1 00:00:02,920 --> 00:00:07,280 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,560 --> 00:00:14,440 Speaker 2: This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 3 00:00:14,520 --> 00:00:17,720 Speaker 1: The real app performance has been the US corporate high yield. 4 00:00:17,880 --> 00:00:20,280 Speaker 1: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:20,320 --> 00:00:23,880 Speaker 1: The semiconductor business is a really cyclical business. 6 00:00:23,600 --> 00:00:27,200 Speaker 2: Breaking market headlines and corporate news from across the globe. 7 00:00:27,240 --> 00:00:29,880 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:30,080 --> 00:00:33,159 Speaker 1: These are two big time blue chip companies. 9 00:00:33,320 --> 00:00:36,920 Speaker 4: The window between the peak and cut changing super fast. 10 00:00:37,080 --> 00:00:41,680 Speaker 2: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio. 11 00:00:43,440 --> 00:00:45,800 Speaker 3: I'll Paul Sweeney and I'm Mollie Smith filling in for 12 00:00:45,880 --> 00:00:46,480 Speaker 3: Alex Steele. 13 00:00:46,720 --> 00:00:49,080 Speaker 1: On Today's Bloomberg Intelligence Show. We dig inside the big 14 00:00:49,120 --> 00:00:51,600 Speaker 1: business stories impacty Wall Street and the global markets. 15 00:00:51,680 --> 00:00:54,120 Speaker 3: Each and every week we provide in depth research and 16 00:00:54,240 --> 00:00:56,640 Speaker 3: data on some of the two thousand companies and one 17 00:00:56,720 --> 00:00:59,360 Speaker 3: hundred and thirty industries are analysts cover worldwide. 18 00:00:59,440 --> 00:01:01,560 Speaker 1: Today, we'll look at how the seven three seven Max 19 00:01:01,680 --> 00:01:03,920 Speaker 1: crisis impacted Boeings quarterly earnings. 20 00:01:04,040 --> 00:01:07,640 Speaker 3: Plus we'll discuss how cost cuts impacted earnings at UPS. 21 00:01:07,760 --> 00:01:09,760 Speaker 1: For first, we kick off a big week of corporate 22 00:01:09,800 --> 00:01:12,880 Speaker 1: earnings with the electric vehicle maker Tesla. Tesla report a 23 00:01:12,920 --> 00:01:16,560 Speaker 1: quarterly profit that fell forty eight percent. Sales also fell 24 00:01:16,680 --> 00:01:17,480 Speaker 1: nine percent. 25 00:01:17,280 --> 00:01:19,280 Speaker 3: And this comes as the company has spent more than 26 00:01:19,360 --> 00:01:22,120 Speaker 3: a year slashing prices across the lineup in an effort 27 00:01:22,200 --> 00:01:26,039 Speaker 3: to boost sales, and after Tesla reported results, CEO Elon 28 00:01:26,160 --> 00:01:29,240 Speaker 3: musk vowed to launch a less expensive vehicle as soon 29 00:01:29,280 --> 00:01:30,200 Speaker 3: as later this year. 30 00:01:30,319 --> 00:01:33,080 Speaker 1: For more, we were joined by Steven Mann Bloomberg Intelligence, 31 00:01:33,120 --> 00:01:36,600 Speaker 1: Global Autos and Industrials Research Channels. We first asked first 32 00:01:36,640 --> 00:01:38,399 Speaker 1: reaction to musk comments. 33 00:01:38,400 --> 00:01:43,160 Speaker 5: I think the affordable EV is the real thing ROBOTAXI. 34 00:01:43,720 --> 00:01:47,360 Speaker 5: I think there's still needs time for development. But if 35 00:01:47,360 --> 00:01:50,040 Speaker 5: you look at the affordable EV actually kills two birds 36 00:01:50,040 --> 00:01:53,240 Speaker 5: in one stone. You know it actually increases a scale 37 00:01:53,360 --> 00:01:56,880 Speaker 5: for Tesla. We're going to see revenue growth, we potentially 38 00:01:56,920 --> 00:01:59,880 Speaker 5: see profit growth from that affordable EV. And that's what 39 00:02:00,120 --> 00:02:03,880 Speaker 5: exactly what the market needs. It's more affordable vehicles to 40 00:02:04,120 --> 00:02:08,440 Speaker 5: increase penetration UH of evs. The other thing that's really 41 00:02:08,520 --> 00:02:12,639 Speaker 5: important with this UH affordable EV launches, it actually ink 42 00:02:12,919 --> 00:02:18,120 Speaker 5: helps UH Tesla increases reach globally because you know you 43 00:02:18,200 --> 00:02:20,480 Speaker 5: have a lot of emerging markets that you know, a 44 00:02:20,520 --> 00:02:23,120 Speaker 5: lot of people, a lot of consumers there cannot afford 45 00:02:23,200 --> 00:02:27,560 Speaker 5: an expensive fifty thousand dollars vehicle, forty thousand dollars vehicles, 46 00:02:27,600 --> 00:02:30,160 Speaker 5: So a sub thirty thousand vehicle is p is is 47 00:02:30,160 --> 00:02:33,760 Speaker 5: the right product for them to expand geographically. 48 00:02:33,600 --> 00:02:36,040 Speaker 1: Steve, what do we know about the economics of such 49 00:02:36,080 --> 00:02:38,880 Speaker 1: a a new or lower cost vehicle? Can they produce 50 00:02:38,960 --> 00:02:42,280 Speaker 1: that at a profitable basis on a per unit basis? 51 00:02:43,080 --> 00:02:45,800 Speaker 5: Yeah, there's there's a couple of ways they can approach this. 52 00:02:46,160 --> 00:02:49,680 Speaker 5: I think they can develop a totally new platform. But 53 00:02:49,960 --> 00:02:52,359 Speaker 5: you know, in the other segments that I've done with you, 54 00:02:52,480 --> 00:02:56,400 Speaker 5: we've talked about vertical integration, and vertical integration has actually 55 00:02:57,000 --> 00:03:03,080 Speaker 5: reduced the cost of you know, car production. So for them, 56 00:03:03,400 --> 00:03:06,840 Speaker 5: you know, for TESTA, it's the only company that's profitable 57 00:03:06,880 --> 00:03:11,000 Speaker 5: in producing evs. So the other option is actually think about, 58 00:03:11,280 --> 00:03:13,720 Speaker 5: you know, what they can do with the three and 59 00:03:13,760 --> 00:03:18,200 Speaker 5: the Y. You know, can they offer you know, lower trims, 60 00:03:18,240 --> 00:03:21,679 Speaker 5: maybe even you know, a smaller battery that's going to 61 00:03:21,760 --> 00:03:25,760 Speaker 5: allow them to cut costs and also make that available 62 00:03:25,760 --> 00:03:27,280 Speaker 5: to the consumer at a lower price. 63 00:03:27,800 --> 00:03:30,640 Speaker 3: So this obviously was the best part of the report, 64 00:03:30,720 --> 00:03:33,720 Speaker 3: but you still had elsewhere in the earnings report. We 65 00:03:33,760 --> 00:03:37,440 Speaker 3: had falling vehicle sales. We had worse than expected revenue 66 00:03:37,480 --> 00:03:40,640 Speaker 3: and profit, and a pretty significant cash burn figure. So 67 00:03:41,200 --> 00:03:44,480 Speaker 3: I mean, Steve, are you totally optimistic here? What kind 68 00:03:44,520 --> 00:03:46,440 Speaker 3: of concerns do you still have here? 69 00:03:47,080 --> 00:03:49,640 Speaker 5: I I've always said, you know, I think this year 70 00:03:49,760 --> 00:03:53,000 Speaker 5: and even into next year, there's there's some bumps on 71 00:03:53,040 --> 00:03:55,840 Speaker 5: the road. You know, cyber truck is still ramping up. 72 00:03:56,000 --> 00:03:59,400 Speaker 5: It's a very difficult vehicle to build. They're still working 73 00:03:59,440 --> 00:04:00,400 Speaker 5: on those issue shoes. 74 00:04:01,520 --> 00:04:01,720 Speaker 2: You know. 75 00:04:02,080 --> 00:04:05,520 Speaker 5: We don't think the EV market actually, especially in the US, 76 00:04:06,040 --> 00:04:10,080 Speaker 5: will pick back up until twenty twenty five, late twenty 77 00:04:10,120 --> 00:04:14,800 Speaker 5: twenty five into twenty twenty six, because the market really 78 00:04:14,920 --> 00:04:19,599 Speaker 5: needs a lower cost, more affordable EV to entice kind 79 00:04:19,600 --> 00:04:23,480 Speaker 5: of more new buyers into the market. I'm very positive. 80 00:04:23,520 --> 00:04:26,560 Speaker 5: I think this company has done everything right in terms 81 00:04:26,560 --> 00:04:29,360 Speaker 5: of looking at AI, looking at AV. I still believe 82 00:04:29,440 --> 00:04:33,040 Speaker 5: the EV, you know, shift has actually sailed. We're going 83 00:04:33,120 --> 00:04:36,840 Speaker 5: to have EV's and I think that subscription based software 84 00:04:36,839 --> 00:04:39,640 Speaker 5: based vehicle that they're trying to build is the right 85 00:04:39,680 --> 00:04:41,840 Speaker 5: move right strategy for the industry. 86 00:04:42,400 --> 00:04:45,400 Speaker 1: Steve, what did the Elon say or to what extent 87 00:04:45,440 --> 00:04:47,599 Speaker 1: did he address just kind of the developments in China, 88 00:04:47,640 --> 00:04:50,200 Speaker 1: how things are developing there from a competitive standpoint, a 89 00:04:50,240 --> 00:04:51,240 Speaker 1: sales standpoint and all that. 90 00:04:51,839 --> 00:04:56,320 Speaker 5: Yeah, it's I actually see that we'll continue to be bumpy. 91 00:04:57,120 --> 00:04:59,960 Speaker 5: They probably likely to lose market share, continue to lose 92 00:05:00,040 --> 00:05:02,880 Speaker 5: some market share there. But I think you know, Tesla 93 00:05:03,000 --> 00:05:06,000 Speaker 5: is leveraging China, not just for sales, but it's a 94 00:05:06,000 --> 00:05:10,479 Speaker 5: low cost manufacturing base for the company. The Shanghai factory 95 00:05:10,520 --> 00:05:12,839 Speaker 5: still pumps out a million vehicles, close to a million 96 00:05:12,920 --> 00:05:16,000 Speaker 5: vehicles a year at a very low cost. They still 97 00:05:16,080 --> 00:05:19,520 Speaker 5: are able to source battery from companies like c at L, 98 00:05:19,680 --> 00:05:22,919 Speaker 5: the largest EV battery maker in the world, at a 99 00:05:23,040 --> 00:05:28,120 Speaker 5: very attractive price given their volume. So, you know, China 100 00:05:28,360 --> 00:05:32,040 Speaker 5: sales will probably slow. There's it's a hyper combetitive market. 101 00:05:32,480 --> 00:05:36,480 Speaker 5: Shao Me which is a you know, a major cell 102 00:05:36,520 --> 00:05:39,599 Speaker 5: phone maker in China, they're launching on vehicles that's also 103 00:05:39,680 --> 00:05:43,080 Speaker 5: very affordable, so they're gonna see more competition in China. 104 00:05:43,520 --> 00:05:47,520 Speaker 5: So but again, China is not just for sales, it's 105 00:05:47,520 --> 00:05:50,080 Speaker 5: a manufacturing, low cost manufacturing. 106 00:05:49,520 --> 00:05:50,040 Speaker 6: Base for them. 107 00:05:50,360 --> 00:05:52,919 Speaker 3: Elon had took a dig at the car makers that 108 00:05:53,000 --> 00:05:55,840 Speaker 3: are pairing back on the EV production plans and going 109 00:05:55,880 --> 00:05:59,240 Speaker 3: more to the gas electric hybrids instead. He didn't call 110 00:05:59,279 --> 00:06:01,960 Speaker 3: them out, but DM and Forward are among those ones. 111 00:06:02,000 --> 00:06:05,279 Speaker 3: And but isn't that really where consumers are going more 112 00:06:05,360 --> 00:06:08,839 Speaker 3: proportionally right now, more into the plug in hybrid space 113 00:06:08,920 --> 00:06:11,680 Speaker 3: or maybe non plug in hybrid, but just hybrids in 114 00:06:11,760 --> 00:06:13,599 Speaker 3: general versus full on evs. 115 00:06:14,520 --> 00:06:17,040 Speaker 5: Yeah, I think the consumer I think, you know, we 116 00:06:17,320 --> 00:06:20,080 Speaker 5: did a survey not so long ago. I think what 117 00:06:20,200 --> 00:06:22,839 Speaker 5: we got from that survey was that I think the 118 00:06:22,960 --> 00:06:27,240 Speaker 5: consumer needs to trial evs. They actually need to be 119 00:06:28,240 --> 00:06:31,400 Speaker 5: educated on, you know, how to make EV work in 120 00:06:31,440 --> 00:06:35,120 Speaker 5: their daily life. So, you know, PHVs, plug in hybrids, 121 00:06:35,240 --> 00:06:40,520 Speaker 5: hybrids is actually good transition into full evs. They alleviate 122 00:06:40,600 --> 00:06:43,119 Speaker 5: some of the concerns in terms of range, in terms 123 00:06:43,160 --> 00:06:46,719 Speaker 5: of the lack of infrastructure that's for the EV market 124 00:06:46,800 --> 00:06:51,160 Speaker 5: right now. So PHIV and EV are a good transitional product, 125 00:06:51,200 --> 00:06:53,400 Speaker 5: but it's not a long term product because if you 126 00:06:53,480 --> 00:06:57,240 Speaker 5: look at some of the emission standards, it's continued to 127 00:06:57,279 --> 00:07:03,400 Speaker 5: continue to be tighter and tighter. Eventually hybrids and phgvs 128 00:07:03,480 --> 00:07:07,799 Speaker 5: are probably won't even meet the more stringent emission standards down, 129 00:07:08,120 --> 00:07:09,159 Speaker 5: you know, in the next decade. 130 00:07:09,400 --> 00:07:12,080 Speaker 1: Our thanks to Steve Man, Bloomberg Intelligence, Global Autos and 131 00:07:12,120 --> 00:07:13,600 Speaker 1: Industrials research analysts. 132 00:07:13,720 --> 00:07:15,920 Speaker 3: All right now, we're going to move to the software space. 133 00:07:16,000 --> 00:07:19,480 Speaker 3: This week we heard that software giants Salesforce's talks to 134 00:07:19,520 --> 00:07:23,640 Speaker 3: acquire the data management company Informatica have fallen through. We 135 00:07:23,640 --> 00:07:27,280 Speaker 3: were told that Informatica said it's not engaged in takeover talks. 136 00:07:27,480 --> 00:07:30,200 Speaker 1: The deal would have ranked among the largest ever by Salesforce. 137 00:07:30,320 --> 00:07:30,680 Speaker 6: For more. 138 00:07:30,720 --> 00:07:32,880 Speaker 1: In this I was joined by Anna Rock, Rana Bloomberg 139 00:07:32,880 --> 00:07:37,520 Speaker 1: Intelligence technology analysts and so Neil Rojokopal, Bloomberg Intelligence, Senior 140 00:07:37,560 --> 00:07:40,320 Speaker 1: software Analysts. I first asked Ana Rock for his reaction 141 00:07:40,520 --> 00:07:41,119 Speaker 1: to the news. 142 00:07:41,440 --> 00:07:43,760 Speaker 7: Yeah, it was just a big head scratch for us too, 143 00:07:43,840 --> 00:07:47,880 Speaker 7: almost because last March, Bennihoff comes and says, I've disbanded 144 00:07:47,920 --> 00:07:50,120 Speaker 7: the mn committee, no more m and A. I'm going 145 00:07:50,160 --> 00:07:53,040 Speaker 7: to focus on margins and organic growth. And in less 146 00:07:53,040 --> 00:07:56,200 Speaker 7: than a year, you know, just around that one year mark, 147 00:07:56,280 --> 00:07:57,920 Speaker 7: he's like, oh, we're going to go back and you know, 148 00:07:57,920 --> 00:07:59,960 Speaker 7: buy something now. He didn't say that, the company didn't 149 00:08:00,040 --> 00:08:01,960 Speaker 7: say that, but that was the rumor on the street 150 00:08:02,000 --> 00:08:04,760 Speaker 7: that they're looking to buy Informatica. For us, that was 151 00:08:04,760 --> 00:08:07,280 Speaker 7: a bit of a surprise because Informatica grows six to 152 00:08:07,320 --> 00:08:10,040 Speaker 7: seven percent compared to Salesforce, which is growing north of 153 00:08:10,080 --> 00:08:12,840 Speaker 7: ten percent. So why would anybody buy something that is 154 00:08:13,200 --> 00:08:15,840 Speaker 7: slow growth? I get the data angle of it, but 155 00:08:16,200 --> 00:08:18,160 Speaker 7: you know it was it was not something that we 156 00:08:18,280 --> 00:08:18,880 Speaker 7: really liked. 157 00:08:19,040 --> 00:08:21,320 Speaker 1: So Neil tell us about Informatica. I don't know a 158 00:08:21,360 --> 00:08:23,280 Speaker 1: lot about it. I don't think a lot of investors 159 00:08:23,320 --> 00:08:25,480 Speaker 1: know a lot about it. And that was one of 160 00:08:25,560 --> 00:08:28,040 Speaker 1: the reasons that they're saying, what is Salesforce buying here 161 00:08:28,080 --> 00:08:30,720 Speaker 1: or maybe thinking about buying? What tell us about this company? 162 00:08:31,040 --> 00:08:36,160 Speaker 4: Sure, Informatica is all about data management, which is about 163 00:08:36,400 --> 00:08:40,400 Speaker 4: cleaning all the data that comes from different sources and 164 00:08:40,559 --> 00:08:45,120 Speaker 4: aligning it with the applications and getting all things sorted out. 165 00:08:45,160 --> 00:08:48,440 Speaker 4: For data, so data comes in various shapes, forms and 166 00:08:48,520 --> 00:08:51,000 Speaker 4: different sources, so all of that needs to be cleaned 167 00:08:51,080 --> 00:08:54,440 Speaker 4: up to be used in a proper shape. So I 168 00:08:54,480 --> 00:08:59,199 Speaker 4: think Informatica is that layer that acts as a cleanser 169 00:08:59,280 --> 00:09:03,160 Speaker 4: of data and gets you to that right usage. So 170 00:09:03,200 --> 00:09:05,360 Speaker 4: that's where it comes in as a player. 171 00:09:05,800 --> 00:09:09,239 Speaker 1: So if they're not going to tie up with Salesforce. 172 00:09:09,360 --> 00:09:11,360 Speaker 1: What's the call on this company? What's the call on 173 00:09:11,400 --> 00:09:14,240 Speaker 1: the stock? Either you know, bullsh or bears. 174 00:09:14,400 --> 00:09:18,160 Speaker 4: Look strategically. For Informatica, such an alliance would have been 175 00:09:18,200 --> 00:09:21,840 Speaker 4: a great move that would have helped fuel its cloud journey, 176 00:09:22,000 --> 00:09:25,640 Speaker 4: and that now accounts for roughly one third of its revenues. 177 00:09:26,559 --> 00:09:30,600 Speaker 4: With the deal not happening, Informatica now has to focus 178 00:09:30,640 --> 00:09:35,560 Speaker 4: on fueling its cloud growth organically. The company is boosting 179 00:09:35,600 --> 00:09:40,200 Speaker 4: its partnership and rolling out new AI powered features, but 180 00:09:40,320 --> 00:09:46,520 Speaker 4: this space is highly fragmented and competitive. The company has 181 00:09:46,640 --> 00:09:50,920 Speaker 4: continued to lose market share, especially with the challengers that 182 00:09:51,000 --> 00:09:55,440 Speaker 4: have risen substantially over the last few years. There are 183 00:09:55,480 --> 00:09:59,000 Speaker 4: other big players like SAP and IBM that also compete, 184 00:09:59,040 --> 00:10:02,120 Speaker 4: So I think going forward the market will definitely look 185 00:10:02,200 --> 00:10:05,760 Speaker 4: a lot more challenging because now Salesforce are not having 186 00:10:05,800 --> 00:10:08,679 Speaker 4: to go through with this tale will put more resources 187 00:10:08,720 --> 00:10:13,760 Speaker 4: into MuleSoft, which I think will raise the competitive intensity 188 00:10:13,840 --> 00:10:16,400 Speaker 4: and I think that is a big challenge for informatical 189 00:10:16,480 --> 00:10:17,000 Speaker 4: going forward. 