Surveillance: Vaccine Distribution With Hochul

long term opportunity. Does the news this morning help us become just a little bit more tolerant as some of the negative stories we've heard across America over the weekend. Absolutely, I mean it gives you more visibility, I think on where we're going. I think it accelerates this sort of rotation into cyclicals and maybe value that the market but sort of been trying to make, but as it has

lacked the courage to make that leap. And I think you're now I'm absolutely getting that we've had this sort of double catalyst of we're now through the election and we can sort of face forward into what I think is going to be a very big sort of growth rebound and and the vaccine or the incremental vaccine news.

I think we've got a lot more still to come here. Um, you know, it helps us sort of bridge that gap, if you like, over these sort of winter infection spike to you know, a gradual sort of renormalization of activity and and the way to play do these these sort of tychnical stocks, which is where I think we're massively underestimating the sort of operating leverage. Ben. You have been way out, way out, way out front, and there's what we have is a distributed base with maybe some catharsis

of chorus in March or April. What's your percentage up visibility out twelve months out, twenty four months out, thirty six months. How big is the Ladler leap Listen, I

think it's huge. I mean I just to give you so if you like the sort of tip of this, right, if I look at those sort of reopening stocks, the ones that have been sort of most impacted by this, even with all the rally over the last couple of weeks, I mean, they've still underperformed this sort of market darling sort of work from home stocks by the eighty percentage points that nearly four times priced the book cheaper are

they're not making any money? Um, there's been where all the biggest surprises and third quarter earnings have come from on this on the sort of positive side. And you know revenues are still down between thirty two over so you know that's your sort of order of magnitude. I think this rotation has sort of barely it's frankly barely getting started. And and the other thing I would say is, you know, the other sort of fuel on this fire

is invested positioning. And we've been saying for a while how cautious it's been, but just in the last week you've seen it begin to turn and actually turned quite dramatically, And that I think is you know, the fuel that's going to come into the market here. So, Ben, what on a day like today are you actually buying or doing? I mean, there is this feeling that long term it's going to be a good scenario. Short term still a lot of volatility. Are you active on a day like today?

Listen if you're you know, your average investor is not carrying anything like as much risk I think as they as they should be. Right now, you know what overweight small cap overweight industrials will overweight real estate consumer durables, and we're not over all cyclicals or even all value. I think it's as much more cyclical story really than

than a sort of value story. I'd make a small distinction there, but but yes, i'd be focusing on where where are you getting the most operating leverage to the sort of fear of the virus beginning to moderate over

the next few months. And again I think it's you know, in these small caps industrials and real estate particularly, and it takes you outside the United States, I imagine as well, Ben, if you really want to get that high leverage play on the reopening of a vaccine, it's got to take you to Europe, which has been beaten up so badly, and it has that mechanical, that composition towards the names the things that you're talking about, Ben, can you walk

me through your Europe called right now? You're a band? And I would also say the sort of cyclical bit of emerging markets, so so yes, so domestic cyclicals in Europe for US, that's sort of financials. It's pretty much the cheapest, most hated and one of the larger sort

of sectors in Europe where you know, we're overweight. We're overweight there, but also within EM right, I mean everybody including US has been sort of hiding out in China and North Asia first in, first out, but you know the rest of the M is really you're much more cyclical bit of em you know, very similar to this sort of you know US reopening story, very depressed earnings

and a lot of operating lebridge. I guess the you know, the one caveat just on Europe is it's just watched the dollar and and the flip side of that the strength of the euro um. You know a lot of these European corporates um, you know sort of very very global, very international. So you know, to the extent we get you know, too much of a euro move, that's definitely a headwind. But yes, broadly Europe, you know, much cheaper,

much more depressed earnings. Uh and and and just seeing a lot more operating libradge here ben greater catch up as always been later there of Tower Hudson Research. Thank you, sir, Thank you very much. Know we're gonna do a Lisa John and I feel is really important. Yes, we do the markets, we do economics, we do the politics, international relations, but you need to understand the science of what we're

talking about. Robert Murphy has acclaimed at Northwestern University in infectious diseases and one time, long ago and far away went through Leninger's biochemistry. Dr Murphy, good morning. I want you to explain in the King's English how messenger RNA goes into the cell, comes out to the cytoplasm and kills this virus. Are we assured that can happen? Well, apparently, so you've got to message messenger RNA vaccines that have been put out there in tens of thousands of people.

