We Must Start Planning For a Permanent Pandemic: Andreas Kluth

we must start planning for a permanent pandemic. And um, Andrea's I want to say, this is getting more and more understandable by the day. But are you being a little bit too pessimistic? I mean, you say, recent developments suggests we may never achieve HERD immunity. Yeah, that's correct, And that sounds pestimistic. It wasn't meant to be. And if you read the article, you know the tone is of anything. I'm trying to be cavalier about it and

in them almost optimistic. Note. I think if this is, if this is the way it's going, Matt, I think it's better to be realistic. In fact, you're into planning and into scenarios as a as a scenario then, UM, just lying to yourself and and as we believe, as we have been like, oh, it'll be over next month, it'll be over in the summer and the fall. We've been through this a few times, and um, we can

go through the arguments, Matt. But there is a bit of a consensus some yeah, that that it may be quasi permanent, which is what Paul Bloomberg opinion columnists have been saying to me a lot lately. If you read the article I'm pulling boats out of the middle of the story, I read it start to finish me too well. Untry asked you talk about it in the in the in your piece about the whole concept of herd immunity.

I think I think one of the working hypothesis in out there is that the combination of people that have already um had the virus plus those that are vaccinated will be enough to get us to quote unquote herd immunity. What's the kind of argument there? The counter argument is, so, so you're right, so you can get immunity from having had it and having antibodies and being immune that way, or from being vaccinated in all the other diseases out there,

including this one. We thought the two to boil the many arguments down to the two main ones. The first is we have now evidence for South Africa and Brazil that having had the disease does not make you immune to new variance, new mutations of the virus, so that there is no what they call cross variant immunity that essentially needs that path to herd immunity isn't may not be available. That leaves everything on the vaccines, and as you know, that's going well in some places and others,

but that this isn't about that. The the virus is mutating, mutating faster. Probably I'm calling it an arms race between new vaccines for new variants and new variants. But keep in mind there the evolution happened. It doesn't care where it happens. If you vaccinate everyone in Israel, which is about half of the people there, fine, maybe they could be taked temporarily. But the next door Syria or Palestine, you know, or in Africa, it is mutating and the

new strain they will be unprotected against. And and that is that arms race we're in and we may lose. So I don't know enough about this, and you're the historian um, which is why we have you on. I thought that, for example, in the Spanish flu epidemic, which I know it's probably not PC to call it the Spanish flu pandemic Um, we saw that virus evolved in a way that just made it like the common flu that we all get today. UM. Basically it's still spread

around but stopped killing people. And epidemiologists that we've spoken with have said that's a possibility with this virus as well. Why do you not think that's a likely path for it to take. I'm actually not have stating in opinion I think this. I'm giving scenarios. First of all, the normal thing with with pathogens, bacterial, viral doesn't matter is that the longer they evolved, they will eventually get better and get more transmissible but weaker, because it's actually the

way it gives you an evolutionary advantage. If you don't kill your host, you get to propagate longer and hop onto the next one. But what we've seen, and this is why the article is coming out now, is what we've seen in recent months is varying submerging that are more transmissible but not less severe and there's the math. The epidemiological math is interesting and I linked to it is if you have a virus that mute, that gets more virulent, worse basically, but not more transmissible, you have

linear growth in cases and debts. But if you have what we have now of a virus that mutates, becomes more transmissible and not less severe, you have exponential growth. And that is this. So, so what I'm saying is not that we're all doom. No, I'm not. I'm saying this is a scenario that so many people are taking very seriously. It just feels like, right now we have

to start planning for it. Andres you you link to that math from Adam Karski at the London School of Hygiene and Tropical Medicine, and I'm going to click on that. I haven't read it yet, but I'm just thinking, like, it's only been a minute, right, We've only been We're only a year into this, and the um pandemic lasted a couple of years before it started to peter out.

So I'm just I guess I'm optimist. I'm hopeful that we get an end not not only of the pandemic, but also eventually we get an end to these lockdowns, and you're allowed to be. Can I say one last thing? Do we have time? Oh? Yeah? Ye? For me, the purpose was to make this the curtain raiser, basically a new premise or a new scenario, which I want to follow up with lots of other columns if this is the case, because actually I'm I'm optimistic on how how

resilient we are if this becomes the scenario. What does that mean for the economy, for politics, for how we work, how we study and learn the kids, how we exercise, how we travel, all these other things. Because you will see amazing changes, and you will see us become the future us in in this and it will not be all bad. And by the way the World Happens Index just came out this week, we're almost as happy as we've always been, So, you know, not the end of

the world if the pandemic is almost permanent. And I think that's one of misunderstanding, So that want to clear that up. So Andrea's just we have about third thirty seconds here. What are you hearing from the biotech industry, from a pharma industry about their ability to create vaccines that may be flexible and in order to handle the various variants. I guess I'm very bullish on the technology.

I don't talk about companies m RNA, which I've written about in the previous article, because this is an unbelievable opportunity for that technology to use messenger RNA to make any protein we want for the body to create community against that protein, because those are the vaccine. If we have a shot in the in the arms race I

described of winning it, it's because of those vaccines. And once we've built up as we are now doing this enormous manufacturing and research capacity for that technology, we can use it against cancer. Cancer that's the next goal, and that would be definitely reason for optimism. Andreas, thanks very much for joining us. Andrea's cloth is a Bloomberg Opinion calumnists.

He's also the author of Hannibal and Me, and you can read his work in the work of his colleagues on the terminal by typing O, P, I and go this is Bloomberg. Let's talk a little bit about real estate and what it's gonna look like as we come out of this pandemic, assuming that we will. Um The vaccine rollout is going really well in the US and the UK UM, and I want to bring in Lisa

Kni for that. She's a co leader for National, the national real estate practice at Eisner Amper and Lisa, it's really interesting because this morning we saw some headlines about banks in Hong Kong that are giving up space. And of course I've spoken to the CEO of Deutsche Bank who thinks commercial real estate is one place where he can cut costs and then continue to save money going forward. Are we gonna see in San Francisco in New York a lot of big tenants start to pare down their uh,

you know, their leases. Yes, thank you for having me this morning. So when you look at real estate overall, and the story is still being written, and but it's certainly with the tenants, as you had mentioned um in

your opening description. And so some people believe that the workers are going to be more productive outside of the house versus some people's picture is saying, we still need that corporate culture environment to get innovation and growth, and so you still need that connectivity of the office, and that story is going to be with the tenant and how comfortable they feel bringing their teams back into the

office market. And so we've already seen. Did they have to do that to the extent that they had them before the pandemic? I mean, I totally I'm totally down with everything you just said. But um, isn't there a

new world facing us? Yeah? And by the way, before the new world faced us New York City and San Francisco, that same story was being written that people were paring down space and starting to at alternatives for their office spake whe whether it was hub and spoke models where there was no elevators and or or doing working outside

of those main hub cities. So this story was being written pre pandemic, and it's also being written post pandemic, and it's going to see who the winners are going to be post pandemic and saying what are those office leases going to look like? How are the tenants are going to say, maybe we're going to take space. It's going to look a little bit different because we have to dedentify now when before we were using less space for a person, now we need to increase that space.

And are we going to ask for shorter term leases which is going to drive down valuation? And how are those tenants going to negotiate with the landlords to figure out what spacing requirements make sense for them. So those cities, it's still a story that's going to be written, and again it's going to all depend on that tenant and that behavior of the people of how they feel when they want to get back into that office space. So coworking, which people were saying there's too much on the market,

and how that was going to impact. And I think in the beginning of the pandemic, people were writing off in disparaging coworking space, but that actually might tend to be a solution for some of these larger companies that are looking to downsize from their bigger office spaces that they held in these bigger cities. Were you disparaging office spaceball coworking office space? Of course, I'm I'm as soon as I get my job, and the first one is Saturday.

I'm back in the Bloomberg. See, I gotta tell you, I gotta tell you both. Um Lisa, right when he started we work, I went to hang out with what's his name now he's um, I can't remember his name's billionaire in the past ran we work. Anyway. I went down there about ten years ago and it was such a cool space to hang out. I thought it was awesome, but now you're right, people rip on it. Co working Lisa and I wonder I'd love to get a sense

of valuation in the corporate office space. Have we seen any transactions, because I wouldn't be surprised to see a building on Park Avenue or Fifth Avenue trade hands at of what it would have two years ago. Have we seen anything? So there's been a lot less trading, and cap crates really have been relatively consistent because because there has been a lot less trading, and and there's still

a major disparity between the bid and the ask. So you've seen some deals, but people are really disciplined with their capital right now, which is good um, and so we haven't seen as much trading, and so you're not really seeing the valuation shifts. And right now, the leases

in place are still long term leases. And again, as I mentioned before, that story is going to be once those leases are set to expire and the revaluation occurs, that's really we're gonna We're we're going to see the trend of either the values are able to remain or they're going to change. By the way, what I like to know, Matt, because when we walk around in New York, what really really jumps out at you because you're at ground level on the street is retail space and the vacancies.

At least it give us a sense of kind of how retail space is looking on some of these major urban markets. Yeah, and that was struggling before the pandemic, the retail space because the biggest problem in retail is not even e commerce. The biggest problem in retail is that oversupply at the stores. There was just there's too many out there, and so that's going to be the biggest struggle UM and and figure out you need capital to reposition those those retail spaces. And there's really no

capital in that marketplace right now. And so retail is gonna has been struggling and probably will continue to struggle, um post pandemic. That's going to be a really the biggest concern of that. But remember it was struggling before we even had this happen. All right, So what's the over the next twenty seconds, I'd love to just get your thoughts here. Are we going to see a rebound, a snap back rebound in real estate? So they're Snappack rebound.

So when we look at real estate overall, there's been some real winners and losers with each property sector. So each property sector has been faring um and there's always going to be an outlier within those. So when you're looking at an industrial center, that's been a darling of the industry and that's going to continue to be um. And so people are liking that hospitality, you know, leasure

travels coming back. We're reading something in the news every single day about you know, people are ready to start traveling and so large block and convention centers may not, but leisure certainly is. So there is hope for the hospitality, hope for there or at least thanks so much for joining us. Lisa Nick, Co leader of the national real Estate practice at Eisner Amper. We all know the bull case for equities. It's kind of ingrained into our minds now.

Persistent low rates, fiscal stimulus, the reopening trade, even some some good earnings. What keeps people up at night that are bullish? Let's talk to Louis Navalier, chairman, founder and c IO of Navallier and Associates based in Renown, Nevada. So Louis the bullish calling equities it's pretty solid. Are you a big proponent of that book call? Yes? The reason is sales and earnings momentum are still accelerate. So the first quarter results are going to be the peak

for sales and earnings momentum. And we're gonna have easy comparisons all year because of the pandemic. But the peak of sales earnings momentum will happen in April and May. When we get those first quote results, Well, is it going to bring with it a lot of inflation um? And do you believe that to be transitory? It looks

like it's transitory. I think what Wall Street wanted is it one of the Fed to acknowledge that inflation exists, and they when they raise their inflation target this year the two point four um that calm Wall straight down. The other thing is that there's a dollar was week for a while, but since late um February the dollars

strengthening here quite a bit. So events like what happened in Turkey earlier this week, all those things to strengthen the dollar, plus all the e t v's money printing and MMT that where they just print endless money so that's that's all helping the strengthen the dollar, plus our GDP.

You know, they're in a double differcession in Europe and uh we're recovering, so Louis, you know, there's been a question of kind of do I stick with the tried and true big tech growth names that have worked so well for me really since the financial crisis, or do I play this uh you know, kind of pivot trade this uh this reopening trade, if you will, and maybe go to some more economic sensitive areas. How are you

thinking about your portfolio allocation? You right here? Well, I'm a growth manager and we got off to a very strong start to share, mostly from international e d rs, and obviously we got caught up in that NASAC capiculation a few weeks ago, but I'm very happy with how things are coming back. Now. I'm not gonna be find the financials because that's a valued managers thing, but the

c Bilker is greater financials. Okay. As far as energy is concerned, we are starting to pick up some energy stocks, especially midstream, and so uh you know, obviously the that that's starting to look look a little more growthy, although technically that's a value stock as well. And then of course we have the chemical shortages. We have the plastic shortage in America and the big freeze in Texas, so

that those are showing up on the energy side. So there's the markets broughtening out here and that's a that's a good thing. So this whole value surge we had is a good thing. But every time you go on earning season, you're gonna have to buy the value stocks averagage. Why do you like or why were you buying a d R s at the beginning of the year. Is that something that you do? Um at the value and associates especially well, we have a lot of foreign A

d rs. We've always had a lot of Itsraeli A d R because you know, Israel's got a great silicon vallee a lot to get bought out. But we've had Chinese a d r s for some time than our perception was. Is that, for lack of a better word, China one the election and uh and we need to beat them or join them and um so um we joined them all right, Louis, So I know you growth and there's obviously tech is part of that. Are you concerned about regulatory risk? Or how concerned are you about

regulatory risk for big tech. We're gonna have uh, some of the big tech CEOs Zuckerberg and so on in front of Congress again tomorrow. I'm pretty immune to that. My biggest check would be like a navidio UM so that's just a chip stock. And obviously there's a chip shortage and uh so the semi conductor space is very healthy. But yeah, I'm not a major holder of of of the check that is restricting Jane censorship and all that stuff.

We're not part of that. But but you do love the uh Silicon Valley, I mean the original, um, the original definition of that. You began publishing research back in d So I'm guessing you're moved by you know, Andy Grove and and crew, like the the original chip producing UH companies. What do you think about the Intel news today that they're gonna, um start building a couple of new foundries. Well, that's great news, but there's an acute chip shortage. But you know, Intel's biggest problem has been

they've been losing out to advanced micro devices. You know, Apple obviously builds their own chips, so Intel is trying to get its mojo back. But you know, worst case, they can just do what Taiwan does and start to make chips are in short supply, by the way, in Taiwan, they gotta drout over there, and that's that's another compilation to a chip shortage. Um, but we own a lot of Taiwan semi conductor and microelk it. Louis just about the thirty seconds. What's kind of your highest conviction work

that you guys are doing right now? UM? I still really really like the cloud Okay, so you know, like service now are great. Obviously we like cybersecurity cloudfare. N e T is a good stock. Um. My favorite e V company is actually n i U. It's a Chinese company that makes uh electric bicycles and scooters. Um, that's my far. My favorite d Q, which makes Polly silicon for the solar sales in China is good. Um. We

also have, you know, the inverter stocks like N's Energy. Louie, great to get some time with you, and I hope we get to talk to you again a little bit more in depth. Louis Navier joining us there, founder and CEO of Navier and Associates, talking about the tech stocks

that he's interested out a Reno, Nevada. This is Bloomberg Craig So you're Auto's team leader for Bloomberg News, and he's got a fascinating story in the new double issue of Bloomberg Business Week magazine entitled the end of Testle's Dominance Maybe closer than it appears. Greg, thanks so much for joining us here. Talk to us about some of the games that are being made by some of the traditional automakers. A lot of noise coming out of Volkswagen

in particular. They had a huge week last week, where it really started on Monday with an event that was kind of shamelessly similar to Tesla's Battery Day. Volkswagen called There's Power Day, but they spent two hours talking about their battery strategy, from manufacturing too uh materials to partners

uh you know, charging stations as well. They really sort of covered the gamut, and and you know, it's it's interesting because this is a company that really since when they were caught with with the diesel emission scandal, they really sort of knew right off the bat that they

needed to make amends. But the auto industry does move in product cycles that are you know, five or so years and so what we're really seeing is is kind of a realization of this you know, change in strategy that they were sort of forced to make away from

diesels and toward electric vehicles. And what we're seeing as well is just you know, sort of the initial fruits of that that they are now building on to really try and become you know, actually that they are coming out and saying we want to be the world's biggest electric vehicle maker. By so uh, for those folks who have ever lived in Germany, we have a uh television

talk show host called Harold Schmidt. And after David Letterman got really popular in the US, Harold Schmidt, who kind of looks a little like Letterman, said, you know what, I'm just going to do the exact same thing. Where's the suit, where's the sneakers? Has the same mimics, his mimics Letterman's delivery, just as the whole top ten list, the whole thing. But in German is Dee's doing that

with musk? You know, It's it's interesting. I think that's a great question that you know, it's it's not quite as bad. I think we had a little fun with this story, you know, mentioning the fact that you know, Deecee is not dating a pop star, He's not going on Joe Rogan. Uh. You know, he is still he is still very German. He is definitely much more buttoned up. His tweets aren't quite as much. I guess fun is

a charitable way of putting Musk's Twitter. Um, but you know, I do think that he definitely is getting his message out there. He only just joined Twitter early this year. It was sort of telling that his first post he said something about taking market share from Elon and tag elon. Um. You know, I think he's been active on LinkedIn, but we know that that isn't necessarily the sort of social

media network of choice for the mean stock crowd. Uh. So you know, I do think Volkswagen very much is making a concerted effort to get their uh message out there where you know, people who've who've bid Tesla up

to the moon are going to see what they're up to. So, Craig, you know, we've heard even some similar language coming out of General Motors, Mary Barros saying, you know, makes a bold proclamations about their growth and their investment in e v s. Here is just just a case of the automakers saying, Okay, now we finally see enough global demand out there where we can make these things profitable. Is that basically what they're all kind of coming to that conclusion.

I think that's right. I think you know, people give Tesla a lot of grief for you know, Elon's sort of intricacy, if if you will, But he what he has done is really sort of gotten people excited about electric vehicles. And I think he's also sort of established that, you know, if you make them compelling, people will want to buy them. I think you've also got a situation where the industry was rightfully concerned that battery prices were not u to where they needed to be for this

to make economic sense for them. And they may still not be U where where you know they need to be, uh, but but they're getting there. And I think you're seeing the industry sort of acknowledge that, yes, there there is demand if if you really sort of put your your

weight behind this effort. And I think you're also seeing a sort of push on the part of the regulatory side of things where they're seeing, you know, Tesla have some success and really using that as as reason to put more pressure on the likes of you know, Volkswagen or General Motors or what have you. I think we

will see the US sort of follow suit. We we've seen a lot of action out of the EU and China, and you know, you do have expectations that the Bimen administration is going to sort of go back, uh, you know, more more towards where the Obama administration was in terms of you know, their approach to regulating the auto industry.

So Bloomberg readers that are paying close attention um will know that Craig Trudale has more experience covering the global auto sector than I think any other reporter in the world. You've been in Detroit, right, you covered the Big Three there, you went to Asia covered auto makers there, You're now running our coverage here in Europe. Who do you think is best positioned too to claim global dominance in e vs?

I think in terms of the company that has the resources and the sort of existing scale and and the wherewithal, it's no doubt about it, it's Volkswagen. I think the question is, you know, sort of how quickly can this company that has a lot of um, you know, sort of factions within it a lot of key stakeholders who don't always agree. How quickly can Herbert Dace kind of

get everybody rowing in the same direction. You know, I think we had the hyper Drive newsletter that I'll plug while I'm on here today that you know, took a

look at the idea that this is. This is a CEO who just late last year his job status is kind of up in the air because you know, it's really cutthroat in Volfsberg Um and you know, so there there is going to be a challenge of just, you know, how quickly is he able to sort of phase out the combustion era at Volkswagen and really ushering and electric era. And that's going to be the question for me as as to, you know, how quickly can they really give

Tesla run for their money. So, Craig, you're based in London, Matt's in Berlin. Let me ask you too, what's this? What's the demand like on the ground in Europe? Generally for evis you see an awful lot. I would be interested to hear what Matt is seeing in Berlin. But walking around London and obviously in these you know, lockdown times,

all you can really do is walk around. Uh you know, you do see an awful lot of of cars plugged into lamp posts over here, a lot of um, you know, BMW I three's, which um, you know, I've always thought are are very unfortunate looking, but they are. They are pretty pretty neat little cars evolved on that, you do. I hated them at first, but I actually love them now now that I've lived around them for so long. I think the out Etron looks like it's a pretty

dominant player right now. Um, and I think that might be what consumers want. A car that looks more like a regular car, like an Audi A five and Etron looks like that than UM and I three, which looks like, I don't know what, it looks like nothing bon w ever made before, and that could be the key. But Craig, you hit on the one thing that we need more of, and it's charging stations, right Yeah. Absolutely, I think the

charging infrastructure issue is still a really big problem. I think, especially you know, you think about city centers and people who who rent and don't necessarily uh you know, have a place to park a garage. So I bring up the lamp post is something that I see a ton in London and did not see around New York obviously. Uh but but I also think, you know, even in

rural areas as as well. You know, you you do have obviously the ability for for folks to charge in their garages, which are more common, but charging stations definitely being needed for longer trips, and that being you know, still a concern for people that's going to keep them from from making the jump. Very cool, Craig, thanks so much for joining us. Craig Trudell wrote the story the end of Tesla's dominance may be closer than it appears,

a bellegially coming up in Business Week. And of course you can get the hyper Drive newsletter on Bloomberg as well. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. On Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio