June 26, 2020 • 34 mins
Dr. Ian Lustbader, Clinical Professor of Medicine at NYU, discusses why COVID-19 cases continue to emerge around the U.S. Albertsons CEO Vivek Sankaran talks about the grocery chain's IPO and first day of trading on the NYSE. Bloomberg News Health Reporter Michelle Cortez provides insight on the growing number of coronavirus outbreaks in the U.S. And we Drive to the Close with Ernesto Ramos, Portfolio Manager at BMO Global Asset Management.
Hosts: Carol Massar and Jason Kelly. Producer: Doni Holloway.
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Episode Transcript
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Speaker 1 (00:00):
This is Bloomberg Business Week. I'm Carol Masser and I'm
Jason Kelly. We're right here every day bringing you the
latest news from the world's of business and finance, plus technology, politics, economics,
all harnessing the power of Business Week reporters and editors,
and of course Carol that's part of a team of
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and twenty countries and Jason. You can download Bloomberg Business
(00:23):
Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
also listen to our radio show at two pm Eastern
on Bloomberg Radio every weekday, or watch us on YouTube
by searching Bloomberg Global News. Let's get into where we are,
because Texas is closing bars. They are coping with a
record number of new cases really around the country, is
(00:43):
what we're seeing. So let's get into with Dr Ian
LUs Beata, clinical Associate Professor of Medicine at n y
U Landgo Medical Center, on the phone from New York City.
I'm kind of jumbled too, because I'm trying to keep track,
to be quite honest, in of all the headlines that
have come down just on this Friday, alone own. Um,
Florida's governor says alcohol suspended at ours, So how do
(01:05):
you make sense of kind of where we are is
the rest of the country kind of where New York
was back in March. Yeah, I think that's a pretty
good analysis. By a happy Friday, Carol and Jason by
the way, and thanks for having me of course. Um yeah,
And by the way, Jason had been in the office
every day since January. So it is a shock. But
some of us have been slogging through it. I know.
(01:27):
And I have to say I before you answer, like
I have such huge I have renewed admiration for everybody
who has been going in our team included, um, just
given what it feels like, and I know it feels
better than it did uh two months ago. So I
really it's remarkable what what you guys have done dealing
(01:49):
with this. And I think that's one of the reasons,
if I may editorialize for a second, why I think
Carol and I are a little upset seeing what's going on,
uh in the rest of the country, given everything we
know from talking to you know, friends and colleagues like you,
You've you've been doing it been through right, So I
think the task force, like you, is concerned about the dramatic,
(02:10):
really spike in cases across the Sun Belt, and and
they all Um vice Version and Pense and Dr burkeson FACCY,
I think really had sort of a fairly uniform expression
of concern, which is that we're really having, um this
paradigm shift from previously just testing people who seem to
(02:31):
have symptoms or or being ill to really asymptomatic testing now,
and as that's happening, we're really seeing a spike in
the number of cases. And I think the press conference
today was really focused on enlisting young people to really
have more social responsibility. As much as they want to
(02:52):
go out, as everyone wants to go out and have fun,
there really is a social responsibility to continue to flatten
the curve, which I think, Um, the Northeastern states did
you know reasonably well, it certainly is not zero by
any means, but it certainly did flatten the cases. And
part of that is to prevent this hospital surge where
(03:12):
you overwhelm the ability of the hospitals to take care
of people. You may not necessarily reduce the total number
of cases. We don't have. Medications are vaccine to prevent cases,
but even if you slow the spread, you're able to
kind of protect hospitals so that when God forbid, when
people need ventilators or need access, you know, that's available.
(03:36):
And I think that was their emphasis today and I
think it it makes a lot of sense because we
are seeing such a spike in cases and part of
that are asymptomatic young people, as they say, under forty
under thirty five who are carrying and transmitting uh COVID
nineteen source CoV two uh and feel perfectly fine. And
(03:58):
that really is the conundrum that's put you. You know,
I have to say, you know, we kind of had
a little bit of a run in this weekend with
a younger individual who was not wearing a mask, you know,
and repeatedly kind of reminding um as we were kind
of out and about um, you know, in a social situation.
And it's just interesting, UM And I think they make
a good point. I do also want to bring up
(04:19):
something or Vince and Neerella um Dr les Better brought
up at the top of our show. You know, how
do we what are the numbers that we really need
to focus? Is it cases? Is it hospitalizations? Like what
is it that either tells us we're getting back to
where we were in New York in March, or it's
a little bit different and maybe perhaps a little better,
or you know, I don't know how you quantify it
(04:40):
or qualify it right. Well, as as Dr Fauchi said,
this is a protean disease and he's never seen it,
and we've never seen it a disease where you can have, uh, fortunately,
the majority of people, it seems with really minimal or
asymptomatic disease all the way to life threatening disease where
people die, and before that there are a month or
(05:02):
two on a on a respirator. So it is very
hard to process and somewhat hard to predict which people
will crash and burn and which people will have very
mild cases. And because of this, we have to be
extra cautious in trying to prevent that. Because although we
(05:22):
know risk factors and they outline that type one diabetes, obesity,
you know, hypertension, lung disease, age, we're still seeing young
people who get sick, and certainly in New York we've
seen young people who unfortunately die, So we don't really
have the full picture, and therefore everyone has to really
be on much more guard hopefully go back to work cautiously.
(05:47):
It's a real balancing act between damaging and economy and
having some potential risk to your population. That's a tough
needle to thread, and that's really what everyone is trying
to grapple with because we don't have recent history of this.
Nineteen it was a long time ago and they didn't
(06:07):
have these issues. All right, We're gonna continue our conversation
with Dr Ian Lesbater giving us some great context about
where we are in the virus. And I think, uh,
probably alongside with us, you know, watching this, uh with
with a little bit of caution, and I dare say,
I don't want to put words in his mouth, maybe
a little frustration of you know, what's going on in
the rest of the world, because we have lived this,
(06:28):
we know, and he's lived in far far more intimately
than we have, Carol and really seen people suffering from
this disease, and you really would hope that, you know,
people have learned from what unfortunately we had to go
through here in the New York metro area in particular,
and you would hope that it would not be as
bad or at least headed in that direction. So I
guess time will tell, Jason, but it certainly is jarring
(06:50):
the tone that we are feeling really throughout the week,
to be quite honest, and then of course to see
that task force back. You are listening to Bloomberg Business Week,
Jason Kelly and Carol Master here with you. We're back
with Dr Ian Lesbier, clinical Associate Professor of Medicine for
ny US Lango and Medical Center, on the phone from
New York City. So I I have to ask you,
(07:11):
you know, we're a little bit doom and gloom, maybe
rightly so about the rest of the country, but we're
looking at Phase three potentially it's scheduled for July six
in New York City. How are you feeling about that,
especially as you see what's going on in the rest
of the country. Uh, you know, I'm optimistic. I do think. Um,
from what I see, most people are wearing masks and
(07:33):
social distancing. We're seeing that, uh in our waiting room.
