WEBVTT - Fed on Path to Hike Rates, Trajectory Unclear 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.320 --> 0:00:09.799 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 clus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.880 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.920 --> 0:00:32.160 YouTube search Bloomberg clovel News. Dr Stephen Skanky is chief 0:00:32.159 --> 0:00:34.600 economic Advisor at Keel Point. He's also a former US 0:00:34.640 --> 0:00:38.840 Treasury and White House National Security Council staff member. Doctor 0:00:38.880 --> 0:00:41.400 Skanky joins us on the phone from Cape Canaveral, Florida. 0:00:41.720 --> 0:00:44.960 Doctor Skanky, how are you. I'm well today, Thanks, and 0:00:45.040 --> 0:00:46.560 it's great to be with you. Yeah, it good to 0:00:46.600 --> 0:00:47.880 be with you. Two. Before we get to what the 0:00:47.880 --> 0:00:50.400 FETE is going to do, I do want to talk 0:00:50.600 --> 0:00:53.320 Russia and Russia's invasion of Ukraine with you because we 0:00:53.320 --> 0:00:55.280 haven't had a chance to speak about that. Since you 0:00:55.280 --> 0:00:57.600 were last on our program and you were on the 0:00:57.600 --> 0:01:00.680 White House National Security Council, a staff member of the 0:01:00.720 --> 0:01:03.279 White House National Security Council, so I wanted to get 0:01:03.360 --> 0:01:05.880 your read on it. It's a humanitarian crisis with more 0:01:05.880 --> 0:01:10.119 than two million refugees fleeing Ukraine. Um, and it's not 0:01:10.240 --> 0:01:13.399 clear that there is any end in sight. Um, how 0:01:13.440 --> 0:01:18.600 are you reading into it? Well, it's it's an extraordinary 0:01:18.720 --> 0:01:25.600 human tragedy and also a tragedy for the geopolitical world order. Um. 0:01:26.160 --> 0:01:30.160 Everyone had thought that we had gotten beyond invasion and 0:01:30.280 --> 0:01:33.559 land wars in Europe in particular as we came into 0:01:33.560 --> 0:01:37.319 this century of having experienced, you know, a hundred billion 0:01:38.120 --> 0:01:40.760 lost lives in the in the twentieth century as a 0:01:41.120 --> 0:01:44.920 as a result of conflict like this. So so that 0:01:44.920 --> 0:01:48.600 that is surprising. What's been amazing about it, though, is 0:01:48.720 --> 0:01:52.480 that it really has a weight and our European and 0:01:52.520 --> 0:01:57.880 Asian allies to the to the real threat to the 0:01:57.920 --> 0:02:01.840 geopolitical and economic system as a result of this. Uh. 0:02:03.000 --> 0:02:06.840 What's happened in Germany and the twenty seven EU countries 0:02:07.000 --> 0:02:11.840 has been absolutely amazing in terms of their recognition of 0:02:11.880 --> 0:02:15.120 the jeopardy and the things that they need to do 0:02:15.280 --> 0:02:19.040 to get that turned around for their own benefit and 0:02:19.080 --> 0:02:23.000 for the safety and security of their own countries. And 0:02:23.120 --> 0:02:25.680 Dr Skinky, I feel like it also has awakened many 0:02:25.760 --> 0:02:28.799 people to just how important Russia and Ukraine in that 0:02:29.000 --> 0:02:32.160 entire region is to you know, supplying the world with 0:02:32.280 --> 0:02:36.440 energy and you know, producing food and grains for the 0:02:36.600 --> 0:02:39.480 entire world. I mean, it feels like everything physical, the 0:02:39.520 --> 0:02:42.680 price of it has just soared in the past few weeks. 0:02:42.720 --> 0:02:45.160 And I mean, to bring it back to the economy, 0:02:45.160 --> 0:02:48.320 I'm curious what you think the lasting read through to 0:02:48.600 --> 0:02:51.480 inflation could be, because it was right around this time 0:02:51.560 --> 0:02:56.040 where that economists had initially predicted that inflation would finally 0:02:56.040 --> 0:03:00.840 start to crust a little bit. That's right, Katie. Uh. 0:03:00.880 --> 0:03:05.480 But you know, Russia exports seven and a half percent 0:03:05.760 --> 0:03:11.400 of crude and refined products before the war in what 0:03:11.600 --> 0:03:16.080 was already a tight energy market, and so to to 0:03:16.200 --> 0:03:21.320 