190 00:10:17,360 --> 00:10:20,600 Speaker 1: An rag on your side from the Salesforce side, I mean, 191 00:10:20,880 --> 00:10:22,520 Speaker 1: is it just steady as she goes? I mean, it's 192 00:10:22,520 --> 00:10:24,360 Speaker 1: just such a great company. What's the call for the 193 00:10:24,400 --> 00:10:28,040 Speaker 1: next twelve to eighteen months for Salesforce dot com? 194 00:10:28,200 --> 00:10:30,560 Speaker 7: So, Paul, what we're thinking. You know, hopefully by the 195 00:10:30,640 --> 00:10:32,520 Speaker 7: end of this year we get a little more clarity 196 00:10:32,559 --> 00:10:35,880 Speaker 7: on technology spending, and perhaps from next year onwards we 197 00:10:35,920 --> 00:10:39,960 Speaker 7: can see that lower doubleg growth in sales coupled with 198 00:10:40,080 --> 00:10:42,880 Speaker 7: some margin expansion getting you to that mid to high 199 00:10:42,920 --> 00:10:46,880 Speaker 7: teens earnings growth. That's what we want from Salesforce, organic growth, 200 00:10:47,200 --> 00:10:50,480 Speaker 7: organic earnings, not so much driven by M and A, 201 00:10:50,600 --> 00:10:53,320 Speaker 7: and I'm hoping that that's what the company delivers. 202 00:10:54,200 --> 00:10:57,319 Speaker 1: On the software side, what are the most exciting areas 203 00:10:57,360 --> 00:10:59,000 Speaker 1: for you that you're looking at here? 204 00:10:59,200 --> 00:11:04,320 Speaker 4: Look for me. In the overall enterprise software space, I 205 00:11:04,520 --> 00:11:11,880 Speaker 4: still like names in the observability sector. The name yeah, 206 00:11:11,960 --> 00:11:16,000 Speaker 4: all right. So the observability is they act as a 207 00:11:16,080 --> 00:11:21,280 Speaker 4: layer that monitors all of your systems applications. So be 208 00:11:21,320 --> 00:11:24,840 Speaker 4: it any kind of an application that you're running your enterprise, 209 00:11:24,960 --> 00:11:28,439 Speaker 4: everything needs to be monitored if there are like any bugs, 210 00:11:28,480 --> 00:11:32,040 Speaker 4: if there are like system downtimes, et cetera. So observability 211 00:11:32,320 --> 00:11:37,480 Speaker 4: vendors typically monitor all your applications and the infrastructure, so 212 00:11:37,559 --> 00:11:40,600 Speaker 4: they play a very critical role in the overall enterprise 213 00:11:40,640 --> 00:11:44,120 Speaker 4: software space, and I think players such as the Data Dog, 214 00:11:44,280 --> 00:11:46,600 Speaker 4: diner Trace are very well positioned here. 215 00:11:46,520 --> 00:11:48,440 Speaker 1: Public recently like recently as a couple of years. 216 00:11:48,559 --> 00:11:49,520 Speaker 4: Yeah, yes, that's right. 217 00:11:49,800 --> 00:11:52,000 Speaker 1: So what is I mean? I love the name. Looking 218 00:11:52,040 --> 00:11:54,319 Speaker 1: at the stock here and bringing up the stock Data Dog. 219 00:11:54,720 --> 00:11:58,000 Speaker 1: The symbol is ddog. This is kind of forty billion 220 00:11:58,040 --> 00:12:00,760 Speaker 1: dollar market cap. It's kind of flat stock price on 221 00:12:00,760 --> 00:12:02,319 Speaker 1: the year, but up to seventy five percent over the 222 00:12:02,360 --> 00:12:04,800 Speaker 1: trailing twelve months. What's the call on Data Dog here? 223 00:12:05,120 --> 00:12:09,120 Speaker 4: Look, it's a very I would say it has been 224 00:12:09,160 --> 00:12:13,160 Speaker 4: a fast growing company. And of course last year we've 225 00:12:13,200 --> 00:12:16,240 Speaker 4: seen a slow down in the overall enterprise software space, 226 00:12:16,280 --> 00:12:18,880 Speaker 4: and Data Dog of course has been impacted with that 227 00:12:19,280 --> 00:12:22,760 Speaker 4: slow it spending trends. But overall, if you look at 228 00:12:22,760 --> 00:12:26,920 Speaker 4: the observability space as we see, I think that is 229 00:12:26,960 --> 00:12:30,079 Speaker 4: a space that will continue to grow because the number 230 00:12:30,080 --> 00:12:34,840 Speaker 4: of applications and the infrastructure that enterprises are deploying, especially 231 00:12:34,880 --> 00:12:38,160 Speaker 4: with what is supposed to come with Jenny AI and others, 232 00:12:38,360 --> 00:12:40,520 Speaker 4: we will continue to see a massive rise in the 233 00:12:40,520 --> 00:12:43,640 Speaker 4: infrastructure and applications and that should all bode well for 234 00:12:44,200 --> 00:12:46,640 Speaker 4: Data Dog and a players such as a Dina Trace 235 00:12:46,679 --> 00:12:48,120 Speaker 4: and others in the observaty space. 236 00:12:48,440 --> 00:12:51,640 Speaker 1: Our thanks to Sigeo, Roger Paul, Bloomberg Intelligence software analysts, 237 00:12:51,640 --> 00:12:54,280 Speaker 1: and anaack runa Bloomberg Intelligence technology analyst. 238 00:12:54,440 --> 00:12:57,040 Speaker 3: Coming up will break down why pessimism about the US 239 00:12:57,160 --> 00:13:00,640 Speaker 3: economy may be impacting President Biden standing with voters. 240 00:13:00,679 --> 00:13:03,480 Speaker 1: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 241 00:13:03,520 --> 00:13:05,720 Speaker 1: depth research and data on two thousand companies and one 242 00:13:05,800 --> 00:13:08,920 Speaker 1: hundred and thirty industries. You can access Bloomberg Intelligence via 243 00:13:09,000 --> 00:13:11,960 Speaker 1: Bigo on the terminal. I'm Paul Sweeney and I'm Molly Smith. 244 00:13:12,160 --> 00:13:13,240 Speaker 3: This is Bloomberg. 245 00:13:16,960 --> 00:13:20,839 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 246 00:13:20,920 --> 00:13:24,240 Speaker 2: weekdays at ten am Eastern on Applecarplay and Androud Auto 247 00:13:24,360 --> 00:13:27,240 Speaker 2: with the Bloomberg Business App. Listen on demand wherever you 248 00:13:27,320 --> 00:13:31,000 Speaker 2: get your podcasts, or watch us live on YouTube. 249 00:13:31,520 --> 00:13:33,839 Speaker 3: I'm Paul Sweeney and I'm Molly Smith, hilling in for 250 00:13:33,960 --> 00:13:36,720 Speaker 3: Alex Ziel. We move next to earnings from the logistics 251 00:13:36,760 --> 00:13:40,640 Speaker 3: company UPS. This week, UPS reported first quarter profit that 252 00:13:40,760 --> 00:13:44,120 Speaker 3: was higher than analyst expectations. This comes as the courier's 253 00:13:44,160 --> 00:13:47,679 Speaker 3: headcount management and restructuring of its Delivery Roots begins to 254 00:13:47,720 --> 00:13:48,800 Speaker 3: bear fruit for more. 255 00:13:49,000 --> 00:13:51,560 Speaker 1: Guest host Emily Graffeo and I were joined by Lee Clascow, 256 00:13:51,559 --> 00:13:55,520 Speaker 1: Bloomberg Intelligence Senior Transport, Logistics and Shipping Analysts. We first 257 00:13:55,559 --> 00:13:57,880 Speaker 1: asked Lee for his take on UPS earnings. 258 00:13:58,200 --> 00:14:00,640 Speaker 8: I think it's really about what they're doing on the 259 00:14:00,640 --> 00:14:04,640 Speaker 8: cost side. I think that's really the driver of the 260 00:14:04,640 --> 00:14:08,920 Speaker 8: outperformance in EPs, because revenue did come in slightly lower 261 00:14:09,240 --> 00:14:13,080 Speaker 8: than expectations on lower volumes. You know, they're dealing with 262 00:14:13,160 --> 00:14:18,720 Speaker 8: lower volumes from last share last year when they you know, 263 00:14:18,760 --> 00:14:21,920 Speaker 8: were negotiating their labor contract and a lot of shippers 264 00:14:22,000 --> 00:14:24,520 Speaker 8: kind of try to find other alternatives in case there 265 00:14:24,560 --> 00:14:27,800 Speaker 8: was an issue with their network, you know, from a strike, 266 00:14:27,880 --> 00:14:30,920 Speaker 8: but obviously that didn't happen. Now they're being pretty busy 267 00:14:30,960 --> 00:14:34,240 Speaker 8: trying to win back that share, so, you know, I 268 00:14:34,240 --> 00:14:37,760 Speaker 8: think what they're all in all, it was a good quarter. 269 00:14:38,120 --> 00:14:41,800 Speaker 8: I think if UPS is you know, meeting or beating expectations, 270 00:14:42,080 --> 00:14:44,360 Speaker 8: that's a good thing because they've had a rough year, 271 00:14:45,200 --> 00:14:49,040 Speaker 8: driven a lot by that labor negotiation, which increased costs 272 00:14:49,040 --> 00:14:53,160 Speaker 8: considerably and resulted in a lost amount of volume, which 273 00:14:53,440 --> 00:14:56,520 Speaker 8: you know, for a company like UPS, the deleveraging effect 274 00:14:56,560 --> 00:14:59,920 Speaker 8: on margins is quite substantial. But there are definitely some 275 00:15:00,040 --> 00:15:02,480 Speaker 8: good news in the report that you know, we remain 276 00:15:02,520 --> 00:15:07,280 Speaker 8: optimistic that they might be even looking to possibly increase, 277 00:15:07,480 --> 00:15:10,160 Speaker 8: you know, their full year guidance for twenty twenty four, 278 00:15:10,640 --> 00:15:14,080 Speaker 8: especially as the US postal service contract which they recently 279 00:15:14,240 --> 00:15:17,360 Speaker 8: won from FedEx starts hitting their p and L. 280 00:15:18,560 --> 00:15:21,840 Speaker 9: When you talk about average daily package volume down, your 281 00:15:21,840 --> 00:15:25,280 Speaker 9: over year revenue down year over year, how much of 282 00:15:25,360 --> 00:15:29,760 Speaker 9: the softer demand for UPS is related to macro economic 283 00:15:29,880 --> 00:15:34,160 Speaker 9: factors and maybe coming out of the pandemic consumers shipping less. 284 00:15:34,440 --> 00:15:35,480 Speaker 3: Is that a factor here? 285 00:15:35,880 --> 00:15:39,920 Speaker 8: Yeah, I think it's a you know, probably a trieffective things. 286 00:15:39,960 --> 00:15:46,960 Speaker 8: It's probably a softer great outlook all together, that coupled 287 00:15:46,960 --> 00:15:50,840 Speaker 8: with tougher comparisons and the fact that they are, you know, 288 00:15:51,000 --> 00:15:53,160 Speaker 8: are still trying to win back the share that they 289 00:15:53,200 --> 00:15:57,640 Speaker 8: lost from their labor contract negotiation. So I think those 290 00:15:57,680 --> 00:16:02,000 Speaker 8: three things are kind of weighing on their volumes, probably 291 00:16:02,120 --> 00:16:06,200 Speaker 8: more than maybe their competitors like a FedEx or a DHL. 292 00:16:07,200 --> 00:16:10,400 Speaker 1: Hayley. I know labor is a big deal with UPS 293 00:16:10,520 --> 00:16:12,760 Speaker 1: and these companies here. I know UPS they had a 294 00:16:12,840 --> 00:16:17,119 Speaker 1: new labor contract that really pushed up wages and benefits 295 00:16:17,600 --> 00:16:20,440 Speaker 1: starting I guess this year. But then on the other side, 296 00:16:20,560 --> 00:16:24,640 Speaker 1: they also cut twelve hundred or twelve thousand white collar jobs. 297 00:16:24,640 --> 00:16:28,400 Speaker 1: That's like fourteen percent of the workforce here. So talk 298 00:16:28,400 --> 00:16:30,400 Speaker 1: to us about the labor and component they're in the 299 00:16:30,400 --> 00:16:31,040 Speaker 1: cost structure. 300 00:16:31,240 --> 00:16:33,720 Speaker 8: Yeah, I mean that they're they're doing the right things. 301 00:16:33,880 --> 00:16:38,040 Speaker 8: You know, the contract might have a you know, with 302 00:16:38,240 --> 00:16:41,479 Speaker 8: the team serves, might have had a negative impact to margins, 303 00:16:41,520 --> 00:16:43,520 Speaker 8: but you know we are going to anniversary those in 304 00:16:43,560 --> 00:16:46,680 Speaker 8: the second half of the year, so those comparisons won't 305 00:16:46,680 --> 00:16:49,840 Speaker 8: be as bad. And also, you know, does provide them 306 00:16:49,840 --> 00:16:53,320 Speaker 8: with a steady labor force, because you know, if your 307 00:16:53,400 --> 00:16:55,200 Speaker 8: labor is happy, you're gonna have less turnover, you have 308 00:16:55,280 --> 00:16:58,240 Speaker 8: less turnover, you probably have better service and better safety, 309 00:16:58,280 --> 00:17:02,000 Speaker 8: and that usually yields better profits. So I think, like 310 00:17:02,080 --> 00:17:05,320 Speaker 8: when if you look longer term, beyond the initial shock 311 00:17:05,480 --> 00:17:08,840 Speaker 8: of that new contract, which is very front loaded, you know, 312 00:17:08,920 --> 00:17:11,880 Speaker 8: the increases aren't as bad. As we get to year two, 313 00:17:12,600 --> 00:17:14,760 Speaker 8: it's not going to be as bad. And listen, you 314 00:17:14,760 --> 00:17:17,280 Speaker 8: know UPS and FedEx and a lot of these companies, 315 00:17:17,320 --> 00:17:19,880 Speaker 8: you know, they did get a little on the fat side, 316 00:17:19,920 --> 00:17:22,720 Speaker 8: if you will, on their corporate ranks, and I think 317 00:17:22,720 --> 00:17:25,040 Speaker 8: they're both doing the right things in terms of trimming 318 00:17:25,080 --> 00:17:28,760 Speaker 8: it for the new normal of what their operating environment 319 00:17:29,119 --> 00:17:29,680 Speaker 8: is today. 320 00:17:30,200 --> 00:17:32,600 Speaker 9: How should investors be thinking about UPS? 321 00:17:32,760 --> 00:17:34,399 Speaker 8: You know, I think what they need to do is 322 00:17:34,440 --> 00:17:36,119 Speaker 8: they need to execute. They do not only need to 323 00:17:36,119 --> 00:17:39,280 Speaker 8: execute on their twenty twenty four plans, but their twenty 324 00:17:39,280 --> 00:17:42,679 Speaker 8: twenty six plans. And I do as I said earlier, 325 00:17:42,720 --> 00:17:45,120 Speaker 8: I think there is some opportunity for some upside surprise. 326 00:17:45,200 --> 00:17:49,160 Speaker 8: Given their US postal service contract. It didn't really make 327 00:17:49,160 --> 00:17:52,320 Speaker 8: that much money for FedEx, But I think UPS's network 328 00:17:52,359 --> 00:17:55,320 Speaker 8: is very different than FedEx's. It's more integrated, it's not 329 00:17:55,359 --> 00:17:58,400 Speaker 8: a hub and spoke network, and that will provide them 330 00:17:58,440 --> 00:18:01,040 Speaker 8: with some profitability and management pretty confident, at least it 331 00:18:01,119 --> 00:18:03,679 Speaker 8: peers confident that this business is going to be not 332 00:18:03,720 --> 00:18:06,639 Speaker 8: only creative to earnings, but a creative to margins. And 333 00:18:06,920 --> 00:18:08,639 Speaker 8: that's kind of what you know, we as we look 334 00:18:08,680 --> 00:18:10,760 Speaker 8: at the company, really want to see. We really want 335 00:18:10,760 --> 00:18:12,880 Speaker 8: to see those domestic margins start to improve. 336 00:18:13,400 --> 00:18:16,560 Speaker 1: Haylee, what are the companies saying about kind of normalized 337 00:18:16,680 --> 00:18:20,399 Speaker 1: growth rates in terms of I guess unit volume. Where's 338 00:18:20,520 --> 00:18:23,639 Speaker 1: this US economy in terms of just packages? Is it 339 00:18:23,680 --> 00:18:26,919 Speaker 1: a GDP kind of number? Is that kind of the story. 340 00:18:28,000 --> 00:18:29,720 Speaker 8: Yeah, it's a GDP kind of number. But you know 341 00:18:29,840 --> 00:18:32,480 Speaker 8: UPS wants to grow beyond GDP and how they're going 342 00:18:32,560 --> 00:18:36,080 Speaker 8: to do that is they've made some pretty significant not 343 00:18:36,200 --> 00:18:40,960 Speaker 8: in size necessarily, but in terms of you know, capabilities acquisitions. 344 00:18:41,240 --> 00:18:44,600 Speaker 8: You know, they bought a company Roadie, which you know 345 00:18:44,720 --> 00:18:47,360 Speaker 8: it's not a drink on the road ball, but it's 346 00:18:47,920 --> 00:18:51,919 Speaker 8: it is. What they do is they deliver heavy stuff 347 00:18:51,960 --> 00:18:56,080 Speaker 8: to people's doors, so think furniture, think workout equipment, fitness equipment, 348 00:18:56,400 --> 00:18:58,679 Speaker 8: and that is done through more or less an asset 349 00:18:58,760 --> 00:19:02,679 Speaker 8: light model where you know, they're arranging the delivery. So 350 00:19:03,320 --> 00:19:07,679 Speaker 8: that's that's a very good business. They're also invested or 351 00:19:07,760 --> 00:19:10,760 Speaker 8: acquired a company that does returns without having it to 352 00:19:10,840 --> 00:19:14,720 Speaker 8: box it, so it's a lot easier for consumers to 353 00:19:15,119 --> 00:19:17,280 Speaker 8: you know, either go to a UPS stoor one of 354 00:19:17,280 --> 00:19:20,440 Speaker 8: the other drop points that UPS provides to return something. 355 00:19:20,480 --> 00:19:22,400 Speaker 8: And that's good for UPS because that stuff goes into 356 00:19:22,480 --> 00:19:26,040 Speaker 8: their system and it becomes a B to B delivery 357 00:19:26,240 --> 00:19:28,800 Speaker 8: where when we say B to B business business and 358 00:19:28,960 --> 00:19:32,000 Speaker 8: meeting that there's more density, so it's you know, they're 359 00:19:32,040 --> 00:19:37,000 Speaker 8: they're shipping you know, they're consolidating and shipping twenty boxes 360 00:19:37,160 --> 00:19:40,960 Speaker 8: versus just one envelope, and that tends to be more profitable. U. 361 00:19:41,119 --> 00:19:43,960 Speaker 8: And then their investments in the healthcare space, you know, 362 00:19:44,000 --> 00:19:47,080 Speaker 8: their goal is to be the largest healthcare logistics provider. 363 00:19:47,440 --> 00:19:51,920 Speaker 8: Healthcare has above average margins for transportation companies given the 364 00:19:51,960 --> 00:19:55,680 Speaker 8: high level of service that's involved there. I think temperature control, 365 00:19:55,880 --> 00:19:58,479 Speaker 8: think the fact that it has to get somewhere at 366 00:19:58,520 --> 00:20:01,840 Speaker 8: a very specific time. So you know, those are higher 367 00:20:01,880 --> 00:20:04,960 Speaker 8: margin business. So, you know, I think that those growth 368 00:20:04,960 --> 00:20:07,520 Speaker 8: areas that I just mentioned will help them grow their 369 00:20:07,560 --> 00:20:11,560 Speaker 8: overall volumes beyond you know, just GDP numbers. 370 00:20:11,880 --> 00:20:15,359 Speaker 1: All thanks to Lead Glasgow, Bloomberg Intelligence Senior Transport, Logistics 371 00:20:15,359 --> 00:20:16,400 Speaker 1: and Shipping Analyst. 372 00:20:16,640 --> 00:20:19,560 Speaker 3: Now we're going to move to politics. President Joe Biden's 373 00:20:19,600 --> 00:20:23,360 Speaker 3: recent polling bump and key battleground states has mostly evaporated. 374 00:20:23,560 --> 00:20:26,280 Speaker 1: Biden is now trailing Donald Trump in six of seven 375 00:20:26,440 --> 00:20:29,560 Speaker 1: swing states. That's according to the April Bloomberg News Morning 376 00:20:29,600 --> 00:20:31,920 Speaker 1: Console poll. For more on this poll, we were joined 377 00:20:31,920 --> 00:20:35,119 Speaker 1: by Gregory Corti, Bloomberg News White House and Political correspondent. 378 00:20:35,160 --> 00:20:38,000 Speaker 1: We first asked Gregory for his takeaways from the latest poll. 379 00:20:38,119 --> 00:20:40,120 Speaker 10: We've been doing this every month. This is the seventh 380 00:20:40,200 --> 00:20:44,439 Speaker 10: iteration of this poll in seven key battleground states, and 381 00:20:44,600 --> 00:20:47,320 Speaker 10: for the first five months it was a pretty stable 382 00:20:47,440 --> 00:20:50,160 Speaker 10: race with former President Trump with a slight lead over 383 00:20:50,200 --> 00:20:53,480 Speaker 10: President Biden. Then after the State of Union address, we 384 00:20:53,520 --> 00:20:56,639 Speaker 10: got a little bit of good economic news, and we 385 00:20:56,680 --> 00:21:01,040 Speaker 10: saw last month President Biden pretty much bring it even 386 00:21:01,640 --> 00:21:04,360 Speaker 10: he was winning or even in the russ Belt states, 387 00:21:04,400 --> 00:21:07,800 Speaker 10: the blue Wall states we call them of Michigan, Pennsylvania, 388 00:21:07,800 --> 00:21:11,159 Speaker 10: and Wisconsin made it, gave him a fighting chance. But 389 00:21:11,280 --> 00:21:13,000 Speaker 10: now we're seeing in this month, in the April poll 390 00:21:13,440 --> 00:21:15,280 Speaker 10: sort of reversion back to the mean what we had 391 00:21:15,320 --> 00:21:19,959 Speaker 10: been seeing all along, with former President Trump having across 392 00:21:20,000 --> 00:21:23,920 Speaker 10: these seven battleground states as six point lead, and that's significant. 393 00:21:24,000 --> 00:21:27,119 Speaker 10: Biden can't win this without getting at least those Blue 394 00:21:27,119 --> 00:21:30,800 Speaker 10: Wall states and probably another one. And he's now down 395 00:21:30,960 --> 00:21:35,119 Speaker 10: in Pennsylvania within the margin of error, but significantly down 396 00:21:35,240 --> 00:21:39,719 Speaker 10: in Wisconsin. Michigan. Interestingly, is this bright spot And who 397 00:21:39,720 --> 00:21:42,120 Speaker 10: would have known, because there are a lot of concerns 398 00:21:42,119 --> 00:21:46,960 Speaker 10: there about a large population of Muslim voters. Union workers, 399 00:21:47,440 --> 00:21:48,840 Speaker 10: but he seems to be holding his own there. 400 00:21:49,240 --> 00:21:51,679 Speaker 1: Gregory, what are the key drivers are key influencers in 401 00:21:51,720 --> 00:21:54,119 Speaker 1: his poll? What kind of moves the numbers around? 402 00:21:54,880 --> 00:21:56,960 Speaker 10: It's really the economy And with that you see that 403 00:21:57,000 --> 00:21:59,760 Speaker 10: with any incumbent president, their numbers move up and down 404 00:21:59,760 --> 00:22:02,280 Speaker 10: with the economy. And what we're seeing in this poll 405 00:22:02,440 --> 00:22:05,480 Speaker 10: is deep pessimism about where we're going to be by 406 00:22:05,480 --> 00:22:07,960 Speaker 10: the end of the year. You see here the numbers 407 00:22:08,080 --> 00:22:11,240 Speaker 10: of majorities think that the inflation rate is going to 408 00:22:11,240 --> 00:22:13,560 Speaker 10: be higher by the end of the year, that the 409 00:22:13,600 --> 00:22:17,040 Speaker 10: economy overall is going to be worse, and also that 410 00:22:17,119 --> 00:22:19,119 Speaker 10: interest rates are going to be higher by the end 411 00:22:19,119 --> 00:22:21,720 Speaker 10: of the year. Now, these are these are voters talking, 412 00:22:21,840 --> 00:22:24,280 Speaker 10: and they're they're sort of giving us their perspective within 413 00:22:24,320 --> 00:22:27,040 Speaker 10: this political framework where this this might differ a little 414 00:22:27,040 --> 00:22:29,320 Speaker 10: bit from the University of Michigan survey when we're talking 415 00:22:29,359 --> 00:22:32,960 Speaker 10: to consumers and people making different kinds of decisions. But 416 00:22:33,359 --> 00:22:35,800 Speaker 10: the fact that President Biden is so tied to the 417 00:22:35,800 --> 00:22:37,760 Speaker 10: state of this economy and that people are pessimistic about 418 00:22:37,800 --> 00:22:39,520 Speaker 10: the economy is not a good sign for the president. 419 00:22:39,640 --> 00:22:42,280 Speaker 3: This is so fascinating to me, is somebody who covers 420 00:22:42,280 --> 00:22:44,439 Speaker 3: the economy just like, I mean, this is something wait, 421 00:22:44,480 --> 00:22:46,919 Speaker 3: you know, Gregory, we're no stranger to this, but just 422 00:22:46,960 --> 00:22:50,119 Speaker 3: like the mismatch and like where the economy is actually 423 00:22:50,160 --> 00:22:54,040 Speaker 3: performing and how people actually perceive it to be performing. 424 00:22:54,080 --> 00:22:56,679 Speaker 3: And it's so interesting to me that like this mismatch, 425 00:22:57,000 --> 00:22:58,879 Speaker 3: I guess when you say to me that you know 426 00:22:58,920 --> 00:23:03,520 Speaker 3: that majority of swing state voters see the economy worsening, 427 00:23:04,040 --> 00:23:06,639 Speaker 3: I just wonder what metric are they referring to? And 428 00:23:06,680 --> 00:23:08,639 Speaker 3: I know that they're not looking at the economy based 429 00:23:08,640 --> 00:23:11,320 Speaker 3: on like, oh, well, we think manufacturings is but like 430 00:23:11,359 --> 00:23:14,200 Speaker 3: what what what are they looking at? Is it really 431 00:23:14,240 --> 00:23:14,800 Speaker 3: just inflation? 432 00:23:15,520 --> 00:23:18,439 Speaker 10: Yeah, voters look at the economy differently than economists. And 433 00:23:18,480 --> 00:23:21,600 Speaker 10: one of the interesting things even in this poll, there's 434 00:23:21,840 --> 00:23:24,280 Speaker 10: an inconsistency and it's a little inscrutable, but when you 435 00:23:24,320 --> 00:23:27,000 Speaker 10: ask people about the national economy, two thirds of them 436 00:23:27,040 --> 00:23:29,119 Speaker 10: to say it's bad. When you ask people about their 437 00:23:29,240 --> 00:23:33,280 Speaker 10: local economy, a majority say it's actually pretty good. And 438 00:23:33,320 --> 00:23:37,200 Speaker 10: so people are differentiating between their own personal economic situation 439 00:23:37,680 --> 00:23:41,160 Speaker 10: and what they see in the economy. Writ large. Why 440 00:23:41,240 --> 00:23:43,600 Speaker 10: is that It may be because of their king off 441 00:23:43,600 --> 00:23:46,119 Speaker 10: of negative political coverage. It might be because we have 442 00:23:46,160 --> 00:23:49,480 Speaker 10: this political polarization where when they're saying the economy is bad, 443 00:23:49,480 --> 00:23:51,720 Speaker 10: they're really trying to make a statement about the president 444 00:23:51,800 --> 00:23:55,639 Speaker 10: who they don't like. It may just be that they 445 00:23:55,840 --> 00:23:59,400 Speaker 10: view inflation as a national issue and inflation is high. 446 00:23:59,440 --> 00:24:01,840 Speaker 10: On one pointed, they might see as a local issue 447 00:24:01,840 --> 00:24:03,520 Speaker 10: because they have a job and their neighbor has a job, 448 00:24:03,560 --> 00:24:05,040 Speaker 10: and so they might see as local issue and so 449 00:24:05,080 --> 00:24:07,440 Speaker 10: therefore their local economy is doing well. There's a lot 450 00:24:07,480 --> 00:24:09,359 Speaker 10: to parse out there, but certainly people are giving us 451 00:24:09,359 --> 00:24:11,240 Speaker 10: mixed signals about the state of this economy. 452 00:24:11,640 --> 00:24:13,960 Speaker 1: What do you think the Biden administration needs to do? 453 00:24:14,200 --> 00:24:18,119 Speaker 1: Perhaps differently, going to Molly's point about saying, hey, the 454 00:24:18,119 --> 00:24:20,760 Speaker 1: economy is in pretty darn good shape. Here's what we've done. 455 00:24:21,160 --> 00:24:22,840 Speaker 1: How do you think they should be messaging this. 456 00:24:23,920 --> 00:24:26,680 Speaker 10: They have been trying with that message for months now, 457 00:24:26,760 --> 00:24:29,320 Speaker 10: and it's been a tough message to get across. At 458 00:24:29,320 --> 00:24:32,479 Speaker 10: one point, they tried to take this pejorative label of 459 00:24:32,520 --> 00:24:35,320 Speaker 10: the economy that Republicans try to brand it with of Bidenomics, 460 00:24:35,560 --> 00:24:37,640 Speaker 10: and turn that into a positive. That did not work. 461 00:24:37,680 --> 00:24:40,439 Speaker 10: They did not change the public perception of Bidenomics. They 462 00:24:40,560 --> 00:24:42,840 Speaker 10: moved a little bit away from that messaging. Right now, 463 00:24:43,560 --> 00:24:46,000 Speaker 10: they can talk all they want about the Infrastructure Bill, 464 00:24:46,080 --> 00:24:48,840 Speaker 10: the Inflation Reduction Act, the Chips Act, all these things 465 00:24:48,840 --> 00:24:52,199 Speaker 10: that we know we've been tracking is starting to make 466 00:24:52,200 --> 00:24:55,560 Speaker 10: a difference, and we'll make a difference in manufacturing on 467 00:24:55,720 --> 00:24:58,800 Speaker 10: sharing a lot of technology. But those aren't really resonating 468 00:24:58,840 --> 00:25:03,000 Speaker 10: with people. People don't really connect with bills being passed. 