clearer. Apartments in the third quarter in Manhattan sold for higher prices than they did pre pandemic. Now not as many of them sold, but it's still surprising to me that that was the case, that they went for higher prices.

Can you give us the explanation? Yes, I can. I think there's a little bit of confusion because in the third quarter we had some about sixteen closings of a very high end project, which adjusted the price up, so it's not really an accurate representation of the average sales price. And then comparing it to the third quarter of we had a really uh, not positive third quarter because so many people try to close in the second quarter because of the new mansion tax, so um that had an

impact as well. And also some of the prices and closings that you're seeing are partially due to pre pandemic contracts that were signed. So it's a mixed bag. Although I will tell you that the New York City real estate market has picked up modestly and we're doing much better. I mean, the second quarter we were closed down pretty much. So we're having a huge increase and we're very happy

about that. Best where are we in maybe just Manhattan, where you field the most compleable commenting in terms of vacancy rates now versus were pre pandemic, and how bad do you think it could get? You know, it's it's hard to tell. I mean, think about this. There's been a lot of media saying, let's just say that, you know, it's not a ghost town here. There are people that are buying renting here. We're seeing the numbers. UM. But

we certainly have more supply than we did before. UM And it's too soon to say whether people are just temporarily leaving the city or there permanently, So that stuff is still it's uncertain. UM. But there are plenty of rentals UM and the rental market is a bit soft, UM and so that's opportunity for people. But um, and there are a lot of condos new developments that UM, there's a lot of vacancies there. But that was a problem before the pandemic, even hit, So we're still wrastling

with all of those things. UM. But having said that, if you look at the third quarter numbers overall, UH, it's clear that New York City is awake and busy and the market is doing pretty well. Considering what price point are you seeing the most action best and what are the if the If it's a skewed picture that we've been looking at, then what is sort of your

your sense of what the average pandemic discount is? I would guess if I had to say, it's hard put a blanket over it, because obviously the high end has been impacted much more than the lower end. But we're seeing most of the business under a million. About fifty percent of the deals of contracts signed have been about

have been under a million. But and then you're seeing the next between one and two million, it's about UM and then the high end, if you are between two and three million, that's about twelve percent of the market. So if something is priced right, even if it's ten million dollars, it's selling. But we're very sensitive to over pricing and the sellers that are anchored to these pre pandemic prices and are not realistic their UH their apartment

or their home is just sitting there. So we know that people have to be realistic if they do want to sell. Talk to us, if if you would best about the rental um market. What kind of price discounts are you seeing in the market today. Um, that kind of surprised you. Here. You know, you're seeing uh, you know, for the first time, you're seeing landlords being incredibly flexible, UM offering too and three months rent for free. Uh. And I'm seeing a lot of landlords let tenants renegotiate

even though they have a fully executed lease. Um that you know, let's say it goes for another year or two. Tenants are calling landlords and saying, look, you know, it's a different environment. I signed this before the pandemic. I'd like a discount. And I'm seeing as much as ten to fifteen percent off of leases that were already fully executed. So landlords, UM, don't want to have somebody leave, They

don't want to have toy, so they're they're negotiating. They're being much more reasonable throughout best What do you say to somebody who can carry the cost of a place but definitely wants to sell at some point, are they better off to keep carrying that cost until the picture is more clear as to when, if ever Manhattan comes back. If they can or do do you, we advise them, look, just just lower the price, get rid of it. Let's dy else carry the cost of us. I mean, it

really depends on their circumstances. If they if they need to sell um, they should price it right. And you know we've had we had a bidding war last week um and on something that was four million dollars um. So if it's priced right, it was just you know, what's important to a lot of people is they want to be close to where they have to go to temple or to school, and they want to be able

to walk. You know, right now people are concerned about public transportation because they're worried about their health and safety. As you know New York City's transportation, subways, buses, all of that is so important. But people are now opting to want to be able to walk to where they have to go just to be safe. So when if an apartment is close to a school, for example, people are saying, yes, that's perfect because I can walk. So that's been taken into account. But if you can hold

off and you have time, and you can wait. You could potentially wait a little bit. Hey, best, thank you so much once again for joining us. We always appreciate your site into the real estate world of New York City. Best Freedman CEO Brown Harris Stevens giving us the update

on the Manhattan real estate market. Time to get back to the President's health and of what we might find out exactly, especially after this news that we just learned that Kati Mcannerny has also tested positive for the coronavirus. So let's bring in Jamie Matsil, Senior Fellow at the Atlantic Council, former National Security Council official, and founder and chair of the global movement One Shared World. So Jamie, talk to us about your reaction to all of this.

