Surveillance: Vaccine Rollout With Dr. Cacchione

I'm a little bit cautious. I think we have to make it through Testa's inclusion. I think a lot of this band aid stimulus has already been priced in, So I'm leaning into a little bit and I still really expect a big rotation where they have not stocks do well, because next year I expect stimulus, but I expect, you know, proper stimulus where we really focus on job creation, where we're gonna get a big bang for the buck, may

be involved in a structure bank at public private. So I view this current stimulus it's nice, but it's nowhere near sufficient for what we need to get real economic growth. Well, let's get the policy coal right first, and then we can get to the market code. The policy code this year has just been the only code to get right, and then you've absolutely now the rest of it lated to risk. The policy call. You called this an aid, band aid patriots n night billion. What's on offer today?

Is that a band aid? These days? Unfortunately it is. As we're shutting down more and more businesses, I think you have to make sure those people receive some sort of compensation. So this is more just to keep things going. And as I see it, and we're not seeing true economic spending where we're going to get real growth. We're not seeing enough spending towards rebuilding, manufacturing, fixing some of our infrastructure, making sure we catch up and surpass other

countries on five G technology. So that's what I expect to happen next year, and that's where we'll get the real boost. This for now, I think is really just covering up the problems that are coming from this resurgence and COVID cases. Covering put the problems. Is that enough to justify the rally that we've seen on the heels of expected support financially from Washington, d C and potentially the end of the pandemic at some point next year. Yeah,

I think we're reasonably priced. I think the market's kind of figured out the pandemic. We have to make it through this struggle right now, but ultimately, with vaccines and treatments and everything improving, we will get through. At some point next year, the economis will look very good. And that's why again, even today, you're starting to see some of the you know, small caps value stocks continue to outperform big tech as this belief sinks in that, hey,

we will have something that resembles a normal economy. It won't be worked from home necessarily, it won't be going back to the office. But there's a lot going on. There's a lot of reason for optimism. There will be ongoing Central Bank support. I think the Treasury Department will work well with the Fed. So I don't think we're miss priced. I just think we're doing for a little pull back, especially surrounding this Tesla inclusion in the SMP,

which occurs at the closed Friday. Okay, so we'll get to Tesla perhaps, But I'm wondering about Airbnb and door Dad and some of these other I p o s that are coming out with valuations that are reminiscent of the tech bubble. I mean, the idea that they doubled in price. Does it give you a feeling of froth or is this also reasonably valued? You know? I think that's typical for these sorts of very hot I p o s where you don't necessarily want to squeeze every

last sign out. You're only releasing a small number of shares, so it sounds like the company maybe left money on the table, but the bulk of their shares are still kind of held in reserve that they can issue going forward. So I'm not worried about that. I think there's been a lot of you know, hyperactive trading. We do see a lot of these small accounts participating. Whether these prices all last or not, it's a little bit you know,

up in the air. Um Again, I think this is really going to depend on what we get in terms of policy next year, and partly what we haven't talked about is the negative potential or policy. Does do we see tax increases again, especially at the corporate level, and then some of these valuations might look a little bit more frothy. Pitch think that comes on the type of

that conversation at some point twenty one. You know, we've been looking at this market as we think Congress and the Senate and the President are going to try and address the you know, everyone's been talking about this K shape recovery, that downward slope with a K. I think that gets addressed, right, and that's all good. That's the positive, that's the stimulus. The question is that upward slope with

a K. Do they do something to punish that? Do they say, hey, you've been really successful, so we want to take something away from you, or do they let that slide. I think for the economy it's probably indifferent From markets, it's much better if they let it slide. I think a lot will hinge on that Georgia election January five, paid it for you. Is that when you start to establish what your year out look really looks

like after that event? Yeah. I think right now we've got a base case of we're gonna get some decent amount of stimulus because I think the Republicans are on board. They kind of failed to get any sort of stimulus done, which, you know, of all the things I would have expected President Trump to be good at, it was building things we did not get any infrastructure done. So I think some level that's gonna be done regardless of the outcome.

