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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 Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: The news again crossing the tape here geopolitical front. The

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Speaker 2: US will demand that Russia accept Ukraine's right to have

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Speaker 2: its own army and defense industry as part of the

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Speaker 2: peace agreement between Moscow and keV. The Trump administration also

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Speaker 2: wants Moscow to return Ukraine's nuclear power plant. In short,

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Speaker 2: Ukraine has passage over the Debay River and return land

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Speaker 2: occupied by Russia in the Kharkiv regen. So so it

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Speaker 2: seems to like some really big news on this front. So

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Speaker 2: let's get talkd to somebody who knows this stuff. Nick

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Speaker 2: Wadams is a US national security reporter for a Bloomberg News.

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Speaker 2: He is based in Washington, DC. Nick, this seems like

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Speaker 2: big news coming from the administration. Put in context for.

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Speaker 3: Us, please, yeah, I mean the big thing here is

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Speaker 3: that a lot of what we've been hearing so far

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Speaker 3: out of the administration and the conversations between the US,

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Speaker 3: Ukraine and Russia have been a lot of demands on Ukraine.

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Speaker 3: So we recently heard that the US wanted to recognize

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Speaker 3: Russian sovereignty over Crimea, they wanted to block Ukraine from

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Speaker 3: getting NATO membership, a host of other issues at Critical

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Speaker 3: Minerals agreement, and that had provoked a lot of fears

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Speaker 3: among European allies and critics of the Trump administration that

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Speaker 3: essentially this deal was going to be really heavily favored

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Speaker 3: towards Russia and Ukraine wasn't going to get anything in return.

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Speaker 3: We are starting now to get some sense of what

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Speaker 3: the US is asking Russia, and what we know so

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Speaker 3: far from our reporters source based work is that they

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Speaker 3: are going to rebuff or push back strongly against this

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Speaker 3: Russian demand that Ukraine essentially demilitarized. This has been a

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Speaker 3: central war aim that Russia has made clear since the

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Speaker 3: start of its invasion in twenty twenty two, and the

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Speaker 3: US is now saying, listen, we want to do this

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Speaker 3: peace deal and you're not. We're not going to let

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Speaker 3: you get away with that. This is going to be

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Speaker 3: something you're going to have to agree to. And then

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Speaker 3: this energy issue, we know energy has been very important

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Speaker 3: to President Trump. So the Zaparisia power Plant, a massive,

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Speaker 3: massive power plant in Ukraine that Russia seized during the war.

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Speaker 3: The US is essentially saying, you've got to give it back.

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Speaker 3: So we now understand the US is going to present

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Speaker 3: these terms of a potential deal to Russia and we'll

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Speaker 3: see what the answer is.

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Speaker 4: And how do you think Russia will respond to that?

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Speaker 4: Because the US is demanding this military right force. But

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Speaker 4: will Russia agree to it? You think?

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Speaker 3: I mean, that's the great question, and that's we're going

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Speaker 3: to learn a lot about the viability of these negotiations.

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Speaker 3: I mean, you know, the Russian idea that Ukraine essentially

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Speaker 3: demilitarized was always seen as an extremely maximalist goal. I mean,

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Speaker 3: it's hard to conceive of the US or any other

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Speaker 3: mediator basically acceding to the idea that a country be

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Speaker 3: left totally demilitarized. I mean, that was something that you

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Speaker 3: saw out of World War Two with Japan. But otherwise

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Speaker 3: this has not been repeated in modern history, so it

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Speaker 3: would have been an extremely difficult demand to meet. The

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Speaker 3: US is saying, essentially, that's not going to fly, And

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Speaker 3: you know, I think what we'll see is depending on

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Speaker 3: how Russia responds, will have a better sense of whether

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Speaker 3: they see these negotiations as a viable path toward an

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Speaker 3: actual ceasefire or whether they have no interest in peace

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Speaker 3: and are just going to press ahead with the war.

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Speaker 3: So we should have a strong indication of the next

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Speaker 3: of that in the next few days when President Trump's

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Speaker 3: on boyheads to Moscow.

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Speaker 2: Nick, is there any sense as to what kind of

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Speaker 2: leveraged the US has here on the campaign trail, Kennedy,

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Speaker 2: Trump at the time was very confident about his ability

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Speaker 2: to get what he turned to a good piece deal

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Speaker 2: and negotiated quickly.

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Speaker 5: Do we have the leverage to actually do that? Well?

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Speaker 3: I mean, the US definitely does have some points of leverage.

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Speaker 3: It also has some weaknesses. I mean, the big leverage

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Speaker 3: it has, obviously, for one thing, is the sanctions, the

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Speaker 3: massive sanctions regime that have essentially choked off the Russian economy,

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Speaker 3: separated it from the West. Though Russia has been able

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Speaker 3: to keep its war machine going, the economy is in

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Speaker 3: pretty grim shape, and the US could just keep up

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Speaker 3: with the flow of weapons and support to Ukraine. You know,

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Speaker 3: under the idea that hey like Russia, they did this

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Speaker 3: invasion in twenty twenty two. They've taken over about a

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Speaker 3: fifth of Ukraine's territory, but they did not topple proud

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Speaker 3: of President Zelenski's government as they had hoped. Ukraine doesn't

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Speaker 3: seem to be going anywhere, so the US could certainly

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Speaker 3: exercise leverage in those ways. Russia, though, also sees that

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Speaker 3: it has its own leverage. Trump does not want to

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Speaker 3: give Ukraine the amount of military aid that it's gotten

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Speaker 3: so far, and they have bide battlefield gains in the

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Speaker 3: last several months. So in some ways for Russia, there

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Speaker 3: is a continued interest in prolonging this thing and drawing

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Speaker 3: it out, and hope that President Trump turns his ire

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Speaker 3: again toward Vladimir Zelenski rather than toward Russia. Whether that's

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Speaker 3: a gamble they're going to be willing to make, though,

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Speaker 3: is another question.

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Speaker 2: All Right, fascinating development here, Nick, thanks so much for

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Speaker 2: your time. We appreciated. Nick Wadams, US national security reporter

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Speaker 2: for Bloomberg News. He is based in Washington, DC. And

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Speaker 2: again the headline crossing the Bloomberg terminal and a significant

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Speaker 2: shift in this story in Ukraine US to demand putin

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Speaker 2: except Ukraine's right to military force. So we'll continue on

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Speaker 2: that reporting throughout the day.

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

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Speaker 2: Just get back to discussions on this market. Joey Yang

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Speaker 2: Joints is here, head of index product management at market

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Speaker 2: Vector Indexes.

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Speaker 5: Joints is here in our Bloomberget Active Broker studio. Joy,

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Speaker 5: thanks so much for joining us here.

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Speaker 4: Thank you.

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Speaker 5: How are you approaching these markets these days? The volatility

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Speaker 5: is significant.

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Speaker 2: We've got a VIS twenty seven, we've got to Move

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Speaker 2: index very showing some volatility in the fixed income market.

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Speaker 5: How are you guys approaching the markets?

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Speaker 6: I think, you know, as with everybody, we're in new territories.

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Speaker 6: Nobody is certain what the outcome of this tariff negotiation is.

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Speaker 6: And even if we do reach a positive win win

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Speaker 6: outcome for every party involved, which is the best case,

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Speaker 6: I think there's still going to be uncertainty around how

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Speaker 6: long will this last? You know, what are the second

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Speaker 6: and third order impacts? So I think This is structurally

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Speaker 6: a new environment for everyone, which is we're at elevated volatility,

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Speaker 6: uncertainty will remain high. So I think for us, you know,

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Speaker 6: we're watching indicators and those are gold prices, bitcoin prices,

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Speaker 6: on what investors are thinking. And at the moment, you know,

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Speaker 6: businesses can't make decisions, they can't give proper guidance, and

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Speaker 6: those who have investors can't rely on those. So I

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Speaker 6: think people are really either parking their money into safe

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Speaker 6: havens or seeking liquid assets which they can move in

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Speaker 6: and out without kind of structural damage that we're seeing

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Speaker 6: across asset classes.

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Speaker 4: I feel like with all this political rhetoric, people are

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Speaker 4: maybe forgetting that it's earning season. NBRE in the thick

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Speaker 4: of it, and around forty four percent of the SNP

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Speaker 4: five hundred companies that have reported mentioned the word recession.

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Speaker 4: That's a little higher than the previous quarter. What is

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Speaker 4: your read on earning so far? It's also been interesting

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Speaker 4: companies have withheld forward outlook or they've had two scenarios,

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Speaker 4: the base case and the tariffic case. What is your

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Speaker 4: read on it?

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Speaker 6: I think it's probably impossible to rely on this quarter's

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Speaker 6: you know, earnings, guidance, and this is going to be

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Speaker 6: short term. So I think it's still proven for investors

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Speaker 6: to focus on the long term and really focus on

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Speaker 6: the fundamentals, which is, you know, we'll get over this.

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Speaker 6: You know, there's got to be something after tariff negotiations.

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Speaker 6: And I think structurally every industry still has a story

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Speaker 6: narrative that's focused on the long term. You know, if

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Speaker 6: you're an AI, that's a real story. You know, innovation

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Speaker 6: will not break down, disruption will not break down. But

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Speaker 6: you know, at the moment, there's so many things shifting

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Speaker 6: that to give any kind of short term guidance, it's

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Speaker 6: really not reliable.

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Speaker 2: Talk to us about the risk controlled indexes ETFs, the

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Speaker 2: market vector, Gamma road US Equity Strategy Index, like what

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Speaker 2: is that?

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Speaker 6: Yes, So I think this is the type of strategies

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Speaker 6: that I think investors should be focused on because I

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Speaker 6: think we're so focused on equities and fixed income, right,

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Speaker 6: But you know, you really have to think about other

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Speaker 6: alternative ways of looking at the world and structuring portfolio solutions.

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Speaker 6: And one is to look at these indicators out there

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Speaker 6: that are independent of any single country or any single

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Speaker 6: asse class. Is to understand how elevated uncertainty is or

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Speaker 6: you know what sentiment is. And I think right now

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Speaker 6: our Gamma Road index is telling us to get out

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Speaker 6: of equities, you know. But if you're out of equities

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Speaker 6: and you're sitting on cash, that's not a great place either,

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Speaker 6: as we see the dollar weakening and weakening. So I

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Speaker 6: think investors should also look at alternative assets like gold

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Speaker 6: or bitcoin that are not driven by the same macro factors.

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Speaker 4: It's interesting gold, as we know, is just ripping, but

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Speaker 4: bitcoin as well. And I feel like with bitcoin it's

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Speaker 4: you choose the narrative. Some people would say it moves

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Speaker 4: and locks that with tech companies like cues, but some

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Speaker 4: would say no, actually it's an inflation hedge. I feel

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Speaker 4: like it's still figuring it out. But can you talk

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Speaker 4: to us about how different this is, this global macroshop

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Speaker 4: compared to others. Because I said, let's look at the

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Speaker 4: long term.

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Speaker 6: Yeah, So I think definitely when you mentioned you're choosing

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Speaker 6: the narrative, because this is still a niscent asset class

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Speaker 6: and we've seen a structural shift in bitcoin also because

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Speaker 6: it is a very volatile asset. But you know, fundamentally

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Speaker 6: it should act like a store value. So we're seeing

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Speaker 6: this as speculative players move out and we get more

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Speaker 6: institutional players and more clarity around regulation. We're seeing it

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Speaker 6: bring out the strengths that bitcoin naturally has, which is

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Speaker 6: it's it's immutable, it's decentralized, so it's not dependent on

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Speaker 6: any single government, and it doesn't require trust because trust

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Speaker 6: is built into the code. And fundamentally, you know, what

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Speaker 6: we're seeing is that investors have lost trust, whether it's

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Speaker 6: US acids or just the correlation that happens between equities

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Speaker 6: and bonds. So they're looking for things that you know,

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Speaker 6: they can actually depend on. Right now, we're seeing gold

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Speaker 6: and bitcoin as one of those assets.

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Speaker 5: How about international markets?

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Speaker 2: If people have been selling the US, whether it's the dollar, stocks,

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Speaker 2: and maybe putting their money internationally, how do you think

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Speaker 2: about that.

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Speaker 6: I think we've you know, if you take a step back,

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Speaker 6: I think the problem was people had too much bias

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Speaker 6: towards US assets and weren't really reflecting on where relative

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Speaker 6: value is happening. And if you still look at international markets,

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Speaker 6: even though globally every market has dropped, international markets still

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Speaker 6: look cheap. You know, they still look better from a

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Speaker 6: pevaluation point of place. So if you're focused on fundamentals

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Speaker 6: and not sentiment, this is a better place.

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Speaker 1: To be in.

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Speaker 5: Does that include emerging markets as well?

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Speaker 6: It includes emerging market but all all markets will be

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Speaker 6: impacted by terrorists.

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Speaker 2: Yep. So that's that's kind of the issue here. But

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Speaker 2: so we'll see how it plays out. But again we've

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Speaker 2: got Green on the screen here today. Joey Yang, thank

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Speaker 2: you so much for being with us. Joey Yang is

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Speaker 2: head of Index Product Management and Market vector Indexes, joining

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Speaker 2: us live here in our Bloomberg Interactive, a broker's studio.

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

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Speaker 2: Is Beldie sitting in for Alex Steele on Paul Swinging.

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Speaker 2: We're live here in our Bloomberg Interactive broker studio. We

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Speaker 2: are streaming live on YouTube as well, so go over

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Speaker 2: to YouTube dot com search Bloomberg Podcasts Live and all

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Speaker 2: that kind of stuff you'll find us there. Let's get

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Speaker 2: the latest reporting from Washington, DC on the tariffs. It

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Speaker 2: is a fluid situation, to say the least. Tyler Kendall,

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Speaker 2: she's been following it for she's a reporter for Bloomberg News.

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Speaker 2: She is down in Washington, DC. So, Tyler, is there

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Speaker 2: a sense in DC at the White House that perhaps

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Speaker 2: is tariff policy could be more I don't know, measured,

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Speaker 2: or more consistent or more formal. It seems to be

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Speaker 2: a little bit ad hoc here, and that's one of

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Speaker 2: the reasons maybe the markets are a little spooked.

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Speaker 7: Yeah, Hey, Paul, there's a lot of mixed messaging currently

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Speaker 7: at the moment when it comes to a tariff policy

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Speaker 7: related to China, even with China saying earlier today that

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Speaker 7: there currently are no negotiations happening between Beijing and Washington,

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Speaker 7: calling reports about recent developments to be groundless. That was

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Speaker 7: particularly interesting after President Trump yesterday in the Oval Office

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Speaker 7: contended when he was asked if he's actively involved in

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Speaker 7: negotiations with China, he said that, quote, everything is active now.

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Speaker 7: We do know that there were some preconditions that Beijing

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Speaker 7: does need to see before talks can really kick off,

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Speaker 7: including that they would like appoint person other than President

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Speaker 7: Trump to lead the negotiations. But he still says that

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Speaker 7: he is very much directly involved here, even though we

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Speaker 7: haven't gotten any real confirmation that Jijingping is willing to

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Speaker 7: pick up the phone. Moving forward the moment, the latest

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Speaker 7: escalation is that Beijing is now calling on the US

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Speaker 7: to eliminate all unilateral tariffs, something that the Treasury Secretary

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Speaker 7: Scott Vesant said yesterday really is just not an option

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Speaker 7: on the table. But when it comes to this back

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Speaker 7: and forth, in the mixed messaging yesterday again in the

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Speaker 7: Oval Office, President Trump saying that he does think that

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Speaker 7: one hundred and forty five percent levee on Chinese imports

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Speaker 7: is very high, and that it's leading to essentially a

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Speaker 7: trade embargo, which has prompted some to think that that

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Speaker 7: level that levee very much will end up being.

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Speaker 4: A lower here.

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Speaker 7: But then at the same time he followed that remark

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Speaker 7: by saying that if a trade deal with Beijing is

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Speaker 7: not reached, that will ultimately be okay because the US

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Speaker 7: will just set what he called a quote fair price.

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Speaker 7: He then suggested that the White House is preparing to

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Speaker 7: release some revised teriff rates for all countries, including China,

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Speaker 7: in the next two to three weeks, ultimately so I'll

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Speaker 7: have to see how that ends up developing here, but

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Speaker 7: it's something that we're closely watching. If we are going

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Speaker 7: to get some potentially new tariff rates.

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Speaker 4: Talk to us more about china attempt to repair tize

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Speaker 4: with the European Union and as it proves to be

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Speaker 4: as it tries to prove itself to be the more

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Speaker 4: reliable trading partner compared to the US. What exactly is

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Speaker 4: Beijing doing.

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Speaker 7: Right exactly so trying to reach out here to the

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Speaker 7: European Union in a bid to try to shore up

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Speaker 7: ties as a counter against the US. Most recently we

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Speaker 7: have reporting, for example that European Union leaders as well

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Speaker 7: as Ujingpain we're actually together on a call having to

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Speaker 7: do with climate change. Now, there has been sort of

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Speaker 7: a distance between the European Union and China, particularly when

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Speaker 7: it comes to their criticism of how China has assisted

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Speaker 7: of Vladimir Putin amid the ongoing war in Ukraine. But

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Speaker 7: there does appear to be some easy here, particularly when

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Speaker 7: it comes to negotiations around electric vehicles. So this is

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Speaker 7: a very important partner that we are watching, particularly as

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Speaker 7: there hasn't really been that much movement when it comes

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Speaker 7: to talks between the US and the European Union, re'll

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Speaker 7: called just a few weeks ago, the Eaves Trade chief

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Speaker 7: left Washington with a very little clarity, according to our reporting,

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Speaker 7: about exactly what this White House needs to see done

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Speaker 7: in order to get a deal. And then I would

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Speaker 7: also just quickly highlight one other trading partner, and that

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Speaker 7: is Japan. There is new reporting this morning from Bloomberg

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Speaker 7: News according to Japanese officials that if the US ends

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Speaker 7: up asking Japan to corbett's own trade against China, they

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Speaker 7: will push back on that.

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Speaker 5: We should make clear our reporting.

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Speaker 7: Indicates that the US has not asked Japan to do

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Speaker 7: that's just yet, but we do know it's something that

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Speaker 7: this White House has been mulling. And also importantly, China

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Speaker 7: has come out and said that it will take its

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Speaker 7: own countermeasures against any countries that try to realign here,

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Speaker 7: particularly when it comes with the US, and what Treasury

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Speaker 7: Secretary Scott Besson has floated could be a plan to

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Speaker 7: then approach China as a block. One statistic that I'll

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Speaker 7: leave you with is that China does about twenty percent

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Speaker 7: of its commerce. Japan does about twenty percent of its

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Speaker 7: commerce with China. That is more than it does in

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Speaker 7: trade with the US, but at the same time, the

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Speaker 7: country does export more material.

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Speaker 4: To the US.

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Speaker 2: Tyler, thank you very much for your reporting. Appreciate you

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Speaker 2: taking a few minutes. Tyler Kendall. She's a reporter for

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Speaker 2: Bloomberg News. She is based down there in Washington, DC.

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Speaker 2: Giving us the latest on the tariff situation is a

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Speaker 2: fluid situation, to say the least.

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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 5: Merk what it's some earnings.

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Speaker 2: They actually put a number on the tariff costs for them,

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Speaker 2: two hundred million dollars. I mean for Mark, I mean

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Speaker 2: it's got a market cap of like two hundred million dollars,

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Speaker 2: So two hundred million doesn't seem like that big a deal,

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Speaker 2: but at least it's a company putting a number on

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Speaker 2: what they see as maybe some of their their cost there.

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Speaker 2: Damien Garde joins us here. He's a healthcare reporter for

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Speaker 2: Bloomberg News. Joinings live here in our Bloomberg Interactive Brokers

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Speaker 2: Studio Damian. What did we hear from MERK today, what

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Speaker 2: did a what did they report and how did they

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Speaker 2: talk about tariffs and maybe some of the costs they see.

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Speaker 8: Well, it's interesting because, yeah, as you mentioned, they disclosed

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Speaker 8: that two hundred million dollars that's what they expect in

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Speaker 8: twenty twenty five to pay on account of teriffs. But

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Speaker 8: these are just already announced tariffs. So principally the ones

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Speaker 8: affecting imports from China of certain goods and then obviously

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Speaker 8: exports to China the retaliatory tariffs that we know about.

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Speaker 8: And so there's a lot of interest in this because

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Speaker 8: in the pharmaceutical world in particular, there's a huge anxiety

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Speaker 8: over how the kind of like sort of damicles of

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Speaker 8: specific pharmaceutical tariffs might affect the industry, what the percentage

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Speaker 8: will be, how they might shake out. So Mirk giving

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Speaker 8: us at least some sense of how it's been so

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Speaker 8: far is helpful. But listening to the earnings call, it's

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Speaker 8: like a certain form of theater where analysts find new

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Speaker 8: and inventive ways to ask the company, will you tell

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Speaker 8: us what you're actually expecting from pharmaceutical tariffs if they

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Speaker 8: come through as the President has promised to bring them about,

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Speaker 8: and Merk kind of artfully dodging actually committing to that.

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Speaker 4: How exposed is Merk do China and maybe broader pharma

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Speaker 4: companies in general, because they do have this drug and

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Speaker 4: they're facing stiff competition in China, and that's one of

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Speaker 4: the really downfalls that the company face in a previous quarter.

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Speaker 8: Yeah, I think Merk in particular faces teriff issues on

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Speaker 8: two fronts. Staliatory tariffs imposed by China make it difficult

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Speaker 8: to sell products into China for any American company. They

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Speaker 8: are sort of in the crosshairs of what Beijing is

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Speaker 8: doing in retaliation to the White House. But then you know,

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Speaker 8: maybe an even larger headwind for them is the potential

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Speaker 8: of the United States imposing tariffs on the importation of pharmaceuticals.

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Speaker 8: Because Mirk, like most of its peers, has a huge

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Speaker 8: global manufacturing network and in many cases will ship products

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Speaker 8: to the US from, for example, Ireland, where they have

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Speaker 8: a lot of manufacturing. And then this gets a little

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Speaker 8: into the weeds of trade policy. But Mirk, like many companies,

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Speaker 8: has offshore the intellectual property behind some of its biggest drugs,

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Speaker 8: So ki Trudah the biggest drug in pharmaceutical history, which

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Speaker 8: is Mark's cancer drug. The IP lives in Ireland, and

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Speaker 8: so that gets cop Ireland. That gets complicated in the

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Speaker 8: if and these are all ifs because we don't know.

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Speaker 8: But if, for example, the President were to impose a

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Speaker 8: twenty five percent tariff on pharmaceuticals, then Mirk could end

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Speaker 8: up paying quite a bit simply to import its own

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Speaker 8: product and basically the intellectual property of its own produc

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Speaker 8: from Ireland to the United States. So that's really the

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Speaker 8: number that analyst are trying to get their heads around,

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Speaker 8: both in terms of Merk and in global pharmaceuticals in general.

