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Speaker 2: Tesla shares they are higher this morning. They're up about
Speaker 2: three tens of percent, but there were some news. Elon
Speaker 2: Musk said the company plans to pull Tesla's shareholders on
Speaker 2: whether to invest in his other company, that's x Ai.
Speaker 2: So here to break it all down for us is
Speaker 2: Craig Trudeli's Bloomberg Global Auto editor.
Speaker 3: Craig I have to.
Speaker 2: Ask you, you know, this is something that came out. I mean,
Speaker 2: what kind of message is this sending.
Speaker 3: It's sending that, you know, Elon's Elon's business empire is
Speaker 3: becoming all the more intertwined. So this has been, you know,
Speaker 3: sort of a case on and off for years. We
Speaker 3: can think back to say, you know, the Tesla Solar
Speaker 3: City acquisition, you know, and that's going back quite a
Speaker 3: way is but uh, you know, in this case it
Speaker 3: would be Tesla, you know, his most valuable company in
Speaker 3: investing in in sort of his up and comer and
Speaker 3: one where he's you know, spent an awful lot of
Speaker 3: time and energy focused on. Lately, as Tesla's electric vehicle
Speaker 3: sales have been slowing, he's been really sort of dead
Speaker 3: set on taking on open Open AI and and sort
Speaker 3: of standing up a competitor to chat GPT and as
Speaker 3: with all the companies in the space, spending an awful
Speaker 3: lot of money to to try and compete in that realm.
Speaker 4: So where do we stand here in terms of kind
Speaker 4: of how investors are viewing their investment in Tesla. Are
Speaker 4: they invested in a auto company or are they invested
Speaker 4: in an AI company? Or they invested just an Elon Inc?
Speaker 4: How did they think about it these days?
Speaker 3: Yeah? I mean, I think Musk has has been trying
Speaker 3: for for several years now to to sell uh and
Speaker 3: and position Tesla as much more than just a car company, right,
Speaker 3: and uh, you know it's it's definitely in in the
Speaker 3: energy space and and uh you know has a battery
Speaker 3: business to to show for that, and in in AI.
Speaker 3: You know, he's he's talked a big game about uh,
Speaker 3: you know, developing self driving technology. He's not he's not
Speaker 3: gotten there yet. Uh as as we've seen with the company,
Speaker 3: you know, starting to offer rides in in Tesla's around Austin, Texas. Uh,
Speaker 3: they still have uh you know, Tesla employees in the
Speaker 3: front passenger seat to sort of take over in events
Speaker 3: where you know, the cars have not been able to
Speaker 3: handle uh, you know, navigating the streets on their own.
Speaker 3: And and yet with with uh SpaceX, I think interest interestingly,
Speaker 3: you know, for them to have just pumped two billion
Speaker 3: into h x AI, I think there's a little bit
Speaker 3: of fomo on the part of of some the Tesla
Speaker 3: shareholder base where they've seen you know, XAI go from
Speaker 3: you know, not all that valuable a startup to suddenly,
Speaker 3: you know, an extremely valuable startup and they feel like
Speaker 3: they've missed out on some of this appreciation and one
Speaker 3: in on that.
Speaker 2: So with all that said, Craig, I mean, does must
Speaker 2: support a merger between x AI and Tesla or maybe
Speaker 2: x a hind SpaceX you mentioned space X two.
Speaker 3: He says he does not. And and I think there's
Speaker 3: been talk about this for years, right that, you know,
Speaker 3: and on and off again there's been you know, questions
Speaker 3: as to whether or not Musk is you know, sort
Speaker 3: of stretched too thin and doing too much. Would it
Speaker 3: make more sense to turn his companies into into one
Speaker 3: and and sort of you know, sort of the think
Speaker 3: about it as sort of the general Electric of the
Speaker 3: New age, right, which is kind of fascinating because of
Speaker 3: course that didn't work out too well for ge. And
Speaker 3: and yet you know, even some of Musk's own out
Speaker 3: have sort of alluded to, you know, it's viewing him
Speaker 3: and his empire as as sort of you know, modern
Speaker 3: day general Electric. So he he did take pains to
Speaker 3: say on an x that he does not support a
Speaker 3: full blown merger of Tesla and x Ai, but he
Speaker 3: has you know, signals on there multiple times now that
Speaker 3: he would be in favor of of Tesla putting money
Speaker 3: in and you know that's that's, of course, you know,
Speaker 3: a proposition that could be helpful if Xai continues to
Speaker 3: grow its valuation. We should note, however, that our colleagues
Speaker 3: have reported just in the last month or so that
Speaker 3: x Ai has been burning through about a billion dollars
Speaker 3: a month. So this is a company that is really
Speaker 3: sort of cash hungry and needy as it's trying to
Speaker 3: stand up a business. You know, with all of this capability.
Speaker 4: Yeah, and Craig, it's been I don't know a month
Speaker 4: or two since Elon Musk left the US government, doje
Speaker 4: is there any evidence that he is meaningfully engaging with Tesla?
Speaker 3: You know, I think he's messaging more about, you know,
Speaker 3: sort of what Tesla's up to than he was while
Speaker 3: he was in Washington. He did also post just within
Speaker 3: the last day that you know, he was in Tesla's
Speaker 3: design studio and sort of hyped up how excited he
Speaker 3: was about what he saw. But you know, the company
Speaker 3: is is, you know, sort of in this really sort
Speaker 3: of challenging state from a sales perspective, and you've you've
Speaker 3: sort of gotten indications that, well, maybe he doesn't necessarily
Speaker 3: fully have his his finger on the pulse in the
Speaker 3: sense that he told us just within the last few
Speaker 3: months that sales have turned around. You know, a couple
Speaker 3: of months later, the company reports that its vehicle deliveries
Speaker 3: had fallen thirteen percent in the second quarter. So either
Speaker 3: he was you know, not necessarily up to speed on
Speaker 3: the state of sales, or perhaps he was optimist more
Speaker 3: optimal stick that they were able to is going to
Speaker 3: be able to turn things around. Then they ultimately were
Speaker 3: able to last quarter.
Speaker 5: Okay, Greg, thanks so much for your reporting. Appreciate it.
Speaker 4: Kraig Trudeau is a Global autos editor for Bloomberg News.
Speaker 4: He's based in London, joining us via zoom.
Speaker 1: Here you're listening to the Bloomberg Intelligence podcast. Catch us
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Speaker 2: This is Bloomberg Intelligence. I'm Lisa Minteo alongside Paul Sweeney. Paul, So,
Speaker 2: summer barbecue. You think hot dogs, right, Robert? Okay, what's
Speaker 2: your favorite?
Speaker 5: What's you go to? Hot dog? Oscar myern the question,
Speaker 5: Oh yes, okay.
Speaker 2: See I'm a Brooklyn girl.
Speaker 5: I go Nathan's.
Speaker 2: But okay, that's title said. There are some big news
Speaker 2: when it comes to your barbecue. So a company may
Speaker 2: be splitting up sources in craft hends, could break itself up,
Speaker 2: spin off into this large part of the business, into
Speaker 2: this new entity.
Speaker 5: What is this all about?
Speaker 2: Let's bring it someone who knows about it. Jennifer bartash
Speaker 2: More Intelligence senior analysts Retail staples and package food Jennifer.
Speaker 2: I know it's sources are saying a lot of things.
Speaker 2: What's the latest that you're hearing about this breakup?
Speaker 6: Yeah, good morning. So this is an interesting breakup because
Speaker 6: it's ten years after they merge together, and it seems
Speaker 6: that the main portions of that initial merger are going
Speaker 6: there will go their separate ways. The way we look
Speaker 6: at it, it looks like there's a core group of
Speaker 6: what they consider their taste Elevation platform, which is what
Speaker 6: is in the seasonings Taste Elevation.
Speaker 4: Oh please, that's Gott mackenzie written all over. It has
Speaker 4: that spices and Condiments.
Speaker 6: That's Spices inc. Yeah, exactly, and then they have you know,
Speaker 6: that's kind of been their growth area for the last
Speaker 6: couple of years. So we think that that's really going
Speaker 6: to be what will be the residual part of Heinz.
Speaker 6: And then there is it's undetermined yet exactly what'll go
Speaker 6: into the rest of the business, but it'll be largely
Speaker 6: those grocery categories where they've invested a lot to try
Speaker 6: to revitalize brands and it just hasn't worked in terms
Speaker 6: of really rejuvenating sales.
Speaker 4: You know, when I think about brands in the shop,
Speaker 4: you know, going to the supermarket. Boy, those house brands
Speaker 4: private label. Talk to us about the growth of private
Speaker 4: label in general, Boy, and if you're a brand like
Speaker 4: an Oscar Meyer or something that you spent jillions of
Speaker 4: dollars over one hundred years, it seems to kind of
Speaker 4: go by the wayside almost.
Speaker 6: It's true. You've got a good point, Paul. Private label
Speaker 6: has been consistently growing and got a huge bump since
Speaker 6: the pandemic. And part of that is that they've the
Speaker 6: retailers have really invested in the quality and the the
Speaker 6: differentiation of those private label brands, so where consumers now
Speaker 6: really consider them not just a replacement for national brands,
Speaker 6: but in some instances just regular brands of their own right.
Speaker 6: And so you know, Craft Times actually had reduced some
Speaker 6: of its exposure to private label when they sold off
Speaker 6: the planter's business, when they sold off the cheese like
Speaker 6: the shredded cheese business with Craft, but the core grocery
Speaker 6: business they do still have a lot of exposure to
Speaker 6: private label.
Speaker 2: So is this a lot of competition from let's say,
Speaker 2: startup food companies appealing to younger consumers? I mean, what
Speaker 2: kind of sparked this.
Speaker 6: Well, there's really been a shift in the way consumers
Speaker 6: are looking at brands. Unless you own a long legacy
Speaker 6: brand that you can reinvent and really you know, drive
Speaker 6: interest from younger generations, it's really hard to keep that going.
Speaker 6: And so what we've seen is that they've done a
Speaker 6: good job with revitalizing things like Philly Cream cheese. But
Speaker 6: despite a lot of investment, brands like Caprice, son Oscar Meyer, Maxwellhouse,
Speaker 6: you know, these brands just aren't resonating with younger consumers,
Speaker 6: and that means that the growth prospects for those brands
Speaker 6: are a lot lower, and that makes it hard to
Speaker 6: really build yourself as a growth type oriented company.
Speaker 4: So I know, as I think back to my M
Speaker 4: and A Memory Banks ten years ago, Crafton Hines Berkshire
Speaker 4: Hathaway had a big hand in putting these two companies together,
Speaker 4: and look now they're still the largest shareholder with just
Speaker 4: under twenty eight percent of the stock. I assume Berkshire
Speaker 4: Hathaway Warren Buffet has kind of signed off on this
Speaker 4: deal or is open to it.
Speaker 6: At least I would assume that they're open to it,
Speaker 6: you know, I mean over time, you know, Berkshire Hathway
Speaker 6: has actually done quite well out of this deal, even
Speaker 6: though Kraft, heindes as an overall entity, is probably disappointed
Speaker 6: in the overall analysis. But you know, the merger was
Speaker 6: in twenty fifteen. It's been ten ten years. The value
Speaker 6: of the deal at the time in twenty fifteen was
Speaker 6: forty five billion dollars. Today's market cap it's thirty two
Speaker 6: billion dollars, so it you know, and yes they've sold
Speaker 6: off a couple of brands, but it just hasn't materialized
Speaker 6: to be the type of growth that I think Berkshire
Speaker 6: Hathway and initially envisioned it would happen.
Speaker 2: Tenfer can you dig more into some of the advantages
Speaker 2: but also the risks associated with breaking up the company.
Speaker 6: Some you know, obviously some of the advantages. And this
Speaker 6: seems very similar to what Kellogg did when they spun
Speaker 6: Kelenova and W. K. Kellogg out into two separate companies.
Speaker 6: They separated the growth prospects and then those from the
Speaker 6: slow growth areas. That's very similar to what Kraft Time
Speaker 6: seems Craft Time seems to be doing. Obviously, if you
Speaker 6: can focus on growth areas, that gives you undivided attention
Speaker 6: to really expand and grow. That would be an advantage,
Speaker 6: I think one of the disadvantages, And this is something
Speaker 6: that's kind of a broader question to consider, is you know,
Speaker 6: whether there's a cycle that's starting because we've seen companies
Speaker 6: like Kelenova split, we see Unilevers spinning off their ice
Speaker 6: cream business, and those new entities are now being bought
Speaker 6: up by others. So you've got Mars acquiring Kelenova, you
Speaker 6: have Ferrero acquiring W. K. Kellogg. But those in order
Speaker 6: to get regulatory approval, you have to have categories that
Speaker 6: aren't overlapping. And so you're you're you're seeing a new
Speaker 6: birth of new kind of conglomerates, of dissimilar portfolios. And
Speaker 6: so it makes me wonder if we're setting up another
Speaker 6: cycle where in another five years, ten years, we're going
Speaker 6: to see these companies that have been buying up the
Speaker 6: underperforming brands going through a similar type of activity.
Speaker 5: What's driving all this?
Speaker 4: It doesn't it feel like this MNA activity, whether you're
Speaker 4: buying or divesting, is out of a position of strength.
Speaker 4: It always feels like I don't know, I'm just I'm
Speaker 4: doing it because anami growth. Then I got to do something.
Speaker 4: I got pressure from shareholders to do something. So I'm
Speaker 4: either buying or selling because your business doesn't have a
Speaker 4: lot of growth.
Speaker 6: No, it's true, Paul, and I think one of the
Speaker 6: crises that we've sort of seen in packaged food at
Speaker 6: least is the North American companies is a lack of real,
Speaker 6: true innovation. So what's happened is a lot of companies
Speaker 6: have fallen into his pattern of innovation being a new
Speaker 6: flavor or a new extension, a new size of the product,
Speaker 6: and that's not really what gets consumers excited. You need
Speaker 6: to bring new and different products to market, and that's
Speaker 6: an expensive endeavor and companies have sort of shied away
Speaker 6: from that. And although they're trying to reinvigorate that innovation pipeline,
Speaker 6: we just haven't seen a lot of home runs coming
Speaker 6: out since the pandemic. And so, you know, I think
Speaker 6: when you've got that backdrop, you have to evaluate for
Speaker 6: your portfolio and say, how do we focus on the
Speaker 6: strengths that we have and can someone else do better
Speaker 6: with the categories where we're not doing as well?
Speaker 5: All right, Jen, thanks so much for joining us.
Speaker 4: Jim Bartasha is seening your retail Anams Bloomborg Intelligence, or
Speaker 4: at least the key question.
Speaker 5: You know Nathan's hothawks. Are you ketchup or mustard?
Speaker 2: Oh, mustard with salacrad and red onions.
Speaker 5: Okay, solid solid.
Speaker 4: I'm a mustard person too, But if somebody put a
Speaker 4: hot dog with ketchup in front of me, I would
Speaker 4: not eat it.
Speaker 5: Well, here's the thing.
Speaker 2: I just came back from Chicago and they said, if
Speaker 2: you put ketchup on your hot dog, no, that's a
Speaker 2: big no.
Speaker 6: No.
Speaker 5: They do not do that in Chicago. Okay, good, good
Speaker 5: to know, Good to know you. Yeah, you know.
Speaker 4: I'm definitely a mustard person. But again, you throw a
Speaker 4: hot dog in front of me with ketchup.
Speaker 5: Off, probably eat it as well.
Speaker 1: Listening to the Bloomberg Intelligence podcast catch us live weekdays
Speaker 1: at ten am Eastern on Applecarclay, and Android Auto with
Speaker 1: the Bloomberg Business app. Listen on demand wherever you get
Speaker 1: your podcasts, or watch us live on YouTube.
Speaker 2: Welcome back to the Bloomberg Intelligence. I'm Lisa Matteo alongside
Speaker 2: Paul Sweeney, Weight.
Speaker 5: Loss, drugs, right, all the rage. I always want to
Speaker 5: know what.
Speaker 2: Is the latest with it? So here with that and
Speaker 2: much more is Sam Fazelli, Bloomberg Intelligence, Director of Research
Speaker 2: for Global Industries and Senior Pharmaceuticals. Sam, thank you for
Speaker 2: joining us this morning. Just want to ask what is
Speaker 2: the latest because we hear so much about weight loss
Speaker 2: drugs and different companies. What's the latest you can here
Speaker 2: you've been hearing so far?
Speaker 1: Yeah, hi, Lisa.
Speaker 7: So in terms of what's happening in the market, we're
Speaker 7: still waiting to see whether the prescription counts for Novo
Speaker 7: Nordisks US WeGo V numbers are up or not. They've
Speaker 7: been flat for pretty much most of this year in
Speaker 7: terms of the number of scripts that doctors are writing
Speaker 7: for their we go V. And the opposite is the
Speaker 7: case for is Lily zeppound continues to keep going up
Speaker 7: and it's a it's a pretty interesting battle which seems
Speaker 7: to be currently being won by Lily, and time will tell.
Speaker 7: What is interesting is that my colleague A. Girzbacker just
Speaker 7: finished a deep patent analysis for so Astria exactly Paul
Speaker 7: for we go V, and I mean the dates in
Speaker 7: terms of pattern experience. Of course, they're important because that's
Speaker 7: when generics can come in and compete with you. Here
Speaker 7: we go from possibly she says twenty thirty one, twenty
Speaker 7: thirty two in the US at least to twenty forty.
Speaker 7: I mean, look, that's an amazing outcome, and she puts
Speaker 7: a decent probability on it in terms of the ways
Speaker 7: that they could protect it. So that could mean a
Speaker 7: lot for a product that could be sending five or
Speaker 7: ten billion dollars a year.
Speaker 5: Right, all right, we got to go to the elephant
Speaker 5: in the room here.
Speaker 4: I mean, Jesus for our listeners on radio, Sam is
Speaker 4: in some kind of contraption like he I'm guessing he
Speaker 4: fell off a barstool and hurt his armor's shoulder.
Speaker 5: Here, what happens, Sammy.
Speaker 7: It's that cheap drink you guys selling the US. You know,
Speaker 7: it just doesn't work for me. What I need is
Speaker 7: are is classified growth, red wines and white wires, right.
Speaker 5: Pole, So what I mean, I'm assuming there's something going
Speaker 5: on there.
Speaker 7: So all right, so rotate tickoff surgery. It's a ard.
Speaker 5: He's not an athlete.
Speaker 4: Bottle He stopping a bottle of bordeaux, threw out his
Speaker 4: shoulder opening a bottle bordeaux. So talk to us about
Speaker 4: what's what's the latest on the cancer field?
Speaker 5: Sam I know you got a lot of conferences in
Speaker 5: here on top of the latest research.
Speaker 4: What should we as consumers and maybe even investors in
Speaker 4: healthcare stocks and biotext what should we be thinking about
Speaker 4: as the next frontier on the cancer front.
Speaker 7: Yeah, I mean, we have a bunch of conference's coming
Speaker 7: up very soon, so the Myloma Conference in International Maloma
Speaker 7: Society in September, the World Lung Cancer Congress, then there's
Speaker 7: the big European Society for Medical Oncology conference in October.
Speaker 7: During these we're going to hear about whether there's going
Speaker 7: to be big step changes again in the treatment of
Speaker 7: some diseases, particularly lung cancer. So we got some therapeutics
Speaker 7: with possibly some data coming up, maybe a door world
Speaker 7: lung cancer. We'll see the aura Desmo. And we've just
Speaker 7: done a survey of US physicians which came back with
Speaker 7: very interesting comments, which are going to write about tomorrow
Speaker 7: about some other trials that are ongoing. So we'll say
Speaker 7: I can't front run that the data will be published
Speaker 7: tomorrow on the terminal. But there's stuff still happening in
Speaker 7: cancer where we're seeing potential for paradigm shift, and that's
Speaker 7: some of the things that we'll be referring to tomorrow.
Speaker 7: Of course, in the middle of all this, we have
Speaker 7: farmer companies continue looking for products to expand their pipelines
Speaker 7: through M and A.
Speaker 2: Now, Sam, we've been talking a lot about tariffs lately.
Speaker 2: How is a biotech sector, even pharmaceuticals, if you can
Speaker 2: dig more into how they're being affected by tariffs.
Speaker 7: Yes, so that that's one area if you look at
Speaker 7: the performance of the farmer stocks relative to the rest
Speaker 7: of the market, I mean Max seven. I mean, I
Speaker 7: don't know where they're going, but Paul I'm sure knows
Speaker 7: more because of the background he has in analyzing tech.
Speaker 7: But they just keep going up. I mean, there's no
Speaker 7: there's no nowhere else for them to go if you
Speaker 7: put them aside. Okay, there s a B five hundred.
Speaker 7: Maybe hasn't been as magical as the when it includes
Speaker 7: the Max seven, but pharma has been a little even less,
Speaker 7: a bit more lackluster, partly because of this continuing conversation
Speaker 7: about tariffs. That two hundred percent is something that President
Speaker 7: Trump mentioned just very recently, although it's delayed till next year.
Speaker 7: You've got your most favored nation pricing that's coming up.
Speaker 7: You've got your possibility that the regulators are going to
Speaker 7: be We don't know where the regulators going in the minute,
Speaker 7: to be honest with you, positive, negative, favorable, not favorable
Speaker 7: for the evolution of regulatory framework in the US. So
Speaker 7: there's a lot of questions. And I know this is
Speaker 7: four's favorite word, uncertainty that still dogs at the pharma sector.
Speaker 5: Yep, that's certainly the case.
Speaker 4: So maybe you know, August one might be a date
Speaker 4: we get some more clarity there. Sam Fazelli, director of
Speaker 4: research for Global Industries and his senior pharmaceutical analysts for
Speaker 4: Bloomberg Intelligence. He's covalescing there in London and our London students,
Speaker 4: but he makes it into the studio folks, even with
Speaker 4: one arm in a sling. So we appreciate that playing
Speaker 4: herd out there for us.
Speaker 5: That's what happens when you get old, Lisa. You know,
Speaker 5: things happen. They just kind of go out and we
Speaker 5: can see you in a sleep.
Speaker 4: I hope, I hope, not exactly so, Sam Fazzelli. There so,
Speaker 4: and Emina, you mentioned M and A. I'm just so
Speaker 4: far in the first quarter. This is according to Sam's notes,
Speaker 4: so far in the first half thirty two billion of
Speaker 4: M and A in farmer thirteen deals.
Speaker 5: Last year it was.
Speaker 4: Sixteen billion for six sixteen deals, so dollar amounts certainly
Speaker 4: bigger this year.
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