1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple, Coarplay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,440 --> 00:00:27,479 Speaker 2: Lots of corporate actions in the marketplace today, Lots of 7 00:00:27,600 --> 00:00:30,760 Speaker 2: M and A activity and in a package good space. 8 00:00:31,040 --> 00:00:34,440 Speaker 2: One of the giants out there, Unilever, the food business 9 00:00:34,479 --> 00:00:36,559 Speaker 2: for Unilever, is going to join with McCormick and a 10 00:00:36,600 --> 00:00:39,920 Speaker 2: forty four point eight billion dollar transaction. 11 00:00:40,000 --> 00:00:41,760 Speaker 3: We're going to break down this deal. 12 00:00:41,880 --> 00:00:44,879 Speaker 2: Diana Gomes Joints is Bloomberg Intelligence senior equity analyst. 13 00:00:45,200 --> 00:00:45,480 Speaker 3: Diana. 14 00:00:45,760 --> 00:00:48,879 Speaker 2: What's the strategy here of these two companies in combining 15 00:00:48,920 --> 00:00:49,800 Speaker 2: their food businesses? 16 00:00:51,560 --> 00:00:55,800 Speaker 4: Hi, thank you. It is really a combination of bringing 17 00:00:56,360 --> 00:01:00,400 Speaker 4: the expertise from McCormick on the natural ingredients side of 18 00:01:00,440 --> 00:01:07,640 Speaker 4: things with Union levers food iconic brands in that protein 19 00:01:07,880 --> 00:01:13,440 Speaker 4: rich toppings. It's it's one of the areas where it 20 00:01:13,560 --> 00:01:18,399 Speaker 4: makes sense to combine for that added scale and also 21 00:01:18,760 --> 00:01:22,759 Speaker 4: reaching markets that are comic doesn't have access at the moment, 22 00:01:22,920 --> 00:01:27,160 Speaker 4: particularly in emerging markets. If we exclude India, which is 23 00:01:27,200 --> 00:01:30,600 Speaker 4: out of the equation in this In this combination. 24 00:01:31,040 --> 00:01:34,200 Speaker 5: We're seeing share a McCormick fault three point seven percent. 25 00:01:34,480 --> 00:01:37,680 Speaker 5: What might investors be skeptical of in this combination? 26 00:01:39,720 --> 00:01:44,880 Speaker 4: It is a really transformational deal for McCormick. It is 27 00:01:45,120 --> 00:01:49,120 Speaker 4: quite a sizeable group of assets that they are taking in, 28 00:01:49,200 --> 00:01:53,120 Speaker 4: so the execution risk is quite high, and it's going 29 00:01:53,160 --> 00:01:58,760 Speaker 4: to be a much more complex organization too to really 30 00:01:59,280 --> 00:02:04,200 Speaker 4: push through the sales growth targets that they are envisioning 31 00:02:04,360 --> 00:02:07,400 Speaker 4: for three to five percent in by year three of 32 00:02:07,480 --> 00:02:13,440 Speaker 4: the combination, compared to about two percent where the companies 33 00:02:13,480 --> 00:02:16,359 Speaker 4: have been growing to in terms of this food speed business. 34 00:02:16,440 --> 00:02:19,600 Speaker 4: So it would be quite a lot of work to 35 00:02:20,040 --> 00:02:20,600 Speaker 4: get there. 36 00:02:24,080 --> 00:02:26,800 Speaker 2: Before Unilever here where where do they want to focus 37 00:02:26,800 --> 00:02:27,280 Speaker 2: going forward? 38 00:02:29,440 --> 00:02:34,640 Speaker 4: Union lever has been Uni liver Union lever, depending we're 39 00:02:34,680 --> 00:02:39,520 Speaker 4: in the country. It's really been focusing more in the 40 00:02:39,560 --> 00:02:43,840 Speaker 4: personal care wellbeing categories, which tend to be less price 41 00:02:43,960 --> 00:02:48,360 Speaker 4: elastic as well. It's something that can bothe well given 42 00:02:48,520 --> 00:02:54,280 Speaker 4: the geopolitical macroeconomic risk environment we are sitting on. But 43 00:02:54,560 --> 00:02:59,080 Speaker 4: even before that, this was the strategy for Fernando Fernandez 44 00:03:00,280 --> 00:03:03,359 Speaker 4: was bringing that side of the business, making it a 45 00:03:03,440 --> 00:03:08,120 Speaker 4: much larger proportion of unil evers revenue as well. So 46 00:03:08,400 --> 00:03:14,360 Speaker 4: this split would fast forward that plan, even though we 47 00:03:14,400 --> 00:03:18,840 Speaker 4: are at least one year to go for the expected completion. 