Surveillance: Post-Covid Bets With Neuberger’s Kantor

the Cancer Sweet Green Index. What's going on? Charles? The Sweet Green Index? I think references my my study of how folks are coming back to work, and yesterday online it was was almost a too our wait at at twelve o'clock, which which for us like you in New York, it feels good to get some vibracy back into into midtown and folks are coming slowly back to work and kids are going back to school. Also hopefully it's returned

to normal slowly. I look where we are, Charles cantor right now in the sequence of interviews I've done with thinkers who keep going back to the dreaded teword technology. You you and your team are expert at this. The overlay of technology seen Microsoft, Amazon, Whole Foods, the rest

of it, but unseen as well. Tell us about the unseen technology now that makes you a bull owning stocks look I think I think the technology goes to to to to quality of business and and sometimes references forward thinking. I think you Amazon example earlier, where you reference the hiring is fascinating to us because it speaks to those that have scale um and those that are forward thinking. I think a lot of businesses out there are struggling

tremendously with with labor. They blaming to some degree the stimulus um, which references the fact that people are getting

paid a lot, not to look um. As that gets peeled back, I think folks are going to remind themselves that it's really about competitive positioning and the lack of forward thinking, and the lack of building a culture and a pay system that really attracts and rewards the best talent, and the lack of investing in technology and and all of that technology investing is happening in some of the best businesses that have come out of COVID as winners

and will remain winners because they're forward thinking and the COVID experience for many businesses I think have revealed weaknesses in in in investment decisions, whether it being supply chain, in culture, in labor management. That and those seeds were planted not last week, but many years ago. So Charles, well,

how dove tell this please into a market call? How do you take this thesis that basically people are getting exposed by the COVID even if they're hiding behind it, and decide what to buy and what to short Because for us, you know, I think we all like to keep it simple and and and focus on the macro. Focus on for you know, focus on is a growth versus value. But as stock pickers and people that love understanding nuance and fundamentals, we just don't think you can

paint this environment with with one with one brush. And and value simply means that trades at a discount of the market, and growth means that that revenues are strong.

The reality is in this environment you've got to be painted a lot of attention to the middle of the of the income statement, because I think businesses will continue to suffer grows, margin degregation and potentially operating margin degregation through forces driven by supply chain, cost, labor management, and lack of competitive positioning, and so we will continue to stay with with the beyond privilege, resilient and and and kind of leading businesses, many of them sitting technology, but

they're sit in other industries as well. So I think my word of caution is is to pay attention to the details. Yes, revenue growth being fantastic because of kind of a generational shifting in driven by demand coming out of COVID, But as the dust settles into into next year, I think it's going to be a focus back on wait a minute, which businesses actually are built to lost, who has the pricing power, who can hire the best labor, and who has has much more diversified supply change that

can that can manage the global inconnect interconnected environment. And so it's it's for us. It's going to be about the companies. It hasn't really been because of the flood of money um and and government stimulus and the like. But at the end of the day, it's it's quality of business that wins out. And and and what's an example of this, if we can chance and forgive me for jump again, give me an example of this right now,

who's gotting it done? What are your favorite lungs, well, I think our favorite lung center a center in in in in the technology space. We're big believers in Amazon because of their scale. Were big believers in Adobe because

of their scale. I mean we we love the businesses that are facilitating today's environment, and you find them in business businesses that would include Microsoft and work Day and businesses that are are maybe not as obvious to to to to and are not discussed each and every day. So so for us, the loans don't really change much. They continue to compound, they continue to take market share, and they continue to liver for share doers. I mean

Microsoft is an example. Yes, the forty billion dollars doesn't really matter, but it's but it's it's a signal that they have more capital that they know what to do with. And like many companies, balance sheets are fantastic um and and they're buying back they stoff. Look for us, it's

I would stay. I'd be very cautious on consumer facing businesses that are going to face tremendous labor and supply chain issues into Christmas um as well as industrial cyclicals that are not going to have the pricing power necessary to manage supply chain complexities was really important conversation. We appreciate its sound to kick things elf this morning. Thank you, sir as a wise child's kinds of that of Newberger

Berman Buck dem sty with us right now. Unfortunately we have to move from the lightness of John's jetender to the reality of the great unraveling. It is some Auckland, New Zealand to Singapore in the last twenty four hours, and now we come out to the reality of Saint Nashville, Tennessee, or wherever you want to pick on back to the direction is not good. We're up to eight hundred deaths. We were at sixteen hundred two cups of coffee ago.

