WEBVTT - Inflation, Health Tech, And Alcoa’s Strong Q4 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.680 at Bloomberg dot com slash podcast. You're kind of a 0:00:22.760 --> 0:00:25.239 rough start to the year for markets here, and uh, 0:00:25.440 --> 0:00:27.200 you know, it's been a while since these markets have 0:00:27.320 --> 0:00:31.160 had to deal with a rising interest rate environment, and 0:00:31.280 --> 0:00:33.880 people are concerned about, you know, how these risk assets 0:00:34.159 --> 0:00:36.800 really perform here in that type of environment. Let's check 0:00:36.840 --> 0:00:38.840 in with a professional who does this for a living, 0:00:38.920 --> 0:00:42.720 Jim Lowell. He's the c i O of Advisor Investments. Jim, 0:00:42.720 --> 0:00:44.879 thanks so much for joining us here. I love to 0:00:44.960 --> 0:00:49.440 get your thoughts, like, what are you telling your clients 0:00:49.680 --> 0:00:52.159 as you know, you kind of start two and this 0:00:52.200 --> 0:00:54.880 is gonna be a different environment than what most investors 0:00:54.880 --> 0:00:56.520 have had to deal with for the last I don't 0:00:56.520 --> 0:01:00.720 know decade plus. What do you say, Jim, Well, one 0:01:00.760 --> 0:01:02.959 of the things we're saying is that any sort of 0:01:03.000 --> 0:01:06.600 selling on short term rumors or news is welcomed by 0:01:06.680 --> 0:01:09.120 us because of course, as long term investors, that means 0:01:09.440 --> 0:01:11.360 we can add to our best ideas at this kount 0:01:11.360 --> 0:01:13.680 of price is something that was pretty difficult to do 0:01:13.800 --> 0:01:16.520 over the last year or two, not to mention over 0:01:16.560 --> 0:01:18.800 the past decade where everything was going up like a 0:01:18.840 --> 0:01:22.080 hockey stick. In particular, of course six or seven stocks 0:01:22.120 --> 0:01:25.640 inside of the SMP. We're also pointing out that inside 0:01:25.680 --> 0:01:28.679 the SMP those six seven stocks that really drove its 0:01:28.760 --> 0:01:32.760 performance mass the fact that's the vast majority of stocks 0:01:32.800 --> 0:01:37.120 are either in correction or even crash level discounted pricing. 0:01:37.640 --> 0:01:40.240 There's a lot of opportunity both we think on the 0:01:40.280 --> 0:01:43.520 growth and the value side of offense. UH is you 0:01:43.600 --> 0:01:48.600 are a discipline, patient, long term investor. For traders, I 0:01:48.640 --> 0:01:52.400 think i'd be, I'd be exceptionally cautious, but we're not traders, 0:01:52.560 --> 0:01:58.040 so we are relatively optimistic. Relatively optimistic, Jim. There's a 0:01:58.080 --> 0:02:01.320 lot of talk about a d basis point rate hike 0:02:01.480 --> 0:02:04.320 in March when you have the bond market really just 0:02:04.320 --> 0:02:07.480 posing in twenty seven basis points. But of course traders 0:02:07.480 --> 0:02:10.040 in particular making the leap that that means perhaps to 0:02:10.880 --> 0:02:13.320 rate hikes wrapped into one in as soon as March. 0:02:13.800 --> 0:02:19.320 Is that a line of thinking that you're taking seriously? Well, 0:02:19.360 --> 0:02:23.880 we certainly look at all the opinions, both both respected 0:02:23.960 --> 0:02:27.600 and simply the those that are broadcasts and red large 0:02:27.639 --> 0:02:30.639 on the daily headlines. But we were patient, will will 0:02:30.720 --> 0:02:33.000 let the data and the FEDS come to us. The 0:02:33.080 --> 0:02:35.519 Fed clearly as broadcasts the fact that they are going 0:02:35.560 --> 0:02:40.320 to be tapering fast there raising rates more, potentially raising 0:02:40.400 --> 0:02:43.600 rates at a higher eclip than is expected. Any consensus 0:02:43.639 --> 0:02:46.400 still expects the quarter point. I can first go around, 0:02:46.520 --> 0:02:49.520 not a not a half point, but whatever the said 0:02:49.639 --> 0:02:51.400 in fact does. We think it's a little bit different 0:02:51.480 --> 0:02:55.120 this time around. They're not trying to fend off any 0:02:55.160 --> 0:02:58.160 sort of recessionary pressure. They're trying to tamp down inflation. 