think about taking any or all of that offline is 0:03:21.320 --> 0:03:26.239 is startling and jarring. Hence the Biden administration's effort to 0:03:27.040 --> 0:03:30.680 do something with the countries that are already otherwise offline 0:03:30.680 --> 0:03:34.200 and to get production geared up in the United States, 0:03:34.880 --> 0:03:37.320 all of which takes time and all of which takes 0:03:37.360 --> 0:03:41.200 infrastructure to get a repositioned into the countries in Europe 0:03:41.200 --> 0:03:45.760 that need it. You know, likewise, on grains, Russian Ukraine 0:03:46.600 --> 0:03:54.280 produce of the world's week supply, significant amount and not 0:03:54.480 --> 0:03:58.520 something that you change overnight. Fortunately, the US is an 0:03:58.560 --> 0:04:02.080 agricultural powerhouse and has the ability to turn its attention 0:04:02.720 --> 0:04:07.440 to replacing some of that, but over time only, and 0:04:08.080 --> 0:04:10.600 in the meantime you have to depend on on the 0:04:10.640 --> 0:04:14.320 stocks that are there. Aluminum the same way, big producer 0:04:14.320 --> 0:04:17.719 and exporter of aluminum, and of course natural gas to 0:04:17.880 --> 0:04:23.920 Europe much harder to replace because the infrastructure or re 0:04:24.120 --> 0:04:28.240 gassification of exports from the United States just takes time 0:04:28.240 --> 0:04:31.320 to put in place. So Dr Skinky, get us to 0:04:31.320 --> 0:04:35.240 tomorrow and what you expect we'll hear from uh FED 0:04:35.320 --> 0:04:38.640 chair J. Powell. Widely expected that they announced an interest 0:04:38.720 --> 0:04:41.680 rate increase of basis points that seems to be priced 0:04:41.720 --> 0:04:44.360 in at this point, and why they agreed upon um. 0:04:44.400 --> 0:04:48.360 But what surprises could we see? I think the big 0:04:48.360 --> 0:04:52.400 surprise will will will come in what they say about 0:04:52.440 --> 0:04:56.240 the trajectory after this. There has been a certain amount 0:04:56.279 --> 0:05:00.799 of public commentarity since the January F and C meeting 0:05:01.320 --> 0:05:04.240 with some misunderstanding as to what was said and some 0:05:04.320 --> 0:05:07.520 expectations that they need to go faster, But I think 0:05:07.600 --> 0:05:13.240 Chairman Powell was was preceded this and and stepping out 0:05:13.320 --> 0:05:18.880 to try to call markets and set expectations that they're 0:05:18.880 --> 0:05:21.760 going to move deliberately as we go along on this, 0:05:22.400 --> 0:05:26.599 fully understanding that the impact of what's happening in Russia 0:05:26.640 --> 0:05:29.560 and the Ukraine is really hard to pass through the 0:05:29.640 --> 0:05:35.000 system right now, and what financial markets and even the 0:05:35.200 --> 0:05:38.440 political system in the United States what it needs right 0:05:38.440 --> 0:05:43.520 now is just stability predictability. But the big surprises will 0:05:43.640 --> 0:05:50.040 come in their discussion about when does quantitative tightening begin 0:05:50.760 --> 0:05:53.960 and what does the dot plot looked like for the 0:05:54.120 --> 0:05:57.760 increase in interest rates going forward to the rest of 0:05:57.760 --> 0:06:02.159 the year. You know, the market's been calling for nine, 0:06:02.960 --> 0:06:06.560 well between seven and nine quarter percent increases, but that 0:06:06.720 --> 0:06:11.000 has been saying four or five. But we'll we'll find 0:06:11.000 --> 0:06:14.560 out soon enough as to where they're thinking has moved 0:06:15.360 --> 0:06:17.280 just as a result of what happened over the last 0:06:17.320 --> 0:06:19.760 couple of weeks. Dr Stephen Skanky, it is always great 0:06:19.760 --> 0:06:22.360 to chat with you ahead of FED day, Chief Economic 0:06:22.360 --> 0:06:24.800 advisor at keel Point, also former U s Treasury at 0:06:24.800 --> 0:06:28.520 White House National Security Accounts Member Member Stephen Skanky joining 0:06:28.600 --> 0:06:31.040 us on the phone from Cape Cannaveral, Florida. This is 0:06:31.040 --> 0:06:37.200 Bloomberg Radio, and this is Bloomberg Business Week. You're listening 0:06:37.240 --> 0:06:41.400 to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. 