Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
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Speaker 1: Business Week on iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube
Speaker 1: search Bloomberg Global News. Earlier this year, Anthem came out
Speaker 1: talking about medical costs this year, saying they would still
Speaker 1: be elevated due to COVID nineteen. Really a sign that
Speaker 1: the pandemic will continue to cast a shadow over the
Speaker 1: health industry as it is in its third year the pandemic.
Speaker 1: Just yesterday, Tim two, we heard from the US Federal
Speaker 1: Reserve about its campaign to tackle the overall fastest US
Speaker 1: inflation in four decades, and that certainly includes things like healthcare.
Speaker 1: It's so interesting, Carol, when we talk about inflationary pre sure,
Speaker 1: we often talk about gas prices. We talked about food prices,
Speaker 1: and we don't necessarily talk about health health prices because
Speaker 1: we're used to them going up. Um. But let's get
Speaker 1: into it with g By, Professor of Health Policy and
Speaker 1: Management at Johns Hopkins Bloomberg School of Public Health. The
Speaker 1: Johns Hopkins Bloomberg School of Public Health. It is supported
Speaker 1: by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies.
Speaker 1: G really really good to have you with us. Um,
Speaker 1: what have you been focused on at the Johns Hopkins
Speaker 1: Bloomberg School of Public Health when it comes to inflationary
Speaker 1: pressure on the health care industry? Thank you, Kim Sanko Carroll.
Speaker 1: I have been focusing on the hospital cost structure because
Speaker 1: that would be the driving force for a price inflation
Speaker 1: in the hospital setting. Okay, we'll tell us a bit
Speaker 1: more about that. When you say hospital cost structure, Um,
Speaker 1: you know, gee, it's probably I'm safe to say that
Speaker 1: there's folks in our audience are like, okay, so what
Speaker 1: does that mean, building beds, medicines, what does it mean? Yes,
Speaker 1: our study found that they labor cost and the medical
Speaker 1: supply costs are the key components for hospital costs. So
Speaker 1: due to the labor shortages, especially nursing shortages, labor costs
Speaker 1: has risen dramatically for hospitals. How much and then how
Speaker 1: much has how much has it gone up? Like if
Speaker 1: is there a number you can give it to us. Sure,
Speaker 1: Sometimes hospitals have to hire traveling nurses because there's no
Speaker 1: local nurses to hire, and the price can be doubling
Speaker 1: or traveling what the hospital has been paying for their
Speaker 1: own local nurses. But we've heard a lot of stories
Speaker 1: about that, and in fact, the pay has been so
Speaker 1: good for these traveling nurses that you find some nurses
Speaker 1: quitting to go join these traveling nursing firms because they
Speaker 1: can make so much more money. G Who gets affected
Speaker 1: the most when we think about inflationary pressures when it
Speaker 1: comes to healthcare? Who who are the victims out there? Unfortunately?
Speaker 1: I think the middle class working Americans will be the
Speaker 1: main victims of healthcare price inflations. You know, they are
Speaker 1: more financially vulnerable than also individuals. More importantly, they are
Speaker 1: more exposed to health care inflation than the lower income individuals.
Speaker 1: Why because lower income in populations sometimes they were often
Speaker 1: they're road in MEDICAIDS and other type payers subsidize. The
Speaker 1: program was very limited out of pocket explosives. But the
Speaker 1: middle class working Americans, in many cases, they are under insured,
Speaker 1: so they have not only to pay the high premiums,
Speaker 1: also had to pay on a pocket when they have
Speaker 1: a medical episode. I feel like, um gee, that this
Speaker 1: is so much um part of a larger story that
Speaker 1: we have been talking for the last couple of decades.
Speaker 1: I think about, you know, when the Clintons were in
Speaker 1: the White House, when Bill Clinton was president and his
Speaker 1: wife at that time, first Lady Hillary Clinton. You know,
Speaker 1: it was working on healthcare for the first go round,
Speaker 1: uh and putting something together, and of course it was
Speaker 1: until President Obama that we actually got something through. But
Speaker 1: we continue to look at the cost of healthcare obviously
Speaker 1: exacerbated right now because of these inflationary times that were within,
Speaker 1: but as something bigger or more broadly broken with the system.
Speaker 1: I mean, anybody who picks up a medical bill or
Speaker 1: hospital bill. We're so grateful if we have insurance because
Speaker 1: so much is covered, but we're always blown away by
Speaker 1: the costs. Absolutely, Thank you, Carroll. Your previous healthcare reforms
Speaker 1: have been focused on expanding insurance coverage. Right, But as
Speaker 1: we have seen, extended coverage has not yet solved the
Speaker 1: longstanding problem of the cost as well as in the
Speaker 1: poor outcomes that have really plagued the US healthcare system.
