1 00:00:02,720 --> 00:00:11,039 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 2 00:00:11,119 --> 00:00:13,240 Speaker 1: with Alex Steel and Paul Sweeney. 3 00:00:13,360 --> 00:00:16,560 Speaker 2: The real AP performance has been in US corporate high yield. 4 00:00:16,720 --> 00:00:19,120 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:19,160 --> 00:00:22,960 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:22,440 --> 00:00:26,120 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:26,160 --> 00:00:28,600 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:28,800 --> 00:00:31,760 Speaker 2: These are two big time blue chip companies. 9 00:00:32,040 --> 00:00:35,839 Speaker 3: Window between the peak and cunt changing super fast. 10 00:00:35,680 --> 00:00:40,720 Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 11 00:00:42,280 --> 00:00:44,800 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 12 00:00:44,840 --> 00:00:47,159 Speaker 2: business stories impacting Wall Street and the global markets. 13 00:00:47,240 --> 00:00:49,199 Speaker 3: Each and every week we provide in depth research and 14 00:00:49,280 --> 00:00:51,080 Speaker 3: data on some of the two thousand companies and one 15 00:00:51,159 --> 00:00:53,800 Speaker 3: hundred and thirty industries our analysts cover worldwide. 16 00:00:53,920 --> 00:00:56,240 Speaker 2: Today, we'll look at why the world's largest hotel company 17 00:00:56,280 --> 00:00:58,240 Speaker 2: lowered it's estimate for sales growth this year. 18 00:00:58,320 --> 00:01:00,800 Speaker 3: Plus we'll discuss why the automaker Ward announced it will 19 00:01:00,840 --> 00:01:03,320 Speaker 3: be suspending its full year guidance for twenty twenty five. 20 00:01:03,560 --> 00:01:05,480 Speaker 2: But first we begin with earnings from the media and 21 00:01:05,560 --> 00:01:07,000 Speaker 2: entertainment giant Walt Disney. 22 00:01:07,040 --> 00:01:09,399 Speaker 3: This week, Disney reported second quarter results that beat Wall 23 00:01:09,440 --> 00:01:12,360 Speaker 3: Street's expectations. The company also raised its outlook for the 24 00:01:12,360 --> 00:01:12,800 Speaker 3: full year. 25 00:01:13,120 --> 00:01:16,080 Speaker 2: This comes as Disney said it saw increased visitors and 26 00:01:16,080 --> 00:01:19,119 Speaker 2: guest spending at its parks and and uptick in streaming subscribers. 27 00:01:19,160 --> 00:01:21,920 Speaker 3: Disney also announced plans for its first theme park in 28 00:01:22,120 --> 00:01:24,440 Speaker 3: the Middle East, a resort property in the Emirate of 29 00:01:24,440 --> 00:01:25,040 Speaker 3: Abu Dhabi. 30 00:01:25,360 --> 00:01:28,320 Speaker 2: For more, we were enjoyed Mike Githa Ranganathan Bloomberg Intelligence 31 00:01:28,400 --> 00:01:29,360 Speaker 2: Senior media analyst. 32 00:01:29,600 --> 00:01:31,840 Speaker 3: We first asked Etha for her key takeaway from Disney's 33 00:01:31,840 --> 00:01:33,880 Speaker 3: earnings and whether the company has turned a corner. 34 00:01:34,200 --> 00:01:37,320 Speaker 4: This turnaround story has now been in the works ever 35 00:01:37,360 --> 00:01:40,480 Speaker 4: since Bob Aiger came back more than two years ago, 36 00:01:41,040 --> 00:01:42,920 Speaker 4: and it looks like, you know, everything that he's kind 37 00:01:42,920 --> 00:01:45,679 Speaker 4: of put in place along with the CFO Hugh Johnston, 38 00:01:45,920 --> 00:01:50,000 Speaker 4: is really working. So they did raise a guidance, you know, 39 00:01:50,080 --> 00:01:52,400 Speaker 4: for the full year. But it's not just that, it's 40 00:01:52,440 --> 00:01:54,920 Speaker 4: just the conviction in the outlook as you kind of 41 00:01:55,120 --> 00:01:58,200 Speaker 4: look out and build out the earnings model. I mean, 42 00:01:58,240 --> 00:02:01,280 Speaker 4: we are basically looking at them doubling their EPs from 43 00:02:01,320 --> 00:02:04,360 Speaker 4: close to almost six dollars this year to well over 44 00:02:04,480 --> 00:02:06,800 Speaker 4: ten eleven dollars in the next four to five years. 45 00:02:06,880 --> 00:02:09,560 Speaker 4: So just a lot of conviction I think now in 46 00:02:09,600 --> 00:02:12,840 Speaker 4: their long term growth trajectory, with those new parks, with 47 00:02:12,919 --> 00:02:15,760 Speaker 4: the added capacity, with the sixty billion dollar investment, with 48 00:02:16,120 --> 00:02:19,160 Speaker 4: you know, the Abu Dhabi Park, new cruise ships, everything 49 00:02:19,200 --> 00:02:21,120 Speaker 4: seems to be finally kind of coming together. 50 00:02:21,639 --> 00:02:24,440 Speaker 3: Last quarter, though, the question was about their theme parks 51 00:02:24,440 --> 00:02:27,000 Speaker 3: prices are too high. The consumers pinched there was a 52 00:02:27,000 --> 00:02:29,239 Speaker 3: competitor opening up a park in Florida and everyone was 53 00:02:29,320 --> 00:02:31,320 Speaker 3: kind of worried. What changed in three months. 54 00:02:31,680 --> 00:02:33,640 Speaker 4: Yeah, so they did say at that point that you know, 55 00:02:33,720 --> 00:02:36,840 Speaker 4: summer bookings were strong. Of course, nobody really believed them. 56 00:02:37,480 --> 00:02:39,800 Speaker 4: But you know, when they kind of reported the numbers 57 00:02:39,840 --> 00:02:43,920 Speaker 4: and you saw that thirteen percent increase in operating income 58 00:02:43,960 --> 00:02:46,120 Speaker 4: in the domestic parks, domestic parks are really the bread 59 00:02:46,120 --> 00:02:48,280 Speaker 4: and butter of you know, the Disney theme park business 60 00:02:48,280 --> 00:02:51,120 Speaker 4: makes up seventy percent of revenue. You know, then that 61 00:02:51,280 --> 00:02:53,520 Speaker 4: has really managed to I think a lay fears and 62 00:02:53,680 --> 00:02:56,480 Speaker 4: they you know, it's not just what they reported, Alex, 63 00:02:56,520 --> 00:02:58,560 Speaker 4: it's what they said for the remainder of the year. 64 00:02:58,639 --> 00:03:01,920 Speaker 4: So they said bookings are up this quarter four percent. 65 00:03:02,000 --> 00:03:05,120 Speaker 4: They said bookings advanced bookings are up for the fiscal 66 00:03:05,240 --> 00:03:08,959 Speaker 4: fourth quarter seven percent, and that is with that new 67 00:03:09,000 --> 00:03:13,240 Speaker 4: Epic Universe coming on board. So still demand seems to 68 00:03:13,240 --> 00:03:16,359 Speaker 4: be really resilient. It seems to be strong, even though 69 00:03:16,360 --> 00:03:19,440 Speaker 4: there's a little bit of softness internationally. Domestically, they seem 70 00:03:19,480 --> 00:03:20,480 Speaker 4: to be in very good shape. 71 00:03:21,280 --> 00:03:23,359 Speaker 2: So Geitha talk to us about the profitability of their 72 00:03:23,360 --> 00:03:26,720 Speaker 2: streaming businesses writ large here, how profitable are they? Do 73 00:03:26,720 --> 00:03:30,080 Speaker 2: you think they can approach the profitability of say. 74 00:03:29,880 --> 00:03:33,120 Speaker 4: Netflix, I think they can over time. They definitely can. 75 00:03:33,160 --> 00:03:36,560 Speaker 4: So this year, Paul, we're looking at just over a 76 00:03:36,640 --> 00:03:41,000 Speaker 4: billion dollars in operating income on a twenty five billion 77 00:03:41,000 --> 00:03:44,320 Speaker 4: in revenue. That's about four or five percent margins. But 78 00:03:44,440 --> 00:03:47,600 Speaker 4: really what we're looking to the north star here is 79 00:03:47,640 --> 00:03:51,120 Speaker 4: definitely Netflix. As you just pointed out, Netflix should get 80 00:03:51,160 --> 00:03:55,280 Speaker 4: to thirty percent operating margins this year. So that's really 81 00:03:55,320 --> 00:03:58,440 Speaker 4: what what Disney is working towards. So even as we 82 00:03:58,560 --> 00:04:00,920 Speaker 4: kind of build out, you know, or we look at 83 00:04:00,920 --> 00:04:04,240 Speaker 4: the earnings trajectory for that streaming unit over the next 84 00:04:04,240 --> 00:04:06,400 Speaker 4: couple of years, I mean, we look at them getting 85 00:04:06,440 --> 00:04:08,880 Speaker 4: to you know, fifteen sixteen percent margins over the next 86 00:04:08,920 --> 00:04:11,000 Speaker 4: two to three years, and then of course a lot 87 00:04:11,080 --> 00:04:15,360 Speaker 4: more upside with you know, the pricing power, with subscription growth, 88 00:04:15,400 --> 00:04:18,479 Speaker 4: with password sharing, with you know, their advertising buildout, so 89 00:04:18,520 --> 00:04:20,120 Speaker 4: they have a lot of different levers that they can 90 00:04:20,120 --> 00:04:20,760 Speaker 4: pull as well. 91 00:04:21,200 --> 00:04:23,840 Speaker 3: Is the goal to catch up with Netflix in terms 92 00:04:23,880 --> 00:04:29,760 Speaker 3: of streamer subscribers? Is it about profitability? Like? What's the 93 00:04:29,800 --> 00:04:32,680 Speaker 3: goal there? Because Netflix is so far ahead just in basic. 