Hopefully businesses have had time to prepare and figure out
ways to bring people back. It's a challenge. We really
don't know what will happen. It looks as if, at
least in the Northeast people will be able to return
using good judgment. Uh. And that's not to disparage people
(07:55):
perhaps in the sun Belt who felt more comfortable because
they really were unaware. Are of the number of cases,
we are probably only diagnosing you know, one in five
or one in ten uh percent of cases, so the
total number is almost you have to think of this
perhaps as ten times more. We have two point five
(08:16):
million cases. Probably there are twenty five million people who
are infected, fortunately most asymptomatic. Uh. It may be less
than that, but certainly we can't be shocked if you know,
if those numbers grow. And I think people have been
feeling very confident. You know, there's more treatment. You hear
less about deaths. But even though many of these things
(08:37):
like convalescent plasma and deaths of metasone from desiviere don't
seem to help a bit. But by no means are
they cures. They they are reducing the death rate. Uh,
but by no means are we out of the woods.
But I do Ian, let me ask you a question
just on that exact point. So if it's ten times
(09:00):
or or you know, if it's like, should that make
us feel better? Well? I think it should make us
feel better as we see the number of cases going up.
And that goes back to your question, what are we
going to measure or what what are we go going
to be concerned about. I think we are going to
see more cases going up, and that's why the number
(09:21):
of hospitalizations and why the death rate or case fatality
rate may be UM somewhat more useful. But I put
that number out and that's a publicly available UM, you know,
just so that we're not shocked at seeing more and
more cases. But it is a reminder that we do
need to again have that community involvement, as Dr Fauci said,
(09:43):
with young people being very aware because they're the main
uh kind of Petrie dish. At this point, there there
are a big reservoir of asymptomatic disease. When we first
started out, we were only testing sick people. Now we
really have the ability, fortunately to test asymptomatic people. So
I think we should go through with Phase three. We
(10:04):
do have more testing available. We're seeing in New York
at least a high serio prevalence rate, probably twenty maybe
even so that many antibodies antibodies exactly, and we think
those are preventive antibodies, how long they will last, how
long they'll prevent recurrence. We don't really know again will
the virus mutate in the second waiver in the fall,
(10:26):
But certainly I think based on what we are seeing now,
cautiously going back makes sense here. But this is very regional.
Obviously there are areas where it's still rising dramatically. So
so I'm just saying about our audience listening to this
and how the week's been and the task force came out,
so ian you know, is it just a case if
we start to see hospitalizations go up a lot, is
(10:49):
that when we all have to say we'll wait a minute,
we've really got to slow this down. Is that the
number that we've got to be kind of glued to.
I think so. And you know there's always that delay,
right so as you're diagnosing cases, hospitalizations and saddly deaths
will be delayed two, three, four weeks down the line.
So we haven't really seen that surge and hospitalizations because
(11:11):
you're just seeing cases diagnosed now, So there will be
a delay in and that in some ways gives the
localities time to prepare. But many community hospitals really don't
have the resources if there's really a big surge, and
that was the whole rationale to try and you know,
flatten the curve. I don't want to say it's too late,
but there may be areas where that we're not as
(11:35):
careful and we're seeing more cases, and I think we
have to expect more hospitalizations and saddling more deaths in
the next few weeks, because that's just the kind of
how the numbers go in this scenario. Yeah, it's a
it's a tricky time, to say the least, in a
worrisome time. I think, uh as well, all right, Dr
(11:55):
Ian less Vader, It's always good to end up the
week with you because I feel like I go into
the weekend smarter, knowing what I should be thinking about,
and you know, candidly, when people from a social distance
asked me what I think is going on, I just
quote doctor unless better no, I do. I really feel
like we take everything that's been going on in the week,
and this day was full of so much and it
just makes sense out of all of it. So um, yeah,
(12:18):
I really always appreciate he being one of our go
two voices when it comes to the virus. You're listening
to Bloomberg Business Week with Carol Messer and Jason Kelly
on Bloomberg Radio. As we mentioned earlier, we did have
an IPO today. America's second largest supermarket operator, Albertson is
once again a public company, and the stock right now
trading at fifteen dollars seventy cents a share. That's below
(12:40):
it's sixteen dollar a share IPO price. Let's get into
it with the company's president and CEO, the VACS anchor
in he joins us on the phone from Boise, Idaho, VCS.
So nice to have you here with us. Congratulations. Um,
it wasn't an easy necessarily I p O to do,
considering kind of the market backdrop and just kind of
(13:02):
the world at large. Oh, Carol, you're right, it's um.
You know, it's so hard to predict what happens to
the market ever, but we as a company, we've been
so ready preparing the company, strengthening it for this day.
We feel so confident about what we're going to do
in the future. So, but I talked to us about
the world we're living in right now, even outside of
(13:23):
the financial markets. When it comes to your stores, you've
obviously had to do some some retrofitting, some remodeling, like
everyone else has had to do. Where are you in
that process? So we did. We started out very early
in February and March Perplexi Glass, Dickcales, new cleaning procedures,
(13:46):
one way ailes, et cetera. One of the things we've
learned is you can never stop innovating on that front, right,
you can never get complacent, never stopped innovating, and we
continue to look for new ideas. Sometimes it's a new
technology that might count the number of people coming into
a store and exiting the store. Sometimes it's about new
thermoscan reading temperatures as people come into our factories. So
(14:10):
we're always innovating. So what do you do with something
like a salad and soup bar? Do you just get
rid of it? Yeah? For now we have, Right, it's
what we do. Instead you you were able to go
to a salad bar and make your own salad or
pick the pick the half a dozen chicken wings you wanted.
Now we package it and a lot and provide it.
We still provide it for our customers, and customers still
(14:32):
want it. They can't customize it like they did before. Right,
it will come over time, but I don't think it's
the right time yet. So I think, if I've got
my numbers right, only about a quarter of your stores
feature online order pick up, well below many of your peers.
So how do you play catch up with your rival,
especially when it comes to e commerce because folks have
(14:53):
had to do it because of the shutdown, and a
lot of people are saying, even those who hadn't done
it before, I like it and are probably going to
continue in the future. So how do you play catch up?
You're so right we were building it. This last few
months have been an incredible catalyst for us to go
even faster and and and the fact that we don't
have it in so much of our footprint is so
(15:13):
much upside for us. I can tell you this though.
Every time we opened it in a new store, we
get a whole set of new customers starting to shop
with us. And the customers are already shopping with us
shop even more. And I think it's because we we
provide such a fabulous, fresh assortment and a more complete
assortment than many um and so so I just think
customers say, I've got a great store, and I now
(15:36):
have the convenience of omnichannel with it. So in terms
of catching up, is it just because you guys are
going to focus on it and just ramp up your
efforts to catch up or what? Yes? That is And
we're also catching up in different ways, you know, we're
we're we've got new technologies that we're putting in place
that that can enable faster picking in stores. So we're
doing it in different ways, and we're adapting to some
(15:58):
new stuff that's coming from the coming onto the market.
And So when you think about the competitive landscape EVCT,
even beyond e commerce from a pricing perspective, what do
you see in terms of pressure from some of the
you know, lower price or the so called hard discount
formats I'm thinking about like Aldi and others, and and
(16:21):
even with the dollar stores who are pushing deeper into grocery.
How do you combat that side of the equation. Yeah,
you know, the way I see it is competition is
a wonderful thing. It keeps us all sharper. We learn
from things, We learn from them all the time. Uh,
and we play the game a little differently. Right, you
can go to some of those stores and you won't
(16:43):
get the full assortment you want to come to our store,
you get the full assortment you want. And the great
thing about our country is there's you can Different customers
want different choices, UM. And and so the key is
to find a way to compete that's different and right
for our customer. And we believe we do that very well.
So the bec I do wonder? So you are you
guys are now, as we said at the top, a
(17:05):
publicly held company trading on the New York Stock has changed.
This is after fourteen years of private ownership by Cerberus Capital. UM.
I do wonder, though, are you disappointed with the I
p O? Sixteen dollars was below and expected range? There
was talk of you know, you guys raising more than
a billion dollars in this I p O. Are you disappointed, Carol?
(17:26):
You know, we are actually elated that we could conduct
an IPO in one of the most difficult environments we
have all seen in our lifetimes, UM, in so many
different ways, and that so many investors had confidence to
put their money with us. And and we are always
long term oriented. You said it, our owner, Our investors
(17:48):
have been with us since two thousand and six. Okay,
and uh, it's a long term orientation and that's what
we have every day here and so that when you
think about your employees too, and the workforce. I mean,
what a change it has been from an incredibly tight
labor market that we had earlier in the year to
(18:08):
record unemployment. Now, tell us about your workforce and how
you see that changing, growing, shrinking in the short and midterm. Yeah,
we've had to add so many people to our stores.
Distribution centers are omni channel business. So in the last
(18:28):
the first few months, we recruited more than fifty thou people.
We had a base of two seventy people. You know,
our workforce, Um, there's there's so many who have been
with us for so long and who are so service oriented,
in service centric that you know, we we celebrate our
workforce and we spent a lot of time keeping them safe,
(18:50):
making sure they're paid right, especially through this crisis, and
we think this will continue for a while, that we'd
be able to we need this level of workforce. Um.
And I don't know how things changed how so hard
to predict it, but but you know we are on
a good trend on that front. So I've got to
just quickly ask you what's going to be the relationship
with Cerberus going forward. They still have a sizeable steake
(19:12):
in you guys, and you still have a fair amount
of debt. I think it was eight point seven billion
at the end of the last fiscal year. How do
you get rid of it? And just got about a
minute left. Yes, it's it's a lot lower now, it's
only two point five times. I read a little shift
of seven billion dollars and and we recognized the Cerberus
and four other investors who have been with us. They'll
(19:34):
continue to stay with us. They've been fabulous. They've invested
in this company to make it stronger, and we've decided
that there they continue to stay with us. All right,
We're gonna leave it there. They ve center and thank
you so much, President, CEO of Albertson's newly public certainly
accompany to watch. Can I say one personal thing, Carol
about Albertson's please. They owned the Randall's Garcia Searchain. My
(19:57):
first job in East Texas, the rand Randall's flagship. If
Debbie Kelly is listening, she would check out. You know
what I wanted to be a because this was a
it was a fancy grocery store in uh In the
neighborhood where we lived in Houston, and so you took
people's groceries out to the car. And even though it
(20:18):
was Houston and it was hot as all get out,
that was the job you wanted because you got tipped.
I couldn't get one of those jobs. Those were all tickets,
So I was a cashier instead. Um pinstriped apron. It's like,
would you like would you like your eggs on the bottom? Yeah, exactly,
But you know you had to worry about like your
speed and all that. You're listening to Bloomberg Business Week
with Carol Masser and Jason Kelly on Bloomberg Radio. We
(20:42):
are obviously tracking so closely what's happening with the virus,
especially outside of New York City and the rest of
the country. The headlines are troubling, to say the least,
and the numbers even more so. Michelle Cortez, health Science
and Medical Technology reporter is with us from Bloomberg. She
joins us on the phone from Minneapoli, and Michelle, before
we talked to you, I want to hear a little
(21:04):
bit from Dr Anthony Fauci. He spoke earlier today, specifically
about his advice to young people. Anyone who gets infected
or is at risk have been getting infected to a
greater or lesson degree, is part of the dynamic process
of the outbreak. And I know because I can understand
when I was at a stage in my life when
(21:25):
I said, well, I'm invulnerable, so I'm going to take
a risk. I think what we're missing in this is
something that we've never faced before, is that a risk
for you is not just isolated to you, because if
you get infected, you apart innocently or inadvertently of propagating
(21:45):
the dynamic process of a pandemic. All right, of course,
Dr Anthony Fauci, member of the White House Coronavirus Task Force.
They are back in action and we heard from them
earlier today. So let's bring in Michelle Cortezes Jason said
Bloomberg News Health Science and medical reporter on the phone
from Minneapolis. So, Michelle, it's really been a different week again,
(22:08):
I feel like, and the tone certainly today from the
task force a bit confusing at times. Um, how do
you add it all up right now? Where we are
in terms of a nation when it comes to the virus,
these things are unusual and hard to follow. So the
task Force was trying to portray it as a positive
(22:28):
situation because in fact, we are seeing a decline in
death rates. Fewer people right now are dying from coronavirus
then we're dying from it back in April, when we
were seeing, you know, thousands of people die every day.
There were a couple of days this week where we
had fewer than three hundred people die. That being said,
the number of new cases is skyrocketing. We hit a
(22:51):
new piece just today with more than forty thousand people infected,
and we know that deaths do follow um, so that's
a trailing indicator. So we did have deaths increasing. Also,
since we're doing a better job of capturing these cases
than finding them early, it might take longer for people
to get really sick or die, or perhaps we're just
finding more people who ultimately won't die. So it depends
(23:13):
on the framing how you're looking at the outbreak, all right,
So the framing, I guess Michelle sitting here in New
York is important. And yet there is a sense of
sort of like gloom and dread that I feel, at
least looking at these numbers either validate that feeling or
(23:35):
tell me that I shouldn't be feeling it. Well, I
think that again, you're hitting it exactly on the head
because you have to remember that you're sitting there in
New York and you probably know someone who was infected
with coronavirus. Many might have done somebody who got very sick. Right,
So in many, many parts of the country and in
many parts of the world, people don't know anyone. I
(23:55):
don't know anyone who's had coronavirus. I don't know anyone
who knows anyone who's had coronavirus. And in Minneapolis, and
so I think that that's the difference. And another thing
that they talked about at the briefing today is that
this is really very regional and not regional by state
by regional by county. There are some areas that are
incredibly hard hit, and those people are panicked by these numbers.
(24:18):
That's like people in New York City. You have lived
this and you know how bad it can be. But
other people don't understand it, and they think that it's
maybe not as serious a problem and certainly not a
problem for them. But across the South now more people
are sadly joining your club and realizing how dangerous this
might be. So how do we I don't know, you know,
(24:38):
here we are, We've got you know, we continue to reopen,
certainly here on the East Coast, you know, and other
states are reopening. And yet you have those number of
cases going up. Michelle, So I don't know, You've been
smack in the middle of this. How do you what?
What do you what's your anticipation of kind of what
comes next? Well, the bottom line is that this is
this virus is not stopping we Most viruses are seasonal.
(25:03):
We should have seen a decline in the summer. We're
not seeing a decline. We know that they're seasonal, they
increase in the fall, so likely we will see an
increase from these higher numbers. We know from the prology
tests that only a tiny fraction of Americans have been infected.
So this virus is going to be with us and
be with us and be with us until we get
(25:23):
a successful vaccine. I when it comes to vaccines and
a show, don't tell person, I want to see results.
We don't even have any phase run results from any
of these trials yet, so I don't think you can
count on that. We can hope for it, but we
can't count on it. What about the Jason and I've
talked a lot this week about Maderna and the CEO
coming out and saying I think they're going into phase
three right or soon? I mean is does that give
(25:47):
you any optimism in terms of a vaccine. Well, that
gives me optimism that if there is a successful vaccine,
if there's a successful trial, which is a huge if,
we will have product at the end of it. But
you have to remember that most clinical trials, at least
initially are not successful. Again, we don't have phase one data.
We don't have any firm evidence of whether this approach
(26:09):
is going to work or not. And there are no
vaccines that work the way this vaccine works. So all
the science suggests that it's going to be great. All
the early laboratory work person man numbers, they all look good,
but we don't have any scientific proup yet. So we're
we're betting a lot on the fact that, you know,
all the numbers add up, and now let's go try
(26:30):
it in the person and see if it's stands. And
I'm just I'm just you know, show don't tell I.
I need to actually see the evidence. But What does
work is masks and social distancing and everyone they see
doing that and it's just one Again, if you've never
been personally affected, it's not in your community. You think
you're crazy for wearing a mask, like an imposter syndrome.
(26:51):
But people need to embrace it. Alright, Michelle Cortez, you're
preaching to the choir. Here are award winning journalist Space
in Minneapolis covering this coronavirus. She's a must read. I said,
like Tom Keene, it's like raid Michelle Cortez everything she writes,
but it's totally true. But she explained so much about this.
But she explained so much right because it you know,
(27:12):
those people who are in states like I don't know
anybody I'm okay, versus US who we know lots of people,
um who have also lost their lives. So it's it's
not something to play around with. It is time for
the drive to the close back with us. As Ernesto
or most he leads the portfolio management and research teams
for all equity strategies over at Demo Global Asset Management
in the US. He's got or the firm, I should say,
(27:34):
has two hundred seventy seven billion in assets under management.
Ernesta joining us once again on the phone in Chicago, Ernesto,
good to have you here with us. UM. Curious about
the last week. We've certainly felt like a tone when
it a tone has changed in terms of concerns once
again about the virus. We've had some trade concerns throughout
the week, and we've seen a plane at play out
(27:56):
certainly in the equity markets. How do you see it? Well,
there's no shortage, for sure of things to worry about
in the equiti market. And the important thing is not
so much what the absolute level of worrying is. It's
whether we're actually seeing things improved. And granted, things were
(28:19):
improving at a batchlor pace, and this week they took
a hit because of of coronavirus, because of trade. Uh.
But we still think that things will be are on
the on the upswing here in terms of the economic
growth and the reopening, even though it may be a
little bit less uh, a little bit more bumpy, a
(28:40):
little bit less smooth. Um. So in our particular, in
our portfolios, we are choosing to stay focused on higher quality,
strong balance sheet companies, companies that can can withstand a
little bit more of the lower growth and perhaps bumpy
route that we're that's in front of us, but still
(29:02):
deliver exposure to equity markets because at the end of
the day, equity markets right now have I've seen an
incredibly strong policy response from from the Fed and and
UH fiscal from the Treasury on the fiscal side. So
that is a very important component of our bullish on
equities and call for the US bullish bottom line, bullish
(29:28):
bottom line bullish yet, but you want to say a
little bit more on the defensive side, such as the
stocks and our BEMO Low Voltility Equity Fund which today
is is down, but is down almost eighty basis points,
are point eight percent less than the market as a whole,
simply because of the defensive nature of the stocks and
(29:50):
the portfolio itself, protecting our clients on the downside, where
you know, Carol and I love talking about names, and
one of the names we definitely wanted to talk to
you about was Kroger. We spoke earlier with the sea
of Albertson's newly public as you know, talk to us
about Kroger and the supermarket business. I mean, talk about UH,
(30:11):
a place that's been important but also disrupted and and
all sorts of things. Talk about that name well, I
mean two of the three picks that I sent over
to you guys, with Kroger and the other one Sprous
Farmer's Market. They're both are in the supermarket business. They're
both benefiting from stay at home UH and and UH
(30:32):
they managed to adapt their businesses to pick ups and delivery.
So so these are companies they're gonna do well in
this environment, and we're doing necessarily as well in terms
of the stock price in a much more risk on
type environment. On on risk on days they lack. But
on the day like today, I'm pretty sure Sprouts is
(30:52):
still up. I'm not sure about Kroger's whether it's that
that was up a little bit, but not as much
as Asprout. But this is the exact nature of the
stocks like that are defensive like this UH that they
are performing on downdeds and provide a counterweight to the
to the rest of the portfolio which might not be
doing as well. So so that's that's why we like
(31:13):
the like them. We like them for the particular stressful
tens as we're in. We have stable and and and defensive,
resilient businesses and so and just going down to level
on that particular sector of that particular business. Why Sprouts
and Kroger, what do you get sort of having both
of them, Well, we own all the kind of consumer staples,
(31:37):
so that's not that those are not our only two.
So so the way we built our portfolio is we
look at the potential return of every stock in the
university's about thousand stocks, and then we and these stocks
wearing in the top of our of our of our attractiveness,
and that is a composite that we create out of
(31:59):
how stronger the fundamentals of the company, and how much
are you paying for those fundamentals, and finally, what's the
sentiment around the stock? And and those those three large
categories of of of metrics are aggregated from one final score.
These three companies have relatively strong fundamentals and they trade
(32:20):
cheaply enough that they make it into the portfolio. And
then we also build a portfolio with a very strong
focus and minimizing the risk on the downside. And and
that's that's also a very critical part of it. So
these companies have enough attractiveness to make it into a portfolio.
But most importantly, and this is the reason that we're
(32:40):
in the portfolio they are they're low risk stocks, stocks
that will protect you on days when the market is
down like uh like today for example. Well, and I
do want to point out Sprouts is up about two
point two today, it's up so far this year. Krueger
is down about one third of one percent, so just
a little bit lower, but it's so far this year.
(33:01):
So Albertson's which one public today second largest operator of
supermarkets in the US. Do you are you interested? Are
you going to look to maybe buy? We we don't
own it, and uh we we will buy according to
what I just told you, And off the top of
my head, I can't tell you what the ranking of
any start in the thousand universe is right now, but
(33:23):
when the time comes to take a look at um rebalancing,
as we call it, our portfolio was definitely pay attention
to see if if Albertson's coming into the mix interesting
All right, Well, look forward to catching up with you
in the future. An Esto Ramos is portfolio manager for
Demo Global Asset Management, joining us on the phone from Chicago.
(33:45):
Have a nice weekend, Thanks so much for listening to
Bloomberg Business week, download the podcast on iTunes, South Cloud,
flooberg dot com, but wherever you get your podcasts, and
of course you can always listen to our radio show
at two pm Eastern on Bloomberg Radio or watch us
on YouTube by searching Bloomberg Global spe
This is Bloomberg Business Week. I'm Carol Masser and I'm
Jason Kelly. We're right here every day bringing you the
latest news from the world's of business and finance, plus technology, politics, economics,
all harnessing the power of Business Week reporters and editors,
and of course Carol that's part of a team of
twenty seven hundred journalists and analysts more than a hundred
and twenty countries and Jason. You can download Bloomberg Business
(00:23):
Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
also listen to our radio show at two pm Eastern
on Bloomberg Radio every weekday, or watch us on YouTube
by searching Bloomberg Global News. Let's get into where we are,
because Texas is closing bars. They are coping with a
record number of new cases really around the country, is
(00:43):
what we're seeing. So let's get into with Dr Ian
LUs Beata, clinical Associate Professor of Medicine at n y
U Landgo Medical Center, on the phone from New York City.
I'm kind of jumbled too, because I'm trying to keep track,
to be quite honest, in of all the headlines that
have come down just on this Friday, alone own. Um,
Florida's governor says alcohol suspended at ours, So how do
(01:05):
you make sense of kind of where we are is
the rest of the country kind of where New York
was back in March. Yeah, I think that's a pretty
good analysis. By a happy Friday, Carol and Jason by
the way, and thanks for having me of course. Um yeah,
And by the way, Jason had been in the office
every day since January. So it is a shock. But
some of us have been slogging through it. I know.
(01:27):
And I have to say I before you answer, like
I have such huge I have renewed admiration for everybody
who has been going in our team included, um, just
given what it feels like, and I know it feels
better than it did uh two months ago. So I
really it's remarkable what what you guys have done dealing
(01:49):
with this. And I think that's one of the reasons,
if I may editorialize for a second, why I think
Carol and I are a little upset seeing what's going on,
uh in the rest of the country, given everything we
know from talking to you know, friends and colleagues like you,
You've you've been doing it been through right, So I
think the task force, like you, is concerned about the dramatic,
(02:10):
really spike in cases across the Sun Belt, and and
they all Um vice Version and Pense and Dr burkeson FACCY,
I think really had sort of a fairly uniform expression
of concern, which is that we're really having, um this
paradigm shift from previously just testing people who seem to
(02:31):
have symptoms or or being ill to really asymptomatic testing now,
and as that's happening, we're really seeing a spike in
the number of cases. And I think the press conference
today was really focused on enlisting young people to really
have more social responsibility. As much as they want to
(02:52):
go out, as everyone wants to go out and have fun,
there really is a social responsibility to continue to flatten
the curve, which I think, Um, the Northeastern states did
you know reasonably well, it certainly is not zero by
any means, but it certainly did flatten the cases. And
part of that is to prevent this hospital surge where
(03:12):
you overwhelm the ability of the hospitals to take care
of people. You may not necessarily reduce the total number
of cases. We don't have. Medications are vaccine to prevent cases,
but even if you slow the spread, you're able to
kind of protect hospitals so that when God forbid, when
people need ventilators or need access, you know, that's available.
(03:36):
And I think that was their emphasis today and I
think it it makes a lot of sense because we
are seeing such a spike in cases and part of
that are asymptomatic young people, as they say, under forty
under thirty five who are carrying and transmitting uh COVID
nineteen source CoV two uh and feel perfectly fine. And
(03:58):
that really is the conundrum that's put you. You know,
I have to say, you know, we kind of had
a little bit of a run in this weekend with
a younger individual who was not wearing a mask, you know,
and repeatedly kind of reminding um as we were kind
of out and about um, you know, in a social situation.
And it's just interesting, UM And I think they make
a good point. I do also want to bring up
(04:19):
something or Vince and Neerella um Dr les Better brought
up at the top of our show. You know, how
do we what are the numbers that we really need
to focus? Is it cases? Is it hospitalizations? Like what
is it that either tells us we're getting back to
where we were in New York in March, or it's
a little bit different and maybe perhaps a little better,
or you know, I don't know how you quantify it
(04:40):
or qualify it right. Well, as as Dr Fauchi said,
this is a protean disease and he's never seen it,
and we've never seen it a disease where you can have, uh, fortunately,
the majority of people, it seems with really minimal or
asymptomatic disease all the way to life threatening disease where
people die, and before that there are a month or
(05:02):
two on a on a respirator. So it is very
hard to process and somewhat hard to predict which people
will crash and burn and which people will have very
mild cases. And because of this, we have to be
extra cautious in trying to prevent that. Because although we
(05:22):
know risk factors and they outline that type one diabetes, obesity,
you know, hypertension, lung disease, age, we're still seeing young
people who get sick, and certainly in New York we've
seen young people who unfortunately die, So we don't really
have the full picture, and therefore everyone has to really
be on much more guard hopefully go back to work cautiously.
(05:47):
It's a real balancing act between damaging and economy and
having some potential risk to your population. That's a tough
needle to thread, and that's really what everyone is trying
to grapple with because we don't have recent history of this.
Nineteen it was a long time ago and they didn't
(06:07):
have these issues. All right, We're gonna continue our conversation
with Dr Ian Lesbater giving us some great context about
where we are in the virus. And I think, uh,
probably alongside with us, you know, watching this, uh with
with a little bit of caution, and I dare say,
I don't want to put words in his mouth, maybe
a little frustration of you know, what's going on in
the rest of the world, because we have lived this,
(06:28):
we know, and he's lived in far far more intimately
than we have, Carol and really seen people suffering from
this disease, and you really would hope that, you know,
people have learned from what unfortunately we had to go
through here in the New York metro area in particular,
and you would hope that it would not be as
bad or at least headed in that direction. So I
guess time will tell, Jason, but it certainly is jarring
(06:50):
the tone that we are feeling really throughout the week,
to be quite honest, and then of course to see
that task force back. You are listening to Bloomberg Business Week,
Jason Kelly and Carol Master here with you. We're back
with Dr Ian Lesbier, clinical Associate Professor of Medicine for
ny US Lango and Medical Center, on the phone from
New York City. So I I have to ask you,
(07:11):
you know, we're a little bit doom and gloom, maybe
rightly so about the rest of the country, but we're
looking at Phase three potentially it's scheduled for July six
in New York City. How are you feeling about that,
especially as you see what's going on in the rest
of the country. Uh, you know, I'm optimistic. I do think. Um,
from what I see, most people are wearing masks and
(07:33):
social distancing. We're seeing that, uh in our waiting room.
Hopefully businesses have had time to prepare and figure out
ways to bring people back. It's a challenge. We really
don't know what will happen. It looks as if, at
least in the Northeast people will be able to return
using good judgment. Uh. And that's not to disparage people
(07:55):
perhaps in the sun Belt who felt more comfortable because
they really were unaware. Are of the number of cases,
we are probably only diagnosing you know, one in five
or one in ten uh percent of cases, so the
total number is almost you have to think of this
perhaps as ten times more. We have two point five
(08:16):
million cases. Probably there are twenty five million people who
are infected, fortunately most asymptomatic. Uh. It may be less
than that, but certainly we can't be shocked if you know,
if those numbers grow. And I think people have been
feeling very confident. You know, there's more treatment. You hear
less about deaths. But even though many of these things
(08:37):
like convalescent plasma and deaths of metasone from desiviere don't
seem to help a bit. But by no means are
they cures. They they are reducing the death rate. Uh,
but by no means are we out of the woods.
But I do Ian, let me ask you a question
just on that exact point. So if it's ten times
(09:00):
or or you know, if it's like, should that make
us feel better? Well? I think it should make us
feel better as we see the number of cases going up.
And that goes back to your question, what are we
going to measure or what what are we go going
to be concerned about. I think we are going to
see more cases going up, and that's why the number
(09:21):
of hospitalizations and why the death rate or case fatality
rate may be UM somewhat more useful. But I put
that number out and that's a publicly available UM, you know,
just so that we're not shocked at seeing more and
more cases. But it is a reminder that we do
need to again have that community involvement, as Dr Fauci said,
(09:43):
with young people being very aware because they're the main
uh kind of Petrie dish. At this point, there there
are a big reservoir of asymptomatic disease. When we first
started out, we were only testing sick people. Now we
really have the ability, fortunately to test asymptomatic people. So
I think we should go through with Phase three. We
(10:04):
do have more testing available. We're seeing in New York
at least a high serio prevalence rate, probably twenty maybe
even so that many antibodies antibodies exactly, and we think
those are preventive antibodies, how long they will last, how
long they'll prevent recurrence. We don't really know again will
the virus mutate in the second waiver in the fall,
(10:26):
But certainly I think based on what we are seeing now,
cautiously going back makes sense here. But this is very regional.
Obviously there are areas where it's still rising dramatically. So
so I'm just saying about our audience listening to this
and how the week's been and the task force came out,
so ian you know, is it just a case if
we start to see hospitalizations go up a lot, is
(10:49):
that when we all have to say we'll wait a minute,
we've really got to slow this down. Is that the
number that we've got to be kind of glued to.
I think so. And you know there's always that delay,
right so as you're diagnosing cases, hospitalizations and saddly deaths
will be delayed two, three, four weeks down the line.
So we haven't really seen that surge and hospitalizations because
(11:11):
you're just seeing cases diagnosed now, So there will be
a delay in and that in some ways gives the
localities time to prepare. But many community hospitals really don't
have the resources if there's really a big surge, and
that was the whole rationale to try and you know,
flatten the curve. I don't want to say it's too late,
but there may be areas where that we're not as
(11:35):
careful and we're seeing more cases, and I think we
have to expect more hospitalizations and saddling more deaths in
the next few weeks, because that's just the kind of
how the numbers go in this scenario. Yeah, it's a
it's a tricky time, to say the least, in a
worrisome time. I think, uh as well, all right, Dr
(11:55):
Ian less Vader, It's always good to end up the
week with you because I feel like I go into
the weekend smarter, knowing what I should be thinking about,
and you know, candidly, when people from a social distance
asked me what I think is going on, I just
quote doctor unless better no, I do. I really feel
like we take everything that's been going on in the week,
and this day was full of so much and it
just makes sense out of all of it. So um, yeah,
(12:18):
I really always appreciate he being one of our go
two voices when it comes to the virus. You're listening
to Bloomberg Business Week with Carol Messer and Jason Kelly
on Bloomberg Radio. As we mentioned earlier, we did have
an IPO today. America's second largest supermarket operator, Albertson is
once again a public company, and the stock right now
trading at fifteen dollars seventy cents a share. That's below
(12:40):
it's sixteen dollar a share IPO price. Let's get into
it with the company's president and CEO, the VACS anchor
in he joins us on the phone from Boise, Idaho, VCS.
So nice to have you here with us. Congratulations. Um,
it wasn't an easy necessarily I p O to do,
considering kind of the market backdrop and just kind of
(13:02):
the world at large. Oh, Carol, you're right, it's um.
You know, it's so hard to predict what happens to
the market ever, but we as a company, we've been
so ready preparing the company, strengthening it for this day.
We feel so confident about what we're going to do
in the future. So, but I talked to us about
the world we're living in right now, even outside of
(13:23):
the financial markets. When it comes to your stores, you've
obviously had to do some some retrofitting, some remodeling, like
everyone else has had to do. Where are you in
that process? So we did. We started out very early
in February and March Perplexi Glass, Dickcales, new cleaning procedures,
(13:46):
one way ailes, et cetera. One of the things we've
learned is you can never stop innovating on that front, right,
you can never get complacent, never stopped innovating, and we
continue to look for new ideas. Sometimes it's a new
technology that might count the number of people coming into
a store and exiting the store. Sometimes it's about new
thermoscan reading temperatures as people come into our factories. So
(14:10):
we're always innovating. So what do you do with something
like a salad and soup bar? Do you just get
rid of it? Yeah? For now we have, Right, it's
what we do. Instead you you were able to go
to a salad bar and make your own salad or
pick the pick the half a dozen chicken wings you wanted.
Now we package it and a lot and provide it.
We still provide it for our customers, and customers still
(14:32):
want it. They can't customize it like they did before. Right,
it will come over time, but I don't think it's
the right time yet. So I think, if I've got
my numbers right, only about a quarter of your stores
feature online order pick up, well below many of your peers.
So how do you play catch up with your rival,
especially when it comes to e commerce because folks have
(14:53):
had to do it because of the shutdown, and a
lot of people are saying, even those who hadn't done
it before, I like it and are probably going to
continue in the future. So how do you play catch up?
You're so right we were building it. This last few
months have been an incredible catalyst for us to go
even faster and and and the fact that we don't
have it in so much of our footprint is so
(15:13):
much upside for us. I can tell you this though.
Every time we opened it in a new store, we
get a whole set of new customers starting to shop
with us. And the customers are already shopping with us
shop even more. And I think it's because we we
provide such a fabulous, fresh assortment and a more complete
assortment than many um and so so I just think
customers say, I've got a great store, and I now
(15:36):
have the convenience of omnichannel with it. So in terms
of catching up, is it just because you guys are
going to focus on it and just ramp up your
efforts to catch up or what? Yes? That is And
we're also catching up in different ways, you know, we're
we're we've got new technologies that we're putting in place
that that can enable faster picking in stores. So we're
doing it in different ways, and we're adapting to some
(15:58):
new stuff that's coming from the coming onto the market.
And So when you think about the competitive landscape EVCT,
even beyond e commerce from a pricing perspective, what do
you see in terms of pressure from some of the
you know, lower price or the so called hard discount
formats I'm thinking about like Aldi and others, and and
(16:21):
even with the dollar stores who are pushing deeper into grocery.
How do you combat that side of the equation. Yeah,
you know, the way I see it is competition is
a wonderful thing. It keeps us all sharper. We learn
from things, We learn from them all the time. Uh,
and we play the game a little differently. Right, you
can go to some of those stores and you won't
(16:43):
get the full assortment you want to come to our store,
you get the full assortment you want. And the great
thing about our country is there's you can Different customers
want different choices, UM. And and so the key is
to find a way to compete that's different and right
for our customer. And we believe we do that very well.
So the bec I do wonder? So you are you
guys are now, as we said at the top, a
(17:05):
publicly held company trading on the New York Stock has changed.
This is after fourteen years of private ownership by Cerberus Capital. UM.
I do wonder, though, are you disappointed with the I
p O? Sixteen dollars was below and expected range? There
was talk of you know, you guys raising more than
a billion dollars in this I p O. Are you disappointed, Carol?
(17:26):
You know, we are actually elated that we could conduct
an IPO in one of the most difficult environments we
have all seen in our lifetimes, UM, in so many
different ways, and that so many investors had confidence to
put their money with us. And and we are always
long term oriented. You said it, our owner, Our investors
(17:48):
have been with us since two thousand and six. Okay,
and uh, it's a long term orientation and that's what
we have every day here and so that when you
think about your employees too, and the workforce. I mean,
what a change it has been from an incredibly tight
labor market that we had earlier in the year to
(18:08):
record unemployment. Now, tell us about your workforce and how
you see that changing, growing, shrinking in the short and midterm. Yeah,
we've had to add so many people to our stores.
Distribution centers are omni channel business. So in the last
(18:28):
the first few months, we recruited more than fifty thou people.
We had a base of two seventy people. You know,
our workforce, Um, there's there's so many who have been
with us for so long and who are so service oriented,
in service centric that you know, we we celebrate our
workforce and we spent a lot of time keeping them safe,
(18:50):
making sure they're paid right, especially through this crisis, and
we think this will continue for a while, that we'd
be able to we need this level of workforce. Um.
And I don't know how things changed how so hard
to predict it, but but you know we are on
a good trend on that front. So I've got to
just quickly ask you what's going to be the relationship
with Cerberus going forward. They still have a sizeable steake
(19:12):
in you guys, and you still have a fair amount
of debt. I think it was eight point seven billion
at the end of the last fiscal year. How do
you get rid of it? And just got about a
minute left. Yes, it's it's a lot lower now, it's
only two point five times. I read a little shift
of seven billion dollars and and we recognized the Cerberus
and four other investors who have been with us. They'll
(19:34):
continue to stay with us. They've been fabulous. They've invested
in this company to make it stronger, and we've decided
that there they continue to stay with us. All right,
We're gonna leave it there. They ve center and thank
you so much, President, CEO of Albertson's newly public certainly
accompany to watch. Can I say one personal thing, Carol
about Albertson's please. They owned the Randall's Garcia Searchain. My
(19:57):
first job in East Texas, the rand Randall's flagship. If
Debbie Kelly is listening, she would check out. You know
what I wanted to be a because this was a
it was a fancy grocery store in uh In the
neighborhood where we lived in Houston, and so you took
people's groceries out to the car. And even though it
(20:18):
was Houston and it was hot as all get out,
that was the job you wanted because you got tipped.
I couldn't get one of those jobs. Those were all tickets,
So I was a cashier instead. Um pinstriped apron. It's like,
would you like would you like your eggs on the bottom? Yeah, exactly,
But you know you had to worry about like your
speed and all that. You're listening to Bloomberg Business Week
with Carol Masser and Jason Kelly on Bloomberg Radio. We
(20:42):
are obviously tracking so closely what's happening with the virus,
especially outside of New York City and the rest of
the country. The headlines are troubling, to say the least,
and the numbers even more so. Michelle Cortez, health Science
and Medical Technology reporter is with us from Bloomberg. She
joins us on the phone from Minneapoli, and Michelle, before
we talked to you, I want to hear a little
(21:04):
bit from Dr Anthony Fauci. He spoke earlier today, specifically
about his advice to young people. Anyone who gets infected
or is at risk have been getting infected to a
greater or lesson degree, is part of the dynamic process
of the outbreak. And I know because I can understand
when I was at a stage in my life when
(21:25):
I said, well, I'm invulnerable, so I'm going to take
a risk. I think what we're missing in this is
something that we've never faced before, is that a risk
for you is not just isolated to you, because if
you get infected, you apart innocently or inadvertently of propagating
(21:45):
the dynamic process of a pandemic. All right, of course,
Dr Anthony Fauci, member of the White House Coronavirus Task Force.
They are back in action and we heard from them
earlier today. So let's bring in Michelle Cortezes Jason said
Bloomberg News Health Science and medical reporter on the phone
from Minneapolis. So, Michelle, it's really been a different week again,
(22:08):
I feel like, and the tone certainly today from the
task force a bit confusing at times. Um, how do
you add it all up right now? Where we are
in terms of a nation when it comes to the virus,
these things are unusual and hard to follow. So the
task Force was trying to portray it as a positive
(22:28):
situation because in fact, we are seeing a decline in
death rates. Fewer people right now are dying from coronavirus
then we're dying from it back in April, when we
were seeing, you know, thousands of people die every day.
There were a couple of days this week where we
had fewer than three hundred people die. That being said,
the number of new cases is skyrocketing. We hit a
(22:51):
new piece just today with more than forty thousand people infected,
and we know that deaths do follow um, so that's
a trailing indicator. So we did have deaths increasing. Also,
since we're doing a better job of capturing these cases
than finding them early, it might take longer for people
to get really sick or die, or perhaps we're just
finding more people who ultimately won't die. So it depends
(23:13):
on the framing how you're looking at the outbreak, all right,
So the framing, I guess Michelle sitting here in New
York is important. And yet there is a sense of
sort of like gloom and dread that I feel, at
least looking at these numbers either validate that feeling or
(23:35):
tell me that I shouldn't be feeling it. Well, I
think that again, you're hitting it exactly on the head
because you have to remember that you're sitting there in
New York and you probably know someone who was infected
with coronavirus. Many might have done somebody who got very sick. Right,
So in many, many parts of the country and in
many parts of the world, people don't know anyone. I
(23:55):
don't know anyone who's had coronavirus. I don't know anyone
who knows anyone who's had coronavirus. And in Minneapolis, and
so I think that that's the difference. And another thing
that they talked about at the briefing today is that
this is really very regional and not regional by state
by regional by county. There are some areas that are
incredibly hard hit, and those people are panicked by these numbers.
(24:18):
That's like people in New York City. You have lived
this and you know how bad it can be. But
other people don't understand it, and they think that it's
maybe not as serious a problem and certainly not a
problem for them. But across the South now more people
are sadly joining your club and realizing how dangerous this
might be. So how do we I don't know, you know,
(24:38):
here we are, We've got you know, we continue to reopen,
certainly here on the East Coast, you know, and other
states are reopening. And yet you have those number of
cases going up. Michelle, So I don't know, You've been
smack in the middle of this. How do you what?
What do you what's your anticipation of kind of what
comes next? Well, the bottom line is that this is
this virus is not stopping we Most viruses are seasonal.
(25:03):
We should have seen a decline in the summer. We're
not seeing a decline. We know that they're seasonal, they
increase in the fall, so likely we will see an
increase from these higher numbers. We know from the prology
tests that only a tiny fraction of Americans have been infected.
So this virus is going to be with us and
be with us and be with us until we get
(25:23):
a successful vaccine. I when it comes to vaccines and
a show, don't tell person, I want to see results.
We don't even have any phase run results from any
of these trials yet, so I don't think you can
count on that. We can hope for it, but we
can't count on it. What about the Jason and I've
talked a lot this week about Maderna and the CEO
coming out and saying I think they're going into phase
three right or soon? I mean is does that give
(25:47):
you any optimism in terms of a vaccine. Well, that
gives me optimism that if there is a successful vaccine,
if there's a successful trial, which is a huge if,
we will have product at the end of it. But
you have to remember that most clinical trials, at least
initially are not successful. Again, we don't have phase one data.
We don't have any firm evidence of whether this approach
(26:09):
is going to work or not. And there are no
vaccines that work the way this vaccine works. So all
the science suggests that it's going to be great. All
the early laboratory work person man numbers, they all look good,
but we don't have any scientific proup yet. So we're
we're betting a lot on the fact that, you know,
all the numbers add up, and now let's go try
(26:30):
it in the person and see if it's stands. And
I'm just I'm just you know, show don't tell I.
I need to actually see the evidence. But What does
work is masks and social distancing and everyone they see
doing that and it's just one Again, if you've never
been personally affected, it's not in your community. You think
you're crazy for wearing a mask, like an imposter syndrome.
(26:51):
But people need to embrace it. Alright, Michelle Cortez, you're
preaching to the choir. Here are award winning journalist Space
in Minneapolis covering this coronavirus. She's a must read. I said,
like Tom Keene, it's like raid Michelle Cortez everything she writes,
but it's totally true. But she explained so much about this.
But she explained so much right because it you know,
(27:12):
those people who are in states like I don't know
anybody I'm okay, versus US who we know lots of people,
um who have also lost their lives. So it's it's
not something to play around with. It is time for
the drive to the close back with us. As Ernesto
or most he leads the portfolio management and research teams
for all equity strategies over at Demo Global Asset Management
in the US. He's got or the firm, I should say,
(27:34):
has two hundred seventy seven billion in assets under management.
Ernesta joining us once again on the phone in Chicago, Ernesto,
good to have you here with us. UM. Curious about
the last week. We've certainly felt like a tone when
it a tone has changed in terms of concerns once
again about the virus. We've had some trade concerns throughout
the week, and we've seen a plane at play out
(27:56):
certainly in the equity markets. How do you see it? Well,
there's no shortage, for sure of things to worry about
in the equiti market. And the important thing is not
so much what the absolute level of worrying is. It's
whether we're actually seeing things improved. And granted, things were
(28:19):
improving at a batchlor pace, and this week they took
a hit because of of coronavirus, because of trade. Uh.
But we still think that things will be are on
the on the upswing here in terms of the economic
growth and the reopening, even though it may be a
little bit less uh, a little bit more bumpy, a
(28:40):
little bit less smooth. Um. So in our particular, in
our portfolios, we are choosing to stay focused on higher quality,
strong balance sheet companies, companies that can can withstand a
little bit more of the lower growth and perhaps bumpy
route that we're that's in front of us, but still
(29:02):
deliver exposure to equity markets because at the end of
the day, equity markets right now have I've seen an
incredibly strong policy response from from the Fed and and
UH fiscal from the Treasury on the fiscal side. So
that is a very important component of our bullish on
equities and call for the US bullish bottom line, bullish
(29:28):
bottom line bullish yet, but you want to say a
little bit more on the defensive side, such as the
stocks and our BEMO Low Voltility Equity Fund which today
is is down, but is down almost eighty basis points,
are point eight percent less than the market as a whole,
simply because of the defensive nature of the stocks and
(29:50):
the portfolio itself, protecting our clients on the downside, where
you know, Carol and I love talking about names, and
one of the names we definitely wanted to talk to
you about was Kroger. We spoke earlier with the sea
of Albertson's newly public as you know, talk to us
about Kroger and the supermarket business. I mean, talk about UH,
(30:11):
a place that's been important but also disrupted and and
all sorts of things. Talk about that name well, I
mean two of the three picks that I sent over
to you guys, with Kroger and the other one Sprous
Farmer's Market. They're both are in the supermarket business. They're
both benefiting from stay at home UH and and UH
(30:32):
they managed to adapt their businesses to pick ups and delivery.
So so these are companies they're gonna do well in
this environment, and we're doing necessarily as well in terms
of the stock price in a much more risk on
type environment. On on risk on days they lack. But
on the day like today, I'm pretty sure Sprouts is
(30:52):
still up. I'm not sure about Kroger's whether it's that
that was up a little bit, but not as much
as Asprout. But this is the exact nature of the
stocks like that are defensive like this UH that they
are performing on downdeds and provide a counterweight to the
to the rest of the portfolio which might not be
doing as well. So so that's that's why we like
(31:13):
the like them. We like them for the particular stressful
tens as we're in. We have stable and and and defensive,
resilient businesses and so and just going down to level
on that particular sector of that particular business. Why Sprouts
and Kroger, what do you get sort of having both
of them, Well, we own all the kind of consumer staples,
(31:37):
so that's not that those are not our only two.
So so the way we built our portfolio is we
look at the potential return of every stock in the
university's about thousand stocks, and then we and these stocks
wearing in the top of our of our of our attractiveness,
and that is a composite that we create out of
(31:59):
how stronger the fundamentals of the company, and how much
are you paying for those fundamentals, and finally, what's the
sentiment around the stock? And and those those three large
categories of of of metrics are aggregated from one final score.
These three companies have relatively strong fundamentals and they trade
(32:20):
cheaply enough that they make it into the portfolio. And
then we also build a portfolio with a very strong
focus and minimizing the risk on the downside. And and
that's that's also a very critical part of it. So
these companies have enough attractiveness to make it into a portfolio.
But most importantly, and this is the reason that we're
(32:40):
in the portfolio they are they're low risk stocks, stocks
that will protect you on days when the market is
down like uh like today for example. Well, and I
do want to point out Sprouts is up about two
point two today, it's up so far this year. Krueger
is down about one third of one percent, so just
a little bit lower, but it's so far this year.
(33:01):
So Albertson's which one public today second largest operator of
supermarkets in the US. Do you are you interested? Are
you going to look to maybe buy? We we don't
own it, and uh we we will buy according to
what I just told you, And off the top of
my head, I can't tell you what the ranking of
any start in the thousand universe is right now, but
(33:23):
when the time comes to take a look at um rebalancing,
as we call it, our portfolio was definitely pay attention
to see if if Albertson's coming into the mix interesting
All right, Well, look forward to catching up with you
in the future. An Esto Ramos is portfolio manager for
Demo Global Asset Management, joining us on the phone from Chicago.
(33:45):
Have a nice weekend, Thanks so much for listening to
Bloomberg Business week, download the podcast on iTunes, South Cloud,
flooberg dot com, but wherever you get your podcasts, and
of course you can always listen to our radio show
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