0:06:41.520 --> 0:06:45.160 Tim Stinovic on Bloomberg Radio. Well, I told you we're 0:06:45.200 --> 0:06:47.640 going all in on Russia's invasion of Ukraine, and it 0:06:47.640 --> 0:06:51.160 not just includes the latest from Ukraine and the international 0:06:51.200 --> 0:06:54.760 community's response, but also the economic impacts not just in 0:06:54.880 --> 0:06:58.000 Ukraine and the world, but also what's going on in Russia. 0:06:58.440 --> 0:07:01.840 To that end, Today's Big Tag focuses on Russia spiraling 0:07:01.839 --> 0:07:06.880 towards a billion dollar debt default nightmare. This story written 0:07:06.880 --> 0:07:10.120 by Eliza RONALDS. Hannon and a couple other of our colleagues. 0:07:10.120 --> 0:07:13.040 Aliza's high yield and distressed debt credit reporter for Bloomberg 0:07:13.040 --> 0:07:15.800 new She joins us on the phone from Boston. Eliza, 0:07:15.880 --> 0:07:21.440 what happens tomorrow to Russia's debt that becomes due? Well, 0:07:21.480 --> 0:07:24.840 what happens tomorrow is a bit up in the air. Still, um, 0:07:24.920 --> 0:07:28.080 the big question has been one or the most immediate 0:07:28.120 --> 0:07:31.040 question has been one of technical default. Really, so the 0:07:31.200 --> 0:07:37.240 Kremlin has uh, you know, outlawed or restricted abilities of 0:07:37.440 --> 0:07:41.680 the sovereign and other companies to pay foreign foreign debt 0:07:41.800 --> 0:07:44.960 in the foreign currency, and any sort of payment made 0:07:44.960 --> 0:07:48.040 in roubles which have been the order would be a 0:07:48.080 --> 0:07:51.960 technical default. But what really investors are talking about at 0:07:52.000 --> 0:07:54.360 this point, if you ask them what their take is 0:07:54.520 --> 0:07:58.760 on the outcomes here, it's less. It's only a matter 0:07:58.800 --> 0:08:03.120 of time before the defaults become a matter of actual 0:08:03.200 --> 0:08:07.560 solvency as opposed to technical ability to pay, because Russia 0:08:07.600 --> 0:08:10.000 is completely cut off from its trading partners now and 0:08:10.400 --> 0:08:14.240 revenue will dry up, cash will become non existent. And 0:08:14.280 --> 0:08:16.800 so let's dig into that. So the worst case scenario here, 0:08:16.840 --> 0:08:21.640 you know, Russia defaults, what's its stake for Russia's economy 0:08:21.720 --> 0:08:24.960 if you know it's then cut off from its trading partners. 0:08:25.040 --> 0:08:28.360 You know, people investors uh don't want to invest in 0:08:28.400 --> 0:08:33.160 its debt anymore. Right, it will really be a negative 0:08:33.160 --> 0:08:37.360 feedback loop that will, as we said in the story, 0:08:37.600 --> 0:08:41.240 really set the economy on its on a road to disaster. 0:08:41.640 --> 0:08:44.360 Um you're seeing, you know, part of the reason that 0:08:44.400 --> 0:08:46.839 people are pulling away from the debt is because of 0:08:46.960 --> 0:08:49.040 downgrades to the credit rating, which of course have to 0:08:49.040 --> 0:08:53.280 do with all of the event risk related to the invasion, 0:08:53.440 --> 0:08:57.280 but also the high inflation and the contracting economy. But 0:08:58.040 --> 0:09:00.720 because of the high inflation and contracting economy is the 0:09:01.360 --> 0:09:04.079 m and because of the debt downgrades, the economy fair 0:09:04.160 --> 0:09:08.520 is even worse. And so it's it's really on a spiral, Eliza, 0:09:08.600 --> 0:09:10.840 forgive me, but you know, on the on the topic 0:09:10.880 --> 0:09:14.600 of Russia's invasion of Ukraine, we're just hearing from President Biden. 0:09:14.760 --> 0:09:17.800 He says that he will speak more about Ukraine on Wednesday, 0:09:17.880 --> 0:09:21.240 that's tomorrow. He did make some comments moment ago saying 0:09:21.240 --> 0:09:24.360 that it's getting harder to get supplies into Ukraine. He's 0:09:24.360 --> 0:09:27.840 speaking right now at a federal government funding bill signing event. 