This is Bloomberg Business Week. I'm Carol Masser and I'm Bloomberg Quick Takes Tim Stanovk. We're here every day bringing you the latest news from the world to business and finance, plus technology, politics, economics, all purnising the power of Business Week reporters and editors, not to mention our journalists and analyst in more than one twenty countries. You can download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg clovel News. I just want to bring you one COVID headline, White House Chief Medical Advisor Andthony Fauci saying it a briefing earlier that the dynamics of the COVID nineteen outbreak in the US are pointing sharply downward. That's a trend line we'd like to see. Yeah, we're not seeing it just here in New York City,
but throughout the United States as well. Let's get into it with Michael Dowling, President and CEO at north Well Health. He joins us on the phone from Long Island. Uh. Michael, it's great to have you back with us. Uh. You run New York's largest health system. Give us an idea of how things are looking inside north Well Health right now. Oh, things are looking very very well. Indeed, we are definitely on the exit ramp of of COVID and consistent we went.
Dr Fauci indicated we only have about five hundred COVID patients in our facilities today and it is dropping each day, So we're in a good place. Um, we're moving back to a normality. Um, and which is I think we've all got to stop beginning to do now, even though COVID will always be hanging around for quite a while, but the devise civility is much much less, and things that things are looking very very positive. Indeed, you know, Michael, we know it wasn't easy, and I'm sure I can't
even imagine the stresses as you guys went through it. Um, And we're just kind of looking in and hearing what was going on in healthcare systems like your own. My understanding is you kind of threw the budget out the window.
How do you do that? Because you do have to ultimately think about the top and bottom line, and there was government assistance in some cases, but how do you do that or do you have it's it's it's a standard thing with us because we've had this situation with Hurricane and Sandy, Hurricane Irene, and ever so often bad things happened to you and you've got to be able to react, and especially when the community is in danger, either from a hurricane and or bad or or things
like COVID. You can't be going around each and every day warning about the budget because you will you will not be innovative, you will not be creative, and you will not respond to what is needed to be responded to. So my message was do what is right, do everything we possibly can to help people, save people, protect people's lives, and we'll figure out the budget and the mechanics that it later, because otherwise you're you're going to be constraining
your your activities. So during the height of COVID that the beginning in twenty our revenue dropped oh well over the billion and a half and it was scary moments, but we know that you're going to We wouldn't we knew that we had the attitude we're going to win against this virus. The virus is not going to beat this. We're gonna win. And then we had to come back and rebuild. Um, this is what you're doing the crisis. Where are you, Michael in terms of rebuilding? Now? How
do you? How do you get back that lost time? And I believe we will come out this year. We will come out positive from a financial point of view. Are the end of the feral help? Just mentioned the subtle assistants help, but we stopped it too, uh to kind of pivot for bringing back regular business. You know, a couple of months after the height of the COVID
crisis and in the spring of quinty. You know, one thing, I'm curious and we were all talking our planning call this morning about the business of running a healthcare system. And I was having a conversation with a doctor earlier in the week about just how slim the margins can be in terms of a hospital running efficiently and as it's supposed to all of a sudden the system being maxed and strained. How tight is it? It's very, very tight.
But we had a fifteen in the fifteen points were Billy in dollar entity and we're not just hospitalizis you know very well, we have huge ambulatory occations and heart care, all of that, plus academics and research, but we run at the bottom one to one and a half cent Martin. It's tight. So you've got to be very efficient. You've got to be quite productive. You've got to be very very careful of how you operated. But you've got to move forward each and every day with a great sense
of optimism. Um uh. And and still they do everything you possibly can to make sure we serve the community the best of all ability. It's not hard to make a margin. If you decide, for example, sit back and eliminate those services that you lose money on, those things that you do you get no money at all for, then you can come back and say, oh, we don't create we have a huge margin. But that's not in my view, that's not why we're here. We're here to
do well, and we're here to do good. And um uh, we were if we have a margin strong enough to be a to you know, feedo balance sheet, commit to the investments we need to make in technology, in people, and in infrastructure, and then show a one to one and a half maybe up to two percent at the end, we're we're we're doing well. Um now not as well. We're in New York is a much more expensive place to be. We have unionized staff, which is more expensive.