It's spreading like wildfire in the White House. There don't seem to have been any precautions to try to save other people, and there still aren't. We just heard today that just now that Katie Mcananny, who has apparently been briefing reporters masklus over the last couple of days, also

has it. Yeah, we can't be surprised. It's it's total chaos, lack of awareness, lack of honesty, lack of transparency, everything that is characterized the Trump administration throughout the entirety of it its administration, um is now defining how our country and the White House responds to this, to this terrible crisis. And um, this is why we're in such danger, this is why our our country is at such unnecessary risk.

And it's just unimaginable that when they had enough information to start being careful, Um, the President puts his perceived narrow interest above the interests of the White Houses, colleagues, his family, and the country. And it's it's really concerning. And this is the kind of of crisis that could

have huge, not just national, but global implications. On the callousness with which this administration is behaving is just breath taken, Jamie, given your experience on the No Security Council, What is the national security implications of what we're experiencing right now and over the past several days. So our allies count on the United States to be a sound We play a foundational role in the world. And there's a reason why all of our allies don't need to build million

person armies or develop their own nuclear weapons. And that's because they believe that the United States has their back, and we have for for many, many decades. With the US in chaos, UM, with so many questions being raised about the validity of our elections by the President of the United States, our allies need to be worried about whether we have the ability to back them up, and our adversaries will recognize that this is a moment of opportunity.

Who's been seeing that for a while with the behavior certainly of China and Russia. I'm recognizing that that in many ways the world is more of a free for all now that that the United States, because of the unimaginable, um poor behavior of the of the Trump administration, US is in many ways out of the game in big

ways global. What about the Senates, Jamie, I mean, this is not just the executive right, It's it's it's other branches of government that's impacting too, and in fact all branches of government at this point, because you know, even as Mr McConnell says the timeline is going to be the same for the school disappointment, it could very well be that that doesn't actually transpire. So, you know, have you ever seen anything like this that the government sort

of infects itself from within. You know, we've we've seen it in the United States where we had our our

Civil war. Governments have broken down over history, and way it happened to the Romans has happened to lots of governments where there's precious from without and collapse and decay from u from with him uncertainly a very patriotic American, but it's heartbreaking to see the president of the United States doing to our country what our adversaries have tried and failed to do to us for many, many decades.

What do you think, Jamie, if we can just kind of hypothize about a potential for a Biden win in this election, how do you think he will approach national security and our relationship with our allies and others around the world. Can we can we go back to kind of the way it was before? Yeah, and so and and Joe Biden is my full disclosure, he's my former boss many many years ago when he was on the Senate Foreign Foreign Relations Committee. But a Biden foreign policy

is going to look in many ways more traditional. We have of our close allies around the world, countries like Japan, Australia, Korea, European Union, countries and others. And rather than than phraising our adversaries like Putin and the Russians and attacking our friends, we're going to try to build We the Biden administration, a Biden administration would try to build a world based on common goals, building alliances, bringing people and countries together

to do great things. And that's what America is about. That's what we've been about, not about hitting one group against each other, against each other, as the Trump administration has done, not undermining science, not knowingly infects, infecting people, or endangering people just for for political systems. So I think that many of us have grown accustomed to the United States playing a responsible role in the world. We can still play that role, but we have to do

things very differently from what's happening now. What is the best case scenario from here, Jamie and and I realized that's a difficult question to answer. So in the short term, I certainly hope that President Trump has a speed recovery, and then I hope that that everybody who's been infected by the callous behavior of the president in the administration

they have a speedy recovery. And then I hope that they recognize that what they've been doing, undermining the scientists, encouraging people to not wear wear masks, all of these things is the long way to go. Yes, maybe there's an opportunity to bring the country together around doing the right thing. Jamie, thank you so much. That is Jamie Metzel, Senior Fellow at the Atlantic Council, former National security official,

founder and chair of the global movement One Shared World. Today, you're drum by Max beson Biotech, farmer and healthcare, calmness, war, Bloomberg Opinion and as we await comments from the doctors at Walter Read Medical Center, perhaps about when President Trump will be released, and we'll bring that to you. Max, thanks so much for joining us here. Boy, there's so much information and perhaps misinformation or just confusion about President Trump at his time at Walter Read the treatments he

has received. Um, what do you know as the latest? What do we know? So you know, all of this is with the caveat that you know, I'm not a physician, and as you said, I'm I'm working from information that has been um at times quite contradictory and confusing. But you know, the latest update we got was m was yesterday the news that he potentially could be discharged as

soon as today. But that news, of course, was was sort of countered by the fact that that we got the news that he was on a third UM significant medication Deckson episode, a powerful steroid generally given to people that that have quite severe COVID as a way to

tamp down potentially dangerous inflammatory response. Um, you know, the use of that medication would tend to in a vacuum in other cases, point you towards the notion that you're dealing with a more significant case or more severe disease.