0:09:28.440 --> 0:09:32.000 For more, just go to life, go on the Bloomberg terminal, Eliza, 0:09:32.120 --> 0:09:37.600 isn't isn't Is this by design? What could happen to 0:09:37.600 --> 0:09:40.880 to Russia, to Russia's economy, what could happen to Russia's debt? 0:09:41.360 --> 0:09:43.760 Is this partly by design? When it comes to sanctions 0:09:43.760 --> 0:09:46.280 and cutting Russia off as much as as as the 0:09:46.360 --> 0:09:48.040 United States and the rest of the world can do. 0:09:49.440 --> 0:09:53.560 Certainly sanctions are designed to inflict pain, and this will 0:09:53.600 --> 0:09:57.839 be painful for Russia's economy and and Russian and the 0:09:57.960 --> 0:10:00.800 state the government. Of course, you're also looking at a 0:10:00.800 --> 0:10:05.360 lot of pain to be absorbed among global investors. Russian 0:10:05.480 --> 0:10:09.880 credit and and corporate credit in Russia is quite widely 0:10:09.920 --> 0:10:13.600 held throughout funds all over the market because until recently 0:10:13.880 --> 0:10:16.439 Russia was a big part of the index for that 0:10:16.520 --> 0:10:19.760 many funds tracked it was also investment grade rated. So 0:10:20.120 --> 0:10:22.280 it's the type of funds that aren't you know, very 0:10:22.400 --> 0:10:25.280 risk friendly, aren't necessarily you know, trying to make a 0:10:25.320 --> 0:10:28.800 big play on the outcome, but are really passive holders. 0:10:28.920 --> 0:10:32.079 And because of how fast everything unfolded, they didn't get 0:10:32.080 --> 0:10:34.760 a chance to sell and you know, let the distress 0:10:34.800 --> 0:10:37.720 guys come in. They're really holding the bags bill even 0:10:37.720 --> 0:10:40.880 as stuff plummet in value. Well, that's what I want 0:10:40.880 --> 0:10:42.360 to get into a little bit of you know, what 0:10:42.400 --> 0:10:45.720 the ripple effects could look like here, and you know, 0:10:45.960 --> 0:10:49.080 are there any potential contagion risks when it comes to 0:10:49.280 --> 0:10:54.120 you know, other emerging markets and their their sovereign debt markets. 0:10:55.960 --> 0:11:00.600 I think that if anything, um in s who are 0:11:00.920 --> 0:11:04.079 pegs to an emerging market index or other indexes that 0:11:04.200 --> 0:11:08.400 involved Russia will in fact need to block to other 0:11:09.720 --> 0:11:13.480 sovereign credits and other emerging markets in order to simply 0:11:13.520 --> 0:11:17.000 balance their portfolios because they did lose such a chunk 0:11:17.240 --> 0:11:22.640 of their benchmark overnight. Almost so, I don't know if 0:11:22.679 --> 0:11:26.439 there's so much contagion risk um explicitly, you know, it's 0:11:26.440 --> 0:11:30.520 a quite limited event. Um. The risk of you know, 0:11:30.679 --> 0:11:37.360 similar counterparty problems with nearby or related countries isn't isn't 0:11:37.440 --> 0:11:40.000 very far reaching at least um. But what might be 0:11:40.040 --> 0:11:43.080 more interesting to look at in the immediate term is 0:11:43.760 --> 0:11:47.720 where investors go to to put their money. Eliza ronalds 0:11:47.800 --> 0:11:50.600 Hannon is one of the authors of Today's Big Take. 0:11:50.720 --> 0:11:54.000 She's High Yield and Distressed Distress Credit Reporter. You can 0:11:54.040 --> 0:11:57.120 read Aliza's story and more from Bloomberg The Big Take. 0:11:57.200 --> 0:11:59.560 You can do that at Bloomberg dot com and of course, 0:11:59.679 --> 0:12:04.040 on the Bloomberg terminal. You're listening to Bloomberg Business Week 0:12:04.200 --> 0:12:08.200 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:12:08.320 --> 0:12:12.040 Bloomberg Radio. Coming up in the upcoming issue of Bloomberg 0:12:12.080 --> 0:12:15.760 Business Week Magazine is a deep dive into cerebral Maybe 0:12:15.800 --> 0:12:17.679 you've heard of it, maybe you haven't. It's backed by 0:12:17.720 --> 0:12:20.720 soft Bank, It's promoted by Simone Biles. The CEO has 0:12:21.120 --> 0:12:23.600 actually even been on Our Heir Our air here on 0:12:23.760 --> 0:12:27.920 Bloomberg business Week magazine. Cerebral has built the fastest growing 0:12:28.000 --> 0:12:31.800 online mental health business. Former