William Blair Investment Management Research Analyst Camilla Oxhamre Cruse, Ph.D., and Global Strategiest Olga Bitel

Part 3: COVID-19 Science and Economics

August 25, 2020 | 38:50
As the pandemic progresses, Hugo checks back in with our in-house COVID experts, William Blair Investment Management Research Analyst Camilla Oxhamre Cruse, Ph.D., and Global Strategist Olga Bitel, on why cases are rising in some areas and declining in others, where we are on a vaccine and testing, and potential risks to our base-case scenario for the global economic recovery.

Meet Our Moderator

Hugo Scott-Gall, Partner



Hugo Scott-Gall: Today I’m delighted to have with me two colleagues to discuss the ongoing COVID crisis and its economic impact. Camilla Oxhamre Cruz is our in house COVID expert, and she has a Ph.D. in infectious diseases and knows lots of scary stuff. Also, with me is Olga Bitel who is our macro strategist, and just knows lots of stuff. Let’s get going and talk about stuff.

First question to you, Camilla. You’re the most frequent appearer on the podcast so you get the first question. The question really is we kind of thought and hoped that the summer was going to see cases steadily fall. That hasn’t happened. We’ve seen cases maybe not spike, but certainly rise in key parts of the world. Why is that increase happening?

Camilla Oxhamre Cruse: A couple of things to highlight. So, what we have seen during summertime. Yes, indeed when we went into summer, we were hoping that we would see an overall decline of cases on sort of a global front. What we have seen now is that there’s been a huge variety of cases, in some areas — in some areas, we have seen a significant increase, where in other areas, we have seen a decrease, in other areas sort of more of a stable level.

So why this difference depending on different areas? So, let’s break it down sort of starting with the U.S. first. So, in the U.S., we have seen a steady increase of cases over the past couple of months, but it has been very much correlated to the standard states. To the states that opened up very early on. And maybe they opened up a bit too quickly to be honest.

Whereas in several other areas in the U.S., we have seen a decline. New York is a good example. And in yet, in other areas, sort of more a stabilization. So here in Illinois, we have seen sort of a relatively stable development.

But, of course, the situation in the southern states has been sort of quite concerning. It’s been sort of a very rapid increase in cases. And now in the last couple of weeks, we’ve also seen an increase in the death rate.

More in current weeks though, if you look over the last maybe week, it seems that we have reached some sort of a peak with both cases and death rates sort of stabilizing.

So, why did this happen? So, first of all, in the southern states, as I mentioned before, they opened up relatively early. They opened up probably a bit too early when we were in some sort of peak. And since then we’ve learned a lot more about the virus and how it spreads. Where it spreads most efficiently. We learned that indoor environments, bars, restaurants, areas where people are in very close proximity, sort of loud environments, poor ventilation, those are sort of optimal environments for the virus to spread. We know that now.

And with that knowledge, of course, going forward, we can to some extent sort of adjust our behavior. Learn from sort of what we’ve seen, particularly in these southern states.

But we should also not forget that we’ve been through this now for a couple of months. There is a level of, how should we call it, the COVID fatigue. People have been for the good part of spring and early summer, basically locked into their homes and apartments. And I believe there was maybe the need to enjoy the summer maybe a little bit too much. And with that came a somewhat more high-risk behavior.

Hugo Scott-Gall: Is that how you think the average transmission in the U.S. happens? Is that the most frequently occurring source of transmission?

Camilla Oxhamre Cruse: I would say that is indeed an optimal environment. I think also sort of in family where you are, any close proximity, of course, will facilitate the spread. So, we’ve also seen that within family the spread is pretty efficient. Meaning that in families where you have multiple generations living together, that is a problem. Where we’ve seen sort of a lot of spread to the elder generation.

But you’re right. Sort of in an environment with enclosed, poor ventilation, a lot of people in the same areas, and where we tend to sort of raise our voices. And therefore, sort of breath deeper and inhale and exhale deeper. That will facilitate the spread.

Hugo Scott-Gall: I want to bring in Olga here, because in Europe and the U.S., we’re moving into the fall and the winter. Summer’s nearly over, which is a shame, but it’s a fact. We’re going to be indoors more. So how are we not going to see an increase in infections, and therefore, how are we not going to see more of an economic hit than we’ve seen in the summer.

Because Olga, you’ve described this to me earlier as a strong recovery. But I wonder how sustainable that recovery is if we know that being indoors, in crowded places, which is sort of what you’re forced to do in the winter months, is the main likely source of transmission? So, let’s throw that to you, Olga.

Olga Bitel: Sure, absolutely. Throw me the hardest questions. Well, let’s start with — I want to kick off by putting a number, which is kind of a base case, at the moment, a number the summarizes a lot of what Camilla has just talked about. Which is to say that the rate of new cases in the U.S. today is running 10 times higher than the comparable rate of new cases adjusted for testing in Europe.

So, the starting point, both have seen an increase since reopening. And, of course, we can debate whether some states in the U.S. have reopened too soon, whereas the majority of European countries have waited, and certainly that has been the case in China as well. Which is also going to experience a winter that is quite similar to what you observe in the northern part of the U.S. So, the same issues apply to all three major global demand centers. The starting point is quite a bit different. So, 10 times higher, 10 times the number of new cases per million people in the U.S. today as compared to Europe.

The second point to make, to your point, Hugo, and Camilla, is that we have not yet seen a second wave. This is really just the continuation of the original epidemic unfolding in our collective and individual failure, such that it is, to contain it. The second wave really comes, and this is borrowing heavily from my extensive discussions with Camilla. So, thank you, Camilla for this. My on-the-fly gaining of epidemiological knowledge is that it’s going to come with the traditional flu season.

So, our hospitals and healthcare systems as well as our respiratory systems are going to get inundated with an ordinary flu, which spikes around October, November, together with COVID virus. And it’s really the ability of the hospital systems, the healthcare providers, to care for the case load that will really influence how much of a renewed lockdown do we really need to have.

And from everything, on a more optimistic side now, that Camilla and I have discussed and read about and shared more broadly, is that our medical community has gotten much better. We know a lot more about the virus. We know what it does and doesn’t do much more than we did in February and March of this year. And our ability to deal with cases before they show up in the hospitals as most extreme and overwhelm our regional and local healthcare centers is much greater now.

There’s a cocktail of different drugs for different levels of disease, etc. So, the idea here is that our base case, to translate this now into economics. Our base case remains that there are no significant lockdowns such as we saw in the spring of this year will be necessary. That is more at risk in the U.S., less at risk in Europe and in China. But that remains our base case across the board.

Nevertheless, the risk of lockdowns and the risk of a very significant increase in the caseloads and in rate of new infections, does raise the spectra of additional headwinds to recovery. It is quite likely to dampen economic activity as we move forward, certainly incrementally.

Against this background, though, we need to remember that retail sales volumes in Europe and the U.S. area are already growing, have already exceeded, basically, pre-crisis levels and are growing, so in positive territory on year on year terms. While industrial production, so the famed supply, so to speak, is lagging very much behind. So, there’s significant room for catchup to address current levels of demand, even before we see further acceleration in the demand.

So, the recovery does have legs, but there are significant headwinds from the virus perspective.

Hugo Scott-Gall: Just picking up on that then, I wonder how much of the recovery has been pent up demand that’s not been released. And then, you said looking like you don’t think we’re going to see lockdowns, or if we do, then they might even just be so localized. But what happens if I just don’t want to go out. So, the lockdown stops me from going out, but what happens if I just don’t want to go to a restaurant, to a movie theater, to a theater, to anything that’s indoors with lots of people. Because you can’t say it’s safe to do that. As per what Camilla just said, it isn’t necessarily safe. It’s the most likely cause of transmission.

Olga Bitel: Absolutely. So just again, to rebase here. So, in the U.S. at least, and in continental Europe, most large-scale events are still closed to the general public. So, we’ve seen the Champions League in soccer pick up to carry forward from last season. Those matches are playing to crowdless stadiums. In the U.S., theaters are not open. Concert halls, venues of that sort, remain closed. So, we’ve seen a strong reacceleration of activity post their reopening, but we’re definitely no where near the pre-crisis levels of activity.

And I’m not aware that anybody is forecasting that these venues and these large-scale gatherings will be allowed to take place even in the absence of fear factor on anything like the next three- to six-month horizon. Six months might be a little further out. There are lots of other developments that could take place. But certainly, nobody’s discussing this in the near term.

In terms of the fear factor, as you rightly pointed out, that’s there and is omnipresent and will likely increase as the number of cases skyrockets, right. And, so that will further limit and be a headwind to socializing indoors. To the small businesses like restaurants that rely on that indoor traffic, that are now able to mitigate that somewhat by having outdoor dining space, which will have to close inevitably in the next couple of months in the large parts of the U.S. and continental Europe and probably China as well.

But that activity that is relying on large gatherings has largely been absent even in the summer months.

Hugo Scott-Gall: Okay. So, I definitely want to get onto where we are with vaccines and treatments. But before that, something you just touched on there, Olga, and this is a question for both of you is behavioral changes. At the start of this crisis we were maybe hopeful that by the summer things would feel quite normal, and they don’t. The longer things don’t feel quite normal, the more likely it is, I think that some behavioral changes might become semi-permanent.

So, what do you think about that? Camilla, in the next two to three years, do you think we are going to see some psychological impacts and some sort of permanent behavioral changes and some lost habits? So, I guess, Camilla, I’ll ask you first. And this is not a scientific question. It’s very permissive and judgmental. I know you’re a scientist and you always like evidence and proof. But what’s your feeling on that. And then, Olga, as an economist and a behaviorist, I’ll ask you.

Camilla Oxhamre Cruse: Of course, there will be some behavioral changes. The question is how sustainable those changes will be and how quickly it will go. But all those sorts of behavioral changes don’t necessarily have to be sort of evil. Sort of interacting today at William Blair, we do everything online. And while I don’t disagree with the importance of in-person interaction, to some extent the situation we have today is working and it’s working fine.

And, I think that sort of more and more people will realize that certain things we had the technology before, but we didn’t really do it because it wasn’t really in our culture. I think that those culture changes, where we already have the technology available but because of more behavioral or culture aspects we haven’t really fully utilized those.

I think that could very well change and maybe sort of see the pendulum go a little bit more extreme now during the height of the pandemic. And after the pandemic, post-COVID, sort of remain, to some extent swing back. But it doesn’t necessarily have to swing back to exactly where we were pre-COVID.

The same goes for some other trends in the healthcare arena for example. With telemedicine, now we’re getting more comfortable interacting with our doctor and physicians online. That technology was available before, but we have not necessarily felt comfortable. It hasn’t been really in our culture necessarily to use it to its full extent.

I think that we are getting more comfortable exploring aspects of particularly using technological tools to a better and fuller extent. And like I said, now during the height of the pandemic sort of that may be a little bit more to an extreme. But I do think that there will be sustainable changes to our behavior that will change how we interact with others. How we interact with for example physicians or pharmacies, etc. etc. So, of course, there will be changes.

Olga Bitel: On the first point, on the social interaction point, we humans are social animals. So, when we’re forced to be by ourselves, when we’re forced to be indoors, when we’re forced to not interact in large groups for period of times, we may or may not comply willingly. And some of us are more introverted than others so it’s easier for some than others. But by and large, I don’t think a pandemic, however long it lasts, whether it lasts a year or two years, which is on average how long pandemics generally last, is going to disrupt hundreds of thousands, if not millions of years of evolution.

So, I think the social aspect of our interactions will not likely persist. We’ve seen this time and time again in previous pandemics, in 1918. In the more recent ones from the 1950s. In the late ‘50s, believe it or not, there was another flu-like pandemic. And people reverted back to the normal social interactions with a vengeance, I may add.

And so, I expect something similar to happen this time, when we’re finally rid of this for good. As long as it seems like from now.

The second point, and I really want to echo Camilla’s point on this, is that this pandemic has forced a change in the pace of adoption of new technologies. So, it’s true that technologies that are available today were not available in previous pandemics. And so, a lot of the technology enabled social interaction and frankly, consumerism, purchasing electronically online with digital payments, etc., was not available 50 years ago.

And so, to the extent that people, many people, large groups, especially in southern Europe, in Germany, on the payment system were forced overnight to drop the use of cash and in person shopping and resort to shopping online with cards or digital payments of different forms. That has brought forward the adoption, the massive, large-scale, and increased pace of adoption of new technologies. And that part will likely stay. The convenience, the cheapness, the safety that has now been proven, I think is likely to stay.

The same thing on the working remotely part. Especially for high-end services firms. So, accountants, asset managers, architects, etc. It doesn’t mean that we’ll never go back to the office and we’ll never see our colleagues in person again. There are tremendous values to be had in personal interactions. But it may mean the pandemic has forced us or at least some of us to rethink the quality of our daily interactions. Such that perhaps we may end up going to the office three times a week and have more targeted and more focused set of meetings, interactions, etc., rather than five days a week.

And on that, again, there have been some studies done, especially in places that have lagged in productivity gains such as Japan, where Microsoft went to a four day week instead of five over a long period of time, and saw a sustained increase in productivity among virtually all cohorts of employees. And these studies have been repeated in New Zealand and in some other places.

So, the point I’m trying to highlight is not all of the experiences associated with COVID will be bad. And many of the good ones will definitely stay.

Hugo Scott-Gall: So, I want to get to Camilla on vaccine development. But before I get there, I guess I want to ask you both again, are we getting this the wrong way around? So, we’re all very focused on a vaccine and it sounds like we’re going to get one of some reasonable efficacies at some point quite soon. But is that the wrong way around. The vaccine’s a silver bullet. But actually if we got really good at testing. Had a really frictionless way of testing, that could be just as good a way of actually managing infection risk. Or maybe not as good a way, but still very effective.

So is this one of those questions where the medical scientist will always say let’s find a vaccine. But the engineer might say actually, look at the problem the other way around and there’s much more — we can solve this by a local, frictionless, testing regime. So, I’m keen to hear both of your thoughts on that. So, Camilla, you go first and once you’re done Olga, we’ll go back to where we are in the vaccine. Because that’s obviously front and center in importance.

Camilla Oxhamre Cruse: So, I would complicate the situation by saying that we unfortunately need both. We need both good testing and eventually we will need a vaccine. And we will get a vaccine, the question is how long it will take not only to develop a reasonably good vaccine for the different patient population cohorts, because we are not all equal in terms of our immunological response. But then we have also the roll out phase. How long it will take before everyone can get a vaccine.

So, we’re probably looking at a broad mass distribution of vaccine likely to happen maybe fall 2021. That’s over a year from now. So, what are we going to do during this period of time? We have to get on with life. We sort of have to get on with our economy. And during that period of time, we need to get on top of our testing. Testing has been something that has been surprisingly poor, particularly in the U.S. where we seem to struggle with the logistics of the testing distribution.

Because we do have the technology. We do have the know-how. But we don’t have the scale and we don’t have the logistics. If we talk about scale, it’s sort of over the last couple of months, we have scaled up testing. It has more than doubled. But over the same period of time, the viral spread in the country has quadrupled. Just sort of giving you an idea of how far behind we are in testing.

And what can testing do for us? If we sort of get it up to the level that we need, will testing put eyes on the pandemic? At the moment we are fighting an invisible virus. We don’t know where it is. We don’t know where it’s spreading. We don’t know when our sort of next outbreak will occur. The only way we can get control over the pandemic is to put eyes on it and that means testing.

And we need to test not only those with symptoms, we need to test those that are called the asymptomatic. Those people that have been infected but don’t know that they’re infected because they don’t have any symptoms. More and more studies are showing that also these asymptomatic persons, they can spread the virus. We don’t know exactly to what extent they spread it. But they do spread it.

So, we cannot without getting eyes on the pandemic, we can never control it. And if we cannot control it, we cannot safely open up schools. We cannot safely open up the economy. So, I would say it’s highly crucial that we build up the infrastructure around testing and get the logistic to work in the entire country. It doesn’t help if one area in the country gets control over the virus when the neighboring area does not because the virus doesn’t really know borders. So, we need to synchronize the testing.

We are, whether we like it or not, we are in this together and that’s the only way we can solve this. By synchronizing but getting control over the logistics. We have the technology, but we don’t have the logistics in place.

And then during that time we will continue to work on the vaccines. We have made great progress. We can talk about that later. But it will take, before we have a massive rollout of vaccines, it will most likely take more than a year from today.

Olga Bitel: This is not a problem of molecular biology, right. This is a problem of industrial organization. And specifically, one that has been uniquely poorly handled in the U.S. as compared to Europe and in China. And this is a problem that is — while we’re great believers in free-market economies and the capitalist systems of industrial organization, the problem with this pandemic and specifically within pandemic testing and rapidly scaling testing, is really not well suited for markets. It requires a central coordinated, and organized, and even mandated response.

And here’s what I mean by that. If you’re asking a company to buildout a large scale manufacturing testing facility, whose success is really predicated on it being closed within a year or 18 months, it’s really hard to get private sector investment to scale up very quickly for that aim. Because most private sector investment is geared toward longer time payouts with more durable asset basis and business models.

And here, we have the opposite problem. We want lots and lots of testing over a very short period of time. Such that hopefully in two years’ time, all of that testing infrastructure will be unnecessary and obsolete. So that is the essence of why the response in the testing scaling up in the U.S. has been so incredibly slow. It’s not that there haven’t been tests developed, to Camilla’s point. But the rolling out of the testing, the infrastructure that is necessary to support the testing in the millions per day, which is what the experts are talking about, is just not there.

And the willingness of the private sector to invest in a duplicative and non-coordinated manner is simply not there. Because the payouts to individual companies are not there, are highly uncertain.

This is an example of where the country needs to come together and mobilize really from the top down and organize this a bit better. Which is exactly what we saw in Europe, basically take place. In places like Germany, in smaller countries, but also increasingly in France and Italy and everywhere else.

Hugo Scott-Gall: So, Camilla, back to you on the vaccine. To the layperson, lots of potential vaccines are in the works. The numbers sound impressive, but really that is not great a predictor of success. How would you rate your confidence in a reasonably effective vaccine coming to market in the next six to nine months, versus what you saw three or six months ago?

Camilla Oxhamre Cruse: Well, we have a lot more data now than what we had three to six months ago. I must say that I’m quite confident that we will have a reasonably good vaccine — and I’ll get back to what I mean by reasonably good. But I’m quite confident that we will have a reasonably good vaccine being approved by early next year. We will have data from the leading vaccine candidate that will start coming out. We’re talking October, November timeframe. So, then we will have real-world data from the vaccine trials.

And, they are sort of sizable trials of 30,000 patients. Different sort of population cohorts. So, we will be able to compare how the vaccine works in the younger population versus the older population, etc. because that’s something that is very important to keep in mind.

And, why I’m so confident, yes, the number of vaccines that are in development, but also, they’re coming from a different technological background. And that also brings me to the sort of issue of some vaccines may work better in some populations versus others may work better in other populations. Because as I mentioned before, we don’t have the same immunological background. The elderly population we know, for example, has a weaker immunological system, and therefore the sort of vaccine in general does not work as well in the elderly population as it does in the younger population.

The problem is that with COVID, it’s primarily the elderly generation that are at risk of developing critically ill symptoms. So, with a reasonably good vaccine — and I think that it’s very important to keep in mind here that we do not necessarily need a the perfect vaccine. Sort of right out of the gate. We need a vaccine that is reasonably good in stopping infection. And the FDA has said about 50% better as compared to a placebo in reducing infection but also reducing the likelihood of developing severe disease.

Because what we need — what we want to accomplish now is of course to minimize the spread of the virus. But should you become infected, it’s also important that you don’t develop critically ill symptoms. So, therefore, we don’t need the perfect vaccine. That we can develop in sort of the second or third generation of the vaccine down the line. What we need now is a reasonably good vaccine that at a reasonable level stops the infection. But should you get infected, that the vaccine prevents the development of critical symptoms. And, I’m, like I said, quite confident that we will be able to achieve that and that we will have a vaccine on the market by early next year.

Hugo Scott-Gall: Obviously it’s too soon to say that there are lingering health effects from this because it hasn’t been very long. But there are those making the argument that there are some ongoing negative health consequences for people who have had this.

You with your sort of deeply scientific hat on, what do you make of that? Is this sort of different in its sort of ongoing effects on the body, different organs, etc.?

Camilla Oxhamre Cruse: So, yes. When we talk about the pandemic, we tend to focus a lot on the cases. We tend to focus a lot on the death rate. But we seem to forget or underestimate what is called the morbidity of the virus. So, there’s a difference with the mortality, the death rate. The morbidity is sort of the impact on the body.

And yes, we have seen that in patients that become critically ill. Not necessarily that lead to death, but become critically ill, they survive it. It’s a long way back to anything that can be called sort of pre-infection or sort of a normal life. Because we have learned that this virus is not just a respiratory virus. It has a systemic impact on the entire body. It induces a very potent immunological response in the patient. And that sort of over reaction, in the immunological response has a very detrimental effect on the entire body.

On different organs we’ve seen a neurological effect, cardiovascular effect, on top of the respiratory effect. So yes, in patients that do become critically ill, we have seen a detrimental impact on the entire body due to the systemic overreaction of the immune system.

Hugo Scott-Gall: We’re going to wrap up now with one tricky but important question to Olga. So, as we’re speaking, the S&P 500 is back at it’s all-time high. Which it was, correct me if wrong, Olga, because you usually do. I think back at the levels it was in February.

So, here’s a fiendishly difficult but simple question. Why?

Olga Bitel: From my vantage point, a couple of reasons. Both cyclical to an extent. The first reason is equity market multiples are a function of the prevailing interest rates in the fixed-income markets. And current level of interest rates, and we can debate whether this is warranted or not and what the path forward is, but that’s a secondary question, or rather a different question.

The fact of the matter is that interest rates today are just a fraction of what they were at the end of 2019 and even in February of 2020. So, for example, the U.S. 10-year was around two percent or so, just a touch above. And today, we’re looking at a rate of .6%. So, if you use that as your denominator and nothing else changes, you expect equity market multiples to be more than double their levels of prevailing levels of February 2020.

Now I’m not arguing, nor I think is anybody that that would be a reasonable course of action. I’m simply pointing out the mathematical fallacy so to speak of just looking at the mathematical S&P levels and comparing them to a prior period without thinking of the denominator which is the interest rate.

The second point and it’s also somewhat cyclical is where we are in the recovery. So quite specifically, in the early stages of economic recovery, and this has been true the best I can tell most of the recoveries we’ve experienced in the post-World War II period. Valuations in the equity space adjust first. And that’s because of the forward-looking nature, as of the recovery. The sequential improvement in economic activity is already evident long before it shows up in year on year changes in corporate earnings.

So specifically, actual reported corporate earnings improvement lags orders and sales improvement by about three quarters or so. And that relationship, as best we can tell, remains stable for now. Which means in the early stages of the recovery, it’s all about being more expensive. So, the stock prices are bid up on the expectations of better year earnings, which are currently very depressed, and which will then materialize with some delay.

So that part of what we’re seeing so far is not that unusual. Given the extreme levels of recession, obviously the dynamic is starker this time. But the actual sequential forces both in the market and in the real economy are actually surprisingly low following the cyclical recovery playbook.

So, let me stop here.

Hugo Scott-Gall: I said it’s the final question, but I guess I can’t leave it there. Which is what’s priced is very difficult to say, but back where we started, if we see a slowing in rates of change of economic recovery because we all want to stay indoors in small groups not large groups, would that present a risk to equity markets, you think, versus what’s priced in?

Because you said this is a very strong recovery and probably has exceeded expectations. Is there some risk to that? Disappointing expectations as we go into the winter in the world’s largest economy, the U.S.?

Olga Bitel: I think the risks as I see them currently are two-fold. The first one is exactly what you just outlined, that the recovery is somehow aborted or at least minimized by the prevailing pandemic headwinds such that everybody suffers. So that would be the scenario that we experienced in March of this year, with at least the threat of lockdowns if not outright lockdowns themselves. But certainly, much reduced levels of activity both on the spending side and the production side. So that’s a non-negligible risk to be sure.

Another risk, which I think is quite as powerful, although perhaps a little bit more subtle. Is that the actual gains, the equity market gains at the headline levels are more muted moving forward into the sort of subsequent stages of recovery. But the leadership transition underneath the headline numbers is quite stark.

And what I mean is so far the companies with the best earnings growth visibility have been disproportionately rewarded and rightly so. In recessions, that’s where you tend to go. It also helps that these have been the biggest earnings growers and cashflow generators. And of course, I’m speaking about quasi-technology/digital consumer stocks as well as select portions of the healthcare universe that Camilla knows about all too well.

And as we move into the economic recovery, what is already apparent in the macro data will start to filter through bottom-up earnings revisions and expectations for repricing more of the cyclical components of the market such as the higher quality industrials, technical equipment, industrial commodities, higher end chemicals, things like that. Things and sectors and industries and companies that benefit disproportionately more in an industrial recovery such as the one we’re seeing.

And so underneath the index gains, we’re going to see a more pronounced rotation in the leadership in the market. So, both of those two risks are equally important to keep in mind moving forward from my perspective.

Hugo Scott-Gall: Great. Well, look, I think that is a nice cliff hanger. I can feel another podcast coming on. So, I think we will return more centrally to those issues. And also, I think we’ll also return to the idea of the notion of rising inflation set against a backdrop of decades of disinflation. But those are all for another time.

So, what I want to do is say thank you to you both again. It’s always good to have you on the show, Camilla. You’re pretty much always on the show. We’re going to be retiring your microphone soon. But thank you both very much. And that’s it. Thank you.

Camilla Oxhamre Cruse: Thank you.

Olga Bitel: Thank you.

Meet Our Moderator

Hugo Scott-Gall, Partner

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Permanent cookies are used to enhance a user’s browsing experience by “remembering” users on subsequent visits. Please note that if you delete these cookies, we will not be able to remember your preferences or your login details or provide you with the content you have requested. These cookies do not gather information about you that could be used for marketing purposes. If you no longer wish for us to remember your selections, you should delete cookies on your machine. The William Blair website uses the following permanent cookies:

  • “recentOffice” and “recentPeople” cookies to speed up navigation by giving you the option to return to pages you have already visited. The cookies expire one year after the last page was requested.
  • “SC_Analytics_Global_Cookie”: this persistent cookie identifies repeat visits from a single user. The cookie expires one year after the last page was requested.
  • “SC_Analytics_Session_Cookie”: this cookie is used to collect anonymised information about how visitors use the site, including the number of visitors, where visitors have come from before coming to the site and the pages they visit on the site. The cookie expires one year after the last page was requested.

Analytics Cookies
There are also certain unique cookies and/or third-party cookies that we may use for analytics purposes to enhance the performance of our website. These cookies may track and provide trend analysis on how our users interact with our website, or help us to track errors. The data collected will generally be aggregated to provide trends and usage patterns for business analysis, site/platform improvement and performance metrics. The type of information we collect includes how many visitors visit our website, when they visited, for how long and which areas of our website are visited and which services are used. While this analysis may be performed by third parties, only William Blair will review the analytics. Your use of our website indicates your consent to the use of these web analytics cookies. One of these third party analytic tools used is a web analytics service provided by Google. Google Analytics is one of the most widespread and trusted analytics solutions on the web for helping us to understand how you use the site and ways that we can improve your experience. Google Analytics uses cookies to help analyze how visitors use the William Blair & Company website. Four types of cookies are used by Google Analytics:

  • __utma Cookie A persistent cookie – remains on a computer, unless it expires or the cookie cache is cleared. It tracks visitors. Metrics associated with the Google __utma cookie include: first visit (unique visit), last visit (returning visit). This also includes Days and Visits to purchase calculations which afford ecommerce websites with data intelligence around purchasing sales funnels.
  • __utmb Cookie & __utmc Cookie These cookies work in tandem to calculate visit length. Google __utmb cookie demarks the exact arrival time, then Google __utmc registers the precise exit time of the user. Because __utmb counts entrance visits, it is a session cookie, and expires at the end of the session, e.g. when the user leaves the page. A timestamp of 30 minutes must pass before Google cookie __utmc expires. Given__utmc cannot tell if a browser or website session ends. Therefore, if no new page view is recorded in 30 minutes the cookie is expired.
  • __utmz Cookie Cookie __utmz monitors the HTTP Referrer and notes where a visitor arrived from, with the referrer siloed into type (Search engine (organic or cost per click), direct, social and unaccounted). From the HTTP Referrer the __utmz Cookie also registers, what keyword generated the visit plus geolocation data. This cookie lasts six months.
  • __utmv Cookie Google __utmv Cookie lasts “forever”. It is a persistent cookie. It is used for segmentation, data experimentation and the __utmv works hand in hand with the __utmz cookie to improve cookie targeting capabilities.

For further details on Google analytics cookies, visit cookies set by Google Analytics.

Targeting Cookies
William Blair may utilize a select set of cookies provided by third parties, such as Like and Share buttons. These cookies store non-personally identifiable information, but may store information that is available to third-party advertisers, publishers, or ad networks.

Managing Cookies
Most browsers are initially set to accept cookies. However, you have the ability to disable cookies if you wish, generally through changing your internet software browsing settings. It may also be possible to configure your browser settings to enable acceptance of specific cookies or to notify you each time a new cookie is about to be stored on your computer permitting you to decide whether to accept or reject the cookie. To manage your use of cookies, there are various resources available to you. For example the “Help” section on your browser may assist you. As our cookies allow you to access some of our website’s essential features, we recommend that you leave cookies enabled. Disabling cookies may mean that you experience reduced functionality or will be prevented from using our site altogether.

Additional Resources



William Blair & Company Privacy and Security Policy

Social Media Disclaimer

William Blair & Company, L.L.C. is a broker dealer and investment adviser dually registered with the U.S. Securities and Exchange Commission (“SEC”). William Blair, along with affiliated entities William Blair Investment Management, LLC and William Blair International, Ltd (collectively, “William Blair”) sponsors and publishes posts on or through pages, profiles, accounts, feeds, channels or other portions of various social media platforms, including but not limited to YouTube, Facebook, LinkedIn and Twitter (each, a “Site”) for educational, promotional or other business reasons.

About William Blair Posts

No William Blair post published on any social media platform is an offer to sell or a solicitation of an offer to buy shares of any William Blair investment product to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction. Additionally, all William Blair posts published on any social media platform are for informational purposes only and should not be considered as investment advice or recommendations to invest in any particular security, strategy or investment product.

William Blair posts on social media may include statements concerning financial market trends, and are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and should not be relied upon as such. The investment strategies and broad themes discussed in William Blair’s social media posts may be unsuitable for investors depending on their specific investment objectives and financial situation. Information contained in posts has been obtained from sources believed to be reliable, but not guaranteed. You should note that the materials on the social media platforms are provided “as is” without any express or implied warranties. Past performance is not a guarantee of future results. All investments involve a degree of risk, including the risk of loss. No part of William Blair posts may be altered without express written permission from William Blair.

William Blair posts may provide links to third party websites only as a convenience and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by William Blair of any content or information contained within or accessible from the linked sites. While we make every attempt to provide links only to those websites we think are trustworthy and accurate, we cannot be responsible for the content or accuracy of the information presented on those websites and we specifically disclaim any liability for any loss or damages which you may incur, directly or indirectly, as a result of your use of them. We reserve the right to terminate a link to a third party website at any time.

General User Guidelines

Due to the highly regulated nature of our industry and as a matter of policy, William Blair, in some instances, may not reply to user comments. Please ensure that your contributions in relation to any William Blair posts are relevant and topical. Do not publish your own advertisements of any kind on any William Blair social media page or with respect to any William Blair posts. We ask you to be respectful and courteous and refrain from publishing, including through hyper-links, inappropriate or offensive material on any William Blair social media page. Do not attempt to promote investments (this includes posting testimonials, giving investment advice, or making recommendations about specific securities, securities strategies, products or services) on any William Blair social media page. Do not attempt to submit to William Blair any personal, confidential or account information through any William Blair social media page. William Blair is not subject to any obligations of confidentiality regarding information submitted to them through any William Blair social media page or otherwise through any social media platform.

Third-Party Posts on any William Blair Social Media Page

While William Blair may monitor third-party posts published on any William Blair social media page, such posts may be reviewed to ensure regulatory compliance, but otherwise are not edited before being displayed. Third-party posts on any William Blair social media page are the view and responsibility of the third-party, not William Blair. William Blair cannot guarantee the appropriateness, accuracy or usefulness of any third-party posts or of any third-party hyper-link, nor are they responsible for any unauthorized or copyrighted materials contributed by a third-party in any William Blair social media page. William Blair reserves the right to remove or edit any third-party posts or comments on any William Blair social media page that are inappropriate or that violate (or may violate) applicable regulations.

William Blair does not publish or otherwise disseminate statements relating to current or former clients’ positive experiences with or endorsements of William Blair and expects you to refrain from publishing such posts on any William Blair social media page. You should limit your posts on any William Blair social media page to investment themes rather than commenting, positively or negatively, on William Blair, its products, services or personnel. Although our clients may follow this account, this should not be interpreted as a testimonial regarding any client’s experience with our firm.

Any descriptions of, references to, or links to other products, publications or services do not constitute an endorsement, authorization, sponsorship by, or affiliation with William Blair with respect to any hyper-linked site or its sponsor, unless expressly stated by William Blair. William Blair expressly disclaims any responsibility for the posts, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites, as posted by third-parties on any William Blair Social media page.

Use Social Media Platforms at Your Own Risk

William Blair is in no way affiliated with any social media platform and has no responsibility for any social media page’s operations and services. William Blair and their respective affiliates, directors, officers, or employees are not liable for any direct, indirect, incidental, consequential, punitive or special damages arising out of or in any way connected with your access or use of, or inability to access or use, a social media platform, any William Blair social media page thereon or reliance on any William Blair post or any failure of performance, interruption, defect, delay in transmission, computer viruses or other harmful components, or line or system failure associated with a social media platform or any William Blair social media page thereon. Use of a social media platform or any William Blair social media page thereon is at your own risk.

Privacy Policy

William Blair is not responsible for the terms of use or privacy policies of any social media platform on which William Blair posts may appear, including in any William Blair social media page. For additional information regarding account security and privacy, refer to our Privacy and Security statement

Copyrights and Trademarks

Each social media page’s content and information, and all trademarks, service marks, trade names, trade dress, logos, copyrights and other intellectual property displayed on the Site by William Blair (“Content”) are protected by U.S. and worldwide copyright and trademark laws and treaty provisions, and are owned by, controlled by or licensed to William Blair or their respective owners. By using any social media page, we do not grant you any rights to reproduce, sell, or license any of the content contained herein, except that you may print a copy of the information contained herein for your personal use only. You may not reproduce or distribute the text or graphics to others or copy all or substantially all of the content to your own hard drive or server without the prior written permission of William Blair.

Permitted Uses of Our Sites and Content

We have listed below the permitted uses of our Content. We reserve the right to change our permitted uses at any time.

  • William Blair grants you a limited, revocable, nonexclusive and nontransferable right to view, store, bookmark, download, copy and print pages from the Site for your personal and noncommercial use only. Unless you receive our permission in advance, you may not exploit any of the Content commercially or forward it as a mass distribution.
  • If you link other websites to any Site, you may not imply or suggest that William Blair has endorsed or is affiliated with such websites and you may not display this Site as “framed” within another website.

Prohibited Uses of Our Sites and Content

William Blair does not grant, by implication, estoppel or otherwise, any license or right to use Content on any social media page other than those set forth above, and you shall not make any other use of such Content without William Blair’s written permission. Without limiting the generality of the foregoing:

  • You agree not to copy large portions of any social media page (such as by bots, robots or spiders that “harvest” the Site), interfere with the functioning of the Site or restrict or inhibit any others from using the Site.
  • If you download any pages from any social media page, you agree that you will not remove or obscure any copyright or other notices or legends contained in any such Content. You may not alter or modify the Content in your copies.
  • You may not (and may not encourage or assist others to) violate any law, regulation, rule or the intellectual property or contractual rights of others, or attempt to violate the security of any social media page or use or gain access to the identities, information or computers of others through any social media page.
  • You may not transmit any virus, worm, time bomb or similar system interference or corruptant through any social media page.

William Blair has the right (but not the obligation) to monitor any social media page for unauthorized or objectionable conduct and to take all appropriate actions in response, without notice to you. We reserve the right to change or supplement our website policies at any time to the fullest extent permitted by applicable law.

Forward-Looking Statements

Statements made on any social media page that look forward in time involve risks and uncertainties and are forward-looking statements. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in William Blair’s products’ performance, a general downturn in the economy, competition from other companies, changes in government policy or regulation, inability of William Blair to attract or retain key employees, unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.

Forward-looking statements reflect our current views with respect to, among other things, the operations and performance of our businesses. You can identify these forward-looking statements by the use of words such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “should,” “seek,” “approximately,” “predict,” “intend,” “will,” “plan,” “estimate,” “anticipate” or the negative version of these words or other comparable words. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

International Use

The Content provided in or accessible through any social media page is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject William Blair to any registration or other requirement within such jurisdiction or country. William Blair reserves the right to limit access to the Site to any person, geographic region or jurisdiction. Unless otherwise expressly set forth herein, William Blair makes no representations that transactions, products or services discussed on or accessible through the Site are available or appropriate for sale or use in all jurisdictions or by all users, or that access by any user in the place it is located is not illegal or prohibited. Users who choose to access the Site from other locations do so on their own initiative and are responsible for establishing the legality, usability and correctness of any information or Content on the Site under the laws of any applicable jurisdictions. You may not use or export the Content on the Site or accessible through the Site in violation of applicable laws and regulations.

Transmission to and From any Social Media Page

Subject to any applicable terms and conditions set forth in our Privacy and Security Statement, any communication or other material that you send to us through the Internet or post on any social media page by electronic mail or otherwise, is and will be deemed to be non-confidential as between you and us and William Blair shall have no obligation of any kind with respect to such information. William Blair will be free to use, for any purpose, and without compensation due or payable to you, any ideas, concepts, know-how or techniques provided by you to William Blair through any social media page.

Disclaimer and Indemnity

William Blair and its affiliates disclaim, to the fullest extent permitted by law, all express and implied warranties of merchantability, fitness for a particular purpose, and non-infringement. If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

William Blair does not warrant that the information in any social media page is accurate, reliable or correct, that any social media page will be available at any particular time or location, or that any social media page is free of viruses or other harmful components. Electronic communications can be intercepted by third parties and, accordingly, electronic mail and other transmissions to and from any social media page or made via any social media page may not be secure.

The investments and strategies discussed in the content may not be suitable for all investors and are not obligations of William Blair or any of its affiliates or guaranteed by William Blair or any of its affiliates. The investments are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other entity and are subject to investment risks, including the loss of the principal amount invested. Nothing contained on the Site constitutes investment, legal, tax or other advice nor is to be relied on in making an investment or other decision. You should obtain and carefully review any applicable prospectus, statement of additional information and/or offering memorandum as well the William Blair Form ADV, as applicable, before making any investment decision. Decisions based on information or materials contained on any social media page are the sole responsibility of the user.

As consideration for access to any social media page, you agree to indemnify and hold harmless William Blair and their employees, contractors, affiliates, officers and directors from and against any claims whatsoever and of any nature for damages, losses and causes of action, including but not limited to actions by third parties against you, William Blair or any of its Related Person, arising out of or in connection with any decisions that you make based on such Content, your use of any social media page, or your violation of our website policies. You agree to make William Blair, whole for any and all claims, losses, liabilities, and expenses (including attorneys’ fees) arising from your use of the Site or any violation of this the policies laid out in this Disclaimer, unless prohibited by law.

Miscellaneous Provisions

YouTube, Facebook, LinkedIn, Twitter, and any other social media sites are public sites. William Blair is in no way affiliated with them and has no responsibility for their operations and services or for related service sites. William Blair is not responsible for any social media platform’s terms of use or privacy or security policies, or any other third party sites that may be linked to by a social media platform. By using a social media platform, you accept at your own risk that the Internet and online communications medium may not perform as intended despite the efforts of William Blair, your Internet Service Provider, and you.

For additional information regarding account security and privacy, refer to our Privacy and Security statement. For customer service inquiries or questions about your accounts, please visit our website at: www.williamblair.com.

Your Acceptance of these Terms

Your use of the Site constitutes your acceptance of the terms contained herein. You may reject these terms by leaving the Site at any time.

For additional information about William Blair or to contact us, please visit our website at: www.williamblair.com.


The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities, and commercial mortgage backed securities.

The MSCI ACWI IMI Index is a free float-adjusted, market capitalization-weighted index that captures large, mid, and small cap representation across developed and emerging markets.

The MSCI ACWI ex-US IMI Index is a free float-adjusted, market capitalization-weighted index that captures large, mid, and small cap representation across developed and emerging markets, excluding the U.S. The Value and Growth Indices are a subset of the Index that adopt a framework for style segmentation in which value and growth securities are characterized using different attributes. Multiple factors are used to identify value and growth characteristics.

The MSCI ACWI Small Cap Index is a free float-adjusted, market capitalization-weighted index that captures small cap representation across developed and emerging markets.

The MSCI Emerging Markets Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of emerging markets.

The MSCI World Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the equity market performance of developed markets.

The Russell 2000 Index is a market capitalization-weighted index designed to represent the small cap segment of the U.S. equity universe.

Index performance is for illustrative purposes only. The indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly.

Alpha is a measure of an investment's return in excess of the market's return, after both have been adjusted for risk.

Beta is a measure of the volatility of an investment relative to the overall market, represented by a comparable benchmark.

Half-life is a statistical measure of the time required for the discrepancy between price and value to contract by half of its starting value. Fundamental value estimates are based on the Dynamic Allocation Strategies team's proprietary research.

P/E Ratio is a measure of valuation which compares share price to earnings per share, calculated using estimates for the next twelve months.

Standard deviation is a statistical measurement of variations from the average.

The William Blair Earnings Trend Model captures information about short- and medium-term changes in analyst estimates in an attempt to anticipate future estimate changes and stock performance. The score combines measurements of earnings revisions, momentum, and earnings surprise.

The William Blair Valuation Model combines varying metrics used to characterize the relationship between the stock’s trading price and its intrinsic value. By going beyond using only one or two measures, the model attempts to build a more holistic version of a stock’s worth vis-a-vis the market. The score combines measurements of earnings/cash flow based, asset-based, and model-based factors.