WEBVTT - Fed in Holding Pattern on Interest Rates, December Cut Possible 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week Inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.360 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.680 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:27.760 --> 0:00:30.920 Let's get to something else that is important on our radar, 0:00:31.040 --> 0:00:33.239 and that is the US Central Bank, which kicked off 0:00:33.240 --> 0:00:36.839 its two day meeting on monetary policy today. That FED decision, 0:00:36.880 --> 0:00:39.280 of course, comes tomorrow at two pm Wall Street time. 0:00:39.400 --> 0:00:41.760 Well earlier today, we got two data points. US consumer 0:00:41.800 --> 0:00:44.280 confidence fell in April to the lowest since mid twenty 0:00:44.320 --> 0:00:46.760 twenty two, as Americans view of the labor market in 0:00:46.800 --> 0:00:50.160 their outlook for the economy deteriorated and a broad gauge 0:00:50.159 --> 0:00:53.280 of labor costs Carol closely watched by the FED, increase 0:00:53.360 --> 0:00:56.400 the most in a year, illustrating persistent wage pressures that 0:00:56.480 --> 0:00:58.040 are keeping inflation elevators. 0:00:58.040 --> 0:00:59.760 It ain't easy, That's the bottom line on all of this. 0:01:00.080 --> 0:01:02.320 To put it all into perspective and how it may 0:01:02.480 --> 0:01:05.920 impact potentially how the FED is thinking about US monetary policy. 0:01:06.120 --> 0:01:08.560 Back with us is Steve Skanke he's chief economic advisor 0:01:08.600 --> 0:01:11.520 at Killpoint, former US Treasury in White House National Security 0:01:11.520 --> 0:01:14.240 Council staff member, and then also with US, of course, 0:01:14.360 --> 0:01:17.960 is Yolena Schaletchiva, senior US economist ever at BNP Pariba 0:01:18.080 --> 0:01:20.679 Yolena in New York City and Steve in DC. Elena, 0:01:20.720 --> 0:01:22.560 I want to kick it off with you, if we may, 0:01:22.959 --> 0:01:28.160 today's data once again reminding us that it is kind 0:01:28.160 --> 0:01:29.760 of a bit of a tricky spot sometimes for the 0:01:29.760 --> 0:01:31.600 FED to be in right now in terms of mixed 0:01:31.600 --> 0:01:33.600 consumer data. That maybe makes it a little bit more 0:01:33.600 --> 0:01:36.039 difficult to find the right way forward, if you will, 0:01:36.040 --> 0:01:38.759 when it comes to monetary policy, what do you make 0:01:38.800 --> 0:01:42.319 of the data and what is your economic forecast right now? 0:01:44.280 --> 0:01:48.600 So I think today's data really supports our call for 0:01:48.640 --> 0:01:53.840 the FED to stay on hold until December, but for 0:01:53.920 --> 0:01:56.200 the next move to be a cut. So if you 0:01:56.240 --> 0:02:00.720 look at inflation data today, wage inflation is still elevated, 0:02:00.960 --> 0:02:06.000 so that does not give it enough confidence that they 0:02:06.040 --> 0:02:10.200 can start moving anytime soon. So at the same time, 0:02:10.560 --> 0:02:13.959 you look at the Conference Board data and in particular 0:02:14.200 --> 0:02:18.560 the labor market differential, and that tells you that the 0:02:18.639 --> 0:02:23.040 labor market is rebalancing. It's not overheating, and it's not 0:02:23.760 --> 0:02:28.280 going back out of balance, it's actually getting back into balance. 0:02:28.480 --> 0:02:31.680 And if you look at jobs are getting a little 0:02:31.680 --> 0:02:35.520 bit harder to get. They're not as plentiful as just 0:02:35.560 --> 0:02:39.760 a few months ago. So consumers are taking a signal 0:02:39.880 --> 0:02:44.120 from what they hear, what they see in the labor market, 0:02:44.200 --> 0:02:48.280 and they're telling us that. So I think the FED 0:02:48.440 --> 0:02:51.320 is still going to cut rates, that's the next move, 0:02:52.080 --> 0:02:55.000 not a hike, but I think they will have to 0:02:55.040 --> 0:02:58.480 be patient and see how inflation subsides. 