employees, though, say the rapid 0:12:31.800 --> 0:12:35.160 expansion comes at the expense of patient care. The story 0:12:35.200 --> 0:12:39.400 by Pauli Mosen's and Caleb Melby. Caleb Melby's financial investigations 0:12:39.400 --> 0:12:41.920 reporter for Bloomberg News. He joined us on the phone 0:12:41.920 --> 0:12:45.480 from from Brooklyn. Joe Weber is editor at Bloomberg business Week. 0:12:45.480 --> 0:12:48.080 He's with us in the Bloomberg Interactive Broker studio in 0:12:48.160 --> 0:12:50.280 New York. Joel, I want to start with people. For 0:12:50.480 --> 0:12:55.200 people who haven't heard of Cerebral UM. What is it? Well, 0:12:55.240 --> 0:12:57.199 first of all, this story is in the current in 0:12:57.280 --> 0:12:59.959 the current excuse me? When is time? What is time? 0:13:00.040 --> 0:13:04.160 What is um? Cerebral? If you're on TikTok, you will 0:13:04.200 --> 0:13:07.480 definitely know it um. I've been fed the ads on 0:13:07.480 --> 0:13:11.760 Instagram and it's basically a telehealth company that during the pandemic, 0:13:11.800 --> 0:13:14.280 there are some policy changes that suddenly allowed you to 0:13:14.320 --> 0:13:18.000 get a d h D medications without having in person 0:13:18.080 --> 0:13:23.280 appointments and cerebral startup very young has been a huge 0:13:23.720 --> 0:13:28.480 beneficiary of these policy changes UM and has basically accelerated 0:13:28.480 --> 0:13:32.559 into uh, you know, this mental health crisis by allowing 0:13:32.640 --> 0:13:37.200 people to have telehealth appointments and get prescriptions basically you know, 0:13:37.720 --> 0:13:42.080 almost on demand and via um online prescriptions as well, 0:13:42.120 --> 0:13:45.040 depending on what state you're in. UM. But you know 0:13:45.080 --> 0:13:47.760 there's a downside to all this too, which is all 0:13:47.800 --> 0:13:49.800 of a sudden, we're dealing with mental health issues and 0:13:49.840 --> 0:13:52.320 telehealth and you don't have those normal check ins that 0:13:52.440 --> 0:13:55.160 most of the time we've had, and in talking to 0:13:55.360 --> 0:13:59.640 employees and former employees and patients of cerebral Pauli and 0:13:59.720 --> 0:14:03.600 Kayle have found some some troubling elements of their business practices. 0:14:03.640 --> 0:14:05.439 So so break that down, Caleb, what what were the 0:14:05.480 --> 0:14:08.559 big takeaways that that you found as you um did 0:14:08.600 --> 0:14:12.320 a bit of an autopsy here, Yeah, I mean, UM 0:14:13.840 --> 0:14:16.880 you the a d h D medication point you highlight, 0:14:16.960 --> 0:14:20.760 Joel is UM definitely among the big ones. Basically prior 0:14:20.840 --> 0:14:24.840 to the COVID nineteen pandemic, UH, you weren't able to 0:14:24.880 --> 0:14:28.840 prescribe controlled substances and a telehealth setting and uh. That 0:14:29.000 --> 0:14:31.600 was the product of a two eight lock called the 0:14:31.680 --> 0:14:35.480 Ryan Hate Act, which which said you you couldn't issue 0:14:36.080 --> 0:14:40.240 controlled substances uh. And that includes amphetamines like adderall and 0:14:40.320 --> 0:14:45.000 also um benzo's like um uh zen ac and klono pannon. 0:14:45.320 --> 0:14:47.640 So for the first time companies could do that, and 0:14:47.920 --> 0:14:49.960 there's been a race to do that. As you can 0:14:50.440 --> 0:14:53.360 imagine a lot of people working from home, going to 0:14:53.480 --> 0:14:57.320 school from home, sitting behind computers all day, not getting 0:14:57.400 --> 0:15:03.880 to socialize. They've become distracted, they've become irritated, they're procrastinating, um, 0:15:03.880 --> 0:15:06.920 which are all symptoms potentially of a d h D 0:15:07.240 --> 0:15:15.480 or you know, a myriad other things, including exactly um uh. 0:15:15.760 --> 0:15:20.720 So that kind of uh supply side drummed up. You 0:15:20.840 --> 0:15:24.480 have companies like Cerebral meeting that with these ads that 0:15:24.600 --> 0:15:27.880 Jewel was describing that you know, it can be quite aggressive. 0:15:27.920 --> 0:15:30.160 I think it's fair to say like people dancing with 0:15:30.240 --> 0:15:35.120 boxes of pills uh and similar and essentially asking have 0:15:35.200 --> 0:15:37.880 you ever thought, um, that you might have a d 0:15:38.040 --> 0:15:40.760 h D. So we we talked to nurses who works 0:15:40.800 --> 0:15:44.440 for this company who you know. Once that business line 0:15:44.480 --> 0:15:48.480 got up and running, so's deluge of clients looking for 0:15:48.560 --> 0:15:51.160 a d h D medication, and the structure is under 0:15:51.160 --> 0:15:54.960 which they were asked to operate half an hour primary appointment. 0:15:55.080 --> 0:15:59.000 People expected the drugs after that first appointment, because that's 0:15:59.080 --> 0:16:02.360 kind of what they've been to believe by these ads. Um, 0:16:02.880 --> 0:16:05.200 they get irate if they don't, and they say, it's 0:16:05.360 --> 0:16:08.600 very hard to diagnose in a virtual setting in half 0:16:08.600 --> 0:16:14.640 an hour. And what kind of uh response did they 0:16:14.720 --> 0:16:18.160 you know, have have you know a employees had when 0:16:18.200 --> 0:16:20.680 dealing in these situations, and then also the customers that 0:16:20.720 --> 0:16:25.960 you you spoke with. Yeah, so so for employees, UM, 0:16:26.200 --> 0:16:29.120 uh you know, uh, A lot of the folks who left, 0:16:29.280 --> 0:16:32.240 you could almost think of them as conscientious objectors. They 0:16:32.240 --> 0:16:35.400 saw kind of all these pressures on their prescribing practices, 0:16:35.960 --> 0:16:38.880 and for some of them, they didn't consider it worth 0:16:38.920 --> 0:16:42.239 it to continue to work under those circumstances. Some described 0:16:42.760 --> 0:16:46.760 fear of uh losing their licenses because of the situations 0:16:46.760 --> 0:16:49.920 they were put in, et cetera. Uh So, so they 0:16:49.960 --> 0:16:53.240 often moved on. Um, there's a whole host of support 0:16:53.360 --> 0:16:57.239 staff who uh you know, felt unsupported as the company's 0:16:57.360 --> 0:17:03.640 profile skyrocketed, doubled its evaluation alone from uh, I'm sorry, 0:17:03.680 --> 0:17:06.800 quadroubled it from June to December of last year to 0:17:07.000 --> 0:17:10.719 four point billion UM. Basically unable to keep up with 0:17:10.760 --> 0:17:16.320 this demand. And uh, patient experience varies widely. Some people 0:17:16.440 --> 0:17:19.520 really need more more tender, loving care than they can 0:17:19.560 --> 0:17:23.400 get under this kind of touch and go environment, UM, 0:17:23.440 --> 0:17:25.359 and felt like they didn't get it. We talked to 0:17:25.440 --> 0:17:28.960 somebody who you know, her first ary employments average nineteen 0:17:29.000 --> 0:17:32.960 minutes each UM when she joined the service. And for 0:17:33.040 --> 0:17:36.720 other people, and these are people who are either geographically 0:17:36.760 --> 0:17:41.439 remote or you know, or uninsured. Um, they can have 0:17:41.480 --> 0:17:44.480 positive experiences. If you have a prescription already and you 0:17:44.600 --> 0:17:47.200 can't get it filled, and you need somebody refilling, and 0:17:47.240 --> 0:17:50.399 you live you know, far away from you know, a 0:17:50.440 --> 0:17:54.480 psychiatrist or other psychiatric prescriber, Uh, this this can be 0:17:54.520 --> 0:17:57.399 a huge opportunity. Yeah, it's also a big question I 0:17:57.440 --> 0:17:59.920 think for what regulators are are going to think moving forward. 0:18:00.040 --> 0:18:02.840 We only have twenty seconds left, Caleb, But um, what 0:18:02.880 --> 0:18:04.560 can you tell us about the way that regulators are 0:18:04.600 --> 0:18:07.719 potentially looking at this? Look you tell what health has 0:18:07.760 --> 0:18:11.080 been seen as a huge boon. I think that continues 0:18:11.160 --> 0:18:15.359 to be the predominant narrative. I think they're going to 0:18:15.560 --> 0:18:18.040 try to find a way to try to make sure 0:18:18.080 --> 0:18:20.280 that people are able to do this in the future. 