I think the outcome is gonna switch how much so if the Democrats one was the more spending, I also expected to switch the mix. So we'll see a much bigger environmental and sustainability focus if the Democrats win the Senate, I think less so if the Republicans retain the Senate. So, given all this fiscal support that you're expecting and fiscal stimulus actual stimulus next year, treasury yields, are we going to see them above one percent? How high can they

possibly get? No, I think we get them above one percent fairly quickly. I'm kind of in the near term called the next few weeks, thinking we're between one and one and a quarter. I think it's hard to get much above even one fifty. I think the Federal Reserve will work very closely with the Treasury Department to control any rise. And again, markets I think will be fine if we see a rising treasury yield, so just as

long as it's not a rapidly rising treasury yield. So again, to me, that would really help these small economies, those cyclicals, and probably less helpful for some of the big large tech fowls. Yelling and pal work in hand in hand PA a chair granted catch ups, pitt a chair of Academy Securities pay their thanks for everything each year as well, have a fantastic Christmas. If we don't talk again, put a chair their Meconomy Securities on this market. Bran Weinstein

joined us now Morgan Stanley had a global fixed income. Brian, let's talk about the other event of the week. I'm not even sure that Brexit is the top of the list for many people. This Wednesday is the Federal Reserve decision. What are you looking for from the feed this Wednesday? Yeah, good morning, Jonathan, and good move on on breakfit rather not talking about that, so that will be interesting. I mean, we think it's a real close call, um, you know, fifty fifty, which is not I know it times we

get caught out. But at the end of the day we think they probably won't go for for moving the the extension of the buying um, better to savor for later. If breads rise, better to savor for dry powder took to the world. We'll probably get some stimulus the equally markets doing great break evenings are keeping higher. I think they'll give us some language. I think they're going to try to link more closely um to the average inflation target,

remind us they're not going to raise rates. There's a couple of things that they could do to tell us maybe when they'll look at this extension of of of the buying, the average maturity of the buying. But it's a close call. They could do it. I don't think it's a huge deal if they don't, as long as they give us some language and rates probably keep creeping higher. Well, Brian,

you mentioned Brake Eaven's inflation expectations creeping higher. Do you think that could be the green light phenomenal yields to start to pick up through one percent, maybe towards your targets through twenty one? Yeah, yeah, I think I think that they could move higher. I mean three. Yeah, the three seems a while away, um, but getting tenure notes into the one percent range I think is a very

likely outcome. Do you look across the world of Australia New Zealand, for example, We've seen raids start to creep higher there even though the central banks have stayed dubbish. Um, it just at some point isn't enough anymore and the markets get rested us when you see growth, when you see break evens. I think stimulus would be the last piece of that in the US. Remember, we need stimulus, right,

the output gap is still big. We still need growth in twenty two to upset the lack of growth this year. Um So stimulus would be a big piece of getting rates higher, along with the stead not being aggressive on extending their purchases. So let's talk about the consequences of additional quantitative easing purchases, additional purchases by the Federal Reserve

of Treasuries and other central banks around the world. I know Morgan Stanley has a forecast about two point eight trillion dollars of bond purchases or as a purchases by the major central banks next year. How much of that has already been priced into riskier debt versus yet to be really factored in. That's a great question, and one and one that we struggled with a lot. There's no question that a lot of has been priced in, right, we've we've I mean, how is stimulus not priced in?

How is the vaccine not priced in? But the market still enjoys when the when these events happen UM and lesten, I think it's done well and we do get the growth. There's a reason to believe that this can continue. So it's hard to look at risk assets and said that none of this is known. The question I think is which risk assets does this help the most? And so when you look at treasuries and you look at investment grade credit where the most help was given, that's probably

where the least upside is. When you look at the high old markets, the loan markets, the equity market UM, some of the emerging markets on anything that benefage more weaker dollar UM. There are many many things that that you can still have great outcomes in UM. You just have to have some of these actual actually come to fruition. So a lot of investment managers come on the show and they say, well, it's time to pick particular bonds and not necessarily indexes. And other people will say they're

talking their book because their active managers. Is this going to be a specific bond, specific company story where you end up with certain defaults and others that do just fine, or is this still an index story still a big macro beta play on just more QUEUEI and more risk on. As an active manager, we do like picking on and certainly this has been a good year for for industries.