This is not a small number of people. I think the Fighter one was like over forty people in the Maderna thirty thousand. A lot of people have taken this vaccine and we were we would have been happy if to your of them were protected from getting it and their ninety and nine point This is this is really way beyond expectations. It is it is original and m A r n A research as well explained to our audience what will be different in this distribution versus a

polio vaccine, a flu vaccine or more bacterial shots as well. Well. The biggest it's it's a vaccine just like the other ones that you mentioned. Uh M, A messenger rna is is a really is a very small protein and it's fragile, and so it has to be kept cold. And the difference between the fiser and the MODERNA is how cold does it have to keep The fisor one has to be kept at minus seventies celsius or minus ninety fahrenheit

very cold. Uh It's doable, believe me. It can be done, but that is going to be a challenge in the whole cold chain supply. The MODERNA one has to be kept cold, but then when it gets out into the market, it can be up to basically just above freezing. So it's gonna be a little bit easier to move that around. But either one of them, it can happen, and we're

probably gonna need both. Dr Murphy, I'm gonna go home today and talk with my eight year old and eleven year old son and tell them there is a vaccine, another efficacy study coming out, and they're gonna say, when the pandemic gonna be over? What's the answer based on the distribution models that you've seen A year from now? Really, yeah, a full year, So walk us through what happens over the next year. So what happens is so these companies

have to submit their EUAY Emergency Use authorization. You know, the data will be gone over by an external advisory board. UH, and they're going to make sure that it's safe. UH, and they're going to continue to follow those patients that are in the study. UH. Then the vaccines will be available probably the end of December most likely. Now there'll be maybe twenty million doses from each one of the companies, UH, and they'll get out there, and then it's who's going

to get those first twenty million doses. Uh. You know, right now there's a lot of reluctance in the world to take it. They think this is going too fast, as a lot of people that are against vaccines. But I think once the data is out there and if it's as good as it sounds and it's verified independently, people are going to be lining up for this thing. So they'll start pushing the vaccine out. And it's going

to come out in UH. Two different populations. People on the front lines, people with high risk for severe complications, diabetics, older people, people with underlying a cancer. For instance, the higher risk people will get it first, and then I would think that by the second quarter of next year, Uh, there'll be enough companies out with the vaccines that will it'll start really penetrating into the general population. And then

basically just go line up and get it. For our audience worldwide on Bloomberg TV and Radio, we're with Dotor Robert Murphy of Northwestern University off the back of some news from Maderna that the coronavirus vaccine was found to be ninety four point five percent effective in analysis. Dr just give me a moment. I want to turn to the price action just for a moment and have a look at what's happening in the United States. Equity futures are picking up here with a bid on the small caps.

The rustle up by two point six four percent. We advanced forty six points tom For our audience right now, we're grappling with the same question we grappled with last week, how much bad news can this market ignore in the short term on the hope that the long term looks better? And my question would be, can you really untangle and draw a hard distinction between those two stories? Short term not great? Long term better? And doesn't the short term to some degree shape what the future looks like in

this economy. There's always abellance of that. John noticed the rud on the screen for the nurse deck one where this is a rotation, and I would point out John, as you go back to Dr Murphy and Chicago, I would point out John very importantly that the rebound in value cyclicals, midcaps and the rest of them isn't even back to the previous regression. Yeah we came up off Fiser, Yeah we came up off Maderna, but we're not even

back to trend. They were so discounted to I'd just like to finish with the final question on the price of a potential vaccine. These are private companies, some of them half worked with the government. Any idea on how much this might cost for governments to provide the general public with a vaccine like this, Well, the government in the U. S. Government has already purchased hundreds of millions of doses. It's already paid for. It's going to go

out there free. So what it actually costs, I don't know. It's anyone's guess. Don't great to catch you out this morning. We appreciate your time, sir. Thank you that the Robert Murphy there of Northwestern University. We've been looking at the vaccines which go out into two thousand twenty one. Now we need to look at the reality of the present. You do that when you're a politician. You do that

when the Buffalo bills lose a heartbreaker to Arizona. As we saw yesterday, she is the lady from Buffalo, the lieutenant governor of the Empire. Straight. Kathy Hokel joins us right now. Kathy, I got to go to the money question for all of our New York City audience on radio and on television. What is your sense with Governor Cuomo of what Mayor to Blasio and you will do

about the school system of New York City. Well, thanks for having me on the show, and I'm sorry you had to twist the nights in my heart about the bills loss. So that's another topic with respect to the schools. The time that was back in the summertime when we are having lower expection rates and the parents of the teachers and the city administration decided that if the number of infection rates hit three percent, would dad be a trigger to close down schools. But what the governor's saying

now is that we're in a different era. We're now finding out because of testing in schools that the schools may be a safer place than having residered backed out in their community. So you're prepared to, you know, you know, work with them to say, can we make an adjustment here? Can we talk about having Okay stay open because it may be better goes to the math. It's point one seven percent on the schools. Many other states are at nine percent, which is where the New York states talking about.

