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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 2: my co host Matt Miller.
Speaker 1: Every business day we bring you interviews from CEOs, market pros,
Speaker 1: and Bloomberg experts, along with essential market moven News.
Speaker 2: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
Speaker 2: you listen to podcasts, and at Bloomberg dot com slash
Speaker 2: podcast here. And you want to talk rates and fed
Speaker 2: and all those bankers stuff. You turn to Ira, Jersey.
Speaker 2: You know, you head down the turnpike, the Parkway Route one.
Speaker 2: You get to Princeton, New Jersey, and that's where Ira
Speaker 2: Jersey is with the Bloomberg Intelligence Strategy team.
Speaker 1: O way on your way there, you can stop for
Speaker 1: gas and fill up for what three dollars and thirteen cents?
Speaker 2: Yes on roote seventy one in Wall Township this weekend,
Speaker 2: which all.
Speaker 1: Time, you know, just a drop for the energy prices.
Speaker 1: And that's part of the reason, Ira, that we saw
Speaker 1: this inflation report come in light. It's good news obviously
Speaker 1: for the Fed if you buy it, it's good news
Speaker 1: for the country as well.
Speaker 3: Does this mean no more hikes are necessary?
Speaker 4: Yeah?
Speaker 5: I think you know, this number takes hikes off the table,
Speaker 5: I think at this point. And yeah, you know, like
Speaker 5: you mentioned the WORP function and just looking at what
Speaker 5: short term interest rate products are doing, we're now pricing
Speaker 5: in for even more cuts in twenty twenty four. I'm
Speaker 5: still skeptical that the Federal Reserve will actually cut, but
Speaker 5: certainly the market is thinking that there's a risk of that.
Speaker 5: And you know, this is what's been happening though, is
Speaker 5: that the market's been extrapolating these trends from single numbers,
Speaker 5: and you know, we have to think that, Okay, maybe
Speaker 5: we got a zero inflation this month, but next month.
Speaker 4: If we get a point.
Speaker 5: One or a point two, it's still slower inflation than
Speaker 5: we had earlier this year, but it's still, you know,
Speaker 5: not going to be necessarily near the Fed's comfort zone,
Speaker 5: at least not yet.
Speaker 2: So what other parts of the market do you look
Speaker 2: at to get a sense of kind of where you
Speaker 2: know future rates may go here?
Speaker 5: Yeah, so the big market now used to be the
Speaker 5: euro dollar market and not meeting the actual dollar, but
Speaker 5: meaning dollars in Europe and interest rates on short term
Speaker 5: on short term products. So if you look at the
Speaker 5: SOFUR futures now you've seen a big shift over.
Speaker 4: The last two weeks.
Speaker 5: Where SOFA was thinking at the end of twenty twenty
Speaker 5: five was going to be that we were going to
Speaker 5: have short term interest rates somewhere around three and a
Speaker 5: half percent. Now it's even lower than that. Right, So
Speaker 5: we're seeing some shifts in the market that like twenty
Speaker 5: five basis points over the last two weeks in the
Speaker 5: market's expectation for where rates are going to be in
Speaker 5: two years.
Speaker 4: So SOFA futures are a big one.
Speaker 5: Obviously Fed funds futures as well, but Fed funds futures
Speaker 5: most of the volume is really in the first six
Speaker 5: months of those contracts. So you looking at longer term
Speaker 5: and what the market's thinking for policy rates, SOFA is
Speaker 5: the much better product for that.
Speaker 3: By way, Paul, you have made a killing on your
Speaker 3: two years.
Speaker 4: Sure.
Speaker 1: You know, as the rate obviously comes down the price
Speaker 1: goes up. You don't need to worry about reinvestment risk.
Speaker 1: You can sell those things out of profit. Exactly right.
Speaker 1: I mean just today, I mean we had five spots
Speaker 1: zero four. Now we're four point eighty five percent of
Speaker 1: just a big move into short term.
Speaker 3: Yeah, these big moves keep happening.
Speaker 1: Is there any problem with this much volatility in the
Speaker 1: treasury market? I'm looking at twenty basis point drops on threes, fives,
Speaker 1: and sevens and almost that much eighteen and change on
Speaker 1: twos and tens.
Speaker 3: Is that a problem?
Speaker 4: I don't think it's a problem.
Speaker 5: I think it's a sign of the new environment that
Speaker 5: we're in with the amount of with the amount of
Speaker 5: bonds that are outstanding versus the capacity of dealers and
Speaker 5: other intermediaries to actually see all the flow and take
Speaker 5: on risks to redistribute that risk at some point is
Speaker 5: much lower today. And you know, part of this is
Speaker 5: electronification of the markets and the like, so you're.
Speaker 4: Likely to continue to see these.
Speaker 5: So actually, we were just looking this morning at comparing where,
Speaker 5: you know, the types of moves we're seeing now versus
Speaker 5: say nineteen ninety seven, when you had interest rates that
Speaker 5: were a little bit higher than they are now, but
Speaker 5: six seven percent on the ten year instead of you know,
Speaker 5: four and a half five, But you actually had regularly
Speaker 5: fifteen twenty basis point moves. So you know, given the
Speaker 5: level of rates, this is not that unusual. Well, I
Speaker 5: think the thing is that we were used to the
Speaker 5: last decade when interest rates were near zero and when
Speaker 5: you had tenure yields at two percent, you know, a
Speaker 5: five basis point move seemed really big. Now that you're
Speaker 5: at you know, five percent, then you know, maybe a
Speaker 5: ten basis point move or a fifteen basis point move
Speaker 5: is kind of you know, on the larger size, but
Speaker 5: also not particularly unusual.
Speaker 4: So so I think you'll see more of these.