Although listen, it's been a great year for for some stock pickers, right, some of those certain UM tech stocks and things like that advent tremendously well away from the industries UM. But yes, I think if you stay in this world, whereas I said, treasuries and investment great credit have done the heavy lifting UM, and you're going to go into these markets. Now, it's harder to buy an e M index. It's it's not as smart to buy

a high yield index. There are lots of active things that you should be doing in sectors that you should be avoiding UM. So you know, the data play is probably UM towards the tail, and now some of the bigger winners here will be more actively selected based on the outcomes of where the stimulus goes UM, Which EM countries are stronger, which EM corporative that are balance sheets, Those things should matter more now that the data rally is is at least mostly played out. Bran, let's just

wrap things up there. I think it's really important to that word avoid that you just used a lot of people come on shows like this at the moment talking about embracing cyclicality, any cyclicality, any cyclical aitiaes of this market brand that you would avoid, you know, big thing. To me, it's a lot harder because the cyclical nature. It's just it's just a bit less cyclical. Um. I think when I want, when I stay avoid some of

the things in data. When we look at the at the high high yield markets, we think there's still be plenty of default right. We still have the energy problems working through the system in a m there are still plenty of countries um where where that matters and where where stimulus is not getting to those countries and they can't do it because of their balance sheet. So I think, no, I don't think there's anything in BIX income as a

as a sector that you need to avoid. I do think it's much more micro, which makes it a little bit harder to to go into in detail. Brown putting into hear from you as always Brown Wainstein their moment, Stanley, thank you sir. The vaccinations begin this week. It is a massive moment in the United States and joining us now is Dr Joseph Catcher ascensioned Chief Medical Officer, Doctor, fantastic to get you with us on the program. Let's just start first up, have you got the vaccine in house?

And talk me through how big this week is? Is a big week nine months of of what we've been dealing with and what the public has been dealing with it. We're very excited our of the vaccines, how are arriving today on our many of our hospitals. We have a hundred and fifty hospitals across twenty states and are we and just state vaccine deliveries today And we've been preparing for that for the last eight weeks. We've had teams working every day on the logistics and um and delivery

of the vaccine. So we're really excited about this. We feel this is the way to get us on the other side of the pandemic. Well, how that's the case? Doctor, When you look at the rollout, it's pretty clear to everyone frontline workers the most at risk in society. First, the decisions on who to give it to in house first doctor, in the initial rollout the first few weeks, is that difficult? How do you come around making those

kind of calls? You know, we we really have strongly encouraged our employees to UM to get the vaccine UM, and our employees are stepping up just like they have through the entire pandemic and are volunteering. We obviously can't vaccinate everybody in a single unit in the same day, so frankly, we're just asking people to schedule their vaccine with us, and we are managing that scheduling process just like we want any other appointment. Our frontline workers are

really the hospital workers. Both nurses are, respiratory therapist, patient care text. Those are the people that were prioritizing, and critical care nurses in particular, which really have bear a huge part of the brunt of this, as well as the respiratory therapists and patient care text We we really want to get them vaccinated early UM, and so we're prioritizing that group. Our frontline physicians are also very important.