So you will see places around the country that are much higher margins. I'm not worried about them. I worried about what we do, and I think we focused on mission and as well as making sure we try to we make a margin to sustain an ongoing business. Well, Michael, that's why we're That's why we're here. What are the permanent shifts that you see in your business on the other side of COVID, we are the permanent changes you have made at north Well Health Well, um, let me.
It accelerates a lot of what we were doing. Okay, not not a complete shift, but an acceleration. So, for example, COVID demonstrated the unbelievable benefit of having large, large ambulatory outpatient entities because they actually treated an awful lot of COVID. If you didn't have those should be in trouble. Trouble, um. It accelerated the use of harm care. It dramatically accelerated the use of technology. So we will never again be exactly the same and call me to me was a
phenomenal learning experience. Capitalists of Change. It's one of them many ways, I would say it's one of the best things that has ever happened. Now, it's difficult to say because of all of the you know, well, Michael just just got about twenty seconds. If there's one thing that has changed dramatically and for the better, Uh, what is it?
Because of what we learned during the panic and just quickly if you could they it proved to us that we can be a remarkably agile and and flexible And if we can continue to maintain that culture of innovation, creativity and be able to change quickly and build it into our culture, then there is nothing that we can Well. Good luck in the future and thanks for finding time once again. Michael Daly, President and CEO at Northwhile Health,
author of the book Leading Through a Pandemic. He was named to Modern Healthcare's magazines a hundred most Influential People in Healthcare, ranked number three overall. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Among our most
read on the Bloomberg Today. It's a Bloomberger exclusive and it's about Morgan Stanley's role in reinvigorating a federal probe examining regularities in a very look at a market for Wall Street. We're talking about block trades. Yeah, raj on his finance reporter for Bloomberg News. He's with us in the Bloomberg Interactive Broker Studio. Let's get some definitions, Sree, just out of the way here first. What is a block trade? Large junks of stock that you need to
sell and it has to be privately negotiated. You can just dribble them out, because if you do that over a long time, it will take a while and you will have advance price action. You might as well figure out the right price at which you can sell off, usually at a discount to where the stock is trading. Say you want a big jung of apple and it's trading at you negotiate a deal and it's usually at a discount, so you probably sell it to the best, better nine and then they hope to parcel it off
to other people. So I remember years ago where we would Las Laborini was really into block trades and money flow and we would track the big moves by institutional investors when they sell the block and watch the money flows, because it was usual an indication of where stock was going. We've gotten away from that big time, like through the tech the tech crisis and run up if you will. What is it that's at stake or what is it that investigators have been looking at when it comes to
block trades? Effectively, if some people have been blurring the lines and going from the grid of the black what they're really trying to figure out is when banks get mandates for some of these block trades, are they tipping
their friends in the hedge fund world? Are they front running some of that information so that they can preposition themselves, possibly by shorting the stock, because you know, when a block trade hits the tape, the stock is going to trade down because a large amount of stock is coming down the bike and that will drive the price down. So if you're short to stock, you're bound to make money.
So is there some willing and dealing going on where some of their clients are short in the stock so that when the block actually comes through, the bank can tap on their shoulders and get them to buy that. So both sides are happy, clients are in a way behold into the bank, and the clients are making some money that is obviously not good. Remember that a lot of this operates in the gray area. It is murky when you're bringing your block trade. What is the hypothetical
conversation you're having. Is it really illegal confidence conversation or even a confidential conversation if you don't have the mandate yet. These are some of the things we imagine that regulators prosecutors will have to wrestle with and it won't be easy to solve. And that might be one reason that might be giving faith and belief to a lot of the defendants that and when I say defendants, I'm just talking about the people who have sought information from right
now because they haven't even charged anyone. But that's the kind of thing that they would have to solve for and figure out if they have a real case. Here, we'll take us back about a year ago to Arks and the blow up there and how this current version of an inquiry into block trades was really set off by that. I'll take you further back then, because this investigation into block trades really started off around twenty eighteen.
