US Producer Prices Jump, Adding to Signs of Persisting Inflation

Published Mar 14, 2024, 8:09 PM

 Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Daniel Hornung, Deputy Director with the National Economic Council and Bloomberg News International Economics & Policy Correspondent Michael McKee discuss US PPI data that rose in February by the most in six months, driven by higher fuel and food costs that add to evidence inflation remains elevated. Bloomberg News Technology Reporter Alex Barinka talks about Steven Mnuchin targeting a purchase of TikTok from its Chinese parent company. Bloomberg News Global Economy Reporter Enda Curran provides the details of his Businessweek story America’s Plumber Deficit Isn’t Good for the Economy. Dr. Iman Abuzeid, Co-Founder and CEO at Incredible Health, shares the hiring platform's fifth annual State of US Nursing report. And we Drive to the Close with George Young, Portfolio Manager at Villere Funds.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

So another US data drop, you know it?

Well, PPI rising in February by the most in six months, driven by high fuel or higher fuel and food costs, and that kind of added to evidence Tim that inflation, Yeah, it remains a bit elevated.

Okay, we got some separate data too that showed retail sales rose last month by less than forecasts after a steep drop to the start of the year. That underscores concerns about the durability of consumer spending. Meanwhile, applications for jobless benefits decreased to a three week low. When we look at all the data we got today, Yeah, I think this was the most consequential day of the week.

What Mike McKee is to say about it?

He's Bloomberg News International Economics and Policy corresponded, joining us right here in studio.

Was this the biggest day?

That's a good question.

We did have CPI earlier this week.

But yeah, well, it's interesting the contrast between PPI and CPI, and they don't relate directly to each other. They each have more of an input into PCE than the fence favorite indicator than each other for the most part, and anything that comes up in PPI at the broad goods level will take a while to get into CPI. But CPI food was flat, no increase at all, and PPI food went up. The numbers were not good, as you mentioned, six tens rise in the headline PPI largely energy, but it was double what we saw last month and double expectations. I tend to look at the supercre PPI which you take out food, energy, and what they call trade services, which is basically for retailers and wholesalers what their margins are. It can be a way of looking at company margins and how they're doing. And that went up four tenths after a six tense gain in January, so we are seeing some return of inflation pressures down below. This is one month, ye yes, torture any fit official they'll say it's only just one month, but it is something that has to be on their radar screen now as they get ready to come up with a new set of economic projections on dot plot.

All right, so let's bring in also Daniel Hornok. He's Deputy director of the National Economic Council. He's there on the lawn of the White House. Daniel, great to have you here with Mike and Tim and myself on inflation. Is the White House confident at the Fed we'll ultimately get to that two percent marker? Is there any kind of internal conversations that maybe two percent isn't the right mark here, that there are macro issues going on that maybe is going to keep inflation higher post pandemic four years out. But nonetheless many have said things have changed here in our economy.

Well, it's good to be with you.

You know.

I won't comment on monetary policy and the Federal Reserve. You know, I think what I can say if you take a step back, you know, our progress on inflation does continue down from you know, a peak of nine percent to the three percent range always. I think we've expected some seasonality in January and February. We didn't expect the progress to continue on a straight line. But I think if you look at what we have from CPI and PPI, and now looking ahead to core PCEE for the month of February, expect, you know, some continued progress there on that core annual inflation number. And you know, from the president's perspective, I think, as you saw in the State of the Union, a continued focus on his part of continuing to really make clear to the American people that he has a series of plans that would lower costs for American consumers and really drawing a contrast with the Republicans in Congress who have not taken up his plans and in some cases have focused more on other issues like tax cuts for large corporations and the wealthy.

Well, those are long term plans, they will take years to have really an effect on prices. Does the President have anything or is there anything that the National Economic Council is suggesting that would help the FED in its goal and bring down inflation in the short run, because obviously you have a kind of November fifth deadline for convincing Americans that things are better.