94 00:04:32,440 --> 00:04:36,760 Speaker 4: Numbers, Netflix is absolutely far ahead, and there's no doubt 95 00:04:36,760 --> 00:04:39,920 Speaker 4: about that, Alex. They have well over three hundred million 96 00:04:39,920 --> 00:04:42,560 Speaker 4: subscribers just in terms of scale, Disney has about one 97 00:04:42,600 --> 00:04:44,839 Speaker 4: hundred and twenty five. So there's one hundred and twenty 98 00:04:44,839 --> 00:04:46,479 Speaker 4: five million. So there's a lot of cashing up to do. 99 00:04:46,760 --> 00:04:49,800 Speaker 4: But there is one area where Disney's far ahead of Netflix, 100 00:04:49,839 --> 00:04:54,040 Speaker 4: and that's advertising. They have a very very good advertising 101 00:04:54,040 --> 00:04:56,080 Speaker 4: infrastructure and this is an area that Netflix is kind 102 00:04:56,120 --> 00:04:59,320 Speaker 4: of really struggling with. And then remember, Disney has a 103 00:04:59,360 --> 00:05:02,200 Speaker 4: big weapon that they can use with that ESPN. It's 104 00:05:02,240 --> 00:05:03,839 Speaker 4: not going to be called flagship, I know, but with 105 00:05:03,920 --> 00:05:07,200 Speaker 4: that ESPN streaming launch coming a little bit later, this 106 00:05:07,320 --> 00:05:10,560 Speaker 4: year they have. You know, they're spending something like eleven 107 00:05:10,600 --> 00:05:13,440 Speaker 4: to twelve billion dollars in sports rights that they are 108 00:05:13,480 --> 00:05:17,640 Speaker 4: going to monetize from a streaming perspective. So that is 109 00:05:17,680 --> 00:05:20,320 Speaker 4: where you know, they're going to have an unrivaled streaming 110 00:05:20,400 --> 00:05:22,680 Speaker 4: product even when you compare it to Netflix, because they're 111 00:05:22,680 --> 00:05:24,760 Speaker 4: going to offer you entertainment, they're going to offer you sports. 112 00:05:25,000 --> 00:05:27,080 Speaker 4: You know, there's going to be something for everybody. So 113 00:05:27,120 --> 00:05:28,920 Speaker 4: it's going to be you know, I think they can. 114 00:05:29,080 --> 00:05:31,440 Speaker 4: You know, I'm not sure if they're going to completely 115 00:05:31,480 --> 00:05:34,080 Speaker 4: be able to match Netflix in terms of subscriptions, but 116 00:05:34,120 --> 00:05:36,040 Speaker 4: they're going to be able to get to that profit number, 117 00:05:36,080 --> 00:05:37,320 Speaker 4: I think pretty quickly. 118 00:05:37,920 --> 00:05:40,000 Speaker 2: Keith, if I'm an investor in Disney, do I just 119 00:05:40,080 --> 00:05:42,559 Speaker 2: kind of write off what used to be the core business, 120 00:05:42,600 --> 00:05:45,200 Speaker 2: which is the cable network business and to say it's 121 00:05:45,520 --> 00:05:49,080 Speaker 2: in secular decline, I'm focusing more on the growing streaming business. 122 00:05:49,120 --> 00:05:50,960 Speaker 2: Is that kind of the play that. 123 00:05:51,040 --> 00:05:54,400 Speaker 4: Is the playball across and that's across majority of the space, 124 00:05:54,560 --> 00:05:58,080 Speaker 4: So you know, yes, it's it's just kind of you know, 125 00:05:58,600 --> 00:06:01,520 Speaker 4: coming along if you will. Advertising is a big concern. 126 00:06:01,560 --> 00:06:04,560 Speaker 4: Their affiliate fees, again as in secular decline. We know 127 00:06:04,680 --> 00:06:07,719 Speaker 4: other companies are actually trying to separate out their cable 128 00:06:07,720 --> 00:06:10,760 Speaker 4: networks business just because it's been struggling and the outlook 129 00:06:10,760 --> 00:06:14,160 Speaker 4: doesn't look good. Comcast actually is, you know, separating out 130 00:06:14,200 --> 00:06:16,560 Speaker 4: its cable networks a little bit later this year. They 131 00:06:16,600 --> 00:06:20,160 Speaker 4: even have a new name for that new business. And 132 00:06:20,480 --> 00:06:23,320 Speaker 4: you know, we kind of expect WBD, Warner Brothers, Discovery 133 00:06:23,320 --> 00:06:26,080 Speaker 4: will do something similar, But yeah, I think it's pretty 134 00:06:26,120 --> 00:06:29,359 Speaker 4: much at this point, it's pretty much written off. Paul. 135 00:06:29,600 --> 00:06:31,839 Speaker 4: The billinear networks business is dying. 136 00:06:32,000 --> 00:06:35,520 Speaker 2: Our thanks to Githa Wronganathan, Bloomberg Intelligence Senior media analyst. 137 00:06:35,760 --> 00:06:38,440 Speaker 3: We move next to corporate earnings from Tyson Foods. This week, 138 00:06:38,680 --> 00:06:41,159 Speaker 3: shares of Tyson Foods some the most since twenty twenty three. 139 00:06:41,200 --> 00:06:44,080 Speaker 3: Is investors shrugged off stronger than expecting quarterly earnings. 140 00:06:44,360 --> 00:06:47,160 Speaker 2: Investors were focused mainly on deepening losses at the company's 141 00:06:47,279 --> 00:06:50,520 Speaker 2: beef business. This business has lost money for six straight 142 00:06:50,600 --> 00:06:53,040 Speaker 2: quarters due to a severe cattle shortage in the US. 143 00:06:53,240 --> 00:06:55,840 Speaker 3: For more, we are joined by Jim Martash's Bloomberg Intelligence 144 00:06:55,839 --> 00:06:58,560 Speaker 3: senior analysts retail staples and packaged foods, and we first 145 00:06:58,600 --> 00:07:01,160 Speaker 3: asked Jen if there was demand concern at Tyson. 146 00:07:01,600 --> 00:07:04,919 Speaker 5: On the beef side, it's an input concern. And actually 147 00:07:04,960 --> 00:07:07,880 Speaker 5: there's a piece to that puzzle that Tyson touched on, 148 00:07:07,960 --> 00:07:10,440 Speaker 5: but they didn't really go into detail, and that's that 149 00:07:10,680 --> 00:07:13,840 Speaker 5: they talk about how consumers have really still had a 150 00:07:13,880 --> 00:07:16,400 Speaker 5: lot of demand for beef, which is true, except that 151 00:07:16,440 --> 00:07:19,360 Speaker 5: when you look at the consumer they're trading down into 152 00:07:19,440 --> 00:07:23,440 Speaker 5: like ground beef. Now when you have a shortage of cows, 153 00:07:24,400 --> 00:07:27,760 Speaker 5: you know, the problem that Tyson has is that they 154 00:07:27,880 --> 00:07:31,160 Speaker 5: have to put higher quality parts of the animal into 155 00:07:31,200 --> 00:07:33,280 Speaker 5: grind in order to sell it, which means that their 156 00:07:33,280 --> 00:07:36,720 Speaker 5: profit per animal is coming down. And that's a concern 157 00:07:36,800 --> 00:07:40,600 Speaker 5: over the long term if those changes in behavior patterns 158 00:07:40,960 --> 00:07:42,800 Speaker 5: don't alter in the near future. 159 00:07:42,960 --> 00:07:46,080 Speaker 2: All right, you know, during our little egg shortage, my 160 00:07:46,200 --> 00:07:51,160 Speaker 2: scientific analysis was basically, just make more chickens. Tyson's are 161 00:07:51,160 --> 00:07:54,120 Speaker 2: the chicken people, I think, what are they saying about 162 00:07:54,160 --> 00:07:56,720 Speaker 2: the chicken population these days and eggs and all that 163 00:07:56,760 --> 00:07:58,960 Speaker 2: kind of stuff, because they're the folks that know. 164 00:07:59,480 --> 00:08:02,720 Speaker 5: Yeah, so the chicken supply is actually pretty healthy from 165 00:08:03,200 --> 00:08:05,880 Speaker 5: a standpoint of the chickens that are used for consumption, 166 00:08:06,840 --> 00:08:09,880 Speaker 5: they really weren't impacted all that much. By avian influenza, 167 00:08:09,920 --> 00:08:12,760 Speaker 5: and so that was the good news. The bad news 168 00:08:12,800 --> 00:08:16,280 Speaker 5: is that the mortality rates on the type of chicken 169 00:08:16,280 --> 00:08:18,880 Speaker 5: that they're currently using is still pretty high. So that 170 00:08:19,000 --> 00:08:21,880 Speaker 5: means that they're not getting as many chickens into the 171 00:08:21,920 --> 00:08:25,480 Speaker 5: processing plants that they normally would given the number of 172 00:08:25,520 --> 00:08:28,200 Speaker 5: eggs that are being laid, and so that is an 173 00:08:28,240 --> 00:08:32,800 Speaker 5: inherent top or cap to supply. So supply is robust. 174 00:08:32,840 --> 00:08:36,000 Speaker 5: It's going to grow about one percent this year, but 175 00:08:36,920 --> 00:08:39,320 Speaker 5: there are some constraints there with how much more they 176 00:08:39,320 --> 00:08:41,080 Speaker 5: could actually grow supply overall. 177 00:08:41,640 --> 00:08:45,480 Speaker 3: What's the tariff impact, if any, on Tyson on both 178 00:08:45,480 --> 00:08:46,880 Speaker 3: sides the demand and supply. 