WEBVTT - BI Weekend: Dollar Tree Dumps Family Dollar, Google's New AI Push 0:00:00.280 --> 0:00:11.160 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.280 --> 0:00:13.400 with Alex Steele and Paul Sweeney. 0:00:13.480 --> 0:00:16.680 The real op performance has been the US corporate high yield. 0:00:16.880 --> 0:00:19.239 Are the companies lean enough? Have they trimmed all the fats? 0:00:19.280 --> 0:00:22.840 The semiconductor business is a really cyclical business. 0:00:22.600 --> 0:00:26.280 Breaking market headlines and corporate news from across the globe. 0:00:26.320 --> 0:00:28.760 Do investors like the M and A that we've seen? 0:00:28.960 --> 0:00:31.920 These are two big time blue chip companies. 0:00:32.159 --> 0:00:35.920 Window between the peak and cunt changing super fast. 0:00:35.800 --> 0:00:40.840 Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 0:00:42.040 --> 0:00:44.559 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.600 --> 0:00:47.680 business stories impacting Wall Street and the global markets. Each 0:00:47.720 --> 0:00:49.560 and every week we provide in depth research and data 0:00:49.560 --> 0:00:51.680 on some of the two thousand companies and one hundred 0:00:51.680 --> 0:00:55.160 and thirty industries our analysts cover worldwide. Today, we'll discuss 0:00:55.200 --> 0:00:58.560 how Google is reshaping search around AI is at racist 0:00:58.640 --> 0:01:01.880 rivals like chat GP, plus a look at how Chinese 0:01:01.960 --> 0:01:07.600 evmaker byd is crushing competitors with a five minute charging system. 0:01:07.680 --> 0:01:10.200 But first we begin with news on the discount variety 0:01:10.240 --> 0:01:13.760 chain dollar Tree. This week, dollar Tree announced it's offloading 0:01:13.760 --> 0:01:17.200 its Family Dollar Chain for about one billion dollars to 0:01:17.240 --> 0:01:21.440 Brigade Capital Management and masseell them Capital Management. And this 0:01:21.520 --> 0:01:24.920 comes a decade after Dollar Tree brought the business for 0:01:24.959 --> 0:01:28.360 nearly nine billion dollars. For more. Co host Alex Steele 0:01:28.360 --> 0:01:31.240 and I were joined by Jennifer bartashis Bloomberg Intelligence Senior 0:01:31.280 --> 0:01:34.480 analyst Retail Stables and packaged Food. We first asked gen 0:01:34.560 --> 0:01:37.679 to break down Dollar Trees purchase and now discount and 0:01:37.720 --> 0:01:40.080 sale of its Family Dollar Chain. 0:01:40.319 --> 0:01:42.640 You are reading that right. They bought it for eight 0:01:42.720 --> 0:01:46.000 point nine billion in twenty fifteen. At that time, they 0:01:46.040 --> 0:01:49.440 had about seventy seven hundred stores and they were generating 0:01:49.480 --> 0:01:53.760 about sixteen billion dollars and they were generating about ten 0:01:53.800 --> 0:01:56.440 point five billion dollars in revenue. And you fast forward 0:01:56.480 --> 0:01:59.840 ten years of multi year investment to try to improve that, 0:02:00.360 --> 0:02:03.360 and they sold it for one billion dollars. Wow, with 0:02:03.480 --> 0:02:06.560 seventy seven hundred stores, so I only three hundred fewer 0:02:06.600 --> 0:02:13.080 stores and sixteen billion dollars in revenue. Wow, it's well. 0:02:13.720 --> 0:02:13.960 Well. 0:02:14.080 --> 0:02:16.360 One of the things I'll say is back in twenty fifteen, 0:02:16.440 --> 0:02:20.160 they way overpaid for this deal and they were in 0:02:20.160 --> 0:02:22.560 a bidding war for it with Dollar General. And I've 0:02:22.600 --> 0:02:25.000 long said that Dollar General was the winner in that 0:02:25.200 --> 0:02:29.680 because they didn't get Family Dollar, and you know Family Dollar. 0:02:29.840 --> 0:02:33.080 It came with a very worn down, tired asset base, 0:02:33.440 --> 0:02:37.960 more locations for their stores, unmotivated staff, and it's taking 0:02:38.080 --> 0:02:41.240 years of investment to try to get it to return 0:02:41.320 --> 0:02:44.760 to some some some revenue growth. And they've been successful 0:02:44.760 --> 0:02:47.560 in doing that, but there just aren't synergies with the 0:02:47.600 --> 0:02:49.120 core Dollar Tree chain. 0:02:49.520 --> 0:02:52.600 Hey, Jen, can you Dollar General Dollar Tree? Can you 0:02:52.720 --> 0:02:55.400 kind of lay out what market they serve and is 0:02:55.400 --> 0:02:56.639 there any difference between those two. 0:02:57.160 --> 0:02:59.720 There actually is a difference between the two. Both of 0:02:59.720 --> 0:03:03.160 them tend to serve slightly lower income households, but the 0:03:03.160 --> 0:03:06.560 main difference is that Dollar General is very focused on 0:03:06.680 --> 0:03:10.960 the rural communities and actually on their left earnings call, 0:03:11.040 --> 0:03:14.200 they talked about closing some more of their underperforming urban 0:03:14.280 --> 0:03:18.240 locations because they just haven't been successful expanding into that space. 0:03:18.720 --> 0:03:22.040 In contrast, more Family Dollar stores are in the more 0:03:22.160 --> 0:03:26.480 urbanized areas, so there is overlap between the two store bases, 0:03:26.520 --> 0:03:31.399 but they're very different actual consumers, even though their core 0:03:31.440 --> 0:03:35.160 customer household income is fairly similar, intends to be in 0:03:35.160 --> 0:03:37.760 those households that earn under fifty thousand dollars a year. 0:03:38.160 --> 0:03:39.720 Tell me how these companies make money. 0:03:39.880 --> 0:03:42.480 Is it based on volume and how many people are 0:03:42.520 --> 0:03:44.560 coming in? Because I mean, I know they don't sell 0:03:44.600 --> 0:03:46.840 stuff for a dollar, but still the whole proposition is 0:03:46.920 --> 0:03:47.440 on the cheap. 0:03:47.840 --> 0:03:51.880 Yeah, it's about convenience and it's about value. And so 0:03:52.560 --> 0:03:54.840 you know what people like about these kinds of stores 0:03:54.920 --> 0:03:56.360 is that they're quick to get in and out of. 0:03:56.720 --> 0:03:59.760 They're located in very close proximity to where people live. 0:04:00.440 --> 0:04:02.240 And so when you think about people who are in 0:04:02.280 --> 0:04:04.839 that income bracket of under fifty thousand dollars a year, 0:04:05.240 --> 0:04:08.040 transportation is an issue. So having something that's in the 0:04:08.080 --> 0:04:10.880 local neighborhood that's quick to get to for fill in 0:04:11.000 --> 0:04:14.320 trips is really how they drive traffic and they make 0:04:14.360 --> 0:04:14.840 their money. 0:04:15.480 --> 0:04:18.719 What are these dollar stores saying these days jen about 0:04:19.560 --> 0:04:22.599 their customer base. We've seen, you know a lot of 0:04:22.640 --> 0:04:25.000 uncertainty com into the economic data just over the past 0:04:25.400 --> 0:04:27.280 couple of months. Here is that being reflected on what 0:04:27.320 --> 0:04:30.080 you're hearing from those dollar store management teams. 0:04:30.839 --> 0:04:34.280 It is with regards to their core customer. Obviously that 0:04:34.360 --> 0:04:37.599 customer is very strapped so when we're hearing news about 0:04:37.880 --> 0:04:41.960 potential cuts to snap benefits, which are you know, old 0:04:42.120 --> 0:04:45.680 term for that as food stamps, that impacts their core customers. 0:04:46.400 --> 0:04:50.960 People are worried about job security and potential layoffs. So 0:04:51.320 --> 0:04:54.200 for those those their core customers, there's a lot of stress. 0:04:54.320 --> 0:04:57.159 But where they are benefiting is they're getting more trade 0:04:57.160 --> 0:05:00.560 down customers. So they're getting hired income household that are 0:05:00.560 --> 0:05:04.400 in sort of middle income households and hire income households 0:05:04.440 --> 0:05:06.920 who are also a little bit worried about the current 0:05:07.279 --> 0:05:10.440 economic environment and are trading down into these stores looking 0:05:10.440 --> 0:05:13.159 for value. So there's a little bit of an offset 0:05:13.200 --> 0:05:15.800 that they can take advantage of. The question is as 0:05:15.880 --> 0:05:17.880 things improve, are they going to be able to hold 0:05:17.920 --> 0:05:21.520 on to those more valuable customers because the hiirre income 0:05:21.560 --> 0:05:24.000 customers are the ones who are buying more than just food. 0:05:24.640 --> 0:05:27.360 They're buying the more discretionary items in the store, and 0:05:27.400 --> 0:05:29.800 that's how you make your margin in this type of 0:05:29.880 --> 0:05:30.679 retail format. 0:05:31.360 --> 0:05:34.240 In terms of tariffs, do these guys have exposure to 0:05:34.920 --> 0:05:37.320 imports overseas and when you have a strategy yet. 0:05:37.640 --> 0:05:41.080 They definitely do have an exposure to tariffs, But for 0:05:41.200 --> 0:05:45.520 family dollar and for Dollar General. Most of their mix 0:05:45.640 --> 0:05:47.640 right now, or the bulk of their sales, is coming 0:05:47.680 --> 0:05:52.200 from consumable so it's food, it's household cleaning supplies. Most 0:05:52.240 --> 0:05:55.920 of that is produced domestically. For Dollar Tree itself, they 0:05:55.920 --> 0:05:59.919 have much higher exposure to to tariffs and to import. 0:06:00.080 --> 0:06:04.520 It's because they have a much bigger amount of discretionary categories, 0:06:04.560 --> 0:06:08.839 so they think about holiday decor, kitchen, you know, choch Key's, 0:06:08.920 --> 0:06:12.560 things like that, and up to now, you know, we've 0:06:12.560 --> 0:06:15.640 got a ten percent tariffy on imports from China. They 0:06:15.640 --> 0:06:17.880 say they've been able to offset about ninety percent of 0:06:17.920 --> 0:06:21.960 that cost so far, but as additional tariffs come, it's 0:06:22.000 --> 0:06:25.440 going to become a bigger challenge for Dollar Tree to manage. 0:06:25.080 --> 0:06:28.440 Our Thanks to Jennifer Bartashi's Bloomberg Intelligence Senior Analyst Retail, 0:06:28.480 --> 0:06:31.240 Staples and package Food, this week we focused on a 0:06:31.240 --> 0:06:34.000 couple of Bloomberg Big Take stories. The story focuses on 0:06:34.080 --> 0:06:36.840 Jay Clayton, President Donald Trump's pick to lead the Southern 0:06:37.000 --> 0:06:40.240 District of New York, and in this position, Clayton will 0:06:40.279 --> 0:06:43.120 have to balance the President's legal priorities with the need 0:06:43.160 --> 0:06:45.720 to stay independent. For more, co hosts Alex Steel and 0:06:45.760 --> 0:06:49.080 I were joined by Ava Bennie Marson, Bloomberg News legal reporter. 0:06:49.520 --> 0:06:51.640 We first asked Ava to paint a picture of Jay 0:06:51.640 --> 0:06:53.080 Clayton and his career. 0:06:53.320 --> 0:06:56.680 So he has a pretty impressive resume. He has been 0:06:56.839 --> 0:07:00.440 a long time senior council at Sullivan and from Well, 0:07:00.480 --> 0:07:03.040 a white shoe firm primarily based. 0:07:02.760 --> 0:07:03.320 In New York. 0:07:03.680 --> 0:07:07.400 He was the Chair of the Securities and Exchange Commission 0:07:07.480 --> 0:07:10.920 under the first Trump administration, and most recently he has 0:07:11.000 --> 0:07:13.880 been the chair of Apollo. He was brought into that 0:07:13.920 --> 0:07:18.680 position at the investing house to help clean up and 0:07:18.720 --> 0:07:22.920 get things back in order after the Jeffrey Epstein scandal, 0:07:23.400 --> 0:07:26.360 and now he is going into one of the most 0:07:26.440 --> 0:07:31.040 premiere seats in American law, which is the US Attorney 0:07:31.040 --> 0:07:33.400 for the Southern District of New York, also known as 0:07:33.400 --> 0:07:34.480 the Sheriff of Wall Street. 0:07:35.200 --> 0:07:38.200 So Eva talked us about this. The Southern District of 0:07:38.240 --> 0:07:43.440 New York historically a very powerful office here, fiercely defending 0:07:43.480 --> 0:07:46.280 its independence, but arguably it's come under some pressure recently, 0:07:46.280 --> 0:07:50.040 most recently with the Mayor Adams case here. What's that 0:07:50.080 --> 0:07:50.920 angle to the story? 0:07:51.040 --> 0:07:53.640 Absolutely, So, the Southern District of New York has a 0:07:53.720 --> 0:07:57.280 nickname of the Sovereign District because it really prizes its 0:07:57.320 --> 0:08:01.240 autonomy from Washington and see itself as a kind of 0:08:01.360 --> 0:08:05.960 independent institution. It chases really big headline grabbing cases on 0:08:06.000 --> 0:08:12.360 Wall Street, in politics, in terrorism, so it's really prized 0:08:13.080 --> 0:08:18.280 itself as being independent. But that came under threat recently 0:08:18.880 --> 0:08:22.920 when after the inauguration day Washington DC, some of the 0:08:22.920 --> 0:08:26.200 senior officials at the Department of Justice there asked the 0:08:26.200 --> 0:08:29.600 Southern District to drop the charges against New York Mayor 0:08:29.720 --> 0:08:33.800 Eric Adams, and that was quite controversial. It led to 0:08:33.800 --> 0:08:37.600 a string of resignations, including by the acting boss at 0:08:37.640 --> 0:08:43.040 the time, a seasoned prosecutor named Daniel Sassoon. She refused 0:08:43.080 --> 0:08:45.520 to comply with that order to drop the case and 0:08:45.600 --> 0:08:48.439 resigned and staid that set off a number of other departures. 0:08:48.800 --> 0:08:51.680 So the office has been in a bit of a 0:08:51.760 --> 0:08:55.439 tenuous situation. There has been some terminal there, and Joe 0:08:55.480 --> 0:08:58.439 Clayton is really coming in at an interesting time. One 0:08:58.440 --> 0:09:01.040 of the big questions is how will he managed that 0:09:01.160 --> 0:09:02.840 relationship with the Trump administration. 0:09:03.320 --> 0:09:06.320 Aside from that relationship, like what will be on his 0:09:06.400 --> 0:09:08.960 docket regardless, and you know, you mentioned the Eric Adams case, 0:09:09.000 --> 0:09:11.920 but like what would we expect him to do as 0:09:11.960 --> 0:09:13.000 head of this area. 0:09:13.120 --> 0:09:15.360 So we've gotten a bit of an insight into the 0:09:15.480 --> 0:09:19.200 kind of priorities he has going into the role. From 0:09:19.280 --> 0:09:23.080 interviewing more than thirty people who know Clayton and who 0:09:23.080 --> 0:09:26.600 have had conversations with other SDMY prosecutors, we know that 0:09:26.640 --> 0:09:31.200 he's particularly interested in focusing on human trafficking, on college 0:09:31.200 --> 0:09:37.200 campus protests, on anti semitism, and also targeting how bad 0:09:37.280 --> 0:09:42.079 people finance themselves, so money laundering. That's kind of in 0:09:42.080 --> 0:09:46.240 line with what SDM Y has done traditionally. You know 0:09:46.360 --> 0:09:48.839 here at Bloomberg, we know them as the office that 0:09:49.280 --> 0:09:54.480 prosecutes big white collar cases like FTX and Archagos. But 0:09:54.720 --> 0:09:58.400 some of these priorities certainly echo the kind of priorities 0:09:58.440 --> 0:10:02.360 that President Donald Trump has spoken about since an inauguration 0:10:02.520 --> 0:10:02.960 day too. 0:10:03.240 --> 0:10:05.760 Do we know anything about his relationship with President Trump, 0:10:05.760 --> 0:10:09.320 because oftentimes that ends up being a critical, critical issue. 0:10:09.480 --> 0:10:11.960 Yes, he has quite a close relationship with Donald Trump. 0:10:12.480 --> 0:10:14.839 From the people that we've spoken to, It's not something 0:10:14.880 --> 0:10:19.160 that he boasts about, but the tour close golfing buddies. 0:10:20.080 --> 0:10:24.440 They're both very good golfers. He was in line for 0:10:24.520 --> 0:10:28.480 the SDNY role actually during the first Trump administration after 0:10:28.520 --> 0:10:31.720 he was Chair of the SEC, but that didn't work out. 0:10:32.679 --> 0:10:36.040 He is JA Clayton is well regarded in the New 0:10:36.120 --> 0:10:39.880 York circles that Trump seeks out and seeks advice from 0:10:39.920 --> 0:10:42.839 as well, So he's going in there with that particularly 0:10:42.880 --> 0:10:46.880 close relationship, and from the conversations that we've had with 0:10:46.920 --> 0:10:50.920 people around Clayton, he certainly thinks that the President will 0:10:51.160 --> 0:10:53.600 and the President's allies and people around him will listen 0:10:53.640 --> 0:10:55.679 to him and will let him get on with the 0:10:55.760 --> 0:10:58.160 job that he has to do there. Whether that turns 0:10:58.160 --> 0:11:02.200 out to be the case is something that we'll have 0:11:02.200 --> 0:11:03.040 to watch and see. 0:11:03.200 --> 0:11:05.240 What are the criticisms surrounding Jake Clayton. 0:11:05.720 --> 0:11:07.960 One of the big criticisms is that he has never 0:11:07.960 --> 0:11:11.200 been a federal prosecutor before, which is extremely unusual for 0:11:11.280 --> 0:11:16.040 someone going in as the boss of SDMY. Most of 0:11:16.080 --> 0:11:18.440 the people who have occupied that position have in fact 0:11:18.520 --> 0:11:23.120 been federal prosecutors, specifically in that office, So that was 0:11:23.120 --> 0:11:25.600 a big criticism the first time around in twenty twenty. 0:11:26.400 --> 0:11:29.000 It has been brought up again, but to a lesser degree. 0:11:29.360 --> 0:11:33.240 When he was first nominated by President Donald Trump late 0:11:33.320 --> 0:11:35.960 last year. There was a sense of relief, certainly within 0:11:36.000 --> 0:11:39.160 the office that this was someone who has a good 0:11:39.200 --> 0:11:42.080 reputation in legal circles in New York, and he's worked 0:11:42.120 --> 0:11:45.160 in government before, he's worked at the SEC. He's a 0:11:45.240 --> 0:11:48.920 known quantity, and there was a sense of comfort with 0:11:49.000 --> 0:11:49.680 his nomination. 0:11:50.120 --> 0:11:51.920 Does you have an agenda right here? At an agenda 0:11:52.080 --> 0:11:54.880 just meaning a to do list here that's front and center. 0:11:55.040 --> 0:11:55.560 He does. 0:11:55.600 --> 0:11:55.960 He does. 0:11:56.000 --> 0:11:58.200 As I was saying before, We've got a bit of 0:11:58.200 --> 0:12:00.240 a sense of what he's going in with and what 0:12:00.240 --> 0:12:03.679 he wants to focus on, and that involves human trafficking, 0:12:04.360 --> 0:12:07.880 a crackdown on college campus protests, and anti semitism. He's 0:12:07.920 --> 0:12:10.439 been vocal about some of these things in the past 0:12:11.280 --> 0:12:15.560 and has expressed disappointment that the government hasn't done a 0:12:15.600 --> 0:12:18.280 whole lot in his view, to crack down. 0:12:18.120 --> 0:12:19.560 On college campus protests. 0:12:20.520 --> 0:12:24.800 So we expect to see those areas focused on. But 0:12:24.920 --> 0:12:27.320 also why call work. This is the kind of work 0:12:27.320 --> 0:12:30.240 that makes that office so famous, and there is a 0:12:30.280 --> 0:12:33.000 sense he doesn't really need to encourage people to go 0:12:33.040 --> 0:12:36.599 and chase those big cases. They will just happen regardless. 0:12:36.720 --> 0:12:40.560 Given that the office is essentially in charge of policing. 0:12:40.280 --> 0:12:42.959 Law Street our thanks to Ava, Benny Marris and Bloomberg 0:12:43.000 --> 0:12:45.680 News Legal Reporter. Coming up will break down how Novo 0:12:45.760 --> 0:12:49.640 Nordesk is looking to refill its pipepoint of experimental drug treatments. 0:12:49.800 --> 0:12:53.080 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:53.120 --> 0:12:55.679 depth research and data on two thousand companies and one 0:12:55.760 --> 0:12:58.760 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:58.800 --> 0:13:01.360 b I go on the terminal. I'm Paul Sweeney. This 0:13:01.559 --> 0:13:02.199 is Bloomberg. 0:13:07.280 --> 0:13:11.000 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:11.080 --> 0:13:14.439 weekdays at ten am Eastern on Applecarplay and Android Auto 0:13:14.559 --> 0:13:17.640 with the Bloomberg Business App. Listen on demand wherever you 0:13:17.679 --> 0:13:20.640 get your podcasts, or watch us live on YouTube. 0:13:21.520 --> 0:13:24.320 We moved to the health and pharmaceutical space this week. 0:13:24.440 --> 0:13:27.640 Novo Nordis agreed to pay Hong Kong based United Laboratories 0:13:27.679 --> 0:13:29.840 as much as two billion dollars for a next generation 0:13:29.960 --> 0:13:33.800 obesity drug. It's a Danish ozembic maker's latest move to 0:13:33.840 --> 0:13:37.280 refill its pipeline of experimental treatments. For more on this 0:13:37.320 --> 0:13:39.199 and the latest news in the biotech space, co host 0:13:39.240 --> 0:13:42.239 Alex Steel and I were joined by Sam Fazzelli, Bloomberg Intelligence, 0:13:42.280 --> 0:13:46.440 Director of Research for Global Industries and a senior pharmaceuticals analyst. 0:13:46.520 --> 0:13:48.840 I first asked Sam about how much money is going 0:13:48.880 --> 0:13:50.400 into the ob city market. 0:13:50.520 --> 0:13:53.200 As you know, obesity is hot and there's been quite 0:13:53.240 --> 0:13:55.640 a few deals in there. We talked about the deal 0:13:55.679 --> 0:13:58.760 between Russian Zealand Pharmaceuticals, and this week, as you run, 0:13:58.840 --> 0:14:01.000 he said, we have the one between over Notice and 0:14:01.080 --> 0:14:04.760 this time a Chinese biotech company and it's an asset 0:14:04.840 --> 0:14:09.240 that continues to broaden their portfolio of X number of 0:14:09.320 --> 0:14:12.640 mechanisms of action to try and hit this big issue. 0:14:12.720 --> 0:14:13.840 And it's an interesting deal. 0:14:13.880 --> 0:14:16.200 I mean, you know, it's China for a start, and 0:14:16.360 --> 0:14:19.400 it's interesting because I've seen others asters an Ix said 0:14:19.400 --> 0:14:22.040 they're putting two and a half billion dollars investment into 0:14:22.040 --> 0:14:25.960 a research center in China, two hundred million dollars up front, 0:14:25.960 --> 0:14:28.560 one point eight billion dollars what we call bio dollars. 0:14:28.560 --> 0:14:32.600 To come BUYO dollars, very very dollar bio dollars. But 0:14:32.720 --> 0:14:34.560 bio dollars are the sorts of dollars that you and 0:14:34.640 --> 0:14:37.840 I would like to have for real, except they're not real. 0:14:38.280 --> 0:14:41.960 I you know, if this works, and that works, and 0:14:42.000 --> 0:14:44.200 that works, you get another hundred, and then that and 0:14:44.200 --> 0:14:46.760 then landing out of the two hundred. So when far 0:14:47.160 --> 0:14:49.160 biotech companies love it, they added all up and say, 0:14:49.240 --> 0:14:51.720 look how big our deal is actually upfront? Only two 0:14:51.800 --> 0:14:54.240 hundred although I wouldn't mind two hundred million dollars either. 0:14:54.240 --> 0:14:56.160 I mean wouldn't turn you away exactly. 0:14:56.760 --> 0:15:00.280 So what's the big question or big discussion have with 0:15:00.320 --> 0:15:02.240 your clients these days? Sam? 0:15:02.520 --> 0:15:05.160 So, as you know, Paul, we have these anonymous chats 0:15:05.240 --> 0:15:09.280 with different industry investors, and we have one for the 0:15:09.320 --> 0:15:12.240 drug sector, and of course there is a huge amount 0:15:12.320 --> 0:15:16.600 of Can I call it depression, Yes, I think we can. 0:15:17.160 --> 0:15:20.840 As regards to public biotech markets, it's been five years. 0:15:20.880 --> 0:15:23.920 If you look at the XBI, which is an ETF 0:15:23.920 --> 0:15:26.000 that tracks the biotechs that are listed on the SIMP 0:15:26.120 --> 0:15:30.640 five hundred, it's gone nowhere pretty much for five years. 0:15:31.160 --> 0:15:33.840 And if you want to really depress yourself, plot that 0:15:33.880 --> 0:15:36.200 against the SMP five hundred and we all know where 0:15:36.240 --> 0:15:40.520 that's gone, irrespective of the latest little little down. So 0:15:40.560 --> 0:15:43.880 that's where biotech investors are a bit sad. On the 0:15:43.880 --> 0:15:47.840 other hand, we're seeing some deals with private biotechs, there 0:15:47.880 --> 0:15:50.280 are nowhere near the sort of valuations that would get 0:15:50.280 --> 0:15:52.920 in the public markets, So it actually starts to question 0:15:53.600 --> 0:15:55.320 why would they want to go public if they can 0:15:55.400 --> 0:15:58.760 get these sort of returns by doing a deal with Astroseneca, 0:15:58.880 --> 0:16:02.000 a deal with Sanofi to get four hundred million dollars 0:16:02.080 --> 0:16:04.400 up front for a very early stage asset. 0:16:04.760 --> 0:16:05.800 Where are we with measles? 0:16:06.080 --> 0:16:06.280 Oh? 0:16:06.360 --> 0:16:10.000 Yeah, Well, the cases are continuing to rise. The disease 0:16:10.080 --> 0:16:12.280 is still there. I think a lot of people that 0:16:12.320 --> 0:16:15.400 I speak to are convinced that we're only looking at 0:16:15.400 --> 0:16:17.440 the tip of the iceberg when you look at the count. 0:16:18.000 --> 0:16:22.360 But we are slowly going through the respiratory season. COVID's 0:16:22.360 --> 0:16:24.880 on this way down, flu is on its way down 0:16:25.000 --> 0:16:27.480 RSV and its way down. Hopefully measles will be the 0:16:27.520 --> 0:16:31.440 same case and that will come out of this without 0:16:31.560 --> 0:16:34.880 too much collateral damage, which is a horrible thing to 0:16:34.920 --> 0:16:38.200 call it, without too much misery for people who suffer 0:16:38.240 --> 0:16:38.520 from it. 0:16:38.880 --> 0:16:41.680 Same as you well know, there's been a growing skepticism 0:16:41.680 --> 0:16:44.760 and regarding vaccinations in general here in the United States. 0:16:44.800 --> 0:16:47.480 How is it in the rest of the world, the 0:16:47.520 --> 0:16:49.400 rest of the Western world, I'd say, I. 0:16:49.360 --> 0:16:52.280 Mean, Paul Remember the author of the paper that has 0:16:52.320 --> 0:16:56.560 now been disgraced and disqualified of whatever the right phrase 0:16:56.640 --> 0:17:02.080 is removed from the scientific conscience for linking MMR vaccines 0:17:02.680 --> 0:17:07.680 to autism was a British scientist or medic But whether 0:17:07.720 --> 0:17:09.600 you want to qualify them as scientists or not, it's 0:17:09.640 --> 0:17:12.639 a different matter. And so there's been you know, the 0:17:12.680 --> 0:17:15.840 story of vaccine skepticism has been here too. It's just 0:17:15.920 --> 0:17:19.600 a little bit different because it's very easy. It's all free, 0:17:19.680 --> 0:17:21.960 it's available to anybody who wants it is available, and 0:17:22.000 --> 0:17:23.840 the energies you walk into a doctor and you get it, 0:17:24.040 --> 0:17:27.960 so you don't have to pay anything. And therefore vaccination compliance, 0:17:28.080 --> 0:17:32.720 particularly in the older cohort of folks is better here. 0:17:33.080 --> 0:17:35.239 Okay, that's interesting, But then when you take a look 0:17:35.240 --> 0:17:38.040 at that, at the broader landscape and just the victriol 0:17:38.160 --> 0:17:41.919 still into the m n R vaccines in general, like 0:17:41.960 --> 0:17:44.720 not just for measles, but just in general. Does this 0:17:44.800 --> 0:17:48.200 really hurt innovation? Does it hurt the private sector's willingness 0:17:48.200 --> 0:17:49.800 to like pump money into all these things? 0:17:50.080 --> 0:17:52.159 Well, I mean, the United States is one of the 0:17:52.160 --> 0:17:55.560 biggest pharmaceutical markets, but they're not the only one. And 0:17:55.600 --> 0:17:57.919 at the end of the day, one has to assume 0:17:57.960 --> 0:18:02.080 that good data and good science will prevail, whether it's 0:18:02.080 --> 0:18:06.000 an MR and A vaccine or not. Maybe it's necessary 0:18:06.040 --> 0:18:08.080 to do some studies to prove that MR and A 0:18:08.160 --> 0:18:11.480 vaccines are not changing your genome. That's not very difficult 0:18:11.520 --> 0:18:14.200 to do. If it's the intent is there, maybe the 0:18:14.280 --> 0:18:18.439 CDC should do that. But in general, MR and A vaccines, 0:18:18.640 --> 0:18:22.480 normal vaccines, style or standard type vaccines, They're all here 0:18:22.520 --> 0:18:23.880 to stay as far as I'm concerned. 0:18:24.000 --> 0:18:26.720 Our thanks to Sam Fazelli, Bloomberg Intelligence, Director of Research 0:18:26.720 --> 0:18:30.680 for Global Industries and senior pharmaceuticals analysts. We move next 0:18:30.680 --> 0:18:34.000 to earnings from the pet food retailer Chewy. Chewy reported 0:18:34.000 --> 0:18:37.119 earnings for the fourth quarter that beat analysts expectations. The 0:18:37.160 --> 0:18:40.040 results were supported by strong customer growth as a company 0:18:40.080 --> 0:18:43.600 attracted pet owners with its assortment and reliable automated shipments. 0:18:43.840 --> 0:18:45.680 For more co hosts, Alex Steel and I were joined 0:18:45.680 --> 0:18:49.440 by Deanna or rossetto Painya, Bloomberg Intelligence consumer staples analyst. 0:18:49.680 --> 0:18:52.600 We first asked Diana how the Chewy business is going. 0:18:53.000 --> 0:18:53.600 So far, so. 0:18:53.680 --> 0:18:57.119 Good, it seems, and one of the things that I 0:18:57.400 --> 0:19:01.560 find very interesting is that insters seem to wait for 0:19:01.600 --> 0:19:06.560 the next shoe to drop. These companies have experienced good 0:19:06.600 --> 0:19:12.360 growth regardless of how the economic situation is going, because 0:19:12.480 --> 0:19:15.560 it seems to be resilient. The category as a whole 0:19:15.840 --> 0:19:17.280 seems to be very resilient. 0:19:17.760 --> 0:19:20.040 Because what's up at the style one hundred and twenty 0:19:20.040 --> 0:19:21.280 percent of the last year. 0:19:21.720 --> 0:19:24.840 Well, it is because a few things. During four Q 0:19:25.040 --> 0:19:28.879 they experienced the first growth in active consumers. For the 0:19:28.920 --> 0:19:32.920 past couple of years, sales growth has been mainly been 0:19:33.040 --> 0:19:36.760 because of net sales per active consumers, which is pretty 0:19:36.800 --> 0:19:40.160 much pricing. So now that there seems to be growth, 0:19:40.200 --> 0:19:44.159 but at the same time, the forecasts, the guidance for 0:19:44.240 --> 0:19:46.480 twenty twenty five, it seems to be on the lower 0:19:46.880 --> 0:19:51.680 end of long term goals, so that seems to worry investors. 0:19:51.760 --> 0:19:54.320 I think what were the competitors to Chewy? 0:19:54.760 --> 0:19:58.080 I would say Amazon is is you know, significant, Yes, 0:19:58.320 --> 0:20:01.400 on the merchandise side. Obviously one of the things that 0:20:01.480 --> 0:20:03.880 Chewy is doing, and I think it's it's a very 0:20:03.920 --> 0:20:07.359 smart smart play is to be able to differentiate themselves 0:20:07.400 --> 0:20:11.520 besides merchandise, which Amazon does that very well. We have 0:20:11.720 --> 0:20:15.240 conducted a couple of pricing studies Amazon versus Chewy, and 0:20:15.280 --> 0:20:17.960 they are pretty comparable. So one of the things that 0:20:18.040 --> 0:20:21.760 Chewy will differentiate itself is by doing other things such 0:20:21.800 --> 0:20:25.160 as healthcare, such as sponsor ads. That has been very 0:20:25.160 --> 0:20:26.280 profitable for Chewy. 0:20:26.680 --> 0:20:29.119 I'm full disclosure, I have never been a pet owner. 0:20:29.480 --> 0:20:31.840 I know that's a character flaw. But these people are 0:20:31.880 --> 0:20:35.560 passionate about their pets. Does that get reflected into the 0:20:35.560 --> 0:20:38.160 business model that like, is it kind of who cares 0:20:38.160 --> 0:20:40.960 what the economy is doing. I'm buying my fluffy, whatever 0:20:41.000 --> 0:20:42.679 toy it is, or whatever great food it is. 0:20:42.960 --> 0:20:45.280 Yes, I think it is a couple of things. One, 0:20:46.320 --> 0:20:50.160 sometimes you tend to be a little bit more resilient 0:20:50.160 --> 0:20:53.639 in terms of pet spenditure because they don't tend to talk, 0:20:53.760 --> 0:20:54.640 so you. 0:20:54.560 --> 0:21:00.080 Know, so they talk well, you know, talk differently, and 0:21:00.119 --> 0:21:05.840 that is true. But wow, now it's something you're saying 0:21:05.840 --> 0:21:07.560 real words. Okay, go ahead, no. 0:21:07.800 --> 0:21:11.080 But in terms of if they like something, you tend 0:21:11.119 --> 0:21:14.240 to stick with that. And that has been the fuel 0:21:14.320 --> 0:21:17.480 for the premium sation of food and that is why 0:21:17.600 --> 0:21:20.360 you have you know, a companies such as Fresh Pet 0:21:21.200 --> 0:21:23.680 growing twenty percent sales every quarter. 0:21:23.960 --> 0:21:27.080 Our thanks to Diana Rossero pin Yeah, Bloomberg Intelligence Consumer 0:21:27.119 --> 0:21:30.040