Vaccine Will Migrate Into Pre-Filled Syringes: BD CEO

be joined by Sarah ponzac here, cross asset reporter. As we get into dig into the markets, I want to get over to the CEO of Beckton Dickinson joining us to talk about the global medical technology companies strides in helping to fight the pandemic that is COVID. Nineteen. Tom Poland joins us right now, and Tom really appreciate your time. I know this must have been an incredibly busy uh year and now year and a half for you. Um where do you stand right now in the fight against COVID.

Thank you Madden and Sarah for for having me. So Bedias has a very broad um roll in in combating COVID, and we we have been busy from the start, not only working closely when we're a global company, and so I had a role whether or not the outbreaks in China through Europe to the US. We've been on the

front lines right from the start. Today we are a major provider of solutions for rapid diagnosis of COVID with fifteen minute point of care tests as well as molecular tests which we've enabled u of any patient who ends up in an ICU with COVID will be touched by one of our devices, and so we have a major role there. And today we're very, very actively focused on ramping up production of syringes. As the world leader in

syringes for delivering vaccines. We've committed to make an incremental one billion syringes this year specifically for providing COVID doses to COVID vaccine doses around the world. So this is how we're so lucky to have you today, because not only do you manufacture medical tools, you guys have been

at the forefront of creating COVID nineteen testing diagnostics as well. So, with that said, seeing the production ramp up, where do we stand now and not just the fight against COVID nineteen, but also when it comes to COVID nineteen testing diagnostics. Clearly we have come a very very far away in

the matter of matter of a year. Absolutely mean, we went from not having any tests really to diagnosed covid given it it really wasn't relevant before two we for example, we normally take it takes about three years to develop a new diagnostic test, and we were able to do so in three months and ramp up production. We're a leader in rapid testing for flu testing traditionally and have

been so for for over ten years. And let's say in a normal year of flu, we may make ten ten million tests in a very severe flu season, maybe eight million tests in a normal flu year. We quickly ramped up to make ten million tests a month um for COVID testing, so very significant increases. And I think today, um, what's very positive is is that testing capacity exists right that we've passed the point where testing capacity is an issue. There's more capacity than there is requirements today and I

think that's that's obviously a great thing. We're seeing really good success with the vaccine deployment as well, and I think we'll continue to see progress there um. And of course today testing is beginning to shift a bit from the focus on testing symptomatic patients to beginning to focus on testing to help reopen the economy and schools and businesses and the like. So in terms of the company, what do you need to do? Two um, impress investors

a little bit more. Tom, I look at the chart of Beckon Dickinson stock versus the SMP and versus the health care sector, and you've underperformed from the beginning of why. Why do you think that is? Yeah, it's it's a matter. It's good question. I think in fairness, there was a we had a quality issue when we when I first took over in the first week that we were addressing

and that that has been overhanging the stock. As we look at being able to get that submitted and resolved, which is forthcoming here UM in the in the next quarter or two. We've communicated very clearly, I think that that will be a very positive factor for the stock. And then as we think going forward, we continue to execute on our strategy around driving new innovations into the marketplace for growth. Of course, we're driving a lot of new solutions to help address the COVID pandemic and that

that will take care of itself. This is obviously our aim strategy and to be very fair to you, Tom, you took over the CEO roll at a pretty difficult time. You cond say, I mean right when COVID nineteen was really beginning. Would you say that you have a philosophy or a theme as to how you're approaching the chief executive officer role at b D and has that changed over the past year as we have had to deal

with the pandemic. But I think for us, we're gonna come out stronger at the after the pandemic in terms of how we've used the challenge to be able to accelerate how we think about growth in our culture and our company. The example of being able to develop an essay in three months that normally takes three years, being able to scale production of products like i V sets and syringes at unprecedented rates and levels um shows really unleashes and demonstrates the agility that we have as a

large company. And what we're very focused on is maintaining that momentum in as the world gets control of COVID, and we can see a lot of momentum um that we've built over that period time, whether or not it's very much larger installation footprints of our point of care devices because of COVID that now we're adding additional menu to same thing on our molecular footprint side, or how we're for example, expanding our pharmaceutical systems business and being

able to create new injection device capacity as ultimately COVID vaccines will migrate into pre filled syringes, will create opportunities for us to help the world on a long term basis there as well. So, UM, we definitely see COVID has properly has given I think the world in many businesses an opportunity to to think differently about growth and accelerate growth over the long term. All right, Tom, thanks

so much for joining us. Appreciate your time here. Tom Poland is the president CEO of the global medical technology company b D. Beckon, Dickinson and Company. Sara Pontze are cross Asset Report. Her is joining me today is UM. We wish Paul a very happy Paul Sweeney out on very well deserved KA day. We have seen Sarah some amazing moves in the oil market today and we want to bring in Ellen Wall to talk about that. She

