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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us Live weekdays at ten am

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Speaker 1: Easterned on Apple Coarclay, and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Looking at the news, Met Sarah shares tumbled after Noboode

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Speaker 2: nord Dick's declined to further raise its offer for the

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Speaker 2: US maker of an experimental weight loss drug, bringing a

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Speaker 2: bidding war with Pfizer to an end.

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Speaker 3: I like the good bidding war. Being a former.

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Speaker 2: Banker, Sam Fazzelli joins US here director of research for

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Speaker 2: Global Industries. He covers all the healthcare stuff for Bloomberg Intelligence.

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Speaker 3: He's based in London.

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Speaker 2: So how good is this Met Sarah company? Sam and

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Speaker 2: their drug? How good is met Sarah? Because boy, it

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Speaker 2: seemed like everybody wanted a piece of it.

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Speaker 4: Yeah. So, Paul, before this last week, sorry, I've been

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Speaker 4: off and you know what happens to your brain when

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Speaker 4: you're off for a few days. Before last week, which

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Speaker 4: is called we had the obesity week right where my

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Speaker 4: colleague mug Show was at. There was a little bit

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Speaker 4: of confusion around how good their data was, how good

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Speaker 4: their assets were in the obesity space, and some questions

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Speaker 4: about can they really be dosed once a month if

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Speaker 4: people wanted to do that. Do we really know what

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Speaker 4: the side effect profile is like? Given the way that

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Speaker 4: disclosed so far, and of course last week you cleared

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Speaker 4: most of it up. The side effect profile is the

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Speaker 4: same as most of these GLP wilogy. You get some nausea,

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Speaker 4: in some tough cases, you get some vomiting, but those

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Speaker 4: are early on and they get out of the way

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Speaker 4: if you can withstand them. You seem to get the

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Speaker 4: benefit and it seems to work pretty well as a

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Speaker 4: once monthly drug, but there's always more wood to be chopped.

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Speaker 4: You know what these things are like. So the assets

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Speaker 4: look great, they're competitive. Adfiser just stood this ground and

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Speaker 4: put the bid up. And of course I think what

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Speaker 4: Clinch did was what we'd be going on for ages

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Speaker 4: about for the past ten days or twenty days about,

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Speaker 4: is that Nova's deal had the risk of not being

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Speaker 4: able to pass due to competition competition issue with FTC issues,

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Speaker 4: and it sounds like the FTC had had given Metzera

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Speaker 4: call saying look, if you go with that there is

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Speaker 4: a risk you won't close, so do whatever you think

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Speaker 4: is the right thing for your shareholders. And they did

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Speaker 4: in the end and find as it did a bit

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Speaker 4: spit right.

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Speaker 5: So Novo Nordisk one in a way in that Vizer

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Speaker 5: is paying up more. Does that actually work in Nova

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Speaker 5: Nordisks favor or does it? Is it still as desperate

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Speaker 5: as it was before to look for some new catalysts

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Speaker 5: in the obesity market.

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Speaker 4: I mean, I'm not going to call Novo desperate. I

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Speaker 4: think they have assets in there. I think they wanted

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Speaker 4: to add some more options to their their sales reps

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Speaker 4: bags over time, so I wouldn't call them desperate, but

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Speaker 4: they're obviously by going after this, they did say that

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Speaker 4: we need more assets in our bang so and Lily

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Speaker 4: wasn't in the game. So it just gives them. That

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Speaker 4: gives you that flavor that they are and I think

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Speaker 4: the market's telling you that. Look at the divergence of

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Speaker 4: the share price performance of Lily versus never noticed that

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Speaker 4: there's the market favoring the drugs that Lily has got

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Speaker 4: on the market today and to compete they needed to

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Speaker 4: get some more. So I think this is not the

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Speaker 4: end for novo at all in this space. There's lots

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Speaker 4: of other interesting obviously assets coming up with different mechanisms.

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Speaker 4: That's the thing that I think the company is now

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Speaker 4: going to have to think about rather than trying to

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Speaker 4: go after the same mechanism all the time.

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Speaker 2: So, Sam, all these big, big cap pharmaceutical companies that

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Speaker 2: you've covered for decades, I kind of always thought they

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Speaker 2: were big diversified portfolios of lots of different drugs and

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Speaker 2: therapeutics and you know, but Bay, when I look at

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Speaker 2: your stocks this year, it seems like there's halves and

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Speaker 2: have nots. If you have obesity exposure, the stocks up,

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Speaker 2: and if you don't, they're down. Is that kind of

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Speaker 2: how your world's evolved into over the last several years.

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Speaker 4: I would just give you one little caveat to the Astrosenicasenica.

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Speaker 4: I think it's doing fine. And then they have an

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Speaker 4: obesity asset, but it's not their major game. Their big

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Speaker 4: plays in oncology cardiovascular is there and they're adding it

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Speaker 4: to it. So, yes, obesity the has been the talk

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Speaker 4: of this this past twenty twenty five. I think you'll

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Speaker 4: still be the talk of twenty twenty six. But there's

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Speaker 4: a lot more going on in pharma neuroscience. Diseases of

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Speaker 4: the brain, diseases of mental health are getting much more attention.

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Speaker 4: Cardiovascular aside from obesity, is getting quite a lot of

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Speaker 4: attention in heart to treat hype atension, et cetera. I

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Speaker 4: have to tell you, I don't think there's an area,

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Speaker 4: perhaps antibiotics set aside, that is not getting a significant

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Speaker 4: amount of progress across some farmer company somewhere.

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Speaker 5: Is what happened with Metsara, no Nordisk afisor an unabashed

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Speaker 5: victory for Eli Lilly. I mean, does it just kind

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Speaker 5: of keep on moving forward or does any of this

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Speaker 5: kind of hurt Eli Lilly's market position.

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Speaker 4: No, I mean, at the end of the day, there'll

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Speaker 4: be multiple players in this space as that are now

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Speaker 4: too at least, and I think Eli Lily is currently

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Speaker 4: very well placed with the assets that they have today

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Speaker 4: to compete, and they're showing that they're competing very very

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Speaker 4: effectively and in some cases winning market share from Noma,

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Speaker 4: not disc.

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Speaker 2: Sam got about thirty seconds left. What's that you have

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Speaker 2: a little hindsight here, President Trump threatening medical funding at.

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Speaker 4: The university level.

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Speaker 3: What's the updated there with the status of that.

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Speaker 4: Yeah, it seems to be that some universities are getting

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Speaker 4: some reprieve from general funding issues, but medical funding is

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Speaker 4: something that I keep scratching my head on. I don't

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Speaker 4: understand why you would want to cut off funding to

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Speaker 4: research and funding to medicine in general, because that is

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Speaker 4: a major driver of economic boom in the US. And

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Speaker 4: it's not just medicine, it's also stem I don't understand it.

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Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Man Deep Singh just barely made it under the wire

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Speaker 2: to get here to talk to us today. Then I

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Speaker 2: was going to give him a hard time, but then

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Speaker 2: I remember he has like five other jobs. He's like

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Speaker 2: senior research channels covering technology. He manages a bunch of people.

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Speaker 5: He's also updating the AI tech guide, that that slide

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Speaker 5: that you're always talking about.

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Speaker 2: You know, all right, we'll cut a break here. Many

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Speaker 2: Deep sing joints us here. He's our senior techauist the

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Speaker 2: Bloomberg Intelligence managing it's like hurting it.

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Speaker 4: You know, a group of cats.

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Speaker 2: And you're managing research channels because they, by definition, they

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Speaker 2: don't want to be managed. You know, Taiwan semiconductor manufacturing,

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Speaker 2: we don't pick attention to this one.

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Speaker 3: It's chips and stuff like that. That's not a lot

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Speaker 3: of fun.

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Speaker 4: But this is interesting.

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Speaker 2: They reported some numbers slower growth, and I think for

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Speaker 2: those that are concerned about the growth of this AI

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Speaker 2: juggernaut that we've all been on over a couple of years,

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Speaker 2: you're wondering does slow and growth at Taiwan Semi confector

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Speaker 2: mean anything for the industry? Written large, Andy, what do

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Speaker 2: you think when you saw the Taiwan Semiconductor numbers.

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Speaker 6: I mean, Taiwan Semi is unique because they give you

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Speaker 6: monthly numbers. So all of our companies report on a

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Speaker 6: quarterly basis. And when I look at Taiwan Semi's quarterly results,

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Speaker 6: they had over thirty percent growth. Gave a guide where

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Speaker 6: AI would be growing, you know, almost fifty percent plus

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Speaker 6: over the next five years. And so if you know

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Speaker 6: this deceleration is happening for a reason, you know I

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Speaker 6: would attribute it to the diversification of their business, because

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Speaker 6: you have to remember Apple is more than twenty percent

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Speaker 6: of their revenue and video is close to twenty percent now,

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Speaker 6: and then they also have some auto's revenues, some analog business.

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Speaker 6: So what is happening right now is everyone is putting

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Speaker 6: their dollars in AI capex, but then they have to

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Speaker 6: take away spending from elsewhere, and so the non AI

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Speaker 6: piece of the hardware spend that seems to be slowing down,

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Speaker 6: although we haven't really seen that. Even with PC sales

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Speaker 6: things seem to be steady. But that could be one

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Speaker 6: reason I can think of in terms of why the

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Speaker 6: monthly number was slightly weak, And there could be seasonality

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Speaker 6: as well. I mean, this is a monthly number. Could

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Speaker 6: happen that the next two months actually are above thirty percent,

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Speaker 6: and then the overall quarter may still look solid.

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Speaker 5: Very good point. And just to recap the numbers, a

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Speaker 5: sixteen point nine percent increase in October sales, which was

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Speaker 5: on track with analyst estimates, but that is the slowest

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Speaker 5: pace in about eighteen months. Well, I keep reading how

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Speaker 5: TSMC is constrained by limited capacity, so if it wanted to,

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Speaker 5: it would want to actually have higher sales. It's just

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Speaker 5: physically limited.

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Speaker 6: Well limited capacity again on the AI side. Okay, so

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Speaker 6: you know TSMC does one hundred and twenty billion dollars

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Speaker 6: run rate business in a year, so out of that

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Speaker 6: AI is still fifteen percent, you know. And so from

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Speaker 6: that perspective, not everything that TSMC manufacturers is at the

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Speaker 6: cutting edge. And then you can slice it by leading

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Speaker 6: versus you know, some of the trailing notes. So from

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Speaker 6: that perspective, the utilization is far higher in terms of

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Speaker 6: the leading notes versus some of the other notes that

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Speaker 6: they manufacture on. And it could happen that, you know,

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Speaker 6: because of the lower utilization they're not seeing as much

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Speaker 6: customer orders flow in. And look, I mean it's hard

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Speaker 6: to say for sure, given you know the book of

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Speaker 6: their business and how many customers they have, and for

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Speaker 6: some customers, they're still the only game in town. You know.

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Speaker 5: So TSMC makes custom chips for companies that order it

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Speaker 5: from TSMC. It's a manufacturer overall. We know that all

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Speaker 5: these big tech companies in the US are starting to

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Speaker 5: turn on their own capabilities of making their own chips.

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Speaker 5: Is that competition or is that out of necessity? I mean,

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Speaker 5: does that take away market share from TSMC down the road.

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Speaker 6: I mean, look, if Intel is successful in terms of

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Speaker 6: reviving itself on the manufacturing side, and that's what everyone

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Speaker 6: is hoping, you know, with the initiative with the government

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Speaker 6: taking a ten percent stake Intel, that the fab side

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Speaker 6: really gets a lift in terms of other companies using

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Speaker 6: Intel fabs to manufacture chips. That's when you got to

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Speaker 6: be worried about TSMC. But for now, there is nothing

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Speaker 6: on the horizon where you think and Open Ai or

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Speaker 6: any of these chip companies is going to go to

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Speaker 6: Intel for manufacturing their chips.

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Speaker 2: And TSMC marketcap one point five trillion, stock up fifty

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Speaker 2: five zero percent this year.

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Speaker 3: Maybe I should pay a little more attention to this one.

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Speaker 3: What do you think?

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Speaker 2: In a related story in Nvidia, more Bloomberg News reporting

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Speaker 2: these people are everywhere in Nvidia, chief executive officer Jensen

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Speaker 2: Wang said he had asked Taiwan Semiconductor Manufacturing for more

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Speaker 2: chips supplies as artificial intelligence demand remained strong.

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Speaker 3: So there you go. I mean, I mean, that's hey,

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Speaker 3: is this thing slowing down? Well, not the Gensen Wong.

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Speaker 6: The Blackwell ramp up is actually accelerating. And if all

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Speaker 6: the hyperscalers are telling you they're raising their capex for

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Speaker 6: twenty twenty six and it's going to be another fifty

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Speaker 6: percent plus year. They need more TSMC capacity, and Nvidia

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Speaker 6: needs more TSMC allocation because TSMC can allocate to anyone

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Speaker 6: outside of Nvidia as well. So from that perspective, you

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Speaker 6: can see how much Nvidia cares about TSMC capacity.

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Speaker 4: Let me ask a dumb question.

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Speaker 5: I used to cover Taiwan equities when I worked in

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Speaker 5: Hong Kong, and there are two big companies in Taiwan,

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Speaker 5: TSMC and UMC United Microelectronics, and it feels like TSMC

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Speaker 5: just ran away with it and UMC is kind of

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Speaker 5: a shadow of its former self. Is there anyone any

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Speaker 5: company with in Taiwan that can really compete or even

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Speaker 5: hope to compete against TSMC?

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Speaker 6: Not right now, and especially when it comes to leading notes.

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Speaker 6: I think that's where our TSMC talking about two nanometer.

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Speaker 6: I mean, we have seen why Intel has struggled in

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Speaker 6: the last five years because they are not able to

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Speaker 6: make the note transitions even though they are a leading

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Speaker 6: note manufacturer. So from that perspective, I mean TSMC, it

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Speaker 6: feels like they have an unassailable mode, and not just

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Speaker 6: in terms of manufacturing, but also their efficiency when it

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Speaker 6: comes to using these semicap equipment tools, like they are

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Speaker 6: probably the best in terms of the leverage they have

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Speaker 6: shown in terms of the useful life of these tools

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Speaker 6: that other manufacturing companies haven't been able to show.

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Speaker 2: All Right, got about a minute and a half left.

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Speaker 2: Instead of me asking a dumb question, why don't I

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Speaker 2: just say, Hey.

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Speaker 3: What are you and your keem working on? What's the

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Speaker 3: next cool thing we need to be we're reading about

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Speaker 3: from you guys.

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Speaker 6: I mean, we are in the process of updating our

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Speaker 6: GENII numbers and they are going up for twenty twenty six.

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Speaker 6: And also there's a heavy emphasis on data centers. So

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Speaker 6: our next big report our dashboard is going to be

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Speaker 6: on data center utilization, data center capacity editions. Everyone is

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Speaker 6: talking in terms of gigawatts, so opening I said, they'll

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Speaker 6: be adding thirty gigawatts over the next five years. Well,

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Speaker 6: we want to track overall gigawats from all these vendors, Microsoft,

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Speaker 6: all the Hyperscaler.

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Speaker 3: Do we have a utilities analyst?

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Speaker 4: We do?

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Speaker 2: Who is that?

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Speaker 6: Well, I mean it's covered by multiple people. Craw Barnett

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Speaker 6: and because.

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Speaker 3: Guys, those guys become front center. I mean, do we

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Speaker 3: have the grid to power all this stuff?

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Speaker 6: I mean everyone has called that power. In fact, right now,

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Speaker 6: the consensus is your power is the biggest constraint, even

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Speaker 6: more so than the GPUs, which was the case for

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Speaker 6: the past three years.

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Speaker 5: So it's always going to be something.

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Speaker 2: Yeah, all right, And how many analysts aren't covering like

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Speaker 2: technology browding defined for BI We're close to twenty people,

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Speaker 2: twenty people globally, right, They're not just stuck in New

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Speaker 2: York everywhere?

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Speaker 4: Right there? You need that stay with us.

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Speaker 3: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am easterne on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 5: Let's head over now to company news, because we do

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Speaker 5: still have companies reporting earnings, and Tyson is the latest

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Speaker 5: to do so. Tyson of course reporting results today and

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Speaker 5: it looks like we had a fourth quarter adjusted earnings

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Speaker 5: for share Beat. And Jennifer Bartashis is joining us now.

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Speaker 5: Jen Covers Senior she's the senior retail staples and packaged

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Speaker 5: food analysts for us here at Bloomberg Intelligence, and Jen,

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Speaker 5: you know, we think about Tyson, I think about chicken

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Speaker 5: right away, and hired demand for chicken certainly was a

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Speaker 5: factor that helped fourth quarter results. But beef is going

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Speaker 5: to be a problem on the road, isn't it.

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Speaker 7: Well, it's an interesting thing because obviously Tyson has been

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Speaker 7: doing very well with the chicken business. They've invested in

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Speaker 7: the last couple of years and improving their operations and

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Speaker 7: we've seen that come through with a better margin, better

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Speaker 7: operating usage, and that sort of thing. But when we

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Speaker 7: look at the guidance for next year, over half of

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Speaker 7: their adjusted operating income is expected to come from chicken.

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Speaker 7: And for a diversified protein company, that's putting a lot

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Speaker 7: of eggs in one basket, so to speak. And so

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Speaker 7: you know it, it's doing well. There's there's a lot

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Speaker 7: of momentum behind chicken in general, but Tyson is going

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Speaker 7: to be very dependent on the continued success of that

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Speaker 7: segment to hit its guidance for next year.

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Speaker 2: Talk to us about the cattle herd in this country,

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Speaker 2: how does that work here? I mean, prices are so high,

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Speaker 2: and I thought, for like a lot of commodities, when

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Speaker 2: you see a price, you know, move materially higher, it

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Speaker 2: brings on more supply. But I guess it's a little

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Speaker 2: different in the cattle business. What's your understanding.

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Speaker 7: Yeah, it's a little bit harder in the cattle business.

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Speaker 7: You know, you have to remember that raising cattle is

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Speaker 7: a it's a capital intensive activity, and so there have

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Speaker 7: been a lot of things that have held ranchers back

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Speaker 7: from increasing the size of their herds. We've had high

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Speaker 7: interest rates because a lot of them have to borrow

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Speaker 7: in order to rebuild herds. We've had drought conditions, especially

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Speaker 7: in the West and in the South, which make it

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Speaker 7: difficult to commit to raising more animals if your land

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Speaker 7: can't sustain them. And so those are some of the

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Speaker 7: kind of structural impediments that have really held us back

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Speaker 7: from what we would typically at this point have expected

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Speaker 7: to see some rebuilding of those herds already. You know,

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Speaker 7: Tyson says they see a couple of indicators in the

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Speaker 7: Northwest and sorry in the Upper Midwest that there's some

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Speaker 7: some heifer retention coming that means that cows are not

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Speaker 7: being sent to slaughter, but it's not enough to really

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Speaker 7: move the needle. So from our estimate, we're not looking

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Speaker 7: at a meaningful change in supply until twenty twenty eight,

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Speaker 7: So you know, expect high beef pace beef prices to continue.

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Speaker 5: Yeah, okay, so not great news if you're a hamburger lover.

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Speaker 5: And it's because these consumer beef prices that are at

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Speaker 5: record highs is what prompted President Trump to ask the

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Speaker 5: DOJ to investigate the meat packing industry. He is blaming

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Speaker 5: majority foreign owned companies for driving up these beef prices. Jen,

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Speaker 5: how do you think about this?

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Speaker 7: Well, you know, when we look at this, I mean,

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Speaker 7: this seems like it's more of a political maneuver than

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Speaker 7: actually based on anything from a market perspective. At this

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Speaker 7: point we will see what the dj comes up with

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Speaker 7: and what they actually share, but this seems to be

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Speaker 7: looking for a rationalization for high beef prices versus actually

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Speaker 7: understanding what the market fundamentals are. And the other thing

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Speaker 7: you have to remember is that we import a huge

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Speaker 7: amount of beef, especially for ground beef, from Brazil, and

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Speaker 7: we have tariffs on that. So part of the part

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Speaker 7: of the government's own policy is contributing to the higher

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Speaker 7: beef prices, but that's not part of this investing at all.

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Speaker 2: All right, So what's next for Tyson is this, I mean,

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Speaker 2: are these kind of companies are they how much did

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Speaker 2: they have in their control because they don't have control

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Speaker 2: of herd sizes and bird flus and things like that,

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Speaker 2: whether the weather exactly is how do investors kind of

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Speaker 2: invest in a company like Tyson's.

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Speaker 7: Yeah, you really have to look at you know, how

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Speaker 7: how are they controlling what they can control? And so

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Speaker 7: that that comes down to their operations. Are they generating

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Speaker 7: the efficiency they need to out of their plants? You know,

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Speaker 7: are they operating at capacity? Do they still have excess

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Speaker 7: capacity to fill? It really comes down to operational execution

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Speaker 7: in this kind of backdrop when there are a lot

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Speaker 7: of unknown variables that can impact supply. But ultimately, you know,

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Speaker 7: supply at least for chicken does look pretty good. It

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Speaker 7: looks pretty solid. So if all things go well, you know,

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Speaker 7: Tyson should be in a position to be able to

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Speaker 7: hit that guidance.

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Speaker 5: Before we let you go, Jen, what does pricing for

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Speaker 5: turkeys look like as we get closer to things.

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Speaker 7: Getting Yeah, you know, turkey has been hit harder by

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Speaker 7: avian flu than chicken. And so if you're talking about

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Speaker 7: a frozen turkey, you're gonna be fine. Those turkeys have

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Speaker 7: been in frozen storage for quite a while. They'll be

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Speaker 7: ready to go. If you're more interested in the fresh bird,

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Speaker 7: your price is probably going to be a little bit

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Speaker 7: higher this year than it was last year.

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