179 00:08:47,880 --> 00:08:51,200 Speaker 5: For Tyson, Actually, they have very limited exposure for tariffs 180 00:08:51,800 --> 00:08:53,800 Speaker 5: they set on their callts. About ninety five percent of 181 00:08:53,840 --> 00:08:56,720 Speaker 5: their revenue comes from product that's sold in the United States. 182 00:08:57,360 --> 00:09:01,320 Speaker 5: Their export is relatively small, and they've had some time 183 00:09:01,320 --> 00:09:04,880 Speaker 5: to work on contingency plans, so finding different end markets 184 00:09:04,880 --> 00:09:07,600 Speaker 5: that they can send some of the parts of animals 185 00:09:07,600 --> 00:09:11,240 Speaker 5: that US consumers just don't eat. So right now, it 186 00:09:11,240 --> 00:09:13,280 Speaker 5: doesn't appear to be a very large risk for Tyson 187 00:09:13,360 --> 00:09:13,600 Speaker 5: at all. 188 00:09:13,960 --> 00:09:17,800 Speaker 2: You mentioned maybe some issue with the cow herd. I 189 00:09:17,840 --> 00:09:20,800 Speaker 2: mean I watch Yosemite. I know all about the. 190 00:09:20,760 --> 00:09:22,360 Speaker 3: Ranching business to see it. 191 00:09:22,440 --> 00:09:24,760 Speaker 2: Yeah, so I mean, can't we make more cows? What's 192 00:09:24,800 --> 00:09:25,360 Speaker 2: going on there? 193 00:09:26,280 --> 00:09:29,520 Speaker 5: We can make more cows. The problem is that for 194 00:09:29,640 --> 00:09:33,320 Speaker 5: ranchers it's a tough environment to decide to actually build 195 00:09:33,400 --> 00:09:36,520 Speaker 5: up herds. Interest rates are still relatively high, there's still 196 00:09:36,600 --> 00:09:40,720 Speaker 5: high cost to expand operations. We've had drought that's only 197 00:09:40,840 --> 00:09:43,200 Speaker 5: just reversing in a lot of the key areas where 198 00:09:43,200 --> 00:09:48,080 Speaker 5: we raise cattle, and so that decision has been coming. 199 00:09:48,880 --> 00:09:51,760 Speaker 5: But the problem is that once you even start, you know, 200 00:09:51,760 --> 00:09:53,760 Speaker 5: it takes eighteen months to get a cattle for birth 201 00:09:53,800 --> 00:09:56,600 Speaker 5: to market. So even if they start, we're not going 202 00:09:56,640 --> 00:09:58,760 Speaker 5: to see an influxus supply for quite some time. 203 00:09:59,280 --> 00:10:00,800 Speaker 3: I feel like just a few years ago it was 204 00:10:00,800 --> 00:10:04,680 Speaker 3: all about alternative protein. I remember, particularly with Cargil for example, 205 00:10:04,679 --> 00:10:07,440 Speaker 3: they're making a really big push into that. Has that 206 00:10:07,559 --> 00:10:09,760 Speaker 3: trend for these guys shifted now? 207 00:10:10,600 --> 00:10:13,720 Speaker 5: It has. When we look at the consumer consumption data, 208 00:10:13,880 --> 00:10:17,880 Speaker 5: the luster around plant based has really fallen off. And 209 00:10:17,960 --> 00:10:21,800 Speaker 5: so you know, right now there's a core demographic that 210 00:10:21,880 --> 00:10:25,920 Speaker 5: will always be interested in that product, but at the 211 00:10:26,000 --> 00:10:29,240 Speaker 5: moment it's not growing. The sales are continuing to contract. 212 00:10:29,520 --> 00:10:32,440 Speaker 5: Part of that is that the cost of regular meat 213 00:10:32,440 --> 00:10:36,120 Speaker 5: has come down, and we had food inflation which pushed 214 00:10:36,120 --> 00:10:39,719 Speaker 5: the cost of special ingredients for alternative meat way up. 215 00:10:40,040 --> 00:10:43,560 Speaker 5: So the price gap between alternative proteins and conventional proteins 216 00:10:43,559 --> 00:10:45,640 Speaker 5: got a lot wider in the last couple of years, 217 00:10:45,960 --> 00:10:48,720 Speaker 5: and it still hasn't completely collapsed again, and so until 218 00:10:48,720 --> 00:10:51,000 Speaker 5: that gets a little bit closer, it's going to be 219 00:10:51,040 --> 00:10:54,520 Speaker 5: harder to get consumers to get interested again in alternative proteins. 220 00:10:55,040 --> 00:10:57,320 Speaker 2: So what is it the Tysons of the world. What 221 00:10:57,360 --> 00:11:00,239 Speaker 2: are they saying about their consumer these days? 222 00:11:01,200 --> 00:11:04,160 Speaker 5: So, you know, they talk about the demand for protein, 223 00:11:04,600 --> 00:11:07,920 Speaker 5: and this is something where at the Bloomberg Intelligence Farm 224 00:11:07,920 --> 00:11:10,640 Speaker 5: Food Fuel Conference we had a whole lot of panelists 225 00:11:10,679 --> 00:11:15,040 Speaker 5: on protein, and the demand for protein is really strong, 226 00:11:15,080 --> 00:11:18,360 Speaker 5: whether you're talking about animal protein, whether you're talking about dairy. 227 00:11:19,800 --> 00:11:23,600 Speaker 5: Current diet trends are high protein based, and so that 228 00:11:23,640 --> 00:11:29,080 Speaker 5: really bodes well for producers like Tyson as the consumer 229 00:11:29,240 --> 00:11:32,120 Speaker 5: is willing to still spend on protein and it's in 230 00:11:32,160 --> 00:11:34,280 Speaker 5: the majority of their purchases when they're going to the 231 00:11:34,280 --> 00:11:35,000 Speaker 5: grocery store. 232 00:11:35,320 --> 00:11:38,440 Speaker 2: Our thanks to Jennifer Bartash, is Bloomberg Intelligence Senior Animals 233 00:11:38,480 --> 00:11:40,720 Speaker 2: covering in the retail, staples and packaged foods coman. 234 00:11:40,800 --> 00:11:42,800 Speaker 3: We're going to break down why the German drug maker 235 00:11:42,840 --> 00:11:46,160 Speaker 3: at BioNTech reported lower than expected quarterly sales. 236 00:11:46,280 --> 00:11:49,080 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 237 00:11:49,120 --> 00:11:51,560 Speaker 2: depth research and data on two thousand companies in one 238 00:11:51,640 --> 00:11:54,640 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 239 00:11:54,720 --> 00:11:57,000 Speaker 2: b I go on the terminal AM Paul Sweeney. 240 00:11:56,720 --> 00:11:58,760 Speaker 3: An am Alex Steel, and this is Bloomberg. 241 00:12:02,559 --> 00:12:06,240 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 242 00:12:06,360 --> 00:12:09,439 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 243 00:12:09,440 --> 00:12:12,760 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 244 00:12:12,800 --> 00:12:15,920 Speaker 1: you get your podcasts, or watch us live on YouTube. 245 00:12:16,440 --> 00:12:18,480 Speaker 3: We move next to the hospitality industry. 246 00:12:18,720 --> 00:12:22,360 Speaker 2: Marriott followed its rivals Hilton, Hyatt and Wyndham and learning 247 00:12:22,400 --> 00:12:25,199 Speaker 2: it's four year guidance setting macroeconomic uncertainty. 248 00:12:25,280 --> 00:12:27,920 Speaker 3: But Marriott did cut its outlook by less and its peers, 249 00:12:27,960 --> 00:12:31,439 Speaker 3: indicating that affluent travelers are less affected by economic uncertainty. 250 00:12:31,640 --> 00:12:33,640 Speaker 2: For more on this, we were joined by Brian Egger, 251 00:12:33,679 --> 00:12:36,160 Speaker 2: Bloomberg Intelligence Senior Gaming and lodging analysts. 252 00:12:36,200 --> 00:12:38,520 Speaker 3: We first asked Brian for his key takeaways from Marion's 253 00:12:38,520 --> 00:12:39,400 Speaker 3: first quarter results. 254 00:12:39,840 --> 00:12:40,080 Speaker 4: Yeah. 255 00:12:40,120 --> 00:12:42,480 Speaker 6: I think the big surpriser was that the rev par 256 00:12:42,720 --> 00:12:46,040 Speaker 6: guidance reduction was actually more modest than some of the 257 00:12:46,080 --> 00:12:49,439 Speaker 6: other hotel companies like Hilton and Hyatt, So I think 258 00:12:49,480 --> 00:12:52,040 Speaker 6: that was a bit of a sigh of relief. They 259 00:12:52,040 --> 00:12:55,440 Speaker 6: did acknowledge there's some US softness for certain customer segments, 260 00:12:56,200 --> 00:12:58,720 Speaker 6: but at the same time they're seeing kind of pretty 261 00:12:58,720 --> 00:13:02,040 Speaker 6: consistent international so I think it was just the relative 262 00:13:02,120 --> 00:13:05,240 Speaker 6: magnitude of the reduction that probably was viewed as being 263 00:13:05,320 --> 00:13:06,120 Speaker 6: somewhat favorable. 