Speaker 1: So you know, in my study we found that, you
Speaker 1: know which, the current the highly subsidized insurance systems give
Speaker 1: consumers and providers very little incentive opportunity right to provide
Speaker 1: or speak appropriate to care that it is efficient and
Speaker 1: the tree affordable. Why. I believe that is the main
Speaker 1: reasons underlying the high cost of law outcomes. So let's
Speaker 1: professor by push the solutions here and try to give
Speaker 1: us an understanding of what your research has said about
Speaker 1: the right way to solve these problems. And look inflationary pressure,
Speaker 1: it's everywhere right now, we heard that from the Fed
Speaker 1: chair yesterday. But when it comes specifically to healthcare, how
Speaker 1: do you bring costs down? I believe the government has
Speaker 1: limited ability to bring healthcare down. Let's look at the
Speaker 1: Affordable Care Act, right. In order for that legislation to pass,
Speaker 1: the Congress has to have the support from the industry,
Speaker 1: and industry will not give Congress the power to redeo
Speaker 1: the price that will hurt their own interests, right, So
Speaker 1: I do believe eventually we need some kind of market
Speaker 1: force competition to help lower the cost. So for example,
Speaker 1: we should like the patients be able with the payers,
Speaker 1: be able to do comparison shopping like transparency and give
Speaker 1: them better insurance options, and also easing the government regulations
Speaker 1: that actually add a cost and efficiency to the system. Well,
Speaker 1: we all talk about you. You know, you look at
Speaker 1: some other countries. Maybe it's not apples to apples in
Speaker 1: terms of health care systems, but there seems to be
Speaker 1: some better ways of certainly rating in cost um. Gee
Speaker 1: we gotta run, Thank you so much. Gee buy. She
Speaker 1: is Professor of Health Policy and Management at Johns Hopkins
Speaker 1: Bloomberg School of Public Health, of course, supported by Michael R. Bloomberg,
Speaker 1: founder of Bloomberg LP and Bloomberg Philanthropies. Joining us on
Speaker 1: the phone from Washington, d C. You know, it's funny
Speaker 1: I think about the new issue Bloomberg Business Week. We're
Speaker 1: gonna get into it in a little bit. It's the
Speaker 1: equality issue. And it's finally, you know, the inequalities in
Speaker 1: the system really tackling people who are actually doing something
Speaker 1: to make things better. And I think health care. It's
Speaker 1: just so tricky. Not a lot of optimism. No, well,
Speaker 1: it's very entrenched and there's a lot of money at stake.
Speaker 1: All right, you're listening to Bloomberg. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. Well, geopolitical relationships, they are definitely
Speaker 1: being tested amid the Russian invasion and war with Ukraine.
Speaker 1: And keeping with that, President Joe Biden is meeting with
Speaker 1: Chinese President jijimping to try and coax him interacting at
Speaker 1: pressure on Moscow to end its war in Ukraine. It
Speaker 1: will be present Biden's first phone call with the Chinese
Speaker 1: president since the invasion began. Oh, to be a fly
Speaker 1: on the virtual wall, as I said earlier, Yeah, that
Speaker 1: would certainly be something. Jody Schneider is political news director
Speaker 1: at Bloomberg Television in Radio. She joins us from the
Speaker 1: Bloomberg studio in Washington, d C. And you can see
Speaker 1: her via zoom as well if you're watching us on YouTube,
Speaker 1: um or via you know, a camera, an actual camera,
Speaker 1: not via zoom, because she's in one of our studios. Jody, Um,
Speaker 1: what is the latest when it comes to diplomatic talks.
Speaker 1: When when we think about Russia's invasion of Ukraine, thinking
Speaker 1: beyond what Biden and She are going to talk about tomorrow,
Speaker 1: just what we've learned today. Yeah, Tim, Well, diplomatic is
Speaker 1: an interesting word in this sense. I'm not sure how
Speaker 1: much actual diplomacy is going on. We do have, as
Speaker 1: you noted, Joe Biden and She jumping speaking tomorrow and
Speaker 1: that has um, you know, all the world watching. But
Speaker 1: at the same time, UM, we don't know that the
Speaker 1: expectations are very high for that that talks. I think
Speaker 1: it's more kind of what it sounds like is a
Speaker 1: check in both on Russia Ukraine, but also they haven't
Speaker 1: spoken in a while, and trade and other things could
Speaker 1: come up. Uh. At the at the same time, we
Speaker 1: have in the talks with h Russia, between Russia and Ukraine,
Speaker 1: and it seems odd that there are talks going on,
Speaker 1: but there are talks going on. But a Kremlin official
Speaker 1: spokesperson said the report of major progress in the talks
Speaker 1: was wrong, but he said talks would still continue. So
Speaker 1: we're not seeing a whole lot there, but they are talking, uh.
Speaker 1: And the problem, of course is that neither side really
Speaker 1: wants to move off of its points that need to
Speaker 1: happen before they'll have serious progress and talks. Ukraine says
Speaker 1: it has to have a ceasefire, it has to have
Speaker 1: a withdrawal of Russian troops and they have to promise
Speaker 1: they won't come back. And Russia says it needs Ukraine, UH,
Speaker 1: basically to give up its hopes of NATO and its
Speaker 1: hopes of being part of the rest of Europe. I
Speaker 1: gotta say, Jody, tib and I've been talking a lot
Speaker 1: about China, the relationship with the US Russia. Which relationship
Speaker 1: is more important? UH. And we've done that with our
Speaker 1: Andy Brown of New Economy. We've also done it with
Speaker 1: Tiff Roberts, who as the former Bloomberg business Week editor
Speaker 1: and was based in China. Both of them understand the
Speaker 1: region a lot. I want to ask you, though, because
Speaker 1: you understand politics, you understand how the diplomatic sausage is done.
