WEBVTT - Tesla, Netflix Energy, and Chris Christie 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.320 --> 0:00:23.520 All right, let's check in with Gena Martin Adams because 0:00:23.520 --> 0:00:25.479 we just got through and we're getting through a week 0:00:25.520 --> 0:00:28.560 of a big, big time earnings here. Gina Martin Adams 0:00:28.640 --> 0:00:33.120 joins as she's the chief US chief strategist for calling 0:00:33.159 --> 0:00:39.159 all the markets equity markets for Bloomberg Intelligence. Gina again, another, 0:00:39.479 --> 0:00:42.160 a great first half of the year, a good July 0:00:42.320 --> 0:00:45.440 here for these markets. We're getting into earnings. As you 0:00:45.479 --> 0:00:47.440 step back a little bit, how do you think about 0:00:47.440 --> 0:00:48.240 these markets here? 0:00:49.360 --> 0:00:51.960 Yeah, I think the markets have largely followed along with 0:00:52.000 --> 0:00:54.960 earnings trends, believe it or not. Because when you exclude 0:00:54.960 --> 0:00:57.360 the energy sector from the S and P five hundred, 0:00:57.400 --> 0:01:00.240 it's important to keep in mind that energy is is 0:01:00.280 --> 0:01:02.520 an input cost for most of the rest of the sector. 0:01:02.600 --> 0:01:04.840 So we want to exclude the energy sector and what 0:01:04.959 --> 0:01:08.000 we find is earnings trends are actually improving pretty materially 0:01:08.080 --> 0:01:09.840 for the rest of the groups and the index, at 0:01:09.880 --> 0:01:12.640 least relative to where they were last year, and that 0:01:12.720 --> 0:01:15.720 improvement has been pretty continuous throughout twenty twenty three. At 0:01:15.760 --> 0:01:19.440 the very least, earnings are much less bad than anyone 0:01:19.480 --> 0:01:22.679 has anticipated for the groups that are outside of energy, 0:01:23.160 --> 0:01:26.760 and that seems to be powering a pretty significant market advance. 0:01:27.440 --> 0:01:30.680 And is that why to your point, powering this advance 0:01:30.720 --> 0:01:33.720 that we've seen, we're investors already looking ahead and seeing 0:01:33.720 --> 0:01:37.080 that improvement, especially when you were talking about Energy masking 0:01:37.120 --> 0:01:39.240 those improvements. I know that when you're looking at the 0:01:39.280 --> 0:01:42.960 earnings revision momentum data on your team. Michael Casper was 0:01:43.000 --> 0:01:45.320 talking to me about how, particularly when you're looking at 0:01:45.360 --> 0:01:48.720 discretionary in industrials, those were the two key groups that 0:01:48.760 --> 0:01:51.600 were leading those growth downturns at the beginning of last year. 0:01:51.760 --> 0:01:54.120 But now those are starting to be marked up highers, 0:01:54.160 --> 0:01:57.000 so more of those cyclically oriented corners of the market. 0:01:57.320 --> 0:02:00.120 Did investors already foresee that? And that's why we in 0:02:00.200 --> 0:02:03.120 part saw that big rebound at the beginning of this year. 0:02:03.920 --> 0:02:06.600 Yeah, I think what happened was by the end of 0:02:06.760 --> 0:02:10.680 last year, investors were largely pricing a pretty significant recession 0:02:10.720 --> 0:02:13.880 in earnings to continue throughout twenty twenty three. So remember 0:02:14.120 --> 0:02:17.440 X Energy, we did see earnings start to crash really 0:02:17.480 --> 0:02:20.440 throughout twenty twenty two. By the end of last year, 0:02:20.560 --> 0:02:23.000 really all hope for any kind of rebound was gone 0:02:23.240 --> 0:02:26.600 and investors were only anticipating that earnings would get worse. 0:02:27.280 --> 0:02:29.440 But what we've seen so far this year is the 0:02:29.480 --> 0:02:33.120 turn in inflation has been very, very consequential for turning 0:02:33.160 --> 0:02:36.280 around the sentiment towards select industries and most of the 0:02:36.480 --> 0:02:38.600 X energy industries in the S and S and P 0:02:38.720 --> 0:02:43.240 five hundred. Last year, remember when inflation was accelerating very rapidly, 0:02:43.720 --> 0:02:47.680 and producer prices in particular were accelerating extremely quickly relative 0:02:47.720 --> 0:02:51.680 to consumer prices. Most US companies were experiencing some degree 0:02:51.680 --> 0:02:54.799 of inflation distress. At the same time, it was very 0:02:54.840 --> 0:02:57.760 clear that tech and tech like industries were over hired, 0:02:58.240 --> 0:03:00.720 had too many employees relative to the haste of sales 0:03:00.720 --> 0:03:03.200 growth that they were experiencing, and needed to write size 0:03:03.240 --> 0:03:06.079 the ships. So we saw that occurred late last year. 0:03:06.200 --> 0:03:09.000 Early this year we started to see inflation pressures ease 0:03:09.560 --> 0:03:11.920 and the combination of those two things has resulted in 0:03:12.000 --> 0:03:15.640 much better performance across the space. Some of the segments that, 0:03:15.760 --> 0:03:19.200 as as you point out, are very sensitive to inflation, 0:03:19.480 --> 0:03:24.280 like some of the consumer discretionary's, consumer staples, industrials, communications, 0:03:24.320 --> 0:03:28.919 even healthcare companies, have experienced a great degree of inflation reprieve. 0:03:29.880 --> 0:03:32.000 The result of that is likely to show up in 0:03:32.240 --> 0:03:35.080 better earnings growth into later this year and into twenty 0:03:35.080 --> 0:03:38.080 twenty four, and I think that is starting to get 0:03:38.080 --> 0:03:40.640 embedded in prices. I would not say that this has 0:03:40.680 --> 0:03:44.480 been anticipated. I think that most investors are still quite 0:03:44.480 --> 0:03:47.760 skeptical with respect to the macro outlook. Most investors are 0:03:47.760 --> 0:03:50.119 looking at top line growth and very concerned about where 0:03:50.120 --> 0:03:53.240 the economy is headed. But what's happening beneath the top 0:03:53.280 --> 0:03:56.040 line is very very important and consequential their earnings trends. 0:03:56.040 --> 0:03:57.920 And I think that's been the lesson of twenty twenty three. 0:03:58.520 --> 0:04:00.560 Hey, Gina, I'm just looking at the SP five hundred 0:04:00.560 --> 0:04:04.040 and off of the October low. We're up almost twenty 0:04:04.080 --> 0:04:06.760 eight percent. Yeah, is that a bull market that I 0:04:06.960 --> 0:04:08.400 just haven't been talking about. 0:04:09.280 --> 0:04:11.839 Yeah, it's a great point. We actually did some work 0:04:11.880 --> 0:04:14.880 on this this week. That gain from the October low 0:04:14.920 --> 0:04:18.880 to date retraces seventy six more than seventy six percent 0:04:19.000 --> 0:04:21.479 of the peak to trap decline. When we look back 0:04:21.480 --> 0:04:24.240 in history and we look at all bear markets, that is, 0:04:24.400 --> 0:04:26.359 all times the S and P five hundred has dropped 0:04:26.360 --> 0:04:29.640 at least twenty percent, we look at those points in 0:04:29.680 --> 0:04:32.080 time in which the SMP started to recover, and a 0:04:32.120 --> 0:04:35.080 seventy six percent retracement of the peak to trough decline 0:04:35.080 --> 0:04:38.839 after every single bear market since history, in US history 0:04:38.880 --> 0:04:43.240 since nineteen twenty nine, suggests that that critical level never 0:04:43.320 --> 0:04:44.159 gets broken again. 0:04:44.400 --> 0:04:44.560 Right. 0:04:44.960 --> 0:04:47.240 What we actually find is over the next year, a 0:04:47.360 --> 0:04:50.919 role market continues. It is a critical marker for a 0:04:50.960 --> 0:04:53.120 continuation of the bull market. You just don't see a 0:04:53.160 --> 0:04:56.600 seventy six percent retracement and then a retest of new 0:04:56.680 --> 0:04:59.320 lows or retest of those foam or former lows within 0:04:59.360 --> 0:05:02.720 the next year. So, you know, our work would suggest 0:05:02.920 --> 0:05:06.560 very consistently the degree to which we've rebounded is a 0:05:06.680 --> 0:05:10.520 very bullish marker, at least historically. Now, you know, every 0:05:10.520 --> 0:05:12.520 time there's a chance that this time