Surveillance: Pandemic Response With Dr. Bright

Response Senior Vice President. Great to have you with us on the program. Sir, I want to start with how you're working with the current administration and the difference since you're experiencing from working with the previous administration as well. What are you learning so far and what are the additional things you've been able to achieve. Well, thanks for having me this morning, in this afternoon around the world.

It's really a stark difference between this administration and last administration. It isn't a secret, um that I had my frustrations with the slow rollout of overall response to the pandemic, and they just continued to increase my frustrations as we missed the ball and getting testing across our country getting

vaccines made and getting vaccine rollout. What we see now with the Divide administration is a complete one eight turnaround, a lot of communication with the state and local levels from the federal government, a lot of collaboration, transparency, and you're starting to see that payoff and dividends with the rollout of the vaccine. We have more than double of the vaccination right now that we had on January. We have more people getting treated, we have more testing being done.

In the passage of this American Rescue Plan is a true commitment to accelerating on all engines, all all cylinders, to make sure we can end the pandemic. We struggled with testing in the United Kingdom, but seem to do a much better job with sequencing and understanding variants much more quickly than other countries. Sat down that was in the UK, Rick and I just want to the United States, can we do a better job down in your experience that we're doing that right now? We absolutely have to

do a better job. That is the big blind spot that we have right now with this pandemic in the United States and around the world. We haven't been doing enough sequencing, we haven't been targeting the sequencing to the right populations. What we're finding is these variants are now emerging, and we're finding them in parts of the United States. And if you backtrack, well, we realize they were in the United States for two or four months. They're widespread

before we even know they're here, they're upon us. We know the threat of these variants. We know that they can transmit more readily. We know that some of them can evade some of the vaccine immunity that we're seeing from the vaccines and the therapeutics. So we have to get in front of them. The United States hasn't been done a good job. The CDC, however, did announce recently they would invest more in the sequencing for the United States.

And really importantly, the Rockefeller Foundation has been working hand in hand with the US government to one um come up with new testing strategies to use testing and screening and testing to reopen our schools. Number two that that

testing leads to identification in more cases. And then just a couple of weeks ago, Rockefeller Foundation hosted a conference with the government and private sector and public sector to identify the challenges we have in the United States to improve our sequencing, and not just a sequencing itself, but how we analyze it, how we communicate it, and how we tie it to the downstream. So so what type

of question. Every mutation isn't impactful, but we do need to know the ones that are, and we need to know where they are so we can in front of them. Rick, there's one thing about analysis and identification. There's another thing about prevention. And this goes to this question of how international the effort of vaccination has to be. The idea that the United States is doing really well, it is doing much much better than Europe and a lot of

the most of the developing world. How much do you think the US needs to do in order to get vaccin scenes out to some of the less wealthy parts of the world in order to prevent some of these variants from being established, from frankly mutating in the first place and gaining a foothold. It sounds like you've been

working on pandemic prevention for quite a while. So that's a critical Actually, that's a critical point, and and it's something that gets lost in the news, gets lost in the enthusiasm for increasing a vaccination rate in a wealthy country in the country that has vaccine production within the borders, and we can vaccinate everyone in the United States, but we are still extremely vulnerable to this virus and to

we vaccinate a sufficient level people around the world. The virus likes to mutate, and a mutates in people mostly who haven't been vaccinated. That's what infects more readily. And if the virus mutates and its circles in some part of the world is not covered with vaccines, and that virus circulates back into into the United States and it's changed in some way. We can see reinfections, can see escape from the immunity from our vaccine. So it's a

real crisis. This pandemic will not end anywhere in the world until we ended everywhere in the world. And that's a critical part on the global picture for vaccinations. Rick, before we let you go, want to finish on something really sensitive and quite important. I think one thing that's been lost over the last twelve months increasingly as trust, trust and institutions, and trust and officials as well. You've

worked with both governments. I understand that you had worked with President Biden in the initial COVID task Force, and as we know you worked with the Trump government, the Trump administration as well, And when you quit, you said the following that some of the decisions being made with dangerous, reckless and causing lives to be lost. And it was

the interference of politics in science. And I think one thing that people struggle with right now when they hear a policymaker speak, even the President of the United States currently, is it driven by politics or driven by science? When he says July four, we can get together it to again. Is that just about sending out a nice message to the public, or is that driven by science. What I see the difference in President Biden President Trump is their

ability and willingness to listen to the scientists. And when President Biden nounced says that he can meet a target and meet a goal, you can bet that he's vetted it with the scientists. You can bet Dr Faucci, the scientists at n I H and CDC and FDA BARDA have weighed in on that goal. And when he sets the goal, I do think sometimes it's an ambitious goal, but we should be ambitious in stopping this pandemic. So I believe when he sets it out, we can achieve it.