But of course, the fact that they've been you know, quite aggressive about drug treatment the whole time, giving him or general experimental and abody, even though they just released you know, early stage data last week, moving on to m desivere and now this it all just makes for um a really difficult to parse scenario, especially when you have new information that that changes day to day about what's happened on any given day of the president's treatment.

So um, it's tough to tell, really, And also the possibility that that that all the doctors might have decided to just frontload everything to throw everything at this at the president at the very beginning to try to stop it from becoming a bad case. Whether that's the right approach or not, I certainly don't know, but that seems to be what they're doing. The President has been tweeting for the last four hours, you know, all caps tweets

about various different things. Is it possible that he feels better because medicine is working right now, But you know, discharging him would be potentially very dangerous. You know, it's really again difficult to tell um just because you know, we we know some about how all of these medicines were individually, we know very very little about how they

might affect somebody used altogether or in concert. I'm not aware of a significant amount of data for the use of any two of the medicines together rather than all three and and then both from you know, General's medicine because it's new rim desivere because of potential liver and kidney impacts and then decks in episode because it affects a variety of different sense uh body systems, and and

damp into the immune system. All medicines that you would expect to have um a significant amount of attention and follow up paid on top of the fact that you know, the president has a symptomatic case of COVID and is seventy four and overweight. So again, you know it all it's a it's a picture that, given the limited facts that we know, is sort of difficult to piece together

with the notion of leaving the hospital today. But you know, again you you can there are certain significant medical facilities at the White House. Um, we don't really know that much about his conditions. So this is all at the end of the day, um, speculation and speculation made necessary by you know, poor disclosure from his physicians. Max, give us the latest from your reporting on kind of where we are in terms of vaccines. Is there any change

in the timeline? It's I guess the consensus was you might get something late this year, early next year, and then maybe by mid next year have maybe broader disseminate our distribution. Is that's still kind of what you're hearing that sounds about, right, Um. And And the kind of key mediating factor here is when you get data and then when you might get an approval decision into how

broad that is two different things. We could conceivably, UM, sometime within the next month if if Fiser's vaccine is doing really well, get efficacy data, but it will take time to evaluate that, and the FDA may want more safety data. So that timeline you pointed out, um still sounds about right to me. Any initial approval it's gonna en.

Availability is going to be quite narrow and um it's it's gonna take some time to get the confidence in the data and quite frankly, the number of doses needed an infrastructure to have a broad vaccination for that you're you're looking at next year. I just want to point out, while we have Max on that we did get the Nobel Prize in Medicine today and it went to the discoverers of the hepatitis C virus and and and and

treatment for that. So that's something worth noting. We all had a deal today, Max Bristol Myers is thirteen billion dollar deal. Hearty. Indeed, as you say, why is it hearty? So it's a deal for Myocardia, a manufacturer of an investigational novel heart drug, and for person our squib. It's it's a move away from cancer drugs towards towards something with a little bit more of a less competitive, clear path to Um, you know, potentially addressing a pretty sizable market.

So I'm interesting to see that in a deal in a year where the biggest deals have been in stet for cancer drugs. So so something that I think may may well for off for them in in targeting the hard market, which can be very lucrative. So Max does this suggests? I mean, it just feels like in the healthcare business, you know, it's ripe for deals. We get

the deal activity remains pretty consistent, pretty heavy. Is this just an example of you know, Bristol Myer saying I can either develop, uh, this drug or this therapeutic or I can go buy it and I just have to figure out what's the best economic model. Is that kind of what we saw here today? Yeah? Absolutely. Um, you know, there there has been some muting of deal activity, but relative to most other sectors of the economy, the pharmaceutical

business has done you know, pretty well. During the pandemic. People still need medicines, uh, and then they will into the future. Add into that, you know, low borrowing costs, um, the continual need to come up with with new therapies, and you know, the high failure rate of research and development. You're going to continue to see. Um, I think some some pretty good deal flow going forward for distort type

of medicine and others. And Max, finally, you know, what would be the one question you'd love to hear from the team at the Walter Read Hospital today because we

will hear from them at some point soon. Briefly, Um, you know they're they're quite a lot, but I think more detail on on when and why he's needed oxygen supplementation, what the plan is to take him off of decks and episode, Um, what their rationale is for if they do move him out of the hospital for doing so, given that he's on all these therapies and the status of his lung scans. Not much detail on what exactly they saw there? All right? Four questions from Max and Nissan, biotech,

pharma and healthcare columnist for Bloomberg Opinion. We thank him very much for his time. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Monny Quinn. I'm on Twitter at Monnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast You can always catch us worldwide at Bloomberg Radio.