is different. The 0:05:12.560 --> 0:05:14.760 one thing that is different this time is the lack 0:05:14.800 --> 0:05:18.039 of recovery in small caps the other thing we've never 0:05:18.120 --> 0:05:21.279 seen in US history is small caps recover so little 0:05:21.839 --> 0:05:24.640 of their peak to trough decline while large caps are 0:05:24.680 --> 0:05:28.000 recovering so much. So we want to watch small caps 0:05:28.040 --> 0:05:30.080 really carefully because I do think that that is an 0:05:30.160 --> 0:05:32.000 area of risk in the market. If we can't get 0:05:32.000 --> 0:05:34.880 some participation from small caps, we can't get that positive 0:05:34.880 --> 0:05:38.840 signal out of small caps continuing to turn a bit higher, 0:05:39.360 --> 0:05:41.200 we could be in for a rocky road ahead. 0:05:41.560 --> 0:05:45.159 And Gina, you've written about recently about how this sort 0:05:45.200 --> 0:05:48.520 of gloom coming into this year about the economy is 0:05:48.560 --> 0:05:51.000 really a distraction when you're thinking about from the point 0:05:51.000 --> 0:05:54.520 of view from an equity perspective, in what it means 0:05:54.520 --> 0:05:57.800 when you're looking more towards what corporate America is signaling 0:05:57.800 --> 0:06:01.159 on the profit outlook. Why do you think this typically 0:06:01.360 --> 0:06:03.800 continues to happen when you look back at history and 0:06:03.839 --> 0:06:07.760 potentially even just be a losing strategy for investors if 0:06:07.800 --> 0:06:10.640 they're obsessing over what the timing could be on a 0:06:10.680 --> 0:06:13.040 recession when all of a sudden, especially like you were 0:06:13.040 --> 0:06:16.400 talking about energy excluded from s and P five hundred 0:06:16.440 --> 0:06:18.239 outlook really improving moving forward. 0:06:18.880 --> 0:06:21.240 Yeah, And this is I think is so key for 0:06:21.320 --> 0:06:24.120 investors to really understand, and we were reminded of this 0:06:24.240 --> 0:06:28.000 all year this year. The economy and the earning stream 0:06:28.080 --> 0:06:30.560 are not the same thing, and stocks trade on earnings 0:06:30.640 --> 0:06:34.279 and the outlook for earnings. Very clearly, we've seen earnings 0:06:34.320 --> 0:06:37.560 growth come in much better than anticipated, like I said, 0:06:37.640 --> 0:06:42.039 less bad than anticipated, but frankly, earnings have improved considerably 0:06:42.080 --> 0:06:44.840 relative to what was priced in the equity market late 0:06:44.920 --> 0:06:48.880 last year. And that is really important because the economists 0:06:48.880 --> 0:06:51.320 are still thinking, well, we are going to we may 0:06:51.440 --> 0:06:54.480 scaze by without falling into recession, but there's still a 0:06:54.520 --> 0:06:57.640 lot of chatter about the macro outlook. Many people are 0:06:57.680 --> 0:07:00.279 still really wringing their hands over what's going to happened 0:07:00.320 --> 0:07:03.560 in the economy, and that really kind of misses the point, 0:07:03.720 --> 0:07:08.160 because there just is there are commonalities, certainly, and if 0:07:08.160 --> 0:07:10.760 the economy does fall into recession, there will be pain 0:07:10.800 --> 0:07:13.960 points in the earning stream that emerge. But for now, 0:07:14.120 --> 0:07:16.679 what is important is that margins appear to have formed 0:07:16.680 --> 0:07:19.080 a bottom. They're starting to improve a little bit here. 0:07:19.600 --> 0:07:22.560 We seem to be stable enough in the economy to 0:07:22.600 --> 0:07:26.600 create some stability in the top line revenue for the index. 0:07:26.680 --> 0:07:29.800 We're always on guard for something to change. But those 0:07:29.840 --> 0:07:31.960 earnings are what really drives stock prices, and I think 0:07:31.960 --> 0:07:35.240 this is so important. You know, the even the percentage 0:07:35.280 --> 0:07:38.520 share of industries impact on the equity market is so 0:07:38.760 --> 0:07:42.440 very different than the percentage share of those industries' impact 0:07:42.520 --> 0:07:45.680 on the economy at large that trying to use the 0:07:45.720 --> 0:07:49.200 economy as a forecasting tool for the market proves to 0:07:49.240 --> 0:07:51.080 be a really dicey business. 