But we're gonna have to work really hard to get there. It's gonna take every one of us. It can't be a policymaker or just a government that achieves that goal. Each of us has a role. We have to wear our mask. We have the social distance with Voyd crowds. Everything that we need to do that's been bringing down that curve. We need to keep doing it to take that curve all the way to the baseline while we accelerate our vaccination rates. That's how we'll achieve that goal

July four. If we all work together, would love to work. We get some mole in the weeks some months ahead right there at the Rockefeller Foundation, and I hand joined us now ons Fargo Securities equity strategist. And for some people this story has got boring. Been talking about it since the early part of November. We've just ripped in cyclical small caps out performing the NAT stacks struggling. We're

seeing that again this morning. When do things start to change for you, Anna, Well, when we see how well a trade has performed, you know, the good news is it's working. The bad news become well. That opportunity or the juice you saw has mostly been squeezed out. So for us, what we're looking forward to is maybe less so much of the value trade still on it, but we're starting to get interested in other parts of the market, other drivers. And for us, we think that next game

in town could be earnings expectations. Let's talk about that. What do you see the opportunity around ownings expectations as

we get deeper into the year. Well, for us, it's playing a little bit more of that kind of mid cycle, mid recovery place because the first early cycle stuff tends to have the early urge as you see, you know, growth prospects improved, as you see more confidence build up, economic recovery, the things that are most sensitive kind of what's gonna move first, A lot of that has occurred. So for us now becomes the things that come next

that comes with more reopening. So an example of that could be the aerospace industry and also the consumer services that has a lot to do with hotels, restaurants. You see these areas where people are going to be are looking forward to spending their money, especially now they have that it is an all stimulus check. So and this story makes sense, and then you see game stuff as John was talking about the fourth biggest holding in the rustle two thousand and Perhaps people will go buy more

games at stores or AMC. Perhaps peop will be going to theaters, but they've been affected by different stories as well. How much do you buy into the meme stocks expecting some of the stimulus checks to feed into people's bank accounts and directly into Robin Hood versus fight against this and say the fundamentals do not justify this price action. Well, you know, it kind of reminds me of like the Kings and Beauty contest concept here, where you know everyone

is liking it, so must be good. Um. But something to keep in mind too is I think it's actually part of one big picture. As people have high savings rates, they have high real disposable income, then you're adding on top of that additional stimulus. Certainly, some of that direct check is going to be used for bridging the gap, but another part of that is going to be used not just on experiences going out buying things for themselves, um, but also on taking a little more higher risk playing

it in the equity market. And keep in mind, what's really helpful for retail traders in the equity market is that. You know, the more sophisticated the investor is, you can use leverage product. Think about the retail flow and options markets. You're able to use leverage products and get multiples of what you put in. So that's could be an attractive risk reward for a lot of retail traders and a leverage checks going into companies that are considered zombies or

perhaps even insolvent. And by all other account how much does what happens over the next couple of months determine the pain later on when people assess the longer term prospects for the economy. I think it's very important, Lisa, and you think about that. You don't want to be putting money in zombie companies. You want to avoid those things we call them value traps um. You know, they can really hurt you later on when you're just spraying

and praying. But you know, right now, it looks like so far, the financial system is pretty solid, our banks are pretty solid. You're not seeing too much strain there um when it comes to you know, uh, you know, miss appropriate cash to you know, risky companies going under. So right now it's looking okay, but it's definitely a soft spot that you always got to keep an eye on and I always great to catch up with you.

Send out regards to Chris One. You and I have that last Faco Securities equity strategist on the outlook cover wilst Faco Michael Holland joining us now holding the company Chairman Michael. We caught up with Amby Joseph Cohen of Government Saxility this week and a question I asked her, I want to ask it of you as well. You have seen it all in your decades on Wall Street, and I think it would really be helpful for us if you could frame just how unique, truly unique original

this moment is as we throw everything at this recounty. Jonathan, thank you, besaudes the corner. I've been around Bossard for about the same amount of time, which is forever, and the reality is is always different. Each time is different. So that's what keeps it interesting and keeps us humble. Uh, she said, Brothers, since this is quite humble. I think this time around. What what she and I could could observe is that we are in the early stages of

a major recovery around the world. Were your word global from before the earnings increases, could easily surprise to the upside over the next twelve months. We talked about a five point five percent median figure for the US. That's probably way understated for the GDP goats over the next

twelve months. And fin me and most importantly is the vaccine news in the US is, if you were pointing out just a few minutes ago, continues to surprise to the upside relative to the rest of the world, particularly Europe. The unknowable is rising rates. What will they do to stock valuations? And for listeners and viewers if they didn't hear Uh earlier in the week, Sebastian Page whom you

had on the show. He pointed out the good numbers that over the last twenty years when rates are rising, you're just as likely to get the stock market increased as it pulled to a stock market decrease relative to Pe. So that's the unknown, especially in the other kind of the cycle. Michael, and to jump in, I think we've got to talk about the cycle and the additional unique part of this recovery is just how quickly things move.

