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Speaker 2: The news again crossing the tape here geopolitical front. The
Speaker 2: US will demand that Russia accept Ukraine's right to have
Speaker 2: its own army and defense industry as part of the
Speaker 2: peace agreement between Moscow and keV. The Trump administration also
Speaker 2: wants Moscow to return Ukraine's nuclear power plant. In short,
Speaker 2: Ukraine has passage over the Debay River and return land
Speaker 2: occupied by Russia in the Kharkiv regen. So so it
Speaker 2: seems to like some really big news on this front. So
Speaker 2: let's get talkd to somebody who knows this stuff. Nick
Speaker 2: Wadams is a US national security reporter for a Bloomberg News.
Speaker 2: He is based in Washington, DC. Nick, this seems like
Speaker 2: big news coming from the administration. Put in context for.
Speaker 3: Us, please, yeah, I mean the big thing here is
Speaker 3: that a lot of what we've been hearing so far
Speaker 3: out of the administration and the conversations between the US,
Speaker 3: Ukraine and Russia have been a lot of demands on Ukraine.
Speaker 3: So we recently heard that the US wanted to recognize
Speaker 3: Russian sovereignty over Crimea, they wanted to block Ukraine from
Speaker 3: getting NATO membership, a host of other issues at Critical
Speaker 3: Minerals agreement, and that had provoked a lot of fears
Speaker 3: among European allies and critics of the Trump administration that
Speaker 3: essentially this deal was going to be really heavily favored
Speaker 3: towards Russia and Ukraine wasn't going to get anything in return.
Speaker 3: We are starting now to get some sense of what
Speaker 3: the US is asking Russia, and what we know so
Speaker 3: far from our reporters source based work is that they
Speaker 3: are going to rebuff or push back strongly against this
Speaker 3: Russian demand that Ukraine essentially demilitarized. This has been a
Speaker 3: central war aim that Russia has made clear since the
Speaker 3: start of its invasion in twenty twenty two, and the
Speaker 3: US is now saying, listen, we want to do this
Speaker 3: peace deal and you're not. We're not going to let
Speaker 3: you get away with that. This is going to be
Speaker 3: something you're going to have to agree to. And then
Speaker 3: this energy issue, we know energy has been very important
Speaker 3: to President Trump. So the Zaparisia power Plant, a massive,
Speaker 3: massive power plant in Ukraine that Russia seized during the war.
Speaker 3: The US is essentially saying, you've got to give it back.
Speaker 3: So we now understand the US is going to present
Speaker 3: these terms of a potential deal to Russia and we'll
Speaker 3: see what the answer is.
Speaker 4: And how do you think Russia will respond to that?
Speaker 4: Because the US is demanding this military right force. But
Speaker 4: will Russia agree to it? You think?
Speaker 3: I mean, that's the great question, and that's we're going
Speaker 3: to learn a lot about the viability of these negotiations.
Speaker 3: I mean, you know, the Russian idea that Ukraine essentially
Speaker 3: demilitarized was always seen as an extremely maximalist goal. I mean,
Speaker 3: it's hard to conceive of the US or any other
Speaker 3: mediator basically acceding to the idea that a country be
Speaker 3: left totally demilitarized. I mean, that was something that you
Speaker 3: saw out of World War Two with Japan. But otherwise
Speaker 3: this has not been repeated in modern history, so it
Speaker 3: would have been an extremely difficult demand to meet. The
Speaker 3: US is saying, essentially, that's not going to fly, And
Speaker 3: you know, I think what we'll see is depending on
Speaker 3: how Russia responds, will have a better sense of whether
Speaker 3: they see these negotiations as a viable path toward an
Speaker 3: actual ceasefire or whether they have no interest in peace
Speaker 3: and are just going to press ahead with the war.
Speaker 3: So we should have a strong indication of the next
Speaker 3: of that in the next few days when President Trump's
Speaker 3: on boyheads to Moscow.
