Markets, The Fed, Currency, And Healthcare (Podcast)

at Bloomberg dot com slash podcast. Daily national average gasoline prices according to Triple A five dollars four dollars and cents of barrel regular, unleaded regular, agaunt agunt, Yeah, barrel a gallant a barrel of gas that would be enough to fill now you. I mean, it's just amazing. So that kind of brings to me. That's inflation. So but everybody says CP I, you know X energy and food. I'm like, how can you can't X out energy and

agree with you? Why would you? Why would you? So I get why economists do it in an esoteric, like academic way, because they feel that those costs or prices are ada tory. But um, there is no way that a public facing civil servant should ever use an inflation X X everything you need to live. Right, Let's see if a portfolio manager does this stuff for living. Did they go extra? Did they look at the whole thing? Hey, Desch Bonde, Founder and Chief investment officers, Centerstone Investors, Uh,

thanks so much for joining us. I mean, inflation is out there. How does that factor in I eat inflation and the FEDS ability to team inflation, how does that factor into your investment outlook? Inflation is elevated, remains elevated, but um, you know you are going to be hopefully like in a month or two, starting to overlap or laugh some of the higher or the steeper rate increases from last year. So I think inflation should probably um, kind of settle down a little bit and allow the

market and breathing room. But the feed is still way behind. Even if inflation settles down to four or five percent, you know, set is still uh you know, behind the curve. It's just going to be interesting for them to be, you know, in a position to have to continuously raise interest rates while the economy is slowing down. For us as value investors at center Stone, you know, um, the fact that money and capital has a cost again is that it's it's it's new, and it means that cash

flow has some value. It's a value as much as we look at cash flow as an important determinant of or an input into the valuation with business companies that generate cash flows, you know, I eat the types of things we invest should be you know, uh in favor, and they have been for the last many months now, So is you know? I just had breakfast over at the where's that place? We go? The lows at the

Regency short was wonderful. Where the entrepreneur who used to always start these kind of UM revenue general raiding tech companies, you know, and just grow the top line and then sell him Now he says, I'm done with that. I'm just focusing on cash cows. And we see the same thing abbe in e t s, right, You see a lot of inflows into these e t f s that have big cash flow generating companies and out of like the queues. So is this is value finally going to overtake?

For lack of a better work, because I know people quibble about the meaning of value and growth, but are you gonna start seeing that rotation UM really stick this year? It's um. You know, It's started about a year ago, the rotation as it were, and now it's gathering pace. I think it's become fairly obvious that the large cap growth stocks are or were over over priced UM and their overpriced in a in a in a environment where

growth is slowing. So then you look at your alternatives, and you look at companies that have been kind of basically ignored for ten years, my own companies that like Parago and we Besoft, that are trading at fraction of their intrinsic values. Companies that generate cash free cash flow in general and distribute that to share orders through rather buy backs or dividends, and so so I'm of the

mind that that turn already happened. It's gathering pace. Whether it's you know, for the one year, I don't know if I can make a prediction for like just another six seven months, but I'd say for the next three or five years that the winds are in the sales of value oriented approaches and I'll buy. I mean, you know,

value investing is not for the faint of heart. What led you into the value camp, Well, it's I think it's a it's a personality thing, like you know, for it's a point of view where a business has an intrinsic value UM it's determined by cash flows and tangible things, and to me, that's just real um. As opposed to me trying to understand what is the potential growth of some company that doesn't have any revenues ten years from now,

what's it going to look like? That? To me, there are so many paths, you know, so many uh undetermined variables and unknowable variables that that can throw you off the path, as opposed to the burden hand of a value company, where you know, I don't have to make so many guesses about things. To me, it's just a it's just a it's just a matter of understanding or

agreeing that the future is uncertain. If the future is uncertain, um, you know, the most value I can add and keep on using that word, but the most value I can add to our shareholders is to invest in companies where uh there's some predictability to the outcome. So I love that kind of investing. It's always been what I've been doing for thirty years. I feel like it is. I feel like I would uh feel safer investing in value

than growth. You would you feel safer, But it's just over my thirty plus odd your career it's been growth. There's been a lot of head things. That's why I was asking if it would stick. But they also came up under some of the most legendary names in value investors, John Marie Viard and Charles Duvot. Maybe they teach it at the University of Louisville, I'm not sure, but anyway, thank you so much for joining us. Always good stuff there, Uh,

founder and Chief investment officer center Stone Investors. I want to bring in Danielle di Martino Booth. She is a big, big star here at Bloomberg Markets. We love having her on to give us thoughts on these markets and on the Federal Reserve. She's at CEO and chief strategist for Quill Intelligence, former advisor at the Federal Reserve Bank of Dallas. So, Danielle, thanks so much for taking the time again to chat with us here. We have a FED meeting next week

which we expect. Well, um, I think that we should expect given you know, I called him the Holy Trinity John Williams, Lele brainerd Jerome Powell. You know that that's the power seat that by share, they want to see share of the FEMC vice share the photo reserve board. They've maintained their hawk is stand. I think they've got their eye on September. Ira Jersey give a really runoff

was just a few minutes ago. I think they have their eye on getting to that third fifty basis point rate hike in front of us in September and achieving that almost one billion dollar a month run runoff rate for the balance sheet. I think they're going to try and communicate that in this coming week's meeting. I didn't get a chance to ask iro A Jersey UM earlier about the auction this afternoon. Normally I don't care about auctions, UM, I probably care less than anyone else in the building,