264 00:13:07,080 --> 00:13:09,600 Speaker 2: So across Marriott and Hilton and Huyatt and all those 265 00:13:09,600 --> 00:13:12,520 Speaker 2: other companies that you cover, BRIME, are they seeing it 266 00:13:13,280 --> 00:13:15,960 Speaker 2: to the extent they're seeing any softening? Is it from 267 00:13:15,960 --> 00:13:18,160 Speaker 2: the leisure travel the business traveler both? 268 00:13:19,640 --> 00:13:22,880 Speaker 6: Yeah, good question. It's really from i'd say three primary 269 00:13:22,960 --> 00:13:28,120 Speaker 6: customer categories, independent leisure travelers, extended stay kind of the 270 00:13:28,120 --> 00:13:33,080 Speaker 6: lower tier, limited service customers, and then government employees, which 271 00:13:33,120 --> 00:13:37,040 Speaker 6: are a customer base of some importance for Marriott, and 272 00:13:37,160 --> 00:13:41,559 Speaker 6: offsetting that is somewhat greater strength in things like group bookings. 273 00:13:41,920 --> 00:13:44,360 Speaker 6: So there's a bit of divergence across segments. 274 00:13:45,280 --> 00:13:48,640 Speaker 3: What about geographically, what's holding up? Because one can make 275 00:13:48,679 --> 00:13:50,320 Speaker 3: an argument if you're tied on budgets, you're not going 276 00:13:50,360 --> 00:13:51,839 Speaker 3: to go to Europe, but maybe you'll travel within the 277 00:13:51,920 --> 00:13:52,760 Speaker 3: United States. 278 00:13:53,280 --> 00:13:56,360 Speaker 6: Yeah, So to the extent that Marriott did trim guidance, 279 00:13:56,760 --> 00:13:59,760 Speaker 6: all of their guidance cut was related to US in particular, 280 00:14:00,080 --> 00:14:04,000 Speaker 6: particularly those segments I mentioned. Internationally, they have not changed 281 00:14:04,720 --> 00:14:07,920 Speaker 6: expectations at all. You know, there's been some concern about 282 00:14:08,000 --> 00:14:11,880 Speaker 6: inbound travel from international markets to the US, but within 283 00:14:12,480 --> 00:14:15,880 Speaker 6: those non US markets, Asia, Europe, et cetera, they have 284 00:14:15,960 --> 00:14:19,120 Speaker 6: not changed or in any way trim their expectations. 285 00:14:19,840 --> 00:14:22,640 Speaker 2: Just in terms of expansion plans. Are there hotel companies 286 00:14:22,680 --> 00:14:26,400 Speaker 2: still planning on maybe developing new hotels or building new 287 00:14:26,400 --> 00:14:28,200 Speaker 2: hotels or are they kind of put their growth plans 288 00:14:28,240 --> 00:14:28,680 Speaker 2: on hold. 289 00:14:29,200 --> 00:14:29,920 Speaker 4: Yeah, so the. 290 00:14:29,920 --> 00:14:33,480 Speaker 6: Unit growth expectations of the rooms are unchanged. There's still 291 00:14:33,920 --> 00:14:36,240 Speaker 6: as they were that they have not really observed and 292 00:14:36,280 --> 00:14:39,320 Speaker 6: I'm speaking particularly about Marryout. They haven't really observed any 293 00:14:39,400 --> 00:14:43,280 Speaker 6: changes in terms of construction starts. So there's really not 294 00:14:43,400 --> 00:14:47,040 Speaker 6: been a material change. Obviously, in an uncertain economic environment, 295 00:14:47,440 --> 00:14:50,480 Speaker 6: it's something that we're watchful of. But to the extent 296 00:14:50,560 --> 00:14:52,760 Speaker 6: that we're looking at that, there's been no change in 297 00:14:52,840 --> 00:14:55,880 Speaker 6: terms of their room expansion pipeline or development plan. 298 00:14:56,520 --> 00:14:59,880 Speaker 3: If we wind up getting more calm and more in 299 00:15:00,080 --> 00:15:02,480 Speaker 3: decision is thrown by the wayside, right, and we get 300 00:15:02,480 --> 00:15:07,440 Speaker 3: clarity which hotel lodging is best set up for that right. 301 00:15:07,480 --> 00:15:09,640 Speaker 6: So that's a good question. I think, to the extent 302 00:15:09,680 --> 00:15:14,040 Speaker 6: that we're talking about the big wild card being independent 303 00:15:14,120 --> 00:15:17,840 Speaker 6: leisure travel extends fairly broadly across the companies. You know, 304 00:15:17,880 --> 00:15:20,360 Speaker 6: to the extent that we look at the degree of 305 00:15:20,560 --> 00:15:22,840 Speaker 6: let's say cuts, Windom probably cut the most, and they're 306 00:15:22,840 --> 00:15:25,720 Speaker 6: deeply in the extended stay segment, maybe you would see 307 00:15:25,960 --> 00:15:28,320 Speaker 6: a little bit more bounce back there to the degree 308 00:15:28,400 --> 00:15:32,240 Speaker 6: that they have reduced expectitions more. But you know, I 309 00:15:32,240 --> 00:15:35,160 Speaker 6: think across the board they all have some degree of 310 00:15:35,200 --> 00:15:37,520 Speaker 6: exposure to the segments that have been a little weaker, 311 00:15:37,840 --> 00:15:42,040 Speaker 6: which is independent leisure travel, certain types of extended state 312 00:15:42,080 --> 00:15:46,040 Speaker 6: customer segments, particularly for Windom and things like government employees, 313 00:15:46,080 --> 00:15:47,400 Speaker 6: which I mentioned for Marriott. 314 00:15:48,200 --> 00:15:52,160 Speaker 2: We've seen a lot of soft data suggesting that inbound 315 00:15:52,240 --> 00:15:56,360 Speaker 2: international travel is down, and this is a short term 316 00:15:56,440 --> 00:15:58,520 Speaker 2: data maybe not any long term trends. What are your 317 00:15:58,560 --> 00:15:59,600 Speaker 2: companies saying about that. 318 00:16:00,160 --> 00:16:02,320 Speaker 6: Yeah, that's been a concern of hours for a while 319 00:16:02,360 --> 00:16:04,840 Speaker 6: that you would see a reduction, particularly from inbound travel 320 00:16:04,920 --> 00:16:08,200 Speaker 6: from Canada and Europe, and I think to some extent 321 00:16:08,520 --> 00:16:12,760 Speaker 6: we've seen that. Mariot did say that their Canadian bookings 322 00:16:12,760 --> 00:16:16,400 Speaker 6: for US stay room nights were down about five percent 323 00:16:16,480 --> 00:16:18,880 Speaker 6: year of the year. However, they did observe that that 324 00:16:19,000 --> 00:16:22,600 Speaker 6: was offset by strower inbound travel from other markets. And 325 00:16:22,680 --> 00:16:27,520 Speaker 6: also Hilton mentioned that Canada represented only about one and 326 00:16:27,520 --> 00:16:30,920 Speaker 6: a half percent of their total company revenues in terms 327 00:16:30,920 --> 00:16:36,720 Speaker 6: of Canadian customer stays at US hotels, right, so the 328 00:16:36,760 --> 00:16:39,720 Speaker 6: exposure to some of those inbound markets is relatively small, 329 00:16:39,760 --> 00:16:41,640 Speaker 6: but there does seem to be some put and takes 330 00:16:41,920 --> 00:16:45,040 Speaker 6: where they're getting summer leaf from other markets. Even though 331 00:16:45,400 --> 00:16:48,320 Speaker 6: across the board Canada inbound tourism to the US is down, 332 00:16:48,720 --> 00:16:52,240 Speaker 6: it's just not a particularly material percentage of the overall 333 00:16:52,320 --> 00:16:53,120 Speaker 6: customer base. 334 00:16:53,960 --> 00:16:56,880 Speaker 3: So that's sort of the lodging side. What about the 335 00:16:56,960 --> 00:16:59,400 Speaker 3: gaming side, What have we noticed in terms of an 336 00:16:59,480 --> 00:17:02,560 Speaker 3: earnings or forecast or just any sort of read through there. 337 00:17:03,240 --> 00:17:05,359 Speaker 6: You know, not really much of a change in terms 338 00:17:05,359 --> 00:17:10,240 Speaker 6: of markets like Las Vegas, which is really principally a 339 00:17:10,240 --> 00:17:13,760 Speaker 6: domestic audience. Really not any material change in terms of 340 00:17:13,800 --> 00:17:18,400 Speaker 6: expectations there, although those companies guidance metrics are a little 341 00:17:18,400 --> 00:17:21,560 Speaker 6: bit less specific. In the case of the Las Vegas companies, 342 00:17:21,880 --> 00:17:24,840 Speaker 6: we were watchful of the sector because at least one company, 343 00:17:24,960 --> 00:17:29,560 Speaker 6: Churchill Downs, delayed a capital spending plan at the Churchill 344 00:17:29,600 --> 00:17:33,359 Speaker 6: Downs racetrack, and there were plenty on fairly large expansion 345 00:17:33,400 --> 00:17:36,560 Speaker 6: project there which they've delayed amid economic and trade uncertainty. 346 00:17:36,800 --> 00:17:39,400 Speaker 6: But that does not seem to have extended to other companies. 347 00:17:39,440 --> 00:17:43,160 Speaker 6: So no major changes in terms of capital spending plans 348 00:17:43,720 --> 00:17:46,840 Speaker 6: or bookings trends for some of the major gaming operators. 349 00:17:47,400 --> 00:17:49,720 Speaker 2: So by and large, here what are the stocks telling you, Brian? 350 00:17:49,760 --> 00:17:52,200 Speaker 2: Here across the lodging space, have they been selling off 351 00:17:52,200 --> 00:17:54,119 Speaker 2: for underperforming the market? What are they telling us? 352 00:17:54,440 --> 00:17:59,400 Speaker 6: I think there's been certainly some expectation of an economic 353 00:17:59,440 --> 00:18:02,479 Speaker 6: impact from both the traded in the economic uncertainties, and 354 00:18:02,560 --> 00:18:04,760 Speaker 6: we did see, you know, for some of the recent 355 00:18:05,320 --> 00:18:08,280 Speaker 6: sell offs of the market, lodging companies were certainly hit. 356 00:18:09,600 --> 00:18:12,400 Speaker 6: And so by the time he got to the companies 357 00:18:12,600 --> 00:18:16,399 Speaker 6: like Hyatt and Hilton actually reducing guidance, you know, the 358 00:18:16,480 --> 00:18:20,600 Speaker 6: reduction follow on Stockbrice behavior was not particularly pronounced because 359 00:18:20,600 --> 00:18:23,520 Speaker 6: I think there's been some anticipation that we'll see a 360 00:18:23,520 --> 00:18:27,800 Speaker 6: little bit of a slowdown and amid the uncertain economic environment. 361 00:18:28,160 --> 00:18:30,840 Speaker 2: Our thanks to Brian Egger, Bloomberg Intelligence, Senior Gaming and 362 00:18:30,920 --> 00:18:32,160 Speaker 2: Lodging analysts. 363 00:18:31,960 --> 00:18:33,520 Speaker 3: We move next to the biotech space. 364 00:18:33,880 --> 00:18:37,479 Speaker 2: This week, the German drugmaker BioNTech reported lower than expected 365 00:18:37,560 --> 00:18:40,840 Speaker 2: quarterly sales on weaker demand for its COVID nineteen vaccine 366 00:18:40,840 --> 00:18:41,800 Speaker 2: developed with Pfizer. 367 00:18:41,920 --> 00:18:44,600 Speaker 3: This comes as the company's now seeking to evolve into 368 00:18:44,640 --> 00:18:47,400 Speaker 3: a broader biotech company focused on cancer treatments. 369 00:18:47,560 --> 00:18:49,240 Speaker 2: For more on this and the latest news in the 370 00:18:49,280 --> 00:18:52,080 Speaker 2: drug space, we were joined by Sam Fazzelli, Bloomberg Intelligence, 371 00:18:52,119 --> 00:18:55,560 Speaker 2: Director of Research for Global Industries and senior pharmaceuticals analysts. 372 00:18:55,560 --> 00:18:57,960 Speaker 3: The first asked Sam for his take on Biontechs results. 373 00:18:58,280 --> 00:19:01,520 Speaker 7: I can remember BioNTech is the originator of the Pfizer 374 00:19:01,960 --> 00:19:04,760 Speaker 7: COVID shot, so they're one of the two mRNA shots 375 00:19:04,800 --> 00:19:08,040 Speaker 7: out there. And what was again good to see is 376 00:19:08,040 --> 00:19:10,359 Speaker 7: that despite all the uncertainties that we're hearing about with 377 00:19:10,400 --> 00:19:14,560 Speaker 7: regards to attitude, CMRNA, vaccines, et cetera. Neither of the 378 00:19:14,600 --> 00:19:17,760 Speaker 7: companies have reduced their guidance for the air, but the 379 00:19:17,800 --> 00:19:21,639 Speaker 7: guidance have got really really wide margins in terms of 380 00:19:21,680 --> 00:19:24,160 Speaker 7: where they're going. And they both need it because they're 381 00:19:24,200 --> 00:19:27,199 Speaker 7: both spending a large amount of money on R and D, 382 00:19:27,359 --> 00:19:30,280 Speaker 7: which is what companies should be doing to discover new drugs, 383 00:19:30,320 --> 00:19:32,399 Speaker 7: and a lot of those drugs are at least in 384 00:19:32,440 --> 00:19:35,919 Speaker 7: the biontic case in cancer in general. And we have 385 00:19:36,000 --> 00:19:38,679 Speaker 7: some interesting mechanisms that are going to read out, so 386 00:19:39,880 --> 00:19:41,560 Speaker 7: that it's going to be interesting to see how this 387 00:19:41,600 --> 00:19:44,280 Speaker 7: all pans out over the next few months with regards 388 00:19:44,359 --> 00:19:48,840 Speaker 7: to vaccine attitudes, et cetera. So as crossed that people 389 00:19:48,880 --> 00:19:50,200 Speaker 7: would take those shots. 390 00:19:50,480 --> 00:19:54,720 Speaker 2: Yeah, Historically, sam have healthcare stocks broadly defined. I'm thinking 391 00:19:54,720 --> 00:19:57,080 Speaker 2: that the big cap pharma companies, So, are there are 392 00:19:57,080 --> 00:20:00,000 Speaker 2: places to hide out in times of uncertainty? 393 00:20:01,040 --> 00:20:04,000 Speaker 7: Yeah? Absolutely, They are probably the most defensive of the 394 00:20:04,040 --> 00:20:07,960 Speaker 7: defensives along with utilities. Along with utilities, et cetera. But 395 00:20:08,080 --> 00:20:10,399 Speaker 7: the problem I think Farma got right now is that, 396 00:20:10,440 --> 00:20:13,080 Speaker 7: as we just saw, President Trump apparently has said that 397 00:20:13,160 --> 00:20:15,320 Speaker 7: he might come back again in the next two weeks 398 00:20:15,640 --> 00:20:18,879 Speaker 7: with some tariffs for pharmaceutical companies. Most of them have 399 00:20:19,000 --> 00:20:21,800 Speaker 7: said that they're ready to manage it and be able 400 00:20:21,840 --> 00:20:25,000 Speaker 7: to absorb it. Some have already given us some numbers 401 00:20:25,040 --> 00:20:27,399 Speaker 7: as we spoke about last time and with regards to 402 00:20:27,440 --> 00:20:30,280 Speaker 7: how they've been hit in the first quarter. But they 403 00:20:30,640 --> 00:20:33,680 Speaker 7: you know, that is the one thing that maybe takes 404 00:20:33,680 --> 00:20:36,879 Speaker 7: a little bit of the shine off from that defensive field. 405 00:20:38,000 --> 00:20:40,600 Speaker 3: How do they mitigate it? Like, I mean, you make 406 00:20:40,640 --> 00:20:42,479 Speaker 3: it sound like it's no big deal. They can manage it, 407 00:20:42,560 --> 00:20:45,000 Speaker 3: But how does a company mitigate issues like that? 408 00:20:45,800 --> 00:20:47,359 Speaker 7: Right, So a whole bunch of them, I think, have 409 00:20:47,440 --> 00:20:50,119 Speaker 7: shipped a ton of drug to the US already. 410 00:20:50,040 --> 00:20:53,000 Speaker 3: Just to stop piling, right, that's their solution stockpiling. 411 00:20:53,480 --> 00:20:57,080 Speaker 7: They can't just switch manufacturing overnight so that that can't happen. 412 00:20:57,600 --> 00:20:59,760 Speaker 7: So they're just putting a whole bunch of drug in 413 00:20:59,760 --> 00:21:03,080 Speaker 7: the US and also hoping that the telefst doon't come 414 00:21:03,400 --> 00:21:06,040 Speaker 7: and if they come, there the numbers that they can manage. 415 00:21:06,119 --> 00:21:08,400 Speaker 7: And let's not forget these are companies that have got 416 00:21:08,840 --> 00:21:12,800 Speaker 7: pretty good margins, so maybe they'll manage the margin impact 417 00:21:13,240 --> 00:21:17,640 Speaker 7: within their capabilities of the guidance that they give. But frankly, 418 00:21:18,680 --> 00:21:20,560 Speaker 7: I think that, as they keep saying, the better way 419 00:21:20,560 --> 00:21:23,080 Speaker 7: to try and get these companies to move manufacturing too 420 00:21:23,080 --> 00:21:25,960 Speaker 7: the US is to just give them some time and say, look, 421 00:21:26,000 --> 00:21:28,520 Speaker 7: you've got instead of a ninety today thing, you've got 422 00:21:28,520 --> 00:21:30,639 Speaker 7: a year two years to show that you genuinely are 423 00:21:30,680 --> 00:21:33,320 Speaker 7: opening and moving manufacturing here. If not, then I'll hit you. 424 00:21:33,800 --> 00:21:37,800 Speaker 2: All right, I'm going to preface this question with a statement. Here, Sam, 425 00:21:37,800 --> 00:21:39,520 Speaker 2: I've been found in the healthcare industry for I don't 426 00:21:39,560 --> 00:21:43,160 Speaker 2: know forty years. I had zero knowledge of the economics 427 00:21:43,520 --> 00:21:45,600 Speaker 2: of the healthcare industry. I don't know who sets what 428 00:21:45,720 --> 00:21:48,639 Speaker 2: price where, who gets paid. I have no idea. I 429 00:21:48,720 --> 00:21:50,720 Speaker 2: just write a check every once in a while. If 430 00:21:50,760 --> 00:21:53,960 Speaker 2: in fact they wanted to push through price increases, can 431 00:21:54,040 --> 00:21:56,240 Speaker 2: they do it with all the insurance and the governments 432 00:21:56,280 --> 00:21:58,680 Speaker 2: and all that kind of stuff they do? 433 00:21:58,960 --> 00:22:03,040 Speaker 7: They do every year in January pretty much every farmer company, 434 00:22:03,200 --> 00:22:04,960 Speaker 7: and I can't say one hundred percent of drugs take 435 00:22:05,000 --> 00:22:08,000 Speaker 7: it a price rise on the list price, let's not forget, 436 00:22:08,200 --> 00:22:11,160 Speaker 7: and then some of them do another one in midiear so, 437 00:22:11,560 --> 00:22:13,920 Speaker 7: and but of course the majority of that price rise 438 00:22:13,960 --> 00:22:16,680 Speaker 7: they give back in discounts. To the to the middlemen 439 00:22:16,760 --> 00:22:19,880 Speaker 7: as they call them, so the pharmacy benefit managers and 440 00:22:19,920 --> 00:22:23,600 Speaker 7: the insurers in the middle so it discounts and rebates, 441 00:22:23,920 --> 00:22:26,040 Speaker 7: and so the end price that gets to the consumer 442 00:22:26,720 --> 00:22:30,040 Speaker 7: is never really up by that much as much as 443 00:22:30,080 --> 00:22:31,840 Speaker 7: what you can see on the list price. So that's 444 00:22:31,840 --> 00:22:34,760 Speaker 7: how that works. And you know, some of the companies 445 00:22:34,760 --> 00:22:37,040 Speaker 7: that are in a very competitive position, So as we've 446 00:22:37,080 --> 00:22:40,320 Speaker 7: seen with these GP one drugs, some of them are 447 00:22:40,359 --> 00:22:42,919 Speaker 7: beginning to discount a little bit. So Nova noticed they 448 00:22:43,000 --> 00:22:45,720 Speaker 7: just announced last week they've got this done this deal 449 00:22:45,800 --> 00:22:48,320 Speaker 7: with Hymns, They've done this deal with CVS, and the 450 00:22:48,359 --> 00:22:51,480 Speaker 7: CVS deal is at a lower price. It's the cheapest 451 00:22:51,600 --> 00:22:53,439 Speaker 7: that you can get for this listed type of dr 452 00:22:53,560 --> 00:22:53,840 Speaker 7: you know, the. 453 00:22:54,320 --> 00:22:54,760 Speaker 1: We go v. 454 00:22:56,000 --> 00:22:58,160 Speaker 3: It also raises the question for me, like what how 455 00:22:58,200 --> 00:23:01,919 Speaker 3: sticky our customers it comes to drugs, Like in general, 456 00:23:01,960 --> 00:23:03,359 Speaker 3: it's like, is it the cheapest one? 457 00:23:03,840 --> 00:23:04,120 Speaker 4: Is it? 458 00:23:04,240 --> 00:23:06,360 Speaker 3: Once you start a regimen you don't want to ever 459 00:23:06,520 --> 00:23:07,520 Speaker 3: change it? 460 00:23:07,560 --> 00:23:07,720 Speaker 8: Is that? 461 00:23:07,920 --> 00:23:10,119 Speaker 3: Like how high is that barrier to entry? I mean, 462 00:23:10,160 --> 00:23:12,440 Speaker 3: we've seen that be a little confusing when it comes 463 00:23:12,480 --> 00:23:13,440 Speaker 3: to the GLP ones. 464 00:23:14,520 --> 00:23:17,440 Speaker 7: Yeah, yeah, so Alex, some of that isn't up to 465 00:23:17,480 --> 00:23:19,720 Speaker 7: the consumer. So a lot of that is up to 466 00:23:19,760 --> 00:23:25,919 Speaker 7: the insurance companies. So if your group insurance suddenly decides 467 00:23:25,960 --> 00:23:29,120 Speaker 7: to switch provider and say, okay, from now on, we're 468 00:23:29,119 --> 00:23:30,960 Speaker 7: going to push you to take we Go Vi versus 469 00:23:31,040 --> 00:23:32,960 Speaker 7: Z bound, you're either going to have to go back, 470 00:23:33,119 --> 00:23:34,720 Speaker 7: go out in the market and bly it out of 471 00:23:34,720 --> 00:23:37,800 Speaker 7: the pocket, or you accept that switch. So that switch 472 00:23:37,840 --> 00:23:42,320 Speaker 7: does happen, it is harder in diseases where you're actually 473 00:23:42,440 --> 00:23:47,639 Speaker 7: maintaining a response or like in a even in those diabetes, 474 00:23:47,640 --> 00:23:50,800 Speaker 7: for instance, you're under control very well, why switch, Well, 475 00:23:50,840 --> 00:23:52,560 Speaker 7: the cities, I don't think it's going to work like that, 476 00:23:52,640 --> 00:23:56,240 Speaker 7: and I think you can see probably more price competition, 477 00:23:56,280 --> 00:23:57,840 Speaker 7: but also I think the best drug will get the 478 00:23:58,280 --> 00:23:59,760 Speaker 7: you know, the one with the lowest side effects of 479 00:23:59,800 --> 00:24:02,679 Speaker 7: the best sweight loss, we'll get the And as you 480 00:24:02,680 --> 00:24:04,320 Speaker 7: can see that Bounds doing a lot better than we 481 00:24:04,400 --> 00:24:06,359 Speaker 7: Go Vi on our prescription data that we have on 482 00:24:06,400 --> 00:24:07,320 Speaker 7: the terminal. 483 00:24:07,160 --> 00:24:10,800 Speaker 2: Our Thanks to Sam Fazzelli, Bloomberg Intelligence Director of Research 484 00:24:10,800 --> 00:24:13,360 Speaker 2: for Global Industries and senior pharmaceuticals analyst. 485 00:24:13,720 --> 00:24:15,520 Speaker 3: Coming up on the program will break down how the 486 00:24:15,560 --> 00:24:17,840 Speaker 3: clean energy build out in the US is being impacted 487 00:24:17,840 --> 00:24:18,920 Speaker 3: by the Trump administration. 488 00:24:19,240 --> 00:24:22,040 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 489 00:24:22,080 --> 00:24:24,439 Speaker 2: depth research and data on two thousand companies and one 490 00:24:24,520 --> 00:24:27,560 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 491 00:24:27,600 --> 00:24:28,679 Speaker 2: b I go on the terminal. 492 00:24:28,800 --> 00:24:31,760 Speaker 3: I'm Paul Sweeney and I'm Alex Steele, and this is Bloomberg. 493 00:24:39,560 --> 00:24:43,280 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 494 00:24:43,320 --> 00:24:46,399 Speaker 1: weekdays at ten am easterne on Apple, Cocklay and Android 495 00:24:46,440 --> 00:24:49,760 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 496 00:24:49,800 --> 00:24:52,920 Speaker 1: you get your podcasts, or watch us live on YouTube. 497 00:24:53,520 --> 00:24:56,520 Speaker 2: This week, the automaker Ford announced it'll be suspending it's 498 00:24:56,520 --> 00:24:59,120 Speaker 2: full year guidance for twenty twenty five. The company cited 499 00:24:59,200 --> 00:25:01,880 Speaker 2: uncertainly surrounding President Donald Trump's auto tariffs. 500 00:25:01,880 --> 00:25:02,200 Speaker 5: For more. 501 00:25:02,240 --> 00:25:04,800 Speaker 3: We were joined by Steve Mann, Bloomberg Intelligence Global Autos 502 00:25:04,800 --> 00:25:07,399 Speaker 3: and Industrials research analyst. We first asked you for his 503 00:25:07,480 --> 00:25:09,320 Speaker 3: take on why Ford's halting its guidance. 504 00:25:09,840 --> 00:25:13,560 Speaker 9: It's normal for these companies to, you know, to to 505 00:25:14,440 --> 00:25:17,879 Speaker 9: kind of remove their full year guidance. There's a lot 506 00:25:17,920 --> 00:25:21,040 Speaker 9: of confusion. We still really don't know what the full 507 00:25:21,080 --> 00:25:24,680 Speaker 9: impact and what is the impact of these tariffs. There 508 00:25:24,760 --> 00:25:27,240 Speaker 9: is still hope that you know, some of these will 509 00:25:27,240 --> 00:25:31,639 Speaker 9: go away. No, President Trump did give some reprieve for 510 00:25:31,720 --> 00:25:34,920 Speaker 9: the automakers, but at the end of the day, it's 511 00:25:34,960 --> 00:25:38,080 Speaker 9: still a big number. We estimate it's going to be 512 00:25:38,119 --> 00:25:42,520 Speaker 9: an eighty five billion dollar impact on the US auto 513 00:25:42,520 --> 00:25:46,080 Speaker 9: industry alone, just you know, in the next twelve months 514 00:25:46,080 --> 00:25:50,520 Speaker 9: from these tariffs. So well, we'll have to see you know, 515 00:25:50,720 --> 00:25:53,800 Speaker 9: full yer guidance pulling them. It's it's it's it's it's 516 00:25:54,160 --> 00:25:54,960 Speaker 9: seems like the norm. 517 00:25:55,000 --> 00:25:58,679 Speaker 2: Now, what are the companies, I mean, realistically, are the 518 00:25:58,680 --> 00:26:02,720 Speaker 2: companies saying, hey, we can I don't know, go to 519 00:26:03,280 --> 00:26:06,639 Speaker 2: kind of change our sourcing, change our supply chain, or 520 00:26:06,680 --> 00:26:08,880 Speaker 2: we're going to we're committed to trying to pass these 521 00:26:08,920 --> 00:26:11,119 Speaker 2: along to customers, or we're going to take it in 522 00:26:11,119 --> 00:26:13,480 Speaker 2: the margin. Any kind of guidelines here just in terms 523 00:26:13,480 --> 00:26:14,240 Speaker 2: of broad strokes. 524 00:26:14,960 --> 00:26:17,240 Speaker 9: Yeah, there's been a lot of question on how they're 525 00:26:17,240 --> 00:26:20,199 Speaker 9: going to approach this, and there's a number of ways. 526 00:26:20,840 --> 00:26:23,720 Speaker 9: You know, there's a lot of production vehicle full fieldal 527 00:26:23,760 --> 00:26:28,120 Speaker 9: productions in Mexico as well as Canada. Now, a lot 528 00:26:28,160 --> 00:26:30,919 Speaker 9: of these automakers do have some spare capacity that they 529 00:26:31,160 --> 00:26:35,679 Speaker 9: they can shift back into the US, but it's going 530 00:26:35,760 --> 00:26:38,600 Speaker 9: to cost them and some of these costs eighty five 531 00:26:38,640 --> 00:26:41,639 Speaker 9: billion I just mentioned earlier really doesn't include some of 532 00:26:41,640 --> 00:26:46,760 Speaker 9: these costs on shifting that production back themselves as well 533 00:26:46,800 --> 00:26:49,960 Speaker 9: as supply chain. So for example, you know, if you 534 00:26:50,200 --> 00:26:54,160 Speaker 9: move a plant either from Mexico to Canada back into 535 00:26:54,200 --> 00:26:57,880 Speaker 9: the US, it could cost an upwards of four billion dollars, 536 00:26:57,960 --> 00:26:59,720 Speaker 9: you know, if they have to build a greenfield site. 537 00:27:00,320 --> 00:27:03,399 Speaker 9: So it's it's it's gonna be a lot of money, 538 00:27:03,640 --> 00:27:08,840 Speaker 9: uh to to actually you know, reshift the supply chain 539 00:27:08,880 --> 00:27:09,919 Speaker 9: that's been built. 