Speaker 2: Nick, is there any sense as to what kind of
Speaker 2: leveraged the US has here on the campaign trail, Kennedy,
Speaker 2: Trump at the time was very confident about his ability
Speaker 2: to get what he turned to a good piece deal
Speaker 2: and negotiated quickly.
Speaker 5: Do we have the leverage to actually do that? Well?
Speaker 3: I mean, the US definitely does have some points of leverage.
Speaker 3: It also has some weaknesses. I mean, the big leverage
Speaker 3: it has, obviously, for one thing, is the sanctions, the
Speaker 3: massive sanctions regime that have essentially choked off the Russian economy,
Speaker 3: separated it from the West. Though Russia has been able
Speaker 3: to keep its war machine going, the economy is in
Speaker 3: pretty grim shape, and the US could just keep up
Speaker 3: with the flow of weapons and support to Ukraine. You know,
Speaker 3: under the idea that hey like Russia, they did this
Speaker 3: invasion in twenty twenty two. They've taken over about a
Speaker 3: fifth of Ukraine's territory, but they did not topple proud
Speaker 3: of President Zelenski's government as they had hoped. Ukraine doesn't
Speaker 3: seem to be going anywhere, so the US could certainly
Speaker 3: exercise leverage in those ways. Russia, though, also sees that
Speaker 3: it has its own leverage. Trump does not want to
Speaker 3: give Ukraine the amount of military aid that it's gotten
Speaker 3: so far, and they have bide battlefield gains in the
Speaker 3: last several months. So in some ways for Russia, there
Speaker 3: is a continued interest in prolonging this thing and drawing
Speaker 3: it out, and hope that President Trump turns his ire
Speaker 3: again toward Vladimir Zelenski rather than toward Russia. Whether that's
Speaker 3: a gamble they're going to be willing to make, though,
Speaker 3: is another question.
Speaker 2: All Right, fascinating development here, Nick, thanks so much for
Speaker 2: your time. We appreciated. Nick Wadams, US national security reporter
Speaker 2: for Bloomberg News. He is based in Washington, DC. And
Speaker 2: again the headline crossing the Bloomberg terminal and a significant
Speaker 2: shift in this story in Ukraine US to demand putin
Speaker 2: except Ukraine's right to military force. So we'll continue on
Speaker 2: that reporting throughout the day.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
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Speaker 2: Just get back to discussions on this market. Joey Yang
Speaker 2: Joints is here, head of index product management at market
Speaker 2: Vector Indexes.
Speaker 5: Joints is here in our Bloomberget Active Broker studio. Joy,
Speaker 5: thanks so much for joining us here.
Speaker 4: Thank you.
Speaker 5: How are you approaching these markets these days? The volatility
Speaker 5: is significant.
Speaker 2: We've got a VIS twenty seven, we've got to Move
Speaker 2: index very showing some volatility in the fixed income market.
Speaker 5: How are you guys approaching the markets?
Speaker 6: I think, you know, as with everybody, we're in new territories.
Speaker 6: Nobody is certain what the outcome of this tariff negotiation is.
Speaker 6: And even if we do reach a positive win win
Speaker 6: outcome for every party involved, which is the best case,
Speaker 6: I think there's still going to be uncertainty around how
Speaker 6: long will this last? You know, what are the second
Speaker 6: and third order impacts? So I think This is structurally
Speaker 6: a new environment for everyone, which is we're at elevated volatility,
Speaker 6: uncertainty will remain high. So I think for us, you know,
Speaker 6: we're watching indicators and those are gold prices, bitcoin prices,
Speaker 6: on what investors are thinking. And at the moment, you know,
Speaker 6: businesses can't make decisions, they can't give proper guidance, and
Speaker 6: those who have investors can't rely on those. So I
Speaker 6: think people are really either parking their money into safe
Speaker 6: havens or seeking liquid assets which they can move in
Speaker 6: and out without kind of structural damage that we're seeing
Speaker 6: across asset classes.
Speaker 4: I feel like with all this political rhetoric, people are
Speaker 4: maybe forgetting that it's earning season. NBRE in the thick
Speaker 4: of it, and around forty four percent of the SNP
Speaker 4: five hundred companies that have reported mentioned the word recession.
Speaker 4: That's a little higher than the previous quarter. What is
Speaker 4: your read on earning so far? It's also been interesting
Speaker 4: companies have withheld forward outlook or they've had two scenarios,
Speaker 4: the base case and the tariffic case. What is your
Speaker 4: read on it?
Speaker 6: I think it's probably impossible to rely on this quarter's
Speaker 6: you know, earnings, guidance, and this is going to be
Speaker 6: short term. So I think it's still proven for investors
Speaker 6: to focus on the long term and really focus on
Speaker 6: the fundamentals, which is, you know, we'll get over this.
Speaker 6: You know, there's got to be something after tariff negotiations.
Speaker 6: And I think structurally every industry still has a story
Speaker 6: narrative that's focused on the long term. You know, if
Speaker 6: you're an AI, that's a real story. You know, innovation
Speaker 6: will not break down, disruption will not break down. But
Speaker 6: you know, at the moment, there's so many things shifting
Speaker 6: that to give any kind of short term guidance, it's
Speaker 6: really not reliable.
Speaker 2: Talk to us about the risk controlled indexes ETFs, the
Speaker 2: market vector, Gamma road US Equity Strategy Index, like what
Speaker 2: is that?
Speaker 6: Yes, So I think this is the type of strategies
Speaker 6: that I think investors should be focused on because I
Speaker 6: think we're so focused on equities and fixed income, right,
Speaker 6: But you know, you really have to think about other
Speaker 6: alternative ways of looking at the world and structuring portfolio solutions.
Speaker 6: And one is to look at these indicators out there
Speaker 6: that are independent of any single country or any single
Speaker 6: asse class. Is to understand how elevated uncertainty is or
Speaker 6: you know what sentiment is. And I think right now
Speaker 6: our Gamma Road index is telling us to get out
Speaker 6: of equities, you know. But if you're out of equities
Speaker 6: and you're sitting on cash, that's not a great place either,
Speaker 6: as we see the dollar weakening and weakening. So I
Speaker 6: think investors should also look at alternative assets like gold
Speaker 6: or bitcoin that are not driven by the same macro factors.
Speaker 4: It's interesting gold, as we know, is just ripping, but
Speaker 4: bitcoin as well. And I feel like with bitcoin it's
Speaker 4: you choose the narrative. Some people would say it moves
Speaker 4: and locks that with tech companies like cues, but some
Speaker 4: would say no, actually it's an inflation hedge. I feel
Speaker 4: like it's still figuring it out. But can you talk
Speaker 4: to us about how different this is, this global macroshop
Speaker 4: compared to others. Because I said, let's look at the
Speaker 4: long term.
Speaker 6: Yeah, So I think definitely when you mentioned you're choosing
Speaker 6: the narrative, because this is still a niscent asset class
Speaker 6: and we've seen a structural shift in bitcoin also because
Speaker 6: it is a very volatile asset. But you know, fundamentally
Speaker 6: it should act like a store value. So we're seeing
Speaker 6: this as speculative players move out and we get more
Speaker 6: institutional players and more clarity around regulation. We're seeing it
Speaker 6: bring out the strengths that bitcoin naturally has, which is
Speaker 6: it's it's immutable, it's decentralized, so it's not dependent on
Speaker 6: any single government, and it doesn't require trust because trust
Speaker 6: is built into the code. And fundamentally, you know, what
Speaker 6: we're seeing is that investors have lost trust, whether it's
Speaker 6: US acids or just the correlation that happens between equities
Speaker 6: and bonds. So they're looking for things that you know,
Speaker 6: they can actually depend on. Right now, we're seeing gold
Speaker 6: and bitcoin as one of those assets.
Speaker 5: How about international markets?
Speaker 2: If people have been selling the US, whether it's the dollar, stocks,
Speaker 2: and maybe putting their money internationally, how do you think
Speaker 2: about that.
Speaker 6: I think we've you know, if you take a step back,
Speaker 6: I think the problem was people had too much bias
Speaker 6: towards US assets and weren't really reflecting on where relative
Speaker 6: value is happening. And if you still look at international markets,
Speaker 6: even though globally every market has dropped, international markets still
Speaker 6: look cheap. You know, they still look better from a
Speaker 6: pevaluation point of place. So if you're focused on fundamentals
Speaker 6: and not sentiment, this is a better place.
Speaker 1: To be in.
Speaker 5: Does that include emerging markets as well?
Speaker 6: It includes emerging market but all all markets will be
Speaker 6: impacted by terrorists.
Speaker 2: Yep. So that's that's kind of the issue here. But
Speaker 2: so we'll see how it plays out. But again we've
Speaker 2: got Green on the screen here today. Joey Yang, thank
Speaker 2: you so much for being with us. Joey Yang is
Speaker 2: head of Index Product Management and Market vector Indexes, joining
Speaker 2: us live here in our Bloomberg Interactive, a broker's studio.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 2: Is Beldie sitting in for Alex Steele on Paul Swinging.
Speaker 2: We're live here in our Bloomberg Interactive broker studio. We
Speaker 2: are streaming live on YouTube as well, so go over
Speaker 2: to YouTube dot com search Bloomberg Podcasts Live and all
Speaker 2: that kind of stuff you'll find us there. Let's get
Speaker 2: the latest reporting from Washington, DC on the tariffs. It
Speaker 2: is a fluid situation, to say the least. Tyler Kendall,
Speaker 2: she's been following it for she's a reporter for Bloomberg News.
Speaker 2: She is down in Washington, DC. So, Tyler, is there
Speaker 2: a sense in DC at the White House that perhaps
Speaker 2: is tariff policy could be more I don't know, measured,
Speaker 2: or more consistent or more formal. It seems to be
Speaker 2: a little bit ad hoc here, and that's one of
Speaker 2: the reasons maybe the markets are a little spooked.
Speaker 7: Yeah, Hey, Paul, there's a lot of mixed messaging currently
Speaker 7: at the moment when it comes to a tariff policy
Speaker 7: related to China, even with China saying earlier today that
Speaker 7: there currently are no negotiations happening between Beijing and Washington,
Speaker 7: calling reports about recent developments to be groundless. That was
Speaker 7: particularly interesting after President Trump yesterday in the Oval Office
Speaker 7: contended when he was asked if he's actively involved in
Speaker 7: negotiations with China, he said that, quote, everything is active now.
Speaker 7: We do know that there were some preconditions that Beijing
Speaker 7: does need to see before talks can really kick off,
Speaker 7: including that they would like appoint person other than President
Speaker 7: Trump to lead the negotiations. But he still says that
Speaker 7: he is very much directly involved here, even though we
Speaker 7: haven't gotten any real confirmation that Jijingping is willing to
Speaker 7: pick up the phone. Moving forward the moment, the latest
Speaker 7: escalation is that Beijing is now calling on the US
Speaker 7: to eliminate all unilateral tariffs, something that the Treasury Secretary
Speaker 7: Scott Vesant said yesterday really is just not an option
Speaker 7: on the table. But when it comes to this back
Speaker 7: and forth, in the mixed messaging yesterday again in the
Speaker 7: Oval Office, President Trump saying that he does think that
Speaker 7: one hundred and forty five percent levee on Chinese imports
Speaker 7: is very high, and that it's leading to essentially a
Speaker 7: trade embargo, which has prompted some to think that that
Speaker 7: level that levee very much will end up being.
Speaker 4: A lower here.
Speaker 7: But then at the same time he followed that remark
Speaker 7: by saying that if a trade deal with Beijing is
Speaker 7: not reached, that will ultimately be okay because the US
Speaker 7: will just set what he called a quote fair price.
Speaker 7: He then suggested that the White House is preparing to
Speaker 7: release some revised teriff rates for all countries, including China,
Speaker 7: in the next two to three weeks, ultimately so I'll
Speaker 7: have to see how that ends up developing here, but
Speaker 7: it's something that we're closely watching. If we are going
Speaker 7: to get some potentially new tariff rates.
