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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye.

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Speaker 3: The real app performance has been in US corporate high yield.

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Speaker 4: Are the companies lean enough? Have they trimmed all the fats?

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Speaker 3: The semiconductor business is a really cyclical business.

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Speaker 2: Breaking market headlines and corporate news from across the globe.

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Speaker 4: Do investors like the M and A that we've seen?

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Speaker 5: These are two.

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Speaker 3: Big time blue chip companies.

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Speaker 4: The window between the peak and cut changing super fast.

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Speaker 2: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio.

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Speaker 3: On Today's Bloomberg Intelligence Show, we dig inside the big

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Speaker 3: business stories Impactnew Wall Street and the global markets.

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Speaker 4: Each and every week we provide in depth research and

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Speaker 4: data on some of the two thousand companies and one

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Speaker 4: hundred and thirty industries our analysts cover worldwide.

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Speaker 3: Today, we'll discuss why Apple's iPhone shipments are falling in China.

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Speaker 4: Plaus we'll look at Boeing's leadership overhaul, with CEO Did

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Speaker 4: Calhoun stepping down at the end of twenty twenty four.

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Speaker 3: But first, Robinhood Market's best known for offering commission Free

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Speaker 3: Trading is rolling out a credit card to US consumers

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Speaker 3: as it looks to become a broader financial services company.

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Speaker 4: The Robinhood Gold Card will be offered exclusively to members

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Speaker 4: of the firm subscription based Gold program.

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Speaker 3: For more, guest host Bailey Lipshaltz and I were joined

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Speaker 3: by Robinhood, co founder and CEO of vladit Tenev. We

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Speaker 3: first asked him for more context on the company's latest news.

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Speaker 6: We were really excited to announce this. We've been working

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Speaker 6: on it for quite a while and we didn't just

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Speaker 6: want to launch another me too credit card. We really

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Speaker 6: wanted to come in and do something special and really

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Speaker 6: lead the industry. So it's really the best cash back

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Speaker 6: rewards that we found in any credit card on the market,

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Speaker 6: the best digital experience, and really the best design. We

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Speaker 6: have a solid gold card that's basically a hunk of metal.

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Speaker 6: It's extremely iconic, very simple, like, very well designed. We're

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Speaker 6: really proud of the product.

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Speaker 7: How does the credit card fit into the business, because

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Speaker 7: I know early last year you guys announced a retirement products,

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Speaker 7: so it feels like you're trying to expand away from

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Speaker 7: the core trading platform.

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Speaker 6: Yeah, so as a business Holistically, we're focused on three things.

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Speaker 6: The first is being the number one platform for active traders.

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Speaker 6: Right now, we're number two, but we have a path

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Speaker 6: to being number one in some number of years, and

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Speaker 6: that's really through user experience improvements, product innovations like twenty

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Speaker 6: four hour market, adding new asset classes like futures, new

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Speaker 6: platform launches like our web Pro platform, which we've announced.

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Speaker 6: But we don't want to just be an active trader platform.

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Speaker 6: We also want to grow wallet share with our customers

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Speaker 6: and help them build wealth. That's where Robinhood Gold comes in.

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Speaker 6: That's where our innovations and the retirement program with three

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Speaker 6: percent match come in. And of course, now the credit

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Speaker 6: card is sort of another pillar of us growing wallet

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Speaker 6: share with customers and helping them do all of their

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Speaker 6: financial activities one place via Robinhood.

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Speaker 3: So are you competing with this card with the bank

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Speaker 3: issued Visa master cards? Is that the market you're now

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Speaker 3: going into.

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Speaker 6: I think that we're trying to do something really interesting

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Speaker 6: with this card. So if you think about premium credit cards,

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Speaker 6: the best ones out there, accept less than half of

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Speaker 6: the people that apply.

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Speaker 3: Is that right? Is that half of that Chase Sephi

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Speaker 3: or is that an platinum or whatever.

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Speaker 6: Those classes of credit cards really like the typical sort

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Speaker 6: of like super prime premium rewards cards, and they have

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Speaker 6: high annual fees. So what we wanted to do is,

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Speaker 6: in the same way that Robinhood democratized stock trading and

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Speaker 6: made it accessible to a wider group of people, we

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Speaker 6: want to open up the private client experience. I don't

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Speaker 6: know if you've been to a Chase branch, but you

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Speaker 6: can see there's two doors, one for the private clients

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Speaker 6: and one for everyone else. And the whole idea behind

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Speaker 6: Robinhood Gold is giving that private client experience for as

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Speaker 6: little as five dollars a month, opening it to everyone.

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Speaker 6: And it starts with the premium credit card. Of course,

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Speaker 6: the retirement benefits where you get a three percent match,

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Speaker 6: the first and biggest in the industry, the five percent

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Speaker 6: apy on our cash, which is just an institutional grade,

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Speaker 6: high yield offering that you have to have, you know,

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Speaker 6: millions of dollars to match at other brokers. So yeah,

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Speaker 6: we're putting all this together and we're seeing Robinhood Gold

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Speaker 6: customers actually depositing the lion's share of their money into

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Speaker 6: Robinhood and really growing with us. And I think we

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Speaker 6: have an opportunity to offer them services for all their

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Speaker 6: financial needs in BLAD.

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Speaker 7: The perks are pretty sweet, as you mentioned, three percent

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Speaker 7: cash back on all purchases. Do you make money off

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Speaker 7: of this? How is this going to be kind of

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Speaker 7: another peg for the profitability and the growth of the company.

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Speaker 6: Yeah. Two things there. One is we do obviously any

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Speaker 6: business line we enter, we intend to be profitable over

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Speaker 6: the long run on a standalone basis, so not just

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Speaker 6: a creative but we anticipate this being a profitable business

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Speaker 6: line just within the card portfolio, and that's through not

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Speaker 6: just the interchange transaction revenue, but also the lending business

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Speaker 6: through the card. We anticipate this would actually be a

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Speaker 6: very attractive card for people building credit over time, and

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Speaker 6: not just folks that pay off their balance in full.

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Speaker 6: The other side of it is we see that when

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Speaker 6: customers adopt Robinhood Gold, their rate of deposit growth and

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Speaker 6: account balance growth is much higher than non gold customers.

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Speaker 6: They also adopt our products at a much higher rate,

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Speaker 6: and so even though they're getting so much more value

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Speaker 6: with all these industry leading rates and value props, the

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Speaker 6: revenue that accrues to the business from the gold relationship

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Speaker 6: is also multiples higher than non gold customers. And we

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Speaker 6: think the credit card since it's so core to people's

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Speaker 6: financial needs. Typically all of their the line share of

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Speaker 6: spending goes through credit and if you're using a credit card,

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Speaker 6: much easier to grab the paycheck deposit. We need to

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Speaker 6: carry his cash around.

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Speaker 7: Now, this is the guy who walks around with hundreds

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Speaker 7: of dollars in his pocket.

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Speaker 3: I don't know why I asked myself to say, when

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Speaker 3: you walk into a bar, the jersey short good cash

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Speaker 3: on the bar there?

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Speaker 8: All right?

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Speaker 3: So who is the typical Robinhood customer these days? Client?

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Speaker 8: These days?

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Speaker 6: A typical Robinhood customer, I would say, is someone in

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Speaker 6: their thirties. They tend to be an early adopter of technology.

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Speaker 6: They have. You know, more, half of our customers make

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Speaker 6: over one hundred thousand dollars in annual income. So it's

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Speaker 6: not sort of like the paycheck to paycheck customer as

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Speaker 6: maybe some people think.

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Speaker 2: Yep.

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Speaker 6: And we also have much larger customers with big accounts.

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Speaker 6: We recently have been introducing matches. In fact, we rolled

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Speaker 6: out another initiative one percent unlimited pose and Match into

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Speaker 6: Robinhood for all dollars deposited for our Gold members. So basically,

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Speaker 6: most financial firms charge you a percentage to keep your

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Speaker 6: money there as a management fee. We're paying you a

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Speaker 6: percentage to move your money with us. And these types

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Speaker 6: of offers have really attracted people with much bigger accounts.