And Mike, I think we had a snapshot of that last year, and I just wonder what the lesson was for you, we can snap back really quickly from this pandemic. We had a little bit of a hint of that center of that last year before things had to slow down again. The speed of the cycle, Markel, can you told to that the speed of the recovery that you're expecting. That's the wonderful thing about these things as they change and experiencing new things every time in cycles, Jonga, This

time around, I expect uber uger speed. I think the I think the the recovery by the fourth of July to use President bodies of goal line is very likely to occur, and maybe even even sooner. We're just getting such good news on the vaccine front in the US, and that's I think that's uh just one of the one of the not the major key to to what you just answered, because it's coming with a pardon my phrase,

work speed. Well, you know, there's really interesting conundrum here for investors that the incredible boom that you're talking about is pretty well accepted and being accepted more and more every day, and yet how to translate that into investment

thesis becomes more complicated. Your resume is basically a tutorial of fund management whether it's the State Street UH passively managed funds, or whether it's a black Stones alternative asset management at the head of that, and Michael, I'm wondering from your perspective, how the best way to play this now?

Is this a time of active management or do you still see a role of passive really coming to the fore based on the idea that lower yields means that lower fees is better and that frankly, there still is that huge alpha and beta play together. Yeah, I don't think it's a binary thing, he said. I don't. I don't think it's active or passive. Um. I have evolved over the decades into both, and I think they are

perfectly appropriate places to use passive. I'm on the board down at Vanguard, and for some stuff that they do, I'm a huge fan of that. But I think there are people and there are times when you can you can appropriately say something is really cheap and I would like to buy it, or to the contrary, you know it's way overvalued. Now I'm going to sell it. So I've been fortunate enough to be able to do to do vote and have the freedom to do vote. I

think you're you're common about the asset management business. The fund management business is perfectly We're not We're not going to see any reversal of key reduction over over time. I think that, uh, we're going to continue because it just doesn't make sense to be paiding high seeds for the sort of numbers that the majority of people have been receiving over the decades. So I think I think

logic is in place. Well, so there's a snundrum here also, Michael, for the likes of pension funds or for example, college endowments, and I know that you had experienced with the Harvard College Fund looking at returns in the future, there need to be higher returns and the benchmark in benchmark yields would imply. And so a growing number of pensions and other institutions are going to the private markets, which charge higher fees. What would your recommendation be for a situation

like that at a time of yields sub two percent? Well, you can't, you can't make a case for traditional fixed income uh in the environment where people have those kinds of acquired returns. The fact at LEASTA there's questions, So wels is being asked day after day. Uh. In the endowment world. Uh, if you can't uh see yourself to a four or five percent pay out, what do you do when you go out to respectrum and you go to private equity, and you go to venture capital. But

those those have been priced up. So I think at the very least, do a reality check if you're on the board of one of these things that you're managing one of these things, that it's possible we're gonna have a period of time there where we're gonna underperform what we would like to do. Having said that, you said it doesn't mean to stop trying, but you try to. You continue to work really hard to find the really smartest people in the world and unfortunately usually discovered. Jonathan

talked about earlier warp speed with technology and information. I think get found pretty quickly. But the best people in the world have to have to be have to be used, and I think at the end of the day, I think those expectations have to be ratcheted down. Michael, You know, I really respect and appreciate your experience, and it's fantastic always just to sit here and listen to everything you've

got to say. Michael Holland. There Holland Company, Chairman bla Arena Rucci, Barclay's senior US economist, uh Lorena, thank you so much for joining us here. I'd love to get your thoughts. I'm sure your clients are reaching out to you saying, talk to me about inflation. Where do I need to be concerned? Where do I need to look to see if inflation is creeping into this economy? What are you telling your clients? Good morning and thanks for

having me today. That's a great question. Certainly, interest on inflation trends has increased a lot recently. I'd like to tell people that there is there are two parts to this. There is an inflation narrative where people are very bullish inflation, and there is the actual realize inflation data and inflation trends. What we're seeing right now is inflation and pressures. Underlying price pressures in the economy still being rather subdued and

quite low relative to the FEDS target. We're seeing pockets of the economy producing strong price pressures, particularly on the good side of the economy. And this is where I tell people to look for rising price pressures and to prepare to see that in the realized data. And that makes sense to US, we have some supply chain bottlenecks as more demands comes online for goods. We have some