is president of Transversal Consulting. She's also a Bloomberg Opinion contributor, and I guess Allen Transversal is uh sort of the intersection between geopolitics and energy policy? Is that? Is that fair? Yeah, that's exactly right. We're a boutique consulting firm that does work in the energy policy and geopolitics and energy markets sphere. So what do you make of today's OPEC meeting? They agreed to keep output unchanged in April, but we have

a jump of five or more on the underlying crude contracts. Yeah. Wow, this was This was a surprise, I think to most to most people going into this meeting because we saw a lot of headlines seeing that OPEQ was poised to kind of cool off an oil market that looks like it was about to overheat in prices, and instead, Uh, they're basically seem like they're about to fan the flames. Uh. It does look like Russia is going to get some kind of special permission to increase production about a hundred

thousand barrels a day. Uh. They say they need this for domestic consumption, but when you look at the overall oil market, that's not all that much. Plus, so you've got that one million barrels a day that Saudi Arabia is holding off the market and they haven't heard for sure about that. And uh we know that the Saudi oil minister likes to uh make a splash and uh have a surprise at the press conference. Uh there is talk that the saudiast could actually decide to hold that

oil off the market for April as well. And what a long strange trip it has been for oil prices. I mean, less than a year ago in April, we are talking about negative oil prices after another OPEC surprise. Today we get a surprise to the upside. And I'm looking at w t I crude oil now trading at the highest level since April. Like you said, they want

the opposite way, possibly fanning the flames of overheating. What comes next after this, well, I think now we need to we need to start talking about the fact that UM gas prices in the United States could um we could be seeing average prices in the US hitting three dollars a gallon, which is a significant amount of money for people who aren't used to paying that much. Plus we've got that on top of by the way, I laugh, ha ha, I laugh from here in Berlin. Three dollars

a gallon. What I wouldn't do for three dollar a gallon gasoline? Yeah, well, well in Florida where I am, I think it's about to sixty right now, so um so yeah, it's it's it's a big deal. I think for a lot of people that are still very much hurting from uh from the economic consequences of the pandemic and UH, that could really pose some some hardship to people, particularly this summer when gasoline prices generally rise. Of course,

you have to look at US production. Typically when when oil prices rise like this, we see US production uh increasing and kicking into here. But we've really had oil basically holding study in the US about eleven million barrels today. A lot of the big producers are saying that they are not planning any increases. But you know, with w T I uh, you know, up at sixty four dollars a barrel, I really don't see how how they can

maintain this discipline. How you know, anyone with with with some money, can you hire a hire a crew and get something going down in Texas if there's money to be made. So I wouldn't be surprised if, um, if we do see production kicking up somewhat in the US

in response to these higher prices. At the same time, you've also got to look at India and China, which India is really a most taking OPAC to increase production because of rising prices there, and you have to really say, well, what is that going to do to their economies and

to their economic recovery. I'm paying about seven fifty seven I think in dollars a gallon, and my truck uses about uh well, I'm so used to thinking about in European ways, so you know, like sometimes thirty leaders for a hundred kilometers, but I guess it's about ten miles per gallon is what I get in my truck. So and nonetheless, um, ellen, I will be driving as much as I can when this lockdown is done. You know, a huge carbon footprint because I need to get out.

I've been cooped up for so long. Is that you think the same for everybody else? Well, I think in the US, and maybe a little different because some places have been open for a long time. But I do think that we are going to see a third. Um, We're still looking at a deficit in jet fuel demand because air travel is not picking up the same way road travel will be. And I think that given continuing restrictions, that we're still going to see jet fuel not really

recovering two pre pandemic levels anytime soon. But so the question is can can gasoline demand make up for that? And in some in some respects it definitely can make up for some of that UH deficit. But what we're really looking at is actually plastics, and we've seen an increase in production in the United States in terms of of plastic, single use plastics especially, and that's actually um taking up some of that UH deficit in jet field demand.

I will say that, although I have a large carbon footprint, I'm very much against plastics, so I try and balance out, you know, my eco activism in that sense. Allan, thanks so much, Ellen Warred. They're joining us from transversal consulting. She's also a Bloomberg opinion columnist. Sarah Ponzak. I'm so proud that you used a grateful dead reference. I had a feeling that you might you might like that. You

must just about five when Jerry died, but I appreciate it. Nonetheless, oil trading up five percent at sixty even Matt Miller here in Berlin alongside Sarah Ponzak in New York. We are joined by former portfolio manager and head of research at Rubicon Fund Management, who uh has written, Richard Cookson, who has written a pretty amazing column i'd say for Bloomberg Opinion. Richard, I am, you know, as a professional journalist,

a sensationalist. I love alarmism and if you if you say black Monday is coming, that just gets me going. So why do you think we're headed for possibly a crash the likes of which we haven't seen since n Well, I didn't quite what it. The tong is? Does that the actually what I said, the mechanism is quite similar. And I did go back to night in seven. Do you have as many gray hairs as I have? Um?