And du Blasio is married to three percent. How do you convince him in the teachers union in New York City to get to where Nebraska is, to get to where Oklahoma is, for that matter, to get to where Chicago is on this percent statistic? Well, that doesn't matter. It's what the parents and the teachers and the ministries feel conquer with. We're not going to We can say that you're going to be going back to school, but if the teachers say we don't feel safe, they're not

showing up. If parents don't feel safe, the kids aren't showing up, and then you basically don't have an educational process. That works at all. So you have to get buy in from everyone, and that's simply what the governor has proposed over the weekend, and not have an automatic shutdown at three percent, but to use what's going on in the schools testing with alts that we didn't have when the decision was made to trigger three percent. Now we

have more data points. Why not look at the data that's in front of you and if a school, a school itself has a low rate of infection, you know, less than one percent or whatever the metrics are going to be, why not keep them open because not only is it safer perhaps for the children, but also you think about the childcare crisis that we've spoken about on

your show for a long time. But how are we going to be able to let you know, parents, particularly women, because it always falls on the shoulders of women to figure out how to get back to their jobs when their schools are shut down. Again. That hurts our economy, it hurts our comeback, and so there's many dynamics involved

to your safety always being first. But realizing now that a three percent threshold is something that should be relooked at with the consultation with the parents and the teachers, Cathy, the reality that you're looking at right now is so vastly different than the reality that equity strategists look out. When they look out over until the end of one

how much economic scarring will they be where? Well they're being excuse me in New York State, New York City, as layoffs have to begin, as we do not necessarily get any aid from Washington d C. During a lame duck session. We won't have that aid immediately, is what it seems clear to me. And I'm willing to be pleasantly surprised that we can actually get Mitch McConnell to do the right thing and to say that, yes, states have suffered. Oh, I realized now it's not just the

Blue states. The red states are in trouble. Therefore, we will help them now because he will go by whatever you think is in the political interests of his own party. Okay, fine, we're at a point now where the interests are all aligned. All American states need help with the testing, with the PPE, the help getting more doctors and nurses into some of our vote states that didn't expect to be dealing with this. So but even if that doesn't occur, in this lame

duck session. I do believe that Joe Biden understands the urgency with this. Governor Cromo has a strong relationship with him, we all do, and he knows that you cannot have every cover are you know. We've said this before, a recovery for the nation without states like New York being able to come back and come back strong and to reduce the chance of more massive layoffs and to keep businesses prospering. We want that is our objective. We have

to keep that going. So under a Biden administration, we feel very confident that the money will start flowing for state and local governments to help us get out of our poles budgetarily, but also to continue funding initiatives like vaccination distribution. The Lieutenant governor that will be early next year. We have some tough months ahead of us, as you know, and the numbers out of America have been quite worrying.

Across many states in the United States, the Lieutenant governor of the President has been criticized for not being engaged enough on this issue with cases increasing at a rapid right, what is it you need from the federal government specifically that you've requested and aren't getting right now. Money also a distribution plan for the vaccination that could be helpful. Let's work on that now and not wait until the vaccine is available that all of a sudden say, well,

let's start figuring it out. That has he figured out now. In the state of New York, we started working on our plan back in the summertime. So but money is the number one thing because that will allow us to continue funding the state and local to the communities, the first responders, the teachers, the health care workers, the child care workers. I think we need money first because they didn't help us when it came to testing. We could

have used the Defense Production Act invoked months and months ago. Basically, now the President checked out. He never wanted to leave. This could have been his Winston Churchill moment. He could have been a hero. He could have won the election if he had done this right. And he blew it basically, and now with the consequences there, he needs to move over.

Let the transition team of Joe Biden take over. Let them have the opportunity to find out, you know, where the money is, what what programs need to be continued, what regulations need to be changed. Let them hit the ground running and start saving our country because it did not have to fall this far. New York State still has the third lowest infection rate in the nation after Vermont May Word about two point six percent. The rest of the nation could be at two point six percent

and we could be functioning. But the President didn't care. He didn't do anything along the lines of what we were asking for early on. So the damage is done and now it's time to do clean up. Lieutenant Covin. I appreciate your time. The commisation will have to continue, Kathy how called that of New York right now, and this is really important on a Monday, Let's recalibrate the American economy. He is award winning Stephen Stanley with Amer's