But apparently like this is a big deal today. I think it's gonna be a forty four billion dollar three year sale at one o'clock, and it'll be the first time that the FED doesn't play a big part. Right, the Fed's not playing a big part. And this will indeed be a litmus tests for what the private investor community, what their appetite is. And you know, look at these levels.

I think that a lot of insurance companies, public pensions. Initially, there's gonna be this massive amount of relief that they can come in and get short paper at high heel. And so I don't think that there's We're gonna watch it closely, don't get me wrong, UM, but to irish points. Once we get further down the line and get through

natural buyers, people who are desperate for yield. Once they get through that population, I think them we're gonna have to be watching out for for what's to come in terms of do we see the potential for higher rates because we have to pull buyers out of the woodwork Danielle over the next several months. What is the what type of mistake could the Federal Reserve make that maybe you're on the lookout for, whether it be maybe too aggressive or maybe not aggressive enough. What's the mistake that

you're maybe have on the on your radar. So I'm going to borrow the wisdom of Tom Honig, who I have tremendous respect for. He was the head of the St. Louis Fed for a long time, UM, and he said that one of the mistakes that was made, uh was that when the Fed was was was changing its policy stance, that they didn't stop and pause. And it's not for I'm not necessarily advocating for the FED to stop or pause in in September and not and and just stop

and pause for the entire cycle. But monetary policy does act with a lag. What we learned from the the national Sessions of Credit Managers was that both UM both delivery excuse me, both collection times for services and manufacturing dipped into negative territory in May. That's the entire economy. Last time we had that was in December two thousand seven,

when the economy entered the Great Recession. So my concern is that we were entering recession and that it that that pushes too far, that this could be not a quick, shallow recession that a more prolonged and deep one. But you do think we are going to go into a recession, right because we've had a lot of big economists, big names UM like I keep referencing Ed Hyman pushed back against UM that that idea and say at least it's not their base case for this year or UM. You

know Ed and I go back a long time. We're both University of Texas, you know, crazy crazy UM freaks and I respect at but everything that we're seeing, whether it's in in car sales. I spoke to somebody who is it when I set X is biggest distribution centers in Portland, Oregon. He said he's never seen a slowdown that like this in twenty five years, just in terms

of this year volume. And that's what we're hearing. We're hearing from Amazon, we're hearing from targets they're sitting on in the demand has been destroyed and it's going to come through with the lack. I wouldn't be surprised to see another big number with consumer credit out at this afternoon, late PCE afternoon, because Americans are putting more and more

on their credit cards to sustain their consumption patterns. But that's not that's not you can't prolong that with Jan Hatzias at Goldman Sachs recently warned about so are are we in stagflation now? Are we in or are we even worse in a recession? Now? Do you think? Do you think inflation is peaked? Danielle. I do think that,

especially on the discretionary side, that inflation is peaked. J Powell, he's trying to break the back of housing speculation, and that's where the policy mistake could come because that that input into the CPI is higher than it was at the than it was at the peak of the housing bubble right now, and we know that it's going to

continue to filter through a very high level CPI. Even if we see discretionary inflation come off its tides, which we know is happening, there are other there are other very sticky forms, and going into a midstrom election, politicians are going to be focused on headline CPI. They're not going to give the FED the luxury of focusing on the core and and food and energy right now are

not in the under the Fed's control. So yes, discretionary inflations off its highs, but there are other persistent, sticky forms that continue to input to feed into the cp I inputs at the same time that I think it's highly feasible that we're already in recession right now. You've got GDP estimates somewh around the two mark for the current quarter ending June. By the way, I have a listener writing in asking if you think we've seen the highs in rates or can rates go higher because the

FED has difficulty controlling inflation. This is something that Ira Jersey also is saying. He's at least close to on the long end of highs and rates. And I would agree with Ira because there's only so much you can do to combat a turn in the labor force, and that is that that's your biggest signpost um for your long rates. We've we've seen two consecutive months of negative net revisions. We've seen two consecutive months of part time working part time for economic reason to tick up. You've

seen your underemployment rate pick up for two months. We're seeing signs of turning in the labor force. Once the labor force turns your past tense looking into the rear view mirror in recession, that signals your peak in long rates. All right. Every time we talked to Danielle and you get Danielle and Ira on the same day, Well, I was just thinking that is awesome. Let's get Danielle on with Ed with Ed Hyman. Sure, get the two of them, and next time you're in New York, Danielle, we're gonna

set this all up. I'm gonna call Ed. I love it, and that would be fantastic, all right, Danielle di Martino Booth. We can corner in our wardrobes. Will both wear burnt orange fort Yes, yes, perfect. Perfect. Daniel D. Martino booth uh U t Alam also the CEO of Quill Intelligence and highly respect. A lot of our listeners love to hear her give talks. Also, great social game. Her twitter feed is really informative. I don't really tweet much. She just read her tweets and get smart. I'll check it out.

I'll check it out, Okay, Danielle. Great to have you on. Thanks so much for joining us. Um, well, usually Paul, you do this part. What do I do now? To just kind of say, hey, we'll talk in a few minutes. This is Bloomberg right now. We want to bring in something. You know, a guy who's traded this stuff all over the place. Now, I don't think we're ever going to see him in the offices here. He is a work from home pro and that is Vince Signaola global macro

strategist for Bloomberg News. He can do this stuff from anywhere. So Vince, thanks so much for joining us here. Curtious just kind of highlighting currencies out there. Is there a bear market case for the U S Dollar? Not yet? Not yet, And we won't talk about my trading options from the beaches a cup or something. We go, um, not not yet. I mean, there's definitely an argument upcoming,

if you will, but not just quite yet situation. One of the things I point out to you is there's an amazing inverse correlation right now between the dollar and equies. And we saw it this morning. The dollar rolled over and we saw a bid and equities once again, typically the dollars the tail where you know, and not wagging the dog. But for the last two days, the dollars actually been leading the equity markets. And one of the reasons is, without getting too deep in the weeds of

this is what what's been driving inflation is commodities. It's not a demand for money, it's not a supply for money per se um. You know, the Fed's monetary polly has policy hasn't changed for fifteen years. We haven't really seen any inflation for fifteen years. Now, all of a sun, we're seeing it because of the commodity pricess. That's something

that's legitimately out of control with the Fed. And the more they take money out of the system, and the more they do this reduction of the balance sheet and higher interest rates, the greater divergence between the demand and supply for money, and as that diverges, you see a greater demand for the dollar. And so I think in the near term, as pretty was mentioning, I think we're going to see a little bit more demands for the

dollar than it's going to be a little choppy. Obviously, what um what Powell says that an espressor after the MC as everyone expects, hikes next Wednesday. UM, my hope is exactly opposite of what. So, I'm sorry to interrupt you. I'm so god it's got to be. It's it's a really good moment when your teacher, your former mentor and teacher says the student was right. It Vince, I got she's been making your argument over the last several days, and no one believes me that like this doesn't matter.

It's flat and unchanged. You're totally right. But let me go cross acid here because if you actually and this is what's so interesting to me, A lot of the correlations that we saw two years ago, which, by the way, Vince also taught me correlations all my rants are really Vince's fault. Um, But if you look at what kind of happened with oil prices, hired stocks, hire all these risk assets that are traditionally supposed to be risk assets, they're moving together again in a way that they haven't.

I would are you year to date, vince your take on that? Well? Um, yes, I mean you know, all correl all correlations equal one at some point or another regarding UL price though, And if you're an FX guy and you're looking how to play this, you know you were mentioned was he again earlier? CAD yen is an exceptional thing to look at. CAD next border of oil? U what am I doing now? Canadian dollar to the end,

so you can bike if you think oil. Okay, that's what I get all right, I'm I'm speaking for every single one of our listeners out there. True, Okay, I got it? Continue an sorry, so no. In a commodity play, um, you have to like Canada for a variety of reasons, major export or commodities uh oil as well. Um. And if if you think you know, you can watch the Bloomberg Commodity Index. I think we hit historical hives yesterday.

If you if you expect that to continue, I I would look for the oil exporters to continue to do better currency wise, kind of way. By the way, Vince, do we almost unrelated? Do we import deflation when the end goes to one thirty two? I mean, I'm just thinking about Ford and GM and Chrysler buying parts from Japan. They can get a lot more for a lot less now, Yeah, absolutely if that's where they're getting in from the norward

China these days. But yes, absolutely correct. Um, it's it's always but the flip side of the coin fluid automakers where they always pushed back is when the end weekends. Uh, the Japanese automakers have a huge advantage over US automake good point. It's a double edged sword, really, all right, Vince, good stuff. Always love having you. We're gonna have you every couple of weeks now, so you're you're locked in.