Well, it's also on that front to look at the progress that has been made, really the significant progress in resolving disruptions and supply chains and getting Americans back into the labor force. Really, I think a result in part of some of the President's policies to drive a strong recovery that has contributed significantly to bringing inflation down while keeping a strong job market. In addition to the proposals that I talked about a moment ago to do things like lower the cost of housing and lower healthcare costs, the President is also focused on using the administrative tools he has to do things taking on junk fees where we're seeing hidden fees that make it more difficult for consumers to understand the true costs that they're being charged. So you'll see the President focus on those kinds of administrative actions as well.

Can you talk a little bit about the conversations happening within the White House within your circle about communicating what you all see as achievements when it comes to the strong economy that by many measures people would consider a strong economy because it doesn't necessarily seem like it's totally resonating with voters poll after poll.

Well, I think there are two important things I'd say. The first is really making clear that, in part because of the President's policies, we've had one of the strongest recoveries in the world, strongest recoveries on record. And what that has meant is, even after accounting for inflation, wages are higher than they were before the pandemic. Wealth is higher than it was before the pandemic. But also being very clear that the President understands there's more work to do to lower costs for families and that he has a very concrete set of plans that would do that. Again, really different from Republicans in Congress who focused instead of on lowering costs for the middle class, on cutting taxes for large corporations and the wealthy.

You know, one of the things I wanted to ask you about, Daniel, is some of the macro issues. And I understand, you know, the White House staying away from specifically what the FED is doing in FED policy. But having said that, you guys watch obviously the cost pressures on Americans here, I think about something like macro factors like tech isolationism, protectionism. President Biden of course just coming you know out was it this morning or in the last twenty four hours about US steel retaining American ownership? And I do wonder about are there substantial macro factors out there? That you guys are having internal discussions out that maybe need us to maybe rethink about some of the cost pressures that might remain on Americans longer term.

Look, I think from the President's perspective, we need to be sure that our economic strategy is durable, is resilient, and is leading to the kind of long term growth that can be broadly shared. We think it's very important that we have a strong international partnerships and an open economy. At the same time, we need to make sure that American workers are feeling the benefits of our economic policy, that the middle class is feeling the benefits of our economic policy. That includes things like investing in a strong manufacturing base here in the United States, and it also includes things like making sure that our tax code is fair so that middle class Americans and some instances aren't paying higher tax rates than billionaires. So you'll see a continued focus from us on those range of issues.

Well, speaking of manufacturing, why is the President opposed to Nippon Steel buying into US Steel Company? They're an ally, the plants would remain here, So what's the problem.

Well, the President this morning and his statement said that he's of the belief that a US operated and US owned steel sector is vital to the national security interests, economic interests, and supply chain interests of our country. There's a process from here, but I won't get ahead of that process. I'll just stay with what the President said this morning.

But in terms of just the pushback, you know about pushback on China, you know, will there be some adjustments to the Trump let's talk about Section three oh one tariffs on China to align with the President's priorities, and we're broadly, how are you thinking about the intersection of China policy and the President's domestic economic agenda.

Well, look, there's an ongoing review of the Section three oh one tariffs. I'd say, more broadly, with respect to our economic relations with China, I think that the President has been clear that we should build a strong competition with China, ensure that we're promoting US interests, but also where we can work with the Chinese on mutually beneficial and mutually agreeable issues that allow us to create a strong economy here in the United States.

Well, the administration has been considering additional tariffs in China and perhaps in some other countries in the region. Is transfers become a big issue. Is that something you would do before the election.

Again, we have an ongoing review of the tariffs that I won't get ahead of and merely say I think from the president's perspective, we need to ensure that our trade policy, like the rest of our economic strategy, is really focused on boosting living standards, boosting wages, and boosting economic well being for the middle class in this country.

Well, so appreciate your time, Daniel Hornig, Thank you so much, Deputy Director of the National Economic Council, there on the lawn of the White House, talking about obviously the inflation prints today and yesterday, and also more broadly about administration policy and of course our thanks to Bloomberg News International economics and Policy correspondent Michael McKey.

Mike, thanks so much well.

