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The US Economy And Investing In Tech And Healthcare · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. I want to get
0:22
Speaker 1: right to because we've got a lot of eco talk here.
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Speaker 1: Seth Carpenter, chief economists for Morgan Stanley joins is. He's
0:27
Speaker 1: got his PhD from Princeton, so he is familiar with
0:30
Speaker 1: Hoagi Haven, which the best cheesteak cogi on the planet.
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Speaker 1: He's got his undergraduate from William and Mary, which is
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Speaker 1: a you know, good, you know, a nice foe to
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Speaker 1: my University of Richmond Spiders, so I'm very familiar with women. Mary. Hey, Seth,
0:42
Speaker 1: thanks so much for joining us here. Let's start with
0:44
Speaker 1: the FED yesterday. What's your takeaway? Uh? Yeah, quite a
0:49
Speaker 1: quite a meeting, long conference. Uh. Inflation, inflation, Inflation came
0:53
Speaker 1: Inflation came up so many times. Bells clearly concerned about it,
0:57
Speaker 1: if anything, incrementally more so than in December. He said,
1:01
Speaker 1: if he had the chance to revise his forecast for
1:03
Speaker 1: inflation this year, he would revise it up, so I
1:05
Speaker 1: think that's important. So was incrementally, I would say, more
1:08
Speaker 1: hawkish than December. I think the initial reaction in markets
1:12
Speaker 1: was that it was a ton more hawkish than before,
1:14
Speaker 1: and I guess I'll take a little bit of the
1:16
Speaker 1: under there. But clearly he's focused on inflation. Clearly they're
1:19
Speaker 1: ready to go. Clearly they have a lot of strategizing
1:23
Speaker 1: to do. So March rate hike looks really solid. I
1:26
Speaker 1: think there's an open question still about the timing of
1:28
Speaker 1: when they run off the balance sheet. So going into
1:31
Speaker 1: the meeting, the market I think was extremely howk as
1:34
Speaker 1: we were talking about four rate hikes priced into the
1:36
Speaker 1: market at the time, all Chairman Powell had to do
1:39
Speaker 1: was come off just relatively dubbish compared to what the
1:42
Speaker 1: market was expecting, and you would have seen a risk rally,
1:46
Speaker 1: essentially a relief rally. We saw the exact opposite. Now
1:49
Speaker 1: you have a bond markets pricing in five full rate
1:52
Speaker 1: hikes in two. Is the market right when it comes
1:56
Speaker 1: to the Fed? I'm not quite sure that the straight
2:00
Speaker 1: read yesterday was the right one. I think there was
2:02
Speaker 1: a lot of confirmation bias going on. You're right, the
2:05
Speaker 1: market came in feeling kind of hawkish, and then when
2:08
Speaker 1: questions came up about you know, are you are they
2:10
Speaker 1: going to hike at every meeting? Are they going to
2:11
Speaker 1: do fifty basis point hike in March? I think the
2:14
Speaker 1: market took Powell's answer, which I think he meant to be,
2:19
Speaker 1: to not give it a steer, not give any direction.
2:21
Speaker 1: I think markets took bit as well. He didn't push back,
2:23
Speaker 1: So it must be, you know, more likely than it
2:25
Speaker 1: was before. Um, you know, it remains to be seen
2:28
Speaker 1: a little bit. Exactly exactly, seth We had a just
2:32
Speaker 1: a whole slow of ECO data and I'm looking at
2:34
Speaker 1: my e CEO GO screen here on the Bloomberg terminal
2:38
Speaker 1: gives you all the the ego data here. What's the
2:41
Speaker 1: big one for you? Was that the g d P
2:43
Speaker 1: the six point nine percent print that got your tention?
2:45
Speaker 1: Or what are you really focusing on from this morning's data?
2:49
Speaker 1: A little bit less? So the g d D print itself.
2:51
Speaker 1: I mean, it was an upside surprise. We knew the data,
2:53
Speaker 1: we knew that it was going to be strong at
2:55
Speaker 1: some point It's a little hard to say this with
2:58
Speaker 1: a straight face, but the difference between six or something
3:01
Speaker 1: percent versus six point nine percent, uh isn't isn't first
3:04
Speaker 1: order huge. There was an upboard surprise in inventories, for example.
3:08
Speaker 1: I think the components of GDP are more important than
3:11
Speaker 1: the individual Uh. You know, the headline number for GDP
3:14
Speaker 1: at inventories number, it's pretty pretty interesting. It might give
3:19
Speaker 1: you a little bit of relief that some of the
3:20
Speaker 1: backlogs and supply chain disruptions and that sort of thing
3:23
Speaker 1: are half the peak and starting to ease. Uh. And
3:26
Speaker 1: so for me, it really is the components. Uh. The
3:30
Speaker 1: rest of it, the durable good sort is going down.
3:32
Speaker 1: I think was big. A lot of that was in transportation.
3:34
Speaker 1: So but nevertheless, uh, you know, the momentum in the
3:38
Speaker 1: first quarter, uh is interesting for me. But the first
3:42
Speaker 1: quarter looks like we're going to have a bit of
3:43
Speaker 1: a soft patch. Talk to us a little bit about
3:47
Speaker 1: the inflation picture here, because yes, we're seeing perhaps some
3:50
Speaker 1: signs of those supply chain pressures easing a little bit.
3:52
Speaker 1: But Chamith how was quite clear that that's going to
3:54
Speaker 1: stick around. Those issues are going to stick around, at
3:57
Speaker 1: least for the remainder of this year. And I'm also
4:00
Speaker 1: of looking at oil prices here, we're we're looking at
4:01
Speaker 1: just shive. Well, we were before this recent dip here
4:05
Speaker 1: Brent now at about eighty nine dollars a barrel, but
4:06
Speaker 1: we were nearing barrel Goldman, for example, upgrading their forecast
4:10
Speaker 1: to a hundred by year end. How much of the
4:14
Speaker 1: oil picture should we be focusing on in terms of
4:17
Speaker 1: driving the direction of the economy. So I don't think
4:21
Speaker 1: the oil picture is going to be driving the direction
4:23
Speaker 1: of the economy. But there's clearly you know, strong demand
4:26
Speaker 1: in the US, strong global demand, and we really have
4:28
Speaker 1: a lot of questions about supply. There's a reluctance to
4:31
Speaker 1: do much in the way of investment in oil given
4:34
Speaker 1: the you know picture down the road of of the
4:36
Speaker 1: push towards screening of of of the economy, and so
4:40
Speaker 1: you know, we are U facing really high oil prices.
4:43
Speaker 1: I think I think that matters for the US that
4:45
Speaker 1: I don't think it's the first order driver that's going
4:48
Speaker 1: to be going on for the US in terms of
4:50
Speaker 1: you know, real outcomes. I'm I'm more interested in how
4:53
Speaker 1: is the consumer doing. Are we going to see that
4:55
Speaker 1: shift in consumer spending from goods towards services that we
4:58
Speaker 1: and I think a lot of others have been expecting.
5:01
Speaker 1: I'm not sure oil is going to be driving that shift.
5:02
Speaker 1: I think it's going to be once people have over
5:04
Speaker 1: consumed in terms of goods, that that shift will be inevitable.
5:08
Speaker 1: Well you read my mind when it comes to the consumer,
5:10
Speaker 1: because I was thinking gas prices as well. When we're
5:12
Speaker 1: talking about the consumer, though, we know that fiscal impact
5:15
Speaker 1: is going to be fading, we know savings are being depleted.
5:17
Speaker 1: Here do you continue to see that really strong consumer
5:22
Speaker 1: um for maybe not this year, maybe not next year,
5:25
Speaker 1: but continuing and say what's in the next five years
5:28
Speaker 1: as that being a driver of the economy. I do?
