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Markets, Women's Health, And The Supply Chain (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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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
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Speaker 1: at Bloomberg dot com slash podcast. Let's get right to
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Speaker 1: our next guest, Mike Mulaney, Director of Global Markets Research
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Speaker 1: at Boston Partners Global Investors. Mike, thanks so much for
0:28
Speaker 1: joining us here. You know, as we really continue our
0:32
Speaker 1: focus on the US failed to reserve, the real challenge
0:35
Speaker 1: for a lot of investors is will this failed reserve
0:38
Speaker 1: move to such a point that it may push the
0:41
Speaker 1: US economy inter recession if we're not already in one already.
0:44
Speaker 1: How do how do you think about that? Well, we
0:47
Speaker 1: gauge it based upon what their targets are for their
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Speaker 1: their inflation forecasts, and that we look at core PC,
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Speaker 1: the personal consumption Expenditure Price index, which is really what
0:57
Speaker 1: they focus on. And if you look at the most
0:59
Speaker 1: recent drop plot that came out with last week, um,
1:02
Speaker 1: you know they've got that at the end of two
1:04
Speaker 1: thousand twenty three at two point seven percent. So to
1:08
Speaker 1: drop from where we are right now, which I believe
1:10
Speaker 1: is four point nine percent down to two point seven percent,
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Speaker 1: it's a pretty substantial drop within a relatively short span
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Speaker 1: of time, roughly about eighteen months um. It has been
1:20
Speaker 1: accomplished before. We've seen that kind of a drop over
1:23
Speaker 1: that's kind of a time frame from a historical standpoint,
1:27
Speaker 1: in two instances since nineteen sixty. But one was during
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Speaker 1: basically the the the recession that was called caused by
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Speaker 1: the Arab oil embargo back in nineteen seventy four seventy five,
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Speaker 1: and the second one was back in the in the
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Speaker 1: Voca era when he burst the prior inflation bubble during
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Speaker 1: the ladder part of the nineteen seventies. So to have
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Speaker 1: that kind of a drop in core PCE over eighteen
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Speaker 1: months has generally been associated with recession both times that
1:56
Speaker 1: we've seen that once again since nineteen sixty. By the way,
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Speaker 1: Arthur Burns also I believe at one point got inflation
2:03
Speaker 1: to um well well where it looked like it was
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Speaker 1: under control, and then failed to continue. Then inflation came
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Speaker 1: roaring back in the latter half of the seventies. Right. Um.
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Speaker 1: Basically he blinked, Is it is it a concern with
2:18
Speaker 1: this fat that they're gonna you know, raise to three
2:22
Speaker 1: and a half four or four and a half percent
2:23
Speaker 1: and and get inflation on the way down, but then
2:26
Speaker 1: be confronted by a recession or a bigger market sell
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Speaker 1: off and then start cutting again. Yeah. I think that's probably,
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Speaker 1: you know, something that's in the back of most investors minds,
2:35
Speaker 1: what they'll do if they'll balk at this, if they
2:37
Speaker 1: really will pull a voke or or the pull a
2:39
Speaker 1: Burns one of the two and Um, then I think
2:42
Speaker 1: the way to look at that would be that watched
2:44
Speaker 1: there once again their inflation forecasts and their and their
2:48
Speaker 1: and their financial objections going forward at the at the
2:51
Speaker 1: meetings that are coming up. Um. If they balk and
2:54
Speaker 1: they say once again that you know, they're still talking
2:57
Speaker 1: about a two percent target inflation for PC, not even
3:00
Speaker 1: the two point seven percent, which is once again for
3:03
Speaker 1: the end of two thousand twenty three. Um. If they
3:06
Speaker 1: balk and they start saying, well, you know, two percent
3:09
Speaker 1: is really an unrealistic number because of structural problems that
3:13
Speaker 1: we can't control, and they start raising that, I think
3:16
Speaker 1: that's probably a greater concern for investors because that brings
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Speaker 1: in more of a stay inflation environment potentially going forward. So, Mike,
3:24
Speaker 1: where you had that stock market, is that pricing in
3:27
Speaker 1: a recession? Uh, soft landing not recession? Um. Historically the
3:32
Speaker 1: last four recessions that we've seen, the market's been down
3:35
Speaker 1: over So if indeed we are about to you know,
3:40
Speaker 1: embark on a recession sometime, maybe not in two thousand
3:43
Speaker 1: and twenty two, but most likely in two thousand twenty
3:45
Speaker 1: three once again at the Fed sticks there to their
3:48
Speaker 1: inflation goals, then the market still has additional die inside.
3:52
Speaker 1: From this point, President Biden out saying that a recession
3:56
Speaker 1: is not an inevitability. Uh. Elon Us counters that, well,
4:01
Speaker 1: we're definitely going to have a recession at some point.
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Speaker 1: You can count on that unless we've ended the business cycle, right. Um.
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Speaker 1: But he says it's he thinks it's more likely than
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Speaker 1: not in the near term, and that call is growing
4:12
Speaker 1: in terms of weight um. More and more UH economists
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Speaker 1: on the street are saying, look, it's it seems um
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Speaker 1: maybe or higher the odds of a recession between now
4:25
Speaker 1: and say, is it is it possible? We get a
4:29
Speaker 1: light recession and pull out quickly based upon the magnitude
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Speaker 1: of the change that we've seen in inflation. You know,
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Speaker 1: it's gone up over five in a one year period. UM,
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Speaker 1: that's pretty much almost unprecedented. So to be able to
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Speaker 1: get that under control, I don't think a light recession
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Speaker 1: does it. It's probably gonna have to be something which
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Speaker 1: is more severe. The question is how you know, long
4:54
Speaker 1: live it is. It may not have to last all
4:56
Speaker 1: that long, but I think it's going to have to
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Speaker 1: be relatively deep, basically to flushed the system again and
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Speaker 1: get things back to a kind of a neutral drawing
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Speaker 1: board from an inflation standpoint. So but what about UM
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Speaker 1: different sectors? Could we have a recession? Uh, spares for example,
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Speaker 1: the finance financial sector? Well, most likely if you look
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Speaker 1: historically what sectors have done well during you know, more
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Speaker 1: inflation induced recessionary periods, it's usually been energy materials. So
5:24
Speaker 1: you could see energy materials still in positive territory. Maybe not,
5:29
Speaker 1: you know, by the end of the year, although energy
5:31
Speaker 1: is up a lot still this year, but you can
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Speaker 1: still see, UM those two sectors performing reasonably well in
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Speaker 1: an inflation induced recession. UM At the other end of
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Speaker 1: the spectrum. You would hope that most likely financials would
5:43
Speaker 1: do well on the increase in interest rates, which generally
5:46
Speaker 1: have a positive effect on banks net interest margins, but
5:50
Speaker 1: we haven't seen that as of yet. Part of the
5:51
Speaker 1: reason is that long growth has been you know, pretty
5:54
Speaker 1: much stubborn at about four percent for banks right now,
5:57
Speaker 1: and it hasn't really grown that much. All right, Mike,
5:59
Speaker 1: your rents box are playing five four baseball. There's six
6:03
Speaker 1: games above five on there, but there's thirty games behind
6:06
Speaker 1: my New York Yankees? What are you? What are the
6:08
Speaker 1: folks in Boston thinking this year? We've got more? We've
6:11
Speaker 1: got more right now. So Mo was on our side.
6:13
Speaker 1: It's all I can tell you right now. So we've
6:16
Speaker 1: been doing well to the last probably three weeks, and
6:18
Speaker 1: hopefully that's the turn that we needed, much like we
6:21
Speaker 1: saw basically at the end of last season. Quite frankly.
6:24
Speaker 1: All right, see, you know, Mike's all over our Boston, uh,
6:27
Speaker 1: you know, baseball stuff. Michael Laney, Director of Global Markets Research,
6:30
Speaker 1: Boston Partners Global Investors. Is it still the case that
6:33
Speaker 1: the Red Sox like um look all bearded and mustache
6:38
Speaker 1: e while the New York Yankees have although one of
6:41
Speaker 1: the Yankees has a mustache I noticed. I'm not sure
6:43
Speaker 1: what's going on there, but I think that's an increasingly accepted.
6:46
Speaker 1: Look around this office, more and more of our smartest,
6:49
Speaker 1: you know, reporters and economists have you, no thank you.
6:57
Speaker 1: June is Pride month and a month when we're focusing
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Speaker 1: on equality issues here at Bloomberg Today, are you bringing
7:04
Speaker 1: Ronda Lanche Sharpe, founder and President at the Woman's Institute
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Speaker 1: for Science, Equity and Race, to discuss her recent Bloomberg
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Speaker 1: piece on increasing black economists in the workforce? Ron, thanks
7:16
Speaker 1: so much for joining us here talk to us about again, uh,
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Speaker 1: the the economics business and the economics environment, uh and
7:26
Speaker 1: trying to increase black economists in that workforce. And first
7:31
Speaker 1: of all, thank you for having me. And before I
7:34
Speaker 1: talk about that, I want to make sure that we're
7:36
Speaker 1: clear on some definitions, because there are economists who are
7:41
Speaker 1: economists by their job titled, but aren't pH d level economists.
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Speaker 1: And my article is focused on PhD level economists for
7:51
Speaker 1: a couple of reasons. One, they are the folks who
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Speaker 1: educate undergraduates because econ departments primarily higher pH d economists.
8:01
Speaker 1: So if indeed, you believe that if you see it,
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Speaker 1: you kind of achieve it. If you don't have faculty
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Speaker 1: members who are black, then you may not see it
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Speaker 1: as a as a possibility for you. And I'd also
8:13
Speaker 1: like to acknowledge a black economist, Ronda Williams, who was
8:20
Speaker 1: the first I think black economists that many of us
8:23
Speaker 1: think about who did LBG t Q issues. And I
8:26
Speaker 1: think Rhonda has been dead about twenty years. The International
8:30
Speaker 1: Association for Feminist Economics gives a prize called Ronda Williams
8:34
Speaker 1: Prize that is to acknowledge women feminist scholars who are
8:39
Speaker 1: both activists and UM scholars. And so I just want
8:43
Speaker 1: to make sure that we're clear about economists are those
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Speaker 1: with pH d s, not those whose job titles well,
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Speaker 1: and um, what I would consider incredibly important Rhonda is
8:56
Speaker 1: UM students need to get a diversity of opinions, right
9:00
Speaker 1: end viewpoints. And if all of their professors in e
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Speaker 1: con or in anything frankly are just white, then um,
9:09
Speaker 1: they don't get that. They don't get to see another perspective,
9:13
Speaker 1: and they could very well develop their own perspectives, of course,
9:17
Speaker 1: but I would think it's key, especially to UM you
9:21
Speaker 1: know better universities that pride themselves on giving a better
9:26
Speaker 1: education to UH to provide students with that kind of
9:30
Speaker 1: broad based education. So so I I agree and disagree.
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Speaker 1: And so the ways and I agree is that ideology,
9:39
Speaker 1: the way that you think about problems are absolutely important,
9:42
Speaker 1: and we want to have all of our students see
9:45
Speaker 1: a diversity of that. I think where where I disagree
9:48
Speaker 1: is the assumption that any one of a particular racial
9:52
Speaker 1: group provides a particular perspective. So when I advocate to
9:57
Speaker 1: have more black economists, and this is also a good
10:00
Speaker 1: point for me, time for me to make this point,
10:03
Speaker 1: and that some of the emails that I've received have
10:06
Speaker 1: you know, talked about Asian economists, and that if you
10:09
Speaker 1: look at the data for economists broadly, we are not
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Speaker 1: producing many economists who are American born or permanent residents
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Speaker 1: across any racial group. About six of economists at the
10:23
Speaker 1: PhD level are those who are temporary residents. So we
10:26
Speaker 1: do a great deal of I would say, exporting that education.
10:31
Speaker 1: So so so I just want us to be be
10:34
Speaker 1: cautious there that the reason that I want black economists
10:38
Speaker 1: is partly because there is this thought that there's an ideology,
10:42
Speaker 1: but I think we're the biggest difference is it's the
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Speaker 1: lived experiences that black economists bring um. And while some
10:49
Speaker 1: of that can have some commonalities, if you're a low
10:52
Speaker 1: income or first generation student, there will be some shared experiences.
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Speaker 1: One of the things that we know in America is
10:59
Speaker 1: that people own assume that whites are poor. They don't
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Speaker 1: assume that Asians are poor. They assume that black and
11:05
Speaker 1: Hispanics are more likely to be poor, because that's so
11:08
Speaker 1: much of what we hear in the rhetoric. So it
11:11
Speaker 1: is more about lived experiences to approach the problems. The
11:15
Speaker 1: way that we're all trained is essentially the same. It
11:19
Speaker 1: is our lived experience then may alter how we look
11:22
Speaker 1: at a problem. So RANDI here at Bloomberg, we're all
11:25
Speaker 1: about numbers, all about data. I wonder if you could
11:27
Speaker 1: just kind of put in context the percentage of black
11:30
Speaker 1: PhD economists that are out there, and maybe how that's
11:33
Speaker 1: trended over the last few years and kind of where
11:35
Speaker 1: you'd like to see it go. Um okay. So so
11:39
Speaker 1: there's sort of two ways to sort of think about this. Generally,
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Speaker 1: when we talk about black economists, we are talking about
11:46
Speaker 1: them who's producing any given year and that's about one percent.
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Speaker 1: We're talking black. In general, black men tend to get
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Speaker 1: the larger share of economics doctorates that are awarded than
11:58
Speaker 1: black women. And again, when we're talking black here, we
12:01
Speaker 1: are talking folks who are permanent residents or citizens. We're
12:05
Speaker 1: not talking international students because they don't show up in
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Speaker 1: the data racially. They show up as temporary residents. UM.
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Speaker 1: When we think more broadly, I think our estimates show
12:15
Speaker 1: that maybe they are about four about three to four
12:18
Speaker 1: hundred black economists period who have doctorates UM and and
12:24
Speaker 1: and so that's that's not very many. But it is
12:26
Speaker 1: tough to really get a count on how many economists
12:30
Speaker 1: there are out there, because, um, once you get your doctorate,
12:35
Speaker 1: there really isn't a data set that then tracks you.
12:39
Speaker 1: Meaning you could get your doctorate in economics and then
12:42
Speaker 1: end up working at a bank or doing something that's
12:44
Speaker 1: not that. But you could have gotten your doctorate outside
12:48
Speaker 1: of the US. And then we know that often people
12:51
Speaker 1: come to the US to get employment, so we wouldn't
12:54
Speaker 1: have a record of those who we would look at
12:57
Speaker 1: and you know, typically say that they are black who
12:59
Speaker 1: have pH d's and economics. We don't have a way
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Speaker 1: to track. By the way, what is UM what is
13:06
Speaker 1: keeping these numbers so low? I noticed in your story
13:09
Speaker 1: that Howard is the only HBCU that has uh UM
13:13
Speaker 1: doctorate program in economics, and I think it's a combination
13:18
Speaker 1: of things. You're one if you have been reading the
13:21
Speaker 1: news over probably the last five years. There was a
13:24
Speaker 1: climate study done by the American Economics Association that just
13:27
Speaker 1: talks about the hostility in in the profession. I think
13:32
Speaker 1: that's one. I think that they're The second is people
13:36
Speaker 1: don't know what economics is right, and so they often
13:39
Speaker 1: get us confused with being a business major. I'd say
13:43
Speaker 1: that those are the two, the hostility in the department
13:46
Speaker 1: and then UM and the act the department specifically, but
13:50
Speaker 1: in the profession, what's felt is hostility and that people
13:53
Speaker 1: don't know what economics is, and so often what you'll
13:56
Speaker 1: see is institutions that don't have business majors particul red
14:00
Speaker 1: for undergrads. Students will study economics because they think that
14:04
Speaker 1: that's business and they're just not the same UM. It
14:07
Speaker 1: is difficult to get people to understand that what economists do.
14:11
Speaker 1: It's really to think about how do we allocate scarce
14:13
Speaker 1: resources and that's broadly defined, and then how do we
14:16
Speaker 1: set up policies to incentivize particular behaviors. And if you
14:21
Speaker 1: don't understand that's what economists do, it is very easy
14:24
Speaker 1: to be dismissive of the need for economists and economic policies.
14:29
Speaker 1: And as one email said to me, and then you
14:32
Speaker 1: focus on the need for STEM and not economists without
14:36
Speaker 1: recognizing that economists are going to set the policies that
14:39
Speaker 1: incentivize the investment in step. All right, Ron, the great,
14:42
Speaker 1: great stuff, Thank you so much for taking the time.
14:45
Speaker 1: Ronda Vanche Sharp, founder and President of the Woman's Institute
14:48
Speaker 1: for Science, Equity and Race, And I'm looking at our
14:50
Speaker 1: very impressive CV. The good news is she spent time
14:54
Speaker 1: at Duke. The bad news and she also spent time
14:56
Speaker 1: at UNC Chapel Hill, so I guess they kind of
14:59
Speaker 1: cancel each other. Are out. But the UH talking about
15:02
Speaker 1: again increasing the number of black economists PhD level black
15:07
Speaker 1: economists in there so they can be professors. Exactly right,
15:11
Speaker 1: absolutely all right. As a good As a former investment banker,
15:18
Speaker 1: I know a good fee when I see one, and
15:20
Speaker 1: breaking a big company up into multiple literal pieces is
15:23
Speaker 1: a darn good that's excited advisory fee. I'm not sure
15:27
Speaker 1: if the Kellogg's news is anything more than that. Jen Bartasha,
15:31
Speaker 1: senior equity Research Channel's Consumer Stables and Retail for Bloomberg Intelligence.
15:34
Speaker 1: She joins, she follows this this industry, this company, Jen,
15:38
Speaker 1: What is Kellogg's doing here? Are they really creating value?
15:42
Speaker 1: Does this make sense to you what they're doing breaking
15:43
Speaker 1: up the company? Yeah? So, thanks, Paul. When when I
15:47
Speaker 1: look at this, there really is a value creation opportunity
15:50
Speaker 1: when you talk about the snacking portion of the company
15:52
Speaker 1: that will go forward. Um, if you just look at
15:54
Speaker 1: how some of the peers in the snacking category are valued,
15:57
Speaker 1: whether it's Mondeleze or Hershey, there is a premium to
16:00
Speaker 1: where Kellogg currently trades, and so there is some value
16:03
Speaker 1: creation opportunity there. UM less a little bit less um
16:06
Speaker 1: enthusiastic about seeing the opportunity for an independent serial company
16:10
Speaker 1: and an independent plant based company. So the independent plant
16:15
Speaker 1: based company is that trying to get the beyond meat
16:17
Speaker 1: type of multiple out there, Well, that would in theory
16:21
Speaker 1: be be one of the things that they can achieve.
16:23
Speaker 1: And and if the you know, the Kellogg says that
16:26
Speaker 1: um that their plant based business is profitable, which would
16:30
Speaker 1: be a certain certainly a differentiator in the plant based world,
16:33
Speaker 1: and so could actually help command a pretty good premium
16:36
Speaker 1: or multiple in in that in that space. Um. That
16:39
Speaker 1: the real concern is is what happens to a serial
16:42
Speaker 1: based company. What happens to any of these companies after
16:47
Speaker 1: they split up? I mean, surely we've seen enough of
16:50
Speaker 1: them to understand, uh, like a track record of these
16:54
Speaker 1: kind of splits. Yeah, it's interesting if you look at
16:58
Speaker 1: if you look back to Wayne craft Times and Mandols
17:01
Speaker 1: broke up. Um. You know, Craft Times, it took them
17:04
Speaker 1: decades to actually regain a positive momentum in their core business. Um.
17:08
Speaker 1: And and that's really maybe one of the concerns that
17:11
Speaker 1: you have when you look at the Kellogg companies is
17:13
Speaker 1: whether that that higher growth snacking company takes off kind
17:17
Speaker 1: of like Mandoles did, um, and then how how much
17:20
Speaker 1: effort is it going to take to really get garner
17:23
Speaker 1: the profit margin increases and then sales increases that they
17:26
Speaker 1: think are possible for the serial company and then plant
17:29
Speaker 1: based you know, it's it's it's a very volatile market,
17:32
Speaker 1: so it's it's it's too early to tell where that
17:34
Speaker 1: could go, all right, So Jen, you may not know this,
17:38
Speaker 1: but I'm big, big into Cereal. Um, a big serial person.
17:41
Speaker 1: It's one of the main reasons I work at Bloomberg.
17:43
Speaker 1: I mean, we have a strong serial game here, not
17:45
Speaker 1: as strong as in uh Princeton. They are big inside tip. Yeah,
17:50
Speaker 1: they have even better serial selections if you go down
17:52
Speaker 1: to L L two. Really yeah, okay, good to talk
17:55
Speaker 1: to us about the serial business. Is it growing at all? Jen? Well,
17:59
Speaker 1: the serial business is the last two or three years
18:01
Speaker 1: has actually seen outside growth relative to its historical performance,
18:05
Speaker 1: at least in the North American market. Um. If you
18:08
Speaker 1: look over time, it's a it's a low single digit
18:11
Speaker 1: growth category, so you're talking anywhere from one to three growth.
18:15
Speaker 1: The pandemic really reinvigorated Cereal, brought a lot of people
18:18
Speaker 1: back to Cereal, and a lot of people are still
18:20
Speaker 1: eating breakfast at home. Um and because they're not necessarily
18:24
Speaker 1: back in the office every day. Um. But it could
18:27
Speaker 1: just be a temporary bolster that's happened to extend over
18:30
Speaker 1: the period of two or three years before we start
18:33
Speaker 1: to see that category start to contract again. All right, Jen,
18:36
Speaker 1: great stuff. You know Bartasha, she's been a Bloomberg since
18:39
Speaker 1: two thousand to twenty years. She's done everything and now
18:42
Speaker 1: she's one of our top research analysts Bloomberg Intelligence. Or
18:45
Speaker 1: appreciate getting her thoughts here on klox. Jen Bartasha, Senior
18:48
Speaker 1: Eggity research channelists for Bloomberg Intelligence. You know, one of
18:56
Speaker 1: the things this pandemic is the way folksed. I think
18:59
Speaker 1: one of the things that changes the way folks interact
19:00
Speaker 1: with healthcare. All this telehealth really really became front and
19:04
Speaker 1: center for a lot more people, and just the way
19:06
Speaker 1: we interact with the healthcarecteris is pretty interesting. Nita Deca,
19:09
Speaker 1: senior Research Channels for Robot Global, joins us here. Nina,
19:13
Speaker 1: you know, it's interesting. Thanks so much for joining us here.
19:15
Speaker 1: Talk to us about maybe some of the ways it's
19:18
Speaker 1: changed how consumers interact with, uh, you know, the health
19:22
Speaker 1: care system. It seems like we're doing a lot more
19:25
Speaker 1: on our own, a lot more remotely. Yeah, we are,
19:28
Speaker 1: and thanks for having me on the show. By the way,
19:29
Speaker 1: we appreciate it. Um. A couple of things really happened
19:33
Speaker 1: as a result of the pandemic. We already knew and
19:35
Speaker 1: we've been hearing about it a lot, but there's been
19:37
Speaker 1: a skilled healthcare worker shortage that was definitely exacerbated by
19:41
Speaker 1: the pandemic. And that's even driving UH from a consumer perspective,
19:46
Speaker 1: people are having a hard time getting doctor appointments and
19:49
Speaker 1: getting medical care. There's been like two three months wait
19:52
Speaker 1: list to get in to see a cardiologist, for example,
19:55
Speaker 1: or two to get knee surgery. So even though UM
19:59
Speaker 1: largely the COVID beds aren't being occupied by hospitals causing delays,
20:03
Speaker 1: the fact that there's just not enough staff is causing
20:06
Speaker 1: delays UM. And then to your point, consumers are having
20:09
Speaker 1: to do a lot of things on their own remote
20:12
Speaker 1: care UM, and they're also looking for convenience. The world
20:16
Speaker 1: got used to being able to see a doctor without
20:18
Speaker 1: having to leave their house through telemedicine and UH. And
20:21
Speaker 1: that's just one part of a huge theme that we're
20:23
Speaker 1: going to see moving forward of virtual care, where people
20:27
Speaker 1: are going to be able to wear wearable devices UM
20:29
Speaker 1: like I Rhythm Ticker I RTC has a wearable device
20:33
Speaker 1: that you can use to help diagnose um arrhythmia and
20:37
Speaker 1: help prevent stroke and heart disease or and and and
20:41
Speaker 1: cardiac failure. So UM, so there's gonna be a lot
20:44
Speaker 1: more remote monitoring We're expecting people to start using more
20:47
Speaker 1: continuous bluecost monitoring devices. That's going to be a huge
20:51
Speaker 1: positive catalyst for dex Com and abb it um. So
20:55
Speaker 1: a lot of more d I Y in healthcare and
20:58
Speaker 1: UH and really an exciting time to be investing in
21:00
Speaker 1: the space. Given the market pullback it is. I was
21:03
Speaker 1: gonna say, it's even more exciting if you want to
21:05
Speaker 1: buy at these levels. What happened to the stock? Uh,
21:09
Speaker 1: you were trading at twelve, thirteen, fourteen, UM came down
21:14
Speaker 1: to ten at the beginning of this year and then
21:16
Speaker 1: all of a sudden, So we just want to get
21:22
Speaker 1: it thoughts here just on the some of the differences,
21:26
Speaker 1: we should clarify that I was looking at a different
21:27
Speaker 1: I was looking at a different So I'm wondering, Uh, Nina,
21:31
Speaker 1: is it going to go back the way it was?
21:33
Speaker 1: Like one of the challenges, I guess is labor, Like
21:35
Speaker 1: every other part of the economy has labor shortages. Is
21:39
Speaker 1: that something that's endemic? Do you think to the health
21:41
Speaker 1: care business going forward? It is a problem. And guess
21:45
Speaker 1: what this means. Healthcare is one of the last sectors
21:48
Speaker 1: to become digitized and automated, and there is a huge
21:52
Speaker 1: opportunities for new technology to be acquired by healthcare stakeholders
21:57
Speaker 1: to further automation. Look at sturgical addicts. You can do
22:00
Speaker 1: more with less um All across labs, there have been
22:04
Speaker 1: um acquisitions and rumors of acquisitions to acquire ways to
22:09
Speaker 1: further automate in the labs. Pharmacies, there's a huge pharmacy shortage.
22:13
Speaker 1: Pharmacists are leaving the work post, just like doctors, just
22:16
Speaker 1: like nurses and uh and and why are pharmacists, these
22:19
Speaker 1: people with extensive degrees in the back of the pharmacy
22:23
Speaker 1: putting pills and bottles that is all automated and and
22:26
Speaker 1: and there's a huge upside potential for companies who do that.
22:29
Speaker 1: For example, Omni Cells ticker O m c L makes
22:33
Speaker 1: robotics equipment for for pharmacists so that it frees up
22:37
Speaker 1: their time and they can help with patient care. Did
22:39
Speaker 1: you know that UM medical error is a third leading
22:43
Speaker 1: cause of death in the US. So if you take that,
22:46
Speaker 1: and then you compound that with the fact that the
22:48
Speaker 1: population is aging, and you've got a healthcare worker shortage
22:52
Speaker 1: that's gotten worse by the pandemic, and you've got a
22:55
Speaker 1: situation where we're going to have even more medical errors,
22:58
Speaker 1: So it really is time to invest more an automation
23:01
Speaker 1: and AI capabilities so that healthcare workers can do what
23:04
Speaker 1: they do best, which is actually care face to face
23:07
Speaker 1: with their patients. Alright, sorry about the false stock quote.
23:10
Speaker 1: I was having a senior moment and I might need
23:13
Speaker 1: some medication, um in terms of investing, In terms of
23:18
Speaker 1: the strategic moves that you make, do you like E
23:21
Speaker 1: T S? Do you like active management over passive? Right now?
23:25
Speaker 1: What do you think we're headed towards? Here's my recommendation.
23:29
Speaker 1: If everything I just said is it sounds a little
23:32
Speaker 1: daunting to an investor, let me tell you that that's
23:35
Speaker 1: just a tiny fraction of all the investment opportunities that
23:37
Speaker 1: are out there. There's regenerative medicine, there's telehealths robotics, there's diagnostics, genomics.
23:43
Speaker 1: Uh yeah, I would recommend an ETS for example, R
23:46
Speaker 1: E T H Tech E T S HT e C
23:50
Speaker 1: Healthcare Technology and Innovation by Robo Global. And it's comprised
23:55
Speaker 1: of a D plus companies that we picked with a
23:58
Speaker 1: team of research channelists, so we do the legwork and
24:01
Speaker 1: it's across that breadth of areas across health scare that
24:04
Speaker 1: I just mentioned where you can really have the team
24:07
Speaker 1: of experts day. These are the best in class companies
24:10
Speaker 1: that are changing the face of healthcare over the next
24:12
Speaker 1: five to ten years, and and it really kind of
24:14
Speaker 1: alleviates the need for for the investor to have to
24:17
Speaker 1: go through sector by sector and figure out where they
24:20
Speaker 1: where they want to invest. Like, for example, there's a
24:22
Speaker 1: company called Cattalent. A lot of investors haven't heard of
24:24
Speaker 1: this name. Cattalent is one of the company's Maderna partnered
24:28
Speaker 1: with to get their drugs manufactured, scaled and across the
24:31
Speaker 1: finish line. And guess what Now that mrn A is
24:34
Speaker 1: a proven, tested, tried therapy global, Cattalent is very well
24:40
Speaker 1: positioned for all the other mRNA therapies to come because
24:44
Speaker 1: they now they now know how to manufacture it and
24:46
Speaker 1: sail it and get it out the door. And that's
24:48
Speaker 1: just one example. So we've got a lot of those
24:51
Speaker 1: really cool names we've got in the portfolio. At least
24:54
Speaker 1: half the portfolio are these large cap, real steady moving
24:59
Speaker 1: up kind of mid single high single digit growers. Um
25:03
Speaker 1: some provide dividends, so you've got that stability in there
25:06
Speaker 1: and then portfolio is like the small mid calf names
25:10
Speaker 1: that a lot of people probably don't already own. Hey, Nina,
25:14
Speaker 1: that's really interesting, good stuff. Really appreciate you taking the time.
25:16
Speaker 1: Nina Deck, a senior research analyst for robo Global. I
25:20
Speaker 1: first met the robot Global folks in Amsdam, which I
25:23
Speaker 1: think was maybe was or is their headquarters. But they
25:27
Speaker 1: are global investors. Before global was cool, I'm talking twenty
25:31
Speaker 1: years ago, they were thinking about where do I invest
25:33
Speaker 1: across the media space or the technology space on a
25:35
Speaker 1: global basis, And that's kind of when I first got
25:37
Speaker 1: meet those good folks at robo Global. Well, if in
25:42
Speaker 1: the United States, if you want to buy I don't know, groceries,
25:45
Speaker 1: household products, health supply, stuff like that, and you want
25:48
Speaker 1: to do it in bulk, one of the companies you
25:50
Speaker 1: can turn to is Boxed. It is a publicly traded
25:53
Speaker 1: company bo x D as a ticker you can put
25:56
Speaker 1: in your Bloomberg terminal. Che Hwang, CEO and co found
25:59
Speaker 1: er Box joins the chay. Talk to us a little
26:01
Speaker 1: bit about your company, kind of the origins of Boxed
26:03
Speaker 1: and and and the market you guys are trying to serve. Yeah, absolutely,
26:07
Speaker 1: Thanks for having me back. You know, it's been a
26:09
Speaker 1: long ride for us about almost ten years now, uh,
26:12
Speaker 1: culminating in our public debut last year. And so start
26:15
Speaker 1: off in a garage ship in bolt consumables to folks
26:18
Speaker 1: all around the country. But since then we've begun to
26:21
Speaker 1: sell to business folks all around the country. So whether
26:23
Speaker 1: it's office pantries, whether it's bus terminals, all the way
26:27
Speaker 1: to actually selling the software that powers are e commerce business.
26:30
Speaker 1: So we not only sell the uh goods, but also
26:33
Speaker 1: sell the technology that power is that business for us?
26:36
Speaker 1: So how difficult is that right now? With supply chain
26:39
Speaker 1: issues with gas and diesel prices, I mean, your costs
26:43
Speaker 1: must be skyrocketing, that's right, you know it's um. Uh,
26:47
Speaker 1: there's definitely have been calmer waters throughout this last decade
26:50
Speaker 1: of operating, that's for sure. UM. Luckily for us, you know,
26:53
Speaker 1: we struck a really great extension, a really great kind
26:56
Speaker 1: of enhanced partnership with Federal Express, so uh we may
27:00
Speaker 1: be able to actually be one of the few companies
27:01
Speaker 1: that blowers their transportation costs this year. But you're exactly right,
27:04
Speaker 1: between labor, supply chain inflation, there's a lot of dynamics
27:09
Speaker 1: in the marketplace right now, all right, So give us
27:12
Speaker 1: a sense of kind of how who you compete against
27:14
Speaker 1: day to day. There's so much I think what we've
27:16
Speaker 1: all done, maybe over the past two and a half
27:19
Speaker 1: years with the pandemic is really embraced e commerce, maybe
27:22
Speaker 1: more than we ever thought we would, for a whole
27:24
Speaker 1: different range of products. So talk to us about the
27:26
Speaker 1: competitive environment you find yourself in. So, UM, what's interesting
27:31
Speaker 1: is that a lot of our customers actually, as of
27:33
Speaker 1: our last read, almost sevent of our customers live out
27:36
Speaker 1: in rural America or live in the deep suburbs. Uh.
27:39
Speaker 1: And so when you think about that customer, um, you know,
27:42
Speaker 1: folks like Costco, Sam's Club, BJ's Wholesale Club. You know,
27:46
Speaker 1: they're ubiquitous in name potentially, but not ubiquitous in location.
27:49
Speaker 1: And so we service actually a lot of folks that
27:51
Speaker 1: would otherwise go into a dollar store or the regular
27:53
Speaker 1: supermarket two shops, so they really don't have that much
27:56
Speaker 1: bulk available to them. On the B two B side,
27:59
Speaker 1: of course, it's a typical kind of office depots W
28:01
Speaker 1: Mason's of the world and some of the caters. And
28:03
Speaker 1: on the software side, UM, you see us bumping against
28:07
Speaker 1: a lot of the big kind of e commerce software
28:08
Speaker 1: companies out there. So but you don't I mean Costco
28:12
Speaker 1: and b JS these must be competitors as well. Or
28:16
Speaker 1: is it the idea that they just don't deliver? Yeah,
28:19
Speaker 1: so they've begun to deliver, especially in recent years. But
28:22
Speaker 1: when you look at kind of the experience that they
28:25
Speaker 1: really trying to push, uh, it's really trying to get
28:27
Speaker 1: you in store. So a lot of folks, folks that
28:30
Speaker 1: we've surveyed in the past, really when they kind of
28:33
Speaker 1: um when you ask the manic gotal Lee kind of
28:35
Speaker 1: why don't you have a costco membership? Why don't you
28:37
Speaker 1: have a membership to a wholesale club? A lot just
28:40
Speaker 1: aren't willing to uh pay for a membership just to
28:43
Speaker 1: be able to get something delivered to them because remember,
28:45
Speaker 1: they don't have a wayhouse club close to them, so
28:48
Speaker 1: they'll buy a membership uh and just buy online. For
28:51
Speaker 1: a lot of them, they just don't see the value
28:52
Speaker 1: in that. So, Chack, give us a sense of kind
28:55
Speaker 1: of your read on the consumer based upon your business
28:59
Speaker 1: to transitioning your business, how do you think that the
29:01
Speaker 1: consumers doing the economies doing from the consumer's perspective. You know,
29:06
Speaker 1: if we had this conversation just a few months ago,
29:08
Speaker 1: I would say probably a lot better. Um. But I
29:11
Speaker 1: think luckily, what you generally find in retail is that
29:14
Speaker 1: in kind of crazy environments that we're that that we're
29:17
Speaker 1: now and that we're probably gonna go into even more
29:20
Speaker 1: than the coming kind of weeks and months, um, you
29:22
Speaker 1: really see consumers trade up or trade down, right, Um,
29:25
Speaker 1: trade down. They can go into a hard discounters dollar stores,
29:29
Speaker 1: trading down into kind of territory they otherwise wouldn't have, um,
29:33
Speaker 1: kind of gone into or shopped in in in kind
29:35
Speaker 1: of better times. Uh. But some consumers also trade up.
29:38
Speaker 1: And I know it's self serving for us to say so,
29:40
Speaker 1: but the numbers in the past have shown that in
29:42
Speaker 1: recessionary environments, folks that with the wherewith all actually stock
29:45
Speaker 1: up because they know they're gonna go through thirty six
29:48
Speaker 1: cans of sparkling water a week and and so um,
29:51
Speaker 1: they definitely want to stock up, and by doing so
29:54
Speaker 1: they can save some money. So I think we're gonna
29:56
Speaker 1: start to see some trading up and trading down across
29:58
Speaker 1: the entire retail sector, especially when it comes to consumables.
30:01
Speaker 1: I drink about that much sparkling water maybe a day.
30:04
Speaker 1: Actually for me, I just knocked back those the polar
30:08
Speaker 1: lime flavored Anyway, it's neither here nor there. In terms
30:11
Speaker 1: of buying in bulk um, are you like using any
30:17
Speaker 1: extra cash you have to buy your own shares? I
30:19
Speaker 1: mean they've dropped to a dollar forty six UM and
30:24
Speaker 1: you have been trading around ten twelve fourteen dollars apiece.
30:28
Speaker 1: So do you see your shares as undervalued? I personally
30:33
Speaker 1: absolutely do. So you're exactly right. We were just probably
30:37
Speaker 1: a few weeks ago, one of the best public debuts
30:39
Speaker 1: in the entire country for uh and then to have
30:42
Speaker 1: kind of no news come out, absent kind of an
30:46
Speaker 1: errings release for this to happen. We just believe it's
30:49
Speaker 1: a severe dislocation of kind of what the value of
30:52
Speaker 1: the company is and what is actually valued in the
30:54
Speaker 1: marketplace today. UM. But you know, I think actions speak
30:58
Speaker 1: louder than words. So we've had separate directors file form
31:02
Speaker 1: force making buys in the marketplace, and actually I just
31:04
Speaker 1: bought more shares UM just this past week. So you know,
31:08
Speaker 1: one of the things we've noticed in the market, uh
31:10
Speaker 1: Shaw when we talk to fund managers and so on
31:13
Speaker 1: as the you know, trying to in this market so
31:15
Speaker 1: far in two is a refocus on kind of the fundamentals.
31:19
Speaker 1: And it's one thing to have a great top line
31:20
Speaker 1: growth story, which you guys certainly do, but you have
31:23
Speaker 1: to deliver that to the bottom line. And I'm just
31:25
Speaker 1: looking at the f A functional on the Bloomberg terminal,
31:26
Speaker 1: looks like the streets still has you negative free cash
31:29
Speaker 1: flow for the next couple of years, and so how
31:32
Speaker 1: do you think about your free cash flow, your capital structure,
31:34
Speaker 1: and your ability to continue to grow the business. Yeah,
31:38
Speaker 1: you know, it's really a balance of all those, right.
31:40
Speaker 1: I think when kind of times were were different, you know,
31:44
Speaker 1: we were on this trajectory and if you look at
31:46
Speaker 1: our growth margin, you look at a kind of ibada growth.
31:49
Speaker 1: We were marching towards this path each and every year.
31:51
Speaker 1: We basically be in been in business, um, but we
31:54
Speaker 1: have to adapt to the marketplace as well. So our
31:57
Speaker 1: B two B business, our software business, those are all
32:00
Speaker 1: much higher gross margin businesses than our B two C
32:03
Speaker 1: consumer business. So if you just look at software, we
32:06
Speaker 1: sold twenty million dollars of software last year at a
32:09
Speaker 1: gross margins, So for us really kind of seeing how
32:12
Speaker 1: the market dynamics are in the coming weeks and really
32:15
Speaker 1: refocusing our efforts. Um if uh, kind of there's low
32:19
Speaker 1: tide when it comes to capital availability and overall market sentiment.
32:23
Speaker 1: So luckily we have all these different business segments, some
32:26
Speaker 1: more profitable than others, and you'll see some focus on
32:28
Speaker 1: those in the coming weeks. Okay, what's it like operating,
32:31
Speaker 1: uh startup company or a new company? I get guess
32:34
Speaker 1: you're publicly traded, it's not really start up, but in
32:36
Speaker 1: New York City as opposed to the West Coast. Um,
32:40
Speaker 1: you know, beck about ten years ago. You know, it's
32:42
Speaker 1: kind of ten fifteen years ago. When I first gott
32:44
Speaker 1: into tech in New York City, it was kind of
32:45
Speaker 1: a waste land like meaning that you know, there weren't
32:48
Speaker 1: a lot of folks writing checks, like everyone kind of
32:50
Speaker 1: knew each other. But man, it's it's gotten much better,
32:53
Speaker 1: I would say, over the last few years. Still not
32:55
Speaker 1: the same, not the same as the West Coast, but
32:58
Speaker 1: definitely a lot better when it comes to the eco system.
33:00
Speaker 1: So um, you know, I'll take it. But overall, you know,
33:03
Speaker 1: between supply chain challenges, going public in this market, it's
33:06
Speaker 1: been a fun ride. We're learning a ton and we're
33:09
Speaker 1: still focused on the future, so we're quite bullish on
33:11
Speaker 1: the company. All right, Check, Thanks so much for joining us.
33:13
Speaker 1: Appreciate getting your thoughts there. Che Hwang, CEO and co
33:16
Speaker 1: founder of Boxed. That is a New York Stock Change
33:19
Speaker 1: listed stock. B o x D is the tim ticker
33:23
Speaker 1: for your Bloomberg terminal shipping stuff like groceries. Think about
33:26
Speaker 1: that uh in bulk. Thanks for listening to the Bloomberg
33:31
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
33:34
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
33:39
Speaker 1: I'm on Twitter at Matt Miller three pt on Ball
33:43
Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
33:46
Speaker 1: you can always catch us worldwide at Bloomberg Radio.