Vince Cigarella, Global macro strategists and also cretic UH Markets corresponded, joining us talking a little bit of the currency set. June is Pride month and a month when we felt you selling equality issues here at Bloomberg. Today we bring in Oregon CEO Kevin Ali to talk about women's healthcare and experiending healthcare for all. Kevin, thanks so much for joining us. Here. You know, I read a recent stat that only four percent of global funding for research and

development and healthcare services go towards women's health. That really shocked me. Talk to me about what you guys that organon are doing here to address the women's healthcare market with your Paul and I gotta say that, you know, we're really excited because last week we celebrated our one year anniversary since the bell ringing ceremony that we had the New York Talk Exchange, and we need to do really three things to you know, four investors to really

believe in organize a company. First and foremost, we said we would stabilize our established brands business, and we've done that. We said we would drive our biosimilars business by double digits. We've done that. And now turning to your point, which is women's health, we said basically that we're going to be an active player in business development because there are a number of assets out there looking for a home

at a reasonable valuation. We've got great cash flow, so we've been able to do five business deals over the last year to kind of buttress our Our business are thriving reproductive health business. So we've gone from two areas of focus in fertility and contraception now to seven areas of focus, uh, literally in one year. So we're very pleased. You know, R and D is starting to emerge in the space, and we're a great player to be a

global leader in the women's health space. There's no other large pharma company quite like us in terms of our focus, so we're very happy with our potential future options here. By the way, Kevin, I know, well a lot of times, at least executives don't like to talk politics, and but we can't have a conversation about women's health and equality without talking about, um uh, the possibility of ROW being overturned.

How do you react? Um? How have your employees reacted to this what what appears to be, at least from one point of view, a huge setback in women's rights. Yeah, look, you know, I'll tell you, Paul, I think everyone is clearly paying attention. As you said, it's still not determined

fully yet obviously soon we'll find out soon enough. But here's the something focus I mean, really, I mean, you know, the employees we call founders of this company, all nearly ten thousand strong, are focused on our vision of a

better and healthier every day for every woman. Part of that focus is really on trying to solve the issue of unintended pregnancies, of which more than fifty of all pregnancies in the United States are and intended the same x x us has been that way for nearly a decade, uh, you know, And so we're starting to invest in things like, for example, education and awareness so that she can have better discussions with health with her health care provider, and

offering up um really unique innovative ideas like next one on which is in curitible rod that we have long acting reversible contraceptive that the potentially essentially says the woman having to think about unintended pregnancy for three years with a ninety nine point eight percent effectiveness level. So we're focused on our end of the spectrum, which is really trying to bring innovative and unique solutions to solve some

of these significant unmend needs like unintended pregnancies. All right, So, Kevin, you spun out from merk last year right in the midst of a global pandemic. Talk to us about what that was like. Yeah, the book is waiting to be written. Trust me when I tell you that, Um, you know, it has been tremendous challenge in terms of being able to wrap everybody up to to get out from you know. You know, this business took a lot of complexity, a lot of a lot of folks involved, god countless number

of consultants and folks of that nature. But I think one of the things I've learned in this process of it last year, the strong of our culture and purpose that you have, the more discretionary effort you're going to get from your employees. And the purpose was so well articulated and so incredibly connected to that that created the discretionary effort, so you don't really need an office space. And to ensure everybody is you know, crossing the t's

and dot in the eyes. Everybody worked like crazy. And it's nice to say that now that we're one year and we can look back and the rear view mirror and say, you know, all things have just gone beautifully well knock on wood, because a lot of things could have gone wrong, and as a matter of fact, that consultants didn't want to scare me with all the things that could have gone wrong in a pandemic. But so far,

so good. Um, knock on wood. All all things being equal, you know, we've been able to deliver everything that we said to shareholders and two investors and analysts, and I think are developing credibility in a very quick rate. And you've had a lot going on, um, you know, besides, it's been off very active in terms of M and A as well. What about UM the E s G phenomenon, which has grown at incredible pace. You've just published your

first E s G report. That's right, that's right. And look, from the first day we actually spun out, we saw a unique opportunity to connect our vision and purpose of a better healthier and healthier every day for every woman to a very unique and differentiated E s G platform UM and it's called Her Promise and we actually UM published that literally a year after launch, which in itself is a tremendous achievement by the team. But the really the focus is on, you know, solving some of these

great on met needs out there. That's why essentially the S and the E s G is one of our kind of superpowers in the sense that you know, we half of the product that we actually deliver. I talked about next one on our reversible, long acting, reversible contraceptive is given to low and middle income countries for you essentially almost a cost, and so that essentially says we've got an opportunity to create more, you know, opportunities like next for the world and the same thing for governors

and good uh all right, Kevin, great, great stuff. Thanks so much for taking the time. Kevin Ali, CEO of Oregon on as a polpy traded company. Oh g N is the symbol. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On Ball Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.