0:18:20.640 --> 0:18:23.560 The really important story. Caleb melb Caleb Melby is financial 0:18:23.560 --> 0:18:26.200 investigations reporter for Bloomberg News. He joins us on the 0:18:26.240 --> 0:18:28.640 phone from Brooklyn Joel Weber, editor at Bloomberg Business Week, 0:18:28.680 --> 0:18:31.240 with us in the Bloomberg Interactive Broker Studio. Check out 0:18:31.280 --> 0:18:33.400 the story. It is in the current issue of Bloomberg 0:18:33.400 --> 0:18:34.920 Business Week magazine. You can read it now on the 0:18:34.920 --> 0:18:41.200 Bloomberg terminal and at Bloomberg dot com slash business Week. Yeah, 0:18:41.280 --> 0:18:46.240 but you let me drive? Oh no, no, no, please, 0:18:46.359 --> 0:18:57.280 I'll do. I want to try. It's good question. The 0:18:57.480 --> 0:19:03.480 drive to the clobe me a thing radio, it's the 0:19:03.640 --> 0:19:05.879 drive to the clothes. We are just over ten minutes 0:19:05.880 --> 0:19:08.760 away from the close of trading on this Tuesday, March fifteen, 0:19:08.840 --> 0:19:12.040 stocks just coming down from their session Highsma, Katie. We've 0:19:12.040 --> 0:19:15.679 got a great voice to comment on all things markets 0:19:15.720 --> 0:19:18.480 today and fed tomorrow. Yeah, Tim, I'm excited about that one. 0:19:18.480 --> 0:19:20.720 We're joined now by Liz Young. She is head of 0:19:20.760 --> 0:19:23.800 investment strategy at so Far and Liz, I'm excited to 0:19:23.800 --> 0:19:25.920 talk to you because I've been thinking about the old 0:19:25.920 --> 0:19:27.960 curve a lot. I know you've been thinking about the 0:19:28.000 --> 0:19:30.639 yield curve a lot, And I'm curious how much do 0:19:30.680 --> 0:19:32.640 you think that the FED is thinking about the yield 0:19:32.640 --> 0:19:34.280 curve right now? Because if I look at the two 0:19:34.640 --> 0:19:38.359 tens yield curve, I see it about thirty basis points, 0:19:38.359 --> 0:19:42.639 which seems very very flat. Yeah, I think about the 0:19:42.680 --> 0:19:47.000 yield curve more than I'd like to, and I think 0:19:47.119 --> 0:19:50.200 the FED probably does too, especially at these levels. So 0:19:50.400 --> 0:19:53.680 as you mentioned that spread between the twos and tens, 0:19:53.720 --> 0:19:56.879 I mean it was below thirties for a period of 0:19:56.920 --> 0:19:59.200 time today, and I think that that is a pretty 0:19:59.240 --> 0:20:03.360 fragile place for us to be heading into a hiking cycle. 0:20:03.800 --> 0:20:06.720 And the FED may not care as much about the 0:20:06.760 --> 0:20:09.360 equity market correcting and some of the drawdown that we've seen, 0:20:09.480 --> 0:20:12.919 especially coming off of all time highs, probably felt like 0:20:13.000 --> 0:20:15.159 we had some room to draw down. But when you 0:20:15.200 --> 0:20:17.560 look at what happens with the yield curve, what you 0:20:17.600 --> 0:20:20.720 don't want to see is a true inversion. Now, the 0:20:20.840 --> 0:20:23.760 good thing about if we get close to inversion, it 0:20:23.800 --> 0:20:27.400 doesn't really count as a true inversion. That's a signal 0:20:27.720 --> 0:20:30.119 until it's lasted for a reasonable amount of time, and 0:20:30.160 --> 0:20:32.800 it was a big enough spread of an inversion, So 0:20:33.720 --> 0:20:38.160 reasonable amount of time. I mean, this is an opinion thing, 0:20:38.240 --> 0:20:40.600 but I would say at least a month. I think 0:20:40.600 --> 0:20:42.840 it has to stay inverted for a month, and it 0:20:42.880 --> 0:20:45.520 has to be let's call it twenty five basis points 0:20:45.600 --> 0:20:48.480 at least, right, So sometimes you might get an intra 0:20:48.560 --> 0:20:50.920 day inversion where it just kind of dips below zero 0:20:51.000 --> 0:20:52.680 for a second and it comes back and it never 0:20:52.720 --> 0:20:55.800 really closes inverted, or maybe it inverts by a very 0:20:55.800 --> 0:20:57.840 small amount for a couple of days. I don't think 0:20:57.840 --> 0:21:00.960 that counts as a true signal. Okay, So help us 0:21:00.960 --> 0:21:02.879 think about this in the context of what the Federal 0:21:02.880 --> 0:21:06.600 Reserve is Board is talking about right now, the decision 0:21:06.600 --> 0:21:09.000 that we'll