Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
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Speaker 2: The most important essay every morning in the earning season
Speaker 2: of Julian Emmanuel holding court at Evercore Isi with one
Speaker 2: Edward Hyman. Ed Hyman and we're threwed he could join
Speaker 2: us today, their chief equity quantitative strategists. Once again, you
Speaker 2: have outlined how we got earnings wrong. Do you believe
Speaker 2: we'll get earnings wrong quarter ending September thirty? We invariably do.
Speaker 3: So we came into this season believing and again, look
Speaker 3: this is quite America. There is the baseline predicted earnings growth,
Speaker 3: and there's the surprise. We almost always surprise positively. I
Speaker 3: think in our view what happened was the market was
Speaker 3: actually surprised by what, in retrospect, is not that surprising.
Speaker 3: A surprise, tom So you're getting ten percent earnings growth.
Speaker 3: But what's more interesting to us about this season is
Speaker 3: the degree of the stock price response has been unlike
Speaker 3: anything we've ever seen, both to the good and the bad,
Speaker 3: and frankly, it isn't that entirely dependent on the scope
Speaker 3: of what they report. A lot of this is positioning,
Speaker 3: but you've had moves just incredibly dramatic in both directions,
Speaker 3: and that points in our mind to a question about
Speaker 3: where we're going in terms of earnings next year within
Speaker 3: the context of the fact that bottoms up consensus is
Speaker 3: looking for thirteen percent earnings in twenty twenty six. That's
Speaker 3: a bit too high in our opinion.
Speaker 4: You don't bury the lead here with your most recent
Speaker 4: note near term, we think stocks are overvalued seven to
Speaker 4: fifteen percent pullback into an October low.
Speaker 5: That's not consensus.
Speaker 3: Well, so, I guess this goes back to the scars
Speaker 3: that we've had by being excessively bullish coming into labor
Speaker 3: day from time to time. That is almost always a
Speaker 3: strategy that runs into difficulty. But again it goes back
Speaker 3: to whether you think about it in the context of
Speaker 3: earnings expectations for twenty twenty six or you think about
Speaker 3: it in terms of valuation. And to be clear, we're
Speaker 3: not at all time high valuations like the Y two
Speaker 3: K dot com bubble, but we're not far away, and
Speaker 3: in our mind, part of what's gone on this summer
Speaker 3: is really a belief that because we haven't seen a
Speaker 3: discrete drag in terms of growth to tariffs and discrete
Speaker 3: underpinning inflation, which we do believe we're going to get
Speaker 3: first evidence of this week with the CPI report, people
Speaker 3: are just you know, don't worry, be happy.
Speaker 2: Let's go there right now. And bringing edheymen into it,
Speaker 2: you have this huge advantage of ed heymen and your
Speaker 2: economic apparatus at evercore is a are you modeling your
Speaker 2: equity market for a sustained three percent or dare I
Speaker 2: say a four figure inflation three percent? Three percent?
Speaker 3: And if you think about it, right, what we have
Speaker 3: seen off of the trough in April, which I believe
Speaker 3: I was on with you all. We were pounding the
Speaker 3: table that you wanted to own it because we had
Speaker 3: seen capitulation of a degree which we had only ever
Speaker 3: seen at the trough of the financial crisis in nine.
Speaker 3: Is that basically the difference between the recovery that we
Speaker 3: saw then and the recovery that we saw actually during
Speaker 3: the bear market that was briefly in nineteen ninety eight
Speaker 3: in the midst of the Internet revolution versus the AI revolution.
Speaker 3: Now the continued response where Nasdaq rose an additional over
Speaker 3: one hundred percent into the y two k bubble, It's
Speaker 3: not going to be like this this time because frankly,
Speaker 3: the Fed doesn't have the leeway to be as accommodative.
Speaker 5: Even though we're expecting.
Speaker 2: Is this the gloomy Emmanuel this morning?
Speaker 5: It might be. It sounds realistic to me.
Speaker 4: It just you know, we got scolded last week for
Speaker 4: calling it a melt up.
Speaker 5: Do you think we experienced a melt up.
Speaker 4: Over you know, this percent move off the bottom?
Speaker 5: Oh?
Speaker 3: Yeah, there's no question about the fact that if you
Speaker 3: measure it in terms of nothing more than public participation,
Speaker 3: the public has been driving this market in large degree.
Speaker 3: And you see that in you know, sort of an
Speaker 3: esoteric area of the world. Zero days the expiration option activity,
Speaker 3: the positions go on at nine point thirty. They expired
Speaker 3: four o'clock. That is accounting for upwards of sixty percent
Speaker 3: of the option activity.
Speaker 2: So what are you doing now at the margin to
Speaker 2: purchase equity shares? Are you in evercore ISI on hold?
Speaker 6: Now?
Speaker 3: So basically what we're saying is you have to think
Speaker 3: long term. There's a certain slug investor that should just
Speaker 3: ignore what we expect to be the volatility in the
Speaker 3: next couple months. But if you're more active, what you're
Speaker 3: thinking about is a right sizing your AI exposure to
Speaker 3: accomplish long term. There's going to be continued our performance.