As early as twenty eighteen is our understanding. But since then it waxed and wained a little bit and never really seemed to gather a steam. Then what happened last year Archagos, Bill Huong's famed family office that had the surprise, spectacular run up and even even more shocking collapse. The unwind happened because a lot of the banks, worried about the positions that Archagos held, moved quickly to dump their holdings, and that meant large blocks and across a variety of
names hit the market. So when investigators a few months down the line started investigating what happened with Archas you know, we know that there are inquiries looking into whether there was market manipulation, whether banks are concluding in the sale process. Along the way, they also started looking at some of these blocked trades, and that seems to have breathed new life into this probe that has looked at this lucrative block trade activity and from there it seems to have
expanded to other traits. That Morgan Stanley, the bank we're looking at that seems to be the center of all this uh is they're looking at the trades that they bought to market and whether there is more wrongdoing, and some executives at the film are under the gun right now, and I think that's what caught our attention. It's like, okay, so where's Morgan Stanley and all of this, So they're being investigated to or there's no charge, Like where what is it? How do we need to look at this firm?
They certainly seems central to whatever process is going on right now. There seems to be a lot of information gathering from the SDN, Y, the SEC and other people. A lot of the threads, based on our reporting so far, tie back to Morgan Stanley. Back in November, we had reported that there had a syndicated recent to get desk power and Pussy was put on leave. It wasn't quite clear why. But now it's become much more apparent than
it was tied to this entire block trading probe. And now they're looking at some of his clients, some of the conversations he's had, some of his colleagues. So it's going to be interesting few weeks and months ahead as they try and figure out whether they can build a real case. I mean, ultimately we could get regulators to rule right on this. But you said it's murky regulators, prosecutors, if if if if we if they have what we think they have in terms of evidence, in terms of
being tracking them for a while. It's really it's really hard for anyone on the outside to be able to definitively tell you which way this goes, because I can guarantee you there's someone at the SD and why sitting in an evidence room looking at a pile of stuff. Very well, good know all the answers well, and just got about twenty seconds or fift I mean black trades. It's a part of how Wall Street works, right, It's
a part of how Wall Street works. It was made famous by the legendary Ghostly we fifty years ago and still a very lucrative part of the market. Well, incredible reporting, and we set a Bloomberg exclusive animals right tree not a Raja, And thank you so much, finance reporter at Bloomberg. This is Bloomberg is do this week with Carol Messer
and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. After surging we're sales plant based meats in the meat departments of grocery stores increased only just a smidge in one percent last year. Tim, It's remarkable to read that in Dina Shanker's latest article in the upcoming double issue of Bloomberg business Week magazine. She's consumer reporter for Bloomberg Knew. She joined us now on the phone from New York City. Also with us as Joel Webber, editor at Bloomberg business Week.
He's with us in the Bloomberg INTERACTI Broker studio. Joel, I think back to where we were about two years ago. I was going to the grocery store every two or three weeks, okay, because that's where I wasn't in pandemic mode, using two shopping carts, okay. And I was at the grocery store. I think it was a Wegman's, and there was like this whole section of beyond me that was on sale there and beyond meat stock. It actually at
the time was doing pretty well. Yeah, And you know, I think, um, uh, you haven't gone to the grocery store since I'm guessing no, I have gone to the grocery first. You know what taken up with the team during the pandemic. We do a lot of delivery these days, right, Well, grocery delivery. So the enthusiasm among investors and certain consumers
was incredibly high. Um. For uh, you know this the foe meat fake meat stuff when it came to market, and we've seen it um reflected in I'm looking at beyond share price, which has come down pretty substantially since that moment that you were at Wigman's all those months ago and then before times. Um. But as Dina writes in this latest issue, which I found this to be really interesting, the companies are starting to attack and think of themselves maybe not as always being the main event,
into something more like an ingredient. So so Dina walk us through the strategy and how it's playing out. Hi. Thanks. So basically what you have is these companies are no longer getting all the attention from consumer from people like me in the media, although I do give them a lot of attention. Um. People are are getting a little bored with the novelty of a burger made from something other than meat, or sausage made from something other than pork.
They're also getting maybe you guys can relate, getting a little tired of cooking all the time. So, uh, the sales have dropped precipitously. Um. Oh, and then there's also the fact that they can get meat a lot more easily than they did during that time when you're taking those two supermarket uh cards through the aisles. So all of these things are making is that uh people just aren't feeling as compelled to try these uh not so
new products anymore. So what are these companies doing? They're saying, but wait, there's more. Okay, we can put our fake beef into ravioli, we can put sausage on a pizza, we can put it in a dumpling. So many ways to eat this stuff, and a lot of it doesn't even involve cooking, or at least, you know, real cooking. You can throw this into a microwave. You can just put it in the oven for ten minutes and it'll be ready before your next zoom meeting. So it's really simple.
And hopefully, you know, with all of this melted cheese on top, or pasta around it, or what other whatever else is dressing it up, you might not even notice that it's not the real thing. So I have a theory, Tina, and I'm interested if you're reporting bear this our just a observation from the Weber household, which is when I've cooked with uh, fake meat, it doesn't smell good when it's just by itself. Did that come up? You know, it did not come up with any of the wrong Definitely,
it has no note. I was gonna say it's come up real human beings, but I talked to um all the time. I've noticed it in my house. Other when I say real human being, I'm using that term really loosely because I'm realizing I'm mostly talking about other reporters.
But people people have definitely mentioned it to me that there's a funny smell, and I noticed it too, Um, but it made me wonder actually, like, you know, this is actually maybe a brilliant technique because there's so many things that meat gets added to, and you know, maybe it doesn't need to be meat. It could be fake muting. Like this solves the other problem of maybe not having that, you know, the smell of jewel cooking in your house. I'm coming over. I don't know that I am sodina.
My problem with this plant based food is that I don't know that it's definitely healthier. And I guess that's what I'm thinking about, that that's where food is ultimately moving in terms of direction, does that hold it back from growth as well? Definitely? I mean it is you know, as a as a category. Um, there's nothing nobody's gonna say this category is a health food category. You can go a product by product and some will have, you know,
better nutritional value than others. But um and and that's also becoming some A way that the newer companies are trying to differentiate themselves is by saying, look, we're only using um, a handful of ingredients or um, we have fewer calories or whatever it is. But compared to uh, you know, like the real stuff, I mean kind of a wash, you can you can definitely make arguments that, um, listen, it doesn't have a cholesterol, but it has a ton
of sodium. Um and uh, the amount of you know, the beef burger can have literally just a single ingredient in it, so um, the beef industry will say that's
really great. But then of course you can make the argument that, um, well, sure, hidden in all that beef are a whole lot of you know, antibiotics that are fed to the animals, said to the animals, um, bring it back, you know, I'm wondering if I'm wondering about product pipelines here, because for the last couple of years, the news from these companies has really been, Hey, we're working on this chicken version of chicken. What is the
product pipeline telling you about their new strategy. Well, when I spoke to Dennis Woodside, who's the president at Impossible, he said, you know, listen, we're still working on mimicking that hole muscle kind of format, which is like a chicken breast or steaks. Um. And then he didn't put it this way exactly, but essentially what he was saying was, but this is so much easier, Like I can just take the ground beef we are have and put it in a ravioli. All I have to do is, you know,
make that business deal. And that's not that's a lot easier than making a fake chicken breath. All right, Well, I want real stuff in my only I'm just gonna put it out there. Um. This story in the new issue of Bloomberg Business Week magazine. You can find it everywhere tomorrow. Bloomberg Business Week getter Joe Weber, who's kind of takes maybe some cooking lessons and of course, Tina Shankar of Bloomberg News. Yeah, I'll bet you let me drive. No, no, no,
all right, I want to drive. It's a good question. Drive is the drive to the clothes on Bloomberg Radio. All right, just about twelve minutes left in today's trading session. We've definitely seen our reversal and we are hovering neuro best levels of the session. So we've gone from red to green when it comes to the equity trade, and that is following the latest FED minutes from the Federal Reserve.
It was at January meeting. I really think the takeaway and our our markets live blog has been just great on this said. Basically, there was nothing there that made investors think that the Fed is going to be more hawkish than it was already anticipate. Keep in mind the markets already pretty aggressive about what the Fed made more hawk issues. I think the key of the Carol right, not much new in there in terms of new hawkish signs in the Fed minutes. Let's shut all about it.
That and more with Jimmy Lee, the founder and CEO of the Wealth Consulting Group two point seven billion dollars in assets under management. Jimmy joins us once again on the phone from Las Vegas. Jimmy, how are you great? Is here from you guys? Yeah, it's good to have you back with us. Help us make sense of this market right now? Um, we not just have you know,
investors trying to figure out the Fed's next move. We have investors concerned about the hottest inflation print in forty years, and then we have geopolitical tensions on the border of Russia Ukraine. Help us make sense of it? Well, I think until we get past the FED meeting in March, we're gonna see some days where we get some wild swings in the market UH and volatility, and so you know, until they Russia, Ukraine, tod Asian UH settles itself out
and we'll know that pretty soon. I think. Um, that's the one thing besides the FED meeting that's coming up where people are speculating whether the FED will raise rates by fifty basis points or less. I'm in the thinking that it's not going to be fifty, but the speculation about that, and you're gonna have people on your show and commentators are they think both ways. So I think
the market economy can absolutely stand fifty. So if that were to happen and we get some short term volatility from either of that or invasion into your crane, I still think I'm constructive on equities for this year and the economy, and I would use that as a buying opportunity if you're a stalk investor. Yeah, it's interesting on the equity side of things. Right to me is that right now a lot of investors are a lot more aggressive in their thoughts about how aggressive the Fed will
be in raising rates UM. You know, we're talking without Kathleen Hayes in terms of the balance sheet is a very big difference, and that's still in question how the Fed approaches this. And there's a difference between letting a run off for actually actively selling UM assets off the balance sheet. There are still a lot of unknowns. We know the Feed's going to raise rates at this point,
it's aggressive. If the FETE is a little bit more devish, what would that mean potentially for the equity markets, I could put it in a really good place. I agree, and that's actually what I think is gonna happen. Carol. I think that you know, the hawkish signaling that the fet IS has made absolutely gives them some room to back off of that statement or those statements, and the people that are predicting seven rak hikes I think are gonna be wrong. And so I think the supply situation
gets better first. And then as they said, they're gonna be very data dependent and very flexible every single meeting. And uh, I don't see them raising rates is as high as some people think. And I think the long part of the bottom market agrees with that. So you don't see the long end of the market really going up that much. And um, I think that the bond investors on that side are disagreeing with people that I
think that FET is going to be very hot. Well, so the bottom market just come in just a little bit un yelled at me, hair, just you know. And what's interesting is in that FOMC minutes um that again we heard from those members that price pressures would moderate.
Uh and the default setting of that the issue will work at south out tim that is still there by members of the f O m C. Yeah, Hey, Jimmy, I want to dig into what you were saying about this being a buying opportunity between now and the next meeting of the Federal Reserve. What type of what to you is sort of a bottom for the current cycle that we're in. Well, I think we've seen a lot of support around temper cent on this and P during the days that we saw across intraday, and Uh, I
would see that. I would see Let's let's say, for example, if we get an invasion into ukrane Um, maybe it could go down a little further. Um. If the FED raises fifty basis points, maybe we could see hitting that temperacent number again. But I would see it. I would I would think that we would get aggressive buying at
around that tempera sent number again. And so you know, I'm bullish um, as long as earnings continue to look good, and I think earnings can look better in a lotter part of this year if costs come down a little bit and so if the shortage on the supply situation improves a bit and um, and we're already seeing some
signs of that. By the way, one of the indexes we follow is the shipping index little London, and costs have come down by like two thirds and over the last month or two and so so certainly supplies the supply situation. You hear lots of different stories, But I think the the supply side and the expense of that companies have to deal with will get better. And so if earnings can hold up parts you do to that,
and also the strong consumer. I think that the equities from here on out, if we end up with high single digits for the year, would be very good. So, Jimmy, you you think inflation has peaked? You know, I think there's a good chance it has. And um, I think that, yes, I do, And I know it's a little bit of a contrarian view, but I believe that the Fed ultimately would be right that that it was transitory. It will be transitory. You're like the only one it might be,
you know, relatively lonely in that corner. But people have talked about peak inflation. They have, but you know we're still seeing Yeah they have, but you know it hasn't really turned out that way. Well, yeah, that's the problem. This is it's a tricky time. So I know, you don't talk stocks sectors. Where should we be there at this point? To be um, we're using a Barbell strategy and we still believe that it's better to be in some of the more economy opening cyclical sectors, and so
we're overweight energy, financials, industrial materials. But I think people will go back into growth stocks and but quality growth stocks, so companies that have good earnings. Obviously the companies have been hit the most with the highest valuations that don't really have great earnings. I don't know if investor money will flow back into those as aggressively as they make some of the megacap stocks that investors have been, you know,
invested in for a long time. Also for listeners, you know, in the past FED tightening cycles, stocks have done very well, so equities of very good asked the class during tightening cycles and actually growth as beat value in those past time periods. Although this time around, I think it's dangerous to say, but I think it is a little bit different in the sense that I think the value sectors
will will be doing very well. And also it's important for investors not to be too underweight overseas, and so I think international markets will do better as well. Yeah, we've heard that too, although you know what's interesting, and I guess we'll have to watch the economic data points um.
The FED in their minutes also talked a lot about O Macron and it's potential to weigh on output and also talked about future variants, and we know are reporting to our I think of our Michelle Cortez story over the weekend that we're not out of the pandemic, and we're not out of the pandemic until everybody's out of the pandemic. So that continues to be something to me that certainly can impact the trade and where the opportunities are. Yeah, and I've got one, you know, I was listening to
on the commercial break there um Dr Fauci's interview. Regardless of where we're at with the with the case count, it's it's pretty evident now that we're opening up the economy and they're getting rid of things like the mass mandates in a lot of states. And so I don't see a reversal on that. I really dont so. And and also investors have not really understood that there's probably
not going to be any tax hikes this year. So they'll understand that once we get closer to April and people are talking their accountants, but without tax hikes in a mid term election year, where as they think, whether you know, I don't really care what side somebody's on on the political side, but there's a little momentum for the GOP, I think, and I think from an investors standpoint, you know, not any more new regulations and things like that will seem bullish and uh, I think you'll it'll
you know, promote risk taking. All right, We're gonna run. Hey, listen, Um, thanks for stopping by. Jimmy Lee, founder and chief executive officer of the Wealth Consulting Group out there in Vegas. Two point seven billion in assa. It's under management, and uh, talking about his thoughts in terms of the environment, We're gonna find opportunities. Yeah, his COVID thoughts are really interesting. Carol reminds me of what Michael Dowling, CEO at North
Will Health told us earlier in the show. We are on the exit ramp of COVID. We're in a good place right now. Yeah, I mean it is interesting and we are also increasingly learning at you know, how to deal with this and move forward on it. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube, search Bloomberg Global News,