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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Well, we talked about how Nova Noordisk is one of

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Speaker 2: the big movers today in early trading. The president and

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Speaker 2: CEO of the drug maker says the company is going

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Speaker 2: all in on weight loss drugs as his company is

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Speaker 2: the first to come out with a pill to be

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Speaker 2: sold in the US market.

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Speaker 3: He spoke with our Katie Greifeld earlier today.

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Speaker 4: This is really going to be super exciting for the

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Speaker 4: millions of patients that have been waiting to get their

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Speaker 4: hands on a gop one pill. And for the first time,

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Speaker 4: we are having a pill that has an efficacy of

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Speaker 4: some seventeen percent if you take the pill regularly, and

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Speaker 4: one in three people are going to actually reduce up

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Speaker 4: to twenty percent weight loss. I think that data speaks

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Speaker 4: for itself, and we are super excited, of course to

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Speaker 4: be the first to the market and we're going to

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Speaker 4: give a go all in trying to make this a

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Speaker 4: huge success.

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Speaker 5: Well, moving forward, I mean beyond just these first few

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Speaker 5: months after Eli Lilly does have their pill on the market,

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Speaker 5: how do you plan to compete? What is your strategy

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Speaker 5: there given my understanding is that there's likely going to

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Speaker 5: be no restrictions when it comes to food, when it

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Speaker 5: comes to drinks around Lilly's version.

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Speaker 4: So, as I mentioned, there are no other phase three

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Speaker 4: trials of oral gop one that has shown this level efficacy.

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Speaker 4: This means that for the first time ever, people do

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Speaker 4: not have compromise between either taking an efficacious injection or

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Speaker 4: a convenient pill. For the first time ever, you have

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Speaker 4: the same efficacy of seventeen percent in injection or at pill.

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Speaker 4: You can take it on a daily basis as a

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Speaker 4: pill or a weekly injection, and that I think is

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Speaker 4: the key selling points.

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Speaker 6: With WeGo v pill.

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Speaker 4: We also have more than ten years of course experience

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Speaker 4: with regards to safety data and what have you. That's

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Speaker 4: why it's called the wegov pill, which means that this

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Speaker 4: pill is not only going to reduce your weight, it

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Speaker 4: also has protection for your cardiovascular systems. So this is

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Speaker 4: a phenomenal pill, second to none, I would say, and

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Speaker 4: we are very ready to compete with it.

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Speaker 5: Let's talk about how you're going to sell it through.

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Speaker 7: What channels?

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Speaker 5: Will you sell this way go v pill and will

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Speaker 5: all of those channels be available at launch?

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Speaker 4: The quick answer is yes, we're going all in. We're

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Speaker 4: of course going to sell this through our own websites,

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Speaker 4: no WorkCare pharmacy, as well as all of our partners

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Speaker 4: be a Row, Live, MD, Costco, weight watchers, everyone that

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Speaker 4: you can imagine is going to start launching this at

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Speaker 4: the same time on the day of the launch. Trum

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Speaker 4: Our ex of course we'll be coming up soon as

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Speaker 4: well well as well as of course the traditional channels

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Speaker 4: that usually medicine is pro crud in us.

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Speaker 3: All right, that was the CEO of Novo Nordisk.

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Speaker 2: Let's bring in John Tozzy now he's a Bloomberg Healthcare

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Speaker 2: reporter on this milestone for the Swiss drug maker.

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Speaker 3: Because Novo Nordisk was the first.

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Speaker 2: Mover here when it comes to the obesity treatments, but

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Speaker 2: it quickly lost its lead to Eli Lilly.

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Speaker 3: Does this put it back in the lead again?

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Speaker 8: Yeah, I mean so for the Danish drug maker. I

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Speaker 8: believe it's Danish. Yeah, No, I think it is. Listen,

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Speaker 8: it is a milestone for sure. You know, patients have

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Speaker 8: been waiting for an oral version of these weight loss drugs.

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Speaker 8: This is the first pill to get approval in the

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Speaker 8: United States. Ili Lily is not far behind. They've said

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Speaker 8: they expect their pill to be a pill version of

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Speaker 8: their weight loss drug zep bound to be approved as

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Speaker 8: soon as March potentially in the US. So, you know,

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Speaker 8: I think it's still quite a competitive space, but this

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Speaker 8: is still certainly a milestone for Novo Nordisk.

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Speaker 9: So I would think that this would be kind of

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Speaker 9: a step function in demand for the industry to have

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Speaker 9: these error products available because I'm guessing there's just a

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Speaker 9: bunch of people out there that don't like to get

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Speaker 9: injections and that's a non starter for them. What's what's

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Speaker 9: the expectation what this could do for the marketplace when

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Speaker 9: we get more and more of these.

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Speaker 8: Oral Yeah, I mean, Novae CEO certainly said that they

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Speaker 8: expect us to expand the market. I think will know

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Speaker 8: pretty soon, right whether you know. I mean, first of all,

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Speaker 8: the question of how many people currently using the injection

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Speaker 8: convert to the pill form and how many new people

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Speaker 8: start who have been reluctant for whatever reason. To take

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Speaker 8: the injection, you know, whether it changes things like adherents.

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Speaker 8: We know with these drugs that there have been you know,

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Speaker 8: questions along how about how long people stay on the

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Speaker 8: medications and whether they go on and off because of

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Speaker 8: some side effects. So, you know, I think it is

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Speaker 8: you know, potentially likely to expand demand.

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Speaker 4: But we'll see, we'll see.

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Speaker 2: And I remember Novo had a what they call the

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Speaker 2: next gen treatment, cagri Semi, which didn't do well, and

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Speaker 2: that tanked the stock. And it's partly why the stock

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Speaker 2: has fallen by about half this year. Is that kind

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Speaker 2: of an experiment that just went off the rails. And

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Speaker 2: this was always kind of in the offing.

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Speaker 8: I mean I think, uh, you know, companies have been

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Speaker 8: looking for an oral GLP one weight awes drug, you know,

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Speaker 8: for uh, you know, for years. I think this has

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Speaker 8: been a goal of the of the market. I mean,

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Speaker 8: there is an oral pill for the diabetes indication.

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Speaker 10: Ye sorry, all right, that's good.

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Speaker 9: I mean I think this will just it'd be big

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Speaker 9: for a lot of folks and hopefully the cost will

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Speaker 9: continue to come down and now I'll make it available

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Speaker 9: for more and more people.

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Speaker 10: John Tazzi Healthcare Report Bloomberg News.

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Speaker 9: Thanks so much for joining us here again, a good

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Speaker 9: day go for Novo Nordisk bloodmore coming up.

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Speaker 10: This is Bloomberg.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 9: All right, here's the story that kind of caught me

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Speaker 9: by surprise. I just wasn't on my radar screen. Sax

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Speaker 9: Mull's bankruptcy year after raising billions for a turnaround.

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Speaker 10: When did that happen?

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Speaker 2: I know they've been having problems with paying off their

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Speaker 2: debt and just kind of trying to restructure everything.

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Speaker 3: But this has been like a slow moving train rad.

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Speaker 10: I mean, it's a phenomenal brand.

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Speaker 11: Here.

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Speaker 10: Let's get to get the latest reporting on this.

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Speaker 9: Basu joints us here Bloomberg News credit reporter so Reshman.

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Speaker 10: What's going on with our friends at sas.

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Speaker 7: Sax is running out of money and the over the

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Speaker 7: weekend we saw some lenders go into enter into confidential

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Speaker 7: discussions to discuss the company's new money needs.

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Speaker 3: And what are the options on the table. At this point, a.

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Speaker 7: Chapter eleven is a possibility. Given the company is running

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Speaker 7: out of cash. It's been having issues with its suppliers,

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Speaker 7: so right now everyone's kind of scrambling to figure out

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Speaker 7: how to salvage the company.

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Speaker 9: So talk to us about what they've been doing over

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Speaker 9: the last several years and trying to stage this off

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Speaker 9: and maybe raise some other capital.

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Speaker 10: What's what's been the recent pass life for this company?

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Speaker 7: Well, Sex has always had some issues with its vendors,

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Speaker 7: and in late twenty twenty four they decided to partner

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Speaker 7: up with Neiman Marcus in a two point seven billion deal,

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Speaker 7: but the integration has not been growing great and the

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Speaker 7: company is still struggling with negative EBITA, dealing with late

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Speaker 7: payments to vendors. So it's just been having a lot

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Speaker 7: of issues, a lot of pressure points coming all together

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Speaker 7: once right before the holidays.

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Speaker 2: Who are the investors that have a lot at stake

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Speaker 2: in this debt situation for Sex.

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Speaker 7: Yeah, it's a lot of you know, the Wall Street

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Speaker 7: lenders that are involved in this name, and they've just

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Speaker 7: seen you know, they're having a really tough time right

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Speaker 7: now with like brounds, et cetera. So they're seeing you know,

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Speaker 7: in Sacks, we're now seeing the debt trading in like

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Speaker 7: the single digits.

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Speaker 10: How much debt do they have outstanding?

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Speaker 7: So they have more than two They did a two

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Speaker 7: point two billion deal and on top of that, they

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Speaker 7: did rescue financing back in August which added another like

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Speaker 7: six hundred million, So.

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Speaker 10: There's this is real money for the banks are on

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Speaker 10: the hook for.

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Speaker 7: Yeah, this is a lot. This is a lot of

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Speaker 7: pain that's going to be going around.

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Speaker 3: So how do you see this shaping up?

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Speaker 2: What will you be looking for in twenty twenty six

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Speaker 2: as this continues to be a story where SAX is

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Speaker 2: working with creditors trying to persuade them to you know,

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Speaker 2: pitch in more or restructure their existing agreements.

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Speaker 7: We'll be looking to see how the company and its

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Speaker 7: lenders are going to structure the new money raise, whether

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Speaker 7: or not that's going to take the form of a

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Speaker 7: bankruptcy loan or a dip. And we'll also be looking

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Speaker 7: to see who's ultimately going to take the keys, if

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Speaker 7: we're going to see a change of control, and if

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Speaker 7: lenders are going to assume control of the company. We're

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Speaker 7: looking to be seen whether or not we see SAX

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Speaker 7: and Nieman kind of separate from each other.

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Speaker 10: I mean, boy, some of this is brutal here.

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Speaker 9: So they have interest payment one hundred million dollars due

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Speaker 9: like December thirtieth, nine hundred and forty one million dollar

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Speaker 9: portion of sex second out notes. Not sure what a

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Speaker 9: second out note is. And I've been in that business

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Speaker 9: a long time. Trades for seven and a half cents

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Speaker 9: on the dollar.

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Speaker 3: Yeah, that's that's that is brital. That's just stress level.

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Speaker 9: Yeah, and about seven hundred and sixty two million of

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Speaker 9: more senior debt was quoted at forty eight cents.

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Speaker 10: So yeah, market's telling you.

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Speaker 7: Yeah, the market's saying that there's not a lot of

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Speaker 7: value here. Like Sacks and Neeman markets were kind of

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Speaker 7: known for their real estate value. But what we're seeing

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Speaker 7: is that's really maybe not the case. So that's something

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Speaker 7: that's going to be deliberated over the next coming weeks.