0:07:51.600 --> 0:07:53.160 All right, Gina, it looks like we're back in the 0:07:53.200 --> 0:07:55.960 business focusing on earnings, maybe a little bit less so 0:07:56.200 --> 0:07:58.760 on the FED. And that's a good thing because maybe 0:07:58.760 --> 0:08:02.120 we get some earnings momentum here, Gina. Martin Adams, chief 0:08:02.160 --> 0:08:05.480 equity strategist for Bloomberg Intelligence, joining us, giving us a 0:08:05.520 --> 0:08:07.400 great overview of the market as we kind of pour 0:08:07.520 --> 0:08:11.320 through these earnings, you know, really kicking in this week 0:08:11.360 --> 0:08:13.560 in size, including today and then well through the next 0:08:13.560 --> 0:08:14.200 couple of weeks. 0:08:14.240 --> 0:08:15.400 So maybe a. 0:08:15.400 --> 0:08:18.080 Little bit better than expected outlook on earnings, just what 0:08:18.120 --> 0:08:18.880 to see how comes in? 0:08:19.280 --> 0:08:22.000 And you brought up the Dow Jones industrial average actually 0:08:22.040 --> 0:08:24.600 heading in today. It had been up for eight consecutive sessions. 0:08:24.680 --> 0:08:27.400 It was as long as winning streak in about four years, 0:08:27.480 --> 0:08:30.800 and so heading for potentially a ninth consecutive session for 0:08:30.920 --> 0:08:32.640 also looking at more of those sickle co oriented and 0:08:32.640 --> 0:08:33.480 pores in the market. 0:08:33.720 --> 0:08:36.040 Yeah, I'd like to see that, And Gina suggested that's 0:08:36.040 --> 0:08:37.200 a good thing to see a little bit of a 0:08:37.240 --> 0:08:38.720 broadening out from the tech. 0:08:38.800 --> 0:08:42.319 So that's good. You're listening to the team. Ken's a 0:08:42.480 --> 0:08:46.160 live program Bloomberg Markets weekdays at ten am Eastern on 0:08:46.200 --> 0:08:50.000 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, 0:08:50.200 --> 0:08:52.840 or listen on demand wherever you get your podcasts. 0:08:54.480 --> 0:08:57.280 Let's talk about earnings here, and let's talk about healthcare earnings. 0:08:57.720 --> 0:08:59.640 We can do that with Ann Hines. She's from a 0:08:59.679 --> 0:09:03.640 Zoo America's she's a managing director and senior healthcare services 0:09:03.800 --> 0:09:07.200 equity analysts there. And thanks so much for joining us 0:09:07.360 --> 0:09:10.800 via the phone here healthcare services, give us a sense 0:09:10.840 --> 0:09:14.079 of about how this group has traded over the last 0:09:14.360 --> 0:09:17.079 couple of years. Just give us a sense how investors 0:09:17.080 --> 0:09:20.880 and how you position the healthcare services providers out there 0:09:20.920 --> 0:09:21.880 to investors. 0:09:22.760 --> 0:09:25.240 Sure, I would say this group has traded. 0:09:25.520 --> 0:09:29.440 It's a tale of two groups mainly managed here in hospitals, 0:09:30.080 --> 0:09:34.520 and it's really based on utilization remember during COVID baseline 0:09:34.600 --> 0:09:38.800 utilization that's what everyone refers to. Healthcare utilization before COVID 0:09:39.520 --> 0:09:43.000 was really below pre pandemic levels. And if you even 0:09:43.160 --> 0:09:45.400 go even further, if you do it by payer mix, 0:09:45.440 --> 0:09:49.800 whether it's commercial, whether it's Medicare advantage, whether it's Medicaid. 0:09:50.400 --> 0:09:55.640 Definitely Medicare advantage, and Medicaid beneficiaries were not seeking care, 0:09:55.760 --> 0:09:56.520 they didn't want to. 0:09:56.440 --> 0:09:57.319 Go to the hospital. 0:09:57.880 --> 0:10:00.800 Now we get to twenty twenty three and it's probably 0:10:00.800 --> 0:10:03.760 the first year since the pandemic that trends and normal 0:10:04.160 --> 0:10:06.800 people are going back to get to the doctors. 