rising shipping cost globally and higher global commodity prices. We're seeing increased price pressures from import prices China, pp I, U U S C p I. But what is lagging for the US is the services side of the economy that's lagging in terms of demand and in terms of inflation, and the services side of the economy it's a much bigger portion of US demand and US inflation. So until we see that rising, I don't think we need to

be concerned about a very strong spike in inflation pressures. Blurrya, can you talk a little bit about the friction in bringing services back online in force. I'm thinking about this summer and the plans and people you know, making their travel arrangements right now at a time when you've got consumers receiving four checks every month for the next few months from the government free money, how quickly can services come back based on the need to hire qualified people

in mass in such a short period of time. Yeah, that's a very good point, And what we need to highlight is that US consumers have this cash cash buffer that has been building up. There is no doubt about that. There is a lot of excess savings in the economy. They're one of the reasons why we're not seeing spending and employment in the services sector is that there isn't that confidence to come out and spend on services where

you have to interact socially more. I think once we have critical mass in terms of vaccination and population immunity, this demand is likely going to come back, and so we expect that in the second half of the year there's going to be some friction here where demand comes back, but supply has a little bit of trouble adjusting because it's going to be tied to hire as many workers as you need and businesses need to readjust to the new world. So this could bring some price pressures in

the services sector, and this is what we expect. We expect in the second half of the year, a shift from the good sector to the services sector, both for demand and inflationary pressures. But for us, the key is this is going to be a one of transitory spike or a sustained one, and we are on the first camp. We think as the economy opens up, we're going to see this spike that is going to be transitory, but it's not going to lead to sustained higher inflation in

the US. But I mean, i'd love to get your thoughts on kind of the employment environment we had. Yesterday's jobles claims came in there. The trend is better, but still it over seven hundred thousand jobles claims stubbornly stubbornly high and appoints to you know, perhaps some of those folks that are been unemployed for a longer period of time, suggesting that they may not be able to come back that easily into the workforce. How do you think about

the employment environment in this country as we begin to reopen. Yes, right, we've made progress, and that's important to highlight, going from double digit unemployment rates late last year early last year to where we are now, which is uh well into the single digits. But as you said, there needs to be more progressed to be made, and the challenges for

me are around employment. Again, going back to the services factor, we know that some pockets of the labor market have been hardest hit, like hospitality, uh and travel, and those workers need to come back online. What we're seeing is also arise in long term unemployment and also a decline in the labor force participation rate. Those workers that are discouraged by high unemployment rate and I'm not even looking for a job. These are the groups of people that

we need to bring back in the labor force. What happens to the labor market in our view is that employment will actually continue rising and will probably go to pre pandemic levels of employment in two But at the same time, we think that some of the We're actually optimistic that's some of the long term unemployed workers will come back and find jobs, but also some of the people that are discouraged now will come back in the labor force. So we have a cyclical rebound in the

labor force participation rate happening next year. So this is going to make subsequent unemployment rate numbers look a little bit flaggish because the unemployment rate will start declining more slowly. But in our views, this is going to be a good thing, and it could actually lead to inflation because I'm that slack could be beaten out of the market. I do want to have a Bloomberg surveillance correction. I

said fourteen dollars UH for for many months. It's a one time payment for now, but it goes exactly where I want to go. B Arena this idea that there's growing discussions among Democrats in particular about income assistance basically check sent to people who are permanent unemployed for a prolonged period of time. Do you see an argument for that in the successes that evidently helicopter money have had

in spirring growth throughout the pandemic. So the way I I think about it is is this unemployment Insurance UM protection, these extra payments. They're lasting until September and the and the checks are one of checks. So I think they're filling a gap that we have in the economy right now because of the high unemployment rate and the damage done by this recession. Uh, once they come off UM and and consumers don't get these payments anymore, I don't think they will pose a risk to the recovery and

a risk to inflation in the quarters after September. So I'm not too worried about these narrative that we're giving people too much money and that's going to lead to higher inflation on a sustained basis. This is the key

to me. What is going to keep inflation higher over the medium term, and I think for that to happen, we actually need some of the structural issues that have been keeping inflation lower until now to change, and that is at the anchoring of inflation expectations, a lots inside credibility, and a change in the way labor bargaining works so we get faster way to growth. Blrina. What's the Barkley's US GDP forecast for this year and next, So we

expect quite a robust and snappy recovery this year. Annual growth in one is about six and a half based on Barkley's forecasting, and next year we're looking at about four percent annual growth. Larina Roucie, thank you so much for being with us. Blori Rugie, Barkley's senior US economist, talking about the key aspects of inflation and employment. This

is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine a m. For insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance Podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course, on the terminal. I'm Tom keene In. This is Bloomberg.