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Speaker 6: We've had customers with tens of millions of dollars moving

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Speaker 6: those accounts to Robinhood and they've been very happy with

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Speaker 6: the experience. So we have been adding capabilities to serve

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Speaker 6: customers across the entire market, not just sort of in

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Speaker 6: that middle tier, but also people with more money and

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Speaker 6: people with less who are just getting started. We also

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Speaker 6: would like to serve them and have been focusing on

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Speaker 6: that demographic since day one and vlat.

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Speaker 7: When I talk to skeptics, they point out that you

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Speaker 7: guys are heavily reliant on options, trading crypto volumes, and

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Speaker 7: that driving the business. Paul mentioned their huge run up

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Speaker 7: over the last twelve months.

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Speaker 4: It's still down.

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Speaker 7: Forty eight percent from the IPO price. What is the

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Speaker 7: kind of mission in the next coming months and years

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Speaker 7: for the company to get back to that IPO price

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Speaker 7: and trade higher.

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Speaker 6: Well, I think we've been doing really well focusing on

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Speaker 6: the inputs of the business. I can't really control the

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Speaker 6: stock price directly, but if we're growing revenues, if we're

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Speaker 6: diversifying revenues, if we're launching innovative new products for our customers,

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Speaker 6: I think we can kind of grow through market headwinds

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Speaker 6: and high interest rate environment and be sort of like

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Speaker 6: a company that thrives in all conditions. And you mentioned

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Speaker 6: the revenues and options trading and all these things. But

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Speaker 6: what's happened in the past couple of years is the

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Speaker 6: revenue profile of the business has diversified as we've rolled

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Speaker 6: out all these products. As of the last earnings report

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Speaker 6: several earnings calls, more than half of the revenues actually

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Speaker 6: net interest margin, not even transaction base. So as we

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Speaker 6: add more of these products, like the five percent yield

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Speaker 6: on your cash, the profile of the business has also changed.

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Speaker 3: Our thanks to Robinhood, co founder and Ceenev, we.

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Speaker 4: Moved out of politics. President Joe Biden has gained ground

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Speaker 4: against Republican Donald Trump and six of the seven key

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Speaker 4: swinging states, and significantly so and at least two of them.

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Speaker 4: The results make for the Democrats the strongest position yet.

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Speaker 4: In a monthly Bloomberg News Morning Console Poll.

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Speaker 3: For more on this poll, we were joined by Mark Niquett,

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Speaker 3: Bloomberg Real Economy Team reporter. We first asked Mark to

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Speaker 3: break down some of the poll's findings.

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Speaker 8: The poll shows it's a monthly tracking poll that we've

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Speaker 8: been doing since October, and it shows that Trump's still

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Speaker 8: doing pretty well in Georgia, Arizona, Nevada are the most

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Speaker 8: significant findings is that Biden has improved his standing in Michigan, Wisconsin,

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Speaker 8: and Pennsylvania, sort of the blue Wall. I think these

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Speaker 8: states are going to decide the election, and he needs

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Speaker 8: to to win these states if he's going to get

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Speaker 8: a second term. In Wisconsin, Biden now holds one point

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Speaker 8: lead over Trump after trailing and by four points in February.

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Speaker 8: In Pennsylvania, the candidates are tied after Trump had a

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Speaker 8: six point lead in February, and they're also tied in Michigan.

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Speaker 3: Any common denominator here, Marcus to what might be driving

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Speaker 3: of these poll numbers.

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Speaker 8: The timing of the poll was interesting. It was conducted

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Speaker 8: March eighth through the fifteenth in the swing states, and

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Speaker 8: March eighth is a day after Biden's State of the

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Speaker 8: Union address, which was pretty fiery, and I think, you know,

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Speaker 8: alleviated some Democratic concerns about the president's age and his

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Speaker 8: fitness to take on Trump a second time in a rematch.

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Speaker 8: And it's also midway about March twelfth is Super Tuesday,

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Speaker 8: when both Biden and Trump sort of clinch the respective nominations.

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Speaker 8: They got enough delegates to clinch, so it kind of

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Speaker 8: really made it a binary choice. You know, we knew

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Speaker 8: this was going to be the outcome, but I think

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Speaker 8: the Democrats in particular, we're thinking that until it was

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Speaker 8: really clear in voters' minds that this was going to

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Speaker 8: be a rematch and it was Trump or Biden, that's

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Speaker 8: their choices, that you know, Biden was not going to

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Speaker 8: do as well in the polls. So this is sort

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Speaker 8: of the first poll that you know, we have clearly

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Speaker 8: established that it's going to be a Trump Biden real match.

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Speaker 4: Are voters voting because they like the candidates or because

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Speaker 4: they don't like the other one?

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Speaker 8: Well, Interestingly, our polls showed that in the case of Trump,

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Speaker 8: most of the support is coming from people who like Trump.

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Speaker 8: Only three and ten Trump supporters said they were voting

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Speaker 8: for Trump because they didn't like Biden. They're essentially voting

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Speaker 8: against Biden. But the case was different for Biden. About

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Speaker 8: half the supporters of Biden so and they were voting

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Speaker 8: for the president essentially as a vote against Trump. They

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Speaker 8: didn't want to see Trump get back into the White House.

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Speaker 8: There was even more pronounced in Wisconsin, were like six

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Speaker 8: and ten of the supporters of Biden were voting for

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Speaker 8: him because they were voting against Trump.

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Speaker 4: To that point, are those voters more sticky or not? Like,

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Speaker 4: is the anti vote stickier than the pro vote?

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Speaker 2: Well?

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Speaker 8: Is what we're going to find out is what's more motivating, right,

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Speaker 8: support for your candidate or desire not to see the

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Speaker 8: other candidate win. You know, I think Trump has benefited

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Speaker 8: over time from enthusiastic support from his base and base

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Speaker 8: turning out board for him, but the negative feeling can

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Speaker 8: also be a very strong motivating factor, could drive folks

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Speaker 8: to the polls specifically to vote against Donald Trump because

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Speaker 8: they don't want to see him back in the lighthouse.

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Speaker 8: But we're going to find out what's more motivating, you know,

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Speaker 8: voting for your guy or voting against the other guy.

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Speaker 4: All right, great stuff, really appreciate it, Thank you very much.

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Speaker 4: We look forward to the next poll as well Mark Nkatt,

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Speaker 4: He's Bloomberg Real Economy reporter, joining us in the latest

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Speaker 4: Morning Console poll.

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Speaker 3: Coming up on the program, we'll discuss why Apple's iPhone

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Speaker 3: shipments are falling in China. You're listening to Bloomberg Intelligence

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Speaker 3: on Bloomberg Radio, providing in that research and data on

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Speaker 3: two thousand companies in one hundred and thirty industries. You

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Speaker 3: can access Bloomberg Intelligence via b I go in the terminal.

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Speaker 4: Oh, Paul Sweeney and I'm Alex Steel and this is Bloomberg.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Affo card playing Android

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Speaker 2: Auto with the Bloomberg Business App. Listen on demand where

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 4: We look next at the aerospace industry in Boeing. Earlier

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Speaker 4: this week, we got news that Boeing CEO Dave Calhoun

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Speaker 4: is stepping down at the end of this year. It's

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Speaker 4: all part of a leadership overhaul.

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Speaker 3: This comes as a planemaker has been dealing with the

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Speaker 3: aftermath of a near catastrophic fuselage failure on a seven

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Speaker 3: thirty seven Max nine aircraft early this year.

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Speaker 4: Boeing also said the chairman, Larry Kellner, will not stand

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Speaker 4: for reelection and stand deal. Chief of Boeing's commercial airplane

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Speaker 4: division is departing. He'll be replaced by Chief operating Officer

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Speaker 4: Stephanie Pope.

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Speaker 3: For more, we're joined by George ferguson Bloomberg Intelligence, senior

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Speaker 3: aerospace analysts. We first asked George for his reaction to

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Speaker 3: the news.