0:10:06.840 --> 0:10:07.680 They're going back. 0:10:07.559 --> 0:10:11.280 To get elective procedures, hip proscedures, things that they really 0:10:11.320 --> 0:10:15.320 postponed during the pandemic. That's really good for any provider, 0:10:15.480 --> 0:10:22.080 so HGA, big hospital companies, Tenant, Universal Surgery Partners. You know, 0:10:22.120 --> 0:10:25.160 I don't came a medtech but meta companies, any company 0:10:25.160 --> 0:10:28.000 that provides healthcare. It's been a little bit more difficult 0:10:28.000 --> 0:10:31.280 for managed care companies this earning season, especially managed care 0:10:31.280 --> 0:10:35.679 companies that have exposure to Medicare because it's the Medicare beneficiaries, 0:10:36.040 --> 0:10:38.959 they tend to use the system more and they were 0:10:39.000 --> 0:10:40.920 the ones that really didn't want to go into the 0:10:40.960 --> 0:10:45.160 system during the pandemic, So we're seeing increased utilization which 0:10:45.200 --> 0:10:47.920 is really heard in the stocks here to date, whereas 0:10:47.920 --> 0:10:50.520 you have the hospital providers that are really outperforming. 0:10:51.000 --> 0:10:53.520 And to your point, I mean looking at stocks like 0:10:54.040 --> 0:10:58.840 Humanity ticker symbol HUM that's down about thirteen percent year 0:10:58.880 --> 0:11:03.080 to date. Also looking over at what's happening with un AH, 0:11:03.200 --> 0:11:05.640 also down about five percent, but the other side of 0:11:05.679 --> 0:11:09.440 that HCA Healthcare that's up about twenty percent, and then 0:11:09.600 --> 0:11:14.199 Tenant Healthcare looking at that ticker symbol THC up almost 0:11:14.240 --> 0:11:17.320 sixty percent. How much longer do you think when we're 0:11:17.320 --> 0:11:20.080 looking at those types of stocks like Tenant and then 0:11:20.200 --> 0:11:23.400 also when it comes to HCA, how long and how 0:11:23.480 --> 0:11:25.400 much more room it could have for those stocks to 0:11:25.480 --> 0:11:26.440 keep moving higher. 0:11:27.720 --> 0:11:30.240 I would argue there is room to move higher for 0:11:30.280 --> 0:11:34.000 two reasons. One earnings, and I like to prefer the 0:11:34.080 --> 0:11:38.280 baseline earnings pre pandemic ex COVID. They are still hampered 0:11:38.320 --> 0:11:40.880 because of labor costs. So to put it in perspective, 0:11:41.559 --> 0:11:44.599 before the pandemic, HDA has been about nine hundred and 0:11:44.679 --> 0:11:47.600 ninety million on temporary labor and at the height of 0:11:47.600 --> 0:11:50.440 the pandemic, the company has been two point five billion. 0:11:50.840 --> 0:11:54.520 That's a twelve percent EBITA headwind, a headwind to EBITA, 0:11:55.080 --> 0:11:57.640 and if you annualize the last quarter, it's still a 0:11:57.720 --> 0:11:59.520 two billion, so it's very elevated. 0:11:59.640 --> 0:12:02.520 So there's there's a lot of drivers for upside. 0:12:02.720 --> 0:12:06.560 For a company like HGA and Tenant because temporary labor 0:12:06.679 --> 0:12:10.080 is coming down slowly, but it's coming down. And then 0:12:10.120 --> 0:12:13.080 you also have this pent up demand utilization that's coming 0:12:13.120 --> 0:12:15.720 back to the system. And if you look at Medicare, 0:12:16.000 --> 0:12:19.240 they were I would say you have probably a two 0:12:19.320 --> 0:12:23.320 year window of people catching up with procedures that they 0:12:23.320 --> 0:12:24.560 didn't do during the pandemic. 0:12:26.080 --> 0:12:28.800 So as you talk to your institution, investor, clients, and 0:12:28.840 --> 0:12:31.040 what are the topics that come up the most, what 0:12:31.120 --> 0:12:34.520 do you find yourself explaining or you know, kind of 0:12:34.559 --> 0:12:35.640 discussing with your clients. 0:12:36.400 --> 0:12:37.239 I'm utilization. 0:12:37.400 --> 0:12:41.360 So it's all about healthcare utilization, but also pricing what 0:12:41.600 --> 0:12:44.920 managed care companies price into their bids for twenty twenty 0:12:44.960 --> 0:12:48.440 four and did capture this utilization. I think all the 0:12:48.480 --> 0:12:51.040 companies expected utilization. 