Our critical care specialists are infectious disease specialists or polenologists. We were just we're very excited for ways and really strongly encouraging them to get the vaccines. Dr Coketona, It's interesting how the initial rollout will be viewed as a template for the further and more extensive rollout that is expected perhaps in the first half of next year. How complicated is it logistically given the cold temperatures that you have to keep the vaccine in addition to some of

the other just typical vaccine logistical issues. You know, it's um it is a challenge. You know, we have to store between minus sixty and minus a d degrees. We have to be prepared to receive the vaccines cold from Viser. UM. I will say that Fiser. I've been on logistics calls with the Visor folks. They've done an incredible job orchestrating this since I'm very uh impressed at the way Fiser has approached us. It has, uh it has posed a problem. We've had to go out and get a bunch of freezers,

some of those where we can't get freezers. Visor has made it so that the shipping boxes that they come and can be recharged with dry ice and we can store them in the shipping containers. So I think they have done an incredible job doing that and providing us backup plans in case freezer uh freezers were unavailable. As you can imagine, it was hard to the number of

freezers that we need for health system our size. We're getting there, but we're not quite there yet, which raises a question about who pays for all of the extra equipment that's required in order to roll this out in effective way. I know there has been some money appropriated that has not yet been passed in Washington, d C. Beyond your particular organization, a sense in hospitals and health care facilities, is this going to be expensive? Who is going to pay for it at the end of the day,

you know, as part of our health system. You know, our CEO told us at the beginning, take care of our associates, take care of our patients, and worry less about the economics. Uh and a global pandemic like this, with the number of people that have been affected by this and the number of lives lost, we have put our our patients and our associates first. And as for that reason, UM, we haven't thought about that as much.

It is something that weighs on our mind over the long haul, but for the short term, we're really focused on delivering this vaccine and UM and for us, we're paying for it. You know, the government has provided us Care to Act funding, but we are paying for it out of ascension and this is part of a a normal business for us. Their technologies to come up all the time that we have to pay for before somebody actually reimburses us. So this is just part of a normal

business for us. And um, you know, our commitment to this is overwhelming, to say the least. So just before we let you run, I think a massive issue over the last nine months, you know, has been compliance around social distancing, mosque wearing, et cetera. It's not just about the first vaccination. You've got to get to come back. They've got to come back for the second, the second hit. It's going to be hard enough to get people to

step up for the first one. Can you walk me through the kind of techniques the marketing around this that you think is effective that you'd like to say in the coming months. Yeah, it's really about education, education, education, you know, and we have significant issues in um, some of our populations that have trust issues. UM, you know, we have the Black African American population, Hispanic population that

have trust issues with the medical community. We have to continue to educate, we have to be culturally sensitive, we have to use our leaders are our Hispanic leaders and our Black African American leaders to actually help educate those populations to give them the trust to get this vaccine, because it's a very important The more vulnerable you are to illness, the more the sicker you are um, the more likely this vaccine is to help you. Uh, And

so we have to get that message out. It's going to be about education, education, education, And I just want emphasize one of the things, you know, as part of this whole thing we've been we've been absorbed with with COVID, but there is a secondary pandemic that's out there right now, and that is people are avoiding care, avoiding coming to our hospital. We're strongly encouraging people only to seek the vaccine, but also to continue to seek care for other medical donta.

We would love to continue the conversation with you through the next couple of weeks and the next several months this rollout and really picks up to catch on that. Thank you very much joining us now as low to rite FS Investments chief economist Allow, right, if you could build on that, that that would be fantastic what you're looking for this Wednesday. Yeah, you know, so, I agree. I think you know they've talked about wanting to do something

fairly soon. I think they are going to try to be more specific about locking in those forward expectations and continued financial market support and economic support. I think something that we really forget is if we look back at

prior expansions. We don't know when this recession is going to end, but if you kind of look back ann and they one two thousand one, the FED was actively cutting interest rates in the first eighteen months of those expansions, Like they are really used to actively supporting an economy as we're coming out of a recession. And I don't think it's a it's a you know, it's not a coincidence.

If you look back in two thousand and nine, interest rates towards zero, you know, puts them in a sticky spot where they can't really you know, do that traditional support. So the most active quantitative easy that we really got was two thousand eleven and two thousand thirteen, Like that is just a sign of how, you know, years into the expansion, they were still having to support our economy.