Speaker 3: But you want to hedge. You want to hedge with
Speaker 3: lower valuation stocks with higher earnings revision type names. It's
Speaker 3: an element of safety that supportfolio and actually, if you
Speaker 3: think about it, enables.
Speaker 5: You to be a buyer of Dipps.
Speaker 2: There you go, there you go, as simple as that, Julian,
Speaker 2: Thank you so much. Julian McKiel. With this EVERCOREA, I
Speaker 2: can't we protect the copyright, folks. I'm not going to
Speaker 2: send out his three paragraph effort that he goes right
Speaker 2: every morning. His team does it, folks, to be honest,
Speaker 2: but it's exquisite on where are we in the earning season?
Speaker 2: It is the industry benchmark. He does that. Julian does
Speaker 2: that at Evercore is.
Speaker 1: A You're listening to the Bloomberg Surveillance podcast. Catch us
Speaker 1: Live weekday afternoons from seven to ten am Eastern Listen
Speaker 1: on Applecarplay and Android Auto with the Bloomberg Business app
Speaker 1: or watch us live on YouTube.
Speaker 2: Joining us now deep in the summer, Lauren Seidelbaker, economist.
Speaker 2: It a we lover work out of Wellesley and Boston University.
Speaker 2: I'm going to audible right now. One of the greatest
Speaker 2: views of Mount Washington, likes spiritual nineteenth century is from
Speaker 2: the Conway North Conway area. Right, Yes, you go up
Speaker 2: there a lot, can I get there's bar in the woods.
Speaker 2: It's in the middle of nowhere. Right.
Speaker 7: We have to get away from fed talk sometime. That's
Speaker 7: where I go.
Speaker 2: This is on the New Hampshire border with Maine.
Speaker 8: Correct, the White Mountains, the.
Speaker 2: White Mountain, But it's a different White mountains than driving
Speaker 2: up the.
Speaker 8: Interstates, you know, Washington Presidential Range. Yeah, it's a lovely
Speaker 8: place to hike.
Speaker 2: It's great. When's the snow pull back? June?
Speaker 8: Oh, there has been snow every month of the year, Washington.
Speaker 2: Yes, okay, Well, great to have you here. Welcome ninety
Speaker 2: two nine FM up in Boston as well. We go
Speaker 2: up to montcatad and mill Knocket. Good morning, Laurence Seidelbaker.
Speaker 2: AI in its effect on our economy, do we understand
Speaker 2: our productivity? Do we understand what's going on in technology.
Speaker 7: I don't think we have a full grasp yet. I
Speaker 7: think there's a lot more to be done with AI
Speaker 7: in productivity, we to date haven't really seen the games.
Speaker 7: We see the need right. We have a very tight
Speaker 7: labor market. We still have very critical skills gaps. But overall,
Speaker 7: I think we're still looking for those fits. I see
Speaker 7: a lot of companies doing the throw money at the
Speaker 7: problem approach to AI. They're telling their employees just use
Speaker 7: it somehow. I don't care how, but do something with AI.
Speaker 7: It's not always the most effective. It's not always the
Speaker 7: most cost conscious way to use AI.
Speaker 4: Lauren, I know in your research you work a lot
Speaker 4: with small, mid sized companies.
Speaker 5: How are they.
Speaker 4: Dealing with tariffs, trade uncertainty, maybe a little bit of
Speaker 4: inflation percolating out there, maybe a little bit of a
Speaker 4: slowing economy.
Speaker 5: How are they seeing things?
Speaker 8: More than anything? They're in a weight and see mode.
Speaker 7: We see this just with uncertainty with tariffs, with every
Speaker 7: new policy that no one saw coming even a week ago.
Speaker 7: Everyone just wants to know what they're up against. But
Speaker 7: I'm getting the sense lately that that tide is turning.
Speaker 7: I think we almost have uncertainty fatigue. At some point
Speaker 7: you just.
Speaker 2: Need to make for the show start there, Paul, So, Paul,
Speaker 2: I think this is a really really important point. Golden
Speaker 2: Sachs publishing this weekend with a three four five month rollout.
Speaker 2: So do you buy the gradual roll into tariff angst
Speaker 2: for our listeners and viewers or are you going to
Speaker 2: be a Lauren Seidelbaker optimistic?
Speaker 8: I can't be an optimist. I am an economist. After all,
Speaker 8: those two are mutually exclusive.
Speaker 7: But at the end of the day, we see businesses
Speaker 7: really making decisions despite even something like tax implications, right
Speaker 7: we talk about tax rates. We have found in our
Speaker 7: analysis that does not materially change business profitability over the
Speaker 7: long term, business investment over the long term. So it
Speaker 7: seems like the business world they have a sense of what.
Speaker 8: They need to do.
Speaker 7: They've been through the NBA programs, right, they know the
Speaker 7: theory behind it, and so it's just a matter of
Speaker 7: doing it. At some point, we've had a multi month
Speaker 7: uncertainty delay. We're starting to see the rubber meet the road.
Speaker 4: How do you think the Federal Reserve is going to
Speaker 4: react to all this uncertainty? What are you guys thinking
Speaker 4: about that.
Speaker 7: Really, I see inflation more than anything else being the
Speaker 7: key to siding factor. Labor market, as I mentioned, still tight,
Speaker 7: some cracks forming, but I still see general balance in
Speaker 7: the labor side of things. It's really the inflation side
Speaker 7: of the dual mandate where we are starting to get nervous.
Speaker 7: I think tariffs are taking much more time to feed through.
Speaker 7: So whether you believe tariffs are a one time step
Speaker 7: up in prices, we see other fundamental pressures. I don't
Speaker 7: think tariffs are really going to come through. The data
Speaker 7: for between nine and eighteen months is on average how
Speaker 7: long it takes.
Speaker 8: So we're not there yet.
Speaker 4: The consumer, the consumer seems to be kind of hanging
Speaker 4: in there. I know there's a bifurcated sense of the consumer.
Speaker 4: You know, the mid to high end doing quite well,
Speaker 4: the lower and maybe struggling.
Speaker 5: How do you thinking about the consumer?
Speaker 7: All we can do is look at the median consumer.
Speaker 7: So you're right, there's a lot going on beneath the surface.
Speaker 7: If you own your home, if you're invested in equity
Speaker 7: markets versus if you are really feeling this pinch of inflation.
Speaker 7: Tariffs specifically they hit those lower income earners much more strongly.
Speaker 8: That's just how the math works out.
Speaker 7: But on median again, with a tight labor mark, more
Speaker 7: folks can get jobs. Yes, there might need to be
Speaker 7: some reskilling. There are some skills gaps that we still see,
Speaker 7: but overall, more people making more money.
Speaker 8: Wages are still outpacing inflation.
Speaker 2: We go to eco go, they go to the lord's
Speaker 2: sidele Baker. The CPI is a tickop. I mean basically
Speaker 2: a CPIX food and energy month over month. McKee looks
Speaker 2: at it. I don't point two to point three year
Speaker 2: over year two point seven to two point eight regular
Speaker 2: CPI two point nine to three point zero. I get
Speaker 2: the nudge up. Do you look at that as a
Speaker 2: linear function? Dare I say? Out there four percent top
Speaker 2: line CPI?
Speaker 8: I think that is well within the range of possibility.
Speaker 2: What is the outcome of that? Forget double major Wellesley
Speaker 2: Economics and religion. Yes, that means she went to Patriots,
Speaker 2: stay red Sox baseball. Okay, you're religion major from Wellesley?
Speaker 2: What is the political religion of this nation? The day
Speaker 2: we print four percent?
Speaker 7: At that point, I think the Fed has their hands tied.
Speaker 7: I think we might see a couple more rate increases,
Speaker 7: call it twenty five maybe fifty basis points. I know
Speaker 7: I've been hearing talk of three cuts this year. I
Speaker 7: think that's going to be a tough reason.
Speaker 2: Some people out there are talking, say you're not listening
Speaker 2: to show enough. Some people are talking seven rate cuts.
Speaker 8: I've heard seven, and you're going to wait with you.
Speaker 2: I love your optimism, seriously, folks. So she's here, But
Speaker 2: if we get Lauren's Sidelbaker optimism, we get four percent
Speaker 2: CPI what does that mean to our listeners and viewers? Besides,
Speaker 2: a grocery store is expensive.
Speaker 7: I think you can't be waiting for rates to go
Speaker 7: back to the lows that they were just a few
Speaker 7: years ago. I see rates going up, not down, and
Speaker 7: again maybe a couple bumps in the road to get there.
Speaker 8: But I really would be if.
Speaker 7: You need to be doing borrowing or refinancing, now is
Speaker 7: the time to do it.
Speaker 8: I'm not waiting to time.
Speaker 7: The low for the sake unless you're very, very interest
Speaker 7: rate sensitive. The sake of twenty five maybe fifty basis points,
Speaker 7: what are you for going? What's the opportunity cost of
Speaker 7: that to risk timing that exact LFE.
Speaker 8: I don't think it's worth it.
Speaker 4: What's an unemployment rate that you think gets the Fed's
Speaker 4: attention here, because right.
Speaker 5: Now you mentioned you know, good question.
Speaker 4: The labor market's pretty solid, although it's maybe it's tougher
Speaker 4: to get a job than it was a couple of
Speaker 4: years ago, but generally most people who want jobs have
Speaker 4: their jobs.
Speaker 5: Wages are growing three, four or five percent. What is
Speaker 5: your view of the labor market.
Speaker 7: So one metric that I'm looking at even more than
Speaker 7: the unemployment rate, that's the balance between unemployed workers and
Speaker 7: job openings. That's one point zero four, so just a
Speaker 7: hair over one worker per available job opening. Now that balance,
Speaker 7: I think we are in balance.
Speaker 8: It's just that both of those numbers are lower. There
Speaker 8: are relatively fewer job seekers right now.
Speaker 7: We'll see that trend continue with negative net migration this year.
Speaker 8: But we also have.
Speaker 7: Fewer job openings as businesses they're just holding back, they're waiting.
Speaker 7: So that balance, I think on both sides we can
Speaker 7: be in balanced, even at lower levels. It's just easier
Speaker 7: to knock it out of balance.
Speaker 2: Out on YouTube, a brilliant live chat. Thank you so
Speaker 2: much for this quote. The rich get richer, the poor
Speaker 2: get poorer. I mean, that's really what this is about,
Speaker 2: isn't it. The rich you know, don't care three point
Speaker 2: eighty four percent, They're like whatever, just you know, by
Speaker 2: the avocados, I mean, it's a partition of the country. Right.
Speaker 7: At some point, again, many more of the wage gains
Speaker 7: in the past couple of years had been concentrated at
Speaker 7: the lower end of the the real wage.
Speaker 2: Negative here with what Paul Swooney's talking about, right, you know,
Speaker 2: higher inflation.
Speaker 8: That's the risk.
Speaker 7: We can only look at the media and I wish
Speaker 7: we had more granular data across the board, but on
Speaker 7: mediaan are our net consumers still doing better.
Speaker 2: This has been great. Thank you for coming in from
Speaker 2: New Hampshire. Yeah really, you know, appreciate it.
Speaker 8: Thank you for having us.
Speaker 2: Well, they're up there, you know water When I was
Speaker 2: a kid, Oh, come on, Cannon Mountain, it's like the
Speaker 2: ice age. I almost lost a child. This is over
Speaker 2: in Vermont, folks. I literally had to hold on to
Speaker 2: the middle child at the top of Jpeak. It's like
Speaker 2: one hundred miles. It's not west. You gotta understand, Lauren
Speaker 2: Sweeney doesn't ski the east. Now he's so large, he's
Speaker 2: only doing Rocky Mountain High exactly.
Speaker 4: I mean I grew up skiing all through New Hampshire, Vermont,
Speaker 4: Ocono's you know, shout.
Speaker 2: Out No, that's where I saw my first I saw
Speaker 2: you at the Wobbley barat It was a few years ago.
Speaker 4: Yep, got my first Wall Street Bonus check back in
Speaker 4: the day. Haven't been back to you since.
Speaker 2: Lauren Seidelbaker, thank you so much. ITR Economics, New Hampshire.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: Last night we had a meeting This is with Surveillance
Speaker 2: Senior executive producer Eric Mallow, Herder of Interns. Yep, it's
Speaker 2: his new title, Herder of Interns. And we had a
Speaker 2: list of people and at the top of the list
Speaker 2: on Putin Trump in Alaska was Angela's stent. Her book
Speaker 2: Putin's World is absolutely definitive. We are beyond honored to
Speaker 2: have a conversation this morning with Angela Stent. Angela, if
Speaker 2: you were in Alaska for this meeting, what would you
Speaker 2: listen for from the two?
Speaker 9: Well, I'm listening to see what it is that Putin
Speaker 9: is proposing to President Trump. And so far it seems that,
Speaker 9: you know, Ukraine is supposed to seed territory to Russia
Speaker 9: that Russia doesn't even control and really not get very
Speaker 9: much in return, maybe a freezing of the Catalines. And
Speaker 9: with Trump, I'm listening to see does he really understand
Speaker 9: that Putin isn't willing to stop this war that he's
Speaker 9: being played. So those are the things that I would
Speaker 9: be listening to.
Speaker 2: And I look, Angela at this, and of course in
Speaker 2: the Zeitgeist this morning is the build article in Germany
Speaker 2: that they got the translation run. Do we have the
Speaker 2: process and apparatus to prepare for Friday's meeting? I mean,
Speaker 2: do we have administration in place that can do this?
Speaker 9: So so far it doesn't appear that we do. I mean,
Speaker 9: normally these kinds of summits are well prepared in advance,
Speaker 9: their experienced diplomats or involved in them. This is the
Speaker 9: result of, you know, a long conversation between Steve and Witkoff,
Speaker 9: not a diplomat, not an expert on Russia and Vladimo Putin.
Speaker 9: We don't know the contents of it, and so we
Speaker 9: are really left in the dark about what the process
Speaker 9: is in this. And the concern is that President Trump
Speaker 9: will be there and then he doesn't have all the
Speaker 9: backing he needs and the understanding going into this about
Speaker 9: what prudent's actually trying to do.
Speaker 5: What is the role, if any, for President Zelenski.
Speaker 9: Well, so far, President Zelenski, of course, has been excluded
Speaker 9: from this. The US and Russia are talking about his
Speaker 9: own country. President Trump has spoken to him, He's in
Speaker 9: He's Zelenski's in very close contact with the Europeans. The
Speaker 9: Europeans are trying to impress on President Trump that he
Speaker 9: has to go into this clear eye and realistic about.
Speaker 10: What Putin is trying to do.
Speaker 9: But to think about two countries trading away another country's
Speaker 9: territory without that country being present, I think that theres
Speaker 9: a lot of thinking about.
Speaker 4: Does President Putin have any intention to sign a ceasefire
Speaker 4: on Friday or even discussing it?
Speaker 10: I very much doubt it.
Speaker 9: I think what he's trying to do is to probe
Speaker 9: and see how much he can get from President Trump.
Speaker 10: So I would not hold your breath on.
Speaker 2: That, Angela. Get the drama. Max Putin writes it up
Speaker 2: in the Washington Post and others, And we don't need
Speaker 2: to do a history lesson in nineteen thirty eight Munich,
Speaker 2: where Neville Chamberlain gave away a piece of Czechoslovakia and
Speaker 2: look what happened. But do you see that moment here?
Speaker 2: I mean, these two world leaders, do we, Angela? Do
Speaker 2: we know where they're going to meet in Alaska? Yet?
Speaker 9: I don't know what they're going to meet in Alaska?
Speaker 9: And it's interesting. So for Putin, all he has to
Speaker 9: do is fly over Russia. If he were to meet
Speaker 9: Trump in many other places, he probably couldn't because there
Speaker 9: are a lot of countries he can't fly over.
Speaker 10: Because it's interesting. Interesting, So we.
Speaker 2: Don't know, Okay, So maybe they're going to meet on
Speaker 2: those two islands. They can wave at each other across
Speaker 2: the bearing straight Angela's stent discuss what's in the zeitgeist
Speaker 2: this morning of illusions to two years before World War Two?
Speaker 10: Well, I think you know two years before World War two?
Speaker 9: If you think about Neville Chamberlain, I mean he was
Speaker 9: trying to postpone a war because you know, he and
Speaker 9: he believed that if he just gave Hitler what he wanted,
Speaker 9: which was, you know, talking about what was happening to
Speaker 9: the Zudatelane, then there wouldn't be a war.
Speaker 10: I think we may still be at that point.
Speaker 9: I think there's enough a full comprehension among the in
Speaker 9: the Trump administration that you know that from Putin. The
Speaker 9: subordination of Ukraine is the goal now, but it's the
Speaker 9: first step towards really retaking influence and land in what
Speaker 9: used to be the former Soviet Union. Putin has expansionist aims,
Speaker 9: and I think maybe in nineteen thirty eight mister Chamberlain
Speaker 9: didn't understand exactly what Hitler's expansionist aims were. So I
Speaker 9: think people need to understand what this is about. And
Speaker 9: I'm sure that that's not fully appreciated in the White House.
Speaker 10: Yet.
Speaker 4: It seems, Angela that most world leaders around the world
Speaker 4: have bent their need to President Trump, whether it's on
Speaker 4: tariffs or other issues. That's not the case with mister Putin.
Speaker 4: Does he how do you think he've vieused President Trump
Speaker 4: and the administration.
Speaker 10: Well, I think he.
Speaker 9: Believes that mister Trump really wants to have a better
Speaker 9: relationship with Russia. Trump started out by saying we need
Speaker 9: to reset and improve relations. I think the Russians understand
Speaker 9: that there's inconsistency in the position of the Trump administration.
Speaker 9: They're going to push as far as they can. This
Speaker 9: is the old if you like Soviet style of negotiation.
Speaker 9: What's mine is mine and what is what's us as negotiable.
Speaker 9: So I think they still believe that they can get
Speaker 9: President Trump to agree to terms that would be really
Speaker 9: very unfavorable for Ukraine and would give Russia most of
Speaker 9: what it wants.
Speaker 2: Angel Ston, the cover of your book, Putin's World, folks,
Speaker 2: it was my book, I think I can't remember, Paul
Speaker 2: if it was Book of the Year, Book of the
Speaker 2: sor whatever. Read the book Putin's World, Angela Stent with
Speaker 2: a new chapter out now. Bill Burns, who has a
Speaker 2: little bit of experience at CIA, says Putin's World is
Speaker 2: a definitive guide to understanding the tangled history of post
Speaker 2: Cold War Russia and its place in the world. You
Speaker 2: got a great photo on the cover, Angela. I'm sure
Speaker 2: you picked it out of the forty seven foot table
Speaker 2: with mister Putin sitting at one end, and I think
Speaker 2: mister mccaran said at the other end. That's not going
Speaker 2: to be Alaska. Is it going to be all smilies
Speaker 2: and you know, arm patting and all that. I mean,
Speaker 2: is it going to be touchy feely?
Speaker 10: It may well be.
Speaker 9: I mean, you've seen the pictures of mister Whitcoff and
Speaker 9: put mister Whitcoff putting his hand on his heart, smiling,
Speaker 9: shaking his hand. I don't know what President Trump will do,
Speaker 9: but it's not going to be this long table. So
Speaker 9: there will be smiles, at least for the public.
Speaker 2: Azo you're not old enough to remember this. I remember
Speaker 2: when khrushchef took a shoe off and pounded in the UN.
Speaker 2: Have we treated Khrushchev or Bresnem or Stylin or dare
Speaker 2: I say Lenin? Have we treated them like the administration's
Speaker 2: treating mister Putin. It's absolutely original, isn't it.
Speaker 9: Oh, it's completely original. No, we were very suspicious of them.
Speaker 9: They were communists. We knew that they were at least
Speaker 9: officially committed to taking over the world.
Speaker 10: We were very wary with them.
Speaker 9: Having said that, you know, Nixon and Brezhnev you know,
Speaker 9: did shake each other's hand. We're all smiles. Bren have
Speaker 9: visited the US, drove around in big cost so there
Speaker 9: was some of that. But this is a very different
Speaker 9: feel to what it was like impossible during the Cold War.
Speaker 2: This is just it's like the new season is slow horses.
Speaker 2: I mean, mister Trump and mister Whitcoff and al should
Speaker 2: just watch slow horses. I mean, that's what the that's
Speaker 2: how they go prepared for.
Speaker 4: So, Angela, is there a scenario here where I don't know,
Speaker 4: some kind of deal gets signed between Russia and President Trump,
Speaker 4: and if I'm a Ukraine I'm just sitting on the
Speaker 4: outside saying what do I do here?
Speaker 10: I mean that is that eveninitely a scenario?
Speaker 9: I mean the Russian goal is to sign and agree
Speaker 9: with President Trump it's favorable toward Russia and then blame
Speaker 9: the Ukrainians if it doesn't work out, because the Ukrainians
Speaker 9: are not going to sign onto a deal that status
Speaker 9: advantageous for them, and the Europeans are going to back
Speaker 9: them in this. So that's definitely a scenario that some
Speaker 9: deal is signed between the US and Russia, but in
Speaker 9: fact the Ukrainians won't accept it.
Speaker 2: And just said one final serious question. Then this goes
Speaker 2: back to mister Gates and Condaliza Rice. I believe in Belgrade.
Speaker 2: I mean, I get it. There's territory in eastern Ukraine
Speaker 2: and they've got four acres of Russia. It comes back
Speaker 2: to the emotion of Crimea. Will that even be discussed
Speaker 2: at this meeting about the sheer reality of Crimea on
Speaker 2: the Black Sea?
Speaker 9: I don't know whether it'll be discussed, but it really
Speaker 9: doesn't seem to be an issue. I mean, I think
Speaker 9: the Trump administration is assuming that the Ukrainians can't do
Speaker 9: anything about the annexation of Crimea, and that they will
Speaker 9: at least day facto.
Speaker 2: I have to recognize, what do you need from Secretary Rubio?
Speaker 9: Well, I think Secretary Rubio needs to, you know, to
Speaker 9: make sure that concessions are not made to Putin that
Speaker 9: are not warranted. He seems to he I think, understands
Speaker 9: the situation pretty well. He was previously at least a
Speaker 9: hawk on Russia, so he needs to somehow be a
Speaker 9: restraining factor in.
Speaker 2: This wonderful This was great. Paul Angelas Stin, thank you
Speaker 2: so much. On Putin's World, we begin our coverage of
Speaker 2: this historic summit meeting. It is scheduled for Friday. David
Speaker 2: Girl will join us later in the show this morning
Speaker 2: to provide further briefing. It is a story on a
Speaker 2: move to say the least.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
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Speaker 2: Jeffrey Meacham joins now from City Group with an acclaimed career.
Speaker 2: Counting the free cash flow of healthcare. How much in
Speaker 2: a value trap is a healthcare sector right now? Jeffrey,
Speaker 2: it's pretty bad.
Speaker 11: I would say, I think the main catalyst is getting
Speaker 11: over this policy of worry. But for sure, though these
Speaker 11: companies and large cap pharma, you know, devices, services, et cetera,
Speaker 11: are generating a ton of cash. You're totally right, But
Speaker 11: we just have to get through the you know, the
Speaker 11: policy over hanks that you know that been prevalent pretty
Speaker 11: much all year.
Speaker 2: Full disclosure, folks. They have a huge bias to Eli Lilly.
Speaker 2: Some of the FAMI is from Indiana and we're original
Speaker 2: shareholders back you know when the covered wagons were there.
Speaker 2: ELI Lilly last ten years twenty six zero point ninety
Speaker 2: seven five percent per year. What, Yes, Eli Lilly is
Speaker 2: a mag seven performance Jeffrey Meacham. It's tanked the last
Speaker 2: twelve months down whatever huge amount down? Is this the
Speaker 2: by opportunity of a lifetime in the giant of Indianapolis.
Speaker 2: I really do think so.
Speaker 11: I mean, honestly, if you look at the past week,
Speaker 11: let's just let's just go back there. The second quarter was,
Speaker 11: you know, was fantastic. We didn't see as much or
Speaker 11: we really saw no resilience, but not as many issues
Speaker 11: as Novo had for sure. In fact, you know they're
Speaker 11: gaining share, you know, growth rate raising, guidance, growth rate higher.
Speaker 11: I think the one you know, kind of negative surprise
Speaker 11: was the orphiklepron data the oral GLP one and you
Speaker 11: know that's what happens when you have a higher multiple stock,
Speaker 11: you know, and people expect, you know, twelve fifteen percent
Speaker 11: weight loss and it's literally only eleven. So that's a
Speaker 11: massive overcorrection, right that I think is completely ridiculous. We're
Speaker 11: going to look back in about a year from now
Speaker 11: when this drug launches and you know it's several billion
Speaker 11: in the first month.
Speaker 2: That laugh at this, I suspect, Paul, do you see
Speaker 2: that for Bloomberg Radio? You're missing this moment On YouTube
Speaker 2: you can observe it. Mister Meacham has the gold trim
Speaker 2: behind him. Sure in his YouTube video shot. Just like
Speaker 2: the isn't it? Just like it's like, you know, the whole,
Speaker 2: the whole houses.
Speaker 5: Styles and new styles.
Speaker 4: Jeffrey, can you summarize what the regulatory or policy overhang
Speaker 4: is for healthcare right at the moment and how you
Speaker 4: think it might play out?
Speaker 11: Yeah, I think the first thing is m f N, Right,
Speaker 11: So m f N is a situation where you know,
Speaker 11: most favored nation where there has to be delineation of pricing,
Speaker 11: how US compares the o U S pricing And it's complicated,
Speaker 11: and I think at the end of the day, Trump
Speaker 11: just wants to have a win where the US pharma
Speaker 11: companies get higher prices from you know, from Europe. So
Speaker 11: how that's going to take form, I think it's it's
Speaker 11: really not clear at this point. The second thing is
Speaker 11: pharma tariffs, and that's a lot more simple, and that
Speaker 11: just is justifying you know, companies bringing on board new
Speaker 11: manufacturing sites, et cetera. And that I think is you know,
Speaker 11: more likely to be resolved I think by the end
Speaker 11: of the year. And you know, and as Trump has
Speaker 11: said in the past, it's been a bit of a
Speaker 11: weight in right. You have like essentially, you know, twelve eighteen,
Speaker 11: twenty four months to bring those manufacturing plants you know,
Speaker 11: and facilities here to the US. And then the last
Speaker 11: one it's a little bit more nebulous. I'm not sure
Speaker 11: about PBM reform. That's that affects the industry indirectly. And
Speaker 11: the other piece is just looking at things like you know,
Speaker 11: vaccines and how that you know that policy is going
Speaker 11: to play out. So it's mostly BARMA tariffs and MFN
Speaker 11: has been the biggest overhang.
Speaker 4: Does any of that result in lower drug prices for
Speaker 4: US consumers?
Speaker 2: I suspect it will.
Speaker 11: But the one so, the one angle in MFN is
Speaker 11: is a consumer base, you know, and this is what
Speaker 11: Trump has mentioned. It's actually pretty insightful if you look
Speaker 11: at the you know, the US in drug industry, it's
Speaker 11: mostly been just like Europe, it's been paid for by
Speaker 11: medicare or you know, private insurance or corporate insurance. A
Speaker 11: drug like Warford glipbarm for obesity is perfect for this,
Speaker 11: right if you think about, you know, how much out
Speaker 11: of pocket is it worth to you? You know, And
Speaker 11: so that's something where Trump is trying to evolve the
Speaker 11: consumer angle into this, and I think I think that's
Speaker 11: a smart strategy. And every company we've talked to in
Speaker 11: major pharma this quarter has talked about Yeah that we're
Speaker 11: trying to figure out how that would play out, but
Speaker 11: I think that would if you if you carve out
Speaker 11: the PBM industry, you know, they you know, up charge
Speaker 11: I don't know, eight ten, fifteen percent in some cases
Speaker 11: maybe more. That could save the US you know, consumer
Speaker 11: a ton.
Speaker 2: Jeffrey, do you have a single best buyke? We talked Lily,
Speaker 2: but is there a Jeffrey Meacham single best buy right now?
Speaker 2: I would say Lily.
Speaker 11: Lily in Vertex of the two that we've liked, and
Speaker 11: both have been really shelled and asked stuff that was
Speaker 11: a month or so. But Vertex is one where you know, look,
Speaker 11: they have assistant Vibrosa's business which is you know, which
Speaker 11: is legendary. I mean it's fifteen billion peak potential, you know,
Speaker 11: very high margin, but they need an Encore and they've
Speaker 11: struggled with that, and they have a pain franchise, they
Speaker 11: have a sickle cell cell therapy.
Speaker 2: All that.
Speaker 11: It's all tracking, but no one's worried about the underlying
Speaker 11: based business right and yet the multiple again has come
Speaker 11: in a ton. But those two are the best growers
Speaker 11: I think in large cat therapeutics.
Speaker 2: This has been a pleasure. Jeffrey Mentium, thank you so
Speaker 2: much for City Group.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station, Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: The newspapers is actually worked all weekend on this. I mean,
Speaker 2: it's just amazing. I mean she goes twenty four to
Speaker 2: seven to prepare for this. The newspapers would Lisa, and
Speaker 2: the Monday edition.
Speaker 10: The Monday edition.
Speaker 6: Okay, so I'm not sure if either you ever received
Speaker 6: a ticket in the mail for speeding or those red
Speaker 6: light cameras I hacking.
Speaker 4: My vespa inappropriately at the beach, got it in the mail?
Speaker 5: What I the spot that was not a dedicated parking spot.
Speaker 5: Boom spring lay hit me up for fifty five big ones.
Speaker 6: Oh my god, yeah, are you going to go to court?
Speaker 4: No, but a woman says she doesn't pay her tickets.
Speaker 4: She says there's no sign. It says I can't pay.
Speaker 4: I can't park here, so I'm not going to pay.
Speaker 6: Well, that's the thing. So people are getting mail tickets right.
Speaker 6: I don't know if you get one for the Vesta
Speaker 6: for the noise, because it's not a noisy. It's not
Speaker 6: like a Harley or anything like that. But there are
Speaker 6: some noise cameras that are giving people and sending them
Speaker 6: in the mail, you know, just like the red light,
Speaker 6: just like the speeding tickets that I've.
Speaker 8: Gotten to from that. So they're starting to go up.
Speaker 6: Tickets can range anywhere from fifty dollars all the way
Speaker 6: to eight hundred dollars. People are getting tickets for these noises.
Speaker 6: And we're talking about loud. Is it coming from it right?
Speaker 6: The revving engines, the mufflers that people make on purpose
Speaker 6: to beat.
Speaker 8: Up the sound.
Speaker 6: It comes from the municipality. So there are noise cameras
Speaker 6: that are out there and they're tracking as cars go
Speaker 6: by to see how loud their car is, and if
Speaker 6: it's over a certain decipel you.
Speaker 5: Will get a ticket in the mail.
Speaker 8: And people are getting these.
Speaker 6: I mean especially Newport Rhode Island is a big spot
Speaker 6: because people are saying, who live there. The tourists come
Speaker 6: in and they're making all this racket and we don't
Speaker 6: want it anymore. But New York City is actually the
Speaker 6: number one noise camera at the center. I wasn't aware
Speaker 6: of this, but they're fine. Started at eight hundred dollars,
Speaker 6: they've already issued more than twenty five hundred tickets since
Speaker 6: twenty twenty one, so they're really really sending this out.
Speaker 6: But like you said, people aren't paid.
Speaker 4: I like the signs in New York City to say
Speaker 4: don't honk your horn, and you hear it all the time.
Speaker 6: But that's another reason for the noise thing, is the
Speaker 6: honking the horn. So this is becoming more of an issue. Okay,
Speaker 6: So this one is in Lucashaw's screen Time newsletter. So
Speaker 6: we've been talking about, Yeah, how a lot of more
Speaker 6: sports are are entering the streaming market, right, So so
Speaker 6: he took a look into why Amazon, Apple, Netflix, YouTube
Speaker 6: are kind of capitalizing on it. He said, the problem
Speaker 6: is that leagues are looking for these bigger paydays right
Speaker 6: because they're the only kind of entertainment program that can
Speaker 6: pull in these live audiences. But their partners, which are
Speaker 6: broadcast in cable networks, traditional partners, they've shrunk, traditional media
Speaker 6: companies like Disney, Paramount, Global, Warner Brothers, they can they
Speaker 6: have a limit on how much they can spend. So
Speaker 6: in order to get these big payouts that they want,
Speaker 6: they're going to have to divide the rights among like
Speaker 6: a different and a wider.
Speaker 2: I've read this too. Thank you Lisa for bringing this up, Paul.
Speaker 2: If I'm watching the NFL, which folks, I don't do.
Speaker 2: I don't do much NFL, but if I was at
Speaker 2: a given game, I really don't. I got like, what
Speaker 2: five places I have to look?
Speaker 5: Yeah, including Yeah, absolutely. But the big, big.
Speaker 4: Sea change will be when one of these Sunday afternoon
Speaker 4: packages and ones that either go to Fox or CBS.
Speaker 4: If one of those packages, which are national packages, go
Speaker 4: to a streaming service, that's gonna be the sea change.
Speaker 4: And it will happen absolutely absolutely because that's just where
Speaker 4: the eyeballs are. So you know, so the nobody's better
Speaker 4: than monetizing broadcast rights in the NFL. They create as
Speaker 4: much demand as they cannot, cross as many bitters as
Speaker 4: they can.
Speaker 2: Both prices go on quickly. Is this because of Pete Rosel?
Speaker 2: Do we underestimate what Pete Rosel invented?
Speaker 5: Yeah? Yeah, he certainly was.
Speaker 4: But Roger Goodell, who gets paid a gajillion dollars here,
Speaker 4: has just minted money for his employers, which are the
Speaker 4: owners thirty second squeeze one more in lea.
Speaker 5: You got it. Okay.
Speaker 6: People use chat sjubyt for a lot of things, but
Speaker 6: there's one thing that Sam Altman says he is not
Speaker 6: very happy about. It's how people are using it as
Speaker 6: a therapist or a life coach. He said that, you know,
Speaker 6: they're they're tracking people's sense of attachment to AI because
Speaker 6: the problem is people who are maybe lonely or whatever,
Speaker 6: they go on chat shoobyt and they start interacting and
Speaker 6: then the query start, query start, and so it becomes
Speaker 6: like this therapist. And he says, that's not the right
Speaker 6: way to to use it. So that's a little bit.
Speaker 5: Scary to me.
Speaker 2: It's a time bag. I mean, like the you know,
Speaker 2: the chet dept. Stuff that's different than doing.
Speaker 6: Searches correct correct, because it keeps asking you what prompts
Speaker 6: you maybe would you like to know more about this?
Speaker 5: Would you like?
Speaker 6: And it kind of keeps prompting you to ask, did you.
Speaker 2: Spend all day Sunday working on newspapers for today?
Speaker 5: Half the day, half the day?
Speaker 2: Lisa, let say thank you so much the newspapers on
Speaker 2: a Monday. We promised Tuesday will be an improvement.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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