0:02:58.280 --> 0:03:01.640 And investors, if they us look at the headlines, would 0:03:01.639 --> 0:03:04.440 think that inflation was nothing but negative news for them. 0:03:04.480 --> 0:03:08.000 But of course it infences organic growth and no organic 0:03:08.040 --> 0:03:11.160 growth that the set is clearly concerned that things might 0:03:11.200 --> 0:03:14.800 get overheated. So that's an environment where we think investors 0:03:14.840 --> 0:03:19.280 clearly can can take advantage of other people's fears. A 0:03:19.440 --> 0:03:24.000 Jim Worth just kind of getting starting beginning earning season here, 0:03:24.240 --> 0:03:26.000 what are you looking for in terms of earnings, I mean, 0:03:26.000 --> 0:03:29.960 how criticals of you to get some really strong earnings 0:03:30.000 --> 0:03:32.800 here in terms of trying to think about that pe 0:03:33.000 --> 0:03:36.800 ratio for this market. So we like to say that 0:03:36.880 --> 0:03:39.840 earnings drive the markets because for the most part they do, 0:03:39.960 --> 0:03:44.000 although obviously subject to momentum driven headline and news. What 0:03:44.080 --> 0:03:47.000 we're looking for this time clearly we're looking at the 0:03:47.120 --> 0:03:51.440 degree to which top bottom line sales were or were 0:03:51.480 --> 0:03:55.480 not impacted by the latest virus variant um, but we're 0:03:55.520 --> 0:03:58.360 also very focused on guidance. We want to know where 0:03:58.440 --> 0:04:02.640 our best business leaders see their current state and also 0:04:02.800 --> 0:04:04.560 where they think they're going to go from here in 0:04:04.560 --> 0:04:07.200 the next quarter or two. It still remains a very 0:04:07.320 --> 0:04:12.200 difficult environment in which to forecast from from virtually any 0:04:12.200 --> 0:04:15.240 business inside of any industry where one thinks one will 0:04:15.280 --> 0:04:17.839 be just a quarter or two ahead. But we're definitely 0:04:18.200 --> 0:04:21.760 looking at i would say guidance, not more so but 0:04:21.880 --> 0:04:25.320 equally as much as we're looking on how companies are 0:04:25.360 --> 0:04:29.120 being able to continue to manage in the pandemic slash 0:04:29.240 --> 0:04:32.520 endemic that we're in. So how do you hedge against it, 0:04:32.839 --> 0:04:35.280 I mean bets into do you just do it through 0:04:35.279 --> 0:04:37.719 the bond market. Do you through do it through Big Tex? 0:04:37.800 --> 0:04:40.320 Do you do it through commodities for example, oil, copper? 0:04:40.600 --> 0:04:43.560 How do you How do you protect yourself so you 0:04:43.560 --> 0:04:45.159 can do it through all of those. But we're big 0:04:45.200 --> 0:04:48.760 believers that bonds are great bulwarks, great bluffers for stock 0:04:48.800 --> 0:04:54.160 market volatility. Cash for outright defense but also for opportunity. 0:04:54.560 --> 0:04:57.360 We think cash will definitely play an attractive role and 0:04:57.400 --> 0:05:01.240 investors portfolio this year for both of those reasons. Um 0:05:01.360 --> 0:05:04.080 we would we would probably be hesitant in terms of 0:05:04.120 --> 0:05:07.400 trying to go on the commodity side to hedge our 0:05:07.480 --> 0:05:10.800 our bets, mainly because the commodity side is purely dependent 0:05:10.880 --> 0:05:15.000 upon inflation lingering higher and longer than we think it 0:05:15.160 --> 0:05:18.080 may yet do. That said, we do have some tactical 0:05:18.080 --> 0:05:22.279 training portfolios that that are open to both commodities and 0:05:22.320 --> 0:05:26.800 currencies as ways of hedging stock market volatility. Jim, I'm 0:05:26.839 --> 0:05:29.400 willing to take on a little bit of extra risk here. 0:05:29.560 --> 0:05:35.200 Should I be looking at emerging markets? I think emerging 0:05:35.279 --> 0:05:39.360 markets established foreign markets, China, which is a market unto 0:05:39.400 --> 0:05:43.680 itself all present long term investors good opportunities here and now, 0:05:44.440 --> 0:05:47.560 even out of this difficult starting game for the US market. 