Markets, Healthcare, And The Supply Chain

That is a correction, territory, kids, and that's what a lot of investors have been kind of expecting for a while here, and a lot of folks are even saying it's a healthy part of a longer term bull market. Let's check in with a professional and get a professional opinion. Katie Nixon, ce IO Wealth Management for Northern Trust. So, Katie, hey, thanks so much for being with us. We really appreciate the time. We are in a correction on the SMP. What do you make of it? Yes, good morning, and

yes it's time for investors to buckle up. But I do think to your earlier point, this is to be a expected five percent corrections. Ten percent corrections are normal parts of market cycles, and the fact that this correction is taking place during a period of relatively strong economic growth,

low unemployment, the backdrop is healthy. So our view is that it will be sort of a short term correction, but something that investors are going to perhaps have to have to live with for the next several weeks or even months. I guess the you know, the economic picture looks good, especially um the historical economic outlook and low unemployment is great, but inflation doesn't look so good. What do you think about seven? How do you expect this

year to play out? Yeah, so, I mean that that is the big question, and I think that's been the biggest issue for investors insofar as the outlook for inflation influences your outlook for what the ben's going to do. Our all look for inflation is, yes, it's very high. It's been higher for longer than we thought it would be. Um, the various cycles of the COVID pandemic have certainly not helped, and we see continued strains and supply chains and things

like that. So inflation has higher for longer, but we do see it coming off the boil as we as we enter the second half of two. And it's a combination of some very obvious things like just the base effects as we get past the very high levels of inflation that we saw, and then an energy prices coming back down as we head towards the summer and into

the fall. So we think inflation will trend down. It will still stay stay elevated above the two percent target, but it certainly won't be printing seven percent like we've seen recently. And because of that, and the important thing for investors is because of that, we don't have an

aggressive sed call here either. We think the market is probably a little bit ahead of itself anticipating for rate hikes or even I read this morning summer anticipating fifty basis point hiking in March, and we think that's a bridge too far. So, Katie, you know, I'm looking at some of the big movers today, you know, Netflix off ten percent, Tesla off seven eight percent. How do you think about the sectors that you want to have exposure to in twenty twenty two in what is in fact

a rising interest rate environment. So that is a great question, and I think it's a very important question for investors to answer because what we've seen sort of coming out of the pandemic is a preference for these high growth stocks. Right you wanted to be involved in the reopening trade. And Netflix and Peloton and these these stocks are sort of very obvious uh stories um COVID related stories and and and also very strong results backing up investors enthusiasm.

What has been under owned though really historically, but even post COVID is value. UM. So what we're telling our clients is you really want to strike that balance and and look at your portfolio see where you're under invested in. Most of the time that's value and value to mean US value stocks, but it can also mean non US stocks. European stocks tend to skew towards the value end of

of the spectrum. UM. So we are telling our clients go global and diversify and really strike the balance between growth and value because that you're probably under under invested in value. What about US stocks? I mean, I'm watching a live ticker of the SMP now down two points seven per cent um. We've we've started the year so poorly. Is this a buying opportunity or do you want to wait it out? Since it took so long, I mean, since it didn't take so long, since it was so fast,

it happened pretty fast. I mean it's just like the blink of an eye that we were back. We were at the highs in early January. So yes, it happened quite quickly. And you know that that that that tends to be in an historical pattern. You know, the the market takes the escalator up in the elevator down, as they say, and we certainly have seen that. I wouldn't really encourage investors not to try to time the market here. Um.

It's so interesting. Investors always say that they want to buy the dips, but then when you have a dip like we're seeing we've seen the last couple of weeks, then especially today, investors are afraid to get in. So you have to fight your emotions state with your strategic plan. Make sure that your investments are aligned with your financial goals. And that might mean buying in a dip, it could

mean selling into a dip. Um. It all really depends on what your specific and unique goals are and focus on that because you're not going to be able to predict the market moves and you're not gonna be able to control the market moves, um, So better to just focus on what you know, which is what do you need your assets to do for you and how can you position them for the best best long term success. Canny, think about global energy here, are you a buyer. We've

got oil. It's off a little bit today, as everything is, but generally oil has been had a nice run up here. We do like it, and you know, we love natural resources as as sort of a one to tail went for portfolios. Number one, you get that equity beta and as I said earlier, we're positive on equities. Um, we're constructive on US equities in particular. So with that as

a as a backdrop, we like energy stocks. And the second thing is, as I mentioned before, inflation are we anticipate coming off the boil in the second half, but the risk is that we're wrong, and if we are in a much more persistent inflationary environment, you do tend to get good inflation protection out of natural resource equities, So we like those as part of a diversified portfolio. Katie Nixon, thank you so much for joining us. We

really appreciate getting your thoughts, getting your perspective. Katie Nixon, she's a c I O of wealth management at Northern Trust's Northern Trust. They're based in Chicago, and I'll tell you they're one of the good long term deep money managers out there in the Midwest. When you've got to Chicago, you have to get a meeting to get It's unbelievable take on this market, for sure, especially as we bounce

a little bit back higher. Right now, we're UM down two point three percent little less so UM we have had a rough morning today, but it is still deeply, deeply in the red. Now I want to get to well coast. I'll say. He is the CEO and founder of Biotricity, and they UM are trying to improve healthcare by developing basically digital solutions aiding a chronic disease prevention and management while cost You know, I was thinking about your company and you can uh tell us more about it,

I guess in your answer, but it daught on me. Um. I've always had this kind of negative view of the metaverse or a future living in virtual reality UM from movies like Wally and Uh and Uh what's that one with Bruce Willis where he UM plays a cop in the metaverse. In any case, I always have thought it would be unhealthy. But now that I'm thinking about your country, your company, it seems like it could be healthier living in the metaverse. What do you think? No, it's a

it's an excellent point. Um. I I always thought about that myself in terms of, you know, getting so connected and being completely integrated, and then how do we how do we take care of ourselves if we're you know, sipping smoothies and and doing all of that, and uh, you know, I think that as we've seen through the pandemic, people have gotten a lot more engaged. I mean the

direction was already there. We were getting into more connected healthcare, but there was an unwillingness from individuals to engage, read instructions and figure that out, and that got all accelerated. So I really think that as long as we as a as, uh you know, individuals as companies continue to innovate on this idea of digital tracking home based labs, but make sure that it's clinically relevant, like it's actually not lifestyle but really rooted and based on good science,

then we can actually get that insight. And I think that the consumption of care, for for basic episodic visits, for general care is going to happen more and more in the home where individuals are engaged. And then they're going to go in for treatment, um, into the into the providers or into the hospital. So first of all them Bruce Willis movie, I was thinking of a Surrogates but in this and while you know, um, we didn't do anything. People in those movies and those fictional uh

you know future forecast did nothing. And you're right. During the pandemic, people did a lot more. Paul for example, got a Peloton bike and was riding every day. Um. A lot of people were doing trying to figure out ways to do exercise and ended up doing even more in lockdown than they would have before. But what kind of solutions are you able to provide now walks in terms of for example, health monitoring solutions. What what can

biotricity give us? Great questions. So you know, we started out we had the diagnostic product which was really available for high risk of patents and so and when I talk about high risk pations, I'm talking about patients that can have a heart attack or stroke. Uh. And you don't want them basically sitting at home, uh, waiting for the data to be collected and then returned back and downloaded because you're worried about something is going to happen.

So that was our first product, and it's a smart to ice and so when you put it onto a patient and you send them home, UH, it'll it'll look for the data and when it detects an emergence here and anomaly, it actually alerts your doctrine gets you back into the hospital. It's like a bracelet or a wearable that detects like it doesn't e c G and detect your pulse and correct. It's a small little advice of of a mouse and it hangs around your neck and and and and makes contact with your skin. And that

device uh saves lives every day. And then we've taken that technology and we've simplified it in two products, one which was just FC cleared last week, which is a patch that gets connected and collects your ECG uh and and accelerates and your your diagnostic response time. So it's a halter product but slightly highly condensed. And then we have a consumer product which is collecting your your e c G long term for weeks, months, years, as long

as you're wearing it. And this is really good for bikes, bikers, is really good for individuals who had an issue but they're fine, now, but they want to track themselves. Uh, really a lifestyle play. So is this you know, I guess the digitization, if you will, of healthcare, is that going to drive costs down? It doesn't every other industry. Good point, now, excellent questions. So I would say, you know, seventy cents of every dollar in the United States is

spent on chronic conditions. And so we've been seeing a huge movement in telemedicine, right, But telemedicine is episodic care. It's thirty cents on the dollar. So the real issue is exactly what you're talking about, right. The people who are sitting at home, they're not exercising, they're not engaging.

They have to go in and out of the doctor's hospital all the time, people with cardiac issues, people who were servicing at biotric City, and we're focused on and the reason is most of these individuals don't actually have technology available to them to get insight. So they get really on it. The doctor says, you're you know, this is gonna be a problem. You really have to do this, and for a week or two weeks the self manage.

But because they have no data, they have no device, they have no technology to tell them that there it's actually doing something. They drop off the wagon and that's what we're doing. And and to your point, I think that's really going to drive cost downs. But we need to continue this trend. So is is this the again kind of some of the telemedicine. Is that just a function of the pandemic or is this a big trend that's going to continue. So I think telemedicine is going

to get bifurcated. So part of it is going to stay. So you know, the people who have a fluid that it's convenient and whatnot, but I think there'll be a drop there and then they're going to be telemedicine for chronic patients. The problem with chronic patients is, you know, you need blood work, you need diagnostics, you need an

actual test. I mean you cannot tell a cardiac patient, I you know, are you actually having a rhythmia or not if you're feeling complications without running some sort of test. And that's a companies like us have to continue to innovate and provide those technologies so that you can get that data integrated with telemedicine and provide here. And that's that seventy cents I'm talking about. All right, that's what's going to move the needle. All right, will cause, thank

you so much. We appreciate a walk us all Sadiq, CEO and founder of Biotricity talking about the future of medicine. You know, one of the key topics that Matt and I like to stay on top of is the global supply chain challenges out there. Uh, and they are in fact global and the impact all of us really in so many different ways, from going to the supermarket to going to the card dealer, lots of ways to experience

the challenges facing the global supply chain. And we have a great voice to help us get a sense of what's going on out there. That is Geene Sharroka, Executive Director of the Port of Los Angeles. And again on my Bloomberg screen, one of my many Bloomberg screens in front of me, I have map Go and I'm looking at the uh uh you know, all the ships that are at sea and kind of where they're kind of anchored and uh, certainly the Port of Los Angeles is

um the busiest container port in North America. So this is a great opportunity. Gene, thanks so much for joining us. I know you're super busy, you and all your folks there at the port here. Uh since the last time we spoke to you, I would say probably you know, three or four weeks ago. Give us a sense of kind of where we are as a nation in terms of our supply chain logistics. Well, good morning, Paul and Matt,

and thanks for having me back on. Since we last spoke when I visited New York in December, we have seen some improvement. Overall, imports on the docks in Los Angeles have been cut by half meeting. They're moving out to the marketplace here domestically, and those aging containers that we had targeted during the fourth quarter to move those out of the way are down by nearly two thirds.

We're still struggling a little bit with the amount of time containers sit at the terminal on the street waiting for warehouse space and coming back to the port. That's been a difficult time. But with all these imports we've pushed out, now we're starting to see those empty containers return. So our focus has got to be loading up as many of these as possible for US exporters and pushing out the rest of the empties for the next round

of import from Asia. We've got about a hundred and three ships on the way departing Asia and headed towards the ports here in southern California, but only about a third of those are ten thousand container units and larger the traditional vessels that we have calling at the port. The balance are those newcomers, the charter hires and the one way ships trying to augment for additional capacity here ahead of water New year. How long do you think

it's gonna be geane until we get back to normal? What? What? And what would you consider that I think it's going to be sometime. A normal has so many variables in that equation, from how merchandisers are putting in orders and factories, what factory can do through all macron, keeping staff on deck to produce the goods that we want to buy, making sure we have enough vessel capacity in the right places,

and utilizing that capacity. One of the areas we're focused on most right now, Paul, is the latent capacity available to us here at the Port of Los Angeles. Fifty five of all available truck gates go unused every day, and we have an overhang of about thirty in our railroad capacity. We've got to keep moving this cargo out, absorb more that's on the water, and take advantage of squeezing every hour of efficiency we can through the port complex.

Geane talked to us about labor. A lot of folks have suggested that, you know, there's just aren't enough folks to unload the containers, and then there aren't enough truckers to you know, get them out into, uh, the interior of the country. How do you think about the labor situation within your you know, ecosystem there at the port. Everybody who wants work right now still has it is that caravan a cargo is coming across the Pacific at still high levels of volume. Three segments of labor the

dock workers, the International Longshore and Warehouse Union. They've been averaging six days a week on the job since the pandemic began back in March of They're going all out. Productivity per ship basis is the best in the industry. Second, of those truckers that you mentioned, they have hours of service, can't drive more than eleven hours a day, and if

they drive consecutively, they've got to take some time off. Nationwide, the American Trucking Association says that we're eighty thousand drivers short, and I would represent here in southern California, we could use another three to four thousand port drayage drivers. Then

there's the warehousing space. We've got two billion square feet under roof from the shores of the Pacific, outs of the desert region in southern California, and we're about eight thousand workers short right now, four hundred thousand ware hackers warehouse workers short nationwide. On these last two segments, they tend to be unrepresented, and we have to find a way to attract, recruit, and retain folks make these professions. Again, I know a great way to attract people to jobs

that pay them more. Is that absolutely? Is that not part of the equation gene. It has to be thinking about how we pay labor wage and benefits, what you can do to attract folks into this industry and not wait until it's crunch time. Like we've seen over the past eighteen months, the industry has really got to focus on this, and some of the work that we're doing at the federal level with the C suite and the private sector is leading us down that path, but we've

got to work double time alright. So Jean, as you think about it, I mean, you've been in this game a long time. Is the just in time inventory strategy that we've all grown up with is that being rethought? Do you think it has to be? We've all thought about lee and keeping inventory levels low. They are right now in the retail sector the lowest they've been in

the decade since two thousand eleven. We've got to make sure that we have a good combination of where we can reshore manufacturing or near short in addition to having some certainty placed back into the international supply chain simply buying products just in case. So we weren't the company that was the paper example, tissue and toilet paper last year seemed to really gum up the works and folks are putting in orders and factories who are working in capacity now for the better part of a year and

a half. So streamlining this, evaluating it at the company level, but also as a nation, and that's part of what we're doing and working with Port Envoy John Paccary, the National Economic Council, led by Brian Eas and others. Hey Geen, thanks so much for taking a time. We really appreciate getting your perspective. You are absolutely on the front lines of this global supply chain issue. With Gene Siroka, executive director at the Port of Los Angeles, the busiest container

port in North America. You know a lot of folks are saying, hey, we need a ten percent, a fifteen or twenty percent correction in the market. It looks like where you go, here you go. This is what it looks like, Charlotte. It is the worst one day sell off for the SMP five since October twenty, which feels like it was so long ago. And how does Matt Miller know that? Because the s I N S function on the Bloomberg terminal tells you so, I will say, it's an internal function? Is it so only we can

see it? I did not know that. If you ever need a quote on S I N S, I just message me. All right, let's check in with a professional on how we should be thinking about this. Jill Garby, she's a senior VP and senior wealth strategist at Huntington's National Bank. Jill, thanks so much for joining us. How do you how do you think about days like today, weeks like we've had over the last few weeks. How do you think about that? What are you telling your clients? Well, hello,

Matt Paul, it's great to be with you. We look at this is maybe the best buying opportunity over the last two years. So we're coaching our clients to be patient, get the bio list ready. Our equity team certainly has their by list ready. And for those individuals who are sitting on a lot of cash, and as a top national bank, we're so fortunate to work with individual clients,

many of whom are business owners. They've been liquidating all our portions of their business, others who have been liquidating real estate. You see this as a tremendous opportunity to start working that cash in. What do you think we're gonna see in terms of how is it going to work out in terms of inflation and the FED and how important is that to your individual investors. It's it's

very important to our individual investors. In fact, we expect Wednesday to be very wild and another volatile day and it'll be very interesting to see the playboy that's coming with respect to inflation. We've been investing in our client portfolios with a bias too small and mid caps and reads.

Of course, we like reads for current income and the potential for price appreciation, and right now with this volatility, I think it's a good reminder and certainly we're imparting this to our clients that you don't want to be invested in large cap growth. So we're taking a very nice barbettle approach where we have growth quality growth names, quality value names, and that's worked out very well for our clients. So, Joe, what's your economic outlook for two?

I think you know, the economy by many measures, is in a pretty solid shape, but there is that inflation concern out there and it's getting I think more and more real by the day for a lot of investors. What's your economic outlook underpinning your investment outlook? It certainly is very real to everyone, and we expect that inflation will be dampened and there will be a decrease each quarter.

We could end up with inflation in the three percent range later this year, and that's what we're imparted to our clients, and certainly we're watching that. But again, we see very strong individual consumer balance sheets, strong business balance sheets, and cash levels, so we think that will support continue spending an investment in so we think we would see you know, sm P, the SMP fire in h the high single digits and maybe even getting to the ten

percent range. Certainly less than what we saw last year. But we are still very positive on stock. Yeah, we've heard. We've had a lot of people come and say CAPEX is going to be strong. Um, what about buy backs? What about dividends? What about payouts? Well, right now we're seeing um, dividend stocks are doing very well, and um, you know we we expect dividends and buy backs to continue. On the fixed income side, Joe, where are the opportunities here?

And again a rising uh interest rate environment? What are you kind of telling your clients, Well, we see more risk in the fixed income market than the stock market right now as the rates rise. So again we're looking our Our fixed income team is looking at opportunities to get in. Many of our clients do have fixed income. We do a lot of work with our clients up front on planning and what they need. Some clients like fixed income to damp in volatility. So right now we're

really looking at what the taxable equivalent yield is. We aren't really um getting into the muni markets. But um, we're looking at um tips of course for inflation protection, and some higher yielding fixed income investments because, let's face it, this lower interest rate environment has been great for roars but not great for savers. So we're looking to get as much shield as we can, and oftentimes we're looking at equities for that because the divining yield can be

higher than the fiction comal do you have? I mean, are your high net worth individuals also interested in investing in things like commodities? And I hesitates you asked these in the same question, but crypto. I was going to go there, but you beat me. Yeah. Well, I mean, I'm just you know, I mean, you're in the middle of America. Um, Columbus, Ohio. She she's you're in Cincinnati, right. I hear Michigan in your voice. But I thought you

were headquartered. I thought you were your office was in Cincinnati. Yes, of course, as as a as a native Ohio and I can spot a Michigander from like ten miles away, Ohio. What happened with the buck Eyes? You know, we did so well against the Sparties and then we lost to the Wolverines. I could not believe that this year. Normally we we talk a lot more about this jail, but we can't on a day when the SMP is selling off three bitcoin is a huge uh drop. We we

saw it coming down below thirty four thousand. Do you have high net worth individuals or your big investors interested all in crypto or they just completely staying away from it. It's a mix. Certainly people are very curious about it. We still see it as speculative. So if our clients have excess cash and they can they like the volatility and they can ride that out, then they're investing in crypto.

Many of our clients are staying away from it, but certainly that is the talk of the town, and if they have the excess liquidity, they're going in real quick thirty seconds. What's the number one, number one question you get from your clients these days? Where should I put my money? When should I be going into the market. And a lot of our clients are also concerned about protecting the wealth that they have, rather whether or not

that's a business, real estate, they're marketable securities portfolio. So we get that question a lot. How can I best protect my asset and make sure that my family receives my wealth in a way that allows me to disinherit very appropriately the I R S. So that's a good questions, A non market question. Yeah, I like that. I like that term disinherit the I R S. I'm all fort Joe Garvey, Senior vice president and senior wealth Strategist at

Huntington National Bank from the great state of Ohio. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews an Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Put on false Sweeney I'm on Twitter at pt Sweeney before the podcast. You can always catch us worldwide at Bloomberg Radio.