0:02:58.760 --> 0:03:01.079 And Steve is that also your position over at kill 0:03:01.120 --> 0:03:03.079 Point is that what you think is going to happen, 0:03:03.280 --> 0:03:06.000 The Fed's next move will be a cut, but they 0:03:06.040 --> 0:03:08.000 will stay on hold until while at the end of 0:03:08.040 --> 0:03:10.239 this year December, like Jolena just spoke about. 0:03:11.320 --> 0:03:14.800 Yeah, absolutely, Tim, I mean, the FED very much wants 0:03:14.880 --> 0:03:18.960 to start cutting rates, but starter inflation and even strong 0:03:19.040 --> 0:03:23.320 economic activity just have them in a holding pattern. The 0:03:23.639 --> 0:03:26.480 FED is sort of stuck with a couple of things. 0:03:27.280 --> 0:03:29.800 They need to have confidence that inflation is coming down, 0:03:29.880 --> 0:03:36.960 and right now it's stall. The employment cost index is 0:03:37.680 --> 0:03:43.160 annualizing at four point four percent, and the VET has 0:03:43.160 --> 0:03:47.120 to depend on productivity growth, which has been annualizing around 0:03:47.120 --> 0:03:50.680 two and a half percent, which gets them toward their 0:03:51.240 --> 0:03:56.320 two percent inflation with wage growth, but that's a little 0:03:56.360 --> 0:04:00.800 bit hard to depend on. The Other thing is, you know, 0:04:00.960 --> 0:04:04.760 consumer competences has been up quite eight percent the last 0:04:04.760 --> 0:04:09.800 two months, which is which is record growth. But from 0:04:09.880 --> 0:04:14.040 the Copter Board numbers today, consumers are weary. They've been 0:04:14.200 --> 0:04:19.599 they've been reducing savings to continue spending, and they continue 0:04:19.600 --> 0:04:22.480 to be overwhelmed by high prices even though the rate 0:04:22.520 --> 0:04:27.680 of inflation has been had been moving lower. And tell 0:04:27.720 --> 0:04:28.760 a sort of got stuck. 0:04:30.839 --> 0:04:33.400 Okay, so yeah, come on in you Lena, and talk 0:04:33.400 --> 0:04:36.600 a little bit about where you think the Fed. How 0:04:36.600 --> 0:04:38.040 do you think the Fed kind of deals with this, 0:04:38.160 --> 0:04:41.080 because okay, Steve said, things are kind of stuck right now. 0:04:41.120 --> 0:04:45.000 From you know, getting that last mile of inflation under control, 0:04:45.839 --> 0:04:49.440 is it proving to be even stickier than the Fed 0:04:49.480 --> 0:04:50.160 thought it would be. 0:04:51.880 --> 0:04:57.360 Well, I think we will see continued deceleration in inflationary pressures. 0:04:57.880 --> 0:05:00.960 We may even see some like two and a half 0:05:00.960 --> 0:05:05.919 percent on core PC by Q three, which technically would 0:05:06.200 --> 0:05:08.960 allow the IT to start easing. But then you know 0:05:09.080 --> 0:05:15.280 election comes into play, and for you know, risk management purposes. 0:05:15.440 --> 0:05:19.359 You may want to wait till December. I think we 0:05:19.480 --> 0:05:24.120 will continue to see inflation to decelerate. Consumers as pending. Yes, 0:05:24.160 --> 0:05:27.479 but they're spending because the labor market is doing great 0:05:27.680 --> 0:05:32.040 and because their balance sheets are so healthy since they 0:05:32.160 --> 0:05:37.200 deleveraged so much. But nonetheless there are some you know, 0:05:37.320 --> 0:05:40.719 pockets of weakness here and there. So we mentioned consumer 0:05:40.800 --> 0:05:45.440 confidence data today pointing to some signs of deceleration in 0:05:45.480 --> 0:05:50.360 the labor market. We also see some pickup in delinquencies. 0:05:50.839 --> 0:05:55.840 All these things that's pooked recessionary you know, fears last year. 0:05:55.920 --> 0:05:59.760 They're still there. It's just not we're not talking recession 0:05:59.800 --> 0:06:05.120 any but we are talking about some moderation in economic growth, 0:06:05.279 --> 0:06:09.839 and we are talking about continued progress on inflation. The 0:06:09.920 --> 0:06:12.560 FID just needs to be patient. They just need to 0:06:13.240 --> 0:06:17.240 not overreact to one data point here and there, and 0:06:17.839 --> 0:06:22.560 I think the conditions will be appropriate for them to 0:06:22.600 --> 0:06:25.880 start adjusting rates slightly by the end of the year. 0:06:27.240 --> 0:06:28.560 One thing I wanted to bring up, and I've been 0:06:28.600 --> 0:06:31.160 thinking about this a lot, is you know, we keep saying, oh, no, 0:06:31.240 --> 0:06:33.400 we need pressures. Oh my god, people are being paid 0:06:33.400 --> 0:06:36.080 more money. How terrible that is because of the impact 0:06:36.120 --> 0:06:39.400 on inflation. Isn't there some balance and Steve, let's bring 0:06:39.440 --> 0:06:42.280 you back into the conversation. Isn't there some balance of like, no, 0:06:42.760 --> 0:06:45.040 this is a good thing, and maybe we're moving more 0:06:45.120 --> 0:06:49.159 towards a livable wages, especially for some hourly workers where 0:06:49.640 --> 0:06:52.080 this isn't just a job for a teenager. They're supporting 0:06:52.080 --> 0:06:56.520 their families and that ability then they can spend on things. 0:06:56.560 --> 0:07:01.480 So what is that balance economically that you think about 0:07:01.560 --> 0:07:03.320 or maybe you don't think about it, but I do 0:07:03.760 --> 0:07:07.839 in terms of we're paying maybe workers maybe what they 0:07:08.240 --> 0:07:11.760 at least should pay or are long overdue that they 0:07:11.800 --> 0:07:14.160 haven't had the ability to have higher wages, and then 0:07:14.320 --> 0:07:17.320 that translates into economic activity. That's a good thing. 0:07:18.800 --> 0:07:22.080 Well that you're absolutely right, Carol, And Jerome Powell actually 0:07:22.600 --> 0:07:25.840 thinks about that a lot. If you sort of go 0:07:25.920 --> 0:07:28.040 back a couple of years, maybe three or four years, 0:07:28.360 --> 0:07:33.880 even before the pandemic, he was talking about wage growth 0:07:33.920 --> 0:07:39.760 being more broadly distributed throughout the labor force, and that 0:07:39.800 --> 0:07:42.720 only sort of happens at as you come to at 0:07:42.760 --> 0:07:46.560 the end of the economic cymcle. So for wages on 0:07:46.600 --> 0:07:49.680 average to be up almost four and a half percent, 0:07:50.200 --> 0:07:53.040 that is a good thing. And if we can rely 0:07:53.120 --> 0:07:56.840 on productivity growth to continue in the neighborhood at two 0:07:56.840 --> 0:07:59.560 and a half percent, that's how you actually raise standards 0:07:59.560 --> 0:08:04.280 of living, particularly for some of the lower income groups. 0:08:05.360 --> 0:08:10.920 But the FED is is flummixed by what's happening with 0:08:11.120 --> 0:08:15.680 the metric for housing inflation for shelter. You know, if 0:08:15.680 --> 0:08:19.320 you look at course course CPI inflation three point eight 0:08:19.360 --> 0:08:22.240 percent twelve months ending in March, you can take out shelter, 0:08:22.480 --> 0:08:27.559 it's two point four core PCEE inflation saying two point 0:08:27.600 --> 0:08:30.640 eight percent twelve months ending in March. You take out 0:08:30.680 --> 0:08:35.199 housing it was two point two percent. And not that 0:08:35.200 --> 0:08:40.320 they can ignore housing inflation or shelter inflation, but we 0:08:40.400 --> 0:08:45.240 all know that there's just some funniness about how that 0:08:45.280 --> 0:08:49.959 gets calculated and how that factors in and the and 0:08:50.000 --> 0:08:53.760 while the FED would like to cut rates to get 0:08:53.800 --> 0:08:59.000 that economic benefit broadly distributed, they're sort of stuck with 0:08:59.520 --> 0:09:00.640 the number that they've got. 0:09:00.800 --> 0:09:02.800 I want to say thirty seconds for you, Elena, in 0:09:02.920 --> 0:09:05.360 terms of this concept of higher wages, and you know, 0:09:05.480 --> 0:09:08.559 some of that's good that people are finally maybe making 0:09:08.840 --> 0:09:11.440 more money. 0:09:11.679 --> 0:09:15.280 More money is good for sure, but you know you 0:09:15.480 --> 0:09:20.280 need to have productivity growth and this is I totally agree, 0:09:20.640 --> 0:09:24.400 uh that that's an essential part. So if you have productivity, 0:09:25.120 --> 0:09:29.480 growing wage is not a problem. Unfortunately, I think productivity 0:09:29.960 --> 0:09:33.920 growth is not going to accelerate here and not until 0:09:33.960 --> 0:09:37.200 we get some AI enhancements. We have to rely on 0:09:37.360 --> 0:09:42.360 label roles for now, and that's the issue at this point. 0:09:42.440 --> 0:09:44.880 Well, the White has correspondence. They made a joke and 0:09:44.960 --> 0:09:47.559 just said he journalists, get ready to your place. 0:09:48.160 --> 0:09:49.480 I wasn't going to make that joke. I was just 0:09:49.480 --> 0:09:51.960 gonna ask for the AI enhancement for doing the dishes. 0:09:53.120 --> 0:09:56.319 That would about the product innovation and disruptions. Steve Skanky 0:09:56.440 --> 0:09:58.320 and ITVA, thank you so much. 0:09:59.080 --> 0:10:02.640 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:02.679 --> 0:10:05.920 live weekday afternoons from two to five pm Eastern. Listen 0:10:05.960 --> 0:10:08.120 on Apple car Play and then Broud Auto with a 0:10:08.120 --> 0:10:11.600 Bloomberg Business app, or watch us live on YouTube. 0:10:13.559 --> 0:10:16.040 So let's get to ONSTOT. That is definitely a standout 0:10:16.080 --> 0:10:20.320 performer in today's overall lower trade equity trade ELI Lilly's 0:10:20.320 --> 0:10:23.080 share soaring up the most in more than nine months, 0:10:23.160 --> 0:10:25.840 hitting an intry day record high. This as a brighter 0:10:25.880 --> 0:10:28.600 outlook for twenty twenty four raise the potential ceiling for 0:10:28.679 --> 0:10:31.079 new weight loss drugs even further in the eyes of 0:10:31.120 --> 0:10:33.280 Allison investors. It's just on a tear. 0:10:33.520 --> 0:10:35.440 It really is back with more on the company and 0:10:35.559 --> 0:10:38.200 this investment play that continues to just dominate this year. 0:10:38.240 --> 0:10:40.920 We got Bloomberg News health reporter Madison Muller here in 0:10:41.160 --> 0:10:45.800 the studio. Madison, I'm wondering, what was the surprise here 0:10:45.920 --> 0:10:49.040 when it came to Uh, it's a good question weight 0:10:49.040 --> 0:10:52.080 loss drugs, because this doesn't surprise me, and I'm not 0:10:52.200 --> 0:10:53.800 following this company as closely as. 0:10:53.640 --> 0:10:56.880 These investors are. Yeah, we knew these things were gangbusters. 0:10:56.960 --> 0:10:57.280 Yeah. 0:10:57.559 --> 0:11:00.200 I think it's what's interesting is like I wasn't really 0:11:00.280 --> 0:11:03.640 surprised by this either, given how much demand there is 0:11:03.720 --> 0:11:04.600 for these products. 0:11:04.960 --> 0:11:07.120 But I guess there was some investor and. 0:11:07.240 --> 0:11:10.880 Analyst concern going into earnings because the shortages have been 0:11:11.360 --> 0:11:14.560 so bad, and so they needed some reassurance that even 0:11:14.600 --> 0:11:17.200 though there are widespread shortages, I mean people are driving 0:11:17.280 --> 0:11:19.440 like three four hours to go to a pharmacy that 0:11:19.480 --> 0:11:22.760 has zeb bound in stock, that Lily is still able 0:11:22.800 --> 0:11:27.760 to sell enough of it, and to also see supply 0:11:27.880 --> 0:11:29.520 getting better in the second half of the year and 0:11:29.559 --> 0:11:31.800 into next year, you know, enough so that they can 0:11:32.240 --> 0:11:34.880 raise their revenue guidance for the full year, raise their 0:11:35.240 --> 0:11:36.920 profit guidance for the full year as well. 0:11:37.200 --> 0:11:38.000 So there was I. 0:11:37.880 --> 0:11:40.040 Think at first a little bit of relief and then 0:11:40.280 --> 0:11:44.600 continue to optimism, Like any good news for Lily is 0:11:44.640 --> 0:11:47.439 like great news automatically, So I think it it automatically 0:11:47.480 --> 0:11:47.920 just pushed. 0:11:48.040 --> 0:11:49.800 What do you say that more? Any good news is 0:11:49.800 --> 0:11:50.679 great news for Lily. 0:11:51.000 --> 0:11:54.920 The margin for error is so slim with them, like 0:11:55.000 --> 0:11:58.160 if there is bad news, it really could affect them. 0:11:58.160 --> 0:12:01.360 But I think it goes the opposite way too. There's 0:12:01.480 --> 0:12:04.560 just there come everything the company does is so closely 0:12:04.640 --> 0:12:08.400 watched and the smallest news is like ends up being 0:12:08.400 --> 0:12:10.720 a big deal, especially when it comes to these weight 0:12:10.760 --> 0:12:13.720 loss drugs, because so much is riding on them. So 0:12:13.800 --> 0:12:16.560 it's just this is seen as you know, a great thing. 0:12:16.679 --> 0:12:17.560 What's the risk there? 0:12:17.600 --> 0:12:19.319 And I know that's where your head was going, Carol, 0:12:19.360 --> 0:12:21.920 because if this is we're talking about. 0:12:21.840 --> 0:12:24.360 Scale of zepbound on one side and all the other 0:12:24.440 --> 0:12:26.240 drugs on the other, does. 0:12:26.080 --> 0:12:28.160 A lot more than just GLP ones. 0:12:27.960 --> 0:12:29.960 Here, Yeah, And that and that was the other really 0:12:29.960 --> 0:12:33.840 interesting thing is even though they missed estimates in most 0:12:33.880 --> 0:12:36.720 of their other key drugs, including Manduro, which is the 0:12:36.800 --> 0:12:41.680 diabetes drug, diabetes version of zep bound, Trulicity, a diabetes 0:12:41.720 --> 0:12:44.920 drug that's been a bestseller for several years now, for Xenio, 0:12:45.000 --> 0:12:48.560 which is a breast cancer drug. They still raise their 0:12:48.559 --> 0:12:50.800 revenue guidance, and you know, it was still seen as 0:12:50.840 --> 0:12:55.320 like a very good result because the story is just 0:12:55.400 --> 0:12:55.880 zet bound. 0:12:56.000 --> 0:12:59.079 How much of their revenue comes from this class of drugs. 0:12:59.400 --> 0:13:01.480 We know actually not, I would have to pull that up. 0:13:01.679 --> 0:13:05.280 Zepbound is still I mean, Monduro is like in the billions. 0:13:05.360 --> 0:13:08.120 Zepbound is still I think it was half a billion 0:13:08.240 --> 0:13:10.400 this quarter. It was five hundred million, but it just 0:13:10.480 --> 0:13:15.840 launched in December, so it's ramping up really quickly. And Trulicity, 0:13:15.880 --> 0:13:18.720 which is also it's an earlier GLP one drug that 0:13:18.760 --> 0:13:21.040 we don't really talk that much about. It's not very 0:13:21.080 --> 0:13:23.720 good for weight loss, but it's great for glycemic control 0:13:23.760 --> 0:13:26.280 and you know, helping control blood sugar for people with 0:13:26.320 --> 0:13:30.040 type two diabetes. That drug is in shortage also in 0:13:30.080 --> 0:13:34.959 the US and in Europe because there's they've been prioritizing 0:13:35.280 --> 0:13:36.400 the newer medications. 0:13:36.880 --> 0:13:38.160 Where is the supply chain. 0:13:39.080 --> 0:13:41.720 It's I mean, they have supply I think they were 0:13:41.760 --> 0:13:45.120 talking today on the call that there's like seven plants, 0:13:45.160 --> 0:13:48.800 eight plants, and there's a lot in the US. There's 0:13:48.840 --> 0:13:52.160 a plant in Ireland, but it is mostly in the US, actually, 0:13:52.200 --> 0:13:56.760 and it is mostly They work with some contract manufacturers, 0:13:56.760 --> 0:13:59.680 but most of the supply chain is controlled by Lily. 0:14:01.120 --> 0:14:03.280 And are these for Eli Lilly. 0:14:03.280 --> 0:14:05.880 I'm just looking at the FA page, the financial analysis 0:14:05.920 --> 0:14:08.520 page in the Bloomberg terminal. Are they classified into the 0:14:08.520 --> 0:14:11.040 diabetes category? Both of these even though one of them's 0:14:11.040 --> 0:14:11.839 weight loss. 0:14:11.920 --> 0:14:14.680 Zep bound shouldn't be okay, Yeah, because it's interesting because 0:14:14.679 --> 0:14:17.720 now the diabetes category is now fifty seven point six 0:14:17.800 --> 0:14:20.880 percent of revenue, right versus a couple of years ago 0:14:20.960 --> 0:14:23.240 is forty six percent. Yeah, And Lily has always been, 0:14:23.320 --> 0:14:25.720 I mean, diabetes is their bread and butter. They've always 0:14:25.800 --> 0:14:28.200 been in diabetes. I think they were the first They 0:14:28.200 --> 0:14:31.000 were the first US company to commercialize insulin, so like 0:14:31.080 --> 0:14:33.040 this has been their story for a long time. 0:14:33.080 --> 0:14:35.000 But I mean, insulin wasn't. 0:14:34.840 --> 0:14:38.720 Really like a super profitable drug, and GLP ones are. 0:14:38.720 --> 0:14:43.080 So that the two billion kickup in annual sales Madison 0:14:43.120 --> 0:14:45.000 one thing I was curious about does that mean the 0:14:45.040 --> 0:14:47.720 demand is that much more or the drug is costing more. 0:14:48.240 --> 0:14:51.640 It's going to mostly be I think a result of 0:14:51.680 --> 0:14:55.520 increased supply. So like they are selling everything that they 0:14:55.560 --> 0:14:58.520 can make, and they set this goal of increasing like 0:14:58.600 --> 0:15:02.680 the number of sellable do by one and a half 0:15:02.840 --> 0:15:05.320 times whatever that means. But they're hoping that they can 0:15:05.680 --> 0:15:08.400 make more sellable doses in the second half of the year. 0:15:08.440 --> 0:15:11.800 The dosage, from what I understand, like you get different dosages, 0:15:11.800 --> 0:15:14.480 I think, yes, well, individual pens, right, yeah, so in 0:15:14.840 --> 0:15:17.640 in outside of the US, they have multi dose pens, 0:15:17.720 --> 0:15:20.440 which you would think that they would roll that out 0:15:20.520 --> 0:15:23.880 in the US because it helps with the number of 0:15:23.920 --> 0:15:26.800 pens that they're making, which is holding up. 0:15:26.800 --> 0:15:28.360 Like that's one of the reasons why they have these 0:15:28.360 --> 0:15:31.440 supply bottlenecks, because the plastic injector pens are like so 0:15:31.600 --> 0:15:35.080 complicated to make. But they're only doing these multi dose 0:15:35.120 --> 0:15:38.160 pens outside of the US, which doesn't really make a 0:15:38.160 --> 0:15:43.520 ton of sense. But yeah, so the doses those have 0:15:43.640 --> 0:15:45.920 multiple doses obviously in them in the US, you have 0:15:46.360 --> 0:15:48.680 four pens and each one contains one dose. 0:15:48.840 --> 0:15:50.800 Who's coming for Eli Lilly at this point We talk 0:15:50.840 --> 0:15:53.160 a lot about Novo, the European sort of sort of 0:15:53.200 --> 0:15:57.840 counterpart the competitor here with Oozepic, But who in the 0:15:57.920 --> 0:15:59.600 US is coming for Eli Lily? 0:15:59.800 --> 0:16:05.160 So we have Bohringer Englheim, which is a private company 0:16:05.200 --> 0:16:07.000 it's a little bit of a mouthful to say, but 0:16:07.080 --> 0:16:09.560 they are also outside of the US. They're private company 0:16:10.280 --> 0:16:14.880 Zeland Pharma as well. They're close behind. Then there's am Gen, 0:16:14.960 --> 0:16:17.840 which is a US company. There's been a lot of 0:16:17.880 --> 0:16:21.880 excitement about Amjin's drug because it's taken less frequently, It's 0:16:21.880 --> 0:16:24.200 taken once a month instead of once a week. However, 0:16:24.280 --> 0:16:27.960 they are still very far behind these other companies, you know, 0:16:28.080 --> 0:16:31.680 behind Novo and Lily, and then Pfizer is still pretty 0:16:31.680 --> 0:16:33.840 far behind as well. So like they do have a 0:16:33.880 --> 0:16:37.200 really good head start on everyone else that's trying to 0:16:37.200 --> 0:16:39.640 get into this market. And you know they're also trying 0:16:39.680 --> 0:16:43.360 to develop a pill and different formulations, so like they 0:16:43.400 --> 0:16:45.920 really they have a jump on everyone. 0:16:46.040 --> 0:16:48.160 How is the focus on these which I get why 0:16:48.240 --> 0:16:50.520 every drug company would be chasing it, right, I mean 0:16:50.520 --> 0:16:52.760 you think about market size and just oh my god, 0:16:53.800 --> 0:16:56.040 but what does it means not getting done? Or maybe 0:16:56.040 --> 0:16:57.000 the focus isn't there. 0:16:57.640 --> 0:16:59.720 It's a good point. I mean, we were looking recently 0:16:59.760 --> 0:17:03.200 at like it's just interesting to see how the attention 0:17:03.360 --> 0:17:06.919 has switched from COVID to GLP want totally covid to 0:17:06.960 --> 0:17:11.000 weight loss. And this happens in the pharmaceutical industry. It's 0:17:11.040 --> 0:17:13.960 like you know, when one company has success in a 0:17:14.000 --> 0:17:17.000 certain area, then everyone sort of chases and follows behind. 0:17:17.080 --> 0:17:19.800 And we are actually seeing this, which this is a 0:17:19.800 --> 0:17:21.959 good thing. We're seeing this right now in heart disease 0:17:22.040 --> 0:17:27.320 and in neurodegeneration as well. So there's been some advancements 0:17:27.320 --> 0:17:32.040 in drugs for like Alzheimer's and Parkinson's and some mental 0:17:32.080 --> 0:17:36.199 health conditions that now there's like a rush to to 0:17:36.359 --> 0:17:38.760 innovate in that field again too, and same with heart disease. 0:17:38.840 --> 0:17:42.360 So like there is actually some other advancements, but we're 0:17:42.359 --> 0:17:43.119 just not talking about that. 0:17:43.240 --> 0:17:46.040 We only have like thirty seconds madicone And this is question, 0:17:46.680 --> 0:17:49.280 yeah that has requires a longer answer. But there has 0:17:49.320 --> 0:17:54.000 been some pushback to these drugs. Not everybody sort of 0:17:54.000 --> 0:17:58.240 on board, pointing outside effects and stuff. What's the latest there. 0:17:58.720 --> 0:18:02.240 I think one of the biggest pushbacks recently has been price. 0:18:02.680 --> 0:18:04.639 Like the Senator Bernie Sanders. We talked to him a 0:18:04.640 --> 0:18:07.119 couple of weeks ago and he was saying that he 0:18:07.240 --> 0:18:09.280 was gonna which I guess he did. Actually end up 0:18:09.320 --> 0:18:12.520 calling the CEO of Nova Noordiskin talking to him about 0:18:12.600 --> 0:18:15.760 the price of Ozembic and Wagovi. And now he's opening 0:18:16.040 --> 0:18:19.480 a Senate committee investigation into the price. So that's been 0:18:19.520 --> 0:18:21.160 a big area of pushback recently. 0:18:21.200 --> 0:18:24.000 All right, great stuff, Hazoways Madison. Thanks, Bloomberg News Health 0:18:24.000 --> 0:18:26.560 reporter Madison Muller a must read here at Bloomberg. 0:18:28.680 --> 0:18:32.520 You're listening to the Bloomberg Business Week podcast. Listen live 0:18:32.640 --> 0:18:35.840 each weekdays starting at two pm Eastern on Applecar Play 0:18:35.840 --> 0:18:38.720 and Android Auto with the Bloomberg Business App. You can 0:18:38.720 --> 0:18:41.960 also listen live on Amazon Alexa from our flagship New 0:18:42.040 --> 0:18:47.200 York station. Just say Alexa Play Bloomberg eleven thirty. Great. 0:18:47.240 --> 0:18:48.840 Now, we want to shift gears a little bit because 0:18:48.880 --> 0:18:50.920 we will be shifting gears big time after the close 0:18:50.960 --> 0:18:54.640 when Amazon reports its latest earnings, and we are going 0:18:54.640 --> 0:18:56.720 to be looking for a show me moment, especially when 0:18:56.720 --> 0:18:59.880 it comes to what they are doing in AI, because 0:18:59.880 --> 0:19:02.159 we've seen a play out, whether it was Google or Microsoft, 0:19:02.400 --> 0:19:04.359 investors wanted to see and we saw some payoff. 0:19:04.600 --> 0:19:06.680 Yeah, the world is, as it often seems, all about 0:19:06.760 --> 0:19:10.080 jen Ai and machine learning and LMS. Is that enough 0:19:10.119 --> 0:19:14.520 for you? Jenai machine learning LMS? Right, It's also its 0:19:14.520 --> 0:19:16.560 evolution and next steps. Was this theme at a recent 0:19:16.720 --> 0:19:20.560 BI event here at Bloomberg HQ that you moderated. 0:19:20.600 --> 0:19:21.240 That was really cool. 0:19:21.320 --> 0:19:22.960 It was a really fun panel. I learned a lot 0:19:23.080 --> 0:19:25.920 and that was thanks to our next guest and who 0:19:26.000 --> 0:19:28.560 was on the panel. We welcome Rouchie R. Puri, chief 0:19:28.560 --> 0:19:31.080 scientist at IBM Research. He's here in our Bloomberg and 0:19:31.119 --> 0:19:34.320 director Broker Studio. He's an inventor over seventy US patents, 0:19:34.359 --> 0:19:36.960 has authored over one hundred scientific publications on AI for 0:19:37.080 --> 0:19:41.440 code responsible AI, semi chip design, and so much more. 0:19:41.720 --> 0:19:44.399 He also led IBM Watson as CTO and Chief Architect. 0:19:44.440 --> 0:19:46.760 I could go on, but then we'd be done here. 0:19:46.800 --> 0:19:48.439 I'm so glad you came in because I said to 0:19:48.640 --> 0:19:53.080 you when we finished the panel that I kind of 0:19:53.160 --> 0:19:55.000 learned a lot and I feel like I wanted to 0:19:55.080 --> 0:19:56.600 kind of pick your brain a little bit more about 0:19:56.680 --> 0:19:59.120 what are the smart conversations to be having about AI 0:19:59.240 --> 0:20:02.280 that we have every day? What are the ones you're 0:20:02.280 --> 0:20:04.480 having with your team back at IBM. What is it 0:20:04.520 --> 0:20:07.880 that clients and customers are thinking about about where jen 0:20:07.960 --> 0:20:10.080 ai takes them in the future. 0:20:10.400 --> 0:20:13.280 So, first of all, Carol and Tim, thank you for 0:20:13.320 --> 0:20:16.800 hosting me. I think this is We had a wonderful conversation, 0:20:16.920 --> 0:20:19.760 but it's a pleasure to continue that conversation as well. 0:20:20.359 --> 0:20:24.040 I would really say we are seeing infection point in 0:20:24.080 --> 0:20:27.960 AI because we are seeing the sort of people playing 0:20:28.000 --> 0:20:31.760 with things to now show me the money. 0:20:31.920 --> 0:20:33.439 It's where is the value? 0:20:34.280 --> 0:20:39.120 And that's exactly the narrative you are seeing roll out 0:20:39.960 --> 0:20:45.720 and the rise of open not just open AI, but 0:20:45.800 --> 0:20:50.920 the rise of open in movement, no Meta, many others. 0:20:50.960 --> 0:20:53.359 IBM and many others are involved in it as well. 0:20:53.680 --> 0:20:58.560 But small to medium size models are where things are 0:20:58.680 --> 0:21:02.159 leading to because when you start to really scale AI 0:21:02.160 --> 0:21:06.720 out in real production use cases, cost is certainly very 0:21:06.840 --> 0:21:12.919 very important because the narrative becomes about scale and volumes, 0:21:13.840 --> 0:21:16.920 and then you also start to look at. 0:21:16.800 --> 0:21:18.240 Where is my data? 0:21:18.440 --> 0:21:22.919 Because AI and data are very closely integrated together, you 0:21:22.960 --> 0:21:26.000 want to bring AI to the data and the data 0:21:26.160 --> 0:21:27.119 is kind of very heavy. 0:21:27.200 --> 0:21:30.879 Actually, Richure, well, I just want to jump in here 0:21:30.920 --> 0:21:33.560 because as Carol was introducing you, and I was reading 0:21:33.560 --> 0:21:34.840 a bit about you earlier. 0:21:34.840 --> 0:21:36.359 Today, I gotta. 0:21:36.119 --> 0:21:38.680 Wonder professionally what this moment means for you, because this 0:21:38.720 --> 0:21:40.960 is something that you've worked on for so many years 0:21:41.720 --> 0:21:46.399 and it's now finally something that everybody's talking about. The 0:21:46.840 --> 0:21:49.000 Wall Street is really taking seriously right now. I mean 0:21:50.000 --> 0:21:53.120 fifteen years ago you were probably like baying your head 0:21:53.119 --> 0:21:55.679 against the wall, being like, pay attention to this stuff. 0:21:56.000 --> 0:21:59.040 We were in a winter. Actually you're all wearing parkas 0:21:59.080 --> 0:22:01.320 and really in the deep of winter. 0:22:01.520 --> 0:22:04.119 What change was it the first and capability? What was 0:22:04.160 --> 0:22:06.199