0:12:50.559 --> 0:12:51.360 To come back. 0:12:51.840 --> 0:12:53.960 I think they probably expected it to come back more 0:12:54.000 --> 0:12:58.160 over twenty twenty three twenty twenty four in twenty twenty five, 0:12:58.280 --> 0:13:01.760 and a reason for that is nursing is an issue. 0:13:01.880 --> 0:13:03.439 A lot of nurses left the field. 0:13:04.120 --> 0:13:06.880 It caused capacity constraints, and I think what we're seeing 0:13:06.880 --> 0:13:11.040 in twenty twenty three is more capacity opening that people 0:13:11.080 --> 0:13:14.920 probably expected. So I would think that's the main thing. 0:13:15.000 --> 0:13:17.800 And to your question, how long can the hospitals run? 0:13:18.200 --> 0:13:21.640 And I would argue companies that have earning upside, they 0:13:21.720 --> 0:13:22.920 usually go up and not down. 0:13:24.080 --> 0:13:26.320 So just so on the on the labor front, I 0:13:26.320 --> 0:13:28.480 mean at granted, I mean you just think back to 0:13:28.520 --> 0:13:31.680 the pandemic and the conditions under which all the healthcare 0:13:31.720 --> 0:13:34.400 providers had to operate. I mean they're just you know, saints, 0:13:34.440 --> 0:13:37.400 every one of them. But as you mentioned, a high 0:13:37.480 --> 0:13:40.920 toll on turnover in that space. So is this an 0:13:40.920 --> 0:13:45.560 industry that just chronically is short on nurses and maybe 0:13:45.559 --> 0:13:48.080 to lesser extent, doctors. Is that something that's kind of 0:13:48.080 --> 0:13:50.880 a chronic issue for the industry to a. 0:13:50.960 --> 0:13:55.079 Agree, But what happened during the pandemic is that you 0:13:55.120 --> 0:13:57.240 have what we have a permanent nurse, a permanent nurse 0:13:57.280 --> 0:13:59.960 that obvious works full time, and then you have nurse 0:14:00.200 --> 0:14:02.800 who like to travel they get paid a little bit 0:14:03.520 --> 0:14:05.360 a little bit more on an hour, but they tend 0:14:05.400 --> 0:14:07.679 to travel. And what happened during the pandemic there was 0:14:07.720 --> 0:14:11.320 such a high demand, you had this phenomena that permanent 0:14:11.400 --> 0:14:16.360 nurses went temporary to get the higher hourly rage. Like 0:14:16.400 --> 0:14:19.680 to primitent perspective, a nurse might make fifty dollars an hour, 0:14:19.840 --> 0:14:22.880 but at the height pandemic, they were making. 0:14:22.680 --> 0:14:24.000 Two hundred and fifty dollars an hour. 0:14:24.400 --> 0:14:26.360 I think what we're seeing is that some of these 0:14:26.440 --> 0:14:29.440 nurses that left their permanent position, they're coming back to 0:14:29.720 --> 0:14:34.560 full time positions in the workforce. But there's also a 0:14:34.640 --> 0:14:37.840 part that the average age of the nurses about fifty. 0:14:38.600 --> 0:14:41.480 Maybe that nurse is working less hours, less shifts. 0:14:42.080 --> 0:14:43.760 So it's a combination of both. 0:14:45.480 --> 0:14:47.760 And to Ball's point, because he was asking about some 0:14:47.800 --> 0:14:50.600 of the top questions you're getting, what about the top 0:14:50.680 --> 0:14:54.280 concerns among some of your clients as far as what 0:14:54.320 --> 0:14:57.000 this could mean as far as the outlook moving forward. 0:14:57.960 --> 0:15:00.680 I would say the top concerns, like get is on 0:15:00.760 --> 0:15:03.760 the managed care sector because they have a few headwinds 0:15:03.800 --> 0:15:07.640 coming up. There's some changes to Medicare reimbursement that would 0:15:07.760 --> 0:15:10.880 impact Medicare advantage plans, and the big thing is all 0:15:10.880 --> 0:15:14.400 also Medicaid we determinations because I'm sure you know the 0:15:14.440 --> 0:15:17.680 Medicaid rolls to well during the pandemic. Because of the 0:15:17.680 --> 0:15:21.160 public health emergency, states would not allow to redetermine anyone 0:15:21.160 --> 0:15:24.360 on Medicaid and that ended in April, and over the 0:15:24.400 --> 0:15:27.160 next twelve to fourteen months, states will be rolling. 