5:32
Speaker 1: I do. I think it's hard to imagine the US
5:34
Speaker 1: economy where the consumer is not the driver. The U
5:37
Speaker 1: S economy is. I think for the foreseeable future are
5:40
Speaker 1: going to be a reflection of the U. S. Consumer.
5:42
Speaker 1: I think the fiscal uh fading this year is an
5:45
Speaker 1: interesting point. We know that the child tax credit, for example,
5:50
Speaker 1: ended and it didn't get extended because build back Better
5:52
Speaker 1: didn't get passed. I think there in lies one serious
5:55
Speaker 1: short term headwind for the consumer but if over the
5:59
Speaker 1: horizons that you're talking thinking about a couple of years,
6:01
Speaker 1: I think it really is going to come down to
6:03
Speaker 1: what's going on with job creation, what's going on with
6:06
Speaker 1: with wages, because that's going to be the core of
6:08
Speaker 1: what's driving consumer spending. And and yeah, I think I
6:11
Speaker 1: think is going to be king of the US economy
6:13
Speaker 1: for the foreseeable future. Alright, so thanks so much for
6:17
Speaker 1: joining us. Really appreciate getting some of your time here
6:20
Speaker 1: to talk through again what we heard from the FED
6:22
Speaker 1: yesterday and then obviously the EGO data that was reported
6:25
Speaker 1: this morning by the U. S. Government. Seth Carpenter, chief
6:27
Speaker 1: economists for Morgan Stanley, the message is clear. Interest rates
6:38
Speaker 1: are going up. That means the discount rate you use
6:41
Speaker 1: in your discount of cash flow goes higher. So for
6:45
Speaker 1: some of those tech companies where they get a lot
6:47
Speaker 1: of value with their terminal value, that's the thing. Let's
6:51
Speaker 1: bring in somebody who thinks about tech investing and find
6:54
Speaker 1: out how much of a thing that is. Lisa Chi,
6:55
Speaker 1: partner at Robo Global. Lisa, how are you guys thinking
6:59
Speaker 1: about investing here in as we go into a what
7:04
Speaker 1: is clearly a rising interest rate environment? How do you
7:07
Speaker 1: guys think about that. I think that this UM in
7:11
Speaker 1: the last several months, there's obviously a lot of focus
7:14
Speaker 1: around some of the high growth companies and the impact.
7:18
Speaker 1: We tend to really look at these companies in a
7:21
Speaker 1: very longer term in terms of their transformative powers, and
7:26
Speaker 1: the company that we're talking to are really not really
7:29
Speaker 1: that focused and and focusing and managing their business around
7:33
Speaker 1: interest rate. I think that is uh, definitely something that
7:36
Speaker 1: we investors look at, But longer term, we do believe
7:39
Speaker 1: that there is a lot of transformative impacts happening with
7:43
Speaker 1: technologies and like our official intelligence and metaverse UM that's
7:47
Speaker 1: really driving kind of the future of digital experience in
7:50
Speaker 1: digital technology. So we tend to kind of look at
7:53
Speaker 1: companies in a longer term and very somatic way. So
7:57
Speaker 1: we're finding that our investors under stan uh some of
8:01
Speaker 1: the technologies and the longer term secular trends are really
8:05
Speaker 1: driving the growth here. So if you do look at
8:07
Speaker 1: it that way, I think the current dynamics of all
8:11
Speaker 1: the focus and the panic around interest rate seems very
8:14
Speaker 1: short term. It kind of sounds like you're saying that
8:18
Speaker 1: perhaps you could see continued growth in some of these
8:21
Speaker 1: big tech names that we've seen in the last say decade.
8:25
Speaker 1: What's your thought on that is that are we are
8:27
Speaker 1: we done with that kind of big boom in those
8:29
Speaker 1: big tech companies or is there still more to come.