Speaker 5: Partially doe to rate, partially due to shifts in the
Speaker 5: market structure that you know, just going to provide for more,
Speaker 5: you know, more jumps in the market when people are
Speaker 5: one way and you know, want to get want to
Speaker 5: get out of risk or into risk in because of
Speaker 5: data or because of some news out of the Fed,
Speaker 5: for example.
Speaker 2: So I when I first got the Salomon Brothers, the
Speaker 2: Salomon had like an army of government bond traders, no kidding,
Speaker 2: I mean just dozens of them, and they were all
Speaker 2: trading for their book, trading for clients, and they made
Speaker 2: a lot of money. I'm guessing they also lost money
Speaker 2: from time to time. Does that even exist on Wall Street?
Speaker 2: And more? Do government trading desks exists? And do they?
Speaker 2: Are they profit centers anymore?
Speaker 5: So there are government Yeah, there are clearly government bond traders.
Speaker 5: I think that the what what you've seen, and this started,
Speaker 5: you know, in the last twenty odd years, you know,
Speaker 5: and progressed while I was on the street myself, is
Speaker 5: that you went from having you know, five six people
Speaker 5: trading treasuries and just treasuries to having somewhat less than
Speaker 5: that because you have more automated pricing.
Speaker 4: So you get auto pricers.
Speaker 5: And electronic trading platforms that basically you know, look at
Speaker 5: supply and demand and and you know price smaller trades
Speaker 5: in in you know, just electronically without necessarily the dealer
Speaker 5: having to take much risk. But for those bigger trades,
Speaker 5: and for trades that you know of decent size, you
Speaker 5: still have a person who has to accept that trade
Speaker 5: because whether or not it fits their risk limits of
Speaker 5: their trading book.
Speaker 4: And banks make money on this.
Speaker 5: You know, you talk to you know, Alison Williams, who
Speaker 5: covers the lot of the dealers here at Bloomberg Intelligence,
Speaker 5: and you look and you know, sometimes fixed income trading.
Speaker 4: Is a big profit center and in other times.
Speaker 5: Obviously twenty twenty two, for example, was not a particularly
Speaker 5: good year for trading, primarily because you get stuck with risk,
Speaker 5: and because you get stuck with that risk, you wind
Speaker 5: up losing money when when bond prices go down and
Speaker 5: yields go up. So I think that that you know,
Speaker 5: the market's changed, and certainly the size of the market
Speaker 5: and the size of the dealer community has shrunk a
Speaker 5: little bit, right in terms of personnel and liquidity and
Speaker 5: also risk taking. Yeah, liquidity is definitely lower. So you
Speaker 5: look at the Bloomberg Liquidity Index, which basically shows you
Speaker 5: how much off the run bond. So these are aren't
Speaker 5: like the current tenure, but the tenure issued.
Speaker 4: Say six months ago.
Speaker 5: Liquidity in those securities in particular has gone way down,
Speaker 5: and that's really where I think you see some of
Speaker 5: the pain points and one reason why dealers, you know,
Speaker 5: aren't willing to take as much risk and some of
Speaker 5: those off the run security. So getting out of out
Speaker 5: of risk sometimes is going to be much more difficult
Speaker 5: today than it had been in past years.
Speaker 2: Yeah, I don't know. I'm sticking with my thought that
Speaker 2: we had way more funnel Wall Street than the kids
Speaker 2: do today. I'm sure you're sticking with that point. Well,
Speaker 2: it depends which kids, right, Yeah, I'm just you know,
Speaker 2: I walk on a desk today, I'm like, there's nobody there.
Speaker 2: I mean, you know, there's a relatively no. I don't know,
Speaker 2: but anyway, they're making tons of money over there, so
Speaker 2: good for them. Iver Jersey, chief US interust Rate Strategists
Speaker 2: for Bloomberg Intelligence.
Speaker 6: You're listening to the team Can's are live program Bloomberg
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com,
Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen
Speaker 6: on demand wherever you get your podcasts.
Speaker 2: Mikey Shaw he is one of our senior analysts over
Speaker 2: in London. Covering a farmer space. He's been doing it
Speaker 2: a long time along with that guy, Sam Fazzelli. Mike's
Speaker 2: got much better hair than Sam Fazelli. Will go there
Speaker 2: right away. I'm jealous exactly. It's over flowing. So Mike,
Speaker 2: you guys have done a ton of work on these
Speaker 2: g LP one drugs. Can you frame out We've had
Speaker 2: a little bit of time now to kind of think
Speaker 2: about this and look at the different products out there.
Speaker 2: But where are we in terms of developing that market,
Speaker 2: that part of the market.
Speaker 7: I mean, in terms of penetration rates with GLP one
Speaker 7: drugs for obesity, I think we're still in the very
Speaker 7: early stages. Excitement around the classes, you know, is constantly growing,
Speaker 7: even more so after this weekend where we saw the
Speaker 7: car the detailed cardiovascular outcomes data in the best patients
Speaker 7: forward go V. I think that was met very positively
Speaker 7: by the prescriber community in general. We saw kind of
Speaker 7: early benefits as early as day one in terms of
Speaker 7: you know, these drugs can reduce major adverse cardiovasco events
Speaker 7: in you in these heavy abest patients. I mean, but
Speaker 7: there's also still a lot to be kind of learnt
Speaker 7: in in terms of you know, the mechanism itself. When
Speaker 7: we look at the I mean, the two curves of
Speaker 7: interests are are the you know, the curve aster outcomes
Speaker 7: curve and then the body weight curve so well.
Speaker 1: And diabetes, right because if you're pre diabetic and you
Speaker 1: can't stop eating hagendas, this thing could be a lifesaver.
Speaker 8: Yeah. So, I mean.
Speaker 7: So, I mean when we look at obesity, it's obviously
Speaker 7: it's a risk factor for you know, diabetes, and in
Speaker 7: that data set, it showed that, you know, it definitely
Speaker 7: cut the move of pre diabetics to you know, developing diabetes.
Speaker 7: And I mean the key question though with with the
Speaker 7: data is, yes, body weight is a contributing factor, but
Speaker 7: given the disparities we saw in terms of maximum weight
Speaker 7: loss being achieved and that early separation of the core
Speaker 7: of the of the Calleavascar outcomes curve, it's not the
Speaker 7: soul you know driver, so that there's.
Speaker 3: A secret ingredient what's doing it?
Speaker 7: Yeah, I mean that's what Nave said. It's got an
Speaker 7: X factor which we you know, we need to find
Speaker 7: out more about.
Speaker 3: But that's what you did.
Speaker 2: Like this weekend, you're at a conference, right, Yeah, up
Speaker 2: in Boston. Where was it.
Speaker 3: It was in Philadelphia.
Speaker 2: Philadelphia.
Speaker 1: Oh so you saw the apparently multiple rounds of applause
Speaker 1: when the data were released.
Speaker 3: Yeah, so the room was full.
Speaker 7: It's like the sounding evasion.
Speaker 2: Okay, Okay. When I go to a conference, this is
Speaker 2: my schedule. Get up, have a little business breakfast, maybe
Speaker 2: a little business lunch, maybe meeting in afternoon, and then
Speaker 2: boom dinner. Then we go to the craps table in Vegas.
Speaker 2: That's how you do an investor conference. These guys healthcare.
Speaker 2: They go on the weekend and they go to these
Speaker 2: conference rooms for like ten hours and have to deal
Speaker 2: with all this medical scientific data. And you guys actually
Speaker 2: have to write research notes based upon this stuff on
Speaker 2: a weekend. By the way, that's what you guys do, right,
Speaker 2: Yeah about See, that's no way to give it.
Speaker 1: Your badge is worth two drinks at the meat and
Speaker 1: greet after exactly.
Speaker 2: All right, So but in reality, how have you guys
Speaker 2: sized out this market?
Speaker 1: Because listen, listen, I have some important questions, okay, because
Speaker 1: I want to get this. I've got a doctor's appointment
Speaker 1: on December seventh, and hopefully he's gonna hook me up.
Speaker 3: I need to lose twenty pounds.
Speaker 1: I want to avoid getting diabetes and I don't want
Speaker 1: to die of a heart attack. Then, you know, and
Speaker 1: I have very weak I have no willpower, right, so
Speaker 1: I'm hoping that this drug can do this for me
Speaker 1: and maybe do.
Speaker 2: My taxes as well.
Speaker 3: I don't want to lose muscle. I only I only
Speaker 3: want to lose fat.
Speaker 1: Is there a competitor to ozempic slash we goo v
Speaker 1: that is going to help with me with that?
Speaker 7: I mean in terms of the data with regardless to
Speaker 7: kind of lean the loss of lean muscle. It's limited
Speaker 7: at the moment, but you know, Lily has done a
Speaker 7: deal for a drug which potentially when you used in
Speaker 7: compination with the drug which is well just go to
Speaker 7: approve to z bound, that could potentially address that issue.
Speaker 3: Okay, so that's one question I have.
Speaker 1: The other one is do I go zepic because I
Speaker 1: really want to avoid diabetes and a heart attack.
Speaker 3: I mean, I need to lose twenty pounds. I don't
Speaker 3: have to write not morbidly obese? Or do I go
Speaker 3: we go.
Speaker 1: Vy because it's a stronger dose and actually has better
Speaker 1: results for hard issues.
Speaker 7: I mean, in order to get we'll gav as in
Speaker 7: because of the supply issues, it needs to be on label, right,
Speaker 7: So you need to be either overweight with a weight
Speaker 7: related to comobidity so that might be diabetes. Oh you
Speaker 7: need to be you know, clinically abese, so BMI have
Speaker 7: thirty or above.
Speaker 1: I don't check that box, but I feel like I
Speaker 1: know people. I can go to Canada, you know, I
Speaker 1: can get the drug elsewhere. So you're saying like, is
Speaker 1: we GOV the right choice but it's gonna be hard
Speaker 1: to get?
Speaker 3: Or should I just settle for ozempic.
Speaker 7: I mean, at the moment, there's a lot of off
Speaker 7: label use of a zempiic simply because of the supply
Speaker 7: supply situation with WEGOV. And in essence, you know, the
Speaker 7: active ingredient of these of these drugs are both sema
Speaker 7: glue tide, and in both cases you would start off
Speaker 7: at a lower dose and then start tie trading up.
Speaker 7: So the maximum dose for for a zempick is two milligrams,
Speaker 7: maximum days FORGOVY is two point four.
Speaker 2: All right, Amy from South Carolina rates in how long
Speaker 2: does someone have to stay on the weight loss drugs? Forever?
Speaker 2: A few weeks? And when you start taking it there's
Speaker 2: a weight cut back on what's the show there.
Speaker 7: Yeah, so there's clinical data from both Lily and Novos
Speaker 7: showing that you know, as soon as you stop these drugs,
Speaker 7: you eventually, you know, put on you put the weight
Speaker 7: back on. Prescribers we've spoken to as well, they're all
Speaker 7: kind of saying, you know, chronic dosing of these drugs
Speaker 7: are needed. But I mean there are you there are
Speaker 7: various kind of things that you could potentially do. You
Speaker 7: could potentially, you know, reach your targeted weight loss and
Speaker 7: then perhaps you lower the dose.
Speaker 8: Of the drug.
Speaker 2: Who pays for this stuff?
Speaker 7: So that's one of the main questions at the moment.
Speaker 2: So you got to go to the money.
Speaker 3: But Mikey, we have the same insurance provider.
Speaker 1: If I go in there and I test like positive
Speaker 1: for pre diabetes, or if I have a BMI of
Speaker 1: like twenty seven twenty eight, are they gonna is my
Speaker 1: insurance going.
Speaker 8: To pay for this?
Speaker 7: I think as we get more and more data, we're
Speaker 7: going to see kind of access and reinbursement for these
Speaker 7: drugs improve. I think the outcomes data for w GOOVI,
Speaker 7: you know, it's a big step in the right direction.
Speaker 4: There.
Speaker 7: The whole I mean what insurers need to do is
Speaker 7: you know, balance that the short term costs, which are
Speaker 7: going to be high of you know, jailping one therapy
Speaker 7: versus the long term benefits in terms of you know,
Speaker 7: saving cost savings through reducing kind of hospitalizations.
Speaker 1: And there's an actuary at Novo Nordisk and the boss
Speaker 1: comes into his office and says, how much does heart
Speaker 1: disease and diabetes and obesity cost the world?
Speaker 8: And he says brillions.
Speaker 3: Yeah, and then he says, Okay, let's price our drug
Speaker 3: for that price. Right, That's exactly what they want to do.
Speaker 3: They want to get it.
Speaker 1: So some studies say it saves some studies say it doesn't,
Speaker 1: but it's basically at the same level.
Speaker 7: Yeah, I mean, like the if you look at the
Speaker 7: direct and indirect costs of of of obesi and diabetes,
Speaker 7: it runs into the trillions, right. And you know, all
Speaker 7: the prescribers we spoke to at the conference, you know,
Speaker 7: they believe in these drugs. They believe that eventually they'll
Speaker 7: be cost effective in terms of as we get more
Speaker 7: competition coming into the market, that price point will come down.
Speaker 7: As we see orals which are cheaper to produce also
Speaker 7: to prove that going to come down to.
Speaker 2: What we need, all right. Mikey Shaw joins us. He's
Speaker 2: a senior industry anist Bloomberg Contology. Dude, you got to
Speaker 2: come here to New York more often.
Speaker 4: Stuff.
Speaker 2: I mean, we see Sam a lot who cares. We'd
Speaker 2: rather talk to the smart money behind the healthcare research
Speaker 2: of Bloomberg Intelligence. Mikey Shaw joining us here in our
Speaker 2: Bloomberg Interactive Brooker's Studio.
Speaker 6: You're listening to the tape cans Are live program Bloomberg
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Speaker 2: Jake Saber knows is did I consent Rais?
Speaker 6: He did?
Speaker 2: Jake's Safer founder, general partner of Emergence Capital. He's out
Speaker 2: there in Silicon Valley. He does all that stuff. So
Speaker 2: when we talk about AI, Jake, I'd like to ask people,
Speaker 2: just say, from your perspective, what is AI?
Speaker 8: It's machines helping humans do their jobs.
Speaker 2: Machines helping humans do their jobs, right, I'm down with that.
Speaker 2: So how do you guys view that space and maybe
Speaker 2: how you view investment opportunities for your venture capital?
Speaker 8: Yeah, totally. Well, I'll start with some context on like
Speaker 8: where we think this fits in our software. More broadly,
Speaker 8: we're focused just on enterprise software B to B software,
Speaker 8: something that I near and dear the hearts of Bloomberg folks.
Speaker 8: Probably presumably our firm have started twenty years ago with
Speaker 8: the thesis that software would move from on premise to
Speaker 8: the cloud. That thesis largely worked, right, So the very
Speaker 8: first investment for US in four was in salesforce and
Speaker 8: investing in all sorts of enterprise software companies like Zoom
Speaker 8: ever since. And we think that this AI wave is
Speaker 8: very similar to the wave of on prem to the cloud. Okay,
Speaker 8: So just like that was transformational for tech, we think
Speaker 8: this will be transformational. We're very bullish and we're very
Speaker 8: focused on how we can help B to B software
Speaker 8: companies make that transition.
Speaker 2: But should we have a should we have a fast
Speaker 2: food company talking about AI on an earn quarterly earning
Speaker 2: conference call?
Speaker 8: I think it's real, right, Like, there's so much hysteria
Speaker 8: and so you have to cut through all the crap
Speaker 8: to figure out what's real. But like in the case
Speaker 8: of fast food, the idea of using this to help
Speaker 8: augment the people doing the drive throughs and make drives
Speaker 8: is more efficient. Like, that's very real. Voice recognition technology
Speaker 8: is real. So I think what may be in danger
Speaker 8: is I think a lot of tech companies public companies
Speaker 8: over the past six months have gotten so excited they
Speaker 8: may have over committed, over promised on what they can
Speaker 8: do with A in the near term. So we may
Speaker 8: be you know, near term negative, But I think over
Speaker 8: the long run, this thing is gonna work.
Speaker 1: Dude, think about you don't want a high school like
Speaker 1: a stoner that you hired for your drive through?
Speaker 3: It'd be like, do you want fries with that?
Speaker 1: He's not going to be enthusiastic about it. He's not
Speaker 1: going to remember to ask every time, like AI can
Speaker 1: be better at up selling in the drive through a pretty.
Speaker 3: Man, these fries are.
Speaker 2: So goodly all right, So what's the next? Well, I
Speaker 2: want to say what's the next because I don't eve
Speaker 2: know where the kind of the starting point is.
Speaker 1: But well in video is the only one that we
Speaker 1: really know, right, I mean, Microsoft, okay with open AI,
Speaker 1: But where do you invest I mean you're not You're
Speaker 1: not looking solely at public markets, so you have a
Speaker 1: much better view of you know, what's what the roots
Speaker 1: are down underground?