Of course, Also on the agenda down in Washington is the future of TikTok, and it's up in the air right now because one day after the US off Is representatives voted to ban it in the US or it could get sold to new ownership to alleviate what US lawmakers say are national security concerns. Meantime, enter former US Treasury Secretary Steve Manushan because he's got an idea when it comes to new owners of the wildly popular social media app. Check out what he said earlier on CNBC.

I think the legislation should pass, and I think it should be sold. I understand the technology, it's a great business, and I'm going to put together a group to buy TikTok.

You're trying to buy TikTok, I am because.

They should be owned by US US businesses. There's no way that the Chinese would ever let a US company on something like this in China.

That's former US Treasury Secretary Steve Nushan earlier on CNBC with more on TikTok with us from our LA bureau, Bloomberg News technology reporter Alex Baranka. Alex, good to have you with us this afternoon. So what do we need to understand here about how likely it is or how realistic it is that a group of US investors along with former Treasury secretary could actually buy an independent TikTok.

Well, there are a few hurdles to clear before that's even an option. This bill still has to pass through the Senate, which we've written could be a tougher battle than we.

Saw in the House.

But let's assume that if happens. Let's assume that this bill does pass, and the company has one hundred and sixty five days to either sell, divest from ByteDance, or be banned in the US. For a group like Steve Manuchin to actually acquire this company, there are a few options. They could acquire it outright. Bloomberg Intelligence analysts valued it at thirty five to forty billion for just the US business, so they would need a pretty significant check size. When we've seen deals like this in the past, I think Twitter might be a decent example if they want to keep this company private. About a third of that is debt, two thirds of that is equity, so that's a lot of dollars there. If that group comes together, whether it's Mnuchen or other buyers, it would also need the review of the president. The way that this bill is written right now, the President would have to sign off on any kind of agreement, and we'd have to kind of clear the fight that might come out of China. The Chinese Foreign Ministry has said in the past that they would block any kind of sale. So a lot of ifs there, but it does seem like Steve Mnuchin is a person who might know how this goes down. You'll recall, as the Treasury Secretary under Trump, he oversaw Siphius, that is the kind of intergovernmental agency that reviews deals, and was very involved in the prior dust up with TikTok when Trump tried to ban it in twenty twenty. So the man surely knows the asset as well as a lot of people out there in the industry might look at this as an amazing asset. But as I said, there are a lot of ifs until we get to that point.

Well, what do you make of the former US Treasury Secretary Steve Manuchin coming in here. I mean, he's obviously someone who knows how government plumbing works, specifically when you're talking about, as you said, foreign deals here, So I don't know what are you hearing about kind of he specifically coming in potentially with a group here to make a deal.

He certainly knew how to operate under the government in the Trump organization, and because he knows kind of the players that would be involved in in Scyphius, not only the Treasury, but folks from the DOJ branch and other intergovernmental agencies. He might know what it means to actually clear some of those national security concerns which certainly have existed before now as this review in the government of TikTok has been an ongoing process. He also is very involved in the banking industry. He certainly knows financiers and might be able to kind of swing the tides to his end. I'm hearing some comparisons to someone like Elon Musk. What Minuchin doesn't have that Musk did have is a war chest of his own. What Manuchin might have is contacts elsewhere. I know he has a lot of ties to places like Saudi Arabia.

Alex, how much would this cost? Do you think so?

Bloomberg Intelligence analysts are valuing the US business at thirty five to forty billion dollars. If you slap a deal premium on that, we could see something that's higher, So not insignificant when it comes to just TikTok's US business.

Now that's real money, Carol, it is real money.

Ten seconds, Alex Oracle. Four years ago, under.

Trump, they were considered as somebody could get involved with TikTok.

Is that likely to come back very quickly?

They have more debt than they did back then. Currently, it seems like they're happy to be just a business partner helping them protect US users data.

You're a gem as always, La Bureau.

That's where we find Bloomberg News Technology reporter Alex Borinkik.

You're listening to the Bloomberg Business Week podcast Can't Just Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and and Broid Auto with a Bloomberg Business act or watch us live on YouTube.

We've talked a lot about the trade. We've talked about different economic indicators. We've got a really cool one.

We do and uh, there's a problem. We've got a plumbing problem. And Carol, it's a cost that all of us are paying for just bite an above average salary. The pace at which the US is minting new plumbers is lagging retirements. The winding plumber deficit matters for households facing hefty charges to fix a leak. I think we've probably all been there totally. That costs what and business is trying to get new buildings completed on time and on budget. In fact, the plumbing deficit costs the US economy a wopping thirty three billion dollars in twenty twenty two. That's according to one analysis. We know all of this because Bloomberg News Global economy reporter and the Current writes about it for Bloomberg Business Week. It's the far reaching consequences of the US plumbing problem. He joins us from Washington, d C. And Carol and I could not get enough of this story. Love it. And it's also something that we talk about a lot because we know how much it costs to hire a plumber. What is it about the plumbing industry that's sort of emblematic of the worker shortage that we're facing here in the US.

So there are some specific kind of stigma issues around plumbing. I mean, as you know, it's such an important function that goes to the heart of our daily activities and our economy. Without plumbers, we don't have clean drinking water.

For example.

But speaking to those in the profession, the teachers and the young students who are starting in their career there, they say that it just doesn't have the appeal of other roles because it's tough physical labor. For example. Spoke to one young plumber who gave example of having to dig a trench in the open in the middle of summer one day, having started at five am that morning. It's seen as dirty work. There's the perception of lying on your back fixing someone's toilet. And of course the hours aren't hours can vary, but they're not seeing as especially social compared to other roles. So when you throw all that into it and consider them this conditioning of younger people over the decades that they should gravitate towards a university away from the trades, the end result of speaking to those people in the industry is that the skilled trades like plumbing just don't feature very highly on the wish list for young students these days. In school they much prefer university education. But the pitches you can become a plumber, get a good job and have much less debt.

Well, how quickly can you become a plumber and electrician? Because my understanding and will sometimes have someone come into our home and it's like they've got an apprentice with them. Who has to do that for I thought a substantial period of time. But set the record straight, because is that part of the problem, that is it just taking too long to train them or allow these folks to kind of go out on their own.

Well, it is, it's a process. It's a five year process that kind of yeah, you know, rotates between the practical laboratory work and the tuition in the school and at the same time being attached to an actual licensed plumber. So over the course it is five years before they get their full certification. But along the way their wages will be increasing. And as I mentioned earlier, they are not accruing the debt that you would be true having to get a you know, a life skill or trade in some other part of life. The end result when you do come out of it, you couldn't get a good job, well paying and potentially for life if you wanted.

That's what I wanted to hit on here is we talked so much about the student loan crisis here in the US, and I mean, my jaw just drops when I talk to parents about the cost of college for their kids right now. I mean, we're talking upwards of sixty to ninety thousand dollars per year for a cost of college here in the US at some schools. And you did some looking into the apprenticeship programs some schools for this stuff. How much does it up costing total for a five year program.

Yeah.

So let me give you an example of the Plumbers and Gas Fitters Local five Apprenticeship School. Forgive me this, needed to read it out to get the name right. I went to that school and they pay the tuition of the students. The money comes from both the unions.

And the they pay the tuition.

Say that again, they pay the situation for the students for the five years, and the students need only pay fifteen hundred US dollars each over the course of the five years. But they are also acquired to buy a pair of boots and the measuring tape. And this is what when, as you know, speak to the teachers and the students out there, this is the great appeal for them. Like you mentioned, you've got this whole political debate going on about students dead, and you have the the legacy of students trying to pay off that debt. Well, here's a walk of life where you can go in, get a good qualification, get a good skill set that does go beyond fixing tollels by the way, and then come out of it relatively left free and with a good salary.

So obviously the pre apprenticeship courses that you looked into are just overflowing with students.

Right, well, this is where this is where the rubber hits the road. So I cided an example of a brand a pre apprenticeship program that has been put on by community college in Maryland to deliberately attract young people to become plumbers. It's a well cryppted, brand new laboratory. They have eighteen seats and they have three students who have enrolled. And this is what speaks to the idea of the diplomber shortage. White people just aren't necessarily being attracted to. And again you speak to the plumbers and the teachers, they say, you've got to go into middle school upwards and condition children that A it's good to have a skill. B you don't have to it's not all about university. And then see they're making the point that schools also have to have practical classes now like would work for example, allow students to do that, and then along the way they can make up their mind whether it's university or or trade.