540 00:27:10,359 --> 00:27:12,320 Speaker 3: Which company, now that we've sort of gotten through a 541 00:27:12,320 --> 00:27:15,520 Speaker 3: lot of this is best equipped to handle this uncertainty. 542 00:27:16,080 --> 00:27:19,080 Speaker 9: Well, I think it's gonna be Uh, it's gonna be 543 00:27:19,119 --> 00:27:22,480 Speaker 9: really tough for for automakers. I don't think they really 544 00:27:22,560 --> 00:27:26,840 Speaker 9: have a good handle onto what the what the costs are, 545 00:27:26,840 --> 00:27:28,960 Speaker 9: and what they need to do. You know, there's price 546 00:27:29,080 --> 00:27:32,879 Speaker 9: increases that they can apply to the consumer, and I 547 00:27:32,880 --> 00:27:35,119 Speaker 9: think that's a very viable option. 548 00:27:35,760 --> 00:27:35,840 Speaker 5: Uh. 549 00:27:35,920 --> 00:27:39,000 Speaker 9: The other one is moving capacity. Uh, then it's going 550 00:27:39,080 --> 00:27:41,800 Speaker 9: to be a huge costs. We actually think among the 551 00:27:41,920 --> 00:27:45,879 Speaker 9: legacy automakers, like if you look at ST. Lentist, GM, 552 00:27:45,960 --> 00:27:49,960 Speaker 9: and four UH. We think Ford has the biggest will 553 00:27:49,960 --> 00:27:54,800 Speaker 9: have the biggest impact from the UH tariffs because of 554 00:27:54,840 --> 00:27:58,440 Speaker 9: their more global strategy around supply. 555 00:27:58,160 --> 00:28:01,879 Speaker 2: Chain Steve, Are we gonna see layoffs in the auto industry? 556 00:28:01,920 --> 00:28:06,119 Speaker 2: Are we can see plants cutting shifts, maybe shutting down 557 00:28:06,640 --> 00:28:08,679 Speaker 2: for they can't get parts or the demand might not 558 00:28:08,720 --> 00:28:09,240 Speaker 2: be there. 559 00:28:09,520 --> 00:28:13,680 Speaker 9: Yeah, it's very possible. I think initially we'll see that 560 00:28:14,320 --> 00:28:17,760 Speaker 9: type of reaction in the market because if prices do 561 00:28:17,880 --> 00:28:24,280 Speaker 9: go up, you know, sales will actually dwindow or decrease, 562 00:28:24,680 --> 00:28:28,600 Speaker 9: and we've already seen that earlier in the year before tariffs. 563 00:28:29,000 --> 00:28:34,160 Speaker 9: This is gonna you know, exacerbate the slowdown in the 564 00:28:34,240 --> 00:28:37,320 Speaker 9: in the auto industry. So we probably will see some 565 00:28:37,440 --> 00:28:41,680 Speaker 9: layoffs and production pep back. We're hearing from the auto suppliers, 566 00:28:41,720 --> 00:28:44,680 Speaker 9: a lot of them, most of them saying that, you know, 567 00:28:44,760 --> 00:28:49,400 Speaker 9: they expect auto production to come off from their already 568 00:28:49,480 --> 00:28:51,680 Speaker 9: reduced forecast for this year. 569 00:28:52,480 --> 00:28:56,000 Speaker 3: When we take a look broadly at autocard sales demand 570 00:28:56,040 --> 00:28:58,959 Speaker 3: here in the US, how is that holding up, especially 571 00:28:58,960 --> 00:29:01,600 Speaker 3: as we can consider are the rising price of potential 572 00:29:01,640 --> 00:29:04,000 Speaker 3: cars and being imported like a rush to buy now 573 00:29:04,160 --> 00:29:04,720 Speaker 3: that kind of thing. 574 00:29:05,960 --> 00:29:08,120 Speaker 9: Yeah, I think we have seen some rush to buy 575 00:29:08,160 --> 00:29:13,120 Speaker 9: now UH before April. First quarter sales is actually pretty good, 576 00:29:14,160 --> 00:29:18,920 Speaker 9: but a lot of that is pull for demand, you know, prices. 577 00:29:19,040 --> 00:29:21,840 Speaker 9: You know, we we actually do see inventory coming down, 578 00:29:22,000 --> 00:29:27,600 Speaker 9: supply being cut UH and UH prices will will come 579 00:29:27,720 --> 00:29:31,480 Speaker 9: up as a result the result of the tariff costs. 580 00:29:31,680 --> 00:29:34,240 Speaker 9: You know, there's there's news out there that some of 581 00:29:34,240 --> 00:29:37,760 Speaker 9: the automakers that import cars in the US are actually 582 00:29:38,080 --> 00:29:42,440 Speaker 9: not releasing those vehicles into the dealer lots. For example, 583 00:29:42,800 --> 00:29:46,640 Speaker 9: we're seeing increase you know, vehicle inventory at the Baltimore 584 00:29:46,680 --> 00:29:49,960 Speaker 9: Ports from Volkswagen and and Aldi. We'll probably see the 585 00:29:49,960 --> 00:29:54,680 Speaker 9: same thing for some of the Japanese and Korean automakers 586 00:29:55,040 --> 00:29:58,840 Speaker 9: UH inventory at the ports UH out on the West Coast. 587 00:29:59,520 --> 00:30:02,720 Speaker 2: Thanks to the man Bloomberg Intelligence Global Autos and Industrials 588 00:30:02,760 --> 00:30:04,000 Speaker 2: research channels. 589 00:30:03,600 --> 00:30:05,760 Speaker 3: Each week we take a look at research from Bloomberg 590 00:30:05,920 --> 00:30:08,880 Speaker 3: NF previously known as New Energy Finance. 591 00:30:08,640 --> 00:30:10,920 Speaker 2: Through the team of Bloomberg that tracks and analyzes the 592 00:30:11,040 --> 00:30:15,440 Speaker 2: energy transition from commodities to power, transport, industries, buildings, and 593 00:30:15,480 --> 00:30:18,520 Speaker 2: agricultural sectors. This week we looked at the clean energy 594 00:30:18,560 --> 00:30:19,440 Speaker 2: build out in the US. 595 00:30:19,760 --> 00:30:22,640 Speaker 3: Research from Bloomberg NEEF says the clean energy will continue 596 00:30:22,680 --> 00:30:25,680 Speaker 3: to grow, and that's despite ongoing tear off threats, President 597 00:30:25,720 --> 00:30:28,800 Speaker 3: Trump's hostility toward clean energy and risks of possible cuts 598 00:30:28,800 --> 00:30:29,640 Speaker 3: in tax credits. 599 00:30:29,760 --> 00:30:31,840 Speaker 2: For more on this, we were joined by Paul Lescano, 600 00:30:31,840 --> 00:30:35,360 Speaker 2: Bloomberg BNF Senior Associate. Were first to ask Paul about 601 00:30:35,360 --> 00:30:38,520 Speaker 2: how the Trump administration is currently impacting clean energy. 602 00:30:38,960 --> 00:30:42,000 Speaker 8: We have to look at every industry separately and in conjunction. 603 00:30:42,120 --> 00:30:44,800 Speaker 8: We have to align to understand what are the common 604 00:30:44,840 --> 00:30:48,840 Speaker 8: threats and then what are the individual characteristics of each 605 00:30:48,880 --> 00:30:54,760 Speaker 8: of those industries. So so far we've seen obviously, offshore 606 00:30:54,760 --> 00:30:57,960 Speaker 8: wind has been badly hit, mostly because offshore wind is 607 00:30:58,120 --> 00:31:03,800 Speaker 8: heavily heavily reliant on federal agencies and federal authority, whereas 608 00:31:04,440 --> 00:31:08,280 Speaker 8: solar has been pretty much unstoppable. There's very little thing 609 00:31:08,760 --> 00:31:11,560 Speaker 8: that Trump and the administration can do to really slow 610 00:31:11,600 --> 00:31:15,760 Speaker 8: down growth. And then battery storage with this nation technology 611 00:31:15,760 --> 00:31:19,960 Speaker 8: that's coming to support both solar and wind generation has 612 00:31:20,000 --> 00:31:23,760 Speaker 8: also been i would say somewhere in the middle, not 613 00:31:23,920 --> 00:31:26,960 Speaker 8: as badly head as offshore wind, but tariffs have had 614 00:31:27,200 --> 00:31:31,680 Speaker 8: much a much bigger impact because the US still imports 615 00:31:31,680 --> 00:31:34,600 Speaker 8: a lot of the batteries from China because the battery 616 00:31:34,640 --> 00:31:37,880 Speaker 8: supply chain is not as diversified as a solar or 617 00:31:37,880 --> 00:31:38,760 Speaker 8: the wind supply chain. 618 00:31:39,000 --> 00:31:40,800 Speaker 3: So you guys have a no doubt that talks about 619 00:31:40,800 --> 00:31:44,080 Speaker 3: how US clean power build will caudruple by twenty thirty 620 00:31:44,120 --> 00:31:48,320 Speaker 3: five despite all of these risks. That's a big number. 621 00:31:48,840 --> 00:31:52,200 Speaker 3: So you mentioned that solar is unstoppable, battery and energy 622 00:31:52,200 --> 00:31:54,960 Speaker 3: storage potentially, also, can you walk us through your outlook 623 00:31:55,000 --> 00:31:56,120 Speaker 3: for solar in particular. 624 00:31:56,400 --> 00:32:00,960 Speaker 8: Yeah, the reality is the US and pretty much everywhere 625 00:32:00,960 --> 00:32:01,520 Speaker 8: in the world. 