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Speaker 7: How much is that real estate worth? How much are

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Speaker 7: is the company's name worth?

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Speaker 2: Reshmie, let me ask you a question because I know

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Speaker 2: a lot of our listeners are AMEX Platinum card holders,

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Speaker 2: which means they get a fifty dollars credit at Sacks

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Speaker 2: every six months and they'll be going into the stores

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Speaker 2: to use that. Does this affect the operations on the ground,

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Speaker 2: Will customers see any difference when they go into Saxsmith Avenue?

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Speaker 7: Well, I mean right now, we're seeing a ton of

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Speaker 7: promotions taking place right now, and that's something that we've

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Speaker 7: seen in retail for years now, a very promotional environment.

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Speaker 7: So there's going to be a lot of discounts out there.

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Speaker 9: Are there other Sacks type stories out there that you're

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Speaker 9: monitoring the name that could be a real credit problem.

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Speaker 7: Credit problem maybe Container Stores is the one that we

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Speaker 7: are kind of keeping an eye out. They filed for bankruptcy,

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Speaker 7: they exited, but there's you know, we're seeing a lot

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Speaker 7: of discounts taking place there as well.

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Speaker 2: But this feels very different from you know, the problems

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Speaker 2: that First Brands or Tree Colore had, which kind of

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Speaker 2: came from out of nowhere. This feels, I was saying

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Speaker 2: to Paul, like a slow moving train wreck. We've known

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Speaker 2: about these problems at Sacks and Cantake for a while

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Speaker 2: and it's a matter of just the two sides working

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Speaker 2: it out right.

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Speaker 7: Like Sachs and Niman, the integration has just gone so

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Speaker 7: wrong in so many ways and it's really not capturing

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Speaker 7: the synergies that maybe lenders had initially hoped for when

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Speaker 7: they did the deal.

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Speaker 9: Is there a call maybe for just a new management

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Speaker 9: team that kind of come in there, if there is in.

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Speaker 10: Fact a reorganization here or filing, I mean.

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Speaker 7: We could definitely see lenders taking control of the company

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Speaker 7: and installing their own people.

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Speaker 10: All right, Rushmi, thanks so much. Appreciate that that was

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Speaker 10: the story. I was not aware of.

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Speaker 9: Rashmi Basu. She's a credit reporter for Bloomberg News joining

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Speaker 9: Slacker in our Bloomberg Interactive Broker studio. And you know,

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Speaker 9: if you bring somebody in here and you say, oh

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Speaker 9: my gosh, is this a trend? And what do we

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Speaker 9: hear with first brands and clear no, it is idiosyncratic.

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Speaker 2: Right yes, and one off well, and that really shocked

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Speaker 2: people because it felt like it came from out of nowhere.

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Speaker 3: They didn't have a sense that this was happening.

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Speaker 2: Clearly, the integration with Neiman Marcus has been kind of troubling,

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Speaker 2: so people had a sense that this was not going

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Speaker 2: so well. And we know that the department stores as

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Speaker 2: a whole just don't have a business model that resonates

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Speaker 2: with younger consumers.

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Speaker 10: Yep.

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Speaker 9: Absolutely, And if you don't have a digital strategy down

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Speaker 9: then you're just in a world of hurt here and then.

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Speaker 9: And it just I think being a former banker with

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Speaker 9: the screams to me is just the capitol structure isn't

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Speaker 9: appropriate for the business the way it is today. You

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Speaker 9: can't capital, you can't have that much debt on this

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Speaker 9: type of business. Maybe you could have a generation to go,

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Speaker 9: but given the economics of the department store business, as

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Speaker 9: you mentioned, it just doesn't feel like this story capital structure.

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Speaker 9: So somebody's gonna have to pay, and it looks like

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Speaker 9: those junior note holders it's seven and a half cents

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Speaker 9: on the dollar they're going to pay, and even the

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Speaker 9: senior stuff they're going to pay as well. So stay

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Speaker 9: on top of that story for sure. SMP of fifteen,

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Speaker 9: the Dow up a needing.

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Speaker 10: This is Bloomberg. Good morning.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 9: I haven't seen the Bloomberg reporting all morning about how

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Speaker 9: many gajillions of people are gonna be flying this weekend.

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Speaker 10: I mean, it's just crazy.

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Speaker 2: I feel like this schedule has changed a little bit

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Speaker 2: of calendar has changed since COVID because people are able

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Speaker 2: to leave it a little bit earlier work from home,

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Speaker 2: you know, for the few days before the holiday.

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Speaker 9: Yeah, apparently like yesterday the day before where it was

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Speaker 9: the crazy day. So that just kind of brings you

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Speaker 9: to how are the airlines doing that there? And what's

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Speaker 9: the out look for twenty twenty six for the airlines?

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Speaker 9: Here George Ferguson, Senior Aerospace, Defense and Airlines anast from

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Speaker 9: Bloomberg Intelligence.

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Speaker 10: It says he's on Zoom from the Jersey office. I'm

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Speaker 10: not buying it. I think it's a beach and you.

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Speaker 9: Got a backdrop there that's CGI. But I look at him,

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Speaker 9: he's in the Princeton office. I mean, all right, George,

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Speaker 9: thanks for joining us here. I appreciate you putting the

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Speaker 9: effort there, sir, talk to us about the airline business.

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Speaker 9: How healthy is it today and kind of what's the

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Speaker 9: outlook for tomorrow? Because every time I got on a plane,

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Speaker 9: it's packed, dude.

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Speaker 11: It is. But remember, you know, those revenue management officers.

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Speaker 11: They don't like to let airplanes go down the runway

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Speaker 11: less than eighty plus percent full anymore. So you need

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Speaker 11: to tell me the price that everybody paid before I

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Speaker 11: get really excited about packed airplanes. Anyways, I'll get off

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Speaker 11: that soapbox right now. Look, I think you know, as

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Speaker 11: we get into twenty twenty six, we're looking at schedules,

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Speaker 11: we're seeing a lot of the growth coming from the

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Speaker 11: big full service carriers. United especially continues to sort of

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Speaker 11: pour on the gas here and put a lot of

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Speaker 11: capacity in the marketplace. Delta a bit less than them,

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Speaker 11: America even a bit less than them. And as we

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Speaker 11: get into the new year, we're going to have Southwest

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Speaker 11: starting to sell premium seats, and everybody's got a plan

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Speaker 11: for bringing more premium seats to the marketplace. So you know,

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Speaker 11: when we just look at the full service carriers, they're

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Speaker 11: going to grow higher than GDP levels. They are going

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Speaker 11: to be I mean, actually not the latest GDP number,

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Speaker 11: which is a bit hot, but we're going to see

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Speaker 11: like three four percent seat growth in the first half

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Speaker 11: from those big full service carriers. I think that means

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Speaker 11: there's probably a risk premium seats are going to start

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Speaker 11: to feel some pressure on fares, and that's been you know,

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Speaker 11: the really big driver of this business, especially for those

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Speaker 11: big full service carriers, has been driving their profitability on

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Speaker 11: the on the you know, economy end. We're seeing Spirit

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Speaker 11: airlines there sort of between this world and that world

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Speaker 11: a little bit. We're trying to figure out if they're

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Speaker 11: going to survive, might get bought by Frontier. They've dropped

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Speaker 11: a bunch of airplanes. We're seeing some of these carriers

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Speaker 11: cut capacity because of weakness in those seat prices. So

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Speaker 11: I think we'll start to see at least some you

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Speaker 11: know firming up of that of that basic economy as

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Speaker 11: the market tries to get that back in balance. So

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Speaker 11: I think that's what we're going to see in the

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Speaker 11: first half of the new year.

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Speaker 2: So it sounds like there's going to be a surplus

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Speaker 2: of those premium seats and then that leaves big empty

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Speaker 2: hole here for the frontiers and the spirits. Are they

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Speaker 2: going to be forced to offer also some kind of

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Speaker 2: premium version of what they currently have an offer?

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Speaker 6: I don't know.

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Speaker 11: I mean, I think everybody's trying to figure out a

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Speaker 11: way to get more premium in their airplane. They're not

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Speaker 11: you know, they're not forced, but they want they want

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Speaker 11: that premium travel that's gonna just keep flying through, you know,

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Speaker 11: through good and bad economic times and not have the

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Speaker 11: challenges of inflation on their budget and things like that.

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Speaker 11: So I don't know if they're forced, but we're definitely

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Speaker 11: seeing all of them look at ways to increase the

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Speaker 11: price they can get the customer to pay for a seat,

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Speaker 11: whether it's block a middle seat, you know, so it

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Speaker 11: might be three by three kind of airplane, they might

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Speaker 11: block the middle seat. Some of them are talking about putting,

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Speaker 11: you know, more reclined and nicer seats in the front

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Speaker 11: of the airplane. So everybody, I think everybody as a

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Speaker 11: plan for how to get more premium in their airplane.

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Speaker 11: And again that's gonna mean like everything in the airline

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Speaker 11: business will get off sides on premium before it's all done.

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Speaker 11: I think it begins in the first half. I don't

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Speaker 11: think premium seat prices are going to create Unfortunately, we're

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Speaker 11: not gonna be able to go anywhere really super cheap

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Speaker 11: flying in front of the airplane in the first half

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Speaker 11: of the next year. But I don't think it'd be

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Speaker 11: as good as it was in twenty twenty five.

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Speaker 9: Wages, that's a big cost component for these airlines. I

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Speaker 9: want my pilots happy and want them feeling like they're

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Speaker 9: well paid.

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Speaker 10: Talk to those about the wage the dynamic in the industry.

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Speaker 11: Yeah, I mean, look, you know, we still see you know,

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Speaker 11: I don't know that I want to call it a shortage,

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Speaker 11: but you know, it's a it's a difficult balance between

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Speaker 11: the number of pilots out there and what's needed by

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Speaker 11: the airlines and the you know, the number of people

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Speaker 11: coming into the industry and getting air transport licenses and

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Speaker 11: things like that, and so the pilots are still decently paid.

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Speaker 11: You know, they came off years decades ago. They just

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Speaker 11: had many, many bad years. There was a surplus of them.

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Speaker 11: So they've been catching up and they got these twenty

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Speaker 11: percent increases in the last couple of contracts. And in

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Speaker 11: the last contract we saw a twenty percent increase and

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Speaker 11: then a four percent five percent, so actually it was

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Speaker 11: a couple it was a five and a couple of

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Speaker 11: fours before two percent salary gains increases. They're pretty nice

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Speaker 11: in this economy, and the airlines really can't afford that

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Speaker 11: kind of inflation. In their cost base. The pilots are

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Speaker 11: a big part of it, and so they keep rolling

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Speaker 11: out bigger airplanes. And that's another challenge in the marketplace.

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Speaker 11: Right as you put a bigger airplane behind the pilot

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Speaker 11: so you could defray their costs over more seats, you

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Speaker 11: got to fly all those seats into these markets, and

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Speaker 11: sometimes you're discounting more to fill the airplane. So that's

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Speaker 11: a challenge and continues in the new year. We think

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Speaker 11: the airlines would be managing cost inflation there and maintenance

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Speaker 11: and gates everywhere.

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Speaker 2: So wager is a big part of the airlines costs

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Speaker 2: the biggest part, but then fuel is the second biggest

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Speaker 2: or it can be and jet fuel has actually come

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Speaker 2: down in twenty twenty five. Is that going to continue

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Speaker 2: to be a tailwind in twenty twenty six.

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Speaker 11: So you know, we kind of we looked at it recently,

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Speaker 11: put it out on the Bloomberg Terminal BI Space AI RLN.

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Speaker 11: We did some scenario analysis on this look. I have

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Speaker 11: a hard time seeing fuel prices dip significantly lower than here.

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Speaker 11: But I am no oil man. Right if I was,

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Speaker 11: i'd own a football team, But I'm not oil man.

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Speaker 11: I don't necessarily where those prices are going. All I

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Speaker 11: could tell you is that they stick around two dollars,

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Speaker 11: the airlines will get The airlines had a nice tailwind

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Speaker 11: from fuel last year as fuel prices fell, it buffered

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Speaker 11: their margins. If they stick around two dollars, they probably

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Speaker 11: get a bit of a tailwind in the first quarter,

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Speaker 11: but as they roll into the back part of the year,

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Speaker 11: they're not going to get a lot of gains from fuel.

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Speaker 11: That's not going to buffer their margins. But we'll see.

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Speaker 11: I mean fuel has dip below two dollars, it could

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Speaker 11: stay below two dollars. I guess if you see slower

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Speaker 11: GDP growth, could be a bit of a buffer. But

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Speaker 11: we don't think as much as in twenty twenty five.

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Speaker 9: Did the airlines hedge their fuel exposure, because boy, I

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Speaker 9: think I'd be hedging right here if I were CFO.

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Speaker 11: Not anymore. I think every so often they surprise you

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Speaker 11: and so I hear what you're saying, Like, you know,

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Speaker 11: you could see one of those crazy the cfo's out

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Speaker 11: there going, hey, we might as well edge here, could

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Speaker 11: be as good as we get. We saw Southwest do

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Speaker 11: that a number of times in their history and win

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Speaker 11: big but for the most part recently, what we've seen

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Speaker 11: is almost the entire field does not hedge fuel prices anymore.

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Speaker 11: If you think about it, they kind of sell tickets

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Speaker 11: out six eight weeks, so they have sort of a

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Speaker 11: future commitment for fuel prices out that far. If fuel

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Speaker 11: prices rise dramatically, I think everybody in the marketplace adjusts

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Speaker 11: fares fairly quickly because they're not edged. And so I

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Speaker 11: think you know, when they look at the pack that

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Speaker 11: they're flying in maybe the airlines, they think no one

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Speaker 11: else hedging fuel. I'm not going to run the risk

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Speaker 11: to be wrong in a hedge, will stay on hedge,

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Speaker 11: and that's what the US guys.

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Speaker 3: Hard to stick your neck out.

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Speaker 9: Yeah, I guess I don't know, unless you think you've

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Speaker 9: got to handle on the market.

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Speaker 10: George Ferguson, thanks so much, appreciate it as always.

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Speaker 9: George Ferguson, a senior aerospace, Defense and Airlines analles for

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Speaker 9: Bloomberg Intelligence.

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Speaker 10: I think I figured out George. He's in the office today.

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Speaker 12: But then I bet you a bunch of them are

440
00:20:56,240 --> 00:20:59,119
Speaker 12: going to noon bag out good to Tiger's tawn. But

441
00:20:59,119 --> 00:21:01,119
Speaker 12: he's sent his work for the Yeah, they're can go

442
00:21:01,160 --> 00:21:04,040
Speaker 12: to the Tiger's Tail and have a little holiday and

443
00:21:04,080 --> 00:21:05,399
Speaker 12: you wish you're there with you exactly.

444
00:21:05,440 --> 00:21:07,240
Speaker 9: It's a great great spot there right around the Bloomberg

445
00:21:07,280 --> 00:21:08,720
Speaker 9: offices down there in Princeton.

446
00:21:09,520 --> 00:21:10,120
Speaker 6: Stay with us.

447
00:21:10,320 --> 00:21:12,679
Speaker 10: More from Bloomberg Intelligence coming up after this.

448
00:21:16,560 --> 00:21:20,280
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

449
00:21:20,359 --> 00:21:23,040
Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and

450
00:21:23,040 --> 00:21:26,320
Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand

451
00:21:26,359 --> 00:21:29,920
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

452
00:21:30,920 --> 00:21:33,280
Speaker 2: Let's head over now to Washington, DC and check in

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00:21:33,359 --> 00:21:37,040
Speaker 2: with Nathan Dean, he is Bloomberg Intelligence Senior policy Analyst,

454
00:21:37,080 --> 00:21:38,760
Speaker 2: to kind of wrap up the year that was in

455
00:21:38,800 --> 00:21:41,640
Speaker 2: twenty twenty five and look ahead to twenty twenty six.

456
00:21:41,680 --> 00:21:45,920
Speaker 2: Because you can't overstate just how much of an influence

457
00:21:46,160 --> 00:21:49,000
Speaker 2: politics and policy had on the markets this year.

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00:21:49,320 --> 00:21:53,000
Speaker 9: Clients actually demand access to Nathan Dean and the and

459
00:21:53,119 --> 00:21:57,560
Speaker 9: his notes get huge readership because politics definitely impacts investments.

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00:21:57,640 --> 00:21:59,439
Speaker 2: I mean, you just look at the crypto space, for instance,

461
00:21:59,440 --> 00:22:01,399
Speaker 2: look at the fininancial space, a banking space.

462
00:22:01,680 --> 00:22:02,520
Speaker 3: Nathan, thank you so.

463
00:22:02,560 --> 00:22:04,919
Speaker 2: Much for joining us today on the eve of Christmas,

464
00:22:04,920 --> 00:22:08,639
Speaker 2: eve which industry saw the biggest impact, for better or

465
00:22:08,720 --> 00:22:09,920
Speaker 2: for worse from policy.

466
00:22:11,160 --> 00:22:13,000
Speaker 13: So obviously, I think the first thing to do is

467
00:22:13,040 --> 00:22:15,760
Speaker 13: look at President Trump's one big beautiful bill, and really

468
00:22:15,800 --> 00:22:17,800
Speaker 13: that's clean energy. You know, we saw a lot of

469
00:22:17,800 --> 00:22:21,520
Speaker 13: the tax credits curtailed in terms of just both solar

470
00:22:21,560 --> 00:22:24,840
Speaker 13: and wind, and both industries are really significantly being felt

471
00:22:24,880 --> 00:22:27,600
Speaker 13: in terms of you know, those actions. I would also

472
00:22:27,640 --> 00:22:29,399
Speaker 13: say is there's a lot of sentiment out there in

473
00:22:29,440 --> 00:22:31,879
Speaker 13: terms of crypto and financial services, like you just said,

474
00:22:32,320 --> 00:22:34,760
Speaker 13: but twenty twenty six is going to bring even more

475
00:22:34,840 --> 00:22:37,760
Speaker 13: deregulation for those two sectors. And that's why we think

476
00:22:37,800 --> 00:22:41,359
Speaker 13: for twenty twenty six, crypto and financial services in particular

477
00:22:41,400 --> 00:22:42,920
Speaker 13: are going to see quite a benefit.

478
00:22:43,080 --> 00:22:44,359
Speaker 6: Just in the banking space.

479
00:22:44,080 --> 00:22:46,800
Speaker 13: For example, you know, back of the Napkin math, because

480
00:22:46,800 --> 00:22:49,040
Speaker 13: we haven't seen some proposals that haven't come out yet,

481
00:22:49,200 --> 00:22:51,920
Speaker 13: we're estimating around seventy three to seventy five billion dollars

482
00:22:51,960 --> 00:22:53,960
Speaker 13: in capital that we returned to the big banks, So

483
00:22:54,040 --> 00:22:56,720
Speaker 13: think of Bank America, Chap Morgan, and City Group. And

484
00:22:56,760 --> 00:22:58,920
Speaker 13: then in the crypto space, obviously, you know, we had

485
00:22:58,960 --> 00:23:02,560
Speaker 13: some stable coin legislation passed that is now going to

486
00:23:02,560 --> 00:23:05,480
Speaker 13: be implemented in twenty twenty six. But also we see

487
00:23:05,480 --> 00:23:08,640
Speaker 13: Congress debating this crypto Market Structure Bill, which we think

488
00:23:08,680 --> 00:23:11,560
Speaker 13: is a seventy percent chance of success passing the first

489
00:23:11,600 --> 00:23:14,000
Speaker 13: half of next year, which would then bring regulatory clarity

490
00:23:14,040 --> 00:23:16,200
Speaker 13: for firms like coinbase and Robinhood.

491
00:23:16,680 --> 00:23:18,720
Speaker 9: It's also an election year in twenty twenty six. How

492
00:23:18,760 --> 00:23:23,560
Speaker 9: does that impact how legislation gets passed or doesn't pass?

493
00:23:23,800 --> 00:23:24,400
Speaker 10: How's that work?

494
00:23:25,400 --> 00:23:27,920
Speaker 13: Yeah, so you know for twenty twenty six, every day

495
00:23:27,920 --> 00:23:29,800
Speaker 13: that all four and thirty five members of the House

496
00:23:29,840 --> 00:23:32,280
Speaker 13: and thirty three members of the Senate are here, it's

497
00:23:32,280 --> 00:23:35,119
Speaker 13: to day that their opponent is back home campaigning against them,

498
00:23:35,119 --> 00:23:37,000
Speaker 13: and look, they don't want to be here. So we're

499
00:23:37,000 --> 00:23:39,080
Speaker 13: telling our clients is that legislation is going to be

500
00:23:39,160 --> 00:23:41,160
Speaker 13: very difficult to come by in twenty twenty six. Now

501
00:23:41,320 --> 00:23:43,640
Speaker 13: the Republicans want to have another bite of what's called

502
00:23:43,640 --> 00:23:47,200
Speaker 13: the reconciliation apple. This is essentially the one big beautiful

503
00:23:47,240 --> 00:23:49,560
Speaker 13: bill pathway again, so think of this is going to

504
00:23:49,600 --> 00:23:50,840
Speaker 13: be more healthcare related.

505
00:23:51,200 --> 00:23:53,280
Speaker 6: We're somewhat barish on this just because.

506
00:23:53,280 --> 00:23:56,600
Speaker 13: The margin of the margins of the House representative are

507
00:23:56,600 --> 00:23:58,600
Speaker 13: pretty thin right now and Look, if it was easy,

508
00:23:58,640 --> 00:24:01,359
Speaker 13: they would have already done it, the Republicans. But there

509
00:24:01,400 --> 00:24:03,199
Speaker 13: are some other bills out there, like I mentioned the

510
00:24:03,200 --> 00:24:05,520
Speaker 13: Crypto Bill. But twenty twenty six is a story about

511
00:24:05,560 --> 00:24:09,280
Speaker 13: deregulation because regulators live here, they don't go home, and

512
00:24:09,320 --> 00:24:11,040
Speaker 13: they're going to be working on these rules. And it's

513
00:24:11,080 --> 00:24:14,040
Speaker 13: also a story of tariffs, because we do anticipate the

514
00:24:14,080 --> 00:24:16,840
Speaker 13: Supreme Court in January is most likely going to say

515
00:24:16,880 --> 00:24:20,040
Speaker 13: that President Trump's eight the tariffs are unlawful, and then

516
00:24:20,080 --> 00:24:21,880
Speaker 13: the Trump administration is going to have to figure out

517
00:24:21,880 --> 00:24:24,040
Speaker 13: another way to implement these tariffs because just as off

518
00:24:24,040 --> 00:24:26,400
Speaker 13: this morning, President Trump said that these are really good

519
00:24:26,440 --> 00:24:27,080
Speaker 13: things for the nation.

520
00:24:27,880 --> 00:24:30,119
Speaker 2: Yeah, that's going to be something we're going to really

521
00:24:30,119 --> 00:24:33,119
Speaker 2: focus in on in twenty twenty six. If the Supreme

522
00:24:33,200 --> 00:24:36,880
Speaker 2: Court does rule against the President, what does that mean

523
00:24:36,920 --> 00:24:41,320
Speaker 2: for the efforts by importers to claim a refund or to.

524
00:24:41,600 --> 00:24:43,240
Speaker 3: Try to get back some of that money.

525
00:24:44,160 --> 00:24:44,359
Speaker 6: You know.

526
00:24:44,359 --> 00:24:45,960
Speaker 13: So Bloomberg News had a call um a couple of

527
00:24:45,960 --> 00:24:48,040
Speaker 13: weeks ago and they use the term refund chaos.

528
00:24:48,080 --> 00:24:50,560
Speaker 6: And I love that two word phrase because that's just.

529
00:24:50,520 --> 00:24:52,760
Speaker 13: Going to show you how difficult it will be to

530
00:24:52,800 --> 00:24:55,560
Speaker 13: get refunds because to the best of our knowledge, it's

531
00:24:55,560 --> 00:24:58,359
Speaker 13: not like one company like Amazon could go to and

532
00:24:58,440 --> 00:25:00,080
Speaker 13: just say, look, give me a check for f one

533
00:25:00,160 --> 00:25:01,840
Speaker 13: hundred million dollars. You have to go down to the

534
00:25:01,840 --> 00:25:05,040
Speaker 13: line item, by each individual line item because each individual

535
00:25:05,080 --> 00:25:07,600
Speaker 13: line item has certain tariffs associated with it.

536
00:25:07,640 --> 00:25:08,639
Speaker 6: So it's going to be messy.

537
00:25:09,320 --> 00:25:11,359
Speaker 13: And there's also no way to we can figure that

538
00:25:11,400 --> 00:25:14,160
Speaker 13: there would be an electronic version of this, wire would

539
00:25:14,200 --> 00:25:15,280
Speaker 13: have to be a paper check.

540
00:25:15,680 --> 00:25:17,800
Speaker 6: So I think there's a lot of folks out there saying, look,

541
00:25:18,040 --> 00:25:20,320
Speaker 6: if the refilms are coming, it's going to be quarters,

542
00:25:20,400 --> 00:25:23,040
Speaker 6: if not years, And I would just say, is that.

543
00:25:23,119 --> 00:25:23,280
Speaker 12: You know.

544
00:25:23,320 --> 00:25:24,679
Speaker 13: The other thing to keep in mind is that the

545
00:25:24,680 --> 00:25:28,600
Speaker 13: Trump adminstration most likely will launch these investigations. So if

546
00:25:28,640 --> 00:25:30,560
Speaker 13: you're in the press, you see section two thirty two

547
00:25:30,640 --> 00:25:34,280
Speaker 13: or section three oh one, think investigation. But those investigations

548
00:25:34,320 --> 00:25:36,359
Speaker 13: take time. And the biggest question that we have we

549
00:25:36,359 --> 00:25:39,600
Speaker 13: don't have this answer yet, is will President Trump reimpose

550
00:25:39,640 --> 00:25:42,480
Speaker 13: these tariffs three, four or five months before the elections

551
00:25:42,520 --> 00:25:44,600
Speaker 13: when they're extremely unpopular with the populace.

552
00:25:45,480 --> 00:25:47,760
Speaker 9: Jeez, I mean, that's going to be crazy to see

553
00:25:47,800 --> 00:25:52,879
Speaker 9: how that plays out. What else here Nathan is the

554
00:25:52,920 --> 00:25:56,919
Speaker 9: expectation in Washington that the Democrats will win back the House.

555
00:25:57,080 --> 00:26:00,080
Speaker 6: Perhaps, so it's certainly looking that way.

556
00:26:00,119 --> 00:26:02,720
Speaker 13: I mean, just go historically, and the minority party has

557
00:26:02,760 --> 00:26:05,520
Speaker 13: always done extremely well. I mean, think of President Obama,

558
00:26:05,600 --> 00:26:07,760
Speaker 13: the Tea Party comes in, think of President Trump, Nancy

559
00:26:07,800 --> 00:26:10,800
Speaker 13: Pelosi becomes Speaker of the House. So historically that which

560
00:26:10,840 --> 00:26:13,480
Speaker 13: suggests that the momentum goes back towards the Democrats. But

561
00:26:13,560 --> 00:26:16,119
Speaker 13: we've seen, you know, in Virginia, New Jersey, Miami, New

562
00:26:16,240 --> 00:26:19,159
Speaker 13: York City, that the Democrats are performing much better than

563
00:26:19,160 --> 00:26:22,240
Speaker 13: they would have even just within that historical norm. And

564
00:26:22,280 --> 00:26:24,640
Speaker 13: we've seen a lot of retirements from the Republican side

565
00:26:24,680 --> 00:26:25,360
Speaker 13: as we head.

566
00:26:25,160 --> 00:26:27,560
Speaker 6: Into these midterms. Now, if you think of how.

567
00:26:27,359 --> 00:26:30,440
Speaker 13: Do the midterms actually impact the investing side, I would

568
00:26:30,440 --> 00:26:32,679
Speaker 13: say is one, it takes away the opportunity for this

569
00:26:32,760 --> 00:26:36,400
Speaker 13: reconciliation method again. So they get twenty twenty seven, You're

570
00:26:36,440 --> 00:26:38,600
Speaker 13: not going to see a very large tax cut bill

571
00:26:38,680 --> 00:26:40,000
Speaker 13: or deficit inducing bill.

572
00:26:40,280 --> 00:26:42,000
Speaker 6: It brings things back down to gridlock.

573
00:26:42,080 --> 00:26:44,679
Speaker 13: I'm not saying nothing can get done, but it just

574
00:26:44,760 --> 00:26:47,640
Speaker 13: means that legislation is going to be less of an emphasis.

575
00:26:47,960 --> 00:26:50,280
Speaker 13: And President Trump to implement policy is going to focus

576
00:26:50,359 --> 00:26:53,840
Speaker 13: more on executive orders and then the deregulatory method.

577
00:26:54,160 --> 00:26:58,040
Speaker 2: Is there any appetite Nathan in Washington to address AI

578
00:26:58,280 --> 00:27:03,240
Speaker 2: and to set up some more standard guidelines for companies

579
00:27:03,280 --> 00:27:04,960
Speaker 2: to operate in. I mean, I think about Nvidia and

580
00:27:04,960 --> 00:27:07,960
Speaker 2: how it's the poster child of the AI revolution here

581
00:27:07,960 --> 00:27:10,439
Speaker 2: in the US, and Jensen Wang has pretty much gotten

582
00:27:10,560 --> 00:27:11,399
Speaker 2: everything he wanted.

583
00:27:12,600 --> 00:27:16,080
Speaker 13: Yeah, So President Trump issued an executive order on artificial Intelligence,

584
00:27:16,200 --> 00:27:19,240
Speaker 13: essentially combating the state's abilities to create their.

585
00:27:19,160 --> 00:27:20,199
Speaker 6: Own rules on AI.

586
00:27:20,760 --> 00:27:23,399
Speaker 13: Now, our legal analysts, Matt Shaddam has looked at it

587
00:27:23,440 --> 00:27:26,000
Speaker 13: and said, most likely this would not pass court muster,

588
00:27:26,200 --> 00:27:29,200
Speaker 13: so that AI executive order probably doesn't have much teeth

589
00:27:29,280 --> 00:27:31,880
Speaker 13: to it. But in that executive order, President Trump also

590
00:27:32,000 --> 00:27:34,960
Speaker 13: directed the Executive Branch to come up with a national standard.

591
00:27:35,320 --> 00:27:38,159
Speaker 13: And so if we see the Executive Branch and the

592
00:27:38,240 --> 00:27:40,679
Speaker 13: various agencies come out and say, look, this is what

593
00:27:40,720 --> 00:27:43,359
Speaker 13: we think the national standards should look like, at least

594
00:27:43,359 --> 00:27:46,120
Speaker 13: it's an area for debate, a foundation, if you will,

595
00:27:46,160 --> 00:27:49,080
Speaker 13: for Congress to begin to start thinking about this, because

596
00:27:49,480 --> 00:27:52,639
Speaker 13: you know, right now it's very hands off industry in

597
00:27:52,720 --> 00:27:54,720
Speaker 13: terms of regulation. You know, I didn't talk about it

598
00:27:54,720 --> 00:27:57,119
Speaker 13: in twenty twenty five because it really isn't all that

599
00:27:57,200 --> 00:28:00,280
Speaker 13: much regulation for it. But if this foundation and this

600
00:28:00,359 --> 00:28:03,000
Speaker 13: debate continues, and you will see a lot of anti

601
00:28:03,119 --> 00:28:06,200
Speaker 13: data center messaging as we get into the twenty twenty

602
00:28:06,200 --> 00:28:08,600
Speaker 13: six midterms here in Northern Virginia. We saw it already

603
00:28:08,600 --> 00:28:11,440
Speaker 13: in our election. You know you are going to see

604
00:28:11,440 --> 00:28:13,720
Speaker 13: this coming to the political spectrum. So I do think

605
00:28:13,920 --> 00:28:16,800
Speaker 13: over twenty twenty six you'll see this debate. But again,

606
00:28:16,800 --> 00:28:18,640
Speaker 13: I don't think you're going to see anything actually put

607
00:28:18,640 --> 00:28:20,040
Speaker 13: down on a piece of paper and say this is

608
00:28:20,080 --> 00:28:21,199
Speaker 13: what the national standard is.

609
00:28:22,119 --> 00:28:24,280
Speaker 10: All right, Nithan Deane, very good, appreciate it as always.

610
00:28:24,320 --> 00:28:27,080
Speaker 9: Nathan Deane, Senior policy analyst for Bloomberg Intelligency is based

611
00:28:27,119 --> 00:28:28,879
Speaker 9: down there in Washington, DC.

612
00:28:30,320 --> 00:28:35,000
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

613
00:28:35,200 --> 00:28:38,680
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614
00:28:38,720 --> 00:28:42,440
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615
00:28:42,560 --> 00:28:46,120
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616
00:28:46,520 --> 00:28:49,480
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617
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