romaine: from bloomberg world headquarters in new york, i'm romaine bostick. this is the virus and its variants on bloomberg television and on quicktake. over the next 30 minutes, we'll going to take a deep dive into the science of the covid-19 variant, omicron. in will go deeper into its impact on global markets and the economy. let's start off with what happened friday. the world health organization announcing omicron was a variant of concern.

it led a number of countries across the globe to tighten travel restrictions particularly for travelers to and from southern africa. we sell the biggest decline of the year for global stocks, crude oil and 10-year treasury yield. today, relative calm has returned to markets with the s&p calling back more than half of friday's losses as investors digested a spate of encouraging news. as an invited cautioned americans against panic. vaccine makers including winter and and j&j said they have been working to adapt covert shots. south african scientists shared their belief existing vaccines are likely to protect against severe illness. we will break down the illness on the new strain and what it means for the economy and the recovery. let's take a listen to what some of the world leaders had to say. >> this is not the first variant and this time, the world showed it is learning. >> there is no scientific justification whatsoever for

keeping these restrictions in place. >> it does appear that omicron spreads very rapidly and can be spread between people who are double vaccinated. >> the new variant is concerning. it moved from being a variant of investigation to a variant of concern in the space of 24 hours. >> i will be putting forward a detailed strategy underlying how we will be fighting covid this winter. not with shutdowns and lockdowns but with more widespread vaccinations, boosters, testing and more. >> we call upon these countries that have imposed travel bans on our country and our other southern african sister countries to immediately and urgently reverse their decision. taylor: speaking of the variant, we are getting comments from the chairman of the federal reserve, jay powell, speaking in remarks that will be delivered to a senate and a later this week

saying omicron adds to some of the economic risks and inflation uncertainty that greater virus concerns could slip -- could slow the job market progress underway. factors looking at inflation, they are going to linger well into 2022 but there is still some ground to cover to reach the maximum employment. they will use all the tools necessary to stop inflation from getting entrenched. that forecasters right now including the fed expect inflation to decline but the headline here, omicron adding to the economic risks and some of the inflation uncertainties. these greater virus concerns can slow down the pace of the job market recovery. it was interesting earlier in previous show we spoke with a doctor who first alerted the south african scientists to the strain. she shared her perspective on the variant.

>> not extremely sick and the vaccinated people. it is more or less the same type of picture. not severely ill. that is what we see at the health level. taylor: let's bring in the leader of the bloomberg u.s. health coverage. we have been digesting the headlines over the weekend. they could be ready if they needed to tweak the vaccine to make it more effective. >> this is the reason why messenger rna vaccines, why everyone was so excited about them. it could be quickly adjusted in the event something like this happened. we will get a real-time test of how fast they can do that. sonali: with the rapid transmission of the virus, how does this complicate the overall picture for nations to get control of the virus? >> it is going to be a big task. is going to take some time for the new vaccines to be developed. there are therapeutics gang --

going through the regulatory process. it is a tall order. there are -- romaine: there's a lot of focus on the science behind the vaccines. there are also practical issues folks can take. the doctor said stay away from crowds, wear a mask and limit your travel. how practical of the solution is that given some of the pushback we have had the last few months people tired of being masked up and staying inside? >> i think a lot of people are and what is going on now is going to heighten some of that. many people who will be predisposed to keep doing the things they have been doing. any of us are still wearing masks and lots of people have gotten booster shots or are trying to. but yeah, i think it is reasonable to expect a response to this and some of the policy measures that need to be taken might inflame some of that division. romaine: a lot for government officials to deal with.

tim helping us kick off the program today. you are taking a look at some of the market reaction to the news of the strain. taylor: i wanted to put today's rebound back into perspective. take a look at the s&p on friday. off more than 2%. more than 100 points. little but of a rebound today. that really shows you that when you are off, some of the market perspective with the headlines, you can have long-term investors start to dip their toes back into the market. we have an incredible mliv blog on the terminal. digesting a lot of this news and trying to determine what this means for global markets, for global economics going forward. the big question of the day, how would this variant affect markets in the long term? that is a big question because we know within the short-term, this is what it meant on days like today. it is back out of the stay-at-home stocks and back

into travel. this was the reverse on friday but for today on the short-term, this is how it is playing out. what we do know is long term, the only thing that will help us get through this crisis is some of the vaccines. that is going to be front and center as we think about economics. we spoke earlier to the ceo of pfizer. >> omicron definitely has the characteristics to create this concern for many reasons. but also, we have been preparing for a moment like this for months. i feel comfortable that the playbook will work. what is the playbook? one is to understand more about the virus. the second is to protect against infections. the third is to treat. taylor: for more, let's bring in part or in portfolio manager advisors capital management to talk to us about some of the long-term investors stepping in today and if friday presented a

buying opportunity. as you are thinking about some of the jitters around the headlines and learning more details from a long-term perspective. >> i think for everyone, it was a wake-up call for investors to recognize while the u.s. has gotten a good handle on covid and we have high vaccination rates in good mitigation methods, this is not over. we have always been worried that mutations or a series of mutations could crop up. it is important to remember we still don't know a lot about the real threat. one has to design portfolios with that in mind. you point to the right thing. what are the long-term consequences? it is still too early to tell. we have a lot of confidence in the mrna vaccines promote is why we held biontech for clients. that will be a good long-term holding even beyond check sonali: i realize you just got a lot of these headlines coming

out ahead of chair powell's testimony at this idea that omicron adds to economic risk, that it complicates the job picture moving forward. what kind of new uncertainties does that add to the market? >> i put on my economist hat for a second try what i can tell you is the risk he is referring to is multifaceted. we were just turning to see consumers start to shift heavily toward their spending toward services, which would take pressure off consumer demand for goods. which has been problematic given supply chain problems. if this variant does become problematic, if it is more deadly in addition to being more transmissible, we could see some shutdowns. unlikely in the u.s. because we have good mitigation methods and it looks like the vaccines will be somewhat protective. look at the far east and countries that have a

zero-tolerance policy. we could seaports shut down again. that could complicate production. that is a couple of the risks powell is concerned about. romaine: what goes through some of the interplay globally. it is easy to say the u.s. may not go into lockdown but if we see large parts of asia go into lockdown, that has to have ripple effects. we saw a huge rebound in a lot of the travel stocks based in the u.s. travel stocks based in china were lower here on the day. how does an investor primarily u.s.-based navigate the ideas so many u.s. companies still depend on china? they still depend on international business. >> it is important to look at that exposure and to make sure you are not overexposed to those areas of the world. even though we have had ongoing supply chain problems out of asia, port shutdowns here and there. it is still remarkable to see

how much production has risen. even the semi conductor companies, which were at the heart of the problem earlier on, they're starting to ramp up production. even with the ongoing port closures that have happened, you're are still seeing them come back up. having too much exposure to china and asia more broadly is a bit of a risky position. investors still need to remember they are in it for the long term. if it does spread more rapidly, it could be over more quickly in terms of us getting it under control. pfizer sounds like it can do a billion doses in the first quarter alone and that should help mitigate any shutdown problems we have. the long-term perspective, you don't have to worry as much but travel stocks are going to be increasingly risky if people continue to worry about new mutations coming along. you can add more long-term growth opportunities whether it is qualcomm, broadcom and in consumer and amazon, which is well protected on both ends of the risk. taylor: deutsche bank did a

study of 1600 market is up and spared 10% said it was a big topic -- study of 1600 market participants. 10% said it was a big topic. he percent said it will be forgotten by year end. does that line up with how you are thinking? >> it is too early to know. i think one has to wait for the science to tell us. early indications suggest it is more transmissible. anecdotal evidence out of south africa suggest maybe it is milder in terms of the severity i think it is too early. we have to position portfolios for any eventuality. whether it is looking beyond at the strength of the housing market, which look at the pending home sale the came off this morning. get the stocks exposed to that. there are ways to invest around this, keep the exposure down to travel related, service related

stocks. the extent to which it is a conversation topic is going to depend on what the science tells us in the next four to six weeks. romaine: the science is always what matters. there will be pockets of strength, pockets of weakness is how you position your portfolio. senior partner and import -- and portfolio manager at advisors capital management. coming up, we are going to take a look at the risk to the economic picture. a chief economist is going to be stepping by --to be stopping by to talk more. we will be right back. ♪

taylor: this is the vaccine and its variants on bloomberg

television and quicktake. risk from the omicron variant dealing a blow to a strong economic recovery with all eyes on whether policymakers shift focus away from inflation and that against a weaker economy, a weaker demand. take a look at the chart we have on the bloomberg terminal as we look at what the market is thinking on their pricing in rate hikes. here in white is the federal reserve. 34 basis points. that is a hike and a half. that is through the end of september 2022. that is not moved a whole lie but it does give you pause and you get some of these big headlines and further comments from jay powell that we just got about 16 and its ago saying this does increase to the downside some of the economic rest. let's do all this with the chief economist at capital economics. you see some of the big downside risk or do you see a federal reserve continuing to go ahead?

>> that is a good question. i was listening to your guest before me. i think at the risk of sounding boring, at this stage, we do not know because we are dealing with the science. depends not just on how transmissible this particular strain of the virus is but the impact on health outcomes as well and whether it could escape vaccines. until all those pieces -- i don't think we could really say other than what jay powell has said now. romaine: still a lot of pieces to fall in place. we have heard from some world leaders who have said there is not going to be a full lockdown. nothing similar to what we saw a year ago where economic activity

was ground to a halt. i guess there is a question going forward of how we live with this. that this is going to stick with us in some form or another and how do we live with this in a way that allows economies to still remain open to some degree , to still grow to some degree? >> i think that is exactly the question and the point is it is becoming endemic. and the way we live with that is the way we have lived with everything else that has become endemic. sonali: one of the big concerns chair powell is raising is this idea of the job market recovery. we have been torn between the job market and inflation already this year. looking more so into next year. what are the biggest damages that could be created to the job market as this new virus continues to transmit? >> there are two big risks.

on the demand side, we start to see weaker demand for goods and services and labor. i think the key risk be on the supply side. those workers discouraged from returning to the labor force because of concerns about the virus -- the new variant, potentially more damaging variant will only deter them further. taylor: how are you thinking about further exasperating some of the inflationary prints we have done with the six handle? >> initially, we had a dry run for what will happen in markets on friday. equities collapse, bond rallies -- bond markets rallied. it is that fall in energy prices

. that would drag down headline inflation over the course of the next year. underlying price pleasures -- price pressures. we are at a point different from previous strains where there are supply chain shortages, that could be exacerbated if we have more port closures and difficulties in labor markets. romaine: a lot of questions about the unevenness about global growth. with you can have some countries continued to prosper and others remain on lockdown. great to catch up with you. giving us a little bit of perspective about the economic picture. we talk about these governments. we talk about the potential for more travel restrictions. we have seen some in place particularly for south africa.

the president is trying to assure the world the variant is going to be mild of our bloomberg reporter's is on the ground in johannesburg. >> i am in the mall today. while the rest of the world as cutting off africa from traveling, people in the country seem to be very chill about the new variant. they are going about with their normal christmas shopping. they don't really seem scared. >> a lot of people expecting that since the defecation of covid variant omicron, the president would tighten the covid-19 regulations already in place in south africa. to the delight of many, this did not happen but the president did

urge the people of south africa to get vaccinated. a lot of people believe that because they have been vaccinated, they should not have to go under more strict regulations. those people who refuse to get vaccinated and still have not been vaccinated should be the ones under stricter regulations. taylor: that was the latest take on the ground in south africa. with 2021 coming to an end and another year of covid, pandemic fatigue is sitting in especially for young people. for more on why the youth are more susceptible, let's bring in our bloomberg quicktake maddie mills. what are you noticing about some of the young people, what they are doing, how they are feeling

about fatigue lockdown? >> when i spoke with dr. fauci, he mentioned it is not abnormal for young people to be responsible for the spread of infectious disease. i don't made to sound like a bloomberg longing young people -- blaming young people but it is not super where for young to spread infectious disease that what is interesting in the u.s. is young people are not getting vaccinated at the rate we had anticipated. for those 18 to 24-year-olds, only 56% are vaccinated. that is just not high enough to romaine: is there an issue with them being young? maybe being more susceptible to both getting the virus and transmitting it? >> what is so interesting about that question is in the beginning, we thought it was older individuals. we were worried about the 65 plus immunocompromised folks. virus is so smart and it wants to stay alive. as the older group got vaccinated, they group said i guess -- the virus that i guess

i'm going to have to go to the younger people know. romaine: we look at the vaccination rates on the screen, it shows you part of the problem. is it just an issue of age? people at a certain demographic say i don't need to worry. i was 18 to 24, i did not really care about anything. >> your thinking i have had to take a year off of college. i am trying to go out with my friends. they did not know they needed to go out and get this vaccine and feeling a lot of pressure about that. now they not lenny to be a vaccinated but they need to get these booster shots. it is a big push for public health officials to get these younger individuals to get those jabs. romaine: madison mills from bloomberg quicktake stopping by to give us insight into that aspect. it's go over to asia where people are just starting their day. what can we expect to see any terms of lockdowns and virus particles? let's bring in jason in

australia. a lot of people looking to asia with some of the lockdowns and talk over there, which are little more strict. >> yes indeed. it is a case of we have to watch this space in terms of how this is going to play out in asia. we have already several cases in australia. none of them have been severe. there really is a lot of interest in understanding more about what this is going to mean. sonali: what does it mean in terms of any restrictions we have in terms of travel moving forward? how will this impact people in goods moving around? -- people and goods moving around? dark i think it remains to be seen. we don't really know enough about the virus. don't know how transmissible it is or how much more disease it could cause or its ability to

escape protection from a prior infection or vaccination. we just have to see how this plays out. romaine: is there a need to close borders here? is that going to be a solution? >> it depends on the context. here in australia in countries like new zealand where there have been -- they have been following a covid zero policy, just slowing down migration, people going into the country until authorities can figure out how severe this is, that may buy us some time. we have seen in countries like scotland where there is evidence of community transmission. stopping travelers coming in in that scenario is a different question. romaine: jason out there in melbourne.

giving us a perspective from that side of the world. that does it for our special. a lot to talk about. interesting to see what the market impact of this is and what the economic impact is as well. sonali: absolutely. taylor: we will wake up tomorrow to another day. this is bloomberg. ♪

>> from the heart of where innovation, money and power collide, in silicon valley and beyond, this is bloomberg technology with emily chang. emily: i'm emily chang in san francisco and this is bloomberg technology. coming up, jack dorsey resigns as ceo of twitter. we will talk about what new leadership means for the future of the internet town square. plus, omic