469 00:25:03,000 --> 00:25:05,520 Speaker 10: They want to see actual stuff getting done, and some 470 00:25:05,600 --> 00:25:07,760 Speaker 10: of that is on a longer time ramps. So maybe 471 00:25:07,760 --> 00:25:09,640 Speaker 10: it's just giving it time. We have six months now, 472 00:25:09,960 --> 00:25:12,480 Speaker 10: But the problem for Biden is that now the second 473 00:25:12,560 --> 00:25:14,879 Speaker 10: quarter of an election year is really when people start 474 00:25:14,920 --> 00:25:17,520 Speaker 10: to make up their minds about the economy, really sort 475 00:25:17,520 --> 00:25:19,880 Speaker 10: of solidify how they think the economy is, and they're 476 00:25:19,880 --> 00:25:21,840 Speaker 10: going to carry that with them into November. 477 00:25:22,280 --> 00:25:26,240 Speaker 1: Thanks to Gregory Corti, Bloomberg News White House and Political Correspondent. 478 00:25:26,480 --> 00:25:29,240 Speaker 3: Coming up on the program, a conversation with Astra Zenega 479 00:25:29,359 --> 00:25:31,920 Speaker 3: CEO Pascal Sorio on quarterly earnings. 480 00:25:32,000 --> 00:25:35,119 Speaker 1: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 481 00:25:35,160 --> 00:25:37,600 Speaker 1: depth research and data on two thousand companies in one 482 00:25:37,640 --> 00:25:40,600 Speaker 1: hundred and thirty industries. You can access Bloomberg Intelligence via 483 00:25:40,600 --> 00:25:42,840 Speaker 1: bi Go on the terminal. I'm Paul Sweeney and. 484 00:25:42,800 --> 00:25:51,119 Speaker 3: I'm Molly Smith. This is Bloomberg. 485 00:25:54,880 --> 00:25:58,760 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 486 00:25:58,840 --> 00:26:02,360 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 487 00:26:02,400 --> 00:26:05,200 Speaker 2: Auto with the Bloomberg Business app. You can also listen 488 00:26:05,280 --> 00:26:08,399 Speaker 2: live on Amazon Alexa from our flagship New York station, 489 00:26:08,760 --> 00:26:11,800 Speaker 2: Just say Alexa playing Bloomberg eleven thirty. 490 00:26:13,200 --> 00:26:13,240 Speaker 8: On. 491 00:26:13,359 --> 00:26:16,240 Speaker 3: Paul Sweeney and I'm Mollie Smith filling in for Alex Steele. 492 00:26:16,600 --> 00:26:19,160 Speaker 3: Now we're going to move to the aerospace industry and Boeing, 493 00:26:19,440 --> 00:26:22,360 Speaker 3: the planemaker, said had burned through nearly four billion dollars 494 00:26:22,359 --> 00:26:24,720 Speaker 3: in cash in the first quarter, and its cash use 495 00:26:24,840 --> 00:26:27,159 Speaker 3: also wasn't as bad as the four point four billion 496 00:26:27,200 --> 00:26:29,440 Speaker 3: dollar outflow that analysts had expected. 497 00:26:29,560 --> 00:26:32,040 Speaker 1: But Boeing is still seeking to resolve concerns around the 498 00:26:32,119 --> 00:26:35,639 Speaker 1: quality of its manufacturing following a near catastrophic accident on 499 00:26:35,720 --> 00:26:37,960 Speaker 1: January fifth. For more on all of this, we were 500 00:26:38,000 --> 00:26:41,600 Speaker 1: joined by George ferguson Bloomberg Intelligence, senior Aerospace, Defense and 501 00:26:41,640 --> 00:26:42,560 Speaker 1: Airlines analyst. 502 00:26:42,720 --> 00:26:45,440 Speaker 3: We first asked George for his key takeaways from Boeing's 503 00:26:45,480 --> 00:26:46,280 Speaker 3: quarterly report. 504 00:26:46,640 --> 00:26:49,280 Speaker 6: We did see cash burn for one que, you know, 505 00:26:49,320 --> 00:26:53,160 Speaker 6: combined with capex free cash flow usage, well a three 506 00:26:53,200 --> 00:26:56,080 Speaker 6: point nine billion CFO had sort of told us that 507 00:26:56,119 --> 00:26:57,960 Speaker 6: we would see something between four and four and a 508 00:26:58,000 --> 00:27:00,840 Speaker 6: half billion. That came in light of that. But you 509 00:27:00,880 --> 00:27:03,600 Speaker 6: can't live here long, right. I guess the big takeaway 510 00:27:03,640 --> 00:27:06,040 Speaker 6: here too, is that there's about seven billion dollars in 511 00:27:06,119 --> 00:27:10,600 Speaker 6: cash and equivalents on the balance sheet. That's dwindling pretty quickly. 512 00:27:10,680 --> 00:27:13,040 Speaker 6: They paid four point four billion I think it was 513 00:27:13,640 --> 00:27:16,719 Speaker 6: in debt during the quarter, so something has to happen, right, 514 00:27:16,720 --> 00:27:20,560 Speaker 6: They want to buy Spirit erow Systems. Out here, all 515 00:27:20,600 --> 00:27:23,159 Speaker 6: kinds of conflicting reports, but essentially I think it's you know, 516 00:27:23,320 --> 00:27:27,320 Speaker 6: there's a lot of challenges around negotiating getting airbust out 517 00:27:27,320 --> 00:27:32,560 Speaker 6: of Spirit Aerosystems, so Boeing can buy it. They've talked 518 00:27:32,600 --> 00:27:35,160 Speaker 6: about using cash to buy Spirit or I guess debt. 519 00:27:35,200 --> 00:27:35,640 Speaker 2: Maybe. 520 00:27:36,160 --> 00:27:37,560 Speaker 6: I think it's a company doesn't want to add a 521 00:27:37,600 --> 00:27:40,360 Speaker 6: lot more debt to their balance sheet. Spirits market cap 522 00:27:40,400 --> 00:27:43,240 Speaker 6: around four billion, you only have seven billion left in 523 00:27:43,280 --> 00:27:45,639 Speaker 6: the balance sheet. Something's got to happen. You got to 524 00:27:45,680 --> 00:27:48,680 Speaker 6: raise some capital here. You can't do this all cash 525 00:27:48,840 --> 00:27:51,240 Speaker 6: or you got to use Boeing stock and just the 526 00:27:51,320 --> 00:27:54,679 Speaker 6: numbers they're getting small, right, the cash numbers are getting small. 527 00:27:55,000 --> 00:27:57,479 Speaker 6: You're running out a runway here. They need to come 528 00:27:57,560 --> 00:27:59,360 Speaker 6: up with this plan with the FAA and how they're 529 00:27:59,359 --> 00:28:03,880 Speaker 6: going to staybleize production, start building airplanes, start generating cash 530 00:28:03,960 --> 00:28:05,560 Speaker 6: because you can't do this many quarters. 531 00:28:05,800 --> 00:28:07,960 Speaker 3: So, George Lyne, do you think that there's a risk 532 00:28:08,040 --> 00:28:10,639 Speaker 3: that we could be hearing about some kind of financing 533 00:28:10,680 --> 00:28:13,720 Speaker 3: activity from Boeing coming up? I mean, like you just said, 534 00:28:13,760 --> 00:28:16,080 Speaker 3: I mean, it's I think it'd be kind of hard 535 00:28:16,119 --> 00:28:18,919 Speaker 3: to envision them doing a debt sale right now. That 536 00:28:19,000 --> 00:28:21,520 Speaker 3: sounds like a little bit of maybe a red flag 537 00:28:21,560 --> 00:28:23,720 Speaker 3: to me. But if they would do, I don't know, 538 00:28:23,760 --> 00:28:25,560 Speaker 3: the equity is not worth a whole lot, Like what 539 00:28:25,600 --> 00:28:26,400 Speaker 3: do you do from here? 540 00:28:27,000 --> 00:28:29,920 Speaker 6: Yeah? So agreed. I think you know what I heard 541 00:28:30,040 --> 00:28:32,000 Speaker 6: from you is that could be hard to do a 542 00:28:32,000 --> 00:28:34,800 Speaker 6: debt deal here. I think so. I mean, I think 543 00:28:34,840 --> 00:28:38,480 Speaker 6: they wouldn't let four point four billion get repaid without 544 00:28:38,560 --> 00:28:41,959 Speaker 6: sort of plumbing the markets and thinking about whether they 545 00:28:41,960 --> 00:28:44,840 Speaker 6: would do an issuance here. But you wouldn't want to 546 00:28:44,880 --> 00:28:47,600 Speaker 6: raise equity here. I feel like it'd be hard to 547 00:28:47,720 --> 00:28:50,000 Speaker 6: raise debt. You got a lot of money wrapped up 548 00:28:50,000 --> 00:28:52,360 Speaker 6: at inventory on the balance sheet. Airplanes that have already 549 00:28:52,360 --> 00:28:55,200 Speaker 6: been built haven't been delivered to customers that they've done. 550 00:28:55,640 --> 00:28:57,880 Speaker 6: They've shipped some of those in the last quarter, which 551 00:28:57,960 --> 00:28:59,719 Speaker 6: is free up some cash. But I think you really 552 00:28:59,760 --> 00:29:04,120 Speaker 6: got to get the manufacturing, you know, process going again 553 00:29:04,640 --> 00:29:07,200 Speaker 6: and genering cash that way. I think that would get 554 00:29:07,440 --> 00:29:10,400 Speaker 6: folks more comfortable about giving more debt or equity. 555 00:29:10,760 --> 00:29:12,480 Speaker 1: I don't know, I could get a debt feel done 556 00:29:12,480 --> 00:29:16,080 Speaker 1: in this marketplace. You personally, Paul, I could go sell 557 00:29:16,080 --> 00:29:17,840 Speaker 1: some bowing debt back the day if I had my 558 00:29:17,840 --> 00:29:22,240 Speaker 1: seat back, maybe some investment debt, sure, no problem, all right, Hey, George, 559 00:29:22,640 --> 00:29:25,920 Speaker 1: Boeing's customers, the big airlines, what are their needs these days? 560 00:29:26,080 --> 00:29:28,720 Speaker 1: Do they need more aircraft? Like if Boeing was it 561 00:29:28,800 --> 00:29:31,840 Speaker 1: fifty or sixty percent production, would there be demand there 562 00:29:31,880 --> 00:29:32,080 Speaker 1: for that? 563 00:29:32,640 --> 00:29:37,200 Speaker 6: They need more faster as soon as possible. I guess. Look, 564 00:29:37,240 --> 00:29:39,760 Speaker 6: I think if you take United as as you know, 565 00:29:39,800 --> 00:29:42,640 Speaker 6: one of the core customers, you know there's sort of 566 00:29:42,680 --> 00:29:45,720 Speaker 6: a there's a demand to fleet refresh around the world. 567 00:29:45,840 --> 00:29:45,920 Speaker 5: Right. 568 00:29:46,000 --> 00:29:50,800 Speaker 6: The new Max is fifteen twenty percent more efficient, than 569 00:29:51,320 --> 00:29:53,680 Speaker 6: the old seven thirty seven or the A three twenty. 570 00:29:53,960 --> 00:29:57,040 Speaker 6: Airlines want that efficiency as soon as possible in their fleets. 571 00:29:57,480 --> 00:29:59,600 Speaker 6: The market I think is is going to is looking 572 00:29:59,600 --> 00:30:02,680 Speaker 6: fairly competitive. It may not, you know, this summer may 573 00:30:02,680 --> 00:30:05,560 Speaker 6: be a little bit less competitive than we expected, given 574 00:30:05,600 --> 00:30:08,680 Speaker 6: Boeing's problems and some of the geared turbofan problems at 575 00:30:08,720 --> 00:30:12,600 Speaker 6: raytheon that knocks on airplanes out of service. But fuels rising, 576 00:30:12,920 --> 00:30:14,960 Speaker 6: airlines want to be very competitive. They need the most 577 00:30:14,960 --> 00:30:17,880 Speaker 6: fuel efficient aircraft, so they want them as soon as possible. 578 00:30:17,920 --> 00:30:22,520 Speaker 6: And like in the United's case, almost everybody is increasing size. Right. 579 00:30:22,600 --> 00:30:26,400 Speaker 6: Size of aircraft are rising because pilot's got twenty percent 580 00:30:26,480 --> 00:30:29,520 Speaker 6: plus wage increases, you got to find a way to 581 00:30:29,640 --> 00:30:32,080 Speaker 6: drive down costs. One of the things you always do 582 00:30:32,160 --> 00:30:36,280 Speaker 6: is increase aircraft size, and therefore you're flying more passengers 583 00:30:36,640 --> 00:30:40,080 Speaker 6: for the same cost of that pilot up front. That 584 00:30:40,160 --> 00:30:42,920 Speaker 6: helps you improve efficiencies. They all want it, so they're 585 00:30:42,960 --> 00:30:46,400 Speaker 6: all trying to find bigger aircraft to fly with more seats. 586 00:30:46,440 --> 00:30:50,440 Speaker 6: And so yes, airlines want airplanes as soon as possible. 587 00:30:50,560 --> 00:30:53,160 Speaker 6: If you're a Boeing customer, what also really ticks you 588 00:30:53,200 --> 00:30:56,760 Speaker 6: off is you look across the street at the folks 589 00:30:56,760 --> 00:30:59,640 Speaker 6: flying the Airbus airplane, and they probably have little to 590 00:30:59,680 --> 00:31:03,840 Speaker 6: know in eruption this summer. In their schedules, you're worried 591 00:31:03,880 --> 00:31:06,640 Speaker 6: about what deliveries you're going to get and your ability 592 00:31:06,640 --> 00:31:09,280 Speaker 6: to fly your schedule, and that hurts if you're the 593 00:31:09,320 --> 00:31:11,640 Speaker 6: bowing custom Right, the airbus customers are smiling. 594 00:31:11,560 --> 00:31:15,240 Speaker 3: Our Thanks to George Ferguson Bloomberg Intelligence Senior Aerospace, Defense 595 00:31:15,280 --> 00:31:16,840 Speaker 3: and Airlines analyst. 596 00:31:16,720 --> 00:31:19,760 Speaker 1: We moved next to the pharmaceutical industry in Astrazenica, the 597 00:31:19,800 --> 00:31:23,000 Speaker 1: company reported profit that beat analysts expectations. This was due 598 00:31:23,040 --> 00:31:25,160 Speaker 1: to demand for its blockbuster cancer. 599 00:31:24,920 --> 00:31:27,760 Speaker 3: Drugs, from where we were joined by astro Zenica CEO 600 00:31:27,840 --> 00:31:30,600 Speaker 3: Pascal Sorio. We first asked for his take on the 601 00:31:30,640 --> 00:31:31,560 Speaker 3: quarterly results. 602 00:31:31,920 --> 00:31:34,400 Speaker 11: We had a tremendous start of the year. Actually I 603 00:31:34,520 --> 00:31:37,600 Speaker 11: said it's our revenue. I should say glu by nineteen percent. 604 00:31:38,040 --> 00:31:41,760 Speaker 11: But the exciting piece was that every portfolio of products 605 00:31:41,920 --> 00:31:45,760 Speaker 11: Golovia is strongly oncology plus twenty six percent to five 606 00:31:45,800 --> 00:31:50,320 Speaker 11: billions for the quota, cardiovascular twenty three percent, rare disease 607 00:31:50,640 --> 00:31:55,480 Speaker 11: sixteen percent, goals, geo geographies gu nineteen percent. In the 608 00:31:55,560 --> 00:31:59,280 Speaker 11: US and Europe. The most remarkable was forty percent goals 609 00:31:59,320 --> 00:32:03,479 Speaker 11: in the emerging markets outside of China, and China itself 610 00:32:03,560 --> 00:32:07,320 Speaker 11: is returning to growth. So really a very very strong 611 00:32:07,640 --> 00:32:10,480 Speaker 11: start of the year. And beyond the financials, our portfolio, 612 00:32:10,880 --> 00:32:14,160 Speaker 11: our pipeline is making a tremendous progress and we start 613 00:32:14,200 --> 00:32:17,560 Speaker 11: a new face rituals and we announced very positive results 614 00:32:17,560 --> 00:32:20,400 Speaker 11: in particular in oncology, which we present to the ASCO 615 00:32:20,440 --> 00:32:21,520 Speaker 11: in Chicago very soon. 616 00:32:22,120 --> 00:32:24,440 Speaker 3: Yeah, you've got an investor day coming up next month, 617 00:32:24,480 --> 00:32:26,240 Speaker 3: and it seems like like you just said you're going 618 00:32:26,280 --> 00:32:29,080 Speaker 3: to discuss the pipeline, including the timing of future treatment 619 00:32:29,520 --> 00:32:32,360 Speaker 3: and their revenue potential. So can you give us a 620 00:32:32,360 --> 00:32:34,440 Speaker 3: little seat peak now for some of us who can't wait. 621 00:32:34,840 --> 00:32:39,240 Speaker 11: Yes, exactly. Actually, Marti, thank you for that question. What 622 00:32:39,360 --> 00:32:42,680 Speaker 11: we're going to try and show to investors is that 623 00:32:42,760 --> 00:32:46,120 Speaker 11: we can be a strong growth company not only for 624 00:32:46,200 --> 00:32:49,840 Speaker 11: the next seven HS to twenty thirty, but even beyond that. 625 00:32:50,960 --> 00:32:53,960 Speaker 11: And so the growth over the next period of time 626 00:32:54,000 --> 00:32:56,760 Speaker 11: to twenty and thirty is going to be driven by 627 00:32:56,800 --> 00:32:58,640 Speaker 11: what we have in our hands today and what is 628 00:32:58,680 --> 00:33:01,360 Speaker 11: going to come out of our Face three pipeline very soon. 629 00:33:01,960 --> 00:33:05,960 Speaker 11: So We're going to add pact attention to investors of 630 00:33:06,320 --> 00:33:10,160 Speaker 11: investors to the major growth drivers. We're going to show 631 00:33:10,200 --> 00:33:15,320 Speaker 11: them where consensus is actually underestimating some of our products 632 00:33:15,320 --> 00:33:17,480 Speaker 11: and the opportunities we have in our pipeline. We have 633 00:33:17,520 --> 00:33:20,240 Speaker 11: a very large pipeline of new projects and some of 634 00:33:20,280 --> 00:33:23,880 Speaker 11: those are underestimated. Beyond that, we will also want we 635 00:33:23,880 --> 00:33:27,240 Speaker 11: also want to show investors what our strategies and what 636 00:33:27,360 --> 00:33:30,320 Speaker 11: our plans are for the long term. We've been investing 637 00:33:30,400 --> 00:33:33,600 Speaker 11: in new platforms, new technologies which we believe will shave 638 00:33:33,640 --> 00:33:36,800 Speaker 11: the future of medicine in cancer, immune diseases, and beyond, 639 00:33:37,320 --> 00:33:42,560 Speaker 11: for instance, sales therapies, gins therapies, antibody drug conjugates, radio conjugates. 640 00:33:43,120 --> 00:33:46,120 Speaker 11: So really this is our goal show people that when 641 00:33:46,400 --> 00:33:50,840 Speaker 11: we are focused on today, but also tomorrow to twenty 642 00:33:51,000 --> 00:33:52,560 Speaker 11: thirty and the long term. 643 00:33:52,760 --> 00:33:55,240 Speaker 1: Pascal I always joke to people and I say, in 644 00:33:55,280 --> 00:33:57,080 Speaker 1: my next life, I want to come back as a 645 00:33:57,120 --> 00:33:59,600 Speaker 1: healthcare m and a banker, because it seems like every 646 00:33:59,600 --> 00:34:02,760 Speaker 1: Monday we come in and pharmaceutical company A is buying 647 00:34:02,760 --> 00:34:07,480 Speaker 1: pharmaceutical company B or biotechnology company C. How does MNA 648 00:34:07,800 --> 00:34:11,319 Speaker 1: growth via acquisition fit in with your growth strategy vis 649 00:34:11,360 --> 00:34:14,400 Speaker 1: a v organic growth that comes from your own in 650 00:34:14,480 --> 00:34:15,080 Speaker 1: house R and D. 651 00:34:15,520 --> 00:34:19,359 Speaker 11: We identified a number of years ago the technology platforms 652 00:34:19,400 --> 00:34:21,759 Speaker 11: of the future, as I said a minute ago. So 653 00:34:21,800 --> 00:34:23,880 Speaker 11: if you look at Seales Therapy, for instance, we have 654 00:34:23,960 --> 00:34:27,120 Speaker 11: our own internal efforts and we've been complimenting this with 655 00:34:27,400 --> 00:34:32,480 Speaker 11: acquisitions or licensing agreements. Particular, we bought a cell therapy 656 00:34:32,560 --> 00:34:36,640 Speaker 11: company and that is bringing us technologies but also products, 657 00:34:36,840 --> 00:34:40,280 Speaker 11: and we've been putting all of this together to actually 658 00:34:40,800 --> 00:34:44,800 Speaker 11: build a portfolio of products in cell therapy, engine therapy, 659 00:34:44,960 --> 00:34:48,760 Speaker 11: in ultiboty, drug conjugates, and beyond. So we target small 660 00:34:48,800 --> 00:34:53,960 Speaker 11: to mid size Barton acquisitions. That really has been our strategy, 661 00:34:54,360 --> 00:34:57,080 Speaker 11: so we can integrate them much better and then we 662 00:34:57,120 --> 00:34:59,000 Speaker 11: can add value along the way. 663 00:34:59,040 --> 00:35:01,839 Speaker 3: Before we launch Pascal. What can you tell us about 664 00:35:01,960 --> 00:35:04,480 Speaker 3: drug prices right now? I mean, this is such a 665 00:35:04,680 --> 00:35:08,799 Speaker 3: sensitive topic here in the US, especially in an election year, 666 00:35:08,960 --> 00:35:11,080 Speaker 3: something that's really close to the heart of so many 667 00:35:11,080 --> 00:35:14,200 Speaker 3: consumers and voters. I mean, how can can you tell 668 00:35:14,239 --> 00:35:16,840 Speaker 3: us a little bit about the pricing strategy? And you know, 669 00:35:16,840 --> 00:35:19,440 Speaker 3: are people able to afford a lot of these medications? 670 00:35:20,080 --> 00:35:22,120 Speaker 11: You know, it's important for us of all to remember 671 00:35:22,239 --> 00:35:26,080 Speaker 11: that in the United States. Of course, you know, price 672 00:35:26,120 --> 00:35:28,279 Speaker 11: is an issue like everywhere in the world, but in 673 00:35:28,320 --> 00:35:31,520 Speaker 11: the United States, patients have access to innovative medicines that 674 00:35:31,600 --> 00:35:35,200 Speaker 11: can save their lives much faster than in Europe or 675 00:35:35,600 --> 00:35:38,319 Speaker 11: in other parts of the world. Innovation is reywilded and 676 00:35:38,360 --> 00:35:42,359 Speaker 11: access is much faster now. Price is definitely a consideration. 677 00:35:42,480 --> 00:35:46,880 Speaker 11: Of course. The IRA, of course has some challenges and 678 00:35:46,960 --> 00:35:51,680 Speaker 11: some issues we are trying to work to addrese but 679 00:35:51,719 --> 00:35:54,279 Speaker 11: there is also a big benefit for patients, which is 680 00:35:54,320 --> 00:35:57,480 Speaker 11: that starting in twenty twenty five, there will be a 681 00:35:57,520 --> 00:36:00,360 Speaker 11: copy cup. Patients will not pay more than two thousand 682 00:36:00,440 --> 00:36:03,960 Speaker 11: dollars a year. We are on Medicare path deep products 683 00:36:04,080 --> 00:36:06,600 Speaker 11: and this year it's two three sizand five hundred and 684 00:36:06,640 --> 00:36:09,680 Speaker 11: six hundred dollars as of max. So ultimately, if your 685 00:36:09,719 --> 00:36:12,440 Speaker 11: MEDICA patient, you will not pay more than two thousand 686 00:36:12,440 --> 00:36:15,040 Speaker 11: dollars a year for your medicines, regardless of how many 687 00:36:15,040 --> 00:36:17,759 Speaker 11: medicines you have and how much the cost. So that 688 00:36:17,840 --> 00:36:21,480 Speaker 11: will be really an enormous progress for patients. And of 689 00:36:21,520 --> 00:36:25,759 Speaker 11: course some of these rebates that are discounts that are 690 00:36:25,800 --> 00:36:29,640 Speaker 11: required to compensate for this, we will be paying. But 691 00:36:29,719 --> 00:36:32,720 Speaker 11: suddenly we see that as a big improvement for patients 692 00:36:32,760 --> 00:36:37,200 Speaker 11: and hopefully also an incremental revenue for us because patients 693 00:36:37,239 --> 00:36:39,560 Speaker 11: will be able to afford their medicines and take them 694 00:36:39,560 --> 00:36:42,200 Speaker 11: and stay on them longer. So you know, win win, 695 00:36:42,320 --> 00:36:45,640 Speaker 11: really better for patients and hopefully better for the industry 696 00:36:45,680 --> 00:36:46,160 Speaker 11: as well. 697 00:36:46,320 --> 00:36:49,040 Speaker 1: The PASCAL I'm looking at the on the Bloomberg terminal, 698 00:36:49,080 --> 00:36:51,680 Speaker 1: the PGeo function which shows me kind of your revenue 699 00:36:51,680 --> 00:36:54,000 Speaker 1: by segment, and I see that oncology is your biggest 700 00:36:54,120 --> 00:36:56,800 Speaker 1: revenue line there about thirty seven percent of total revenue. 701 00:36:56,800 --> 00:37:00,360 Speaker 1: What are the opportunities there in your oncology is I 702 00:37:00,400 --> 00:37:02,480 Speaker 1: know it's a competitive business, but what do you have 703 00:37:02,600 --> 00:37:05,760 Speaker 1: in the pipeline? What do you have to bring to market? 704 00:37:05,760 --> 00:37:06,960 Speaker 1: How do you think about that business? 705 00:37:07,200 --> 00:37:10,600 Speaker 11: Yeah, ourcology portfolio of products go by twenty six percent 706 00:37:10,640 --> 00:37:13,920 Speaker 11: in the first quarter to five billion dollars in the quarter. 707 00:37:14,080 --> 00:37:17,640 Speaker 11: So we are on a very strong trajectory, driven by 708 00:37:17,640 --> 00:37:20,120 Speaker 11: a number of products that we have in a portfolio 709 00:37:20,239 --> 00:37:24,400 Speaker 11: for lung cancer, breast cancer, prostate cancer, or variant cancer. 710 00:37:24,920 --> 00:37:27,560 Speaker 11: And there's more to come. And the future of oncology 711 00:37:27,640 --> 00:37:32,320 Speaker 11: really is about combination therapy, combination of antibody drug conjugates, 712 00:37:32,360 --> 00:37:36,000 Speaker 11: as I said before, those products that target the tumor 713 00:37:36,080 --> 00:37:39,120 Speaker 11: cells and deliver a toxin at the site of the 714 00:37:39,520 --> 00:37:43,239 Speaker 11: tumor cell and essentially kill the tumor cells without affecting 715 00:37:43,320 --> 00:37:48,840 Speaker 11: the helcy cells around, and combining this with immuno oncology products, 716 00:37:48,880 --> 00:37:52,520 Speaker 11: and then in long run, adding cell therapy to this. 717 00:37:53,000 --> 00:37:55,799 Speaker 11: So there's an enormous amount of innovation that's going on 718 00:37:55,920 --> 00:38:00,920 Speaker 11: in cancer. The bilogy of cancer is being improved very rapidly, 719 00:38:00,960 --> 00:38:03,279 Speaker 11: and as a result, new medicines are coming up. There 720 00:38:03,280 --> 00:38:07,840 Speaker 11: are still cancers, unfortunately, that are difficult to treat, but 721 00:38:07,960 --> 00:38:10,680 Speaker 11: one of the other aspects of cancer that is very 722 00:38:10,680 --> 00:38:14,560 Speaker 11: important is diagnosing patients early so you can intercept the 723 00:38:14,640 --> 00:38:18,000 Speaker 11: disease early. If you look at breast cancer, mamographies have 724 00:38:18,280 --> 00:38:22,640 Speaker 11: really helped diagnose breast cancer very early and survival right 725 00:38:22,680 --> 00:38:25,800 Speaker 11: at five years is ninety nine percent when patients are 726 00:38:26,120 --> 00:38:29,279 Speaker 11: diagnosed early. Lung cancer is the opposite, diagnos too late, 727 00:38:29,640 --> 00:38:33,240 Speaker 11: So there are no technologies that will enable to patients 728 00:38:33,320 --> 00:38:36,120 Speaker 11: and doctors to diagnose cancer very early and treat it only. 729 00:38:36,200 --> 00:38:39,560 Speaker 11: So the combination of these plus new treatments gives us 730 00:38:39,600 --> 00:38:42,879 Speaker 11: hope that there is a possibility that in the near 731 00:38:43,040 --> 00:38:46,160 Speaker 11: future we could actually cure cancer or turn it to 732 00:38:46,239 --> 00:38:49,279 Speaker 11: a chronic condition that people can live with our. 733 00:38:49,239 --> 00:38:51,600 Speaker 3: Thanks to Astrozenica CEO Pascal Sorry. 734 00:38:52,200 --> 00:38:56,719 Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 735 00:38:56,920 --> 00:39:00,160 Speaker 2: and anywhere else you get your podcasts. Listen live each 736 00:39:00,200 --> 00:39:03,680 Speaker 2: weekday ten am toanoon Eastern on Bloomberg dot com, the 737 00:39:03,800 --> 00:39:07,239 Speaker 2: iHeartRadio app tune In, and the Bloomberg Business app. You 738 00:39:07,280 --> 00:39:10,440 Speaker 2: can also watch us live every weekday on YouTube and 739 00:39:10,600 --> 00:39:12,240 Speaker 2: always on the Bloomberg terminal.