Speaker 1: I mean, tell me how this goes down when you
Speaker 1: have diplomacy. As you said, I almost feel like I
Speaker 1: need to use quotes about it around it between two
Speaker 1: superpowers like the U S and China, How does it
Speaker 1: go down in a situation that's very tense, like the
Speaker 1: one we are in today. Lots of formalities and sugarcoat
Speaker 1: of conversation or are there get real moments between the
Speaker 1: two leaders. Yeah, I think again between China and the US.
Speaker 1: I think the fact that they're getting on the phone
Speaker 1: and talking is important in and of itself. And we
Speaker 1: said this during the trade talks when they may not
Speaker 1: be going you know, they weren't going particularly well, and
Speaker 1: that they may not have big uh you know asks
Speaker 1: and and certainly not big to do lists. Uh. We're
Speaker 1: not necessarily achieved off those calls, but the fact that
Speaker 1: they had them, that they're still talking is important. And
Speaker 1: I think what's important in this uh. And and we've
Speaker 1: written about this, you know, it's stories on the terminal.
Speaker 1: Uh is that uh for she for for she jumping
Speaker 1: At this point, he's got a lot on his plate, right. Uh.
Speaker 1: The economy is not going exactly the way they want.
Speaker 1: They're still they're locking down major cities. Shenzhen, across the
Speaker 1: border from Hong Kong is in lockdown, a place that
Speaker 1: you know, was a thriving technology hub they called the
Speaker 1: Silicon Valley of China. They wanted to be that nothing's
Speaker 1: going on there now it's in total lockdown. Uh they
Speaker 1: have you know, there's a lot of things going on
Speaker 1: in China, and now there's this on the world stage.
Speaker 1: She jumping had Vladimir Putin for a visit before the Olympics.
Speaker 1: He attended the Olympics, all seem well. We think the
Speaker 1: message there was if you're going to go into Ukraine,
Speaker 1: do not do it while the Olympics are still on.
Speaker 1: Wait until the Olympics are over, which which Vladimir Putin did.
Speaker 1: But now I think even China is sort of walking away,
Speaker 1: not necessarily walking away from overall support. That relationship between
Speaker 1: uh Putin and Ji Jianping remains, and the relationships into
Speaker 1: the country's obviously, But at the same time, we've heard
Speaker 1: in recent days rhetoric from China that really seems to say, well,
Speaker 1: we are not we don't want to become a pariah
Speaker 1: on the world stage over this. For instance, the rhetoric
Speaker 1: to to Ukraine about you China will not be unfriendly
Speaker 1: to Ukraine, which is a very interesting statement. Yeah, it
Speaker 1: certainly is. All right, Jodi, thank you so much. Jody Schnyder.
Speaker 1: She is political news director of Limberg Television Radio. She's
Speaker 1: joining us from our ny I one studio in the
Speaker 1: nation's capital. This is Bloomberg business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. The
Speaker 1: new issue of Bloomberg Business Week it is out. The
Speaker 1: domestic cover is about baby Bonds, one of the stories
Speaker 1: making up the annual Equality Issue coverage, which this year
Speaker 1: looks at people really trying to make change and bring
Speaker 1: about change, actual actions being done in better our world.
Speaker 1: Joel Weber is editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studios. Along with us,
Speaker 1: is the author of that cover story, Ben Steve Bermani's
Speaker 1: personal finance editor at Bloomberg News with us again in
Speaker 1: the Bloomberg Interactive Broker Studio. Ben's story is the US cover,
Speaker 1: as Carol mentioned, of the business Week magazine Equality Issue,
Speaker 1: available on news stands, on the Bloomberg and at Bloomberg
Speaker 1: dot com slash business Week. Uh, Joel, because this is
Speaker 1: the cover story here in the US, the Equality Issue. UH,
Speaker 1: talk to us a little bit about about why this story,
Speaker 1: why baby Bonds, is the one that you are focusing
Speaker 1: on as sort of the overall arching concept for the
Speaker 1: equality issue. Well, we wanted something that really could tie
Speaker 1: that package together, and they're, like you mentioned one of
Speaker 1: the elements that that we tried to do with this
Speaker 1: equality issue is like, look, we can talk about the problems,
Speaker 1: but there's also places that we're beginning to see some
Speaker 1: progress and and baby buns which aren't actually baby buns,
Speaker 1: but we'll get there in a second, are are an
Speaker 1: early example of that. And there's been chatter at sort
Speaker 1: of a federal level, but where it's actually where the
Speaker 1: movement's actually happening is on a state level. And been
Speaker 1: found a really interesting character that we could drive that
Speaker 1: story through UM and then the art department just came
Speaker 1: up with this an amazing you know, fake baby bond
Speaker 1: that UM I thought was iconic. Right it's and often
Speaker 1: when we think about the cover, how do I make
Speaker 1: that iconic and breakthrough? And obviously we have an international
Speaker 1: cover that's all about UM yet uh you know, ongoing
Speaker 1: coverage of Ukraine and Russia and the fallout there. But
Speaker 1: this was also was something that I just wanted to
Speaker 1: make sure that we continue to prioritize because look like
Speaker 1: here we are going on two years post George Floyd.
Speaker 1: We do accounting that in the issue, and it's also like,
Speaker 1: let's make sure that we continue to prioritize this coverage
Speaker 1: going forward. But let's talk about Ben's story because it's
Speaker 1: not a baby bond, it's actually a trust fund. And
Speaker 1: what why is it breaking through on a state level
Speaker 1: when it when it didn't do that on a on
Speaker 1: a federal one yet. Well, I think after George Floyd's murder,
Speaker 1: state lawmakers, local lawmakers were just scrambling looking for a
Speaker 1: solution and they this is something that Derrick Hamilton's the
Speaker 1: subject of this story, has been talking about for more
Speaker 1: than a decade UM. And he's a progressive economist. He
Speaker 1: was a big Bernie Sanders supporter. But this is an
Speaker 1: idea that seems to be getting much broader um appeal
Speaker 1: um mostly Democrats, but there are some Republicans who have
Speaker 1: signed on as well. And the idea is give give
Speaker 1: a certain amount of money to kip babies when they're born.
Speaker 1: Um these states, they're only setting aside about three thousand dollars,
Speaker 1: which doesn't seem like very much, but you invest it
Speaker 1: and that could be more than ten thousand dollars by
Speaker 1: the time they're eighteen, and then allow them to use
Speaker 1: that for some wealth building purposes like education, UM, homeownership, UM,
Speaker 1: starting a business. And the idea is, let's let's use
Speaker 1: this as a one tool of many, maybe to narrow
Speaker 1: the racial wealth gap, which is, as we know, is
Speaker 1: very persistent and has been um lasted for decades. Even
Speaker 1: as Black Americans have made huge progress in a lot
Speaker 1: of other areas, their wealth really hasn't. The wealth gap
Speaker 1: has not narrowed at all. Oh go ahead, please, So
Speaker 1: narrowing the wealth gap is the ultimate goal here, right,
Speaker 1: or or creating a device that can help do that.
Speaker 1: I think I know how that's going to go over
Speaker 1: on the left side of the aisle. How has it
Speaker 1: gone over on the right side of the aisle? Well?
Speaker 1: The thing is this is this is UM. You know,
Speaker 1: when Derrick Hamilton's um started talking about this UM, he
Speaker 1: was basically he had been talking about reparations and he
Speaker 1: still talks about reparations. But people were like, well, let's
Speaker 1: give us something that's actually gonna pass, something that's actually
Speaker 1: gonna work. UM and I get through the legislature as
Speaker 1: we came up with this. But the idea is, um, uh,
Speaker 1: let's let's make this race neutral. This isn't as focused
Speaker 1: on Black Americans, as focused on focused on every kid
Speaker 1: in America. Potentially, if you have the full Derrick Hamilton,
Speaker 1: like a much more expansive, generous federal program, but then
Speaker 1: you give the most money to the poorest kids. And
Speaker 1: because race and wealth are so correlated in this country, um,
Speaker 1: you actually end up giving a real boost to Black Americans.
Speaker 1: But you also give a big boost of rural areas,
Speaker 1: which are for the most part represented by Republicans these days.
Speaker 1: And there's been huge capital drain out of rural communities
Speaker 1: where people are growing up and they're getting into young
Speaker 1: adulthood and they don't have the capital to start that
Speaker 1: business or to go to vocational school or whatever. So um,
Speaker 1: these folks who are passing these things, that's Washington State
Speaker 1: is working on something. Massachusetts, UM, Connecticut and DC already
Speaker 1: have them. They're really trying to appeal to everyone across
Speaker 1: the spectrum, saying by saying this is can this can
Speaker 1: help people in your community? Well, and it really speaks
Speaker 1: to and I feel like we are all getting smarter
Speaker 1: about the words we use. Right, we still talk about
Speaker 1: making more money or making you know, higher income. But
Speaker 1: it's not about that. It's about wealth creation, right, and
Speaker 1: that comes through generational wealth, it comes through homes. And
Speaker 1: there's many people, as we know we keep identifying that
Speaker 1: have been left behind and this is a way to
Speaker 1: give them a leg up. Yeah, you know that's one
Speaker 1: of them. Create wealth. Yeah, and wealth that This is
Speaker 1: one of the core concepts behind baby bond. Is it
Speaker 1: just the importance of wealth? Like making more money in
Speaker 1: one year? Okay, so you make four thousand dollars more
Speaker 1: and you're able to save you know, a thousand of it.
Speaker 1: Is that really going to change your life in a
Speaker 1: significant way? Is that I'm going to change your children's
Speaker 1: life or your grand children's life. Probably not. But what
Speaker 1: if you can build build um some home equity, What
Speaker 1: if you can get a college degree that will really
Speaker 1: triple your earnings or or could you do your earnings
Speaker 1: over your lifetime? Those are the things that really build
Speaker 1: wealth over multiple generations. And those that those are the
Speaker 1: opportunities that Black Americans and other poor Americans have not
Speaker 1: been allowed to do all up over years. So then
Speaker 1: just in the last minute that we have with you,
Speaker 1: the confidence that you have based on your reporting that
Speaker 1: there will be widespread adoption of this on a state
Speaker 1: or or local level versus that federal level that you'll
Speaker 1: will refer to earlier. So we already have these programs
Speaker 1: in Connecticut, in d C. And um, we think it
Speaker 1: will probably get I think it's going to get some
Speaker 1: momentum in some blue states, UM, a few others. New
Speaker 1: York has there's a proposal there as well. So I
Speaker 1: think it's all going to depend on how maybe how
Speaker 1: this money is going to be used and is it
Speaker 1: actually going to make a difference. Um, you know, I
Speaker 1: think the results will maybe create the political will to
Speaker 1: do something much more significant on the federal level if
Speaker 1: this is a successful policy, right, Like I do think
Speaker 1: everybody's gonna be watching right as it rolls out, as
Speaker 1: it's put to use, and the difference that makes in
Speaker 1: these individuals lives. Let's hope it does. Um, great story, Ben,
Speaker 1: Thank you so much. Ben Stepherman, Personal Finance editor, Bloomberg News,
Speaker 1: along with Chill Weber, Editor Bloomberg business Week. Check out
Speaker 1: the new issue of Business Week. It is the equality issue.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio. Well, the
Speaker 1: oracle of Omaha himself, we know he likes to get
Speaker 1: greedy when others are being too fearful, which may explain
Speaker 1: Berkshire Hathaway raising its stake in Occidental Petroleum by more
Speaker 1: than eighteen million shares. Are more shares, I should say
Speaker 1: this week. So let's find out and put it into
Speaker 1: context of what Buffett and Berkshire up to. Let's bring
Speaker 1: catch to Glinsky. She's finance reporter at Bloomberg News. She
Speaker 1: follows all things Warren Buffett and Berkshire and the finance base,
Speaker 1: along with Justin Zach's Bloomberg News Equities report at Bloomberg News,
Speaker 1: both here in our interactive broker studio. Alright, Cat to
Speaker 1: lay it out for us, what is Berkshire up to?
Speaker 1: It's been a busy past few weeks, Berkshire, they have
Speaker 1: been that way. Yeah, they've been all in on Occidental stock.
Speaker 1: And even this week Monday through Wednesday, they bought um
Speaker 1: eighteen point one million additional shares. So now they have
Speaker 1: a total common equity stake, have seven point one billion
Speaker 1: dollars in Accidental and that's just in addition to the
Speaker 1: ten billion dollars in preferred stock and warrants they already
Speaker 1: owned in the company. You know you you brought up.
Speaker 1: Can I just say, Timmy, you brought up on our
Speaker 1: planning call? You're like, what was it? Somebody who was
Speaker 1: just selling? Right? Yeah? So I I saw this and
Speaker 1: I was like, wait, So I saw this, you know
Speaker 1: a couple of weeks ago when I con sold, and
Speaker 1: I was like, Okay, maybe it's time to get out
Speaker 1: of the energy trade. But what is Buffett getting into
Speaker 1: the energy trade? Signal justin right now about that it
Speaker 1: still has room to run because it's up. What it's
Speaker 1: the only sector that's up this here, Yeah, it's up.
Speaker 1: The sector itself is up thirty percent, while Occidental is
Speaker 1: up over It's the uh biggest gainer among all SMP
Speaker 1: five components. Haliburton is the next at So that can
Speaker 1: just show you and what it What's interesting for Buffett
Speaker 1: is most people think of Buffett as a value investor.
Speaker 1: You don't think of him as chasing these huge returns.
Speaker 1: And I think with these recent purchases Monday through Wednesday,
Speaker 1: he did wait for oil came down from about one
Speaker 1: in two about and he brought back in. But it's
Speaker 1: a small blip compared to how much it's run, So
Speaker 1: he must really think that there's, you know, still a
Speaker 1: lot of room for the stock to run, and there's
Speaker 1: still a lot of value. Meanwhile, other investors who have
Speaker 1: kind of been in this trade for a while on
Speaker 1: the reopening, you know, they were looking at from the
Speaker 1: demand side. They're saying, well, we're reopening all this and
Speaker 1: the energy talk stocks have done so well. So when
Speaker 1: we came to the invasion of Ukraine, uh, they you know,
Speaker 1: now we have a supply issue that's exacerbating the whole thing.
Speaker 1: But I think a lot of investors are a little
Speaker 1: bit skittish and saying, well, we don't want to We've
Speaker 1: already done so well, but the dynamics have changed so
Speaker 1: much recently that there could still be a huge amount
Speaker 1: of room to run on the upside. It's Kate Cat
Speaker 1: rather help me out here, because I'm looking at Occidental,
Speaker 1: Like you know, we just heard from Justin that I
Speaker 1: do think of Warren and Berkshire as like value plays,
Speaker 1: and yet it's been on such a tear. What's the
Speaker 1: strategy here? How does this fit into the portfolio? Well,
Speaker 1: I think you can hurt him back to his apple stock.
Speaker 1: Everyone was like, oh, you're getting an apple too late,
Speaker 1: and then now you look at the stock, it was
Speaker 1: a really good bet. So I think we have to
Speaker 1: caution ourselves a little bit when we're like, oh, is
Speaker 1: he getting into late or has it you know, been
Speaker 1: on too much of a run. But I really think here,
Speaker 1: I mean, Buffett knows the energy business pretty well. You know,
Speaker 1: they have a huge obviously power business. But you know
Speaker 1: Greg Abel, his key deputy and his likely successor, they
Speaker 1: know this space well. They've been around Occidental for a
Speaker 1: while and Buffett and Berkshire are way more of an
Speaker 1: industrial behemoth than they used to be. And I think
Speaker 1: he's always on the hunt for an elephant sized deal
Speaker 1: and who knows, you know, um, if he's would he
Speaker 1: buy who knows? Yeah, we we don't have any confirmation
Speaker 1: about any means, but I'm not it's a big company,
Speaker 1: and you know, I think there always on market cap
Speaker 1: and I think Buffet's always on the hunt. So I
Speaker 1: think we shouldn't ever rule out. Yes, he has a
Speaker 1: hundred nearly a hundred fifty billion to put to work,
Speaker 1: and I think I think there's a chance that you know,
Speaker 1: he keeps going after the stock and it becomes a
Speaker 1: really good bet for him, like Apple. Obviously you know
Speaker 1: did has performed well, but but I also think he
Speaker 1: wants to get close to some big companies. And I
Speaker 1: think about listen, we are all going back and forth
Speaker 1: every day about alternative energy fossil fuel world, right, Like
Speaker 1: we understand climate change and the push away, but we
Speaker 1: also know, right tim Lett, it's gonna be a while
Speaker 1: before you can totually fully make that pivot off a
Speaker 1: fossil fuel it is. But justin I wonder how crowded
Speaker 1: this trade is because we saw the way that oil
Speaker 1: bounced back to about a hundred dollars a barrel yesterday.
Speaker 1: It's higher today. Um. But you know, on Quick take
Speaker 1: Stock we talk a lot about the retail investors getting
Speaker 1: into the energy stocks over the last week. And I'm
Speaker 1: and I'm wondering what your data tells you, what your
Speaker 1: reporting tells you about how crowded the trade is. Well,
Speaker 1: it's not as crowded as you might think. Bank of
Speaker 1: America reported recently that that active fund managers there are
Speaker 1: still thirty underweight the sector. And the other thing to
Speaker 1: look at this, this is really this trade is really
Speaker 1: a trade on oil. Occidental had been hedging their oil
Speaker 1: positions up until the end of last year and they
Speaker 1: let those hedges roll off. So now if the price
Speaker 1: of oil goes up, there completely exposed. And what will
Speaker 1: happen there is that that the oil producers have less
Speaker 1: incentive to produce more. They want the price to go higher,
Speaker 1: and it will that will push the price higher in
Speaker 1: addition to uh problems of supply constraints in labor shortages.
Speaker 1: Hey cat. In terms of Berkshire and Buffett's biggest holdings,
Speaker 1: this is not the top but number eight in terms
Speaker 1: of their common stock bets and so, and that's sizeable
Speaker 1: given that they at the end of the year one
Speaker 1: they didn't have a single common stock holding in this company.
Speaker 1: What are other energy bets? Effects absolutely say that again
Speaker 1: they didn't have any common stock of Incidental. At the
Speaker 1: end of the year, they did have it, so they
Speaker 1: had ramps. Yes, it's it's a big recent ramp up.
Speaker 1: And he's even said publicly he really liked the CEO's
Speaker 1: last earnings call, and so I think that you know,
Speaker 1: he's signaling that it's not just an in and outplay
Speaker 1: or a simple market bet. Right now, although you know,
Speaker 1: obviously Berkshire can and might change his mind. Run by
Speaker 1: a woman, I'm just going to say that other energy
Speaker 1: bets Cat Chevron is one of the big, big common
Speaker 1: stock holdings. So yeah, so Berkshire is exposed in general
Speaker 1: to the energy market, the oil market, and then obviously
Speaker 1: they own their own energy business. And I think to
Speaker 1: your point earlier of you know, he is really into
Speaker 1: this idea that it's going to be a long time
Speaker 1: until we really see sort of this renewable energy kind
Speaker 1: of dominance, and and Berkshire Energy is doing a lot
Speaker 1: in that space. But I think, you know, he's willing
Speaker 1: to bet on these companies that may be still very
Speaker 1: tied to oil. And you know, as we were talking
Speaker 1: about the war, I mean, you see the world rethinking
Speaker 1: about where they're getting their energy from. And there was
Speaker 1: some headlines just about you know, the moves France is
Speaker 1: making and everybody's rethinking about it and their exposure and
Speaker 1: their vulnerability. Um, guys, thank you so much. Well they appreciate.
Speaker 1: Ketch Glensky, finance reporter at Bloomberg News, along with Justin
Speaker 1: Zach's Bloomberg News equities reporter here in the studio. Yeah,
Speaker 1: but you let me drive now, all right, pleasels, I
Speaker 1: want to drive. It's good question. Drive is the drive
Speaker 1: to the clothes? Well Briar on Bloomberg Radio, all right, everybody,
Speaker 1: just about ten minutes left in today's trading session. You
Speaker 1: heard Charlie breaking down, uh the numbers where you see
Speaker 1: equities building on yesterday's gains. Really some out performance? Well,
Speaker 1: I guess actually as about one percent higher, as Charlie
Speaker 1: mentioned on the S and P and the Dow and
Speaker 1: the NAZAC. So let's get to it. Vance Howard is
Speaker 1: in the house. He's portfolio manager CEO at Howard Capital Management,
Speaker 1: roughly five billion in assets under management, and he's here
Speaker 1: in our Interactive broker studio. So nice to have you
Speaker 1: here with Tim and myself. Nice to have you in studio.
Speaker 1: How are you? Thank you, Thank you so much for
Speaker 1: having me. It's it's real. Well, it's great to have
Speaker 1: you here. Um, also thrilling depending on the day. Are
Speaker 1: the market's a lot of volatility and it's interesting to
Speaker 1: see the reaction coming off of the FED meeting. How
Speaker 1: do you see it? What's the outlook here for equities
Speaker 1: in particular? Well, you know, Carol, we're we're in a
Speaker 1: down trend, so we're our proprietary indicated. The h C
Speaker 1: on boline is still negative. So we're holding about thirty
Speaker 1: thirty five were sent in cash right now and the
Speaker 1: funds across the board, my two et s or what
Speaker 1: do you normally care held? Usually we're hundred invested in
Speaker 1: unless the h C on biolines negative. Now the a
Speaker 1: c bolin is negative, we we pull pull money off
Speaker 1: HTN byline. H C on biolin is our proprietary trend indicator,
Speaker 1: and it tells us it doesn't fire off a signal
Speaker 1: very often. But I fired off a negative single on
Speaker 1: January nineteenth of this year, So we were pulling money
Speaker 1: away from the markets and just sitting it out and
Speaker 1: letting the market. What is it looking, it's proprietary. Can
Speaker 1: you give us a hint? What is it? Well, it's
Speaker 1: it's just a good, solid intermediate term trend indicator. Basically,
Speaker 1: it's very, very in my opinion's best one ever built.
Speaker 1: I built it back in the nineties. We've never ever
Speaker 1: sat through a bear market in the history of Howard
Speaker 1: Capital to two thousand and to two thousand, eight hundred
Speaker 1: sit in cash. You're in the height of the pandemic.
Speaker 1: Were Yeah, it's called capital preservation. It is I want
Speaker 1: I want to learn more about well, no, I want
Speaker 1: to learn more about it because you know, if you
Speaker 1: built this in the nine nineties, Uh, ostensibly you'd be
Speaker 1: adding different signals to it as the data gets better
Speaker 1: and you get more forces alternative data. Oh, Tim, we
Speaker 1: used to run this thing on a big chief tablet,
Speaker 1: pen and paper, and then now it's computer driven. And
Speaker 1: now we've got seven computer programmers working on a seven
Speaker 1: trying to make it better and better and better. So
Speaker 1: you know, during the health of the pandemic, we were
Speaker 1: sixty percent in cash when the market was bottoming out.
Speaker 1: Do you know when you get back in, That's the
Speaker 1: great part what we built it is to be slow
Speaker 1: to get out, but very fast to get back in.
Speaker 1: Because what I'm trying to do, Tim, is I'm always
Speaker 1: trying to catch the curve of the turn of the market.
Speaker 1: I'm not so I can't call a topper bottom and
Speaker 1: we're not doing that. I just want to stay in
Speaker 1: eighty five percent of the good and out of eighty
Speaker 1: five percent of the bad, and I'll have a much
Speaker 1: more smoother ride with higher return, and we are not yet.
Speaker 1: Your argument two is that we're not yet to the
Speaker 1: to buying into that curve when the market's gonna start
Speaker 1: going up again, despite the fact that this is the
Speaker 1: third day in the row of the sp rallying. Yeah,
Speaker 1: we were not there yet. No, the trends clearly down.
Speaker 1: It's uh, you know, sometimes you get a dead cap bound.
Speaker 1: I hope the bottoms in. There's a good chance that
Speaker 1: maybe we put the bottom in February. Who knows, Maybe
Speaker 1: that's what this is. And then I was so glad
Speaker 1: just to get a rally we did, Carol, you were
Speaker 1: off that day. We called that a cat bounces, aren't it. Hey,
Speaker 1: The methodology hasn't changed, though, it's always evolving, because you know,
Speaker 1: you can't stay static. The markets are faster now than
Speaker 1: they've ever been. You know, you're not trading against the
Speaker 1: three of us aren't trading against one another anymore. We're
Speaker 1: trading against a computer. So you're gonna have to get
Speaker 1: faster and faster. Everything we do has to have a
Speaker 1: quantitative edge to win. And and you got to be
Speaker 1: fast anymore. And you can't sit there and being the
Speaker 1: guessing game. You gotta get in the odds game like
Speaker 1: we are all right? So I mentioned, um, you've got
Speaker 1: a bunch of fun. Your Tactical Growth fund and dividend
Speaker 1: Sector plus fund each beating just about all of its
Speaker 1: peers in its category of the past three years, putting
Speaker 1: them in the percentiles, respectively. Tactical Growth Fund returning on
Speaker 1: average annually according to our data. Dividends Sector plus fund
Speaker 1: returning on average annually. That's not too shabby. Thank you,
Speaker 1: You're welcome. So okay, so what is your um? What
Speaker 1: is it showing you now that are you putting money
Speaker 1: to work or you're not? You still? Are you still
Speaker 1: pulling money? We don't ever buck buck the h C
Speaker 1: on bottling it's negative. We're gonna sit on our hands
Speaker 1: and sit in cash period and tell it. Tell it
Speaker 1: gives us a firm signal to go along again. But
Speaker 1: could that cash position grow? You could, Yes, if the
Speaker 1: bottlene continues to get more negative, it would grow. And
Speaker 1: we have been as much as a hund percent in cash,
Speaker 1: like I said earlier, were cash in two thousand and eight,
Speaker 1: but during the pandemic we were only sixty percent in cash.
Speaker 1: But it felt pretty good. The day the doll was
Speaker 1: down I think twelve and we were down three, So
Speaker 1: that was a pretty good feeling. Okay, let's talk you
Speaker 1: had something. No, I just I'm trying to figure out.
Speaker 1: So you're watching, so you're in cash, you could go
Speaker 1: into more cash, which is why when we talk about
Speaker 1: dead cat bounds. You know, we've had a lot of
Speaker 1: questions and not questions, but a lot of debate about
Speaker 1: is this how we hit the bottom? Uh? And hard
Speaker 1: to say. Did anything change in terms of your metrics
Speaker 1: or your indicator off of the FED meeting? No? No,
Speaker 1: the trainer was clearly down, still down. I would still
Speaker 1: be sitting in thirty percent cash. It had no effect
Speaker 1: other than the fact we're getting a rally, which I'm
Speaker 1: glad to have. Well, this two day rally. I mean,
Speaker 1: does it make you say I want to put some
Speaker 1: money to work. No, not until the HC on bioline.
Speaker 1: That's part of being disciplined, and the discipline is the
Speaker 1: key to winning in this game. If you're not disciplined,
Speaker 1: you look, you're flying, you're an instrument rated, you don't
Speaker 1: care what you see in front of you. It's just
Speaker 1: what it says, is the HC M byline? Is it
Speaker 1: binary like negative or positive, or their different degrees of
Speaker 1: it and different degrees. And that's a good point. We
Speaker 1: do have three different stages and one, so we tear out.
Speaker 1: We don't play the all or none game. The only
Speaker 1: time we've been a hunter percent in cash with two
Speaker 1: thousand and eight, and that's when when that is a quantitative,
Speaker 1: it's not more it's more fundamental. When the banks are imploding,
Speaker 1: we're We're out. We're just out. We're not anywhere near that. Now.
Speaker 1: This is just a garden variety of correction, and it
Speaker 1: may be turned into a bear market. It may just
Speaker 1: be a nasty little correction. I'm just not that worried
Speaker 1: about it. By the way, we had three great years, right,
Speaker 1: So here's you know, I Tim and I talk a
Speaker 1: lot off air because I know you're not supposed to
Speaker 1: time the market, but I mean, after a year like
Speaker 1: we had last year, like I feel like, yes, you
Speaker 1: could kind of time the market and pull money out,
Speaker 1: because even if you just had a great year, why
Speaker 1: not take a breather and see where this goes. Are
Speaker 1: you saying yes or now I'm saying that, I'm saying
Speaker 1: that that I don't. I'm saying I follow the h
Speaker 1: C on byline. If it was still positive, i'd in
Speaker 1: right now, you would be yeah, But it's not, so
Speaker 1: I'm negative. But it's creating a vast amount of great bias, Carol.
Speaker 1: I mean, I'm sitting in thirty percent of cash and
Speaker 1: some of these stocks are off. Think of my gunpowder
Speaker 1: coming back here. Well, does your indicator play for individual stocks?
Speaker 1: And absolutely sectors mainly? Okay, so might you put money
Speaker 1: to work in some sectors? Yes? I would any sectors
Speaker 1: you want to share with us? Tech tech, what kind
Speaker 1: of tech? And and and and the and the semiconductor index.
Speaker 1: We can look at all these tech stock look at
Speaker 1: you know, I would consider Salesforce Tech Company. They're I mean,
Speaker 1: they're beaten to death. Paypals looking great. Microsoft is a
Speaker 1: screen once it turns rough from its high. But don't
Speaker 1: buy until the bioline is positive, because don't find the positive. No,
Speaker 1: it's negative. It's it's negative, negative, negative. As long as
Speaker 1: the overall bioline is positive, we won't buy. Now. Once
Speaker 1: we do have a bi signal, then we can start
Speaker 1: to pick out what we're gonna Has the byeline ever
Speaker 1: been wrong? Of course? And then you can say exactly
Speaker 1: what it is. The boeling is wrong about the time,
Speaker 1: it's right about seventy percent of the time. I can
Speaker 1: tell you what your odds are of winning. When the
Speaker 1: by lines positive, your odds are seventy three percent of
Speaker 1: it going higher cent that it's not. When the by
Speaker 1: line is negative, your odds of it going down to
Speaker 1: negative or seventy in your odds or for reverse to
Speaker 1: So I'm not gonna take a trade when the odds
Speaker 1: on scent that is going to move higher. Because the
Speaker 1: trend of the market moves four out of five stocks
Speaker 1: the direction of the trend alright, So come back. Let
Speaker 1: us know when it goes either positive or more negative.
Speaker 1: Let me share it with you. Let me share it
Speaker 1: with you. Look forward to it travels back home. Vance Howard,
Speaker 1: Portfolio Manager CEO at Howard Capital Management, joining us. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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