What was the big driving factor in October seven was something called portfolio insurance where these guys called Layland and Brown and Rubinstein decided he didn't need to buy options. You could go and replicate them and they told you how much you needed to sell. And basically what happened was that you've got this force selling into markets, the mechanistic selling. Now. I say that because actually if you look at every single bank and large institutions risk management.

There's something called value at risk, and very simply, what this does is it looks at the last year that you can use longer and it says, okay, what's the volatility over that time period, and what's the correlation of that time period, and you whagged all that in the transiard and number. Now, if those volatilities start to start to go up, and if correlations starts to shift, then

mechanistically you're going to get some selling. You can put more capital in, but actually, guess what, when you're losing money, you tend just to sell. So it's the same sort of mechanistic process. In other words, particularly if those correlations flipped. So what you've seen is equity markets falling at the same time as long dated treasury bonds falling. That is a real problem because they assume that most of the time, and most I mean of the time, that's not going

to happen. So you're assuming that it it happens only on five percentifications it's happening more than five percent. So you're starting to see forced selling in both markets now the longer term typically because typically um investors see at least in my young lifetime, I'm not even I'm not even fifty yet. Investors see bonds as a safe haven for

when stocks are coming down. So um, you buy bonds when you're worried about selling stocks, and you can get read of your bonds when you want to buy equities. You're saying that, and that that has kind of looked like it's changing over the last couple of weeks. Well, again, it's a very interesting question that that that negative correlation between the two, because before about that was positive. In other words, for decades. Previously, it tended to to tend

to go in tandem. In other words, trojury bonds sold off at the same time as equities and vice versa. Now that changed. The best evidence suggests that it changed because you had disinflacetory pressures, and I think you've got far more inflationary pressures coming through at a time when both equities and bonds are very expensive. So you're relying upon a correlation that has actually only been um there

for the last twenty years or so to protect yourself. Now, all I'm saying is that if you have those correlations flipping the other way around, from a risk management point of view, you're going to be able to less of both because they're not losses in one is not going to be able to offset again to the other and

vice versa. I can see. And what's interesting, it's such an interesting we could have this conversation for an hour, right because it's so weird that disinflation worries happened in like after Paul Walker, all of a sudden, woot disinflation. It was the opposite of what he's famous for. So, Sarah, what do you think watching Paul Worker was the early Yeah,

Paul Worker was remember the early eighties. It was really when China came along um and added surface capacity to the to the world economy, got these disinflationary pressures coming through. And if you look over the last twenty years, what changed for America has been you've got this persistent disinflation

coming through from importants. So all I'm saying is that actually you're starting to get some inflationy pressures coming through, both because of the supply side shocks from the pandemic, but also you've got central banks um pretty money on a fairly unprecedented scale. Add at the same time telling we're not going to work, which is either them being stupid or mendacious possible combination, and we do see five year break even inflation expectations now at the highest level

since two thousand and eight. Just last week, speaking of that flipping correlations, we actually saw real yields and US equities the correlation between the two dropping to the most negative level in five years. And I would love to read a really quick excerpt from your opinion piece, Richard, where you say the bigger point, however, is this this disinflation. Disinflationary forces that help propel assets higher are turning into

inflationary ones. And if that leads to a shift in bond equity correlations that seems to be happening, institutions big and small will have to stump up more capital or reduce risk across the board. But my question to that is, if you need to reduce risk, but you can't go to bonds because all of a sudden, bonds and stocks are moving in tandem, how do you actually go about reducing risk? Right? You just have to be basically, and again, it's not just bonds and equities, it's bombs and risk.

So if you look at you know, credit, or you look at junk bombs, you'll find that actually there's a very very strong relationship between the performance aspectory markets and performance of credit. So actually what you need to do in those sorts of situations is just to hold much more cash and all by a lot of volatility. So if you've noticed, even though you've seen a tear in equity mark, volatility and equity marks between persistently bit and

that's what happens when you can't head with bombs. It's I mean by holding much more cash isn't something you want to do if you're truly worried about inflation, which is driving this. I have to say at the at the offset which are apologizing for dramaticizing your column, because

I didn't even have to. I think it's an incredibly well thought out and well written peace and I really appreciate you joining us, and I will recommend to all of our listeners just check out if you have a Bloomberg terminal in front of you O P I N go to check out Richard's calum It's honestly, it's one of the most interesting columns I've read on the opinion page in uh In in a long time, and I read opinion columns. Um you know regularly. It's probably my

favorite section on the Bloomberg terminal. So this value at risk. Uh, you know that we lay people became familiar with. I think during the h and Coldman Sachs was called up on Capitol Hill in front of Senator Carl Levin. UM. I haven't really thought about it since then, and it's really great to see UM and also a little bit scary, honestly to see this because Sarah's question is good one. What do you go to if you're worried about um

of our shock and cash is terrifying? Volatility is a very interesting answer, and that's one I'm going to continue to delve into with our guests UM throughout. Richard Cookson there. He's a former portfolio manager and head of research at Rubicon Fund Management and a Bloomberg opinion columnist for US. Now check it out, O, P, I N go. This is Bloomberg. All right, let's get over right now to someone who might advise my parents if they had a

lot more money. Michael Sonnfeld joins US chairman of Tiger twenty one on how the ultra wealthy are investing. And Michael, it's especially interesting to ask you what you think of the Elizabeth Warren tax plan. There are some very wealthy people that are for a wealth tax um, but probably more who think it's pretty Unamerican. What's your take? Thanks

for having me. Most of our members are entrepreneurs who spent twenty thirty years creating businesses from scratch, their first generation wealth creators, and the wealth tax would be in their mind antithetical. Most of our members are willing to pay taxes, even progressive taxes, so the more money you make on income, the more you pay. But a wealth tax creates a real problem for people who own businesses.

If you if you have everything tied up in a business and they give you a wealth tax, you can't sell two percent of a business or five percent of a business. Uh. And if you look at yields on a bond, if you have a wealth tax on top of an income tax, you can't even break even on it.

So there's a lot of negatives and I don't think it would improve the economy particularly right Well, clearly we have a new presidential administration, and it will be interesting down the line to see what the Biden tax plan in actuality actually looks like and what the policies and

encompasses actually hold. I want to get to how many of your members over at Tiger twenty one are actually looking at markets and thinking about markets these days, you release information on how your members are positioned, and something that really jumped out at me was that only three percent allocation to hedge funds, which is a historical low. And I was hoping you could give us some color on really what's driving this, what's behind this? Sure, this is a this is a ten year low. Hedge funds

were more than twice as much as a proportion. But hedge funds typically, although there are many strategies, in general relate to the risk free or government rate, and when you have very low rates, it's very hard for hedge funds to produce the kind of historic returns that made

them stars. And then you have the compounding effect that hedge funds generally have very high fees, which are acceptable when they're delivering ten and fifteen and returns, but in this very low interest rate environment, hedge funds just can't produce there. They can't squeeze the juice enough to make it attractive, and then it gets even hot harder when

you look at the fees. This is what our members are doing in meetings is comparing the different opportunities, and uh, they're just not adding up to hedge funds these days. What about private equity, It's I think interesting that, um, after real estate, your uh, your I guess group of investors is most invested in private equity after in real estate, and that's even better than public equity. Yeah, it's it's

it's an extraordinary evolution. Are members over the last decade have gone from low teens, ten eleven, twelve percent private equity to it's the one area over the last decade that has moved forward all the time. You know, are members because our members are first, first generation wealth creators and they come together in these groups they're comparing notes.

The three places they're most invested is real estate, as you say, private equity, in public equity, those three still add up to almost eighty percent, so they're fully invested. But it's in the private equity where you can really create wealth if you can roll up your shirt sleeves

and you have the skills to build businesses. It's the small businesses that grow into business is that are big enough to be owned or bought by public companies where the largest amount of wealth is created, and that's what our members represent. It's it's sort of making creating wealthy the old time way in America. So lately you mentioned the risk the rate of return. We've seen long end

rates rising. You now see rates at pre pandemic highs where in the midst of the fastest quarterly increase in tenure yield since would you say, though, that this move is getting to a point where you or your members would say, maybe this isn't such a great sign. You know, um, most of our members are more entrepreneurs than investors. Their skill sets are not as market based as they are building businesses, and what they see is the potential of inflation.

Inflation hasn't happened in the last couple of years on the wage side, and things that people buy, if you're UH in terms of living have not gone up, but assets have gone up. But look at just you just mentioned a few minutes ago, lumber prices up a hundred percent. There's recent reports that we might be in a commodity supercycle. One example that we talked about in our groups is that the whole inter the whole UH infrastructure is going to be rewired for new energy copper is going to

be a long bet. That's amazing. So we could have rising interest rates UH and inflation and I wouldn't bet against it. Michael, thanks so much for joining us. Really appreciate your time. Michael sonnon Felt, their chairman of Tiger. 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. Pet On Paul Sweeney, I'm on

Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio