tv Bloomberg Surveillance Bloomberg November 2, 2021 6:00am-7:00am EDT
inflation. >> inflation has been a difficult variable for any macroeconomist to get right. >> this is not a bond market that is ahead. >> it is a risk on environment for market. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: record highs into tuesday. we are doing it again. good morning. this is "bloomberg surveillance." alongside tom keene and reese abramowicz, i am jonathan ferro. equity futures pretty flat this morning. a three day rally and a three day rally and i record high to start this morning. tom: absolutely phenomenal. the interest is rolling over, $120 oil front and center. it is about the equity markets and the linkage into the dynamics in the fixed income space. jonathan: it is about fixed
income decisions. the bank of england, the federal reserve very much in front of us. tom: the federal reserve will be the one that matters. i agree. it is a sum total effort. what do you do about the word that says september, which is transitory? nothing is transitory this november. jonathan: the big question, lisa, what comes next. lisa: it is not a question of when the fed lifts off, but how many rate hikes will be in the cycle. new surveys are getting more aggressive with how many rate hikes the federal execute before the end of 2024, which i find interesting. what about this gives them a feeling that it will be more persistent? jonathan: equity futures totally unchanged as we set you up at the federal reserve. here is the price action on the s&p 500, three days of gains into tuesday, all-time highs in the bond market. yields unchanged. 155, euro breaker at 115.96.
the focus on commodities, i've got crude at $83.94. tom: this is emotional. we don't have time to get into it. but there is a cultural impact here. there is an emotion. when you see paris week, which is european with all of the cultural heritage, go out to record highs, that gets your attention. jonathan: can i just say, going the other way. lisa: it has to do with production and china. they are producing less, therefore the demand is less. this is the bifurcated nature of the market, supply chain issues, ongoing disruptions from the pandemic. today, we are getting u.s. vehicle sales, which has been one of the key moments that has been affected by all of the supply chain issues and chip shortages. the expectation is for a slight increase, 12.8 million vehicles
sold in the month of october. however, i am curious to see at what price. the asking price is going up, which has dampened demand. i wonder how much that will continue especially because you hear all of these automakers saying the supply chain disruptions will not end before the end of next year. today as you were mentioning the federal reserve meeting takes place in washington, d.c. he commences tomorrow at 2:00 p.m. the expectation is for a taper. nobody cares. what they want is what the indication is for when they raise rates. we are now baking in based on market expectations more than two rate hikes in 2022. just to give you a sense of how quickly this moves, people thought it was a moonshot to the federal reserve to hike rates for all 2022 as recently as just a few months ago. it is election day. the key focus will be on the gubernatorial race in virginia. terry mcauliffe versus glenn
youngkin. predictions are predicting a republican win. what does this do for the democratic agenda? some suspect it gives them some steamed because people will actually quickly say we better get something done now before the midterm elections where the democrats look like they have a worse chance. jonathan: looking forward to catching up with him a little bit later this morning. the stocks to watch this morning are tesla. it is down more than 5%. we have had a 50 percentage point move. it is a $1 trillion name. to be fair to elon musk, he has alluded to this point. he is talked about the fact that tesla has far more demand in production. it is interesting about what he said in the last 24 hours is this is based on hurts, i would like to emphasize that no contract has been signed yet. that was elon musk on twitter. tom: is he allowed to say this stuff? jonathan: well, he does.
the stock is down 5% this morning. we will pick up on some of the details around the story through this morning. jim caron joins us now from morgan stanley investment management. let's start right here. we have the market priced for rate hikes next year. is that in line with your view of how this is going to play out for the fed? jim: thank you for having me on your show. i think the narrative on inflation is confused. we are talking about what inflation is today and we know core pce is high. we know it will be high in the first quarter. what we are not talking about is where inflation will be in the second quarter, the third quarter, and the fourth quarter. the fed needs to look forward and the fed will look forward. i think the rate hikes are probably that are being priced over two rate hikes as lisa was discussing, i think it is too many. it could be two. but the point here is that inflation is expected to fall
off dramatically starting in the second quarter of next year because the year-over-year base effects will be very difficult to be. the third quarter net year and the fourth quarter of next year, inflation might be just over 2% on a core pce measure. to think that the fed will be hiking rates aggressively into declining inflation of what may be likely -- i think it is a stretch in terms of what the market is pricing. tom: for the zeitgeist, you credit deutsche bank, is the shift a subtle shift from transitory over to macro blather and fed talk, over to you reality where people are losing money on debts placed previously. is that what we are seeing? jim: we are seeing some of that. there were curve steepeners in the market prior to the big flat and we saw and that certainly contributed to it. i would not cast that aside as nothing.
there has been a pretty big shift. central banks have marked themselves. they have become more hawkish in terms of their overall tone. i think the technicals did play a big factor. lisa: right now, we are taking a look at people bringing forward the number of rate hikes the federal execute, not just the timing. i wonder if this is baked into the rest of the bond market or if this is a peripheral call and not actually bets on the future. jim: lisa, i love your question. if the yield curve is talking, is anybody listening? the problem is that not that many other markets are listening. what the yield curve is saying is the fed -- the central bank will bring rate hikes board. the curve will flatten because the market is not willing to adjust higher the terminal central bank rate. that means we are still in a low rate environment from a fed
policy perspective, but we may bring these rate hikes forward. what is happening in high yield spreads? almost nothing. what is happening in investment grades spreads? almost nothing. what is happening to equities? equities are making new highs. we can say maybe these markets have it wrong at this point, but as far as i can say, is the yield curve falls in the woods and nobody is listening, is it falling? this is a critical message. this is information, when you bring rate hikes forward because we are responding to supply shocks that today has inflation higher does not mean that inflation will necessarily be higher and continue to grow. inflation is a growth rate of crisis. we may not be having just this time next year. therefore, the market is unwilling to raise the terminal funds rate or the terminal central bank rate. therefore, longer yields and 10 year yields are not really
changing that much. 30 year yields have been falling. it is pretty serious right now. lisa: what do you do as an investor? do you bet that the market is wrong and sell high-yield debt? do you sell riskier assets? jim: the answer is, not us at morgan stanley. we still like high-yield. the central bank is going to raise rates that they are not trying to tighten financial conditions. they still want financial conditions easy to expand the economic cycle, to continue growth, to push down the unemployment rate. it is an inclusive old for the fed -- inclusive goal for the fed. that is exactly what is taking place here. the fed is not trying to kill the expansion. they are trying to extend it. but they may need to address the near term pressures of inflation with a rate hike or two and that could be in 2022. but it does not mean that they
are shifting their terminal rate a lot higher. if they do, the terminal rate is 2.5% by the way based on the fed forecast. if the terminal rate goes from 2.5% to 3%, the 10 year yield would be somewhere around 2.15%. we are not expected at any time soon, but the point here is that the terminal rate matters a lot in the market -- and the market is not willing to shift higher on longer-term rate hikes. jonathan: good to catch up. jim caron of morgan stanley. on the equity market in the next hour, looking forward to catching up with wells fargo on their new bullishness. let's call it new bullishness because they were not so will issue early in the year. tom: there have been some shifts. i am seeing some injustice -- some adjustments. you are coming to a point where people have this massive ambiguity. if rates go up, does that signal a prosperous economy for equity
profit? jonathan: if it's just about inflation, we have a problem, right? tom: i will go with that. the bottom line is how much up is conducive for good equity investment, not that it will come up in the press conference, but i am sorry. look at the equity markets. up it goes. jonathan: no one wants my view. morgan stanley. manager risk accordingly. lisa: a lot of this has to do with the idea that rates are going up. tom: i talked to antonio yesterday. jonathan: i knew it. i was going to ask you. tom: think about what he did when he moved from italy to chelsea. jonathan: if you interviewed for the job -- tom: no, i did not. i talked to him. he was the real deal. jonathan: he is the real deal. a fantastic manager. equity futures down 0.1%.
antonio contact. tune in to "bloomberg surveillance" 10 years ago for that. this is bloomberg. >> nancy pelosi plans to push forward with plans to vote this week on president biden's economic agenda legislation. she is getting pushback from moderates who want a detailed analysis of the cost and economic impact. but complaints from joe manchin, he says congress need more time to assess the bill. the biden administration is launching an assault on methane. it wants to keep the heat trapping gas on oil wells and farms. u.s. says more than 90 nations have china -- signed onto the joint initiative to cut methane emissions 20% by 2030. president biden calls methane
cuts the most effective strategy for slowing global warming in the near term. the dispute over fishing rights, president macron says he will give negotiations more time here france accuses the british of unfairly researching the access of fishing boats in british waters. prime minister boris johnson says he welcomes the french move. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.
without knowing how the bill will impact our economy and our country. we will not know that until we work through the tech. jonathan: joe manchin, the democrat from west virginia, holding things up a little bit. from new york city, good morning. tom keene, the surf waves, and jonathan ferro. -- lisa abramowicz, and jonathan ferro. all-time highs and a nice feature of 4600 as we start another day. in the bond market yields unchanged. 154. the fed decision comes tomorrow. senator manchin holding this bill hostage is not going to work in getting my support for the reconciliation package. tom: this could be a one hour conversation. the politics that the president come home to -- comes home to will be extraordinary. joining us now, we are thrilled she can be with us and we will take a moment in the ark of this pandemic, this 18 months, we
have misses kenneth walker the third joining us. emily, wonderful to have you here. that was one of the most extraordinary games. john watched it, i watched it, lisa watched it, but you lived it. what was it like to see east lansing at last ann arbor? emily: like many spartan games, it was basically being nervous for most of the game until the very last minute in which you suddenly realize that we had it. it was very exciting. you missed it. i was rocking the spartan green. we had to switch up the color palate this morning. tom: emily, thank you. it is a joy to see that. it is a joy to have the president come home. what does he come home to? emily: the is coming home to a democratic party that still is struggling to pass his signature piece of policy legislation. it is played that clip from senator manchin.
over in the house, nancy pelosi says they are on track, on course to continue passing both bills, that social tax plan as well as the bipartisan infrastructure plan this week. it is what democrats are hoping to do. we talked to progressives and they say this is in president biden's hands right now, putting a lot of pressure on the president, saying if biden can guarantee that he will be able to get to senator manchin and senator sinema to go along with him, then progressives are ok moving forward with those two pieces of legislation whether or not senator manchin gives a verbal yes or no. lisa: how much does the outcome of the gubernatorial race in virginia matter for the infrastructure bill vote? emily: there definitely is some impact. democrats are cognizant that president biden's approval rating has fallen. he faces a very difficult midterm for historical reasons and because of how states are redrawing congressional district lines.
for democrats, the one bright spot is that they currently control the house, the senate, and the white house and they can move this big piece of policy legislation, which they can run on. it is important to get that done. right now, democrats will have a reckoning to face even if the democratic nominee terry mcauliffe pulls off a win tonight. virginia is a state that president biden won by 10 percentage points. to have this race as close as it is, to have some analysts actually saying that it is more likely that republican nominee glenn youngkin will win, this is something democrats will have to reckon with a how they message, how they talk to voters, and how they go forward. lisa: how much will this come out to turn out? emily: all elections come out to turn out and this is something we will be watching. one big question is did terry mcauliffe successfully energize the democrats who usually do not vote in the midterms to come out and vote?
we are really paying attention to the suburban voters. those are ones who really supported republicans before president trump came along and then switch to democrat. the question is what do they do now that trump is no longer on the ballot and for republicans trying to see if glenn youngkin can form an alliance between hardcore trump supporters as well as more moderate republicans who really did not support the party that much when trump was the head of it. tom: does the former president bend over in his support? emily: president trump did give youngkin his endorsement, which youngkin acknowledged. he has also kept him at arms length. he did see president trump in the state of virginia campaigning for glenn youngkin. he did a telephone town hall last night, but youngkin was not there on the line with him. there is this bouncing -- balancing aspect that glenn youngkin is doing that republicans in similar swing states might seek to emulate.
how do you make sure you are not completely isolated from trump, but that you are making sure that trump supporters report you? -- support you? tom: if there is one item that the president can bring back from glasgow, one single little thread that congress can agree on, does that exist? emily: yes. you do see democrats acknowledge the fact that climate change is something they want to address. it is something that is important to their base. the question is how do you do it and how do you do it so you can keep the senator from west virginia on board with you? you are seeing some of that today in the methane regulations that president biden has announced, sort of walking that fine line, addressing leaks of methane, but not going so far as to ban practices that are sometimes used. jonathan: thank you. emily wilkins. i have to do this. glasgow.
you've got this. we will have a couple of weeks of this. can we get it right? just look at just listening to casting over the last 24 hours. tom: i have been practicing. jonathan: i like how you say moscow. it is glasco. tom: i slipped there. jonathan: maybe you're confused that the agreement is in glasco. tom: for the international artists -- audience, there are sports moments. it is michigan. it is a culture of two different schools. they are outstanding academics. you do not want the game to end. it was so graceful. it was nice. it was in a smaller stadium. it was not in some mega
corporate stadium. it was in a smaller, more collegiate 60,000 stand stadium. on grass. jonathan: let's move on from this. we will stop a little bit later in virginia. that is the focus politically speaking in america. lisa: for the midterm elections. what is interesting is terry will be joining us. he thinks we will push forward the democratic agenda. it is now or never. they have a limited amount of time if the midterm elections are called into question. jonathan: to get something done. how quickly can they get something done this week? equity futures down 0.1% on the s&p 500. there is a lift them up equity market. lisa called it a test lawn -- teslon equity market. it is my fault. tom: ok.
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♪ jonathan: equity futures down four on the s&p. from new york, good morning. futures down 0.2%. the small caps doing ok. a little lift, up about 0.1%. australia happened overnight. switch up the board. the front end of the curve in australia, the u.s., the u.k.. this will be the focus as the week progresses. the fed tomorrow. the bank of england on thursday. they were targeting 0.1% on the front end of the curve. the market had made its mind up about that. 72 basis points for the front end. even around 50 boys this point -- 50 basis points, we have more than doubled since the fed last met on september 22 and on the
two year yield, we have had a massive moves. it is ok to call it explosive. the bank of england encourages that move. the federal reserve, it is about whether we get some pushback. tom: let's pause because this is important. the first derivative of the movement of yields in europe is quite steep. why is that? jonathan: we go from zero to 70 in australia. the reason i mention that is it is not just europe, it is not just the u.s.. it is global. it has been a massive move all over the place. some people have encouraged it. some people have validated it. australia validated the move. the bank of england encouraged the move. the federal reserve has not on much. if we do not get pushback, the market will see it as encouragement. let's finish on what it means for the currency. better to travel than to arrive.
we may not hike interest rates through 2024 geared -- 2024. down under and up here in the united states, down about 0.8%. tomorrow at the federal reserve, it is about two things. tell me what is next, give me a better view on inflation and about how the latter informs the former. tom: i like how you have the all-star youngling go. the down under thing. -- the australian lingo, the down under thing. jonathan: do you like that. tom: frances donald joins us and she has written an important essay on all this talk about policy mistakes. let's folded into the word transitory. a transitory policy mistake. when a central bank screws up, what do they do? frances: it depends on who they are, but traditionally they have pivoted back.
we are going to see central bankers who may be get a little too excited in validating those front and moves and you see those longer and start to move down and this is saying to a lot of economists that in 2022 growth of inflation slows pretty heavily and central banks will want to pivot and will have to pivot towards more dovish language. the challenge is we have to traverse some challenging curve flatters, some challenging economic environments. tom: the 20 year yield is higher than the 30 year yield. it is an inverted yield in the 20-30 spread. i have never mentioned that on air before. lisa mentions that daily. that is another world. francis, the fed can control how far out the curve and if they can only control so far out, why do they care what the farther out curve does?
frances: the 20-30 is less of an economic signal and more of a technical development. what you should be watching is the two-year versus the 30 year. the fed cannot control that 30 year yield, but that 30 year yield still has a lot of information about where we are going long-term growth potential is embedded in the long end of that curve. the story we are seeing is that no, despite what we believe would be game changing fiscal stimulus, we have not checked that box. remember average inflation targeting? that was supposed to be a big deal. we were supposed to be in a regime change when the fed let things run hot, with the idea that covid was going to produce massive activity gains. it turns out, we have a labor shortage, which is not giving as a productivity gain, but the opposite. the game changing growth that we thought we were going to burst out of in a build back better
regime, we are not getting that. we are probably getting the opposite. jonathan: you have a fascinating forward look. you are talking about growth slowing next year, inflation slowing, and the possibility that the fed has to flip once and slip again. i wonder how that stacks up with your view on risk assets and equities more broadly. what is the outlook? frances: what we see is the fed cannot hike in 2022 and a lot of global central banks that are either going to have to pivot back to a more dovish stance or even reverse rate hikes in the blacks -- in the next five years. i am happy to be adding back cyclical trays. until we can get there, i have to make sure that the central bankers are not going to commit more of a policy was states going into 2022. i don't think that happens this week. that has to echo that it is still ok. inflationary pressures are still hot, dear we say getting more and more political.
that is why it is choppy or as we head into 2022. i think we are in that bad news is bad news phase. trying to get back to bad news is good news in order to get back to adding to risk assets. lisa: just to highlight your position, are you saying that the bond markets are wrong and that equity markets, risk assets are more right when it comes to the outlook going forward? frances: i don't support -- subscribe to the market being wrong. i think markets are telling us the right story and that is that central banks are too hawkish, but there is liquidity in the system and if you are looking at a five year return forecast, it does not make this an amount of sense as being in equities -- the same amount of sense as being in equities. in order to get steepening, we have to see the policy pivot. the policy pivots are impossible for me to forecast. i don't have a model that tells me what is going on in powell's head. i don't have a model that tells me was going to be running the
fed in 2022. in looking at betting markets. there is this huge amount of uncertainty as to when we will see a policy pivot. we might not get one, and which case we are talking about a much more difficult outlook as the curve continues to steepen and our inboxes are full of all of those recession types of stories. lisa: you are not alone in looking at. of pages on whether -- looking at prediction pages of whether fed chair powell will be the chair next year. i wonder what it would actually due to the potential stance of the federal reserve when governments want a central bank that is dovish. frances: most of the time we would say do not pay attention who is running the fed. focus on the data. except right now, the outlook for the fed is very binary. the fed is looking from the inflation site, which i don't think they would be successful at taming. in which case we are talking about more curve flatters in a
shortened cycle. the fed is saying labor force partition rate -- participation rate is still really suppressed. our job market is still dysfunctional. we have to allow the overheat and re-convince the market of average inflation targeting. will brainard seems more in that latter camp. when we are in that binary outcome, then who is running the fed will matter more than it has. tom: is this traditional economics? do they have a foundation to work on right now? frances: no. we have talked about this for the last almost two years. we do not have a lot of economic that helped us deal with covid and covid is still a big issue. i did not have a model that tells me how long covid policies will be ongoing in china. i don't have a model for who will be running the fed. i don't have historical data that tells me how to deal with the chain disruptions. lot of our supply chain disruption forecast are based on survey data or soft data.
it is based on opinions. there is a lot of data that we are going to call known unknowns that create a challenge in 2022. i am writing my 2020 to forecast right now. tom: give us a forward look on that. we have to make some news. frances: my forecast is called the anti-forecast because for the first time it is critical we acknowledge the extent of uncertainty in 2022. we are not sure what is going to happen. that is a not -- that is not a great way to get news. there is an important moment where we acknowledge uncertainty as a proper risk management tool and how binary the central bank outlook is. jonathan: i love that. i am looking forward to reading it. when does it come out? frances: soon. jonathan: ok. frances donald of manulife. were you raised on betting, tom?
tom: we do it very different in america. jonathan: you did not have the sports book? tom: that is really recent in america. lisa: standing on the corner? jonathan: every street corner had a bookie. you could smoke inside at that point too. and then the fruit machines got involved. good stuff. tom: we could bet on whether they will have a team this weekend. jonathan: i think they will have a team. tom: did you see the uproar out there about all of our fans? jonathan: we have to make it happen. tom: people were putting videos together. i teared up. i was emotional. i talked to david yesterday. he was a little busy. jonathan: what is -- what did he say? tom: he said he's got to wrap
this thing up fast. what in gods name did they do with harry king? jonathan: look at rome ella -- romela. he was one heck of a player. that is my opinion. tom: i value it. jonathan: fans everywhere value that opinion, tom. tom: they do. jonathan: honestly, i wondered where you were. tom: i was on the phone. we had an open line and we were talking. jonathan: your bond market unchanged. equity futures down not even 0.1%. all-time highs through the week. monday into tuesday. from new york, this is bloomberg. >> with the first word news, i
am laura wright. today's election for governor in virginia will be a clear picture of how much momentum republicans will have in the 2022 vote for congress. gop candidate glenn youngkin is backed by donald trump and in a deadlock with terry mcauliffe. mcauliffe is betting that the former president levity will turn out democratic voters. hong kong enticing one of the world strictest coronavirus policies. it will end restrictions for most groups starting november 12. hong kong has not had a local outbreak of the virus since early june. shares of tesla are falling. elon musk says the company has not filed a contract for hertz for that record order for electric cars. last week, the car company said it would buy 100,000 sedans for $4.2 billion. that sent shares rocketing. but, there was no signed agreement and tesla would only
sell cars to hertz for the same margin. engineering material technology maker rodgers for $5.2 billion. that represents a 33% premium over yesterday's. rodgers develops advanced electronic materials used in electric vehicles. the proceeds of surging energy prices to woo investors who are disenchanted with oil and gas. the company will buyback another $1.55 billion in shares. the announcement comes as bp reported an increase from a year earlier. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.
goes for the police, firefighters. it is appropriate for there to be a requirement. jonathan: that is one of payment -- that is one opinion. from new york city, good morning. tom keene, lisa abramowicz, and jonathan ferro counting your down to a fed decision tomorrow. your equity market unchanged on the s&p. unchanged all-time highs for the close on monday. on the bond, yields unchanged on 155. just a bit softer, lighter, lower. negative 0.2%. pfizer out with numbers this morning. four your outlook for revenue, gets a raise. the numbers, it is a beat and a raise. your covid vaccine revenue for the full year now at $36 billion. the previous forward look was $33.5 billion.
the stock is up 1.47% -- 1.74%. tom: all of this life-saving medicine. this is an important interview. all of us are doing our mathematics. none more than terrence in america. running through the mass of pediatric vaccine. and then there is a worldwide mathematics gone array. amateur doll jet, nothing -- amesh adlaja, there's nothing i have seen even close. senior scholar at johns hopkins. they had one case at shanghai disneyland. it is a magical destiny. the propaganda of shanghai disneyland and they quarantined 40,000 people, which is one divided by 30,000.
explain the idiocy of the chinese math. dr. adalja: it is mind-boggling that they took such a draconian action for one case. it reflects the fact that there are many people who do not understand that covid-19 does not going to be eradicated. it is not going to be eliminated. they will be cases that shanghai disneyland 20 years from now and taking these heights of authoritarian action is not the right policy. it is evidence of policy to -- policy failure. we know how to handle cases. we don't need to resort to this type of measure where you restrict people's freedom, especially not in the air of vaccines and rapid tests. this is something reminiscent that we saw in countries like new zealand and australia. that type of strategy makes no sense now and it never made sense. tom: what do leaders like you and dr. fauci representing the president have to do to bring a correct mathematical perspective to this disaster in america?
dr. adalja: we have to teach people how to risk calculate and teach people that there are certain activities that are low risk and certain activities that are high risk. we have a very safe and effective vaccine available that makes that risk calculation so much easier. that's what we have to teach people have to do and that is what our policy should reflect. it will continue to have cases and our goal is entertainment. i do not think that these types of activities like what is going on in shanghai reflects the biology of the virus. it is a mind-boggling move made. lisa: we mention the fact that parents are doing a lot of calculations. the expectation is by the end of this week that the pediatric vaccine will be rolled out in the united states. how much of a game changer is this? dr. adalja: for children that
are at high risk, it will make a major difference and for children are not high-risk, it is a great tool for them to not allow covid-19 to disrupt their lives. covid-19 tends to scare children from severe disease so having a vaccinated will allow them -- they are at high risk for quarantine, high for exposures. all of those protocols can get a little bit looser. especially when it comes to in person's cooling -- in person schooling. this is a safe vaccine. even if it is mild illness, why not prevent it because who wants their child to feel miserable for couple of days and there will be kids who benefit from prevention of severe disease. what we're trying to do is make over something that is much more manageable and this is a big step toward it. even if not every parent gives their child vaccinated. lisa: what is a public health benefit to getting them vaccinated? i say this heading into a winter
where people are concerned about additional variants coming into play and covid evolving and the idea that we could be getting another wave that becomes more virulent because there is more adaptation of the virus to a more in isolated population. dr. adalja: the more people that are vaccinated, the more immunity there is, the harder it is for the virus to spread and if it is harder for the virus to spread, it is harder for it to generate new variants. the more vaccine we have, the more immunity there is, the less we have to worry about and the solution to the variant is more vaccination. getting this number of is an important goal when it comes to the trajectory of this pandemic. tom: i look at the trajectory of the pandemic and i'm going to ask you the rookie question. what is your timeline to the trajectory of this pandemic? john and i fell in this huge trap 18 months ago. we were out three months.