John Waldron Interviews Gen. James Mattis...US Holiday Retail Outlook...Vaccine Logistics

[Goldman Sachs]( [BRIEFINGS] November 25, 2020 Talks at GS With General James Mattis Above (L to R): John Waldron of Goldman Sachs and Gen. James Mattis (USMC, Ret.) General James Mattis, the former U.S. defense secretary, says strong diplomatic ties with other nations are critical to the future of U.S. national security and vital to the global response to COVID-19. “We need to have science and international health organizations helping direct these vaccines as we snuff out the pandemic,” Mattis tells Goldman Sachs President and COO John Waldron in a recent episode of Talks at GS. “It’s hard to do this if you don’t have international organizations already in existence, already used to working together, already with communication lines and knowing who to contact in other capitals.” Another lesson from the pandemic, says Mattis, is that “when America leads internationally, things happen...[and] when America steps back, coalitions do not form…But now I think people realize that the pandemic is not going to respect borders. And I think the lasting lesson will not be unilateralism, I think it's going to be quite the opposite. We've got to work together more on the multinational, on the international level.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20With%20General%20James%20Mattis&body=https%3A%2F%2Fyoutu.be%2FaYqpwAt0cRI) The Daily Check-In With Goldman Sachs Above: Kate McShane of Goldman Sachs While Black Friday is typically a barometer of the holiday retail season, the pandemic has reshaped the way consumers are shopping and taken a bit of importance out of the day, explains [Kate McShane]( of Goldman Sachs Research in a recent episode of The Daily Check-In. “In 2020, we've seen a pull forward of [Black Friday] promotions,” she says. “We think this is being done to help reduce the numbers of crowds, spread out the demand, if you will. Amazon Prime days were October 13th and October 14th, which really was the kickoff of the holiday season.” As far as what consumers are shopping for, her research highlights a shift toward categories like home furnishings and decor that benefit from people staying at home. “When we took a look to see how many dollars had shifted from the leisure activities to the retail categories, we saw a shift of anywhere between $184 billion and $228 billion. And really what that means is...dollars that are up for grabs this holiday season that can be diverted to these categories,” she says. In another episode of The Daily Check-In, [Kelly Galanis]( of the Investment Banking Division explains how insurtechs—startups that apply advanced software to the conventional insurance industry—are disrupting their marketplace. "Insurtechs are using modern technology—think AI, ML, IoT, low code—combined with much broader data sets, to manage nearly all aspects of their business,” she says. "This gives them an advantage in customer acquisition, in product development, underwriting and many other areas." The digital transformation is leading to a surge in capital markets activity, such as landmark IPOs, private capital inflows and strategic M&A, she notes. “At $5 trillion globally, it's one of the few remaining places where technology can be used to disrupt how things are done across the entire value chain,” Galanis says. “It's one really ripe area.” For more Daily Check-In videos, [subscribe to our channel]( on YouTube. [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fthe-daily-check-in%2Findex.html) Global Strategy Outlook: The Bull Run in 2021 Goldman Sachs Research remains confident about the global recovery in 2021, says Peter Oppenheimer, the firm’s chief global equity strategist. “We are optimistic for equity markets, risk assets and indeed the economy,” Oppenheimer explains in the latest episode of Exchanges at Goldman Sachs. What’s driving this bullish view? “I think that this strong outlook is supported by the prospects for more positive news on vaccines and the implementation of those, as well as very, very supportive monetary and fiscal policy through the course of next year,” he says, explaining why he thinks the current bull market is transitioning from a “hope” phase to a “growth” phase. “As we move forwards in time...we do expect to see more even returns globally, less so than extreme outperformance of the U.S.,” he says. “We would expect people to be diversifying more by country, region and by industry.” [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Global%20Strategy%20Outlook%3A%20The%20Bull%20Run%20in%202021&body=https%3A%2F%2Fyoutu.be%2FZfruOSFd8FA) Insights From Great Investors: Tom Lister of Permira Above (L to R): Alison Mass of Goldman Sachs and Tom Lister of Permira Permira Co-Managing Partner Tom Lister says that one of the greatest lessons he’s learned over his 30-year career in private equity is to leave some returns for the next investor. “Monetizing at the absolute peak leaves lots of ill will on both sides,” Lister says in a conversation with Goldman Sachs' Alison Mass on an episode of Talks at GS Presents: Insights From Great Investors. “It’s totally fine in our industry to monetize something you’ve done a really good job with and leave opportunity and return and reward for the next owner, whether that be public shareholders or a corporation or another private equity owner.” Lister also describes what he considers to be the traits of great investors, noting that Permira’s most successful investors are typically resilient, skeptical—“with a bias towards optimism”—entrepreneurial and empathetic. “The four- or five-year principal at our firm does not specialize in empathy,” Lister says. “But over time, they develop incredible empathy because if they don’t, they never get to a place where a management team or another private equity firm or a corporation wants to partner with them.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Insights%20From%20Great%20Investors%3A%20Tom%20Lister%20of%20Permira&body=https%3A%2F%2Fyoutu.be%2FED_kl7nhUW4) Briefly…on the Road Ahead for COVID-19 Vaccines With one or more COVID-19 vaccines on the horizon, investors are looking ahead to manufacturing and distribution. During a recent Goldman Sachs Asset Management (GSAM) Forum event, Dr. John Grabenstein, president of consulting service Vaccine Dynamics SP and former global executive director of medical affairs for Merck Vaccines, discussed the logistics of a vaccine rollout with Gurpreet Gill, a macro strategist within GSAM’s Fixed Income team. Gurpreet Gill: Dr. Grabenstein, can you start by sharing your thoughts on the recent vaccine efficacy results and what they mean for COVID-19 vaccine discovery? Dr. John Grabenstein: While I would caution that the efficacy findings are still interim results, they are certainly good news as they suggest we have correctly identified the spike protein as the Achilles’ heel of the virus—and that bodes well across all vaccine technologies. It is rare to observe adverse events beyond 42 days after vaccination and so the coming months will provide more clarity on vaccine safety. We only need one successful vaccine—though more than one is helpful—but what will be crucial is obtaining sufficient doses to be able to cover the global population of more than 7.8 billion people, especially given that some of the vaccine candidates require two doses. Gurpreet Gill: Will pharmaceutical companies and governments achieve the manufacturing and distribution undertaking ahead of them? Dr. John Grabenstein: This is uncharted territory—we have never tried to vaccinate the whole world at once before. Smallpox is the closest historical parallel but that was a 10-year sustained effort. That said, there are modern-day precedents for mass vaccinations. In the U.S., for example, we administer 160 million to 180 million doses of influenza vaccine in a span of three to four months, year after year. With COVID-19, vaccine developers have been working on development, manufacturing and logistics concurrently so they can move quickly if their vaccines get the regulatory green light. As part of that process, they’ve been focused on identifying potential bottlenecks. Gurpreet Gill: What are some of the potential challenges and bottlenecks? Dr. John Grabenstein: There is an unprecedented requirement for cooperation, coordination, synchronization and integration to deliver the vaccine to every city, town or village. Consider this: there is no master database bringing together every health care provider, medical equipment warehouse, vaccine storage place and transit node. That said, there are efforts underway to solve the logistical challenges. In the U.S., for example, the Department of Defense is helping the Centers for Disease Control allocate and distribute COVID-19 vaccines by leveraging the DOD’s military planning and logistics technology to integrate various data into one platform. Another challenge is that vaccines have to be distributed under controlled conditions, with some requiring ultra-cold temperatures. It is doable, but it requires meticulous planning and monitoring. For example, dry ice—which is required to maintain the cold chain during transport of some vaccines—can become CO2 gas in airfreight unless stored appropriately. That said, these issues are controllable and vaccines can be transported this way if airlines are able to monitor this precious cargo with suitable equipment while in flight. It’s worth noting that Merck’s Ebola vaccine faced similar challenges as it had to be stored at -80 degrees Celsius. That vaccine was transported using Arktek containers—a high-tech insulated cylinder that can maintain cold temperatures for up to a week at a time without an external power source—during the 2014-16 Ebola outbreak in Western Africa and more recently during outbreaks in the Democratic Republic of Congo. As a result of this technology, that Ebola vaccine could be distributed to austere rural regions during armed conflict. While the scale and reach of that vaccination program was not as broad as what will be required for a COVID-19 vaccine, its success creates room for optimism. Gurpreet Gill: Will the location of vaccine manufacturing influence vaccine distribution? Dr. John Grabenstein: In order to produce billions of doses, vaccine developers have partnered with manufacturers around the world. There are manufacturing plants in the U.S., Europe and the U.K., but also across developing countries including Brazil, Russia and India. Many advanced countries have secured supply commitments that do not depend on manufacturing location. For developing countries, the [COVAX facility]( global procurement mechanism—seeks to ensure equitable vaccine distribution. Gurpreet Gill: Finally, Dr. Grabenstein, when do you think a vaccine will be widely available and how willing do you think the broader public will be to receive it? Dr. John Grabenstein: Once vaccine developers apply for Emergency Use Authorization (EUA) for vaccination of at-risk individuals and essential workers—which we’ll likely see in November or December—the U.S. FDA will require perhaps two or three weeks to review the application before it goes to the CDC for implementation. The European Union has a pathway similar to EUA called Conditional Marketing Authorisation. Given this is new territory, there is currently some debate over which U.S. population groups would be prioritized in an EUA approval. At the earliest, I would expect first vaccinations for identified at-risk groups in the U.S. from mid-December. Assuming a significant supply of vaccines is available by late spring or early summer of next year, a large portion of the U.S. population could be vaccinated by the end of 2021. A similar timeline seems plausible for other major economies such as the Euro area and the U.K. But of course, a final and critical step in this progress is vaccine uptake which will depend on vaccine safety and efficacy—data on which is still incoming—as well as trust in the licensure process. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20the%20Road%20Ahead%20for%20COVID-19%20Vaccines&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Bloomberg - November 23 [Economist Hatzius Sees ‘V-shaped or Vaccine-shaped’ U.S. Recovery]( (2:19) Bloomberg - November 22 [Goldman Sees 18% Total Returns for Asian Stocks in 2021]( (5:09) CNBC - November 17 [Japan has ‘woken up from its slumber’ after a dull first 9 months in 2020: Goldman Sachs]( (3:26) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. 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