What direction do you observe on this pandemic nationally and globally? The nationally the news is I think a little bit more positive. But we're seeing is a plateau ng up that peak that we have been experiencing for the lost week. The deaths are still growing up, but previously we have seen that there is a lag and the death we would use as the pandemic its self plateaus. Globally, there is hot pockets as countries that have managed to maintain

epidemic control have this low indulating rate of cases. Other countries are seeing surgeries and trying to adapt accordingly. Um there's still a number of countries globally where vaccine rates are shut south of and that is problematic. You are in emergency medicine with your international acclaim and epidemiology, what

do the people you know? And emergency medicine observed now is different from a year ago, different from sixteen months ago, so unfortunately a lack of difference from sixteen months ago. So there's a difference in patients. But right now nationally we have a shortage of resources. UM, I was working, I'm gonna be working the overnight tomorrow night. I was

at working the overnight last week. UM My hospitals are full, UM money hospitals on diversion, which is where the hospital says we have no capacity, please find somewhere else to receive care. There's long wait time to the ICU, and the challenge that we're going to face is as the COVID nineteen cases continue to be a recent high, we are now about to face a flue pant flue surge

as well. And so you know, physicians everywhere we are concerned that we do not have the resources to adequately care for all the patients who are critically ill who need them. Dr Han Sarti, how prepared are we for another pandemic? Well as prepared as we could be. Right, We've been doing the same thing the last eighteen months. Right, So we have optimized um at a health facility level, as a health system level, as much as possible. Right.

We have search preparedness plans, we have stockpiles a ppe, we have the number of ventilators, we have a number of ice, you beds, we have you have a critical shortage of healthcare workers and especially nurses. So we are running at maximum capacity. I don't know how you go beyond maximum capacity. Well, I ask this because I've heard a President Biden talk about getting a planting other to

combat more effectively the next pandemic. And there was a study that was reported today from Duke In a number of other medical researchers talking about other covid uh IF infections that they are tracking around the world. I mean, how much of a concern is this in the near term versus just something that's going to happen once every hundred years. Well, I wish it was one every hundred years. I fear it will be more frequent now. There are

several variants of interests that have emerged. Um there's some variants that higher transmissibility than COVID. We don't know how that plays out, given that a significant proportion of the American population is a vaccinated or be has had COVID. And we also don't know if these newer variants are likely to cause severe illness or mildest symptoms, which is what I'm really praying for. Doctor gotta leave it that about to Hansanty that John's Helpkins Associate Professor of Emergency Medicine.

This is a joy. He's a former Prime Minister of Latvia. Far more, he is a physicist and I mean real physicist with electrical engineering from the University of Maryland. Valdis Dombrowsky is European commission Executive Vice President and Commissioner for Trade. And what you need to know is a year ago, eight months ago, ten months ago he was in the Timeout chair over vaccination and he and others in Europe have had the great success story of the turnaround of

Europe in vaccination. Prime Minister, thank you so much for joining us today. How did you in Brussels in Europe turnaround vaccination in Europe to sevent good morning. Indeed, as regards vaccination campaign, by now more than seventy percent of

adual population in Europe are vaccinated. And what was important is that European Union was acting on this as a whole, so on behalf of the anti seven member states, we were securing vaccines and that's what helps to secure this availability because it's clear that the biggest and uh soorts say richest EU countries could secure vaccines on their own, but not the smallest anatonomically less developed countries. So we ensure that vaccines are available across Europe and managed to

how a very effective vaccination campaign. Right, Prime Minister, how did you sell unvaccinated people? The New York Times today, Sir has a brilliant article and the failure of America to convince the unvaccinated to get vaccinated? What was the Dombrawski method? Well, first of all, it must be said if you look at the vaccination rates in the EU, there are also an E one. There are a number

of countries which are actually lugging behind. So there is still lots of work also in the EU to convince the pop relation to vaccinate, and we are still in this work. Of course, vaccination campaigns are run by individual member states, but we are helping all we can by providing all necessary evidence, all necessary information, helping also to counter disinformation fake news, which we see in this context. So it's still an ongoing work, Commissioner, You've made tremendous progress.

Many people have acknowledged that over the last several months. It's a real turnaround. Why do you think then, even with this fantastic progress with vaccinations across the continent, the Europe has struggled to get the United States to reciprocate on things like travel. Why stand being so difficult? Well, that's I would say a bit of general tendency. We see during the pandemics that we have lots of disruption

for travel. Actually we had it within the EU, but also there we managed by now to set up what we call EU the just All COVID Certificate, where people which how proof of vaccination or negative test or which how process they actually had had COVID can travel without additional restrictions. Within the U. Many countries in use neighborhood

are using this system. But of course, as regards other countries, they take all their own decisions, and we're still in continued dialogue also with us because of these things that the epidological situation would permit actually to lift travel restrictions also from the U S side, you've code it continued dialogue. Characterize how that dialogue is going for us right now? Are you making progress? Are you further along now than

you were a month ago? Or were coming nowhere? Well? Uh, it's at the end of the day decision for US to take which third country residents they are admitting in the country. The point we are making that if you look at the epidomological data also as a reliability of the COVID certificates which EU is providing to its citizens, this is a good basis actually to leave those restrictions.

How different is it dealing with President Biden and President Trump on issues like this as well as issues on trade. Well as regards trade, it must be said that we are now on a much more positive track with by the administration. Already several months ago we resolved longstanding Herbus Boeing dispute. We are now working on resolving another trade irritant from Trump era, which is still and aluminium tariffs.

And later this month we will be launching a Trade and Technology Council where we will be cooperating in these areas of trade of new and emerging technologies. And we think it's important that EU and US, being strategic allies, being like minded partners, actually work together on those issues. So what's the main point of agreement between the European Union and the United States when it comes to China

and the trade negotiations there? Well? As regards China, we share a number of concerns as regards China's socio economic model, like roll of state on enterprises and their competitive neutrality, industrial subsidies and transparency as this UH forced technology transfers intellectual property rights. So also there we agreed already in the EU US summits that will be cooperating closely and seek common approaches boss bilateral but also for example, in

the context of the foremost of all trade organization. Let's hope we can make some progress. Commissioner always fantasy to catch up with you, sir, Thank you for your time this morning. That's the get there, get my words out. Varis Dombroski is there. The European Commission Executive Vice President and Commissioner of Trade in an important and different interview here not nitpicking each moment about monetary policy and the politics of Europe, and that would be with David Rubinstein,

peer to peer conversations. David joins us right now. What was it like, David speaking to this different leguard. I've known her for quite a while when she was ahead of the i m F. She was the first woman to be the head of the IMF, and she had quite an important impact on the i m F, and people were i'd say disappointed at the i mm that she chose to leave, because after two terms she could

have had a third term. But I think Angela Merkel really thought that a more important job for her was to come back to Europe and run the European Central Bank, where she's the first woman to do that, and she's had a gigantic impact on the European Central Bank in just the two years that she's been there, a lot of criticisms, a lot of compare and contrast to the previous leader. Mr Drogging occupied in Italy. Did you speak to her of the interior politics of front for her

greeting and where she is right now. Well, I think she feels she's got a pretty good grip on the European Central Bank. She's an articulated policies which the bank is pursuing, so they have a very clear policy now of getting to two percent inflation. That's their real target, not close to two percent, but two percent, which is not easy to do, but that's what she wants to do.

She's also made it clear that the economic package they put together to deal with COVID has worked, and maybe better than they thought, because as you heard earlier, she now thinks that they will recover to the gp GDP levels they had before COVID in Europe by the end of this year, which is really more than the United

States is doing. Perhaps one of the bigger challenges that she has that the Federal Reserve does not is that she's got a bit of a harder job hurting cats than the Federal Reserve, which tends to remain a bit more cohesive. Did she talk at all about trying to keep a consistent message. It's such a tenuous moment. Yes, For those who aren't familiar with the European Central Bank, it's not like the Federal Reserve. The Federal Reserve is in charge of monetary policy, but we have one part

of the one country that does physical policy. So we have a physical policy for the United States and a monetary policy in Europe. You have one monetary policy that the e c B does, but each of the countries have their own physical policy. So it is like hurting cats. I uh, you know, said to her, somewhat facetiously, her background as a national synchronized swimmer was that helpful in enabling her to figure out how to get people to

work together, because she was a great synchronized swimmer. And she now has an interesting situation where she has twenty three central bankers of each of the countries and she has to preside over that. Interestingly, she said, in many of these meetings there are twenty two men and one woman. And she said there's still amount of discrimination in Europe, even though she's got this very lofty position. Uh, there aren't that many women sitting in the meetings with her.

Do you think that she likes her job, David, Yes, Um, she is a very very smart person who actually came from France, United States for high school for a year, and then she became the head of a major global offer and the first woman to do that. I think she relishes it in part because we didn't really talk about this much on the air. But she now has grand children and they live in Europe, and so she has a chance to be back in Europe, and so I think after living United States for about ten years,

she was ready to move back to Europe. David, we have headlines at this moment, and I would be honored to have your perspective of the final agreement of the Canadian Pacific Company with Kansas City Southern. And as you know, this is involved to Canadian giants, Canadian Pacific, in Canadian National, in the US company as well strategic if you will, in railroads. Is this what is to come in this

odd economy we're in, true? More mergers in combinations. I do think you're going to see more mergers because people fairly Uh. I would say, not inflated, but high value stocks. And when you have high value stocks, you can use

that as a really good currency to make acquisitions. And I would say the anti trust authorities in the United States, UH, they try to deal with some of these problems, but very few major acquisitions are being blocked right now, and in fact, there is no an trust official in charge of the Justice Department because no one's been confirmed yet, and so it's gonna take a while before I think you've got the n I trust authorities catching up to some of the all the acquisitions that are being done.

Maybe they're good acquisitions, but I don't know whether we have the authorities yet. Really is focused on some of these. Is private capital, private equity? How has that change transactions and combinations? It seems like a new player has added ever more money, more capital to the fire. Well, it's not only private equity firms, but you now have UH sovereign wealth funds which you're doing deals directly. And you also have a new phenomenon family offices. Family office as

are doing deals directly as well. So it seems as if there's not a lack of capital, plenty of deal doing is going on. And until the FED raises interest rates and until the economy slows down, I don't think you're going to see any change in what we now see in terms of lots of deals being done, lots of investments at relatively high valuations. All right, before we let you go, David, you did ask Christine Leguard about working from home and when they actually start to gather

as a group. And I'm wondering, from your perspective, what's the new September we've been talking about when people will get back to the offices. For Carlisle Group, for the companies that you speak with, when is the new time to return. Well, at Carlisle, we have reopened our offices UM after Labor Day, but we're not saying that everybody has to come in, because everybody has to deal with

their own situation. We do think, uh in the United States, that people will be coming back to work, but I don't think you're gonna see anywhere in the United States people coming back to work five days a week at quite the pace they did before. Some firms will do four days a week, maybe three days a week. In terms of asking their people to come in, Carlos policy is to have people come in a number of days a week, but we're not selling them exactly what days

they have to come in UM. But each company has to feel it its own way. I don't think we're going back to the way we used to work, which is five days a week, nine to five, And I just don't think that's gonna happen in the office now, David again, congratulations on your new book, that piece with Ken Burns. Of course, out with Muhammad Ali right now. Mr Rubinstein, the Carlisle Group, co founder, co chairman, peer to peer conversations with Christine Legard. 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 am 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 Bloomer