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Speaker 9: My reaction was, you know, we thought Dave Calhoun probably

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Speaker 9: would be going. I hate to sort of wish that

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Speaker 9: in anybody, but it seemed that, you know, the problems

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Speaker 9: in the manufacturing business just there were just too many

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Speaker 9: of them over too long a period of time to

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Speaker 9: say that he was as effectual, if that's a right words,

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Speaker 9: as he should have been at bringing everything, you know,

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Speaker 9: back into order. It does seem weird that it's going

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Speaker 9: to take them till the end of twenty twenty four

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Speaker 9: to find his replacement. There's a lot of things that

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Speaker 9: have to happen between now and then that the company

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Speaker 9: just can't wait for. They've got to serve to the

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Speaker 9: FAA their view and how they're going to stabilize their

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Speaker 9: production process, and at the same time, right they've got

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Speaker 9: to start to increase build rates so they can improve

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Speaker 9: profits and cash flow. They can't wait a year on

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Speaker 9: that either. So there's a lot of super important things

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Speaker 9: that are happening this year to wait till the end

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Speaker 9: of the year to replace the CEO that doesn't seem

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Speaker 9: to have been able to get that job done well.

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Speaker 9: It seems like a lengthy timeline to me, But it

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Speaker 9: may just be that the board was flat footed and

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Speaker 9: realizing that the CEO had to go and as nowhere

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Speaker 9: in a search and so they've got to start from

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Speaker 9: scratch here and figure out who the next person is.

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Speaker 3: What can you tell us about Stephanie Pope. She's going

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Speaker 3: to be stepping up and taking a big role with

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Speaker 3: the aircraft business.

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Speaker 9: Yeah, so she's been around for a while and she's

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Speaker 9: been CFO of that aircraft business. So it seems like

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Speaker 9: a logical in side choice. But I think when you

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Speaker 9: have a you know, ahead of that department stand deal

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Speaker 9: who's leaving after thirty plus years of the company, they're

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Speaker 9: hard shoes to fill. You look around internally for who could.

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Speaker 7: Be the next person.

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Speaker 9: The CFO is always in particularly decent shape because they

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Speaker 9: understand at least all the financials about the business. She's

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Speaker 9: also had, you know, had positions at Boeing Global Services,

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Speaker 9: which is a super successful business inside Boeing, high teens margins.

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Speaker 9: To me, the only thing I don't see in her

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Speaker 9: background is that manufacturing skill set. I think the next

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Speaker 9: CEO has to really have a manufacturing engineering mindset background,

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Speaker 9: and I think that's that's what I don't quite see there.

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Speaker 4: Sort Of like Larry culp No.

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Speaker 9: I mean Lowry obviously, he's pretty busy, and honestly, the

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Speaker 9: job he has now a GE could be better profits,

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Speaker 9: more fun than Boeing because there's a lot of great

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Speaker 9: technology inside GE and there's a huge bow wave of

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Speaker 9: a lot of maintenance coming that really high margin. I

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Speaker 9: think you'd really have to work hard to get like.

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Speaker 4: But George, I mean, does he like fun or does

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Speaker 4: he like a challenge? I mean he was the one

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Speaker 4: that went did GE to begin with.

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Speaker 9: I do think he likes a challenge, and I think

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Speaker 9: he showed his ability to navigate it really well at GE.

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Speaker 9: But again, you know, they're just kind of getting to

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Speaker 9: the super fun part. I think there's still challenge inside GE,

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Speaker 9: but he's just getting to the point where he's got

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Speaker 9: aerospace broken out and he can really make a lot

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Speaker 9: of hay here. So someone like him is absolutely what

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Speaker 9: I think Boeing needs. I don't know, maybe he's got

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Speaker 9: a you know, maybe there's a protege somewhere inside there

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Speaker 9: that they could tap or something.

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Speaker 3: Thinking about who could be the next CEO. Here is

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Speaker 3: the expectation, George, that it'll come from an external candidate

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Speaker 3: or internally And are there any early front runners? Do

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Speaker 3: you think?

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Speaker 7: Yeah?

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Speaker 9: So, I definitely think it's going to come external, right.

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Speaker 9: I just think the fact that you've seen this purge

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Speaker 9: of the CEO, you see the purge of commercial airplane president,

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Speaker 9: means that we've depleted some talent there. There was you know,

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Speaker 9: former heads of boeing'smmercial airplanes that had left when Muhlenberg

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Speaker 9: came on. They could potentially be, you know, in the

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Speaker 9: running for something like this. I know a couple of

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Speaker 9: them wanted the CEO job and didn't get it, But

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Speaker 9: I'm almost positive you're talking about something that's going to

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Speaker 9: be outside. Ray Connor is the name that comes to mind.

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Speaker 9: Used to be the head of Boeing Commercial. Not sure

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Speaker 9: what he's doing now, but he might be on the list.

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Speaker 4: Similar what's the culture like at a Boeing in terms

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Speaker 4: of getting an outsider?

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Speaker 9: You know, I think Boeing is one of those companies.

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Speaker 9: I think you get a job and you stick around

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Speaker 9: for lots and lots of years, and so, you know,

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Speaker 9: I think that bringing people in from outside is something

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Speaker 9: you do only when you have a breakdown like you've

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Speaker 9: had now. Right under normal circumstances, there would be very

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Speaker 9: clean lines of succession inside Boeing. You know, you would

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Speaker 9: move up through the ranks and expect opportunities as you rose.

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Speaker 9: But there's been so much tumult in this business over

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Speaker 9: the last I don't know, you know, four years or

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Speaker 9: so that I think that it's a time in their

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Speaker 9: history where they're they're going to be going outside a

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Speaker 9: lot more to replenish some of these senior management ranks.

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Speaker 9: So they've just they've turned over a bunch of it.

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Speaker 3: And George, it seems like this is no quick fix here.

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Speaker 3: It seems like it was years, maybe even decades in

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Speaker 3: the making in terms of maybe the deterioration of some

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Speaker 3: of their quality controls.

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Speaker 2: Here.

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Speaker 3: When you talk to an industry folks, people at Boeing,

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Speaker 3: is there a pathway to kind of get back to

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Speaker 3: where they were in terms of quality.

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Speaker 9: I think there is, but it's a lot of attention

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Speaker 9: to detail. And like you said, it's it's slow work,

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Speaker 9: so you can't sort of wave a wand I think

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Speaker 9: and make it, you know, happen overnight. Really, you know,

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Speaker 9: I think has a lot to do with people and processes, right,

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Speaker 9: And that's why I think you want someone like a

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Speaker 9: Larry Koppe who loves people in processes. You need and

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Speaker 9: I mean that just takes time. You need a lot more,

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Speaker 9: you need training, you need, you need, you know, in

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Speaker 9: the interim, you probably need to beef up some of

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Speaker 9: the oversight. You need to get into your supply chain.

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Speaker 9: You need to give them a hug, you need to

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Speaker 9: help them out, you know, help them bring you quality products.

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Speaker 9: It's not a hey, how are you going to make

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Speaker 9: my margins work better in the next couple of years discussion, right,

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Speaker 9: It's really, like I said, it's people and processes. It's

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Speaker 9: the softer side of management. I think Boeing over the

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Speaker 9: last decade or two really was more into the how

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Speaker 9: do I squeeze you to get you know, you to

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Speaker 9: give me products at a cheaper price. So I could

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Speaker 9: build my margins recipe for success. It wasn't that wasn't

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Speaker 9: quite the term, but there was a term like that

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Speaker 9: that Boeing was using with their suppliers. It was all

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Speaker 9: about squeezing them. So the supply chain is all. You know,

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Speaker 9: they've been scarred. They're worried about when Boeing comes to

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Speaker 9: talk to them, and I think they need to get

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Speaker 9: to a world where when Boeing shows up, that they

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Speaker 9: think someone's there to help them and is looking out

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Speaker 9: for their best.

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Speaker 3: Interests our Thanks to George Ferguson, Bloomberg Intelligence, Senior Aerospace Analyst.

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Speaker 4: We moved next to big tech and Apple. Earlier in

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Speaker 4: the week, we reported that Apple iPhone shipments in China

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Speaker 4: fell about thirty three percent in February from a year earlier,

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Speaker 4: and that's citing data from the China Academy of Information

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Speaker 4: and Communications Technology.

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Speaker 3: For more on this, we were joined by man Deep Sing,

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Speaker 3: Bloomberg Intelligence Senior Tech analysts. We first asked man Deep

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Speaker 3: why he thinks China iPhone shipments are falling.

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Speaker 5: Clearly, you know they have a problem both with the

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Speaker 5: demand for iPhone as well as competition. I think one

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Speaker 5: of the things that doesn't get as much attention right

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Speaker 5: now is the fact that Huawei has a comparable phone

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Speaker 5: to iPhone, and the reason they have been able to

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Speaker 5: do it very quickly is because of the supply chains

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Speaker 5: that Apple created in the region. So a lot of

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Speaker 5: those suppliers are actually making the phone for Huawei and

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Speaker 5: they don't have to do much because Apple is at

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Speaker 5: the cutting edge when it comes to the chip, the assembly,

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Speaker 5: and so all the supply chains. Guys are actually diversifying

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Speaker 5: themselves and making phones for Shami Huawei. Huawei is the

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Speaker 5: notable share gainer here, but that just goes to show that,

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Speaker 5: you know, they are also diversifying.

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Speaker 3: I don't know the answer. I can't think of an

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Speaker 3: answer for Apple, particularly on a supply chain. I can

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Speaker 3: pencil out China going too close to zero in terms

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Speaker 3: of sales. I could pencil that out, put a multiple

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Speaker 3: on it, and there we go. There is no Apple

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Speaker 3: without China. In terms of supply chain. There is no

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Speaker 3: Apple without that supply chain.

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Speaker 5: And for the longest time we thought the risk for

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Speaker 5: the suppliers is if Apple is not giving business to them,

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Speaker 5: they don't have anything to manufacture. Well, guess what they have,

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Speaker 5: you know, a Huawei and the local guys, and so

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Speaker 5: that's how they are going about the business right now.

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Speaker 4: So if I'm Tim Cook and I have seen this

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Speaker 4: for years and I want to diversify my supply chain,

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Speaker 4: what does that look like? What is that?

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Speaker 5: I mean, it's a we did a big report. It's

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Speaker 5: a multi year yes, and you know, the assembly part

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Speaker 5: is already moving to India. We've seen a big ramp

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Speaker 5: up in India. Almost twenty two percent of the phones

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Speaker 5: last year iPhones, not the highest end, but a lot

439
00:21:49,480 --> 00:21:52,720
Speaker 5: of the models were assembled in India, and gradually they

440
00:21:52,800 --> 00:21:56,199
Speaker 5: will have to diversify, you know, the assembly side. The

441
00:21:56,320 --> 00:21:59,679
Speaker 5: problem they're running into is the all the components that

442
00:21:59,720 --> 00:22:03,719
Speaker 5: you need to manufacture an iPhone and the complex device

443
00:22:03,760 --> 00:22:06,919
Speaker 5: that it is. It's not that easy to just you know,

444
00:22:07,119 --> 00:22:09,920
Speaker 5: lift and shift your supply chains into a different regions.

445
00:22:10,080 --> 00:22:13,720
Speaker 5: There's so many dependencies both with TSMC and the other

446
00:22:13,800 --> 00:22:18,560
Speaker 5: suppliers that feed into the Chinese assembly. So all that

447
00:22:18,680 --> 00:22:21,240
Speaker 5: needs to be relocated, and it will happen. It's just

448
00:22:21,359 --> 00:22:24,560
Speaker 5: it's a multi year effort, and right now the focus

449
00:22:24,680 --> 00:22:27,960
Speaker 5: is also shifting towards on device AI. I feel the

450
00:22:28,040 --> 00:22:31,879
Speaker 5: reason why Chinese government is really cracking down is because

451
00:22:31,920 --> 00:22:34,840
Speaker 5: the next wave of this is AI will run on device,

452
00:22:35,119 --> 00:22:38,600
Speaker 5: and they don't want a US based company probably to

453
00:22:38,640 --> 00:22:41,919
Speaker 5: be running AI you know on device in the in

454
00:22:41,960 --> 00:22:43,960
Speaker 5: the region. So that's the other aspect of THEIRS.

455
00:22:44,480 --> 00:22:47,560
Speaker 3: A bear case could be made here, long term, multi

456
00:22:47,640 --> 00:22:50,640
Speaker 3: year bear case here. I've got supply chain issues. I've

457
00:22:50,680 --> 00:22:52,840
Speaker 3: already zeroed out my China revenue and.

458
00:22:52,840 --> 00:22:55,359
Speaker 4: Aris's revenue is going to be changing because of all

459
00:22:55,359 --> 00:22:56,760
Speaker 4: the new laws right in terms.

460
00:22:56,600 --> 00:22:59,760
Speaker 5: Of core cases could be Yeah, the DOJ lawsuit, it's

461
00:22:59,800 --> 00:23:02,959
Speaker 5: come at the worst time for Apple. I mean, they

462
00:23:03,000 --> 00:23:05,480
Speaker 5: should be doubling down on other markets where they can

463
00:23:05,520 --> 00:23:08,960
Speaker 5: acquire share that they may end up losing in China. Obviously,

464
00:23:09,720 --> 00:23:12,480
Speaker 5: the dj lawsuit is not helping. And the EU regulation

465
00:23:12,560 --> 00:23:16,240
Speaker 5: they are digital markets acts, so from a regulatory perspective,

466
00:23:16,280 --> 00:23:19,120
Speaker 5: you're right. I think the bear case is really around

467
00:23:19,160 --> 00:23:23,760
Speaker 5: the revenue exposure and I'm sure the supply chains they'll

468
00:23:23,840 --> 00:23:26,520
Speaker 5: moddel through in terms of making sure they can still

469
00:23:26,560 --> 00:23:28,919
Speaker 5: make the phone. And you know, as long as the

470
00:23:29,000 --> 00:23:31,879
Speaker 5: manufacturers or they are getting the business, they don't mind

471
00:23:32,119 --> 00:23:36,399
Speaker 5: Apple continuing to you know, have the supply chains remain

472
00:23:36,480 --> 00:23:39,600
Speaker 5: intact there. But I think the hard part would be

473
00:23:39,640 --> 00:23:44,720
Speaker 5: the EPs drawdown as a result of the Chinese revenue

474
00:23:44,720 --> 00:23:45,200
Speaker 5: going down.

475
00:23:45,359 --> 00:23:47,480
Speaker 4: Why can't they just build stuff in the US? Like,

476
00:23:47,560 --> 00:23:49,200
Speaker 4: I know, it's not as easy as like here's a plant,

477
00:23:49,240 --> 00:23:50,720
Speaker 4: let's PLoP it down in the US. But like why

478
00:23:50,800 --> 00:23:52,679
Speaker 4: is India the next port of call? Like why not

479
00:23:52,760 --> 00:23:53,240
Speaker 4: the US?

480
00:23:53,800 --> 00:23:56,920
Speaker 5: Well, again, it's the components. So think of the bill

481
00:23:56,960 --> 00:24:00,720
Speaker 5: of Yeah, there are certain components that can only be

482
00:24:00,880 --> 00:24:04,840
Speaker 5: sourced over there, and over time they can move things around.

483
00:24:04,840 --> 00:24:07,800
Speaker 5: But if you're talking about, you know, a twelve hundred

484
00:24:07,840 --> 00:24:11,680
Speaker 5: dollars phone, it has a certain bill of materials. Things

485
00:24:11,680 --> 00:24:13,520
Speaker 5: are done in a certain way. That's why it comes

486
00:24:13,600 --> 00:24:15,879
Speaker 5: at that cost. We're not talking about a five thousand

487
00:24:15,960 --> 00:24:16,560
Speaker 5: dollars phone.

488
00:24:16,680 --> 00:24:18,320
Speaker 4: You remember when the iPhone was coming out of a

489
00:24:18,400 --> 00:24:20,359
Speaker 4: thousand and it was like, no one's going to pay that.

490
00:24:20,520 --> 00:24:23,000
Speaker 4: This is insane, this is ridiculous. Now it's like twelve

491
00:24:23,080 --> 00:24:23,720
Speaker 4: hundred whatever.

492
00:24:23,880 --> 00:24:24,520
Speaker 2: Yeah, exactly.

493
00:24:24,960 --> 00:24:27,760
Speaker 3: The market adapts as we've seen here, all right, So

494
00:24:28,200 --> 00:24:30,640
Speaker 3: if you're a bull, are you simply saying there's two

495
00:24:30,640 --> 00:24:32,800
Speaker 3: billion units out there? They'll forget to way to make

496
00:24:32,800 --> 00:24:35,879
Speaker 3: money off of those things and that ecosystem.

497
00:24:35,280 --> 00:24:37,560
Speaker 5: I mean The bull case is still the ecosystem and

498
00:24:37,600 --> 00:24:40,280
Speaker 5: the fact that they have an install base of one

499
00:24:40,320 --> 00:24:43,439
Speaker 5: point three billion users you know who still have the

500
00:24:43,480 --> 00:24:46,119
Speaker 5: iPhone and they will refresh the phone at some point,

501
00:24:46,200 --> 00:24:50,520
Speaker 5: and everyone still likes the iOS ecosystem. I think what

502
00:24:50,720 --> 00:24:54,639
Speaker 5: Huawei is doing is laying out a path where people

503
00:24:54,760 --> 00:24:57,600
Speaker 5: can move out of the iOS ecosystem, and then the

504
00:24:57,640 --> 00:25:00,800
Speaker 5: whole AI thing and the regulatory stuff, I think is

505
00:25:01,280 --> 00:25:03,359
Speaker 5: just making it worse. Word the timing of it is

506
00:25:03,440 --> 00:25:05,000
Speaker 5: just worse for Apple right now.

507
00:25:05,280 --> 00:25:08,440
Speaker 3: The Developer conference in June, right the pressure is gonna

508
00:25:08,440 --> 00:25:09,040
Speaker 3: be big for.

509
00:25:09,000 --> 00:25:09,480
Speaker 10: Them to reach.

510
00:25:09,640 --> 00:25:13,240
Speaker 5: And remember they're looking at leveraging by do now. The

511
00:25:13,320 --> 00:25:17,200
Speaker 5: reason for leveraging by Doo for AI in Chinese region

512
00:25:17,280 --> 00:25:19,359
Speaker 5: is just to please you know that, the fact that

513
00:25:19,359 --> 00:25:23,000
Speaker 5: they're using a local AI player as opposed to deploying

514
00:25:23,040 --> 00:25:24,080
Speaker 5: their own ais our.

515
00:25:24,080 --> 00:25:27,000
Speaker 3: Thanks to Mandy, you've seeing Bloomberg Intelligence senior tech analyst.

516
00:25:26,920 --> 00:25:28,639
Speaker 4: Coming up on the program a look at how Danish

517
00:25:28,680 --> 00:25:32,240
Speaker 4: Drugmakernovo Nordist is expanding its treatment for cardiovascular disease.

518
00:25:32,560 --> 00:25:35,959
Speaker 3: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing research

519
00:25:35,960 --> 00:25:37,920
Speaker 3: and data on two thousand companies and one hundred and

520
00:25:37,920 --> 00:25:40,840
Speaker 3: thirty injuries. You can access Bloomberg Intelligence via b I

521
00:25:40,920 --> 00:25:41,679
Speaker 3: go on the terminal.

522
00:25:41,800 --> 00:25:45,280
Speaker 4: I'm Paul Sweeney and am Alex Steel, and this is Bloomberg.

523
00:25:48,560 --> 00:25:52,440
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

524
00:25:52,520 --> 00:25:55,560
Speaker 2: weekdays at ten am Eastern on Apple card Play and

525
00:25:55,560 --> 00:25:58,440
Speaker 2: Android Auto with the Bloomberg Business app. You can also

526
00:25:58,560 --> 00:26:02,080
Speaker 2: listen live on Amazon Alexa from our flagship New York station,

527
00:26:02,440 --> 00:26:07,120
Speaker 2: Just say Alexa playing Bloomberg eleven thirty the mood.

528
00:26:07,160 --> 00:26:09,920
Speaker 4: Now to the cruise operator Carnival, the company reporting first

529
00:26:09,960 --> 00:26:13,240
Speaker 4: quarter revenue the beat analyst expectations. The company also raising

530
00:26:13,240 --> 00:26:16,080
Speaker 4: its profit forecast for the year on record bookings volume,

531
00:26:16,160 --> 00:26:18,919
Speaker 4: and this includes high demand for cruise vacations combined with

532
00:26:18,960 --> 00:26:21,760
Speaker 4: cost management including debt, refinancing and repayment.

533
00:26:21,920 --> 00:26:24,160
Speaker 3: For more on this, we're joined by Jody Lorie, Bloomberg

534
00:26:24,160 --> 00:26:26,960
Speaker 3: Intelligence credit analysts. We first asked for her take on

535
00:26:27,000 --> 00:26:28,520
Speaker 3: Carnival's first quarter earnings.

536
00:26:28,600 --> 00:26:30,720
Speaker 1: I would say that when you look at Carnival, it's

537
00:26:30,760 --> 00:26:33,800
Speaker 1: really a cash flow story. It really is a credit

538
00:26:33,920 --> 00:26:37,080
Speaker 1: story more than anything else. And the bookings are sort

539
00:26:37,080 --> 00:26:40,080
Speaker 1: of confirming that. Now the booking level if you include

540
00:26:40,119 --> 00:26:42,720
Speaker 1: short and long term, it's actually not at the peak,

541
00:26:42,760 --> 00:26:45,040
Speaker 1: which was second quarter of last year, but it's right

542
00:26:45,119 --> 00:26:48,320
Speaker 1: near the peak, and based on what management is saying,

543
00:26:48,359 --> 00:26:51,679
Speaker 1: it sounds like second quarter of this year my top

544
00:26:52,000 --> 00:26:55,280
Speaker 1: second quarter of last year. That said, I think more importantly,

545
00:26:55,320 --> 00:26:58,040
Speaker 1: the company is starting to attack some of its debt load,

546
00:26:58,160 --> 00:27:02,960
Speaker 1: particularly in of its secured areas, which will help to

547
00:27:03,000 --> 00:27:05,440
Speaker 1: sort of free up the balance sheet a little bit,

548
00:27:05,720 --> 00:27:09,119
Speaker 1: provide some flexibility, make it so that the company has

549
00:27:09,200 --> 00:27:11,560
Speaker 1: an ability to sort of make its way back to

550
00:27:11,640 --> 00:27:14,720
Speaker 1: high grade ratings as it's been targeting for twenty twenty six.

551
00:27:15,119 --> 00:27:16,920
Speaker 7: H Jody, you call that out just using the FA

552
00:27:17,000 --> 00:27:20,880
Speaker 7: function on the terminal Carnival cruise almost thirty two billion

553
00:27:20,920 --> 00:27:23,440
Speaker 7: dollars in debt compared to a market cap of twenty

554
00:27:23,480 --> 00:27:26,879
Speaker 7: one billion dollars. How does that stack up to the

555
00:27:27,040 --> 00:27:30,160
Speaker 7: likes of Royal Caribbean or Norwegian and some of those

556
00:27:30,200 --> 00:27:31,920
Speaker 7: other piers in the cruise liner space.

557
00:27:32,960 --> 00:27:35,880
Speaker 1: So yeah, Carnival was able to bring down their debt

558
00:27:35,880 --> 00:27:40,160
Speaker 1: load to about thirty billion over the past year, and

559
00:27:40,440 --> 00:27:43,399
Speaker 1: it's likely that it'll probably end this year around that

560
00:27:43,520 --> 00:27:45,960
Speaker 1: level based on what they're taking in in terms of ships.

561
00:27:46,520 --> 00:27:49,280
Speaker 1: That said, it is significantly higher than Royal, it is

562
00:27:49,280 --> 00:27:54,320
Speaker 1: significantly higher than Norwegian, but on a leverage perspective, it's

563
00:27:54,320 --> 00:27:56,000
Speaker 1: sort of middle of the pack at the moment as

564
00:27:56,000 --> 00:27:59,280
Speaker 1: compared to Royal and Norwegian. Royal is a few quarters

565
00:27:59,359 --> 00:28:03,160
Speaker 1: ahead of Carnival in terms of its deleveraging strategy. Management

566
00:28:03,200 --> 00:28:06,280
Speaker 1: at Royal actually bumped up their narrative around getting to

567
00:28:06,440 --> 00:28:09,440
Speaker 1: investment grade level metrics to do it earlier than twenty

568
00:28:09,520 --> 00:28:13,119
Speaker 1: twenty five, and Carnival stuck to that twenty twenty six number,

569
00:28:13,280 --> 00:28:15,600
Speaker 1: which I think is descriptive of being a little bit

570
00:28:15,680 --> 00:28:20,480
Speaker 1: more conservative, particularly with the backdrop of everything happening globally,

571
00:28:20,600 --> 00:28:24,240
Speaker 1: not just the Baltimore Bridge situation, but also at the

572
00:28:24,240 --> 00:28:27,600
Speaker 1: Red Sea and everywhere else that's affecting Carnival more broadly

573
00:28:28,000 --> 00:28:29,960
Speaker 1: because of its more global nature.

574
00:28:30,840 --> 00:28:33,720
Speaker 3: I'm looking at again, the FA function is barely called out.

575
00:28:33,720 --> 00:28:35,639
Speaker 3: I still see, you know, three four billion dollars in

576
00:28:35,960 --> 00:28:39,040
Speaker 3: capex every year. Are they buying ships or what are

577
00:28:39,080 --> 00:28:40,200
Speaker 3: they spending that kind of money on?

578
00:28:41,040 --> 00:28:45,400
Speaker 1: Yeah, the three four billion dollars of CAPEX is primarily ship.

579
00:28:45,760 --> 00:28:48,720
Speaker 1: There is a portion of it that is in terms

580
00:28:48,720 --> 00:28:51,280
Speaker 1: of maintenance CAPEX right, your ships get old, you have

581
00:28:51,320 --> 00:28:54,040
Speaker 1: to update them every few years. You have all these

582
00:28:54,040 --> 00:28:56,760
Speaker 1: sort of different requirements related to it. They also have

583
00:28:56,920 --> 00:28:59,280
Speaker 1: that celebration key that they're rolling out on, which is

584
00:28:59,280 --> 00:29:02,479
Speaker 1: on the Grand Behind and that's to rival their peers,

585
00:29:02,520 --> 00:29:07,680
Speaker 1: which have been investing really heavily also into island presence, right.

586
00:29:07,920 --> 00:29:10,640
Speaker 1: The Caribbean island presence is a money maker for all

587
00:29:10,680 --> 00:29:13,880
Speaker 1: of them. It's this captive audience. They bring the people

588
00:29:13,920 --> 00:29:16,240
Speaker 1: who are on their ships to these islands and to

589
00:29:16,360 --> 00:29:18,400
Speaker 1: these sections of islands, like you know, not the whole

590
00:29:18,440 --> 00:29:22,760
Speaker 1: Grand Bahama, but that carved out sections specifically for carnival,

591
00:29:22,880 --> 00:29:25,040
Speaker 1: and you know, wine and dine them get them to

592
00:29:25,040 --> 00:29:27,840
Speaker 1: spend extra money. That onboard spend is really where you

593
00:29:27,840 --> 00:29:28,240
Speaker 1: see that.

594
00:29:28,200 --> 00:29:30,960
Speaker 7: Margin you mentioned wining and dining. I just want to

595
00:29:31,000 --> 00:29:33,280
Speaker 7: look at some of the other areas that you cover

596
00:29:33,800 --> 00:29:36,880
Speaker 7: talking about wind resorts, MGM, Hilton, all the funds, all

597
00:29:36,920 --> 00:29:38,360
Speaker 7: the fund stuff. Yeah, you have the best job. I

598
00:29:38,400 --> 00:29:41,200
Speaker 7: hope you take advantage of it. But when you look

599
00:29:41,240 --> 00:29:44,280
Speaker 7: at the underlying business dynamics of some of the other

600
00:29:44,320 --> 00:29:46,760
Speaker 7: areas that you cover, what are we seeing in terms

601
00:29:46,800 --> 00:29:49,800
Speaker 7: of hotel demand and hotel sales and what that means

602
00:29:49,800 --> 00:29:50,600
Speaker 7: from a credit.

603
00:29:50,320 --> 00:29:55,080
Speaker 1: Perspective, so hotel demands, hotel sales. It is a bit

604
00:29:55,240 --> 00:29:58,720
Speaker 1: mixed regionally, but I think overall we're pretty optimistic about

605
00:29:58,760 --> 00:30:00,680
Speaker 1: this year, and that's a function of the fact that

606
00:30:00,720 --> 00:30:03,960
Speaker 1: business and conference is really picking up this year as

607
00:30:03,960 --> 00:30:06,280
Speaker 1: compared to the past few years. You know, we're at

608
00:30:06,280 --> 00:30:09,080
Speaker 1: that point where that post pandemic narrative has sort of

609
00:30:09,080 --> 00:30:12,200
Speaker 1: played out and we're getting to more normalized. That said,

610
00:30:12,240 --> 00:30:15,800
Speaker 1: there are areas of expansion and growth. We're also seeing

611
00:30:15,800 --> 00:30:19,880
Speaker 1: that all inclusive area be a much more attractive area

612
00:30:19,920 --> 00:30:21,440
Speaker 1: for a lot of these companies, and I think we

613
00:30:21,520 --> 00:30:24,280
Speaker 1: are seeing some rivalry across the board when it comes

614
00:30:24,320 --> 00:30:29,880
Speaker 1: to hotels, casinos, cruise lines as these destination opportunities. We're

615
00:30:29,920 --> 00:30:32,720
Speaker 1: talking Las Vegas obviously, not the regional casinos that's a

616
00:30:32,760 --> 00:30:36,560
Speaker 1: little bit different, but Las Vegas, Macau, the cruise lines,

617
00:30:36,560 --> 00:30:38,320
Speaker 1: and the hotels. There's a lot of sort of this

618
00:30:38,440 --> 00:30:41,400
Speaker 1: destination narrative that's going on to get people to spend

619
00:30:41,400 --> 00:30:44,320
Speaker 1: that extra money and to sort of go on vacation, live.

620
00:30:44,240 --> 00:30:45,120
Speaker 3: Life to the fullest.

621
00:30:45,560 --> 00:30:49,120
Speaker 1: Now, we do have these partnerships that are happening between

622
00:30:49,960 --> 00:30:53,080
Speaker 1: Marriott and MGM, but then also we have an MGM

623
00:30:53,160 --> 00:30:56,400
Speaker 1: and carnival relationship, So there is this fluidity that's happening

624
00:30:56,400 --> 00:30:58,560
Speaker 1: within my industry that makes it sort.

625
00:30:58,400 --> 00:31:01,080
Speaker 3: Of interesting and you get a great view on the

626
00:31:01,120 --> 00:31:04,080
Speaker 3: consumer Jody with you know, the coverage you have again

627
00:31:04,440 --> 00:31:07,920
Speaker 3: hotels and casinos and cruise lines. Where are people kind

628
00:31:07,920 --> 00:31:10,720
Speaker 3: of spending their dollar And it seems like they're still

629
00:31:10,760 --> 00:31:14,760
Speaker 3: spending on that whole experiential thing, the experiences. What are

630
00:31:14,800 --> 00:31:16,480
Speaker 3: the companies you cover, what are they saying is to

631
00:31:16,560 --> 00:31:18,600
Speaker 3: the how that's likely to play out?

632
00:31:19,280 --> 00:31:23,160
Speaker 1: So consumers are definitely spending still on experiences. We're still

633
00:31:23,240 --> 00:31:26,000
Speaker 1: very much seeing it now. If you compare twenty twenty

634
00:31:26,000 --> 00:31:29,200
Speaker 1: three twenty twenty two, it's a different sort of narrative

635
00:31:29,200 --> 00:31:32,360
Speaker 1: than twenty twenty three twenty twenty four because the base

636
00:31:32,640 --> 00:31:35,560
Speaker 1: is a much greater, right, if you looked at the

637
00:31:35,600 --> 00:31:38,960
Speaker 1: base going back to twenty twenty one, you're dealing with nothing,

638
00:31:39,560 --> 00:31:42,440
Speaker 1: building on nothing. It's very significant. That said, there still

639
00:31:42,480 --> 00:31:45,760
Speaker 1: is that narrative of growth and that consumer spending on

640
00:31:46,120 --> 00:31:50,440
Speaker 1: experiences where we sort of wonder is what's going to

641
00:31:50,560 --> 00:31:53,320
Speaker 1: happen heading into the second half. That's sort of the

642
00:31:53,720 --> 00:31:56,440
Speaker 1: puzzle piece that isn't quite filled out for us yet,

643
00:31:56,840 --> 00:32:00,800
Speaker 1: where first half into the summer season is very strong.

644
00:32:01,200 --> 00:32:03,320
Speaker 1: We're also seeing that for cruise lines. They're saying that

645
00:32:03,400 --> 00:32:06,440
Speaker 1: going into the twenty twenty five they're seeing strength, and

646
00:32:06,480 --> 00:32:08,400
Speaker 1: that's a function of the fact that people book their

647
00:32:08,440 --> 00:32:11,320
Speaker 1: cruises so far in advance. You don't get that benefit

648
00:32:11,360 --> 00:32:13,640
Speaker 1: in the hotel space, you don't get that benefit as

649
00:32:13,760 --> 00:32:19,640
Speaker 1: much in the vacation arena elsewhere. People don't book vacations

650
00:32:19,680 --> 00:32:23,000
Speaker 1: apart from cruises so far in advance. So I think

651
00:32:23,040 --> 00:32:25,000
Speaker 1: as we head into second half, we'll sort of get

652
00:32:25,040 --> 00:32:28,160
Speaker 1: a feel for how comfortable the consumer is in terms.

653
00:32:27,920 --> 00:32:31,520
Speaker 3: Of spending our Thanks to Jody Lourie Bloomberg Intelligence Credit Analysts,

654
00:32:31,560 --> 00:32:32,040
Speaker 3: we turn.

655
00:32:31,960 --> 00:32:32,960
Speaker 4: Down to the drug space.

656
00:32:33,000 --> 00:32:33,160
Speaker 6: Now.

657
00:32:33,160 --> 00:32:35,240
Speaker 4: This week we heard the Danish weight loss drug maker

658
00:32:35,240 --> 00:32:38,160
Speaker 4: Novo Nordisk has agreed to buy Cardier Pharmaceuticals for up

659
00:32:38,160 --> 00:32:41,120
Speaker 4: to one point one million dollars. This comes as soaring

660
00:32:41,160 --> 00:32:44,120
Speaker 4: demand for obesity drugs continues to drive the more deal

661
00:32:44,200 --> 00:32:45,520
Speaker 4: making for Nova Nordois.

662
00:32:45,680 --> 00:32:48,520
Speaker 3: For more, we were joined by Michael Shaw, Bloomberg Intelligence,

663
00:32:48,520 --> 00:32:51,600
Speaker 3: Senior pharmat Biotech Analysts. We first asked him for some

664
00:32:51,680 --> 00:32:53,160
Speaker 3: context on this deal, but.

665
00:32:53,160 --> 00:32:56,800
Speaker 10: Deal very much in line with kind of Novo's strategic aspirations,

666
00:32:56,920 --> 00:32:59,880
Speaker 10: which is to build a presence in the cordative ast

667
00:32:59,880 --> 00:33:03,720
Speaker 10: to spaced. So prior deals that they've done include a

668
00:33:03,760 --> 00:33:07,000
Speaker 10: deal with KBB for a hypertension asset, a deal with

669
00:33:07,280 --> 00:33:10,040
Speaker 10: care Video for silk investment, So this is very much

670
00:33:10,080 --> 00:33:12,959
Speaker 10: in line with that sort of play in terms of

671
00:33:13,120 --> 00:33:15,200
Speaker 10: you know, the lead asset, it's a drug called CDR

672
00:33:15,280 --> 00:33:18,920
Speaker 10: one three two L, So you know, in simple terms,

673
00:33:19,120 --> 00:33:23,640
Speaker 10: it's designed to block a buyermarker of heart failure. What

674
00:33:23,680 --> 00:33:26,800
Speaker 10: we see with current therapies is you know, current therapies

675
00:33:27,160 --> 00:33:30,960
Speaker 10: kind of slow disease progression, but they don't necessarily you know,

676
00:33:31,040 --> 00:33:32,960
Speaker 10: hold it or reverse it. And that's kind of what

677
00:33:33,080 --> 00:33:34,760
Speaker 10: Nova trying to do with this asset.

678
00:33:35,000 --> 00:33:37,760
Speaker 4: So they're trying to stop it all together and reverse it.

679
00:33:38,280 --> 00:33:38,600
Speaker 5: Yeah.

680
00:33:38,640 --> 00:33:41,880
Speaker 4: Wow, Actually that's amazing. How does this also fit into

681
00:33:41,960 --> 00:33:46,400
Speaker 4: Novo's weight loss drug in that I remember speaking to

682
00:33:46,400 --> 00:33:50,160
Speaker 4: the Nova Nordisk CEO and they're like really really really

683
00:33:50,160 --> 00:33:53,760
Speaker 4: invested in like improving people's overall health. Like the weight

684
00:33:53,840 --> 00:33:57,120
Speaker 4: loss drug isn't about losing weight, it's about relieving the

685
00:33:57,160 --> 00:34:00,800
Speaker 4: pressure that it puts on the heart, it's about relieving diabetes,

686
00:34:00,800 --> 00:34:03,680
Speaker 4: it's about the broader stuff. How do these two work together.

687
00:34:03,960 --> 00:34:08,799
Speaker 10: Could potentially add to Novo's cardiovascular portfolio. So, I mean

688
00:34:08,840 --> 00:34:11,600
Speaker 10: it's still very early stage, but you know, we're seeing

689
00:34:11,640 --> 00:34:14,759
Speaker 10: Novo build this presence in the space. So we've seen

690
00:34:14,840 --> 00:34:19,400
Speaker 10: the outcome status for supplemental approval for GOVI that's also

691
00:34:19,760 --> 00:34:23,799
Speaker 10: you know, pending a approval in heart failure. We've got

692
00:34:23,800 --> 00:34:26,759
Speaker 10: these other passets which I talked about in terms of Zelkaveka, MAAB.

693
00:34:27,360 --> 00:34:30,080
Speaker 10: So it's really just kind of building out that portfolio

694
00:34:30,480 --> 00:34:31,120
Speaker 10: in the space.

695
00:34:31,360 --> 00:34:31,719
Speaker 8: All right.

696
00:34:31,800 --> 00:34:34,719
Speaker 3: So I'm asking for a friend here, Mikey. When is

697
00:34:34,840 --> 00:34:37,480
Speaker 3: Novo Nordisk in a ramp up its production of these

698
00:34:38,080 --> 00:34:40,160
Speaker 3: with gov and ozempic and all that kind of stuff

699
00:34:40,200 --> 00:34:42,720
Speaker 3: to meet demand because it's not even close yet.

700
00:34:43,040 --> 00:34:47,360
Speaker 10: Yeah, I mean, so Novo Holdings obviously did the deal recently.

701
00:34:48,440 --> 00:34:50,759
Speaker 10: I mean production is going to take time to ramp up,

702
00:34:50,920 --> 00:34:53,480
Speaker 10: you know, three four years before you know, these sites

703
00:34:53,640 --> 00:34:57,960
Speaker 10: come online. There's also limited capacity in the market as well.

704
00:34:58,719 --> 00:35:02,120
Speaker 10: I think what's going to help kind of things you know,

705
00:35:02,200 --> 00:35:05,919
Speaker 10: longer term is you know, the potential approvals of oral

706
00:35:06,040 --> 00:35:09,839
Speaker 10: JOLP ones that should hopefully ease some of the you know,

707
00:35:10,000 --> 00:35:11,040
Speaker 10: some of the type.

708
00:35:10,800 --> 00:35:13,400
Speaker 3: Supply and what's the what's the timing on that?

709
00:35:13,719 --> 00:35:16,520
Speaker 10: So twenty seven I would say that sort of time

710
00:35:16,560 --> 00:35:20,000
Speaker 10: frame twenty seven to twenty eight, possibly maybe a year earlier.

711
00:35:20,320 --> 00:35:23,880
Speaker 10: There's several you know, players that are developing oral jop

712
00:35:23,960 --> 00:35:27,560
Speaker 10: one drugs, so Lily being one of them. We could

713
00:35:27,560 --> 00:35:31,440
Speaker 10: see some data for Viking and amjines albeit early data

714
00:35:32,040 --> 00:35:34,719
Speaker 10: this year, but yeah, that could really be key to

715
00:35:34,760 --> 00:35:35,880
Speaker 10: kind of opening up the market.

716
00:35:36,200 --> 00:35:39,240
Speaker 4: So are there also M and A opportunities or boltons

717
00:35:39,280 --> 00:35:42,400
Speaker 4: that nobody could make to help expand capacity more quickly?

718
00:35:43,000 --> 00:35:46,120
Speaker 10: Well, they've done one deal already and yeah, I mean

719
00:35:46,120 --> 00:35:50,920
Speaker 10: they're looking to invest to basically expand capacity going forward

720
00:35:50,920 --> 00:35:53,400
Speaker 10: and support their jop one portfolio. So it wouldn't surprise

721
00:35:53,480 --> 00:35:55,800
Speaker 10: me if you know, there are further deals of further

722
00:35:55,840 --> 00:35:59,960
Speaker 10: efforts and investment into expanding this supplydcraft.

723
00:36:00,360 --> 00:36:02,920
Speaker 3: All right, So Mikey, what are some of the maybe

724
00:36:02,920 --> 00:36:08,040
Speaker 3: the one or two big therapeutics or drugs or twenty

725
00:36:08,200 --> 00:36:10,520
Speaker 3: twenty four event here that are you guys are waiting

726
00:36:10,520 --> 00:36:12,160
Speaker 3: on that If something hits, it's just going to be big,

727
00:36:12,239 --> 00:36:14,960
Speaker 3: Whether it's in the world of cancer or if it's

728
00:36:15,000 --> 00:36:17,400
Speaker 3: in the world anywhere else in healthcare, what's kind of

729
00:36:17,440 --> 00:36:21,440
Speaker 3: the big next big blockbuster that you think is reasonable

730
00:36:21,440 --> 00:36:22,640
Speaker 3: to come out of the format industry.

731
00:36:22,920 --> 00:36:25,480
Speaker 10: I think twenty four is all of our weight loss

732
00:36:25,520 --> 00:36:27,880
Speaker 10: and some of the chomon viviencies. To be honest, I

733
00:36:27,880 --> 00:36:30,160
Speaker 10: mean some of the data points that we're looking out for.

734
00:36:30,560 --> 00:36:33,920
Speaker 10: It's going to be semi glue Tide's mash readouts, so

735
00:36:33,960 --> 00:36:37,680
Speaker 10: that's a liver condition. We're also expecting kind of detailed

736
00:36:37,760 --> 00:36:42,080
Speaker 10: data from Boeing and Zealand's server do Tide in the

737
00:36:42,120 --> 00:36:45,319
Speaker 10: same disease area, and then we'll also see details of

738
00:36:45,840 --> 00:36:49,319
Speaker 10: Lily's ze bound in that liver condition too. You know

739
00:36:49,480 --> 00:36:52,840
Speaker 10: BC readouts, you know, front and center again, So in

740
00:36:53,000 --> 00:36:55,920
Speaker 10: terms of you know, data upcoming data sets, it's going

741
00:36:56,000 --> 00:37:01,080
Speaker 10: to be amgines readouts for Amgine's assets, and as I

742
00:37:01,120 --> 00:37:05,759
Speaker 10: said earlier, possibly some oral data for Vikings GLP one drug.

743
00:37:06,040 --> 00:37:09,600
Speaker 4: What do you make of the valuations for the likes

744
00:37:09,640 --> 00:37:12,520
Speaker 4: of Nova, Nordisk or any that are in the weight

745
00:37:12,600 --> 00:37:15,680
Speaker 4: loss drug Like, we have no idea how to value this.

746
00:37:15,800 --> 00:37:17,960
Speaker 4: It's sort of like the AI phenomenon. How do you

747
00:37:18,000 --> 00:37:18,640
Speaker 4: think about it.

748
00:37:19,080 --> 00:37:22,680
Speaker 10: Yeah, So when we look at you know, Lily and Nova,

749
00:37:23,120 --> 00:37:28,040
Speaker 10: you know, they clearly stand out obesit GLP ones underpinning

750
00:37:28,080 --> 00:37:31,200
Speaker 10: their growth prospects. You know, both have well, Nova at

751
00:37:31,239 --> 00:37:35,120
Speaker 10: least has you know, margins up there with peers. But

752
00:37:35,280 --> 00:37:38,880
Speaker 10: we look at you know, the obesity space. You know,

753
00:37:39,000 --> 00:37:42,920
Speaker 10: in general, more than one hundred million suffers GLP one

754
00:37:42,960 --> 00:37:47,080
Speaker 10: penetration rates you know, very low at the moment. You know,

755
00:37:47,160 --> 00:37:49,719
Speaker 10: we think access is going to improve, you know, as

756
00:37:49,760 --> 00:37:53,760
Speaker 10: we see more data, as we see more benefits and comorbidities,

757
00:37:54,320 --> 00:37:57,919
Speaker 10: and you know, we're looking at a or we're forecasting

758
00:37:57,960 --> 00:38:01,279
Speaker 10: ABC market size of you know, eighty billion dollars in

759
00:38:01,320 --> 00:38:05,239
Speaker 10: twenty thirty, which is looking quite conservative. And when we

760
00:38:05,280 --> 00:38:08,600
Speaker 10: look at kind of penetration rates as based on just

761
00:38:08,680 --> 00:38:12,520
Speaker 10: twelve percent of US patients being on a JLP one therapy,

762
00:38:13,120 --> 00:38:16,919
Speaker 10: So there's significant runway there, you know, to support the valuations.

763
00:38:17,320 --> 00:38:20,839
Speaker 10: And then there's also other markets which we haven't necessarily

764
00:38:20,960 --> 00:38:24,319
Speaker 10: kind of fully factored in. So China, for example, could

765
00:38:24,320 --> 00:38:25,960
Speaker 10: be a massive market for these drugs.

766
00:38:26,200 --> 00:38:30,160
Speaker 4: Right Thanks to Michael Sha Bloomberg Intelligence senior Pharma biotech analyst.

767
00:38:29,920 --> 00:38:34,480
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768
00:38:34,640 --> 00:38:38,280
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769
00:38:38,400 --> 00:38:41,360
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770
00:38:41,480 --> 00:38:44,719
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771
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