Speaker 3: What are you looking at?
Speaker 8: So the way I think about it is like there's
Speaker 8: there's different layers to the AI stuff. There's nvideo, which
Speaker 8: is at the base layer, right, it's the actual you know,
Speaker 8: chips that are helping power this. Then there's the foundational models.
Speaker 8: This is opening and Microsoft developing their own addition to
Speaker 8: open AI, and there's a bunch of others. And then
Speaker 8: there's the application layer, and that's the stuff we're most
Speaker 8: excited about, which is what do you do with this
Speaker 8: stuff once it's built? Right, you don't just build it
Speaker 8: for the sake of building it. But how can you
Speaker 8: make the stoner dude more effective at taking your order?
Speaker 8: How could you help doctors treat patients more effectively? How
Speaker 8: can you help lawyers go through contracts more effectively? So
Speaker 8: we're investing in companies that do all that stuff aided
Speaker 8: by AI.
Speaker 2: So all right, now, given it feels like we're in
Speaker 2: the top of the first inning for AI. Yeah, where
Speaker 2: are you guys looking and what types of deals are
Speaker 2: you guys looking at?
Speaker 4: Yeah, for sure.
Speaker 8: So we're seeing a lot of activity in vertical specific
Speaker 8: AI solutions, and this actually mirrors software. So in the
Speaker 8: first wave of cloud technology, horizontal SaaS was the thing,
Speaker 8: so salesforce, work day, et cetera. In the second wave,
Speaker 8: it was vertical SaaS or what we'd emergence call industry cloud.
Speaker 8: These are companies like Viva Systems, which is a thirty
Speaker 8: billion dollar public company selling into the pharmaceutical industry. The
Speaker 8: same things starting to happen in AI, where you're taking
Speaker 8: this technology instead of just trying to broadly apply it anywhere,
Speaker 8: you're actually choosing a specific job to be done and
Speaker 8: you're having it solve that problem. So we have invested
Speaker 8: in companies, as I said, that use this technology to
Speaker 8: do help lawyers draft contracts better. So the idea is
Speaker 8: you can, as you're writing contracts, say hey, help me
Speaker 8: make this clause mutual, and it will use AI to
Speaker 8: help draft that. We've invested in companies that help doctors
Speaker 8: communicate with insurance companies and write the letters to get
Speaker 8: approvals for different treatments. A company called Doctimity that does
Speaker 8: that so that kind of concept we think is going
Speaker 8: to be really powerful. The question is what are the
Speaker 8: jobs to be done for which this technology is most
Speaker 8: applicable in your term.
Speaker 3: And what are the data sets that they use to
Speaker 3: train on.
Speaker 1: Is that like a sticky issue because recently Elon Musk
Speaker 1: came out with his competitor to open aiy Grock.
Speaker 3: And apparently it's supposed to use real time data Twitter data.
Speaker 1: I didn't even know they could do that without breaking
Speaker 1: certain you know, privacy clauses. Maybe they don't mind, but
Speaker 1: you know, I think of Google, they have so much
Speaker 1: data at their fingertips.
Speaker 3: Can they use all that?
Speaker 8: So I think companies, the larger companies the ones that
Speaker 8: have to be the most conservative about this, which is
Speaker 8: kind of interesting actually, like in many ways, those of
Speaker 8: the folks that have the most to lose, and so
Speaker 8: startups I think can be more innovative on this front.
Speaker 8: They can you know, find different sets of data and
Speaker 8: actually kind of outmaneuver some of the incumbents. There's a
Speaker 8: real innovative's dilemma problem for the incumbents here, right If
Speaker 8: your Google, if your salesforce, if you're one of these
Speaker 8: established public companies, you have a lot to lose in this.
Speaker 8: From a legal perspective, you also if you drastically try
Speaker 8: to change your UX your user interface, let's say doing
Speaker 8: a chat based interface is better than doing the traditional interface,
Speaker 8: you could piss off a lot of your existing users.
Speaker 8: So there's risk there. There's also risk on business models.
Speaker 8: I think a lot of these technologies are starting to
Speaker 8: think about how do I charge not on a per
Speaker 8: seat basis or usage basis, but actually on an outcomes basis.
Speaker 8: Because the technology actually can help you process contracts more
Speaker 8: quickly or you know, cure patients more quickly. Would have
Speaker 8: you what if you could start actually charging on that basis,
Speaker 8: which would be disruptive to the incumbents. So from as
Speaker 8: a startup investor perspective, which is what I'm focused on,
Speaker 8: I'm spending a lot of time thinking about what are
Speaker 8: the advantages of startup hads over the incumbent in this
Speaker 8: new era?
Speaker 2: How much incremental CAPEX? If I just look at the
Speaker 2: macro tech CAPEX summers I get from IDCU whatever, and
Speaker 2: I see some of these big growth rates, how much
Speaker 2: of that do you think is incremental AI or maybe
Speaker 2: taking from some other bucket and putting it into AI.
Speaker 2: I don't know how much. Does think about it as
Speaker 2: how much is incremental.
Speaker 8: It's a really good question. I think some of it
Speaker 8: will actually come from labor. Right, So, if you had
Speaker 8: hired a consulting firm before to help you implement some
Speaker 8: new technology, and you had a big budget for that
Speaker 8: consulting firm, it's very possible that you can use AI
Speaker 8: to help you implement this technology more effectively, and so
Speaker 8: you don't need to spend as much on consulting firms. Interesting,
Speaker 8: which actually brings me to another point I've been reflecting on,
Speaker 8: which is we thought that it was like the stoner
Speaker 8: dude that was going to be most at risk in
Speaker 8: this age of AI, that it was a lot of
Speaker 8: the kind of more blue collar workers, you know, the janitors,
Speaker 8: the nannies, et cetera. What's happened with this past year
Speaker 8: of A is it seems like white collar workers are
Speaker 8: actually the ones that may have more infringement upon their
Speaker 8: daily work, and as a result, they're the ones who
Speaker 8: have to probably get up to speed faster on how
Speaker 8: to make use of this technology to augment what they do,
Speaker 8: otherwise they may fall by the wayside.