here tomorrow at two pm Wall Street time, 0:21:09.320 --> 0:21:12.520 and uh, what investors really need to understand about the 0:21:12.560 --> 0:21:16.400 tough task that the FED has ahead of it. Yeah, 0:21:16.560 --> 0:21:19.480 I mean I do not envy the FED situation. I 0:21:19.960 --> 0:21:22.840 think they are up against a lot of different challenges, 0:21:22.960 --> 0:21:27.040 especially because we've put as investors and when we talked 0:21:27.040 --> 0:21:29.639 about the economy, we've put so much pressure on the 0:21:29.680 --> 0:21:31.520 FED to be able to solve a lot of the 0:21:31.560 --> 0:21:34.560 problems and frankly, they don't have the tools to solve 0:21:34.600 --> 0:21:38.200 all the problems that we might have. So heading into this, 0:21:38.800 --> 0:21:41.000 when you look at really what their job is, their 0:21:41.080 --> 0:21:43.800 job is to promote maximum employment and I think we 0:21:43.840 --> 0:21:47.600 can check that box and control prices. So their main 0:21:47.680 --> 0:21:51.040 purpose right now is to get inflation under control. Now 0:21:51.080 --> 0:21:54.240 what that means, though, is the piece of the inflation 0:21:54.280 --> 0:21:57.159 picture that they can control is really the demand side. 0:21:57.440 --> 0:22:00.360 They can't control the supply side, So what they would 0:22:00.400 --> 0:22:03.240 actually be intending to do is to get demand to 0:22:03.440 --> 0:22:06.800 relax to the point where supply can actually meet it 0:22:07.080 --> 0:22:10.600 and inflation relax as a little bit as a result. Now, 0:22:10.640 --> 0:22:13.200 I think some of the pressures come off because oil 0:22:13.200 --> 0:22:16.160 prices have come down from their peak last week, and 0:22:16.359 --> 0:22:19.040 we saw some of the moderation and pp I numbers 0:22:19.040 --> 0:22:21.320 today at least a month over month pp I numbers, 0:22:21.320 --> 0:22:25.000 So that's promising, but we need to see more sustained 0:22:25.040 --> 0:22:29.040 relax agent relaxation in inflation. Right now, their hands are tied. 0:22:29.160 --> 0:22:31.200 They have to hike, and they have to hike into 0:22:31.240 --> 0:22:33.720 a period where markets are down, and Liz I mean 0:22:34.000 --> 0:22:36.840 FED leadership has made clear that they see hikes as 0:22:36.880 --> 0:22:39.320 the primary tool here that they want to use. But 0:22:39.720 --> 0:22:42.119 how do you think they use the balance sheet this 0:22:42.200 --> 0:22:46.520 time around in terms of, you know, quantitative tightening. Yeah. 0:22:46.640 --> 0:22:49.399 So the thing about hikes is that if they start 0:22:49.760 --> 0:22:52.280 and move too quickly, or they go too big, it's 0:22:52.280 --> 0:22:55.400 all about the messaging. It's not necessarily about the move itself. 0:22:55.400 --> 0:22:58.439 It's about the messaging. And if the market starts to 0:22:58.480 --> 0:23:01.119 feel like the Fed is way behind the curve, it 0:23:01.240 --> 0:23:03.760 might get more scared than it already is. So I 0:23:03.800 --> 0:23:06.320 think with the hikes, they have to be gentle, and 0:23:06.359 --> 0:23:08.359 they have to be gradual about it, and they have 0:23:08.480 --> 0:23:11.480 to message them very clearly, which Jerome Powell did in 0:23:11.520 --> 0:23:14.119 his testimony a couple of weeks ago. It was very clear, 0:23:14.480 --> 0:23:19.320 very specific, surprisingly specific about wanting a twenty five basis 0:23:19.320 --> 0:23:22.280 point hike tomorrow. I think we will continue to hear 0:23:22.440 --> 0:23:25.600 very clear messages from them about rate hikes. What they 0:23:25.680 --> 0:23:29.280 might do with the balance sheet is directly impact the 0:23:29.359 --> 0:23:31.800 yield curve. So if they start to feel uncomfortable with 0:23:31.800 --> 0:23:33.760 where the yield curve is or how flat the yield 0:23:33.840 --> 0:23:37.560 curve is, they may start to signal outright sales from 0:23:37.600 --> 0:23:40.600 the balance sheet rather than just letting assets roll off. 0:23:40.960 --> 0:23:43.400 Because that may cause a little bit of a rise 0:23:43.480 --> 0:23:46.040