626 00:32:01,440 --> 00:32:02,440 Speaker 9: Will need power. 627 00:32:03,000 --> 00:32:07,160 Speaker 8: What's the fastest, cheapest new source of power generation. It's 628 00:32:07,160 --> 00:32:11,800 Speaker 8: older like, hands down, it's easier, quicker to build. If 629 00:32:11,840 --> 00:32:14,000 Speaker 8: you can get the permits and the great connection on time, 630 00:32:14,000 --> 00:32:17,280 Speaker 8: which are really the only bottlenecks to get to getting 631 00:32:17,400 --> 00:32:20,720 Speaker 8: new solar built, then it's very very hard to stop. 632 00:32:20,760 --> 00:32:23,760 Speaker 8: And we've seen that all over the world, especially now 633 00:32:23,960 --> 00:32:28,200 Speaker 8: the US gas nuclear there's a you know, there's talks 634 00:32:28,240 --> 00:32:31,960 Speaker 8: about a renaissance for both of these technologies, but the 635 00:32:32,040 --> 00:32:35,680 Speaker 8: reality is is that physical there's physical limitations to building 636 00:32:35,720 --> 00:32:39,040 Speaker 8: gas into building nuclear that probably most of the audience 637 00:32:39,160 --> 00:32:41,120 Speaker 8: is very familiar with. 638 00:32:41,120 --> 00:32:41,520 Speaker 9: With soul. 639 00:32:41,600 --> 00:32:44,000 Speaker 8: You don't need pipelines. You don't need to build new pipelines, 640 00:32:44,040 --> 00:32:47,080 Speaker 8: you don't need to improve new pipelines. You just grap panels, 641 00:32:47,120 --> 00:32:49,800 Speaker 8: You install them, you connect them to the grid, and 642 00:32:49,880 --> 00:32:51,800 Speaker 8: that's it. And then you have new source and new 643 00:32:51,800 --> 00:32:55,000 Speaker 8: source of generation. And the reality is that despite the 644 00:32:55,040 --> 00:32:58,760 Speaker 8: efforts from the from the administration to revitalize false fossil 645 00:32:58,800 --> 00:33:02,200 Speaker 8: fuels and nuclear, the easiest thing to build to solar, 646 00:33:02,240 --> 00:33:05,120 Speaker 8: and it's going to continue to be to be like 647 00:33:05,160 --> 00:33:06,240 Speaker 8: that for a long time. 648 00:33:06,480 --> 00:33:08,440 Speaker 2: Well, talk to us about the towers here, Like, if 649 00:33:08,440 --> 00:33:11,120 Speaker 2: there's one hundred and forty percent tariff on a battery 650 00:33:11,160 --> 00:33:13,840 Speaker 2: coming in from China, doesn't that make a lot of 651 00:33:13,840 --> 00:33:15,800 Speaker 2: projects just unfeasible economically. 652 00:33:15,880 --> 00:33:19,880 Speaker 8: Yeah, that's a great question. And there's certainly some battery projects, 653 00:33:19,920 --> 00:33:23,360 Speaker 8: big battery projects in parts of the US there are 654 00:33:23,360 --> 00:33:25,720 Speaker 8: going to be delayed. There's going to be probably delayed 655 00:33:25,720 --> 00:33:28,800 Speaker 8: by twelve to eighteen months as everyone figures out what 656 00:33:28,840 --> 00:33:31,240 Speaker 8: the final tariff on China will be. But the reality is, 657 00:33:31,320 --> 00:33:33,959 Speaker 8: if we look at what happened to the solar sector 658 00:33:34,000 --> 00:33:36,040 Speaker 8: and the global solar supply chain back in the day 659 00:33:36,040 --> 00:33:39,920 Speaker 8: when Obama started introducing high tariffs on solar panels, supply 660 00:33:40,040 --> 00:33:43,880 Speaker 8: chains re route very very quickly. So we do expect 661 00:33:43,920 --> 00:33:47,040 Speaker 8: eventually with the next couple of years, if tariffs in 662 00:33:47,120 --> 00:33:49,360 Speaker 8: China continue to be pretty high and the risk of 663 00:33:49,440 --> 00:33:52,600 Speaker 8: using Chinese batteries remains pretty high, irrespective of what the 664 00:33:52,600 --> 00:33:55,840 Speaker 8: tariff level is, we do expect some new capacity coming 665 00:33:55,920 --> 00:33:59,240 Speaker 8: online in South Korea and Southeast Asia as well as 666 00:33:59,680 --> 00:34:00,840 Speaker 8: in in the US. 667 00:34:01,640 --> 00:34:04,640 Speaker 3: What about battery storage and energy storage. 668 00:34:05,240 --> 00:34:09,279 Speaker 8: So, battery storage is as I said, it's it's what 669 00:34:09,400 --> 00:34:12,680 Speaker 8: it's more mower hit for by tariffs and solar because 670 00:34:12,719 --> 00:34:15,799 Speaker 8: of its reliance on China. So we had to we 671 00:34:15,920 --> 00:34:18,720 Speaker 8: had to re assuming a slowdown in new additions because 672 00:34:18,800 --> 00:34:21,560 Speaker 8: right now the ramp up has been pretty quickly. But 673 00:34:21,640 --> 00:34:24,359 Speaker 8: the role of battery storage for power markets has been 674 00:34:25,040 --> 00:34:27,440 Speaker 8: very very critical over the past couple of years. It 675 00:34:27,480 --> 00:34:32,560 Speaker 8: has probably arguably saved Texas from blackouts in the past 676 00:34:32,600 --> 00:34:36,120 Speaker 8: twelve eighteen months because the ability of batteries to ramp 677 00:34:36,239 --> 00:34:40,360 Speaker 8: up quickly and meat peak demand. It's it's it's really 678 00:34:40,840 --> 00:34:45,279 Speaker 8: it's fascinating and and it's really quick to dispatch, and 679 00:34:45,040 --> 00:34:47,200 Speaker 8: and we think it's going to play a bigger, bigger 680 00:34:47,280 --> 00:34:50,040 Speaker 8: role in markets outside of Texas too in the US? 681 00:34:50,400 --> 00:34:52,759 Speaker 2: How hard How hard is it to get connected to 682 00:34:52,800 --> 00:34:54,319 Speaker 2: the grid? If I build a wind farm in the 683 00:34:54,320 --> 00:34:57,319 Speaker 2: middle of West Texas like I saw on land Man, 684 00:34:57,880 --> 00:34:59,600 Speaker 2: they're off the grid. How do you get stuff to 685 00:34:59,640 --> 00:34:59,959 Speaker 2: the grid. 686 00:35:00,160 --> 00:35:04,080 Speaker 8: It's very very difficult. Some of the difficulties are obvious 687 00:35:04,120 --> 00:35:07,120 Speaker 8: when there's a very very long distance between where you're 688 00:35:07,160 --> 00:35:09,560 Speaker 8: building the farm and where you want to deliver the power. 689 00:35:09,960 --> 00:35:12,239 Speaker 8: So you need to get transmission built, which means you 690 00:35:12,280 --> 00:35:14,800 Speaker 8: need to get everyone along the way who owns the 691 00:35:14,880 --> 00:35:17,880 Speaker 8: land where that transmission where those transmission lines are going 692 00:35:17,920 --> 00:35:21,320 Speaker 8: to be, to approve to allow you to build it, which, 693 00:35:21,360 --> 00:35:23,080 Speaker 8: as I'm sure you can imagine, is a very very 694 00:35:23,080 --> 00:35:27,680 Speaker 8: tedious process. You need different regulatory approvals, and then to 695 00:35:27,719 --> 00:35:32,320 Speaker 8: get connected to the grid, you have to undergo years 696 00:35:32,320 --> 00:35:35,560 Speaker 8: and years of different system studies where they have to 697 00:35:35,600 --> 00:35:38,680 Speaker 8: assess what's going to happen if your wind farm now 698 00:35:38,680 --> 00:35:40,480 Speaker 8: connects to the grid, what's going to happen to all 699 00:35:40,480 --> 00:35:43,600 Speaker 8: the power flows going in all directions. Imagine just doing 700 00:35:43,600 --> 00:35:47,080 Speaker 8: that study for one farm, and they do this for 701 00:35:47,360 --> 00:35:49,560 Speaker 8: pretty much everyone who's applying for the grid at the 702 00:35:49,600 --> 00:35:52,520 Speaker 8: same time or the same grid connection point. So the 703 00:35:52,560 --> 00:35:56,000 Speaker 8: engineering is really really complicated, and it's been by far 704 00:35:56,080 --> 00:35:58,840 Speaker 8: the biggest bottle knight of getting any new source of 705 00:35:58,840 --> 00:35:59,480 Speaker 8: power generation. 706 00:36:00,040 --> 00:36:02,160 Speaker 3: And yeah, is it easier to do that or build 707 00:36:02,200 --> 00:36:02,800 Speaker 3: a pipeline? 708 00:36:02,880 --> 00:36:04,960 Speaker 8: Easier to do that than build a pipeline, I would say, 709 00:36:04,960 --> 00:36:07,880 Speaker 8: except if you're in Texas or Louisiana. 710 00:36:08,280 --> 00:36:12,040 Speaker 3: All right, Thanks to Paul Ascano, Bloomberg Leanni app Senior Associate. 711 00:36:12,800 --> 00:36:17,520 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 712 00:36:17,680 --> 00:36:21,680 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 713 00:36:21,880 --> 00:36:25,160 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 714 00:36:25,239 --> 00:36:29,120 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 715 00:36:29,160 --> 00:36:32,440 Speaker 1: can also watch us live every weekday on YouTube and 716 00:36:32,640 --> 00:36:34,600 Speaker 1: always on the Bloomberg terminal