Speaker 3: I always think about this as well the jobs at risk.
Speaker 3: But what will be created?
Speaker 1: You know, because every time there's a technological wave or
Speaker 1: an industrial wave, it does knock out a whole group
Speaker 1: of jobs, but it also creates so many more.
Speaker 3: So what's going to be created here? It's not just
Speaker 3: more coders, right please?
Speaker 8: No, No, it's not more code.
Speaker 6: No.
Speaker 8: In some ways we may have different types of coders
Speaker 8: in the sense that you may not need to know
Speaker 8: as much code because the AI can help you do it.
Speaker 8: So you'll have probably more of democratization, So therell be
Speaker 8: more people to code, but you may have less people
Speaker 8: to do it at their full time job. I do
Speaker 8: think like in the near term, figuring out how to
Speaker 8: implement this technology and existing text acts is something that
Speaker 8: everyone's figuring out real time. Remember like this chatchipte thing,
Speaker 8: it's a year old, Like we've aged a ton and
Speaker 8: a year, So what's it going to look like in
Speaker 8: a year two years from now? So I think I
Speaker 8: think the world will look different, in jobs will look
Speaker 8: very different.
Speaker 2: Jake, just on the VC business today, talk to us
Speaker 2: about what it's like at in sand Hill Road out there,
Speaker 2: and if I have a cool technology, can will you
Speaker 2: fund it?
Speaker 8: Well, I'll start by saying sand Hill Road isn't what
Speaker 8: it used to be.
Speaker 3: Really, Yeah.
Speaker 8: What I mean by that.
Speaker 2: Is like, and where did sand Hill Road come from?
Speaker 8: Sand Hill Road went to San Francisco from from sand Hill, So.
Speaker 3: Sand Hill from New Jersey actually.
Speaker 8: Oh sure, yeah? Yeah?
Speaker 2: And Menlo Park, California, where'd that come from?
Speaker 8: Much love to the East Coast, Like there's so much.
Speaker 2: For advanced study, Albert Einstein my backyard, go ahead.
Speaker 8: There's there's a lot of history that came from the
Speaker 8: East Coast that made West Coast what it is. And
Speaker 8: actually the military is a lot of what made the
Speaker 8: West Coast and Silicon Ugway was anyway, Silicon Valley and
Speaker 8: sand Hill in particular have moved up to San Francisco largely.
Speaker 8: I think there's more action there. We're at peer five actually.
Speaker 3: Right, yeah, but I get that Humphrey slocom action.
Speaker 8: Yeah, Like there's a lot of ways to you were
Speaker 8: talking about with Goovi before. So if you want to
Speaker 8: get on that train, and I'm like to the right
Speaker 8: way to do it, I need to get some secret
Speaker 8: breakfast first exam. I'll do the would go exactly, but
Speaker 8: to answer a question on like what's the state of VC.
Speaker 8: There's kind of a weird bipolar state of VC.
Speaker 2: Right now, and we got about twenty seconds cool.
Speaker 8: What I mean by that is like, there's lots of
Speaker 8: hysteraian segment on AI, some of which is justified. And
Speaker 8: there's also some real challenges that these companies who are
Speaker 8: dealing with high interest rates and having slower sales cycles
Speaker 8: are facing.
Speaker 6: RP.
Speaker 2: We'll get you back next time you're in the big
Speaker 2: town here, Jake Safer, he is a general partner of
Speaker 2: Emergency Can.
Speaker 3: We can do it over Zoom too.
Speaker 8: We can do it with Zoom. We love Zoom.
Speaker 2: No, I don't, I don't, I don't. We go We
Speaker 2: go real time here and that's how we do it. Jake,
Speaker 2: thanks so much for joining us here. Markets tearing up
Speaker 2: here today, own a back some good inflation data.
Speaker 6: You're listening to the tape cans are live program Bloomberg
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
Speaker 6: You can also listen live on Amazon Alexa from our
Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2: I did not know what CGM met until just recently.
Speaker 2: Continuous glucose monitoring. Yeah, that's a big deal.
Speaker 1: Well, and I've been interested in it. You know, I
Speaker 1: don't have diabetes yet.
Speaker 3: You're in good shape.
Speaker 2: What are you talking about?
Speaker 1: But I'm sure it's in my future because I eat
Speaker 1: so many sugary foods. But well, I mean, I'm fortunately
Speaker 1: I trying to stop. I've been interested in these continuous
Speaker 1: glucose monitors for a while just because I'd like to
Speaker 1: see how my body reacts different foods. For example, you
Speaker 1: could eat you and I could eat the exact same
Speaker 1: meal and we could have very different responses in terms of,
Speaker 1: you know, how that makes our blood sugars react. And
Speaker 1: I think it's really interesting information to have, especially interesting
Speaker 1: for athletes or for people who are really monitoring their
Speaker 1: health closely.
Speaker 3: But for now, diabetics are getting to use these products,
Speaker 3: good stuff. Insurance pay for it.
Speaker 2: Jeremy Silvan joins the CSC dex coom that is a
Speaker 2: NASTAK listed company. D x CM is a ticker uh
Speaker 2: to put in there. They are based in San Diego.
Speaker 2: I believe, nice choice. Jeez, lame.
Speaker 3: Why aren't we all based on San Diego.
Speaker 1: I don't understand when I don't know, you know, when
Speaker 1: the founding fathers set everything.
Speaker 2: Up exactly why in New York and watch it.
Speaker 3: I mean it's nice, but.
Speaker 2: All right, Jeremy, thanks so much for joining us here
Speaker 2: in our Bloomberg Nactior broker studio d X dex comp
Speaker 2: for ourn listeners. Tell us what you guys do kind
Speaker 2: of how you play the game here?
Speaker 9: Yeah, sure, and thanks for having us here. Dexcom we
Speaker 9: make continuous glucose monitors, as you mentioned, our G six
Speaker 9: and our G seven series as well as Dexcom one.
Speaker 9: And what the really the product does is that there's
Speaker 9: a small interest needle that goes right beneath your skin
Speaker 9: into your interstitial fluid. It monitors your glucose throughout the
Speaker 9: course of the day. And so for anybody that is
Speaker 9: monitoring their glucose levels because they take insulin, because they
Speaker 9: take other drugs like glp ones, as they monitor their food,
Speaker 9: their sleep patterns, and ultimately their exercise patterns, we're able
Speaker 9: to monitor in real time and give feedback as to
Speaker 9: how your glucose levels are moving in your body really
Speaker 9: minute by minute. Every five minutes, we send a ping
Speaker 9: to your phone or to the receiver. We do that.
Speaker 9: It's obviously very beneficial to those that need to manage
Speaker 9: their glucose levels, and by the way, that really spans
Speaker 9: the entire population.
Speaker 3: It's really the fifth vital sign.
Speaker 1: So, but it's interesting that you say you can use
Speaker 1: it to work with GLP ones, to work with semi
Speaker 1: glue tites likeozepic and we govy are you seeing more
Speaker 1: more customers do that?
Speaker 3: We are, in fact.
Speaker 9: You know what we see is if you look at
Speaker 9: the prescribing patterns, you're really realizing these are companion therapies.
Speaker 9: You're seeing our prescriptions actually increase when you have somebody
Speaker 9: who's using a GLP one, and what you find is
Speaker 9: the outcomes are better. There's an increase in a one
Speaker 9: C reduction when you have somebody using both of these products.
Speaker 9: And so, you know, we think about it as if
Speaker 9: you want to think about it as therapy and diagnosis
Speaker 9: coming toge other. The therapy is the drug, the diagnosic
Speaker 9: is the real insight into what's happening in your body.
Speaker 9: Those two things are an incredibly powerful combination. You're seeing
Speaker 9: positions prescribing more and more in that pattern.
Speaker 2: What are that so for your CGM business, that is
Speaker 2: that is your business. Yes, okay, what are the growth
Speaker 2: drivers on the top line for you?
Speaker 6: Yeah?
Speaker 9: Absolutely, I mean the total addressable market is huge, and
Speaker 9: you know, it's one of those things when we sought
Speaker 9: out to.
Speaker 8: Meet an unmet need, we.
Speaker 9: Realized and you mentioned sugary foods, a lot of us
Speaker 9: are sitting down more often than we have in the past.
Speaker 9: There is a challenge with glucose levels in the body.
Speaker 9: It started with folks using insulin, but it's really progressed
Speaker 9: beyond that. And when you think about the entire population
Speaker 9: diabetes thirty million in the US, pre diabetes ninety million
Speaker 9: in the US, Global diabetes over five hundred million YEA,
Speaker 9: and only about one percent of the people that have
Speaker 9: diabetes in the world are on this therapy, so there's
Speaker 9: ninety nine percent to go, and so there's a real
Speaker 9: opportunity for us to continue to drive adoption really change people.
Speaker 2: Is your customer, the physician.
Speaker 9: Our customer is the physician, the payer, and the actual
Speaker 9: customer themselves. I mean, really, this is incredibly personal to
Speaker 9: the actual patient. They wear it on their body, yep.
Speaker 9: The physician clearly wants to know it, how it helps
Speaker 9: them titrate medication. And then obviously the payer wants outcomes,
Speaker 9: and so you have to have a product that delivers outcomes.
Speaker 9: Ours delivers outcomes.
Speaker 1: So I've seen you see the YouTube videos or Instagram
Speaker 1: videos where somebody just kind of slaps it on the
Speaker 1: bottom of her arm or his arm. It doesn't look
Speaker 1: like it hurts. Explain to you, say needle, But I
Speaker 1: feel like it's more of a wire almost, isn't it.
Speaker 9: That's what it is. I mean, it's I'm wearing one now.
Speaker 9: Basically you put on your body, a click, a button,
Speaker 9: it comes on. I don't feel it. Most folks don't.
Speaker 9: When I say it's a little needle under it. It's
Speaker 9: about the size of a hair and about about a
Speaker 9: quarter of an inch.
Speaker 3: And how long do you leave it in your arm?
Speaker 9: For ten days? So stays in there for ten days,
Speaker 9: giving you feedback over the course of those ten days.
Speaker 9: Real easy to put on, real easy to take off.
Speaker 9: Pairs with your foam, pairs with other devices as well.
Speaker 3: And do you leave it on all the time? Do
Speaker 3: you constantly have one on always?
Speaker 9: You have it on twenty four to seven, you swim
Speaker 9: with it? I noticed you mentioned San diego, you surf
Speaker 9: with it. If you guys ever want to try it
Speaker 9: and come out surfing with us, you're more.
Speaker 8: Than welcome to.
Speaker 9: But absolutely part of wearing it twenty four to seven
Speaker 9: So it gives you that twenty four to seven feet back.
Speaker 3: What do you notice? I mean when you have I
Speaker 3: don't know, a glass of wine. Do you see a
Speaker 3: change when you have you know, peanut butter? I mean,
Speaker 3: what are the things that you notice? You change?
Speaker 9: You change your habits, you really do. I'll tell you
Speaker 9: what's good whiskey. That's a good one, that's not good beer.
Speaker 9: So there you go, and you're gonna have to battle
Speaker 9: between those if you want to keep it. But there
Speaker 9: are foods that you eat that you realize to your point,
Speaker 9: your body interacts with differently. For me, it's rice. Rice
Speaker 9: sends me through the roof. And so what I've done
Speaker 9: is I've stayed. I've changed my behavior around my eating habits.
Speaker 9: I stay away from rice. I don't want that to
Speaker 9: impact my glucose levels, which obviously impacts your health.
Speaker 2: Why are you wearing the patch?
Speaker 9: So I wear it for the similar reason I like
Speaker 9: to one. I'm a bit of a sensor nerd since
Speaker 9: I work at the company.
Speaker 2: You know, is this a prescription thing?
Speaker 9: It is a prescription.
Speaker 3: I have a prescription.
Speaker 2: And why did you get the prescription?
Speaker 9: Because I wanted to monitor the post levels. It was
Speaker 9: really important me for long term health.
Speaker 3: Concert But the.
Speaker 2: Target market is what it's still those? Is it you
Speaker 2: or is it just somebody who has an underlying condition
Speaker 2: that requires this type of monitoring.
Speaker 9: Today it's really targeted at the diabetes popularation and those impacted,
Speaker 9: so that population, but longer term it will, believe go
Speaker 9: well beyond that to folks that are monitoring their health
Speaker 9: before your physical.
Speaker 2: So the Apple Watch isn't enough. We got to go
Speaker 2: another step.
Speaker 3: You have to step.
Speaker 9: You have to be accurate. And that's the big thing.
Speaker 9: The difference between a healthy person and someone with pre
Speaker 9: diabetes is very very small, so accuracy is paramount.
Speaker 3: Yeah, ninety million people have pre diabetes.
Speaker 2: And I go once a year from my checkup.
Speaker 4: That's not good enough.
Speaker 1: You, I'm sure, are a healthy eater and an active
Speaker 1: fitness guy.
Speaker 3: You don't need to worry about it.
Speaker 1: But I'm cramming like peanut butter and jellies down my
Speaker 1: throat as fast as I can.
Speaker 3: You know, and I like to watch TV.
Speaker 8: How much does this cost from Matt when he doesn't
Speaker 8: have a prescription.
Speaker 9: When you don't have a prescription, you can get online.
Speaker 9: It's one hundred and seventy nine for a month. That's
Speaker 9: three different sensors, ten days each.
Speaker 1: And then I just think it's interesting. You know that
Speaker 1: rice drives your blood sugar higher. I would not have
Speaker 1: any idea if I'm sitting in front of a bowl
Speaker 1: of rice that that's gonna do it. So, you know,
Speaker 1: we take these tests. The doctor will say, hey, avoid
Speaker 1: sugary foods, don't eat anything after dinner, and then come
Speaker 1: in the next morning. I will avoid ice cream and
Speaker 1: you know obviously cake and candy, but I probably would
Speaker 1: eat a bowl of rice no problem, and even sneak
Speaker 1: one in after dinner.
Speaker 2: Wow, look at you going crazy.
Speaker 3: Well, but then I would get a bad result on
Speaker 3: the test.
Speaker 9: You might even find out that the ice cream is
Speaker 9: actually good for you and the rice isn't.
Speaker 3: Don't take my work all right?
Speaker 2: Twenty one by ratings three whole and zero cells.
Speaker 1: The stock has outperformed Medtronic Insulate Tandem Diabetes and Abbot
Speaker 1: labs over the last five years. I'll look at those
Speaker 1: because they make you know, competing products or in the
Speaker 1: same space in the diabetes.
Speaker 2: What's the investment message you give to the street.
Speaker 9: You know, we have a product, it's the most accurate, simple,
Speaker 9: it's easy to use, it's covered. So we have a
Speaker 9: population in front of us, a TAM in front of
Speaker 9: us that we think is absolutely unparalleled. On top of that,
Speaker 9: we've been working very, very hard on profitability. I know
Speaker 9: that's top of mind for investors. And if you look
Speaker 9: at our performance, a twenty six hundred basis point increase
Speaker 9: over the last five years in profitability. So when you
Speaker 9: combine incredible top line growth we grew twenty six percent
Speaker 9: organically last quarter and the prior quarter, along with that
Speaker 9: profitability in this unmatched TAM, I think you really have
Speaker 9: an incredible investment opportunity. And we've been communicating that to
Speaker 9: the investing public for some time, and you know you've
Speaker 9: seen that through our growth over the years. Just really
Speaker 9: passionate about the company and the opportunity ahead.
Speaker 2: Yeah, I'm looking at the projectors out there on the
Speaker 2: street kind of high teens, low twenty top line growth,
Speaker 2: IBATHAM margin mid twenties going to high twenties and free
Speaker 2: cash a positive. If you can't sell that, I think
Speaker 2: you need another job. So that's why we got all
Speaker 2: those buys out there. So Jeremy Silvin, thank you so
Speaker 2: much for joining us. Jeremy is the CFO of dex Com,
Speaker 2: the symbol to put into your Bloomberg Professional Terminals d
Speaker 2: XCM there, and he got his undergraduate from Arizona State.
Speaker 2: Who's basketball team just coach by the greatest point guard
Speaker 2: in college history. That's Dandy Early good bud Man.
Speaker 1: Thanks for listening to the Bloomberg Markets podcasts. You can
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Speaker 1: at Matt Miller nineteen seventy three.
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