0:15:28.520 --> 0:15:30.880 Beneficiary is off. And that just causes a. 0:15:30.840 --> 0:15:33.040 Lot of uncertainty with numbers because a lot of these 0:15:33.040 --> 0:15:36.720 companies didn't benefit benefit from the public health emergency. 0:15:37.640 --> 0:15:40.520 All right, and top picks, what are you talking to 0:15:40.560 --> 0:15:43.760 your clients about? What do you like right here going forward? 0:15:44.640 --> 0:15:46.800 So I would say a top pick on the managed 0:15:46.840 --> 0:15:50.200 care side are Signa and Elevance and singing that for 0:15:50.280 --> 0:15:52.960 two reasons. One, they don't have a lot of Medicare 0:15:52.960 --> 0:15:56.760 advantage exposure, so a lot of the changes to reimbursement's 0:15:56.800 --> 0:15:58.600 not going to impact them. And they also don't have 0:15:58.760 --> 0:16:02.600 a lot of Medicaid determined exposure. So the two biggest 0:16:02.640 --> 0:16:04.280 worries in the managecure sector they don't. 0:16:04.160 --> 0:16:05.120 Have a lot of exposure to. 0:16:05.680 --> 0:16:08.120 There is some risk with PBM legislation, but I would 0:16:08.200 --> 0:16:12.240 argue that's already based in valuation at about ten times 0:16:12.240 --> 0:16:13.680 twenty twenty four earnings. 0:16:14.680 --> 0:16:15.440 I also like. 0:16:15.520 --> 0:16:18.760 I still like HGA, just because despite the run, there 0:16:18.840 --> 0:16:20.920 is a lot of upside to earnings in my opinion 0:16:21.520 --> 0:16:23.680 for twenty twenty three and twenty twenty four. 0:16:24.000 --> 0:16:27.840 And when you're talking about legislation, are there anything in 0:16:27.880 --> 0:16:30.760 particular coming up on Capitol Hill that you think infesstors 0:16:30.760 --> 0:16:32.960 should keep their eyes on when it comes to potential 0:16:33.160 --> 0:16:35.680 maybe regulations that could affect some of these companies. 0:16:36.680 --> 0:16:41.880 Yes, so Congress wants to pass PPM legislation that has 0:16:41.920 --> 0:16:46.280 that will result in increased regulatory scrutiny on the PBM. 0:16:46.440 --> 0:16:49.880 So companies with the biggest exposure would be United Healthcare 0:16:50.560 --> 0:16:55.360 CBS and Signa that's pretty well known. But the question 0:16:55.440 --> 0:16:57.880 is that if there's going to be a legislative vehicle. 0:16:58.440 --> 0:17:01.239 I believe there will be a legislator vehicle in December. 0:17:01.560 --> 0:17:04.639 And I'm also a believer that this has been a 0:17:04.680 --> 0:17:07.000 headline of us for a long time, and I think 0:17:07.040 --> 0:17:11.000 any type of legislation that passes will have not going 0:17:11.000 --> 0:17:13.200 to walk to twenty twenty six, which will allow these 0:17:13.200 --> 0:17:18.080 PBMs to change language and their contracts. So when all 0:17:18.080 --> 0:17:19.960 of a sudden done. I actually don't think it will 0:17:19.960 --> 0:17:22.440 have a meaningful impact on EPs, and it should remove 0:17:22.440 --> 0:17:25.320 a headline risk and we should get more details on that, 0:17:25.440 --> 0:17:27.880 but not until December. But that's the major thing because 0:17:27.920 --> 0:17:31.000 typically in healthcare, when there's a balance of power in Washington, 0:17:31.560 --> 0:17:33.679 not a lot of healthcare legislation is passed. 0:17:34.520 --> 0:17:37.479 And just about thirty seconds here, drug distributors, you're neutral 0:17:37.520 --> 0:17:40.280 on that group? Why really? 0:17:40.480 --> 0:17:41.000 Valuation? 0:17:41.119 --> 0:17:43.640 They've had a great run for a long time and 0:17:44.520 --> 0:17:48.600 they're reaching their ten year highs. Earnings visibility is very good. 0:17:49.359 --> 0:17:51.399 But I do think it's a crowded sector. It's a 0:17:51.400 --> 0:17:53.480 sector that a lot of journalists went in over the 0:17:53.480 --> 0:17:55.560 past couple of years when there was a lot of 0:17:56.280 --> 0:17:59.000 uncertainty in the market. But they are great companies and 0:17:59.000 --> 0:18:00.520 it's more valuation anything. 