0:05:47.560 --> 0:05:51.760 In two we've seen the EFA that the broad established 0:05:51.760 --> 0:05:56.840 foreign market measure UH even relatively greater strength than our own. 0:05:56.880 --> 0:05:59.280 We know there are opportunities, we know there are rubies 0:05:59.320 --> 0:06:03.080 in the rubble across the global global landscape, but you're 0:06:03.120 --> 0:06:07.640 gonna have to be highly selective. We think finding good 0:06:07.720 --> 0:06:11.400 active managers with stellar track records in being able to 0:06:11.440 --> 0:06:15.040 turn over stones in the international market makes for for 0:06:15.080 --> 0:06:19.800 a good purchase idea here, you know, fascinating stuff. I 0:06:19.800 --> 0:06:21.560 love that you talked about emerging markets a little bit. 0:06:21.600 --> 0:06:23.800 I want to bring it back to the equity market 0:06:23.839 --> 0:06:26.160 because a lot of people, and I think I can 0:06:26.279 --> 0:06:28.480 throw Paul Sweeney into this as well, is perhaps a 0:06:28.520 --> 0:06:30.880 little bit more optimistic on the value trade. The idea 0:06:31.520 --> 0:06:34.360 the airlines, cruise lines, hotels essentially are going to come back. 0:06:34.400 --> 0:06:37.839 But we started that kind of thinking at the beginning 0:06:37.839 --> 0:06:40.680 of and look how it turned out. What are your 0:06:40.720 --> 0:06:45.000 thoughts on that? Well, my thoughts are that Omicron is 0:06:45.040 --> 0:06:47.440 not going to be the last variant, and that we 0:06:47.480 --> 0:06:49.839 are going to have to continue to be able to 0:06:49.920 --> 0:06:53.600 battle the headwinds of a virus that's clearly capable of 0:06:53.680 --> 0:06:57.320 awarding our our best efforts and hopes uh, in terms 0:06:57.400 --> 0:07:00.760 of being more disruptive for a longer period of time 0:07:00.839 --> 0:07:03.040 than I think anyone priced in last year. We don't 0:07:03.080 --> 0:07:07.120 think that that changes this year. Rather than be beholden 0:07:07.200 --> 0:07:10.520 to sectors that obviously would have a firelit under them 0:07:10.520 --> 0:07:13.480 if we could finally turn the pandemics corner, we like 0:07:13.600 --> 0:07:16.640 to invest in managers who have good track records being 0:07:16.680 --> 0:07:21.679 able to find decent value in growth stocks and growth 0:07:21.920 --> 0:07:26.000 in value stocks across across the spectrum. So we don't 0:07:26.000 --> 0:07:29.000 think this is a time to be either style specific 0:07:29.600 --> 0:07:33.680 or to try and that uh, you know, even quarter 0:07:33.800 --> 0:07:38.080 of the ranch on one major value oriented theme. But 0:07:38.200 --> 0:07:42.560 that's we have begun to increase the waiting within our 0:07:42.640 --> 0:07:45.840 overall portfolios on the value side of the ledger. We 0:07:45.920 --> 0:07:48.680 definitely think there's some opportunity there. Jim, Before we let 0:07:48.720 --> 0:07:51.200 you go, i'd love to just get your number one 0:07:51.360 --> 0:07:54.880 message you're going to your clients with today, because there's 0:07:54.960 --> 0:07:59.880 so many cross currents out there in the market. So 0:08:00.160 --> 0:08:03.320 my number one messages don't let short term selling trump 0:08:03.560 --> 0:08:07.320 long term views. The reality is that what happens today 0:08:07.440 --> 0:08:10.760 is going to matter infinite, desimally less. But you think 0:08:10.760 --> 0:08:13.760 it will three five, ten years down the road, what 0:08:13.880 --> 0:08:16.880 will matter most is sticking to your discipline, hopefully being 0:08:16.880 --> 0:08:20.520 diversified so that you can smooth out the volatility. Come 0:08:20.600 --> 0:08:23.520 what may, there will always be volatility, and achieve the 0:08:23.560 --> 0:08:26.560 goals you hope to achieve while still being able to 0:08:26.560 --> 0:08:29.160 sleep well at night. All right, Jim, thank you so much. 0:08:29.200 --> 0:08:33.120 We appreciate that. Jim Lowell, Chief investment Officer for Advisor 0:08:33.240 --> 0:08:37.280 Investments are based up in Newton, Massachusetts. A lot of 0:08:37.280 --> 0:08:45.520 smart folks up there in the Boston Greater Boston area. Okay, folks. 