Speaker 4: Talk to us more about china attempt to repair tize
Speaker 4: with the European Union and as it proves to be
Speaker 4: as it tries to prove itself to be the more
Speaker 4: reliable trading partner compared to the US. What exactly is
Speaker 4: Beijing doing.
Speaker 7: Right exactly so trying to reach out here to the
Speaker 7: European Union in a bid to try to shore up
Speaker 7: ties as a counter against the US. Most recently we
Speaker 7: have reporting, for example that European Union leaders as well
Speaker 7: as Ujingpain we're actually together on a call having to
Speaker 7: do with climate change. Now, there has been sort of
Speaker 7: a distance between the European Union and China, particularly when
Speaker 7: it comes to their criticism of how China has assisted
Speaker 7: of Vladimir Putin amid the ongoing war in Ukraine. But
Speaker 7: there does appear to be some easy here, particularly when
Speaker 7: it comes to negotiations around electric vehicles. So this is
Speaker 7: a very important partner that we are watching, particularly as
Speaker 7: there hasn't really been that much movement when it comes
Speaker 7: to talks between the US and the European Union, re'll
Speaker 7: called just a few weeks ago, the Eaves Trade chief
Speaker 7: left Washington with a very little clarity, according to our reporting,
Speaker 7: about exactly what this White House needs to see done
Speaker 7: in order to get a deal. And then I would
Speaker 7: also just quickly highlight one other trading partner, and that
Speaker 7: is Japan. There is new reporting this morning from Bloomberg
Speaker 7: News according to Japanese officials that if the US ends
Speaker 7: up asking Japan to corbett's own trade against China, they
Speaker 7: will push back on that.
Speaker 5: We should make clear our reporting.
Speaker 7: Indicates that the US has not asked Japan to do
Speaker 7: that's just yet, but we do know it's something that
Speaker 7: this White House has been mulling. And also importantly, China
Speaker 7: has come out and said that it will take its
Speaker 7: own countermeasures against any countries that try to realign here,
Speaker 7: particularly when it comes with the US, and what Treasury
Speaker 7: Secretary Scott Besson has floated could be a plan to
Speaker 7: then approach China as a block. One statistic that I'll
Speaker 7: leave you with is that China does about twenty percent
Speaker 7: of its commerce. Japan does about twenty percent of its
Speaker 7: commerce with China. That is more than it does in
Speaker 7: trade with the US, but at the same time, the
Speaker 7: country does export more material.
Speaker 4: To the US.
Speaker 2: Tyler, thank you very much for your reporting. Appreciate you
Speaker 2: taking a few minutes. Tyler Kendall. She's a reporter for
Speaker 2: Bloomberg News. She is based down there in Washington, DC.
Speaker 2: Giving us the latest on the tariff situation is a
Speaker 2: fluid situation, to say the least.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 5: Merk what it's some earnings.
Speaker 2: They actually put a number on the tariff costs for them,
Speaker 2: two hundred million dollars. I mean for Mark, I mean
Speaker 2: it's got a market cap of like two hundred million dollars,
Speaker 2: So two hundred million doesn't seem like that big a deal,
Speaker 2: but at least it's a company putting a number on
Speaker 2: what they see as maybe some of their their cost there.
Speaker 2: Damien Garde joins us here. He's a healthcare reporter for
Speaker 2: Bloomberg News. Joinings live here in our Bloomberg Interactive Brokers
Speaker 2: Studio Damian. What did we hear from MERK today, what
Speaker 2: did a what did they report and how did they
Speaker 2: talk about tariffs and maybe some of the costs they see.
Speaker 8: Well, it's interesting because, yeah, as you mentioned, they disclosed
Speaker 8: that two hundred million dollars that's what they expect in
Speaker 8: twenty twenty five to pay on account of teriffs. But
Speaker 8: these are just already announced tariffs. So principally the ones
Speaker 8: affecting imports from China of certain goods and then obviously
Speaker 8: exports to China the retaliatory tariffs that we know about.
Speaker 8: And so there's a lot of interest in this because
Speaker 8: in the pharmaceutical world in particular, there's a huge anxiety
Speaker 8: over how the kind of like sort of damicles of
Speaker 8: specific pharmaceutical tariffs might affect the industry, what the percentage
Speaker 8: will be, how they might shake out. So Mirk giving
Speaker 8: us at least some sense of how it's been so
Speaker 8: far is helpful. But listening to the earnings call, it's
Speaker 8: like a certain form of theater where analysts find new
Speaker 8: and inventive ways to ask the company, will you tell
Speaker 8: us what you're actually expecting from pharmaceutical tariffs if they
Speaker 8: come through as the President has promised to bring them about,
Speaker 8: and Merk kind of artfully dodging actually committing to that.
Speaker 4: How exposed is Merk do China and maybe broader pharma
Speaker 4: companies in general, because they do have this drug and
Speaker 4: they're facing stiff competition in China, and that's one of
Speaker 4: the really downfalls that the company face in a previous quarter.
Speaker 8: Yeah, I think Merk in particular faces teriff issues on
Speaker 8: two fronts. Staliatory tariffs imposed by China make it difficult
Speaker 8: to sell products into China for any American company. They
Speaker 8: are sort of in the crosshairs of what Beijing is
Speaker 8: doing in retaliation to the White House. But then you know,
Speaker 8: maybe an even larger headwind for them is the potential
Speaker 8: of the United States imposing tariffs on the importation of pharmaceuticals.
Speaker 8: Because Mirk, like most of its peers, has a huge
Speaker 8: global manufacturing network and in many cases will ship products
Speaker 8: to the US from, for example, Ireland, where they have
Speaker 8: a lot of manufacturing. And then this gets a little
Speaker 8: into the weeds of trade policy. But Mirk, like many companies,
Speaker 8: has offshore the intellectual property behind some of its biggest drugs,
Speaker 8: So ki Trudah the biggest drug in pharmaceutical history, which
Speaker 8: is Mark's cancer drug. The IP lives in Ireland, and
Speaker 8: so that gets cop Ireland. That gets complicated in the
Speaker 8: if and these are all ifs because we don't know.
Speaker 8: But if, for example, the President were to impose a
Speaker 8: twenty five percent tariff on pharmaceuticals, then Mirk could end
Speaker 8: up paying quite a bit simply to import its own
Speaker 8: product and basically the intellectual property of its own produc
Speaker 8: from Ireland to the United States. So that's really the
Speaker 8: number that analyst are trying to get their heads around,
Speaker 8: both in terms of Merk and in global pharmaceuticals in general.
Speaker 8: And it remains a mystery because we don't know Merk
Speaker 8: based where.
Speaker 2: John Tucker, that would be New Jersey, that would be
Speaker 2: New Jersey. Yes, it would be Rawway, New Jersey. Johnson Johnson,
Speaker 2: New Brunswick, New Jersey. Just for those out there wondering,
Speaker 2: And we got sharing Plow, Bristol, March Squib all over
Speaker 2: the state.
Speaker 4: I still have to visit New Jersey.
Speaker 5: Have to visit New Jersey. How long have you been
Speaker 5: in New York? Seven years? But I stay in the City. Absolutely. Jeez,
Speaker 5: all right, Damien, let's so frame out Merk.
Speaker 2: I mean, the stock is down twenty one percent this
Speaker 2: year to date. That's the worst of the big pharma here.
Speaker 2: I've got a Lily up ten percent.
Speaker 5: What's what's the story on Mark?
Speaker 2: What's the concern in the marketplace about Mark?
Speaker 8: I think it boils down to Gardasil, which is Merk's
Speaker 8: blockbuster vaccine for HPV, which is a cancer causing virus.