0:18:00.680 --> 0:18:02.399 All right, And thanks so much for giving us some 0:18:02.400 --> 0:18:05.840 of your time. An Heinz's senior healthcare Services Equity. An 0:18:06.040 --> 0:18:07.880 she's a managinging director over at Mizuho. 0:18:08.240 --> 0:18:11.359 You're listening to the tape. Cat's are live program Bloomberg 0:18:11.440 --> 0:18:15.000 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:15.080 --> 0:18:18.320 tune in app, Bloomberg Dot com and the Bloomberg Business App. 0:18:18.359 --> 0:18:21.159 You can also listen live on Amazon Alexa from our 0:18:21.160 --> 0:18:26.240 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:18:27.320 --> 0:18:29.680 We want to switch things up for our next segment 0:18:29.800 --> 0:18:34.040 and do an energy outlook. And I'm excited because we 0:18:34.200 --> 0:18:39.040 do have in studio here Jonathan Maxwell, who's CEO at 0:18:39.119 --> 0:18:42.840 Sustainable Development Capital, who's joining us to discuss the outlook 0:18:42.880 --> 0:18:46.840 on oil and the renewable energy markets, particularly with the 0:18:46.880 --> 0:18:50.040 growth of tessel this year in the emergence of v evs. 0:18:50.160 --> 0:18:52.320 But before I actually get into that, I have to 0:18:52.400 --> 0:18:57.520 ask you about Ukraine. And we're seeing wheat prices soaring today. 0:18:57.600 --> 0:18:59.760 It's actually their three day gain is more than ten 0:18:59.760 --> 0:19:02.280 per after the US did warn that Russia has laid 0:19:02.359 --> 0:19:05.800 mines at Ukrainian grain ports. Now you've written a book 0:19:05.880 --> 0:19:09.320 recently tied to Ukraine. What's your take on this and 0:19:09.359 --> 0:19:11.280 how does this mean in what does it mean for 0:19:11.320 --> 0:19:12.800 the energy and commodity space. 0:19:13.200 --> 0:19:17.159 I think it has a huge story around resources and 0:19:17.240 --> 0:19:23.240 conflict over resources. Ukraine was really the conduit prior to 0:19:23.240 --> 0:19:27.680 the Russia Ukraine crisis for Russia's exports of oil and 0:19:28.280 --> 0:19:31.320 sorry of gas. Into Europe its pipe. It was piped 0:19:31.359 --> 0:19:35.520 through Ukraine. Europe needed to get forty percent of its 0:19:35.560 --> 0:19:41.400 gas from Russia. That's over. We saw energy prices skyrocket 0:19:41.680 --> 0:19:44.200 last year. We saw energy in Europe. We saw energy 0:19:44.240 --> 0:19:47.080 security become front page news in a way that it 0:19:47.160 --> 0:19:51.879 never had before. So the link between Ukraine and resources 0:19:52.920 --> 0:19:56.360 was the big headline last year was energy. Now, there 0:19:56.400 --> 0:20:00.360 was a deal struck which kept grain exports and other 0:20:00.840 --> 0:20:05.320 really critical resource exports going out of Ukraine. But Ukraine 0:20:05.359 --> 0:20:09.760 is one of the most important resource stories in the world. 0:20:10.200 --> 0:20:14.280 After America became energy independent in twenty nineteen, really this 0:20:15.080 --> 0:20:19.159 resource arena has shifted now into eastern Europe. You know, 0:20:19.359 --> 0:20:22.720 Russia and Ukraine are really the nexus for the balancing 0:20:22.760 --> 0:20:25.639 demand around or supply and demand around oil and gas 0:20:26.200 --> 0:20:28.720 on the one hand, another resources like grain on the other. 0:20:28.840 --> 0:20:33.159 So what we're seeing is a conflict which is partly 0:20:33.280 --> 0:20:36.720 driven by conflict over resources, but also it's having a 0:20:36.760 --> 0:20:38.280 dramatic impact on pricing. 0:20:38.800 --> 0:20:42.600 All right, So, as sustainable development capital, you guys look 0:20:42.640 --> 0:20:46.320 at kind of I guess this challenge about being sustainable, 0:20:46.320 --> 0:20:48.639 being eco friendly a little bit differently. Talk to us 0:20:48.640 --> 0:20:51.199 about the types of investments you make there. What do 0:20:51.240 --> 0:20:53.320 you like to what do you think you can add value? 0:20:53.520 --> 0:20:53.680 Right? 0:20:53.760 --> 0:20:57.560