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Speaker 8: And it remains a mystery because we don't know Merk

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Speaker 8: based where.

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Speaker 2: John Tucker, that would be New Jersey, that would be

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Speaker 2: New Jersey. Yes, it would be Rawway, New Jersey. Johnson Johnson,

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Speaker 2: New Brunswick, New Jersey. Just for those out there wondering,

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Speaker 2: And we got sharing Plow, Bristol, March Squib all over

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Speaker 2: the state.

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Speaker 4: I still have to visit New Jersey.

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Speaker 5: Have to visit New Jersey. How long have you been

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Speaker 5: in New York? Seven years? But I stay in the City. Absolutely. Jeez,

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Speaker 5: all right, Damien, let's so frame out Merk.

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Speaker 2: I mean, the stock is down twenty one percent this

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Speaker 2: year to date. That's the worst of the big pharma here.

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Speaker 2: I've got a Lily up ten percent.

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Speaker 5: What's what's the story on Mark?

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Speaker 2: What's the concern in the marketplace about Mark?

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Speaker 8: I think it boils down to Gardasil, which is Merk's

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Speaker 8: blockbuster vaccine for HPV, which is a cancer causing virus.

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Speaker 8: It's one of the more I mean, it's the only

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Speaker 8: vaccine you can say prevents cancer. So this is a

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Speaker 8: massive product around the world that Merk developed and has

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Speaker 8: been marketing for more than a decade. The issue came

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Speaker 8: about last year related to China, which is that there

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Speaker 8: had been this massive boom and demand in China for

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Speaker 8: this vaccine, which is paid for out of pocket. It's

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Speaker 8: a luxury product for basically the wealthy of China, and

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Speaker 8: then suddenly that demand seemed to fall off a cliff

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Speaker 8: last year, and Merk didn't have initially much in the

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Speaker 8: way of convincing explanation as to why that happened and

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Speaker 8: why it might ameliorate, and slowly, quarter after quarter the

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Speaker 8: story got worse until in the first quarter of this year,

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Speaker 8: they halted all shipments of Guardacil to China so voluntarily, yes,

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Speaker 8: because the inventory had built up, the demand had fallen off,

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Speaker 8: as such that their partner in China was apparently unable

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Speaker 8: to sell the doses at the level that they were

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Speaker 8: previously scrambling to meet the demand of. And so if

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Speaker 8: you just subtract all of Gardasil's potential revenue in China,

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Speaker 8: you're probably talking about three to four billion dollars a year, which,

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Speaker 8: in as you mentioned in the context of merk is

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Speaker 8: not that big of a deal. Especially key true to

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Speaker 8: the cancer drug can make that up in half a quarter.

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Speaker 8: I think the issue really with the stock move you mentioned,

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Speaker 8: and they're down forty percent since first disclosing the guard

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Speaker 8: Sil problems in China relates to the fact that the

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Speaker 8: company has not had a very convincing explanation for why

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Speaker 8: it happened and why it's going to be ameliorated. And

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Speaker 8: so you're seeing both a sort of you know, reputational

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Speaker 8: kind of risk taking place there and then furthermore, not

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Speaker 8: unlike Wiley Coyote running off a cliff. I think when

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00:22:23,440 --> 00:22:27,400
Speaker 8: the Gardasil situation worsened investors started taking a hard look

438
00:22:27,440 --> 00:22:29,880
Speaker 8: at the rest of merks portfolio heading into the rest

439
00:22:29,920 --> 00:22:32,800
Speaker 8: of the decade, especially key Truda, which will face lower

440
00:22:32,800 --> 00:22:35,720
Speaker 8: cost competition around twenty twenty eight, and kind of start

441
00:22:35,760 --> 00:22:37,639
Speaker 8: to panic, like, are we sure this company has a

442
00:22:37,640 --> 00:22:41,040
Speaker 8: plan to withstand what's going to be a massive pattern?

443
00:22:41,040 --> 00:22:43,440
Speaker 4: Cliff, what are your sources telling you? Why are they

444
00:22:43,480 --> 00:22:44,560
Speaker 4: not explaining at them?

445
00:22:45,160 --> 00:22:45,960
Speaker 5: I think they.

446
00:22:47,800 --> 00:22:50,080
Speaker 8: In fairness to Merk, I think they have been probably

447
00:22:50,080 --> 00:22:52,800
Speaker 8: about as forthcoming as they can be. It's a little

448
00:22:52,800 --> 00:22:54,680
Speaker 8: bit of a black box for them because, as I mentioned,

449
00:22:54,720 --> 00:22:57,280
Speaker 8: they do business in China with respect to Gardasil through

450
00:22:57,560 --> 00:23:00,480
Speaker 8: a Chinese company that is their distributor. So Mirk on

451
00:23:00,480 --> 00:23:02,960
Speaker 8: the US end is basically shipping doses according to what

452
00:23:03,000 --> 00:23:06,080
Speaker 8: that company orders. They don't necessarily have as that company

453
00:23:06,080 --> 00:23:08,120
Speaker 8: would the sort of like boots on the ground selling

454
00:23:08,160 --> 00:23:11,680
Speaker 8: doses in China. So I think they were probably caught

455
00:23:11,680 --> 00:23:14,680
Speaker 8: a little flat footed, and I think reasonably you could

456
00:23:14,720 --> 00:23:17,320
Speaker 8: say that they didn't read the market well. We had

457
00:23:17,320 --> 00:23:19,840
Speaker 8: a story earlier this week looking at the rise of

458
00:23:19,920 --> 00:23:22,400
Speaker 8: biotech companies in China which have rapidly come to develop

459
00:23:22,480 --> 00:23:25,359
Speaker 8: vaccines of their own and are now seeking to supplant

460
00:23:25,560 --> 00:23:28,080
Speaker 8: gardasil in the country. And I think it's fair to say,

461
00:23:28,080 --> 00:23:30,280
Speaker 8: and we've heard analysts say this that Merk did not

462
00:23:30,960 --> 00:23:33,400
Speaker 8: adequately assess the competitive dynamics on the ground.

463
00:23:33,440 --> 00:23:33,680
Speaker 6: There.

464
00:23:34,720 --> 00:23:37,919
Speaker 2: Where is the University of New Mexico, Albuquerque? Okay, and

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00:23:38,000 --> 00:23:41,880
Speaker 2: you're from New Mexico originally, that's right, like a native Oh.

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00:23:41,840 --> 00:23:43,800
Speaker 8: Yeah, I mean in fact, I'm going back in a month.

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00:23:44,280 --> 00:23:46,000
Speaker 5: Virtually everyone to whom I'm related.

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00:23:45,720 --> 00:23:48,320
Speaker 8: Lives within about one hundred miles of Albuquerque, no kidding.

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00:23:48,359 --> 00:23:51,159
Speaker 5: So what town were you born in? Los Lunas Los Lunae.

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00:23:51,280 --> 00:23:55,360
Speaker 8: So it's south of Albuquerque, between Albuquerque and the isleta Indian.

471
00:23:55,160 --> 00:23:58,280
Speaker 5: Reservation that's west of New Jersey. That's little west of

472
00:23:58,280 --> 00:23:59,879
Speaker 5: New Jersey. Have you been in New Jersey? I have

473
00:24:00,280 --> 00:24:04,280
Speaker 5: see delightful place. All right, Damon GARDI thank you so

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00:24:04,400 --> 00:24:05,040
Speaker 5: much for joining us.

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00:24:05,080 --> 00:24:09,240
Speaker 2: Amen Guarde Healthcare reporter, Bloomberg News, proud graduate of the

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00:24:09,480 --> 00:24:13,080
Speaker 2: University of New Mexico. They are the Lobos.

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00:24:14,119 --> 00:24:18,800
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