0:08:45.679 --> 0:08:51.000 The Aluminium Company of America otherwise known as ALCOA, they 0:08:51.000 --> 0:08:54.640 are based in Pittsburgh, one of the great American companies. 0:08:54.960 --> 0:09:00.000 Stock reported better than expected results today, Stocks up two today, 0:09:00.040 --> 0:09:04.439 A up a hundred and sixty seven percent Aluminium? Who 0:09:04.440 --> 0:09:06.839 would have thunk it up a hundred sixty seven percent 0:09:06.920 --> 0:09:09.440 over the trailing twelve months. Our next guest gets a 0:09:09.559 --> 0:09:13.120 b A in Industrial Engineering and Operations research from Virginia Tech. 0:09:13.160 --> 0:09:15.560 Who does that? And then get some masters at Carnegie 0:09:15.559 --> 0:09:19.120 mill and so I'm thinking this person likes numbers. Bill Applinger, 0:09:19.160 --> 0:09:22.480 he's a CFO and executive vice president for ALCOHOLA Hey, Bill, 0:09:22.520 --> 0:09:24.160 Thanks so much for joining us. I know you're you're 0:09:24.200 --> 0:09:26.960 busy these days with your earnings. Here just give us 0:09:26.960 --> 0:09:30.320 a snapshot of what you guys reported with your quarterly 0:09:30.320 --> 0:09:34.720 earnings and then more importantly with your guidance. Hey, Paul, thanks, 0:09:35.000 --> 0:09:38.320 thanks for that great introduction, and thanks for having me on. 0:09:38.920 --> 0:09:43.160 We had a strong fourth quarter recorded close to a 0:09:43.200 --> 0:09:48.520 billion dollars of adjusted but UH adjusted net earnings were 0:09:48.520 --> 0:09:52.320 two dollars and fifty cents of share. We provided guidance 0:09:52.600 --> 0:09:55.000 UH for the first quarter that said it would be 0:09:55.040 --> 0:09:58.280 as strong as as the fourth quarter. UH. We're seeing 0:09:58.400 --> 0:10:02.199 some very good under the ying market fundamentals in our 0:10:02.240 --> 0:10:06.359 in our industry, riding the benefits of some higher prices. 0:10:06.360 --> 0:10:09.200 But over the last five years we've really spent a 0:10:09.200 --> 0:10:11.920 lot of time trying to transform the company into the 0:10:11.960 --> 0:10:16.880 company that has become This year and UH one, the 0:10:16.880 --> 0:10:19.800 fourth quarter really capped off a very strong one that 0:10:19.880 --> 0:10:24.120 was transformative for the company. Talk to us a little 0:10:24.120 --> 0:10:28.680 bit about how you're pricing in simply some of these 0:10:28.760 --> 0:10:30.959 kind of new supplies that may or may not come. 0:10:31.000 --> 0:10:34.160 In December, you halted, and I say you'll CoA halted 0:10:34.320 --> 0:10:37.079 their primary aluminum production at its plant in Spain. You're 0:10:37.080 --> 0:10:39.840 also dealing with cut output from of course you're the 0:10:39.840 --> 0:10:42.719 rest of Europe and China. On top of that, you're 0:10:42.760 --> 0:10:46.319 dealing with potential conflict between Russia and Ukraine. How are 0:10:46.400 --> 0:10:50.720 you crunching the numbers on that pretty h WE We 0:10:50.800 --> 0:10:55.320 have seen UH some supply constraints that have come about 0:10:55.440 --> 0:10:58.720 in in Europe. As you alluded to, with the higher 0:10:59.160 --> 0:11:03.160 energy prices in Europe. UH we in Spain had to 0:11:03.559 --> 0:11:06.920 purtail the facility that we have there a little over 0:11:06.920 --> 0:11:11.120 two d thousand metric tons. We have seen significant reductions 0:11:11.120 --> 0:11:14.400 and capacity, and some of our competitors also in Europe. 0:11:15.000 --> 0:11:19.000 UM combine that with some of the overall structural changes 0:11:19.080 --> 0:11:21.920 that we see in China UH in that they are 0:11:22.000 --> 0:11:26.040 capping their their UH their their output to a forty 0:11:26.040 --> 0:11:32.120 five million metric ton capacity cap really combined with some 0:11:32.200 --> 0:11:35.200 of the stronger market dynamics that we're seeing on the 0:11:35.240 --> 0:11:37.960 demand side, has UH has it led to some of 0:11:37.960 --> 0:11:41.240 the higher aluminum prices UH that that we're UH that 0:11:41.360 --> 0:11:46.360 we're seeing today. As far as the Ukrainian situation goes, UH, 0:11:46.640 --> 0:11:50.160 the impacts of that are yet to be determined. However, 0:11:50.480 --> 0:11:53.360 if it does have any impact as far as higher 0:11:53.480 --> 0:11:57.679 energy costs in Europe, that would put further pressure on 0:11:57.720 --> 0:12:01.480 some of the supply side uh in in Europe, and uh, 0:12:01.600 --> 0:12:08.040 aluminum is largely you know, very energy intensive and therefore, uh, 0:12:08.280 --> 0:12:11.360 you know, increased energy costs would put upward pressure on 0:12:11.360 --> 0:12:14.640 on aluminium crisis. So it remains to be term be 0:12:14.720 --> 0:12:18.439 determined based on what the response from other countries will be. 0:12:19.040 --> 0:12:23.040 Bill you mentioned, Uh, you know, aluminium is energy intensive. 0:12:23.160 --> 0:12:26.079 How do you think about your carbon footprint you as 0:12:26.080 --> 0:12:29.199 a company, as an industry you know, I'm sure you're 0:12:29.200 --> 0:12:33.679 getting some question slash pressure from investors and other stakeholders 0:12:34.000 --> 0:12:36.120 about the kind of the whole E s G aspect 0:12:36.200 --> 0:12:38.960 of your business. How do you guys think about that? Oh, 0:12:39.040 --> 0:12:42.160 we think a lot about it, Paul, and the industry 0:12:42.200 --> 0:12:46.320 itself is decarbonizing, uh, and we think we will lead 0:12:46.360 --> 0:12:50.280 the way. We along with our joint venture partner Rio Tinto, 0:12:50.800 --> 0:12:54.960 have launched the technology called Elisis, which is zero carbon smelting. 0:12:55.040 --> 0:12:58.880 So it is a revolutionary process that takes the carbon 0:12:58.960 --> 0:13:03.680 emissions out of the smelting process. And UH we will 0:13:03.760 --> 0:13:07.040 be uh coming out with a commercialized package for that, 0:13:07.160 --> 0:13:09.640 or I should say Ellisish the joint venture will be 0:13:09.840 --> 0:13:13.120 coming out with a commercialized package for that in four 0:13:13.760 --> 0:13:17.720 and that will lead the industry in low carbon technology 0:13:17.880 --> 0:13:22.520 for UH for for aluminum smelting. I'm just looking at 0:13:22.520 --> 0:13:24.439 your forward guidance here. A lot of this is based 0:13:24.480 --> 0:13:28.440 on just stronger aluminium demand. This persistent supply constraints. Any 0:13:28.520 --> 0:13:32.480 concerns around meeting some of that capacity, that's a course 0:13:32.520 --> 0:13:34.760 been a concern we talked for the oil market, for example, 0:13:34.960 --> 0:13:39.000 can you apply the same to aluminum? So on on. 0:13:39.000 --> 0:13:43.160 On the capacity side, um we we have seen very 0:13:43.240 --> 0:13:48.480 strong UH demand growth UH in one across all of 0:13:48.520 --> 0:13:52.400 our end markets. We're projecting that that will continue in 0:13:52.480 --> 0:13:58.000 two UH and we will have demand growth in in 0:13:58.000 --> 0:14:02.560 in the aluminum demand space. UM so we will be 0:14:02.559 --> 0:14:04.400 able to meet some of that by some of the 0:14:04.440 --> 0:14:08.600 restarts that we are currently having in uh IN. Down 0:14:08.600 --> 0:14:11.839 in Brazil, we've announced capacity that will be coming online 0:14:12.440 --> 0:14:15.319 UH later this year in one of our Brazilian operations 0:14:15.360 --> 0:14:19.040 called Alumar. We are also restarting a small amount of 0:14:19.040 --> 0:14:22.760 capacity in Australia. UH so we will be able to 0:14:22.760 --> 0:14:26.400 meet some of that higher demand. In essence, though across 0:14:26.440 --> 0:14:30.720 the industry, we are seeing a deficit of of metal 0:14:30.880 --> 0:14:34.760 going into two about another million and a half metric 0:14:34.880 --> 0:14:39.920 tons of deficits. So that should burn off some of 0:14:39.920 --> 0:14:43.280 the inventories that we see across the industry. Hey Bill, 0:14:43.320 --> 0:14:46.240 When we have members of the corporate C suite on, 0:14:46.320 --> 0:14:49.040 we love to just get a sense of yeah, maybe 0:14:49.040 --> 0:14:51.800 how their businesses has been impact by this pandemic. I 0:14:51.800 --> 0:14:53.880 think so we think about al COHA, this is you know, 0:14:54.240 --> 0:14:59.840 iconic aluminum manufacturing industrial America type company. How is it 0:15:00.040 --> 0:15:02.280 some of the ways that your company, your business, your 0:15:02.360 --> 0:15:06.320 day to day has been impacted by the pandemic. Well, 0:15:06.480 --> 0:15:08.960 when when the pandemic first hit back in February, in 0:15:09.000 --> 0:15:11.960 March of we we took action to make sure that 0:15:12.000 --> 0:15:14.560 we would be able to keep our operations running. It 0:15:14.640 --> 0:15:17.600 has not been easy, especially with the with the latest 0:15:17.800 --> 0:15:23.240 omicron variant UH spreading so rapidly. However, we've not we've 0:15:23.320 --> 0:15:26.840 we've largely not been impacted from an operations perspective. We've 0:15:26.840 --> 0:15:30.200 been able to keep the plants going. We reacted quickly, 0:15:30.280 --> 0:15:33.360 we added shifts, we we did everything we needed to do. 0:15:33.480 --> 0:15:35.720 So a real testament to the folks that are that 0:15:35.760 --> 0:15:37.920 are running our plants that we've been able to keep 0:15:37.960 --> 0:15:41.520 that going the rest of the rest of the organization, 0:15:41.600 --> 0:15:43.920 probably very similar to a lot of the companies that 0:15:44.000 --> 0:15:47.880 you talked to. We've gone to a flexible work policy, uh, 0:15:48.200 --> 0:15:50.440 you know, to to to the credit of many of 0:15:50.440 --> 0:15:53.320 the people at work at Alcoa, we've been able to 0:15:54.000 --> 0:15:57.200 release earnings as quickly as we do even though we've 0:15:57.200 --> 0:16:00.800 been remote. We've done a numerous spawn train actions, we've 0:16:00.840 --> 0:16:04.000 done a lot of corporate activity, announced our first dividend 0:16:04.080 --> 0:16:07.200 in the fourth quarter, and largely uh, much of the 0:16:07.200 --> 0:16:11.200 staff continues to work remotely. And so how about the 0:16:11.280 --> 0:16:14.080 on the labor front? Bill, just quickly thirty seconds? Are 0:16:14.080 --> 0:16:15.440 you okay on the labor front, because we here a 0:16:15.480 --> 0:16:20.560 lot of companies are not the labor front of tell 0:16:20.640 --> 0:16:24.160 you honestly, Paul, the labor front has been difficult, especially 0:16:24.240 --> 0:16:27.440 in certain parts of the world. We've been able to 0:16:27.480 --> 0:16:30.520 work through it. We we do that by making sure 0:16:30.680 --> 0:16:36.040 that our compensation packages are fair and competitive. But I 0:16:36.080 --> 0:16:39.880 really believe that the long term vision of the company 0:16:40.280 --> 0:16:43.760 is one that appeals to people and uh, and we've 0:16:43.760 --> 0:16:47.280 been able to manage through some of the difficult labor environments. Hey, Bill, 0:16:47.280 --> 0:16:49.440 thanks so much for joining us. We really appreciate getting 0:16:49.480 --> 0:16:52.560 some of your time. Bill Opplinger, CFO and executive vice 0:16:52.560 --> 0:16:56.400 president for Alcoa UH company just reported some pretty strong 0:16:56.600 --> 0:16:59.640 numbers of stock has performed very well over the trailing 0:16:59.640 --> 0:17:06.360 twelve You know, I think I'm probably like a lot 0:17:06.359 --> 0:17:09.800 of investors that during this pandemic, I've spent more time 0:17:09.840 --> 0:17:16.959 thinking about healthcare investing, you know, big farmer, biotech, healthcare services, UM. 0:17:17.000 --> 0:17:21.040 Because you think about how well these farma and biotech 0:17:21.040 --> 0:17:24.439 companies did in terms of delivering a vaccine to the 0:17:24.480 --> 0:17:28.120 world in such incredibly short time. UH, it really makes 0:17:28.160 --> 0:17:31.040 you rethink kind of your views of healthcare, and our 0:17:31.040 --> 0:17:33.560 next guest certainly spends a lot of time thinking about 0:17:33.600 --> 0:17:36.840 investing in healthcare. That's Nina dec A, senior research analysts 0:17:36.840 --> 0:17:40.320 at Robo Global. Nina, thanks so much for joining us here. 0:17:40.800 --> 0:17:45.080 I wonder where you guys are thinking about maybe where 0:17:45.200 --> 0:17:51.480 some of the best opportunities are in healthcare right now. Sure, so, UM, 0:17:51.920 --> 0:17:54.280 as you mentioned, there's just been a lot of really 0:17:54.359 --> 0:17:58.720 interesting and impressive UM demonstrations of technology and innovation over 0:17:58.760 --> 0:18:01.640 the last couple of years. With the endemic, rapid adoption 0:18:01.640 --> 0:18:05.439 of telehealth, for example, UM, we've seen a lot of 0:18:05.440 --> 0:18:08.159 companies rise about what we're not hearing. Oh and you 0:18:08.200 --> 0:18:12.119 mentioned the vaccines. Of course, the rapid um UH research 0:18:12.160 --> 0:18:15.119 and development and bringing vaccines to market. Now, as we 0:18:15.160 --> 0:18:18.080 look forward, we've got the next public health crisis, which 0:18:18.119 --> 0:18:22.240 is UH staffing shortages, and that is driving a very 0:18:22.320 --> 0:18:28.639 compelling needs for automation AI, UH data integration technology, robotic solutions. 0:18:28.680 --> 0:18:31.520 So when we look forward on UH. In fact, we 0:18:31.600 --> 0:18:34.199 have a Healthcare Innovation e t S the tickers H 0:18:34.280 --> 0:18:37.879 Tech ht e C. It's comprised of about eighty five companies, 0:18:38.440 --> 0:18:40.439 half of which are small MidCap names that a lot 0:18:40.480 --> 0:18:43.040 of people have never heard of. However they're they're driving 0:18:43.080 --> 0:18:45.639 fast growth. One of which is called both Sarah. This 0:18:45.760 --> 0:18:48.200 is a company that helps to integrate all the different 0:18:48.200 --> 0:18:51.240 medical devices within a hospital and smooth and make the 0:18:51.840 --> 0:18:55.160 nurses workload a lot more efficient. We need this type 0:18:55.160 --> 0:18:57.520 of technology as we move forward to deal with the 0:18:57.560 --> 0:19:00.840 fact that UH, the the US healthcare system alone has 0:19:00.920 --> 0:19:05.920 lost over a half million healthcare workers since February UH 0:19:05.960 --> 0:19:08.000 And then a Striker just announced that they're going to 0:19:08.040 --> 0:19:10.679 acquire both Era. This goes to show that there is 0:19:10.760 --> 0:19:14.840 demand for these these integration capabilities helped here just got 0:19:14.880 --> 0:19:17.520 digitized in the last ten years, and so we're going 0:19:17.560 --> 0:19:20.880 to see a lot of investment dollars going towards digitization 0:19:21.000 --> 0:19:24.800 and integration moving forward. You know, that is fascinating to me. 0:19:24.840 --> 0:19:28.720 The combination of biotech and AI sounds like something from 0:19:30.080 --> 0:19:33.080 perhaps Paul, I mean, Paul and I talk about just 0:19:33.240 --> 0:19:35.639 the kind of very binary response when it comes to 0:19:35.640 --> 0:19:38.320 some of these biotech stocks and getting FDA approvals or 0:19:38.320 --> 0:19:41.760 clinical trial developments or everything. How do you price something 0:19:41.800 --> 0:19:44.560 like that? How do you looking at this the monster 0:19:44.640 --> 0:19:47.800 gains that Paul was mentioning in the biotech space. How 0:19:47.800 --> 0:19:49.639 do you decide if you want to really enter the 0:19:49.680 --> 0:19:52.360 sector at a time when this is of course very 0:19:52.400 --> 0:19:57.920 front and center. Well, interestingly, you mentioned a great entry 0:19:57.960 --> 0:20:00.520 point would be now, uh, if you get the h 0:20:00.560 --> 0:20:03.720 tech portfolio, it's trading at around five and a half 0:20:03.800 --> 0:20:07.520 times next year's sales. Um that that valuation is just 0:20:07.560 --> 0:20:12.520 not sustainable for these high growth technology forward disruptive companies, 0:20:12.920 --> 0:20:15.240 um with with very most of which have very strong 0:20:15.280 --> 0:20:18.720 balance sheets. To two thirds of the portfolio is net 0:20:18.720 --> 0:20:22.480 cash positive. So or I should say it so um 0:20:22.600 --> 0:20:25.919 So as you look forward right now, these stocks have 0:20:26.080 --> 0:20:30.280 all really come in due to concerns about rising interest 0:20:30.359 --> 0:20:33.960 rates inflation. UM tech stocks kind of took a back 0:20:33.960 --> 0:20:36.920 seat last year because people are concerned about companies that 0:20:36.960 --> 0:20:39.919 aren't profitable yet or don't have cash positivity yet. But 0:20:40.000 --> 0:20:44.159 when you look at healthcare innovation, we are only in 0:20:44.280 --> 0:20:47.280 the earliest days. We have just seen one type of 0:20:47.440 --> 0:20:49.879 mr and A therapy come to market, and that is 0:20:49.920 --> 0:20:55.200 the vaccine for coronavirus. There are over twenty other uh 0:20:55.520 --> 0:21:00.159 mRNA therapies that that the company of Maderna had in 0:21:00.240 --> 0:21:02.960 its pipeline and all it took for is one to 0:21:03.040 --> 0:21:04.960 come to market for the rest of these to all 0:21:05.040 --> 0:21:09.600 UH see some some further UM tail winds for that industry. 0:21:09.600 --> 0:21:12.040 And that's just one area. UM. We're going to see 0:21:12.119 --> 0:21:16.160 more adoption of telehealth. We're gonna see early cancer detection. 0:21:16.280 --> 0:21:19.159 There's been over ten billion dollars worth of M and 0:21:19.200 --> 0:21:22.640 A going towards companies who are looking to acquire new 0:21:22.720 --> 0:21:27.240 technology to help detect cancer earlier, and estimated hundred thousand 0:21:27.240 --> 0:21:29.679 lives can be saved each year if cancer is the 0:21:29.760 --> 0:21:33.000 text center. The technology exists and now it's a matter 0:21:33.000 --> 0:21:37.240 of adoption. This is a huge multi billion dollar market opportunity. 0:21:37.560 --> 0:21:39.720 There's a long runway for growth here and this is 0:21:39.760 --> 0:21:42.680 a great entry point you we gotta get you back. 0:21:42.720 --> 0:21:45.160 There's a ton more to talk about when you're talking 0:21:45.240 --> 0:21:47.919 healthcare investing in healthcare, and again, I think a lot 0:21:47.920 --> 0:21:50.720 of folks probably have a greater appreciation for some of 0:21:50.760 --> 0:21:54.080 the opportunities in the healthcare investing space. Nina Decca, senior 0:21:54.119 --> 0:21:58.320 research analysts for Robo Global uh former cell Side analysts 0:21:58.359 --> 0:22:02.720 Piper Sandler. Piper Sandlers all always had really good healthcare 0:22:02.760 --> 0:22:05.080 research and they've trained a lot of good analysts there. 0:22:09.960 --> 0:22:13.159 Today's Bloomberg Markets brought to you by Commonwealth, supporting more 0:22:13.160 --> 0:22:16.880 than two thousand independent financial advisors with the solutions they 0:22:16.960 --> 0:22:20.040 need to grow a thriving business. Commonwealth Go where you grow. 0:22:20.480 --> 0:22:24.080 Visit Commonwealth dot com to learn more. Well. I think 0:22:24.119 --> 0:22:27.080 the first lesson I learned on Wall Street way back 0:22:27.119 --> 0:22:30.360 in six from Johnny Coglan, the head of the block 0:22:30.400 --> 0:22:32.480 trading desk at pain Weber, and probably the most valuable 0:22:32.520 --> 0:22:35.920 lesson is don't fight the Fed. So now I've got 0:22:35.920 --> 0:22:38.159 to fed raising interest rates. This year they kind of 0:22:38.200 --> 0:22:42.639 indicated three. Now the market was telling me four, maybe 0:22:42.680 --> 0:22:46.080 as many as five What is a trader to do? 0:22:46.800 --> 0:22:49.480 What is an investor to do? David Coudla, founder CEO 0:22:49.560 --> 0:22:52.080 and c I O of Mainstay Capital Management, hopefully has 0:22:52.119 --> 0:22:54.639 some answers for us. David, how are you thinking about 0:22:54.720 --> 0:23:01.520 your Federal reserve in Hi? Paul? Yeah, it's been I 0:23:01.560 --> 0:23:04.840 think more fun and meaningful to watch this or listen 0:23:04.880 --> 0:23:07.800 to this bidding war that seems to have been going 0:23:07.880 --> 0:23:10.560 on the last week as to who can call for 0:23:11.760 --> 0:23:15.680 more rate hikes or a higher basis point rate hike. 0:23:15.760 --> 0:23:18.719 We you know, we had Jamie Diamond last week at 0:23:18.760 --> 0:23:22.879 this time talking about six or seven rate hikes this year. 0:23:23.480 --> 0:23:27.280 Bill Ackman one up and with fifty basis points at 0:23:27.280 --> 0:23:31.280 the first March hike, and then JP Mortgage Global ce 0:23:31.280 --> 0:23:34.680 IO Fixed Income earlier this week on Bloomberg talked about 0:23:34.840 --> 0:23:40.439 eight rate hikes in and so I think, you know, 0:23:40.520 --> 0:23:43.240