8:33
Speaker 1: I think there's a lot more to come. I think
8:34
Speaker 1: we're really seeing this next generation of Internet technology that's
8:38
Speaker 1: really developing. You're seeing the ecosystem of companies that's been
8:43
Speaker 1: driven by the tech giants. And you saw that a
8:46
Speaker 1: few nights ago when Microsoft CEO made a lot of
8:49
Speaker 1: comments about increasing their R and D investments around metaverse
8:53
Speaker 1: technologies and and the gaming and also they're in the
8:55
Speaker 1: price technology. So that tells you if you look at
8:58
Speaker 1: uh these company needs in the past, when they were
9:01
Speaker 1: worried about the economy and interest rates, they did pull
9:04
Speaker 1: back on their spending with different Here seems to me
9:08
Speaker 1: that many of these companies really feel great about the
9:12
Speaker 1: next generation of technology being developed, you know, fueled by
9:15
Speaker 1: the cloud deployment and also probably accelerate by the pandemic
9:19
Speaker 1: with all of this staying at home and working from home,
9:21
Speaker 1: so much of our experience, that digital experience has really
9:26
Speaker 1: pushed some of the Internet technology to sort of the
9:29
Speaker 1: next generation and That's why I think these companies and
9:32
Speaker 1: the CEOs feel really comfortable about the visibility over the
9:36
Speaker 1: next couple of years, and they're investing and they're moving forward,
9:39
Speaker 1: and that that gives you some comfort as to the
9:42
Speaker 1: technology investing in the growth rate. I don't really think
9:45
Speaker 1: it's gonna slow down anytime soon. I think right now
9:49
Speaker 1: you are seeing lots of emotional trading and impact that's
9:52
Speaker 1: happening right now. But longer term, I don't think artificial
9:55
Speaker 1: intelligence is going away. I don't think digital experience is
9:59
Speaker 1: going to go away, and I think it's probably just
10:01
Speaker 1: gonna advance over time, right at least. You know, one
10:04
Speaker 1: of the big M and A trades that got my
10:05
Speaker 1: attention over the last couple of weeks was Microsoft's nearly
10:08
Speaker 1: sixty nine billion dollar act of acquisition of Activision, the
10:12
Speaker 1: gaming company. What did you guys think about that deal? Yeah, well,
10:17
Speaker 1: it was strategically it makes sense. We were surprised, um
10:21
Speaker 1: like many other investors, that they had this. They made
10:24
Speaker 1: this acquisition because it is Microsoft's largest acquisition to date
10:29
Speaker 1: and it is a company that has a very strong assets,
10:32
Speaker 1: but also give you some glimpse as to what they're
10:35
Speaker 1: thinking about while they commented that healthcare was an area
10:39
Speaker 1: they really interested in, you could see that healthcare getting
10:42
Speaker 1: penetrating into that sector. It's gonna be it's gonna be difficult,
10:45
Speaker 1: it's going to take a longer time. The gaming industry
10:48
Speaker 1: is booming, it's being accelerated by the pandemic, and all
10:51
Speaker 1: of us with our smartphones are going to be using
10:54
Speaker 1: more of the mobile game and that's where the money
10:56
Speaker 1: is at this point. So you could see that Microsoft
10:59
Speaker 1: strategy g whether it's it's a metaverse strategy or the
11:03
Speaker 1: gaming strategy there really want to own the consumer, not
11:07
Speaker 1: just in the inner price level but also at home,
11:09
Speaker 1: so they really want to build at their subscription revenue.
11:12
Speaker 1: So that's really about their mobile side of the business
11:14
Speaker 1: and obviously their power for that multiplayer experience for the
11:19
Speaker 1: metaverse strategy. But you're stung to see a lot of
11:22
Speaker 1: tech joints like Microsoft really trying to build their sub
11:24
Speaker 1: subscription revenue. So over time, these are the big implications
11:29
Speaker 1: is that our lives is going to be really all
11:31
Speaker 1: of our lives canna be generated based on our subscription
11:35
Speaker 1: revenues right at home and also at work, and that's
11:37
Speaker 1: gonna blur all right, Lisa, thank you so much for
11:40
Speaker 1: joining us. Really appreciate getting your thoughts here on the text.
11:43
Speaker 1: Basically say she's a partner at Robot Global. All right,
11:50
Speaker 1: we've spent a lot of time here talking about some
11:52
Speaker 1: really big picture economic issues. Supply chain woes. We heard
11:56
Speaker 1: that from one Flowers today that impacted them um rising
12:01
Speaker 1: interest rates. I was certainly in the topic to Joy
12:03
Speaker 1: yesterday afternoon with the Federal Reserve. But let's drill down
12:07
Speaker 1: a little bit and look at the small business owner
12:09
Speaker 1: and how is a small business owner dealing with the
12:11
Speaker 1: economic disruption we've seen from this pandemic and the resulting
12:15
Speaker 1: head winds. Derek Ellington is the perfect person that chat
12:18
Speaker 1: with about that. Derek Ellington is ahead of small business
12:21
Speaker 1: for Wells Fargo. Derek, I'd love to get your thoughts
12:24
Speaker 1: on kind of what are the top you know, one
12:26
Speaker 1: to three challenges for small businesses in America today. Thank you, Paul.
12:33
Speaker 1: I really appreciate the opportunity to be on the show
12:36
Speaker 1: with you today, and again a great question around the
12:40
Speaker 1: outlook for small businesses and some of the challenges that
12:43
Speaker 1: still persist. I'd say starting with supply chain issues. Uh,
12:48
Speaker 1: they continue to persist materials and other costs continue to rise.
12:55
Speaker 1: Hiring also remains a challenge. But I'll say this, one
12:59
Speaker 1: common theme we've continue to see throughout this entire pandemic
13:04
Speaker 1: is how resilient small businesses are. If you look at
13:07
Speaker 1: the past twelve months in particular, we've seen our small
13:12
Speaker 1: businesses continue to pivot and adjust their business models to
13:16
Speaker 1: better accommodate the needs of their clients, leverage technology and
13:20
Speaker 1: other resources to adapt to the changing environment. And we've
13:25
Speaker 1: also seen a record number of new business starts, particularly
13:30
Speaker 1: many folks during this great resignation making the decision to
13:34
Speaker 1: start their own businesses. So when we think about the
13:38
Speaker 1: outlook for small businesses in two it's bright, and it's
13:43
Speaker 1: building off of that strong fourth quarter GDP growth. We
13:47
Speaker 1: all solve fuel by accelerated consumer consumption. Touch us a
13:52
Speaker 1: little bit about how perhaps government aid or lack thereof,
13:57
Speaker 1: is impacting small businesses. My dad, for example, a small
14:00
Speaker 1: business owner, and in the depths of the pandemic that
14:03
Speaker 1: the small business loans was a big part of what
14:06
Speaker 1: kept him afloat. Talks us a little bit about how
14:09
Speaker 1: small businesses are navigating this environment when perhaps some of
14:12
Speaker 1: that government help is receding. That's a great question, pretty
14:17
Speaker 1: and I'd say that the the government funding was critical
14:22
Speaker 1: in supporting our small businesses. That was one thing that
14:27
Speaker 1: as a country we saw one thinking about that when
14:30
Speaker 1: you look at the whole U S economy, uh of
14:35
Speaker 1: all businesses are small businesses in America, so that stimulus
14:40
Speaker 1: funding being targeted on helping small businesses was critical. We
14:45
Speaker 1: stall businesses take that support and use it to capitalize
14:51
Speaker 1: their businesses while they were closed, to also invest in
14:55
Speaker 1: their businesses and keep employees on staff while things got
15:00
Speaker 1: back to better footing in the economy. And as a
15:04
Speaker 1: result of that, we saved a tremendous amount of jobs
15:08
Speaker 1: in our economy by making those decisions to provide that support,
15:12
Speaker 1: and it also limited the amount of additional borrowing that
15:18
Speaker 1: many small businesses had to take on during the pandemic
15:22
Speaker 1: in order to to to survive and get to the
15:26
Speaker 1: other side of the challenges. So we've seen that funding
15:30
Speaker 1: a critical element of survival and support during these challenges. Derek,
15:36
Speaker 1: what are you hearing from your small business customers about
15:40
Speaker 1: the labor market challenges? It just seems like every small
15:43
Speaker 1: business has a help wanted sign out and it's not
15:46
Speaker 1: even small businesses. I was down Durham, North Carolina over
15:50
Speaker 1: the weekend going to a cracker barrel and I walk
15:53
Speaker 1: into the cracker bartle on Sunday morning, prime time, and
15:56
Speaker 1: they said it's gonna be an our weight And I
15:57
Speaker 1: look around, there's like half the tables full, and it's
15:59
Speaker 1: because only had three servers and usually have twenty. Yes,
16:03
Speaker 1: there was an inch of snow like two days before
16:05
Speaker 1: which shut down the entire city. But talk to us
16:07
Speaker 1: about the labor market and how small businesses are dealing
16:10
Speaker 1: with it. Great question again, Paul, and there are a
16:15
Speaker 1: couple of barbells around. Uh. The challenges small businesses are
16:19
Speaker 1: facing around labor one is the cost of just wages
16:25
Speaker 1: in general have gone up significantly in the current labor environment.
16:30
Speaker 1: We've seen a lot of individuals who were retirement eligible
16:35
Speaker 1: make a decision to retire. We've seen other folks make
16:39
Speaker 1: decisions that they want to go in a different line
16:42
Speaker 1: of work, and that's put a lot of pressure on
16:46
Speaker 1: labor capacity and availability. But for the top workers along
16:51
Speaker 1: every aspect of the spectrum, particularly those skilled laborers, the
16:56
Speaker 1: cost of employing those individuals and the copy titian for
17:00
Speaker 1: that talent has gone way up. And also again the
17:04
Speaker 1: other barbell again is that there are fewer workers available
17:08
Speaker 1: in general because of the wave of retirements as well
17:12
Speaker 1: as those that again have pivoted to other industries as
17:18
Speaker 1: as they've had time to reflect on their long term
17:22
Speaker 1: career aspirations. And again that's made it very tough for
17:25
Speaker 1: our small businesses to compete for that talent, particularly at
17:28
Speaker 1: the lower end of the wage spectrum. Yeah, very interesting dynamic.
17:33
Speaker 1: It's interesting to see how again a lot of these
17:35
Speaker 1: businesses react. Deric Ellington, thanks so much for joining us.
17:38
Speaker 1: Deeric Ellington is the head of Small Business for Wells Fargo. Well,
17:45
Speaker 1: I'll tell you one thing that a good global pandemic
17:48
Speaker 1: will do, will get you to focus even more on healthcare,
17:51
Speaker 1: healthcare trends, healthcare costs. Um. I think we've all kind
17:55
Speaker 1: of gotten become a little bit of an expert on
17:58
Speaker 1: those types of things, and let's get some color. Let's
18:01
Speaker 1: get a thirty foot view on all things healthcare with
18:03
Speaker 1: Ash Shahata, Partner Advisory Industry Leader Health Plans at KPMG.
18:08
Speaker 1: Ash thanks so much for joining us. I know you
18:10
Speaker 1: guys do a lot of survey work thinking about kind
18:12
Speaker 1: of what are the trends in healthcare here as we
18:16
Speaker 1: maybe back away a little bit from COVID, what are
18:18
Speaker 1: some of the bigger trends that you guys are looking
18:20
Speaker 1: out for. Well, thanks, Paul. You know, the trends are
18:24
Speaker 1: pretty amazing going into the year, and there's just so
18:26
Speaker 1: much excitement and energy, as you know, in the healthcare
18:29
Speaker 1: and life sciences sector. One of the big heepny percent
18:32
Speaker 1: of healthcare and life sciences surveys basically said about half
18:36
Speaker 1: of the healthcare and life sciences investors they're saying they
18:38
Speaker 1: want to do more deals than last year, and last
18:41
Speaker 1: year was already kind of a landmark year, and we're expecting,
18:45
Speaker 1: you know, somewhere in the neighborhood of ten percent more deals.
18:49
Speaker 1: The other I think he data point is for intent
18:51
Speaker 1: life sciences investors, and thirty percent of healthcare investors say
18:55
Speaker 1: that they actually, you know, are are really really kind
18:58
Speaker 1: of focusing on that ten percent growth numbers. So it's
19:01
Speaker 1: it seems to me that you know, they're ready to go,
19:03
Speaker 1: and I we know we have some headwinds, but there's
19:06
Speaker 1: a lot of enthusiasm in the market right now. How
19:09
Speaker 1: much of that enthusiasm is coming from the COVID nineteen
19:14
Speaker 1: pandemic as opposed to just kind of the momentum in
19:16
Speaker 1: the biotech space pre pandemic. Great, great question. Great. I
19:21
Speaker 1: mean I think the you know, obviously the pandemic put
19:24
Speaker 1: put some accelerators on on some things and also put
19:27
Speaker 1: some pauses a little bit on the healthcare side. So
19:30
Speaker 1: I think most of this has really been kind of
19:32
Speaker 1: the sustainability of the industry. We are seeing kind of
19:35
Speaker 1: very strong demographic growth. We're seeing you know, investments in
19:39
Speaker 1: technology across the board, post acute care, biotech. So I
19:44
Speaker 1: think it really is about looking for those good valuations,
19:47
Speaker 1: looking at those good opportunities. I mean, just the point
19:50
Speaker 1: on valuation growth, biopharmas expecting sixt valuation growth, med device sevent,
19:57
Speaker 1: farmer services sevent, even healthcare I t on other se
20:03
Speaker 1: So it is very very positive, and I think when
20:05
Speaker 1: you look at those growth numbers, you really are looking
20:08
Speaker 1: beyond the pandemics. Alright, So Ash, give us your thoughts
20:12
Speaker 1: on inflation here. We're seeing inflation all throughout the US economy,
20:17
Speaker 1: and we've certainly seen it in drug prices. You know,
20:20
Speaker 1: since I don't know the beginning of time, um, how
20:23
Speaker 1: are your clients in the healthcare space thinking about inflation
20:26
Speaker 1: and the impacts on their business. You know, obviously the
20:29
Speaker 1: inflationary trends are our top of mind. Clearly, it will
20:33
Speaker 1: you know, potentially be a headwind, but I think we
20:35
Speaker 1: have options. You know. The nice thing about this sector, uh,
20:38
Speaker 1: it usually is a very strong safe haven inflationary times.
20:42
Speaker 1: Once we get past the kind of pandemic concerns, the
20:46
Speaker 1: expectations that more more UH opportunities will flow into this sector.
20:51
Speaker 1: But I do think optionality is really important. You know,
20:53
Speaker 1: if inflation does start to move up the needle a
20:56
Speaker 1: little bit on the affordability, there will be options to
20:59
Speaker 1: sell uh, potential investments and sponsors and strategic So I
21:03
Speaker 1: think we're going to see that across med device and
21:05
Speaker 1: and even health systems and distributors. I think the other
21:08
Speaker 1: one I would just say is, uh, you know, it
21:10
Speaker 1: might also accelerate deal activity in the first half of
21:13
Speaker 1: the year. Uh, So that actually might be something we
21:15
Speaker 1: want to look at. But in normal circumstances, this is
21:18
Speaker 1: a sector that can handle inflation. And I think when
21:21
Speaker 1: we started to see the data, uh, you know, people
21:24
Speaker 1: were actually factoring that into their growth strategies even ahead
21:27
Speaker 1: of this, you know, recent announcement we're seeing from the FED.
21:31
Speaker 1: Let's just talk about the kind of scrutiny or perhaps
21:34
Speaker 1: the medical regulations that you're going to see around the
21:36
Speaker 1: world now that you have seen see the FDA the
21:39
Speaker 1: c d C kind of diverge from some of the
21:41
Speaker 1: other medical authorities around the world. How much of that
21:45
Speaker 1: is a risk to the sector broadly? You know, I
21:49
Speaker 1: think you kind of look at both sides of this. Uh.
21:51
Speaker 1: You know, obviously the risks are are clearly there, and
21:53
Speaker 1: I think understanding this industry is one that many investors
21:57
Speaker 1: and also corporates have have done well. But I also
22:00
Speaker 1: look at it as an opportunity. I think the fact
22:02
Speaker 1: that we have seen so much collaboration public private partnerships.
22:07
Speaker 1: The one thing that this pandemic has taught us is
22:09
Speaker 1: that the partnership between government and private industry can be tremendous,
22:13
Speaker 1: and not only that, but they can be life saving.
22:15
Speaker 1: So I think there is a kind of an upside
22:17
Speaker 1: sentiment here that, you know, in a regulatory environment where
22:21
Speaker 1: healthcare and life sciences is so strategic to our growth
22:24
Speaker 1: and our survivability as a nation, I think we're going
22:28
Speaker 1: to see that across the globe. So I think you're
22:30
Speaker 1: going to see positives out of this, uh, you know,
22:32
Speaker 1: even more so than than negative downside. It seems like
22:35
Speaker 1: for a while there we had an every time every
22:38
Speaker 1: Monday morning we came into the office, we had a
22:40
Speaker 1: big M and A trade in the healthcare space. How
22:44
Speaker 1: what's your survey data showing you about kind of the
22:47
Speaker 1: outlook of the next year two as released to M
22:49
Speaker 1: and A. Yeah, I think the M and A side
22:52
Speaker 1: of it is is still going to be pretty healthy. Um.
22:54
Speaker 1: So just to give you a kind of the you know,
22:56
Speaker 1: we do kind of expect, you know, in that ten
22:58
Speaker 1: percent growth number I talked to about, a lot of
23:01
Speaker 1: that will be kind of you know, factored in around
23:03
Speaker 1: the growth segment. But I do think you're going to
23:05
Speaker 1: see more and more of it as we start to see,
23:08
Speaker 1: at least on the healthcare side, a little bit of
23:10
Speaker 1: the resumption of the inpatient cases. I think we're looking
23:14
Speaker 1: for a little bit at on certainty, the ease. Uh.
23:16
Speaker 1: And I think as we start to get you know,
23:18
Speaker 1: past the next several months and and this next wave
23:21
Speaker 1: of of you know, the pandemic, you're gonna see M
23:23
Speaker 1: and a kind of resume. I think the other issue,
23:26
Speaker 1: I think we're gonna start to see for M and A,
23:28
Speaker 1: there are going to be opportunities to do strategic M
23:31
Speaker 1: and A not only for growth, but also to look
23:33
Speaker 1: at areas around leveraging resources, staff, I, T and technology.
23:37
Speaker 1: So I think those areas are still ahead of us
23:39
Speaker 1: and we're expecting that to drive further growth for two.
23:43
Speaker 1: All right, Ash, thank you so much for joining us.
23:45
Speaker 1: Really appreciate it as always as Shahada, Partner Advisory Industry
23:49
Speaker 1: leader for Health Plans at KPMG, talking all things healthcare.
23:55
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 1: Matt Miller three. Put on fall Sweeney. I'm on Twitter
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