Speaker 8: It's one of the more I mean, it's the only
Speaker 8: vaccine you can say prevents cancer. So this is a
Speaker 8: massive product around the world that Merk developed and has
Speaker 8: been marketing for more than a decade. The issue came
Speaker 8: about last year related to China, which is that there
Speaker 8: had been this massive boom and demand in China for
Speaker 8: this vaccine, which is paid for out of pocket. It's
Speaker 8: a luxury product for basically the wealthy of China, and
Speaker 8: then suddenly that demand seemed to fall off a cliff
Speaker 8: last year, and Merk didn't have initially much in the
Speaker 8: way of convincing explanation as to why that happened and
Speaker 8: why it might ameliorate, and slowly, quarter after quarter the
Speaker 8: story got worse until in the first quarter of this year,
Speaker 8: they halted all shipments of Guardacil to China so voluntarily, yes,
Speaker 8: because the inventory had built up, the demand had fallen off,
Speaker 8: as such that their partner in China was apparently unable
Speaker 8: to sell the doses at the level that they were
Speaker 8: previously scrambling to meet the demand of. And so if
Speaker 8: you just subtract all of Gardasil's potential revenue in China,
Speaker 8: you're probably talking about three to four billion dollars a year, which,
Speaker 8: in as you mentioned in the context of merk is
Speaker 8: not that big of a deal. Especially key true to
Speaker 8: the cancer drug can make that up in half a quarter.
Speaker 8: I think the issue really with the stock move you mentioned,
Speaker 8: and they're down forty percent since first disclosing the guard
Speaker 8: Sil problems in China relates to the fact that the
Speaker 8: company has not had a very convincing explanation for why
Speaker 8: it happened and why it's going to be ameliorated. And
Speaker 8: so you're seeing both a sort of you know, reputational
Speaker 8: kind of risk taking place there and then furthermore, not
Speaker 8: unlike Wiley Coyote running off a cliff. I think when
Speaker 8: the Gardasil situation worsened investors started taking a hard look
Speaker 8: at the rest of merks portfolio heading into the rest
Speaker 8: of the decade, especially key Truda, which will face lower
Speaker 8: cost competition around twenty twenty eight, and kind of start
Speaker 8: to panic, like, are we sure this company has a
Speaker 8: plan to withstand what's going to be a massive pattern?
Speaker 4: Cliff, what are your sources telling you? Why are they
Speaker 4: not explaining at them?
Speaker 5: I think they.
Speaker 8: In fairness to Merk, I think they have been probably
Speaker 8: about as forthcoming as they can be. It's a little
Speaker 8: bit of a black box for them because, as I mentioned,
Speaker 8: they do business in China with respect to Gardasil through
Speaker 8: a Chinese company that is their distributor. So Mirk on
Speaker 8: the US end is basically shipping doses according to what
Speaker 8: that company orders. They don't necessarily have as that company
Speaker 8: would the sort of like boots on the ground selling
Speaker 8: doses in China. So I think they were probably caught
Speaker 8: a little flat footed, and I think reasonably you could
Speaker 8: say that they didn't read the market well. We had
Speaker 8: a story earlier this week looking at the rise of
Speaker 8: biotech companies in China which have rapidly come to develop
Speaker 8: vaccines of their own and are now seeking to supplant
Speaker 8: gardasil in the country. And I think it's fair to say,
Speaker 8: and we've heard analysts say this that Merk did not
Speaker 8: adequately assess the competitive dynamics on the ground.
Speaker 6: There.
Speaker 2: Where is the University of New Mexico, Albuquerque? Okay, and
Speaker 2: you're from New Mexico originally, that's right, like a native Oh.
Speaker 8: Yeah, I mean in fact, I'm going back in a month.
Speaker 5: Virtually everyone to whom I'm related.
Speaker 8: Lives within about one hundred miles of Albuquerque, no kidding.
Speaker 5: So what town were you born in? Los Lunas Los Lunae.
Speaker 8: So it's south of Albuquerque, between Albuquerque and the isleta Indian.
Speaker 5: Reservation that's west of New Jersey. That's little west of
Speaker 5: New Jersey. Have you been in New Jersey? I have
Speaker 5: see delightful place. All right, Damon GARDI thank you so
Speaker 5: much for joining us.
Speaker 2: Amen Guarde Healthcare reporter, Bloomberg News, proud graduate of the
Speaker 2: University of New Mexico. They are the Lobos.
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