You know what they need. They just need more plumbing influencers. Okay, I'm not joking. I heard I heard Paul Brennan laugh. This is not a joke, but this is like a thing on TikTok and Instagram.

And st influencers, winswers for.

Every trade, for woodworking, for plumbing, for cleaning cast iron. I mean, seriously, everything is out there.

Having said that, I mean you think you know, I remember like a show like This Old House, like they were trying to recruit students because nobody wanted to do construction anymore.

Nobody wants to do this.

I mean, but I want to go back to end it. Does someone really need five years to become a plumber if the demand is such an issue, isn't there I don't know, Like I don't know enough about it, and I certainly want if somebody comes into my house that they do it right so that all of a sudden I don't have a flood.

But does it really have to take that long?

Is there any move to kind of figure out how to condense the teaching so we can get people out there?

I mean, look, that's of the fair question. I'm sure that that teachers will be open to debate, but I have to say I have a new found respect for what they do. Happened to have gone along I shadowed them in the classroom watching what they're doing. You've got the technical cide of it, which is a quantitative coatient, learning those blueprints, figuring out their math for the measurementsuring out how to get the water flowing in the right direction, the right weight, and the right pressure. That there's a whole technical side to it that I guess I wasn't fully aware of. And then there's the physical side to it. And you know, they shared the labor side to it. So it certainly would take some time before you're fully confident that you would let this person run amook in your in your house. I would imagine it takes a few years at least, But you know, whether that's four or five years, I'm sure that's that's probably a valid point for debate. But that's where the program seems to be said at the moment.

And just in the last thirty seconds, dovetail this with your most recent reporting about just the overall worker shortage in the way that the immigration in the US needs to change in order to fill these jobs.

Yeah, that's right.

So these companies and especially those in constructions, so they cannot get the workers part of that solution as we talked about it last time is legal immigration. But in this case it speaks to the idea that children at school, if they're encouraged to learn a trade instead of university, could go somewhere to Ord's filling some of those skills shortages as well.

Yeah, and I'm sure there's like carried out construction electrician. Like there's lots of things and a current thank you as always Global Economy reporter at Bloomberg News. They're in our DC bureau. His story featured in the forthcoming issue of Bloomberg BusinessWeek magazine, but you can read it now on the Bloomberg terminal, of course, at Bloomberg dot com slash BusinessWeek.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.

So if you've been paying any attention, this shouldn't be news to you. Post pandemic, we face a shortage of healthcare workers. Here's how dire it is. Carol last year, the rate of job openings and what's referred to by the Bureau of Labor Statistics as healthcare and social assistance was seven point six percent. It's the second highest percentage going all the way back to two thousand and one, that was when the data started being recorded. All of this according to the nonprofit researcher and consultant Altarium.

All Right, so it shouldn't be of any surprise to you that eight percent of nurses say that staffing shortages negatively affect patient care. That's just high.

It's a lot.

That's almost everybody, right, That's just one of the findings from Incredible Health's annual State of the US Nursing Report. This is a voice that we have been reaching out to for several years now and really giving us a.

Great gut check on what's going on in the.

Nursing community and the healthcare sector overall. Back with us is doctor Iman Abuzaid. She's co founder and CEO of Incredible Health. It's a marketplace that connects nurses and hospitals, which is why she has a great vantage point of this.

Great to have you back with us. How are you.

I'm doing well? Thank you so much for having.

Me, well, how are nurses doing and what's changed.

I mean, I do feel like every time or on the last few years, it's not been great for nurses, especially coming off the pandemic. But give us an idea of how they are doing.

That's right, So incredible health. We just reached a recent milestone of one million nurses in the US on our platform, so one in three nurses and fifteen hundred hospitals. So a lot of the data and information I'm sharing today is from that. What we're what we're seeing is a eighty eight percent of nurses are pointing to staffing shortages negatively impacting patient care.

And that's showing up in several ways.

It means that nurses are stating that they're caring for too many patients at a time, that they're performing task outside of their job description, and that the understaffing is impacting patient care in the form of medication errors, readmission rates, and so on.

This is not good. I mean, it's concerning if you're considering it all going to a healthcare facility or you end up accident, you know, by some sort of accident. We're all we've all been there, right, you know, we all need medical care. This is this is kind of scary stuff, doctor abizaiding in your report, in the research that you've done, in the surveys that you've done, is there any sign of improved been here.

Yeah, there's definitely some good news that we've uncovered. So first is that eighty percent of nurses plan to stay in the profession until retirement. And this has been a big increase since the years of the pandemic when it was as low as fifty five percent, So their sentiment around staying in the profession is improving. And then also the mental health of nurses is also improving. It's a six percent improvement compared to last year. As we're seeing more and more health systems implement tools and strategies to help the mental health of healthcare workers.

What about the pipeline into the nurses we're going to need over the next five years, ten years, twenty years, how is that looking.

So there's still a lot more work to be done there. The demand on the healthcare system continues to increase because our population is aging, and even though we are graduating more and more nurses every year, it's still not enough to keep up with that demand.

So there's still still more work to be done.

There is it? Just can I just ask you though?

Is it just folks who don't want to be We just did a story about younger generation don't.

Want to be plumbers for a lot of different reasons.

What about intern of nursing, which for women for a long time was a really great way into the workforce. But I'm just curious younger generations, how are they looking at the nursing profession.

So the demand for the nursing profession is actually higher than ever, right, So there's tens of thousands of Americans who want to enter nursing school and their on waitlists, but we have a ball onneck with nursing schools. They can't train as many as we would like because of their own capacity constraints around faculty. There's also another ball onneck happening after nursing school around training programs, and so we do need more and more training programs. And then we also have a challenge of retirement. So over the next five years, twenty percent of nurses are on track to retire.

And so this is an age and an older workforce as well.

So what does it take?

You're right in it it's a very appealing profession from in terms of just expanding socioeconomic opportunities too, And you can really change your life and your family's life by going into nursing, especially given where salaries are today.

But we just you know, we just need to do you get more of them.

You can also from the perspective of the work week in determining your own hours. I mean, some of my friends who are in the profession are working three days a week and they're working full time. It's a ton of work, but you know, they're getting two extra days at home with their babies, which is pretty cool. Yeah. Hey, doctor Abizaide, what does a traditional nursing education look like right now? And is there any opportunity to sort of do the acceleration that we saw during the pandemic or like a rethink of what it takes to become a nurse considering they're such a backlog right now.

Absolutely.

I mean, it is regulated profession at the end of the day, and there are there is licensing involved as well. So the education is the traditional four year bachelor's degree, but there are also associates degrees in r and diplomas that are shorter in duration. We're also seeing more and more community colleges offer nursing programs too, So it's not just the academic you know, the top to your academic programs and the for profit organizations, but we're seeing more and more community is offer nursing programs too, which is which is which is a great thing.

Are all of them affiliated though with some kind of hospitals. I have a sister who initially that was her first profession, a nurse, and it was affiliated directly with a hospital. It was right next to it, and you know, they were in the hospital. I think from the get go. Are they all like a community program? Are they affiliated so that people actually get individuals get hands on experience.

Yes, many of many of them are affiliated with a health system because once it comes to the clinical training, which is part of nursing school as well, you do you have to do it at a facility as well, And so that's that's what we're seeing more and more of that, as well as more health systems form partnerships with nursing schools.

What are you seeing on the platform right now in terms of the burnout that you referenced and about different types of resources that are becoming available as these health systems realize they need to make sure to retain this talent.

Yeah, so we're seeing a variety of trends. So the one I wanted to mention is AI. Actually, so ninety percent of nurses have not used AI yet, but for those that have used it, they've used it for recommendations on patient care for patient for improving the patient intake process, and they've used it in their job search process as well. Through Incredible Health Becaus, we offer a whole range of AI features to accelerate and enhance the job search experience. So that's an sort of an interesting piece from this year's study that we didn't see as much in previous years.

Well, how much further can it go in terms of AI, artificial intelligence really helping out this profession.

So, you know, the majority of nurses, over sixty percent of nurses believe AI is going to have a negative impact on their employment or a negative impact on the industry. But honestly, I do think that's just part of the fear, uncertainty, and doubt that exists among all Americans around AI, just because it's not in prevalent, in widespread use yet. And should you know that uncertainty should come down over.

Time, Doctor Abouzaid, I am just wondering though. You know, there's a lot of times I hear conversations with my colleagues at my own home of just trying to access a doctor and they're like, sure, you can have an appointment in six months or just you know, we're.

Seeing stresses in the healthcare system.

And obviously from the conversations we've had for you for quite some time, you know, across the board, certainly in the nursing community.

I mean, are we in crisis?

Are we headed for a crisis in some regard as you look at kind of the trends and the numbers of people coming in and who want to continue to do this job.

So our surveys of hospital executives show that eighty percent of hospital executives do describe the nursing shortage as eight crisis. And when you look at the statistics from the Bureau Labor Statistics, you see that we are the gap between the demand for healthcare and the supply of healthcare workers continues to grow and that trend is projective to continue for many decades to come.

Hey, before we let you go, just in the last thirty seconds. I want to go back to AI because you also have some other interesting research about AA and not just who's using it, but do you think AI can help alleviate in the coming years the shortage of nurses.

Absolutely, there's certain aspects of a nurse's role that can be supported with AI, certain specificy specific tasks like patient intake and like creating care summaries, like determining the next recommendations for patient care. And we see that in use with doctors as well, and so it's only a maunter of time before it starts impacting nurses tasks as well, which help hopefully will help them to do more with their time.

Always important to kind of find out what's going on, certainly in this area. Doctor Abuzaid, thank you so much. Appreciate you checking in with us once again. Doctor Abuzaid, co founder, chief executive officer of Incredible Health, joining us there from Austin, Texas.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and and Brout Auto with a Bloomberg Business app, or want us live on YouTube.

All Right, let's give it our judge closed, guests have to say, George Young back with us, partner portfolio manager at Villary and Company. Back with us from New Orleans. Last time I think we talked, we were actually in New Orleans with you.

How are you.

I'm doing great? Yeah, I do remember that last time. That was great.

Yeah, it was fun to be there and get another slice of life around this country.

Market's a lot different since then.

Yeah, exactly. How are you seeing?

It?

Quite a run up? Right in terms of the equity trade.

Is it time to maybe, I hate to say, take some money off the table, take some profits. What's the smart take right now in this environment?

Well, two things. It's been kind of a tale of two cities in a lot of ways.

Because the SMP is up thirty six percent, that's been fantastic, But if you slice it look at a little bit more carefully, it's a different story because there are a lot of stocks that haven't participated. SMP up thirty six percent, but on the other hand, the rest of the market, if you look at the equal weighting of the S ANDP, it's only twenty three percent.

So that's great.

But what's happened is the really popular stocks, and Magnificent seven, which represent thirty percent of the SMB, have done really well.

But that means that.

There's great valuations to be anticipated on stocks that are telling at a bit of a discount to the S andp's historic earnings. So we think there's opportunity there. But again, don't fall in love with the stock. It'll never love you back. So you need to be taking some chips off the table where you've made money and put into things that haven't participated and have some patience. I think that's the hallmark there.

What's a stock that wouldn't love someone back right now?

Well, I think one of those is a play on the consumer being Caesar's meaning there are a lot of folks that love the game, love domestic gambling, and they will go to Vegas and they'll go to a lot.

You're saying, this is one that that would love you.

Back, that will love you back eventually, but it's cheap right now. In terms of a stock that probably should sell, I mean on everybody's lips nowadays is in Vidia.

You can't get enough in Vidia.

Any cocktail party you go to, you hear about artificial intelligence. So in that case, I would say in vidiot to pick one that is overvalued. I think that's one that should be sold, or at least sell a portion of take some chips off the table.

Use a gambling analogy.

So is that a stock that you yeah, I just want to make you collecta Is.

That a stock that you shouldn't love right now that won't leve you back?

Is that your take?

That is correct?

Nvidia and a lot of the MAGNIFSM seven are overvalued, and they just there's stocks that people say I'll never sell them, and that never makes some sense.

So interesting to hear that right now? I mean, do you think that the market is poised for some sort of bigger pullback right now? It's again a day like today where we are seeing a risk off mood, still reminding people of the S and P five hundreds up more than seven point seven percent this year.

Correct, No, I remain optimistic about it because I think, really the consumer is still strong, the unemployment numbers remain somewhat low. Consumer is still spending and that's really what droves economy. That's sixty percent plus what this economy is all about. And again here at Villary, we invest domestically. We don't look internationally. Domestic is our focus.

Hey, let me ask you something.

Performance is always important, and I just you know you guys in your fun.

It's a balanced fun.

Year to date, it's up about four and a half percent according to Bloomberg data. That puts you in the fifty six percentile against your peers. Five years, you're up just shy of four percent, and that put you in the fifth percentile. I am curious conversations you have with investors in terms of performance and what you think might have potentially held you back.

Right, we've been more small and mid cap focused and more value focused. If you look at what happened last year twenty twenty three, the exact opposite is what did well. The large cap growth stocks did well, the small count value didn't.

But what you have to do is figure there's always a regression to the means.

So those stocks that did particularly welladation in the marketplace and those that haven't performed, and we happen to have a.

Number of those. We think they're good value. We think they're going to come out on top soon.

When though, that's the question, because every year we hear it's going to be a year of value and that hasn't happened in small caps for years have been under pressure at least against the performance of the S and P five hundred. So when are we going to see that?

Right?

Well, part of the reason for that is past investing.

All the past investing has really increased over the last ten years or so.

So that means that money is going blindly and I don't mean this to be critical, but.

It's blindly going into pools where it's a self fulfilling prophecy. So the large cap stocks are getting the attention because that's where passive.

Investing is going. At some point.

I think it's important to remember that what we do in the investment world is really not a popularity contest. It's really a weighing machine over time as opposed.

To a voting machine.

So stocks are selling cheap and popular at the same time. And it's interesting because there are a lot of people that don't respect that old adage, and I think it makes a lot of sense.

You've got to have some patience.

New money.

You talked about Caesar's Progressive as another company that I believe that you are keen on talk to us about the take on that one.

Sure, So progressive. Everybody knows flow.

They've done a great job marketing and what's interesting is they're really recognized an auto insurer, but what they've done is moved into bundling, so not just cars now but home commercial insurance, higher risk general liability policies. They've really done a good job in marketing themselves and extending throughout the insurance world. Fantastic company continues to show good growth, pays a little divid.

NYU, wait, what else is on your radar?

Well, I mentioned Caesars earlier. I think that's worth revisiting.

Okay, The problem with Caesar's a lot of people are concerned about the leverage that it has, and again with instrates, as you talked about before I came on, they've been moving up in the last year and a half or so, so leverage, any sort of debt concern is something that's on a lot of investors' mind. In this case, we think that over time, given the steady and flow of gaming interest, there's going to be an.

Opportunity for them to de leverage, and they've taken action on that so far.

Plus they've got a big property on the strip in Vegas, which they're likely to be selling in due course.

They can be committing about that for two years now.

Yeah, our BI team, you know, definitely notes that the margins are still strong at Caesar's, but they're concerned about some of the elevated operating cost pressures this year. Is that's something that you think investors might then have to be patient maybe for some returns because of those concerns.

Just got about thirty seconds left.

Yeah, not overly concerned about that, but I think online gaming is really what people should focus on.

That's really taken off.

They've done a great job marketing that and managing, and so that's what I would really focus on.

Yeah, OURBI team saying digital segment sales could rise twenty eight percent twenty twenty four, after that unit earned EBITDA finally in twenty twenty three or in twenty twenty three, I.

Should say, hey, listen George, Thank you so much. George Young.

He's partner and portfolio manager at Villary and Company out there in New Orleans.

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