So I really think obviously very different recessions, very different expansions I would expect, But the point is that they are really gearing markets up for the idea that they are going to have to be accommodating them for years to come. And I think Mike's point is important. Markets love to look for a change, They to be forward looking, and you know, they're not worried about changing expectations right

now the rate hike. They're worried about those five year forward expectations and any kind of YO curb st deepening. They want to make sure to sit on that. Laura, this is a really important point, the idea that the FED is run out of a lot of ammunition, given where rates are, given how much money has already been

pumped into the system by their monetary policies. Are you suggesting that based on where they are, based on their ammunition, they're not being easy enough that they're not necessarily increased their increasing their purchases enough to support the expansion as they have in the past, just based on where we are and how receptive the market is to their measures at Lisa, That's that's a tricky question because it goes

both ways, like what more can they do? I mean, I think they have actively said now they're they're all really squawking when Venusians trying to shut down the main street lending facility. You know, I think they would acknowledge that they want to do more and that they really are upset that some of those pathways to impact the economy directly might be taken away. You know, I think they feel very comfortable that they can help financial conditions.

The question is what that's really doing for the main street economy. So um that I think that's really the issue. But absolutely I think they will argue that they need to be doing more, They want to be doing more, and that you know, as to your point, they kind of run out of traditional mechanisms, so you know, how creative can they get? They are really pushing the envelope. In the meantime, you're flicking at the economy and the

hurt that's currently out there. We're gonna be getting retail sales later this week, as John was talking about in the unemployment UH filings as well on Thursday. What are you looking for? How close our way to a double dip versus the expansion that people are already pricing in. I think we're pretty close. Uh. And again that's a typical during you know, longer downturns that we get you know, sub quarters the rise sub quarters fall as certainly don't

think it's going to be another que two. But you know, think about you know, we were so used to looking at seasonally adjusted data, we forget that when it's not seasonally just in so much spending activity and hiring takes place in this holiday period, so we're already seeing claims move in the other direction. We're seeing, um, you know, we've already seen auto sales down in November, so I think we're gonna see a decline in November retail sales

and December. I think, you know, you can really get some pain just inflicted upon the fact that normally seasonal hiring is you know, plus five million in December when it comes to you know, retail facilities and holiday shopping. So the December numbers could, just because of technical reasons, look pretty ugly. So I think it's you know, whether quarterly GDP you end up splitting it across to orders, you don't actually get into negative territory. We have a

resilient consumer, resilient businesses. Those are that's the best that we can hope for to power us through when I think it's really a tricky time for the economy. But when you look at hiring. You know you're seeing those permanent layoffs increase. I think that's a that's going to be a concern going forward, Laurie, I mentioned retail salves. A negative print may be on Wednesday. A lot of

people agree with you. We're looking for negative zero point three month on month on the headline number claims the day after you mentioned claims as well. Claims have been moving in the wrong direction the last couple of weeks, As you say, Laura, claims haven't exactly given you a clear read on where payrolls might go because there's just been this massive churn in the U. S economy. How useful do you think that is as an indicator for

what's happening in this economy right now? I think you know, I always call it in your claims the canary in the full line. I feel like the direction that it takes, how fast it moves, really has enormous predictive hour. But it has been very hard and it's really stymied a lot of us because you can't draw the claims in terms of just plugging in as an exogenous factor into your model to get the employment number. Has really weakened in that regard, So I still think it's important to

watch claims. That number last week really confirmed what we expect, which is that, you know, we've seen the mobility data shrinking a little bit, whether or not communities are imposing lockdowns or whether people are just selecting to be uh to stay at home, or either way, you know, we're seeing some slowdown and economic activity, you know, in November and most likely in December. So I think claims are

still a critical indicator. But it's just to your point, it's making that that monthly payroll forecasts a lot more tricky because we're used to using that as a strong input and it's kind of been all over there. A lot of great to catch up to get your thoughts. Always appreciate your time, a lot of right meth Fs Investments, Chief Economist. 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 Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio