1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence podcast. Catch us Live weekdays at ten am 3 00:00:14,600 --> 00:00:17,840 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,520 Speaker 1: or watch us live on YouTube. 6 00:00:24,160 --> 00:00:27,480 Speaker 2: Want to bounce off with Live Nation and our next guest, 7 00:00:27,600 --> 00:00:32,320 Speaker 2: Jennifer Reed, Bloomberg Intelligence Senior Litigation analyst. Jennifer, thanks so 8 00:00:32,360 --> 00:00:34,519 Speaker 2: much for coming in studio here. We don't know a 9 00:00:34,560 --> 00:00:37,640 Speaker 2: lot about this Live Nation settlement, right, Maybe we should 10 00:00:37,640 --> 00:00:38,520 Speaker 2: just start with what. 11 00:00:38,400 --> 00:00:38,879 Speaker 3: Do we know? 12 00:00:39,479 --> 00:00:39,680 Speaker 4: Right? 13 00:00:39,720 --> 00:00:41,519 Speaker 3: And it's changing by the minute, by the way. I 14 00:00:41,600 --> 00:00:44,360 Speaker 3: keep seeing new reports with new details. But it looks 15 00:00:44,400 --> 00:00:46,960 Speaker 3: like at least one part of it is a divestiture 16 00:00:47,000 --> 00:00:50,239 Speaker 3: that would be divesting large amphitheaters that are owned by 17 00:00:50,280 --> 00:00:53,520 Speaker 3: Live Nation. The Department of Justice alleged that Live Nation 18 00:00:53,640 --> 00:00:56,240 Speaker 3: owned sixty out of the one hundred top amphitheaters in 19 00:00:56,280 --> 00:00:59,080 Speaker 3: the US, and the control over those amphitheaters, which the 20 00:00:59,200 --> 00:01:02,880 Speaker 3: artists really needed for summer tours. Desire for summer tours 21 00:01:04,120 --> 00:01:06,039 Speaker 3: was part of the problem some of the claims that 22 00:01:06,080 --> 00:01:08,920 Speaker 3: were left in this litigation, so selling some of them 23 00:01:09,240 --> 00:01:10,959 Speaker 3: opens them up to other promoters. 24 00:01:13,200 --> 00:01:17,000 Speaker 5: Okay, I guess one big question people had was Ticketmaster. 25 00:01:17,120 --> 00:01:20,120 Speaker 5: The fate of Ticketmaster and whether that stays with Live 26 00:01:20,200 --> 00:01:23,240 Speaker 5: Nation or whether it's spun out or the company's forced 27 00:01:23,280 --> 00:01:25,720 Speaker 5: to sell that. Do we have a firm answer as 28 00:01:25,720 --> 00:01:27,520 Speaker 5: to what happens to Ticketmaster. 29 00:01:27,520 --> 00:01:28,440 Speaker 6: Well not really. 30 00:01:28,480 --> 00:01:30,959 Speaker 3: According to the DOJ settlement, it does not have to 31 00:01:31,000 --> 00:01:34,119 Speaker 3: be sold. But there are forty states involved as well. 32 00:01:34,120 --> 00:01:36,760 Speaker 3: They are also plaintiffs, and they also have the authority 33 00:01:37,200 --> 00:01:40,440 Speaker 3: to litigate under federal antitrust laws just as the Department 34 00:01:40,480 --> 00:01:43,440 Speaker 3: of Justice does, and not all of them have settled. 35 00:01:43,480 --> 00:01:45,760 Speaker 3: According to the news reports, New York has actually come 36 00:01:45,760 --> 00:01:47,560 Speaker 3: out and said this isn't good enough. We're going to 37 00:01:47,560 --> 00:01:50,520 Speaker 3: continue on. So if they continue on with the litigation, 38 00:01:50,600 --> 00:01:53,760 Speaker 3: they will continue to seek a divestit your order from 39 00:01:53,800 --> 00:01:56,720 Speaker 3: the judge for Live Nation to sell Ticketmaster. They see 40 00:01:56,800 --> 00:01:59,000 Speaker 3: that as the only solution to kind of fix a 41 00:01:59,120 --> 00:02:03,680 Speaker 3: broken concert ticketing system and live concert industry. I'll tell you, 42 00:02:03,720 --> 00:02:05,760 Speaker 3: I think it's a long shot. You know, once you 43 00:02:05,760 --> 00:02:07,760 Speaker 3: get this settlement with the Department of Justice and you 44 00:02:07,840 --> 00:02:10,640 Speaker 3: kind of get the lose the weight of the Department 45 00:02:10,680 --> 00:02:13,040 Speaker 3: of Justice behind you on these anti trust matters. It 46 00:02:13,120 --> 00:02:15,639 Speaker 3: is difficult for the States to go forward and win, 47 00:02:16,080 --> 00:02:19,079 Speaker 3: even if they won a jury determination that Live Nation 48 00:02:19,240 --> 00:02:22,040 Speaker 3: was guilty of a legal monopolization. I'm not so sure 49 00:02:22,080 --> 00:02:24,200 Speaker 3: that the judge would be willing to stick his neck 50 00:02:24,240 --> 00:02:27,800 Speaker 3: out and impose what's considered a really drastic remedy generally 51 00:02:28,240 --> 00:02:29,920 Speaker 3: to force a company to break itself up. 52 00:02:30,040 --> 00:02:32,760 Speaker 2: So let's play pretend and say the States are not 53 00:02:32,880 --> 00:02:37,600 Speaker 2: successful with their trials. Does this DOJ settlement mean anything 54 00:02:37,639 --> 00:02:39,639 Speaker 2: at all to you and me when we go out 55 00:02:39,680 --> 00:02:41,600 Speaker 2: to try to buy tickets. I mean, and I've said 56 00:02:41,600 --> 00:02:43,480 Speaker 2: this people who listen to the show regularly. No, I 57 00:02:43,480 --> 00:02:46,480 Speaker 2: talk about being a family of five, and man, if 58 00:02:46,639 --> 00:02:48,359 Speaker 2: you had taken a small mortgage, this just like take 59 00:02:48,360 --> 00:02:50,560 Speaker 2: the whole Saley to go see a show. So is 60 00:02:50,600 --> 00:02:53,200 Speaker 2: that going to get any better under this settlement as 61 00:02:53,200 --> 00:02:53,680 Speaker 2: it stands. 62 00:02:53,760 --> 00:02:56,880 Speaker 3: I'll tell you that I'm skeptical. And you know what 63 00:02:56,919 --> 00:02:59,600 Speaker 3: you just said is why this case is so politically popular. 64 00:02:59,639 --> 00:03:02,120 Speaker 3: And this was a little bit surprising because it really 65 00:03:02,160 --> 00:03:07,440 Speaker 3: has bipartisan interest. It has bipartisan support, you know, consumer support. 66 00:03:07,760 --> 00:03:09,480 Speaker 3: Kid Rock was going to come along and he was 67 00:03:09,520 --> 00:03:11,640 Speaker 3: going to be a witness for the plaintiffs in this 68 00:03:11,720 --> 00:03:15,560 Speaker 3: case because Live Nation has been under a Department of 69 00:03:15,639 --> 00:03:18,800 Speaker 3: Justice consent order since twenty ten, So, in other words, 70 00:03:18,840 --> 00:03:21,800 Speaker 3: since twenty ten, the way they behave in the marketplace 71 00:03:21,919 --> 00:03:24,840 Speaker 3: was supposed to be regulated. They were supposed to behave 72 00:03:24,880 --> 00:03:27,000 Speaker 3: in a certain way, and they've managed to really get 73 00:03:27,040 --> 00:03:30,880 Speaker 3: around that for years. In fact, during the first Trump administration, 74 00:03:30,960 --> 00:03:34,400 Speaker 3: the Department of Justice investigated, determined that Live Nation was 75 00:03:34,520 --> 00:03:36,920 Speaker 3: violating the terms of that order, and extended it and 76 00:03:36,960 --> 00:03:39,920 Speaker 3: sort of bolstered its terms. And now this case came 77 00:03:39,960 --> 00:03:43,680 Speaker 3: along with the allegation that no Live Nation continues to 78 00:03:43,800 --> 00:03:46,920 Speaker 3: violate the terms of that order. And so my skepticism 79 00:03:46,960 --> 00:03:50,440 Speaker 3: comes from, there are new terms here that they're talking about. 80 00:03:50,560 --> 00:03:53,160 Speaker 3: That again, our behavioral I talked about selling the amps, 81 00:03:53,160 --> 00:03:55,800 Speaker 3: but there are also behavioral conditions, and if Live Nation 82 00:03:55,880 --> 00:03:58,600 Speaker 3: has been able to get around behavioral conditions since twenty ten, 83 00:03:58,800 --> 00:04:00,360 Speaker 3: I'm not sure what's going to stop now. 84 00:04:01,320 --> 00:04:04,680 Speaker 5: What about Ticketmaster's competitors. Have they done things better? Have 85 00:04:04,760 --> 00:04:07,440 Speaker 5: they changed a way that they sell tickets or that 86 00:04:07,560 --> 00:04:09,720 Speaker 5: they allow people to buy and sell tickets. 87 00:04:09,840 --> 00:04:12,520 Speaker 3: What's interesting you ask, because the CEO and founder of 88 00:04:12,600 --> 00:04:15,080 Speaker 3: seat Geek was one of the witnesses I heard last week, 89 00:04:15,320 --> 00:04:17,920 Speaker 3: and seat geek started as a secondary ticket seller. They 90 00:04:17,920 --> 00:04:20,440 Speaker 3: were just a marketplace to bring together people who wanted 91 00:04:20,440 --> 00:04:22,880 Speaker 3: to sell tickets they couldn't use and buyers. But they're 92 00:04:22,920 --> 00:04:25,360 Speaker 3: trying to get into what's called primary ticketing, being the 93 00:04:25,400 --> 00:04:28,280 Speaker 3: first one to ticket an event, and really have struggled. 94 00:04:28,440 --> 00:04:30,760 Speaker 3: And they say they have struggled because of Live Nation, 95 00:04:31,120 --> 00:04:34,400 Speaker 3: that they have superior technology, that their platform is better, 96 00:04:34,600 --> 00:04:36,680 Speaker 3: that what they can offer venues is better, but they 97 00:04:36,720 --> 00:04:39,520 Speaker 3: haven't been able to get those venues signed up because 98 00:04:39,560 --> 00:04:41,919 Speaker 3: either they have a long term exclusive agreement to be 99 00:04:41,960 --> 00:04:45,520 Speaker 3: ticketed by Ticketmaster, or because Live Nation, which is a 100 00:04:45,600 --> 00:04:49,080 Speaker 3: huge promoter handles artists tours, said we'll route our artists 101 00:04:49,120 --> 00:04:51,359 Speaker 3: around your venue. We won't bring them to your venue 102 00:04:51,440 --> 00:04:53,680 Speaker 3: if you use some company other than Ticketmaster. 103 00:04:54,200 --> 00:04:57,080 Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this. 104 00:05:00,760 --> 00:05:04,440 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 105 00:05:04,520 --> 00:05:07,880 Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto 106 00:05:08,000 --> 00:05:11,080 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 107 00:05:11,120 --> 00:05:14,560 Speaker 1: get your podcasts, or watch us live on YouTube. 108 00:05:15,080 --> 00:05:18,320 Speaker 2: Just a few days ago, Novo Nordisk was suing Hymns 109 00:05:18,400 --> 00:05:22,320 Speaker 2: and Hers because they were selling a cheaper knockoff brand 110 00:05:22,360 --> 00:05:26,039 Speaker 2: of their best selling WGOVI blockbuster obesity drub. Well, you 111 00:05:26,040 --> 00:05:29,440 Speaker 2: know what, now they're in business once again with Hymns 112 00:05:29,480 --> 00:05:31,320 Speaker 2: and Hers here to break it down. As Madison Muller 113 00:05:31,320 --> 00:05:34,680 Speaker 2: Bloomberg News health reporter boy shares of Hymns and Hers 114 00:05:35,080 --> 00:05:37,120 Speaker 2: up now, I think better than thirty percent. So Wall 115 00:05:37,120 --> 00:05:39,960 Speaker 2: Street obviously likes this situation. How are these two companies 116 00:05:39,960 --> 00:05:40,560 Speaker 2: working together? 117 00:05:40,920 --> 00:05:43,920 Speaker 7: Yeah, it's a little bit of a crazy, surprising situation 118 00:05:44,120 --> 00:05:47,400 Speaker 7: that ends a month's long saga between the two companies. 119 00:05:48,080 --> 00:05:50,839 Speaker 7: They are now pairing up for the second time to 120 00:05:50,920 --> 00:05:54,120 Speaker 7: allow Novo to sell discounted versions of its weight loss 121 00:05:54,200 --> 00:05:57,880 Speaker 7: drugs on Hymns and Hers telehealth platform. And people might 122 00:05:57,920 --> 00:06:00,720 Speaker 7: recall that this actually was the case back in June. 123 00:06:00,800 --> 00:06:03,400 Speaker 7: The two companies were working together to do something similar 124 00:06:03,400 --> 00:06:07,760 Speaker 7: and that sort of fell apart spectacularly when Novo accused 125 00:06:07,800 --> 00:06:12,320 Speaker 7: Hims of deceptive marketing of these copycat weight loss medications 126 00:06:12,320 --> 00:06:15,320 Speaker 7: that it was continuing to sell on its platform, and 127 00:06:15,320 --> 00:06:18,400 Speaker 7: that really sent him shares down at the time. But 128 00:06:18,480 --> 00:06:21,479 Speaker 7: the two companies since then have traded various barbs I 129 00:06:21,520 --> 00:06:26,120 Speaker 7: mean with Novo suing HIMS over selling a copycat version 130 00:06:26,160 --> 00:06:29,600 Speaker 7: of its blockbuster weight loss pill that recently launched, And 131 00:06:29,680 --> 00:06:32,320 Speaker 7: so this is definitely a surprise too. I think a 132 00:06:32,320 --> 00:06:34,720 Speaker 7: lot of investors out there who had expected this to 133 00:06:34,839 --> 00:06:36,839 Speaker 7: continue dragging on between the two companies. 134 00:06:37,080 --> 00:06:40,719 Speaker 2: So is this what's really driving this strategic partnership though? 135 00:06:40,880 --> 00:06:44,360 Speaker 2: Is it eHealth these eHealth providers and if so, sort 136 00:06:44,360 --> 00:06:45,920 Speaker 2: of connect those dots for us. 137 00:06:46,040 --> 00:06:48,880 Speaker 7: Yeah, exactly. I mean, I think on both sides, both 138 00:06:48,920 --> 00:06:53,960 Speaker 7: companies are under enormous pressure right now. HYMNS mounting regulatory 139 00:06:54,000 --> 00:06:57,080 Speaker 7: and legal pressure, both with the Nova Noordist lawsuit that 140 00:06:57,160 --> 00:07:00,200 Speaker 7: now has been pulled, but also with the FDA saying 141 00:07:00,240 --> 00:07:02,200 Speaker 7: that it was going to crack down on compounded weight 142 00:07:02,240 --> 00:07:06,320 Speaker 7: loss drugs. There's a possible DOJ investigation, and they also 143 00:07:06,360 --> 00:07:08,400 Speaker 7: disclosed during earnings a couple of weeks ago that they're 144 00:07:08,640 --> 00:07:12,080 Speaker 7: under investigation by the SEC. So they have a lot 145 00:07:12,160 --> 00:07:15,560 Speaker 7: going on themselves and really need a path forward, even 146 00:07:15,640 --> 00:07:18,840 Speaker 7: though they have other offerings on their platform. Investors really 147 00:07:18,920 --> 00:07:21,640 Speaker 7: have said that they don't see another similar avenue of 148 00:07:21,720 --> 00:07:24,760 Speaker 7: growth like weight loss drugs. Then on the Novo Nordisk side, 149 00:07:24,840 --> 00:07:27,600 Speaker 7: Novo has really been losing market share to companies like 150 00:07:27,680 --> 00:07:30,560 Speaker 7: Hymns that sell these knockoff weight loss drugs, as well 151 00:07:30,600 --> 00:07:34,119 Speaker 7: as Eli Lilly, which is a massive pharmaceutical company based 152 00:07:34,120 --> 00:07:36,560 Speaker 7: here in the US, and they have rival weight loss 153 00:07:36,600 --> 00:07:39,360 Speaker 7: drugs that have become more popular than Novo's. So there's 154 00:07:39,400 --> 00:07:42,360 Speaker 7: a lot of pressure for both companies on both sides. 155 00:07:42,440 --> 00:07:45,560 Speaker 7: These ehalth platforms, like you said, have been an enormous 156 00:07:45,640 --> 00:07:49,080 Speaker 7: driver of growth for Lily and for Novo. A lot 157 00:07:49,080 --> 00:07:51,920 Speaker 7: of patients are seeking out these medications on these online 158 00:07:51,920 --> 00:07:54,800 Speaker 7: platforms where it's often easier and can be cheaper to 159 00:07:54,840 --> 00:07:58,600 Speaker 7: get these medications, and so partnering both companies have been 160 00:07:58,600 --> 00:08:01,760 Speaker 7: looking to partner with a lot of these eHealth companies, 161 00:08:02,400 --> 00:08:04,720 Speaker 7: from Row to weight Watchers to Hymns and Hers. 162 00:08:04,840 --> 00:08:07,200 Speaker 2: Right, what is Hymns and her sort of bread and 163 00:08:07,240 --> 00:08:08,239 Speaker 2: butter if you will? 164 00:08:08,640 --> 00:08:10,080 Speaker 7: Yeah, I mean for a long time it was a 165 00:08:10,080 --> 00:08:13,080 Speaker 7: rectile dysfunction and hair loss drugs, okay, And so they 166 00:08:13,080 --> 00:08:16,600 Speaker 7: really went after this you know, consumer market, consumer drugs 167 00:08:16,840 --> 00:08:19,240 Speaker 7: that are popular and that maybe patients didn't you know, 168 00:08:19,320 --> 00:08:21,720 Speaker 7: were embarrassed for whatever reason to go into their doctor 169 00:08:21,760 --> 00:08:24,760 Speaker 7: and ask for these medications. They wanted a more discreete 170 00:08:24,880 --> 00:08:28,040 Speaker 7: online sort of service where they can get them. But 171 00:08:28,080 --> 00:08:30,360 Speaker 7: then when they moved into weight loss drugs I think 172 00:08:30,440 --> 00:08:33,600 Speaker 7: two years ago now at this point, that really became 173 00:08:33,840 --> 00:08:36,120 Speaker 7: what put them on the map for a lot of people. 174 00:08:36,200 --> 00:08:38,200 Speaker 7: I mean I still talk to people who weren't really 175 00:08:38,200 --> 00:08:40,520 Speaker 7: paying attention to what Hymns was doing until they started 176 00:08:40,559 --> 00:08:43,120 Speaker 7: selling weight loss drugs, and that was a massive boon 177 00:08:43,200 --> 00:08:46,360 Speaker 7: for them over the last couple of years and really 178 00:08:46,559 --> 00:08:49,640 Speaker 7: a major growth driver. And then when that sort of 179 00:08:49,800 --> 00:08:52,680 Speaker 7: ended that it became a question mark of sort of 180 00:08:52,679 --> 00:08:54,600 Speaker 7: what was going to be that next avenue of growth 181 00:08:54,600 --> 00:08:54,960 Speaker 7: for them. 182 00:08:55,600 --> 00:08:58,600 Speaker 2: So Nogo has a new CEO, right, Mike is it 183 00:08:58,720 --> 00:09:03,560 Speaker 2: Dukeston Star? He was personally involved in these negotiations with 184 00:09:03,640 --> 00:09:05,360 Speaker 2: Hymns and hers. What does that sort of tell you 185 00:09:05,400 --> 00:09:08,400 Speaker 2: about this new CEO? I guess a much more hands 186 00:09:08,400 --> 00:09:09,960 Speaker 2: on approach than some others might have. 187 00:09:10,240 --> 00:09:13,840 Speaker 7: Yeah, definitely. And the last sort of talks and issues 188 00:09:14,000 --> 00:09:17,199 Speaker 7: really fell apart under Novo's last CEO, So Mike was 189 00:09:17,240 --> 00:09:21,000 Speaker 7: kind of looking to bring things back and really, from 190 00:09:21,000 --> 00:09:24,520 Speaker 7: what we understand, like shepherded this renewed partnership between the 191 00:09:24,520 --> 00:09:27,000 Speaker 7: two companies. He was very involved him and the HYMN 192 00:09:27,080 --> 00:09:32,520 Speaker 7: CEO Andrew Dudam spoke directly worked directly on reigniting this 193 00:09:32,600 --> 00:09:35,880 Speaker 7: partnership between the two companies. You know, Mike has taken 194 00:09:35,920 --> 00:09:39,840 Speaker 7: a more aggressive approach than Novo has historically Novo's CEOs 195 00:09:39,880 --> 00:09:42,640 Speaker 7: have historically because they've really lost out in the US 196 00:09:42,760 --> 00:09:44,920 Speaker 7: market that they have helped create, and that is the 197 00:09:44,920 --> 00:09:49,120 Speaker 7: most lucrative weight loss drug market, and he's looking for 198 00:09:49,160 --> 00:09:52,000 Speaker 7: aggressive actions to get them back in the game, everything 199 00:09:52,040 --> 00:09:54,080 Speaker 7: from M and A to sort of the approach that 200 00:09:54,120 --> 00:09:58,280 Speaker 7: they're taking with these compounding pharmacies and with these eHealth companies. 201 00:09:58,600 --> 00:10:00,840 Speaker 7: And one of the things he has told us that 202 00:10:00,920 --> 00:10:03,800 Speaker 7: when he took this job several months ago, one of 203 00:10:03,840 --> 00:10:06,000 Speaker 7: the feedbacks he got from a lot of investors and 204 00:10:06,000 --> 00:10:09,560 Speaker 7: analysts was that Nova wasn't making the most of this 205 00:10:09,880 --> 00:10:13,040 Speaker 7: you know, consumer health e health market like in the 206 00:10:13,040 --> 00:10:15,079 Speaker 7: same way that Lily was, and that was somewhere where 207 00:10:15,120 --> 00:10:17,840 Speaker 7: they could really improve things. So he's said that that's 208 00:10:17,880 --> 00:10:20,400 Speaker 7: been a major push for them, even with sort of 209 00:10:21,080 --> 00:10:24,600 Speaker 7: refreshing their own consumer health websites and the way that 210 00:10:24,640 --> 00:10:28,000 Speaker 7: everything looks, just making it a better experience for consumer's patients. 211 00:10:28,600 --> 00:10:30,880 Speaker 7: And so that sort of fits in with this same 212 00:10:30,960 --> 00:10:32,040 Speaker 7: strategy with hims. 213 00:10:33,080 --> 00:10:35,920 Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this. 214 00:10:39,320 --> 00:10:43,000 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 215 00:10:43,080 --> 00:10:44,120 Speaker 1: weekdays at ten am. 216 00:10:44,200 --> 00:10:44,880 Speaker 6: He's done on. 217 00:10:44,880 --> 00:10:48,120 Speaker 1: Apple, Cocklay and Android Auto with the Bloomberg Business app. 218 00:10:48,200 --> 00:10:51,480 Speaker 1: Listen on demand wherever you get your podcasts, or watch 219 00:10:51,520 --> 00:10:53,080 Speaker 1: us live on YouTube. 220 00:10:53,600 --> 00:10:56,280 Speaker 5: We want to talk a little bit about some individual sectors, 221 00:10:56,280 --> 00:10:59,080 Speaker 5: and here I'm really talking about consumer and high end. 222 00:10:58,920 --> 00:11:00,000 Speaker 6: Consumer, luxury consumer. 223 00:11:01,200 --> 00:11:04,880 Speaker 5: They are obviously impacted by how people feel when it 224 00:11:04,920 --> 00:11:07,920 Speaker 5: comes to the conflict in the Middle East and how 225 00:11:08,240 --> 00:11:11,120 Speaker 5: comfortable people feel about spending in this current environment. 226 00:11:11,240 --> 00:11:13,520 Speaker 6: There's a lot of uncertainty out there. What does that. 227 00:11:13,520 --> 00:11:17,600 Speaker 5: Mean for companies like LVMH what does it mean for 228 00:11:19,280 --> 00:11:22,960 Speaker 5: the companies behind Cardier. Deborah Aiken is the luxury goods 229 00:11:22,960 --> 00:11:25,760 Speaker 5: analysts here a Bloomberg Intelligence and joins us now from London, 230 00:11:25,840 --> 00:11:29,000 Speaker 5: and Deborah, you've crunched the numbers and you say that 231 00:11:29,040 --> 00:11:33,160 Speaker 5: this Middle East war will have a quantifiable impact on 232 00:11:33,679 --> 00:11:36,280 Speaker 5: the luxury goods space, at least what was expected for 233 00:11:36,360 --> 00:11:37,200 Speaker 5: twenty twenty six. 234 00:11:39,080 --> 00:11:44,480 Speaker 8: That's right, yes, So we went through some estimates and 235 00:11:44,600 --> 00:11:48,240 Speaker 8: some data from third party sources. We started with Alta 236 00:11:48,280 --> 00:11:52,800 Speaker 8: Gamma who having spoken to around nineteen sul side analysts, 237 00:11:52,840 --> 00:11:55,679 Speaker 8: it'd looked at twenty twenty six and we saw that 238 00:11:55,720 --> 00:11:58,560 Speaker 8: the highest growth was set to come from Middle East 239 00:11:58,600 --> 00:12:01,920 Speaker 8: at around six percent, of which four and a half 240 00:12:02,000 --> 00:12:06,600 Speaker 8: percent from locals and one and a half percent from tourists. 241 00:12:07,040 --> 00:12:08,959 Speaker 8: And that was the fastest growth in the sector in 242 00:12:09,000 --> 00:12:11,960 Speaker 8: a sector which we expected for twenty six grow to 243 00:12:12,120 --> 00:12:15,560 Speaker 8: forty five percent. So we then start to say, okay, 244 00:12:15,679 --> 00:12:20,040 Speaker 8: what happens if we see demand coming off in the 245 00:12:20,040 --> 00:12:23,720 Speaker 8: Middle East locally at around ten percent, and that gave 246 00:12:23,800 --> 00:12:27,240 Speaker 8: us about a fifty big stent for every ten percent 247 00:12:27,280 --> 00:12:29,320 Speaker 8: that was coming off, And given that we get a 248 00:12:29,360 --> 00:12:32,800 Speaker 8: lot of that high wealth traveling abroad also to spend, 249 00:12:32,880 --> 00:12:36,880 Speaker 8: we felt they could quite quickly across the year and 250 00:12:36,920 --> 00:12:40,839 Speaker 8: dependent on what would happen around the area, with around 251 00:12:40,920 --> 00:12:43,480 Speaker 8: one and a half percent shaped off that four percent 252 00:12:43,559 --> 00:12:45,239 Speaker 8: overall for the global industry. 253 00:12:46,080 --> 00:12:50,280 Speaker 2: Deb of the luxury names, the luxury retailers globally, is 254 00:12:50,320 --> 00:12:56,680 Speaker 2: anyone particularly better positioned to sort of weather the storm. 255 00:12:56,960 --> 00:12:59,920 Speaker 8: I think we need to think about the biggest global 256 00:13:00,080 --> 00:13:04,959 Speaker 8: makers and the most high end so we know companies 257 00:13:05,080 --> 00:13:09,440 Speaker 8: like air Mares and Brunellocutionelli are running and expecting high 258 00:13:09,520 --> 00:13:12,760 Speaker 8: single digital load double digit growth in twenty twenty six. 259 00:13:13,360 --> 00:13:16,400 Speaker 8: Much of that comes from parts of Asia at the 260 00:13:16,480 --> 00:13:19,720 Speaker 8: high end, very much from the US, part of Europe 261 00:13:19,800 --> 00:13:22,000 Speaker 8: and the Middle East, so there's a very good mix there. 262 00:13:22,440 --> 00:13:25,920 Speaker 8: And then also we could look at names like Richemond 263 00:13:26,000 --> 00:13:29,959 Speaker 8: for example, where Cartier is being growing very strongly. And 264 00:13:30,040 --> 00:13:33,400 Speaker 8: Richemon incidentally is one of only two who give away 265 00:13:33,440 --> 00:13:37,320 Speaker 8: their breakdown in Middle Eastern Africa. They have nine percent 266 00:13:37,360 --> 00:13:40,400 Speaker 8: of sales from maa region prior to being the other 267 00:13:40,440 --> 00:13:42,600 Speaker 8: with around four percent, which is where it is on 268 00:13:42,760 --> 00:13:47,120 Speaker 8: average for the industry overall for Middle East Africa. But 269 00:13:47,280 --> 00:13:51,160 Speaker 8: overall we would expect Rolexas and others to do very 270 00:13:51,160 --> 00:13:54,280 Speaker 8: well with wait to lists, so high end jewelry and 271 00:13:54,360 --> 00:13:59,520 Speaker 8: some of the high end leather goods or apparel makers 272 00:13:59,559 --> 00:14:02,959 Speaker 8: we would would do very well. It's quite interesting that 273 00:14:03,040 --> 00:14:08,280 Speaker 8: into this geopolitical unrest for Q four there were some 274 00:14:08,400 --> 00:14:11,560 Speaker 8: big names coming through with high single digital or double 275 00:14:11,600 --> 00:14:14,160 Speaker 8: digit growth from the Middle East. So if things do 276 00:14:14,280 --> 00:14:16,480 Speaker 8: continue for a long time, it does knock some of 277 00:14:16,480 --> 00:14:17,280 Speaker 8: the growth away. 278 00:14:18,080 --> 00:14:22,000 Speaker 5: You mentioned jewelry and you mentioned leather goods. What about spirits? 279 00:14:22,120 --> 00:14:25,520 Speaker 5: How is that different when it comes to the breakdown 280 00:14:25,560 --> 00:14:27,960 Speaker 5: the categories within luxury. 281 00:14:28,640 --> 00:14:32,000 Speaker 8: So the only spirit maker that I closely follows my 282 00:14:32,200 --> 00:14:35,720 Speaker 8: one of my colleagues covers the high end spirits. But 283 00:14:35,840 --> 00:14:39,200 Speaker 8: I would be looking at what would happen within LVMH group. 284 00:14:40,280 --> 00:14:45,560 Speaker 8: Their biggest exposures were out of Asia and the US 285 00:14:46,080 --> 00:14:48,920 Speaker 8: and where they were doing very well again in Champagnes, 286 00:14:49,040 --> 00:14:53,600 Speaker 8: doing better in wines, but spirits, particularly cognacs were difficult 287 00:14:53,640 --> 00:14:56,480 Speaker 8: again for twenty twenty six. So the growth outlook there 288 00:14:56,560 --> 00:14:57,480 Speaker 8: wasn't very strong. 289 00:14:57,760 --> 00:15:00,640 Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this. 290 00:15:04,240 --> 00:15:07,920 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 291 00:15:08,000 --> 00:15:10,720 Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and 292 00:15:10,720 --> 00:15:14,000 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 293 00:15:14,040 --> 00:15:17,120 Speaker 1: wherever you get your podcasts, or watch us live on 294 00:15:17,160 --> 00:15:18,720 Speaker 1: YouTube with. 295 00:15:19,640 --> 00:15:23,280 Speaker 5: Long term bonials as they go, So go mortgage rates 296 00:15:23,400 --> 00:15:24,960 Speaker 5: and so I want to bring in our next guest. 297 00:15:25,000 --> 00:15:28,280 Speaker 5: She is Best Friedman, CEO at Brown Harris Stevens, to 298 00:15:28,360 --> 00:15:31,080 Speaker 5: join us to talk about what's happening in the residential 299 00:15:31,120 --> 00:15:34,000 Speaker 5: housing market and Best, I guess the best way I 300 00:15:34,040 --> 00:15:36,040 Speaker 5: want to start things off is to kind of take 301 00:15:36,080 --> 00:15:39,800 Speaker 5: a big step back and consider just how much international 302 00:15:39,840 --> 00:15:40,920 Speaker 5: conflicts tend. 303 00:15:40,720 --> 00:15:42,520 Speaker 6: To affect the housing market. 304 00:15:42,600 --> 00:15:45,360 Speaker 5: Yes, we know they lead to hire bond yields and 305 00:15:45,840 --> 00:15:48,160 Speaker 5: or they can lead to higher boniolds in this case, 306 00:15:48,560 --> 00:15:51,160 Speaker 5: which could increase mortgage rates. But what does it mean 307 00:15:51,200 --> 00:15:54,560 Speaker 5: in terms of demand overall for housing in the US? 308 00:15:55,640 --> 00:15:58,160 Speaker 4: Well, good morning, thank you for having me this morning. 309 00:15:59,280 --> 00:16:02,480 Speaker 4: You know, I think it's just more volatility and uncertainty, 310 00:16:02,680 --> 00:16:05,480 Speaker 4: and I think, you know, we've already had sort of 311 00:16:05,520 --> 00:16:08,600 Speaker 4: a bit of a frozen housing market and some challenges 312 00:16:08,640 --> 00:16:12,920 Speaker 4: with affordability, and this just creates a little bit more 313 00:16:13,640 --> 00:16:16,920 Speaker 4: sort of concern for buyers who've been on the sidelines 314 00:16:16,960 --> 00:16:20,000 Speaker 4: a bit, and so they may hold off. Even though 315 00:16:20,000 --> 00:16:22,640 Speaker 4: we saw rates go down there lower than they were 316 00:16:22,720 --> 00:16:24,960 Speaker 4: the thirty year from a year ago, which is good. 317 00:16:25,560 --> 00:16:29,440 Speaker 4: But this war is not really great for markets because 318 00:16:29,600 --> 00:16:31,680 Speaker 4: you know, people don't know what's going to be and 319 00:16:31,720 --> 00:16:35,320 Speaker 4: so it's it's hard to say what the impact will be. 320 00:16:36,600 --> 00:16:38,800 Speaker 4: But you know, I think it's going to be slow 321 00:16:38,800 --> 00:16:42,160 Speaker 4: and steady, and people are watching, and you know, when 322 00:16:42,200 --> 00:16:45,800 Speaker 4: buyers need to buy and can buy, they do, Uh, 323 00:16:46,240 --> 00:16:49,600 Speaker 4: and in this environment, it's sort of wait and see 324 00:16:49,600 --> 00:16:50,160 Speaker 4: a little bit. 325 00:16:50,840 --> 00:16:53,600 Speaker 2: Is cash still king in the home buying market right now? 326 00:16:53,640 --> 00:16:55,720 Speaker 2: Because we knew for a long time there was this 327 00:16:55,840 --> 00:16:58,480 Speaker 2: trend of people who had the cash were using it. 328 00:16:58,480 --> 00:17:00,120 Speaker 2: It was really hard for other people to go up 329 00:17:00,120 --> 00:17:02,680 Speaker 2: against them and win in these bidding wars. Is that 330 00:17:02,760 --> 00:17:05,239 Speaker 2: still the case or is that starting to you know, 331 00:17:05,320 --> 00:17:06,360 Speaker 2: pull back a little. 332 00:17:06,160 --> 00:17:09,040 Speaker 4: Bit, you know, I'm still seeing the cash is king. 333 00:17:09,240 --> 00:17:11,879 Speaker 4: Last year we saw you know, especially in places like 334 00:17:11,960 --> 00:17:15,560 Speaker 4: New York City where you have discretionary markets, you know, 335 00:17:15,560 --> 00:17:18,240 Speaker 4: where people are buying their second or third home, you know, 336 00:17:18,440 --> 00:17:21,600 Speaker 4: cash is king. And we saw more than half the 337 00:17:21,640 --> 00:17:24,360 Speaker 4: deals last year in New York City were done in cash. 338 00:17:24,680 --> 00:17:26,960 Speaker 4: And so yeah, I think that goes a long way, 339 00:17:27,040 --> 00:17:29,959 Speaker 4: especially because money is more expensive. So if people have 340 00:17:30,040 --> 00:17:33,760 Speaker 4: the cash, they're using it to buy their homes. So 341 00:17:34,119 --> 00:17:36,600 Speaker 4: I haven't seen that mitigate at all. I see. I 342 00:17:36,600 --> 00:17:40,320 Speaker 4: think people who can afford to and have cash are 343 00:17:40,320 --> 00:17:43,400 Speaker 4: going to use it versus getting a mortgage. 344 00:17:43,880 --> 00:17:45,480 Speaker 5: And a lot of the people who have the cash 345 00:17:45,520 --> 00:17:48,720 Speaker 5: tend to be international buyers as well. How present are 346 00:17:48,760 --> 00:17:50,359 Speaker 5: they in this housing market? 347 00:17:51,440 --> 00:17:54,280 Speaker 4: Not seeing a lot of the international buyers as of 348 00:17:54,440 --> 00:17:57,320 Speaker 4: late I see a lot of domestic people moving from 349 00:17:57,359 --> 00:18:00,239 Speaker 4: within states, you know, like New York to Texas, New 350 00:18:00,320 --> 00:18:03,159 Speaker 4: York to Florida. But that sort of thing about I 351 00:18:03,160 --> 00:18:05,760 Speaker 4: don't see a huge international presence. 352 00:18:06,880 --> 00:18:11,120 Speaker 2: When you look at affordability across the map of the US, 353 00:18:11,440 --> 00:18:14,679 Speaker 2: where does the buyer get the most value for their 354 00:18:14,720 --> 00:18:15,560 Speaker 2: money at the moment. 355 00:18:16,760 --> 00:18:20,199 Speaker 4: I mean, that's so it's really hard to say. I mean, 356 00:18:20,240 --> 00:18:24,560 Speaker 4: there's certain pockets and areas, you know, in different places 357 00:18:24,800 --> 00:18:27,439 Speaker 4: of the United States where there are good you know, 358 00:18:27,560 --> 00:18:32,280 Speaker 4: deals where there's ample supply. But you know, there's certain 359 00:18:32,320 --> 00:18:34,560 Speaker 4: parts of New York, even New York City, where there's 360 00:18:34,600 --> 00:18:38,959 Speaker 4: decent supply and people can and negotiate and and and 361 00:18:39,000 --> 00:18:41,760 Speaker 4: really get something that makes sense, where the price per 362 00:18:41,760 --> 00:18:45,680 Speaker 4: square foot is really a good value. Parts of Brooklyn, 363 00:18:46,560 --> 00:18:50,400 Speaker 4: there's parts of upstate New York and Florida. There's different areas. 364 00:18:50,440 --> 00:18:55,200 Speaker 4: It really depends on someone's circumstances and what they can afford. 365 00:18:56,119 --> 00:18:59,240 Speaker 4: But where you see tighter plate supply, like places like 366 00:18:59,320 --> 00:19:03,920 Speaker 4: Palm Beach and Connecticut, that's where buyers are much more challenged. 367 00:19:03,960 --> 00:19:07,919 Speaker 4: But there's certain areas, like you know in California, and 368 00:19:08,000 --> 00:19:11,200 Speaker 4: different areas where there is decent there's a decent amount 369 00:19:11,240 --> 00:19:14,280 Speaker 4: of supply. It just really depends because real estate is 370 00:19:14,320 --> 00:19:18,679 Speaker 4: so local, and it depends on someone's circumstances and what 371 00:19:18,800 --> 00:19:19,680 Speaker 4: they can afford. 372 00:19:20,680 --> 00:19:20,960 Speaker 1: Yeah. 373 00:19:21,440 --> 00:19:24,680 Speaker 5: Absolutely, I mean one one town in one state will 374 00:19:24,720 --> 00:19:27,800 Speaker 5: be completely different from another town in the same state. 375 00:19:28,359 --> 00:19:31,120 Speaker 5: What does inventory look like when it comes to existing 376 00:19:31,160 --> 00:19:33,240 Speaker 5: homes versus newly new construction. 377 00:19:34,800 --> 00:19:38,320 Speaker 4: You know, you guys probably have read this stat that 378 00:19:38,359 --> 00:19:41,199 Speaker 4: we have a shortage of homes in the United States 379 00:19:41,200 --> 00:19:44,280 Speaker 4: of roughly four million, give or take, and we have 380 00:19:44,359 --> 00:19:46,480 Speaker 4: a real you know challenge and that we need to 381 00:19:46,480 --> 00:19:51,080 Speaker 4: get more supply. So you know, builders are you know, 382 00:19:51,359 --> 00:19:53,920 Speaker 4: not as quick to build today as they were, and 383 00:19:54,000 --> 00:19:57,520 Speaker 4: so we're not seeing the same incentives to build. We 384 00:19:57,600 --> 00:20:01,560 Speaker 4: have challenges with zoning, and the people that own homes 385 00:20:01,720 --> 00:20:04,600 Speaker 4: already are taking their time to sell as well because 386 00:20:04,640 --> 00:20:07,200 Speaker 4: they have locked in rates that are lower and therefore 387 00:20:07,200 --> 00:20:08,879 Speaker 4: they don't want to list in sell. So we have 388 00:20:09,000 --> 00:20:13,880 Speaker 4: a challenge in both areas, and so you know, we're 389 00:20:13,880 --> 00:20:16,040 Speaker 4: trying to do things like as you guys are probably 390 00:20:16,080 --> 00:20:19,760 Speaker 4: aware of City of Yes where that was able to 391 00:20:19,880 --> 00:20:22,919 Speaker 4: we're able to get something like eighty thousand new units 392 00:20:22,920 --> 00:20:26,199 Speaker 4: into the housing market. We need more legislation like that 393 00:20:26,240 --> 00:20:28,600 Speaker 4: so that we can get you know, more supplying to 394 00:20:28,680 --> 00:20:31,760 Speaker 4: the market. So new home sales are you know, new 395 00:20:31,800 --> 00:20:35,639 Speaker 4: builder sales are slower, but you know, it's sort of 396 00:20:35,680 --> 00:20:38,400 Speaker 4: a challenge in both arenas, in the resale market and 397 00:20:38,440 --> 00:20:40,000 Speaker 4: in the new home market. 398 00:20:40,520 --> 00:20:42,199 Speaker 2: I'm wondering if it's going to if banks are going 399 00:20:42,280 --> 00:20:45,600 Speaker 2: to get a little stingy when it comes to mortgages 400 00:20:45,800 --> 00:20:48,119 Speaker 2: in the months ahead. And part of that I'm wondering 401 00:20:48,200 --> 00:20:51,000 Speaker 2: is is might that be a knockoff effect of the 402 00:20:51,040 --> 00:20:53,560 Speaker 2: cracks we're seeing in the private credit market. Are there 403 00:20:53,600 --> 00:20:55,320 Speaker 2: any signs out there that make you think it's going 404 00:20:55,359 --> 00:20:57,480 Speaker 2: to be harder for folks to get a mortgage in 405 00:20:57,480 --> 00:20:58,560 Speaker 2: the coming months. 406 00:21:00,080 --> 00:21:04,120 Speaker 4: And seeing anything in particular, but you know, it's been 407 00:21:04,240 --> 00:21:07,200 Speaker 4: somewhat slow. If you talk to mortgage professionals, they'll tell 408 00:21:07,200 --> 00:21:10,600 Speaker 4: you that people you know, are taking their time where 409 00:21:10,600 --> 00:21:13,399 Speaker 4: they're not you know, jumping into the housing market in 410 00:21:13,400 --> 00:21:15,960 Speaker 4: the way that they were. There's a little bit more 411 00:21:16,000 --> 00:21:20,040 Speaker 4: refinancing right now, but I'm not seeing anything via restrictions 412 00:21:20,119 --> 00:21:23,840 Speaker 4: that are prohibiting people. It's more of you know, people 413 00:21:23,840 --> 00:21:27,040 Speaker 4: feel they can't afford to buy their first time home. 414 00:21:27,119 --> 00:21:29,600 Speaker 4: The stat was something like, first time home buyers are 415 00:21:29,600 --> 00:21:32,639 Speaker 4: now roughly forty years old when they used to be 416 00:21:32,720 --> 00:21:34,880 Speaker 4: twenty eight years old, just you know, a little more 417 00:21:34,880 --> 00:21:37,600 Speaker 4: than ten years ago. So people have been priced out 418 00:21:37,640 --> 00:21:41,080 Speaker 4: of the American dream, as they say, and so hopefully 419 00:21:41,119 --> 00:21:43,159 Speaker 4: we can come up with new incentives and ways for 420 00:21:43,160 --> 00:21:45,840 Speaker 4: people to be able to get back into the housing market, 421 00:21:46,119 --> 00:21:49,560 Speaker 4: things like city of yes, good legislation, up zoning, all 422 00:21:49,600 --> 00:21:53,400 Speaker 4: those things. We need more supply. That's really the biggest issue. 423 00:21:53,560 --> 00:21:56,720 Speaker 4: You know, every article you read from economists, from law professors, 424 00:21:56,760 --> 00:21:58,840 Speaker 4: they talk about the fact that we just we need 425 00:21:58,880 --> 00:22:01,000 Speaker 4: more supply and we have to put more supply in 426 00:22:01,040 --> 00:22:04,720 Speaker 4: the market. Freezing rents, those sorts of things certainly do 427 00:22:04,800 --> 00:22:06,040 Speaker 4: not help the market. 428 00:22:07,520 --> 00:22:12,199 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 429 00:22:12,400 --> 00:22:15,880 Speaker 1: and anywhere else you get your podcasts. Listen live each 430 00:22:15,880 --> 00:22:19,640 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com, 431 00:22:19,760 --> 00:22:23,320 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 432 00:22:23,720 --> 00:22:26,640 Speaker 1: You can also watch us live every weekday on YouTube 433 00:22:27,040 --> 00:22:29,280 Speaker 1: and always on the Bloomberg terminal