48 00:03:18,600 --> 00:03:22,359 Speaker 5: Date, Diana, What does this combination mean for the other 49 00:03:22,400 --> 00:03:26,240 Speaker 5: big food companies globally, for the Nestle for instance, for 50 00:03:26,560 --> 00:03:29,359 Speaker 5: craft Tigns, which decided not to split up its businesses 51 00:03:29,400 --> 00:03:31,959 Speaker 5: as it had once been entertaining under its new CEO. 52 00:03:35,080 --> 00:03:38,600 Speaker 4: One of the interesting parts of this combination of McCormick 53 00:03:38,640 --> 00:03:43,680 Speaker 4: with UNIL ever Foods is also beyond the consumer facing 54 00:03:43,800 --> 00:03:47,800 Speaker 4: business but also the food service so they bring strength 55 00:03:48,240 --> 00:03:53,320 Speaker 4: from both. So definitely it's going to build their competitive 56 00:03:53,440 --> 00:03:57,320 Speaker 4: force compared to rivals in that space as well. 57 00:03:58,600 --> 00:03:59,720 Speaker 3: So I'm just looking at UNI. 58 00:04:01,360 --> 00:04:03,960 Speaker 2: Down five and a half percent today, down twelve percent 59 00:04:04,040 --> 00:04:06,280 Speaker 2: year to data. It's had a fifty two week low here. 60 00:04:08,120 --> 00:04:10,320 Speaker 2: What's the call around this stock? What's the challenge for 61 00:04:10,400 --> 00:04:12,560 Speaker 2: this for the stock? Is it just simply the group 62 00:04:13,240 --> 00:04:17,120 Speaker 2: consumer products or something specific to the company. 63 00:04:18,000 --> 00:04:22,520 Speaker 4: There's definitely some stepticism about the terms of the way 64 00:04:22,960 --> 00:04:26,000 Speaker 4: the foods business is going to be split, so that 65 00:04:26,040 --> 00:04:30,719 Speaker 4: we are seeing some reaction today to that it's a 66 00:04:30,760 --> 00:04:35,600 Speaker 4: deal that is stock heavy. It's mostly stock. The cash 67 00:04:35,600 --> 00:04:41,440 Speaker 4: consideration is only seven sixteen billion dollars, or they'reabout for 68 00:04:41,720 --> 00:04:47,279 Speaker 4: a business that was generating about twenty two billion dollars 69 00:04:47,320 --> 00:04:53,800 Speaker 4: in revenue. So there is some septicism from that perspective. 70 00:04:54,160 --> 00:04:58,120 Speaker 4: It's not going to be a clear cut exit. And 71 00:04:58,360 --> 00:05:02,599 Speaker 4: it also comes at the time yes, heightened uncertainty. So 72 00:05:02,800 --> 00:05:06,120 Speaker 4: I believe that's all playing out a little bit in 73 00:05:06,520 --> 00:05:07,000 Speaker 4: that sense. 74 00:05:07,480 --> 00:05:10,279 Speaker 5: Stay with us more from Bloomberg Intelligence coming up after this. 75 00:05:14,000 --> 00:05:17,719 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 76 00:05:17,800 --> 00:05:20,840 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 77 00:05:20,880 --> 00:05:24,200 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 78 00:05:24,240 --> 00:05:27,760 Speaker 1: you get your podcasts, or watch us live on YouTube. 79 00:05:28,240 --> 00:05:30,200 Speaker 2: A lot of M and A in the marketplace today, 80 00:05:30,200 --> 00:05:31,559 Speaker 2: particularly in the healthcare space. 81 00:05:31,640 --> 00:05:34,240 Speaker 3: What else is new there? But let's break it down 82 00:05:34,800 --> 00:05:36,400 Speaker 3: with the resident expert. 83 00:05:36,440 --> 00:05:38,640 Speaker 2: San Fazeli, director of Research for Global Industries and a 84 00:05:38,720 --> 00:05:42,039 Speaker 2: senior pharmaceuticals analyst for Bloomberg. Intelligency is based in London. 85 00:05:43,480 --> 00:05:47,280 Speaker 2: Sam Let's start with Eli Lilly. They're acquiring Sintessa Pharmaceuticals, 86 00:05:48,480 --> 00:05:51,560 Speaker 2: who was Sentessa and why is Lily making this acquisition. 87 00:05:53,000 --> 00:05:59,039 Speaker 6: So Santesta is a company developing a sleeping sleep disorder product. 88 00:05:59,240 --> 00:06:02,640 Speaker 6: So it's a novel mechanism of action, not entirely novel, 89 00:06:02,640 --> 00:06:05,400 Speaker 6: because there's already a drug on the market that targets 90 00:06:05,440 --> 00:06:09,159 Speaker 6: the same mechanism or ex in pathway in the brain. 91 00:06:09,200 --> 00:06:13,919 Speaker 6: But it's not the usual kind of drowsy type of 92 00:06:14,040 --> 00:06:16,919 Speaker 6: drug that puts you to sleep like the ambience of 93 00:06:16,960 --> 00:06:19,360 Speaker 6: this world. It's not at all the same mechanism of action. 94 00:06:19,920 --> 00:06:23,599 Speaker 6: So here's a drug that's in development for those for 95 00:06:23,680 --> 00:06:26,080 Speaker 6: that indication, and we have a proof of concept already 96 00:06:26,160 --> 00:06:29,200 Speaker 6: or a product on the market, not necessarily flying off 97 00:06:29,200 --> 00:06:33,200 Speaker 6: the shelves, but doing fine. And so here comes Lily 98 00:06:33,240 --> 00:06:36,960 Speaker 6: with a neuroscience business, and it's a bolt on to 99 00:06:37,080 --> 00:06:39,719 Speaker 6: their business. I mean, six billion, is I am not? 100 00:06:39,839 --> 00:06:41,680 Speaker 6: You know, I don't know a week's worth of cash 101 00:06:41,720 --> 00:06:44,680 Speaker 6: flow for Lily. I have to do the math. So 102 00:06:44,720 --> 00:06:47,240 Speaker 6: don't please multiply that by fifty four and tell me 103 00:06:47,279 --> 00:06:50,159 Speaker 6: Samuel got it wrong. But it's not a lot of money. 104 00:06:50,240 --> 00:06:54,720 Speaker 6: I mean. The interesting thing, Paul is this, if you 105 00:06:54,760 --> 00:06:58,640 Speaker 6: look at our analyst forecasts in modl or consensus forecasts 106 00:06:59,480 --> 00:07:02,840 Speaker 6: is around the two billion dollar business in twenty twenty, 107 00:07:03,400 --> 00:07:06,920 Speaker 6: twenty thirty three, twenty thirty four. Guess what Lily's top 108 00:07:06,960 --> 00:07:09,640 Speaker 6: line revenue would be at that point. No, approaching one 109 00:07:09,720 --> 00:07:12,760 Speaker 6: hundred and fifty billion. Of course, this is this is 110 00:07:12,800 --> 00:07:16,400 Speaker 6: seven or eight years away, so it's probably all wrong. Nevertheless, 111 00:07:16,600 --> 00:07:19,280 Speaker 6: that's what consensus has got, so it doesn't make a 112 00:07:19,320 --> 00:07:22,200 Speaker 6: huge difference. But it's a nartial ladder, okay. 113 00:07:22,200 --> 00:07:24,640 Speaker 5: So it sounds like this is nice to have, not 114 00:07:24,680 --> 00:07:27,440 Speaker 5: a need to have. We've seen companies like Mirk make 115 00:07:27,440 --> 00:07:31,360 Speaker 5: a lot of acquisitions because they mark faces patent expiration 116 00:07:31,440 --> 00:07:33,400 Speaker 5: on some of its best selling drugs, like you Truda. 117 00:07:34,120 --> 00:07:36,080 Speaker 5: Lily is not in that position. 118 00:07:35,760 --> 00:07:35,960 Speaker 6: Is it. 119 00:07:36,000 --> 00:07:39,160 Speaker 5: So this feels like it's very offensive rather than defensive. 120 00:07:40,320 --> 00:07:44,480 Speaker 6: Yeah, I mean, farmer companies tend to scramble or scramble 121 00:07:44,680 --> 00:07:51,160 Speaker 6: sorry at the end, in the final yards of the game, 122 00:07:51,240 --> 00:07:55,760 Speaker 6: to try and get their pipelines all organized so that 123 00:07:55,800 --> 00:07:57,520 Speaker 6: they can cope with it. You know, it takes time 124 00:07:57,600 --> 00:08:00,640 Speaker 6: to develop these franchises. So Lily's doing exactly what he 125 00:08:00,640 --> 00:08:05,440 Speaker 6: should be doing, just slowly padding it's pipeline, adding more 126 00:08:05,480 --> 00:08:09,240 Speaker 6: products into it. Now, how do you manage to deal 127 00:08:09,280 --> 00:08:12,600 Speaker 6: with a drug or a drug group that is going 128 00:08:12,640 --> 00:08:14,320 Speaker 6: to go off pattern at some point and you're selling 129 00:08:14,320 --> 00:08:17,920 Speaker 6: one hundred billion of it. I think it's very hard 130 00:08:17,960 --> 00:08:20,320 Speaker 6: to know which one of these drugs is going to 131 00:08:20,320 --> 00:08:22,200 Speaker 6: be there. But you need a lot of products to 132 00:08:22,240 --> 00:08:25,280 Speaker 6: be able to backfill that, and at some point people 133 00:08:25,320 --> 00:08:27,760 Speaker 6: will start worrying about that. But it's way too soon 134 00:08:27,840 --> 00:08:30,600 Speaker 6: for us to worry about that with Lily. Let's just 135 00:08:30,640 --> 00:08:33,120 Speaker 6: see how they do with the current business that they 136 00:08:33,160 --> 00:08:35,200 Speaker 6: have in terms of the growth that they're getting. Sam. 137 00:08:35,240 --> 00:08:39,600 Speaker 2: When a drug goes off pattern, what's the what's the 138 00:08:39,640 --> 00:08:42,040 Speaker 2: timeframe for sales to fall into what the breeder they 139 00:08:42,040 --> 00:08:43,480 Speaker 2: falls or predictable pattern? 140 00:08:44,600 --> 00:08:47,880 Speaker 6: Yes, there is, and we have blueprints that we follow 141 00:08:47,880 --> 00:08:51,200 Speaker 6: when we're doing all our modeling. It depends on what 142 00:08:51,280 --> 00:08:54,400 Speaker 6: sort of deals they might have done. So, as you know, Paul, 143 00:08:54,440 --> 00:08:57,240 Speaker 6: we have a very strong patent team led by old 144 00:08:57,280 --> 00:09:00,160 Speaker 6: Guestpacker in our group, and they've done some work on 145 00:09:00,200 --> 00:09:02,680 Speaker 6: some of these drugs. You know, where people expect Youtruder 146 00:09:02,720 --> 00:09:05,680 Speaker 6: from Mark for instance, to expire in twenty twenty nine, 147 00:09:06,200 --> 00:09:10,720 Speaker 6: they're thinking twenty thirty three, right, So there's room for 148 00:09:10,840 --> 00:09:12,920 Speaker 6: companies to push these things out a little bit, but 149 00:09:12,960 --> 00:09:16,720 Speaker 6: eventually they happen. If you're a small molecule, you tend 150 00:09:16,760 --> 00:09:20,760 Speaker 6: to give have some exclusivity. With one generic company which 151 00:09:20,800 --> 00:09:24,280 Speaker 6: is legal, they have a six month exclusivity period when 152 00:09:24,320 --> 00:09:26,560 Speaker 6: they launch. They make a lot of money by dropping 153 00:09:26,600 --> 00:09:28,920 Speaker 6: the price at a bit. That six month ends and 154 00:09:28,960 --> 00:09:31,720 Speaker 6: suddenly you get ten of those drugs, the small molecule 155 00:09:31,840 --> 00:09:35,520 Speaker 6: type pills that we all swallow. That's the pattern. A 156 00:09:35,520 --> 00:09:39,600 Speaker 6: little drop six months later, catastrophic droup. So, and then 157 00:09:39,600 --> 00:09:42,560 Speaker 6: the companies themselves make branded generics, et cetera, to keep 158 00:09:42,600 --> 00:09:45,400 Speaker 6: some other biologics a little bit different because it's harder 159 00:09:45,400 --> 00:09:48,760 Speaker 6: to make them and sometimes it's more complicated to make 160 00:09:48,760 --> 00:09:50,480 Speaker 6: sure that you got the right bits and bobs in there, 161 00:09:50,520 --> 00:09:51,840 Speaker 6: so a little bit smoother. 162 00:09:53,000 --> 00:09:54,439 Speaker 5: Sam, Before we let you go, I got to ask 163 00:09:54,440 --> 00:09:56,440 Speaker 5: you about buy Gen buying a palace for five point 164 00:09:56,480 --> 00:09:59,959 Speaker 5: six billion. If a Lily acquisition for some point a billion, 165 00:10:00,040 --> 00:10:02,040 Speaker 5: it's kind of a drop in the bucket for that company. 166 00:10:02,200 --> 00:10:04,600 Speaker 5: How meaningful is this acquisition for Biogen? 167 00:10:05,600 --> 00:10:08,600 Speaker 6: Yeah, clearly a lot bigger for Biogen on a relative 168 00:10:08,600 --> 00:10:11,840 Speaker 6: basis in terms of market cap or money expenditure, But 169 00:10:11,960 --> 00:10:15,760 Speaker 6: it fits in with what the new CEO, Christopher Becker, 170 00:10:15,760 --> 00:10:18,400 Speaker 6: has been saying about where he sees the company going. 171 00:10:18,720 --> 00:10:23,120 Speaker 6: Company was broadly viewed as a neurology business, as a 172 00:10:23,160 --> 00:10:27,200 Speaker 6: company that's focused on neurodiseases, and I think they're pivoting 173 00:10:27,240 --> 00:10:30,120 Speaker 6: to call it an immunology and rare diseases now, I mean, 174 00:10:30,840 --> 00:10:33,320 Speaker 6: neurology still fits in. A lot of the disease drugs 175 00:10:33,320 --> 00:10:36,640 Speaker 6: that you're using for neurology in multiple sclerosis, et cetera 176 00:10:37,080 --> 00:10:39,680 Speaker 6: do target the immune system because there are two immune diseases. 177 00:10:40,360 --> 00:10:44,000 Speaker 6: So by rare diseases, sure you get some neurological diseases 178 00:10:44,040 --> 00:10:45,760 Speaker 6: that are rare so you could treat them there. So 179 00:10:45,840 --> 00:10:48,199 Speaker 6: it fits in this in that bucket, and I think 180 00:10:48,480 --> 00:10:51,960 Speaker 6: a Pellis is a is a reasonable fit from that 181 00:10:52,120 --> 00:10:53,199 Speaker 6: strategy perspective. 182 00:10:54,000 --> 00:10:57,120 Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this. 183 00:11:01,000 --> 00:11:04,720 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 184 00:11:04,800 --> 00:11:07,880 Speaker 1: weekdays at ten am Eastern on Apple Coplay and Android 185 00:11:07,880 --> 00:11:11,199 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 186 00:11:11,240 --> 00:11:14,400 Speaker 1: you get your podcasts, or watch us live on YouTube. 187 00:11:15,120 --> 00:11:17,160 Speaker 5: Let's switch gears and take a look at what's happening 188 00:11:17,200 --> 00:11:19,679 Speaker 5: in the tech sector in video. It feels like it's 189 00:11:19,679 --> 00:11:22,640 Speaker 5: been quite of late, but it is taking a two 190 00:11:22,640 --> 00:11:26,400 Speaker 5: billion dollars stake in Marvel Technology, and it's deepening an 191 00:11:26,440 --> 00:11:29,880 Speaker 5: existing partnership that it has with that company. Man Deep 192 00:11:29,880 --> 00:11:32,720 Speaker 5: Sing is our global tech research head here at Bloomberg Intelligence, 193 00:11:32,760 --> 00:11:36,840 Speaker 5: Man Deep, how meaningful is this for Marvel? How meaningful 194 00:11:36,880 --> 00:11:37,800 Speaker 5: is this for in Vidia? 195 00:11:38,520 --> 00:11:40,760 Speaker 7: I mean, at this point of time, I feel in 196 00:11:40,960 --> 00:11:45,040 Speaker 7: Vidia may end up generating one hundred and fifty billion 197 00:11:45,120 --> 00:11:49,679 Speaker 7: dollars in cash for twenty twenty six hundred and fifty billion, 198 00:11:50,400 --> 00:11:52,960 Speaker 7: So they keep giving you know, two three billion to 199 00:11:53,040 --> 00:11:57,200 Speaker 7: pretty much everyone with Not meaningful for Nvidia, not meaningful 200 00:11:57,280 --> 00:12:00,880 Speaker 7: for Invidia. And look, their playbook right now is to 201 00:12:01,000 --> 00:12:06,400 Speaker 7: create an ecosystem where in Vidia GPUs are pervasive. Everyone 202 00:12:06,720 --> 00:12:10,760 Speaker 7: uses them in some capacity. And in this case, Marvell 203 00:12:11,679 --> 00:12:16,240 Speaker 7: is an acy chip maker that does a lot of 204 00:12:16,320 --> 00:12:21,280 Speaker 7: networking work for an Amazon So think of how Google 205 00:12:21,320 --> 00:12:26,440 Speaker 7: has rammed up on Broadcom. Amazon similarly uses Marvel for 206 00:12:26,640 --> 00:12:31,520 Speaker 7: their custom chip work, networking, et cetera. So by Nvidia, 207 00:12:31,559 --> 00:12:35,360 Speaker 7: by giving Marvel two billion dollars, is saying, hey, we 208 00:12:35,480 --> 00:12:39,800 Speaker 7: want to integrate with your ecosystem and you know, we'll 209 00:12:39,960 --> 00:12:45,080 Speaker 7: we'll make Nvidia GPUs compatible with whatever custom chips that 210 00:12:45,200 --> 00:12:49,480 Speaker 7: you have. And that is their best way of you know, 211 00:12:50,120 --> 00:12:55,080 Speaker 7: really spreading their tentacles in terms of enterprise public cloud providers. 212 00:12:55,200 --> 00:12:59,840 Speaker 7: Even though it's Amazon has their custom chips, in Vidia 213 00:13:00,120 --> 00:13:03,600 Speaker 7: is finding a way to you know, sell something to 214 00:13:03,720 --> 00:13:04,520 Speaker 7: their ecosystem. 215 00:13:05,120 --> 00:13:06,760 Speaker 3: In Vidia, for. 216 00:13:07,360 --> 00:13:10,080 Speaker 2: I guess counter twenty six the fiscal twenty seven year 217 00:13:10,360 --> 00:13:12,720 Speaker 2: forecast is two hundred and fifty billion dollars in EBITDA 218 00:13:13,559 --> 00:13:17,120 Speaker 2: and Capex get this, seven billion dollars. 219 00:13:17,320 --> 00:13:18,839 Speaker 3: There's only I. 220 00:13:18,760 --> 00:13:21,679 Speaker 2: Think I might have more Capex except than in Vidia. 221 00:13:22,600 --> 00:13:24,760 Speaker 5: Just six hundred and sixty billion for the hyper scalers 222 00:13:24,760 --> 00:13:25,240 Speaker 5: for this year. 223 00:13:25,480 --> 00:13:28,400 Speaker 7: Yeah, is the beneficiary. They are the ones who are 224 00:13:28,440 --> 00:13:30,880 Speaker 7: taking the just three guys sitting. 225 00:13:30,600 --> 00:13:32,920 Speaker 2: In garage is that in video and they're just selling 226 00:13:33,000 --> 00:13:33,880 Speaker 2: chips to everybody. 227 00:13:34,160 --> 00:13:35,000 Speaker 3: It's unbelievable. 228 00:13:35,080 --> 00:13:38,080 Speaker 7: I mean, they've seen a head and partly that has 229 00:13:38,120 --> 00:13:40,600 Speaker 7: to do with, you know, what they did with Melanox 230 00:13:40,720 --> 00:13:43,200 Speaker 7: acquisition back in the day. It was a company like 231 00:13:43,320 --> 00:13:46,440 Speaker 7: Marvel that they bought, you know, five six years back, 232 00:13:46,720 --> 00:13:50,760 Speaker 7: integrated it really well, and they've just stayed ahead of 233 00:13:50,920 --> 00:13:54,880 Speaker 7: everyone else, whether it's MD, Intel or anyone else in 234 00:13:55,000 --> 00:13:58,960 Speaker 7: terms of offering the best performance per what which is 235 00:13:58,960 --> 00:14:01,920 Speaker 7: what everyone cares about in the world of AI and 236 00:14:02,040 --> 00:14:05,440 Speaker 7: partnerships like this or even the aquahiers that they made 237 00:14:05,480 --> 00:14:10,160 Speaker 7: with Rock you know that twenty billion dollar Aquahi Again, 238 00:14:10,520 --> 00:14:13,439 Speaker 7: you know, Jensen is like three steps ahead of everyone 239 00:14:13,520 --> 00:14:15,840 Speaker 7: in terms of thinking through what is coming next, and 240 00:14:15,880 --> 00:14:19,000 Speaker 7: he's thinking about what is the bottomleck when it comes 241 00:14:19,080 --> 00:14:23,640 Speaker 7: to AI performance and he's saying it's it's memory. I 242 00:14:23,640 --> 00:14:26,720 Speaker 7: mean some of that has to do with by creating 243 00:14:26,760 --> 00:14:30,840 Speaker 7: an ecosystem, you'll be able to improve the performance slightly 244 00:14:31,160 --> 00:14:34,360 Speaker 7: for your chip relative to what Google TPUs will be 245 00:14:34,400 --> 00:14:37,360 Speaker 7: able to do with other chip providers. And the small 246 00:14:37,440 --> 00:14:40,280 Speaker 7: increments is what has really kept Nvidia and the lead. 247 00:14:40,320 --> 00:14:42,280 Speaker 2: And it's not an expense, it's a cheap stock. 248 00:14:44,720 --> 00:14:46,080 Speaker 3: It's a cheap stock. 249 00:14:46,320 --> 00:14:47,400 Speaker 7: Yeah. 250 00:14:47,440 --> 00:14:51,040 Speaker 5: On, So who is Nvidia not hooked up with? Who 251 00:14:51,080 --> 00:14:52,680 Speaker 5: is Nvidian not partnered with yet? 252 00:14:52,880 --> 00:14:58,000 Speaker 7: Right now it's a Google ecosystem, the Broadcom Google GPU ecosystem. 253 00:14:58,400 --> 00:15:01,800 Speaker 7: I would say that's like a para well alternative to 254 00:15:02,160 --> 00:15:05,440 Speaker 7: Nvidia stack. But again you see that. 255 00:15:05,680 --> 00:15:08,000 Speaker 5: Do you see there being any kind of synergy between 256 00:15:08,040 --> 00:15:10,040 Speaker 5: those two at all, I mean, or are they just 257 00:15:10,080 --> 00:15:11,640 Speaker 5: developing separately on their own paths? 258 00:15:11,960 --> 00:15:16,280 Speaker 7: They are, I mean Google TPUs are in their seventh versions, 259 00:15:16,400 --> 00:15:19,400 Speaker 7: so from that perspective, they've had a ton of progress 260 00:15:19,440 --> 00:15:22,840 Speaker 7: on their own. But again, if you're an enterprise and 261 00:15:22,960 --> 00:15:27,520 Speaker 7: you are using Nvidia GPUs, you want compatibility, and now 262 00:15:27,840 --> 00:15:31,400 Speaker 7: it's inevitable that you will be using in Vidia GPUs 263 00:15:31,440 --> 00:15:34,560 Speaker 7: in some form given how spread in Vidia is at 264 00:15:34,560 --> 00:15:38,080 Speaker 7: this model. They're like the Intel, you know, twenty years back. 265 00:15:38,320 --> 00:15:42,120 Speaker 7: I mean they everyone used to use Intel. Everyone is 266 00:15:42,240 --> 00:15:44,160 Speaker 7: using Nvidia when it comes to AI. 267 00:15:44,280 --> 00:15:47,720 Speaker 3: Now, stay with us. More from Bloomberg Intelligence coming up 268 00:15:47,960 --> 00:15:48,440 Speaker 3: after this. 269 00:15:52,320 --> 00:15:56,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 270 00:15:56,120 --> 00:15:58,800 Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and 271 00:15:58,800 --> 00:16:02,080 Speaker 1: Android Auto with the Work Business App. Listen on demand 272 00:16:02,120 --> 00:16:05,680 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 273 00:16:06,520 --> 00:16:11,160 Speaker 2: Saw JP Morgan. They announced something called the American Dream Initiative. 274 00:16:11,240 --> 00:16:12,840 Speaker 3: I don't know if that is, but our next guest does. 275 00:16:12,880 --> 00:16:16,200 Speaker 2: Hannah Lovett, Senior finance reporter for a Bloomberg News jointus 276 00:16:16,240 --> 00:16:16,840 Speaker 2: here in our studio. 277 00:16:17,120 --> 00:16:17,760 Speaker 3: Hannah, what's J. P. 278 00:16:17,880 --> 00:16:20,920 Speaker 2: Morgan Chase doing there with their American Dream Initiative. 279 00:16:21,240 --> 00:16:24,400 Speaker 8: Hey, so thanks for having me. Another initiative from JP Morgan. 280 00:16:24,400 --> 00:16:26,440 Speaker 8: They've been you know, kind of full of initiatives and 281 00:16:26,600 --> 00:16:30,400 Speaker 8: acronyms lately. This one American Dream Initiative or ADI. They're 282 00:16:30,440 --> 00:16:34,240 Speaker 8: going to be investing in local communities across six areas 283 00:16:34,720 --> 00:16:39,320 Speaker 8: and that includes small business and housing and financial health 284 00:16:39,560 --> 00:16:43,920 Speaker 8: and you know a few others. And so what it 285 00:16:44,000 --> 00:16:46,600 Speaker 8: is is small business was the one that they focused 286 00:16:46,600 --> 00:16:48,440 Speaker 8: on today in the announcement. And I think, you know, 287 00:16:48,480 --> 00:16:51,080 Speaker 8: they'll be rolling out further announcements as this thing goes, 288 00:16:51,120 --> 00:16:54,200 Speaker 8: but small business was the focus in today's announcement and 289 00:16:54,400 --> 00:16:58,920 Speaker 8: for that, they will be investing eighty billion over ten 290 00:16:59,000 --> 00:17:02,120 Speaker 8: years in lending to small businesses. They're trying to grow 291 00:17:02,120 --> 00:17:04,639 Speaker 8: their roster of small business clients from seven million today 292 00:17:04,680 --> 00:17:09,480 Speaker 8: to ten million. They're hiring a thousand more small business bankers, 293 00:17:09,520 --> 00:17:12,560 Speaker 8: so they have three thousand now. Yeah, so really just 294 00:17:13,480 --> 00:17:15,359 Speaker 8: trying to you know, dig deeper into the communities and 295 00:17:15,400 --> 00:17:19,720 Speaker 8: bring together you know, business and in some cases philanthropy. 296 00:17:20,320 --> 00:17:20,960 Speaker 3: That they do. 297 00:17:21,160 --> 00:17:23,680 Speaker 2: Because of one of the many firms on Wall Street. 298 00:17:23,680 --> 00:17:25,440 Speaker 2: I worked at JP Morgan back when they were the 299 00:17:25,520 --> 00:17:28,480 Speaker 2: Chase Manhattan Bank for the merger of Japen Morgan, and 300 00:17:28,560 --> 00:17:32,919 Speaker 2: they had a real small business retail focus. The Chasemen 301 00:17:32,960 --> 00:17:34,920 Speaker 2: hadn't banked and I felt like now that they merged 302 00:17:34,920 --> 00:17:36,240 Speaker 2: with jpen Morgan, that kind of got. 303 00:17:36,200 --> 00:17:37,000 Speaker 3: Lost a little bit. 304 00:17:37,080 --> 00:17:39,399 Speaker 2: You get a sense that they're trying to maybe re 305 00:17:39,600 --> 00:17:41,719 Speaker 2: establish that part of the business for themselves. 306 00:17:41,920 --> 00:17:42,120 Speaker 7: Yeah. 307 00:17:42,160 --> 00:17:44,520 Speaker 8: I mean, they've stayed huge in the consumer side, their 308 00:17:44,560 --> 00:17:47,520 Speaker 8: credit card businesses that is ginormous. They are the biggest 309 00:17:47,560 --> 00:17:51,560 Speaker 8: bank mortgage lender. Of course we've had like the non 310 00:17:51,600 --> 00:17:54,359 Speaker 8: banks growing size of since the crisis, but so that 311 00:17:54,480 --> 00:17:56,400 Speaker 8: they're big across the consumer. But I think what they're 312 00:17:56,400 --> 00:17:58,960 Speaker 8: trying to do here is they've had these targeted initiatives 313 00:17:58,960 --> 00:18:01,760 Speaker 8: in places like Detroit where over the past it's been 314 00:18:01,880 --> 00:18:04,119 Speaker 8: over a decade now, it's been hundreds of million dollars 315 00:18:04,160 --> 00:18:08,159 Speaker 8: that they've plowed into Detroit, and that's not you know, 316 00:18:08,160 --> 00:18:10,200 Speaker 8: some of it's flying through, but it's it's business stuff 317 00:18:10,200 --> 00:18:13,320 Speaker 8: where it's you know, lending to affordable housing things like that. 318 00:18:13,359 --> 00:18:17,080 Speaker 8: But where they bring together, you know, various aspects of 319 00:18:17,119 --> 00:18:20,840 Speaker 8: the behemoth that is JP Morgan to have this targeted 320 00:18:20,880 --> 00:18:24,040 Speaker 8: effort in you know, in that case Detroit, but now 321 00:18:24,440 --> 00:18:27,119 Speaker 8: they're trying to kind of replicate and go beyond that 322 00:18:27,200 --> 00:18:28,800 Speaker 8: and local communities across the country. 323 00:18:28,840 --> 00:18:31,280 Speaker 2: Is this I mean, this feels like it's the business. 324 00:18:31,320 --> 00:18:33,000 Speaker 2: I'm trying to think who they'd be really competing. It's 325 00:18:33,040 --> 00:18:36,280 Speaker 2: I think it's City Bank of America. Those are the 326 00:18:36,320 --> 00:18:40,159 Speaker 2: ones I think about retail, consumer, small business. Is that 327 00:18:40,280 --> 00:18:42,040 Speaker 2: kind of who they're going to be going up against her? 328 00:18:42,200 --> 00:18:44,359 Speaker 8: Increasing it's kind of everyone. I mean b of A 329 00:18:44,640 --> 00:18:46,919 Speaker 8: and Wells Fargo are both big and small business. But 330 00:18:46,960 --> 00:18:49,679 Speaker 8: then you also have the regional banks and even you know, 331 00:18:49,720 --> 00:18:51,920 Speaker 8: the more local community banks that are huge forces in 332 00:18:51,960 --> 00:18:56,520 Speaker 8: their communities. Although you know, in some sense it's not 333 00:18:57,040 --> 00:18:59,720 Speaker 8: an effort to kind of take out the community banks. 334 00:18:59,560 --> 00:19:03,720 Speaker 8: It's an effort to you know, grow the pie for everyone. 335 00:19:04,040 --> 00:19:08,439 Speaker 2: Interesting, Like I wonder when I see a branch open up, 336 00:19:08,440 --> 00:19:11,280 Speaker 2: particularly like the one just downstairs in our building here, 337 00:19:11,320 --> 00:19:12,920 Speaker 2: I can't even think of the bank what it is 338 00:19:13,280 --> 00:19:15,600 Speaker 2: With all the technology when we do all of our banking, 339 00:19:15,600 --> 00:19:16,919 Speaker 2: I can remember the last time I was in a 340 00:19:16,960 --> 00:19:19,920 Speaker 2: branch because you can do everything on your phone. Yet 341 00:19:19,920 --> 00:19:22,119 Speaker 2: I see branches popping up left and right. What's the 342 00:19:22,119 --> 00:19:24,000 Speaker 2: business strategy behind that. What did the banks tell you. 343 00:19:23,960 --> 00:19:27,040 Speaker 8: It's funny because I have covered banking for eight years 344 00:19:27,040 --> 00:19:29,399 Speaker 8: and I went into a branch recently and got scared. 345 00:19:29,440 --> 00:19:31,200 Speaker 8: I was like, I don't know how to be in here, right. 346 00:19:31,880 --> 00:19:35,480 Speaker 8: But JP Morgan has really, like Jamie Diamond, who's been 347 00:19:35,560 --> 00:19:37,360 Speaker 8: CEO for more than twenty years at this point, has 348 00:19:37,400 --> 00:19:39,960 Speaker 8: been always been a big believer in the power of 349 00:19:40,000 --> 00:19:43,879 Speaker 8: the branch, and so they kind of zigged when the 350 00:19:43,880 --> 00:19:46,639 Speaker 8: rest of the industry zagged a bit on the branch stuff, 351 00:19:46,640 --> 00:19:50,200 Speaker 8: and they've been adding branches for years and now they're 352 00:19:50,240 --> 00:19:52,679 Speaker 8: in they're the only bank to be in all lower 353 00:19:52,720 --> 00:19:55,000 Speaker 8: forty eight states, right, Yeah. 354 00:19:54,600 --> 00:19:57,560 Speaker 3: So I kind of view it as advertising nothing else. 355 00:19:57,600 --> 00:19:59,600 Speaker 2: I mean again, I think it's a capital one downstairs 356 00:19:59,600 --> 00:20:02,680 Speaker 2: in our bill think they got a little cafe down there. 357 00:20:03,440 --> 00:20:05,359 Speaker 3: People are in there. There's always a lot of people. 358 00:20:05,520 --> 00:20:08,840 Speaker 2: So it feels like it's a billboard a different type 359 00:20:08,840 --> 00:20:10,680 Speaker 2: of outdoor advertising for these banks. 360 00:20:10,680 --> 00:20:12,480 Speaker 8: But totally that's part of the thinking that I've heard, 361 00:20:12,480 --> 00:20:16,719 Speaker 8: you know, from them and others, is that it is advertising. 362 00:20:16,760 --> 00:20:18,680 Speaker 8: And also they do some of these things that they're 363 00:20:18,720 --> 00:20:21,639 Speaker 8: going to do, you know, as part of the American dreamanship, 364 00:20:21,680 --> 00:20:23,840 Speaker 8: but that they already do, like some of the coaching 365 00:20:23,880 --> 00:20:25,760 Speaker 8: stuff and where there will be events at the branches 366 00:20:25,760 --> 00:20:26,440 Speaker 8: and things like that. 367 00:20:26,520 --> 00:20:28,360 Speaker 2: So what's a big theme that you're working on just 368 00:20:28,440 --> 00:20:30,879 Speaker 2: for the banks? It seems like they've got an administration 369 00:20:30,920 --> 00:20:33,439 Speaker 2: that's supportive of the banking system in general and banks 370 00:20:33,800 --> 00:20:34,920 Speaker 2: all over the places. 371 00:20:35,119 --> 00:20:36,919 Speaker 3: Do you get a sense of optimism from the companies 372 00:20:36,960 --> 00:20:37,240 Speaker 3: you cover? 373 00:20:38,000 --> 00:20:39,640 Speaker 8: Absolutely, I mean, I think, you know, there's a lot 374 00:20:39,680 --> 00:20:43,240 Speaker 8: going on in the world, but if you look beyond 375 00:20:43,240 --> 00:20:44,800 Speaker 8: that for a minute, to the extent that you can. 376 00:20:45,480 --> 00:20:47,800 Speaker 8: I mean, I wrote a story at the end of 377 00:20:48,080 --> 00:20:51,440 Speaker 8: last year about how it was really, you know, banks 378 00:20:52,160 --> 00:20:55,160 Speaker 8: fighting back against the buyside and private credit where banks 379 00:20:55,160 --> 00:20:57,680 Speaker 8: were growing there the big banks were growing their loan 380 00:20:57,840 --> 00:21:01,760 Speaker 8: books at the fastest rate since in at least a decade. 381 00:21:01,760 --> 00:21:05,040 Speaker 8: It may have been since pre crisis, but you know, 382 00:21:05,080 --> 00:21:10,600 Speaker 8: so they're definitely enthused about the level of deregulation and 383 00:21:10,720 --> 00:21:13,720 Speaker 8: the ability to kind of chip back away at the 384 00:21:13,760 --> 00:21:16,080 Speaker 8: areas that non being subtripped away at everything. 385 00:21:16,160 --> 00:21:18,439 Speaker 3: Yes, I agree. I mean, God, we used to make 386 00:21:18,480 --> 00:21:20,440 Speaker 3: a fortune off of those syndicated loans we did back 387 00:21:20,440 --> 00:21:20,840 Speaker 3: in the day. 388 00:21:22,720 --> 00:21:27,399 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 389 00:21:27,600 --> 00:21:31,560 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 390 00:21:31,760 --> 00:21:35,120 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 391 00:21:35,160 --> 00:21:39,000 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 392 00:21:39,040 --> 00:21:42,359 Speaker 1: can also watch us live every weekday on YouTube and 393 00:21:42,560 --> 00:21:44,480 Speaker 1: always on the Bloomberg terminal