Pierrepont does wonderful work with the conventional function. Why will C plus I plus G plus whatever the export noises Steve Stanley, what matters right now within that equation? Well, I think consumption has really been the start of the show, um, and that's what we're looking at. I mean, consumer has held up much better than I think most people expected through the pandemic and now with renewed restrictions and kind

cuts and mobility a little bit. I think there's obviously some concern about whether the consumer can continue uh to get back toward normal over the next couple of months. Give us a calendar of the need for income substitution benefits. I guess one disappear for many. But how urgent for you is income replacement right now? Yeah, I think we're in a different place than we were in the spring. I mean, in the spring, we we put forward the six hundred dollar a month unemployment benefits as well as

a round of rebate checks for everyone. And I think at this point, um, the the whatever income replacement we do probably needs to be more targeted. So I think the idea of continuing the unemployment benefits certainly, um, you know, continuing them beyond mid year or the end of the year,

but also, um, maybe putting forward another bonus. You know, it doesn't necessarily have to be six hundred dollars, but you know, perhaps three or four hundred whatever makes a lot of sense because there's still plenty of people who basic we can't work because of the pandemic. I'm not sure that we need across the board help the way that the way that we got in the spring so

that to me, that's the key distinction. And Steve, this is a really important nuance because right now we're looking at American consumer finances that are best shape in decades. People took these checks, they paid down their debt, they don't have any where to go to spend money, and so you're seeing really really good balance sheets. But that's

an aggregate. What is the long term economic consequence of the lower tier of workers who are seeing their jobs get cut at a faster pace and who don't have the same kind of cushion even after the round of stimulus. Yeah, well, I mean, you know, obviously those are the sorts of people that have to live paycheck to paycheck. So the loss of a paycheck means a lot more for someone in that financial situation than it would for, um, you know,

someone that has a nest egg. And I think again that's why there is, in my view, there is urgency to make sure that we're providing ample um support to that group of people, the people who are unable to work and and need the money right away. I think you know that maybe the urgency for uh, for the rest of the population isn't as great. Wan we've certainly made up over half of the jobs that were lost during the lockdown. So there are a lot of folks who were out of work in the spring who were back,

but there's still plenty who are not. And I think, you know, those are the folks that we want to try to take care of, and especially now that we have a sense that perhaps it's only a few more months, you know, maybe the vaccines are broadly distributed by the spring um and things can get back to something much closer to normal at that point. So if I'm a if I'm a lawmaker at this point, it makes it a lot more, makes it easier, I would think, uh, to say, Okay, well we can support people for three

or four more months, but it's not an indefinite thing anymore. Stephen. Let's talk about the economics. So mentioned. The Asian currency is doing tremendously well recently that I trying to shine a fantastic decent again this morning. And don't think it's it's really to talk about payrolls for this month when it comes out in early December, Stephen, what are you comfortable forecasting at this point given the direction to travel

with economic restrictions coming up across America. Yeah, I mean, I would say most likely that we're going to see another deceleration UM, and this one could be more significant than what we've seen over the last couple of months. The pace of growth was fairly steady over the last two or three months. I would say, certainly in the private numbers, UM, you're probably going to see a slowdown,

obviously with the virus having picked up. But I would say, you know, we've suddenly we've seen a flurry of new restrictions put in place over the last week or so, and so my guess is I mean, we've just last week was the payrolls survey week. So my guess is that whatever UM slow down you're going to see in the pace of job growth over the next several months is more likely to be clear in December than in November.

I think we'll get some slow down, perhaps UM for November, but then maybe a more significant one on the back of some of these virus restrictions in December. Let's add to this, then, Stephen, and think about the fact that this economy has have the stress test a severe one back in spring. Can you model what it might look like when you get the same stress test again you have it once, you get it a second time, and

how corporations and individuals might respond and maybe differently. Yeah, I mean, I think the one thing is that people have kind of gotten used to the to the new reality. So if you think about, for example, manufacturers, I mean they had to they close their plants for almost two months, and then when they came back, they had to retool their operations to provide for a more socially distant workplace.

And having done that, um, it makes it. I think it makes it far easier now because they've already kind of adjusted. Um. So really, the I think the bulk of the adjustment that needs to be made now is just kind of dialing up and back the uh degree of which people are getting out and about you know, the mobility and um, the level of contact that people

are having. And so that does affect restaurants and high contact industries like that, But I think the bulk of the economy, the rest of the economy hopefully has already made the necessary adjustments and won't be disrupted too badly. Um. In the current situation, Steve is a stock market linked

to your world. Um, I think I would look at it as a as a gauge of sentiment um and I think you know clearly at this point it seems to me that the stock market is looking through our investors are looking through the current bad news and into you know, the prospect of of an effective vaccine at some point next year and then getting back to something closer to normal over the course of I mean, that doesn't do anything for us today in terms of the

number of cases and hospitalizations and death, but it certainly suggests that people are hopeful at things we'll get back to something closer to normal as we've moved into Stephen, there's some hope in this market this morning, that's for sure. Stephen Stanny that I'm hast papon. Thank you said thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio