1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,240 --> 00:00:37,839 Speaker 3: That Miskin joins us now for more mac. 11 00:00:37,920 --> 00:00:39,560 Speaker 4: Good morning to you, Good morning, thanks for having me. 12 00:00:39,600 --> 00:00:41,639 Speaker 3: Great to catch up with you in person as well. 13 00:00:41,680 --> 00:00:43,920 Speaker 2: It's been a while. Let's get into this. Governor Waller, 14 00:00:44,040 --> 00:00:45,840 Speaker 2: is it in ignore and move on? Do you agree 15 00:00:45,840 --> 00:00:47,160 Speaker 2: with Luke kickmore of Aberdeen? 16 00:00:47,479 --> 00:00:49,120 Speaker 4: I actually thought it made a lot of sense. 17 00:00:49,159 --> 00:00:52,080 Speaker 5: I thought Powell in the press conference during the FED 18 00:00:52,120 --> 00:00:55,440 Speaker 5: meeting was you know, he kept saying overtime. It's like 19 00:00:55,480 --> 00:00:57,720 Speaker 5: when I tell my children to clean their room and 20 00:00:57,760 --> 00:01:00,600 Speaker 5: they're like, oh yeah, overtime, all clean the room. You know, 21 00:01:00,880 --> 00:01:03,960 Speaker 5: it just keeps on getting more messy at everything over time, 22 00:01:04,160 --> 00:01:06,800 Speaker 5: you got to be thinking about this more with a priority. 23 00:01:06,840 --> 00:01:09,280 Speaker 5: Inflation is starting to come back, and it just you 24 00:01:09,319 --> 00:01:10,800 Speaker 5: said before data dependent. 25 00:01:11,080 --> 00:01:12,960 Speaker 4: I love that. That's a great way for the Fed 26 00:01:13,000 --> 00:01:13,640 Speaker 4: to think about this. 27 00:01:13,800 --> 00:01:16,000 Speaker 5: But if you're going to revise up your inflation forecast 28 00:01:16,200 --> 00:01:18,920 Speaker 5: and you're going to keep cuts, that's not being data dependent. 29 00:01:19,400 --> 00:01:21,560 Speaker 5: So they have a communication issue right now, and I 30 00:01:21,560 --> 00:01:23,520 Speaker 5: think they're going to have a tough time navigating this 31 00:01:24,000 --> 00:01:28,880 Speaker 5: because the markets are really dependent on them being dubvish, 32 00:01:29,080 --> 00:01:30,720 Speaker 5: and if they push back, I think it's going to 33 00:01:30,800 --> 00:01:33,839 Speaker 5: be tough, but I think they should because they don't 34 00:01:33,880 --> 00:01:34,520 Speaker 5: want to fight. 35 00:01:34,360 --> 00:01:36,600 Speaker 4: This battle all over again later this year. 36 00:01:36,800 --> 00:01:39,240 Speaker 2: Always lovely storytelling, So let's run with it. Let's say 37 00:01:39,280 --> 00:01:41,400 Speaker 2: the claim room is two percent and you're less convince 38 00:01:41,400 --> 00:01:43,120 Speaker 2: they're going to clean it anytime soon. When is the 39 00:01:43,120 --> 00:01:45,480 Speaker 2: bumb market starts to get messia, which essentially is what 40 00:01:45,560 --> 00:01:46,319 Speaker 2: las raz askin. 41 00:01:46,920 --> 00:01:49,240 Speaker 5: So we've seen some that are saying in the position 42 00:01:49,440 --> 00:01:52,600 Speaker 5: with four higher interest rates because of that, the long 43 00:01:52,720 --> 00:01:54,760 Speaker 5: end of the curve would see higher rates if that 44 00:01:54,800 --> 00:01:58,400 Speaker 5: does if they let inflation run like this. But in 45 00:01:58,440 --> 00:02:01,000 Speaker 5: our view, it's just you're seeing a lot of value 46 00:02:01,000 --> 00:02:04,040 Speaker 5: in the bond market yields are already up where in 47 00:02:04,040 --> 00:02:06,520 Speaker 5: an inverted yield curve. This is the longest inversion the 48 00:02:06,560 --> 00:02:10,120 Speaker 5: yield curve ever, So the bond market's a mess in 49 00:02:10,160 --> 00:02:13,320 Speaker 5: a way. Just try and interpret this. In our view 50 00:02:13,360 --> 00:02:15,840 Speaker 5: though we stay inverted. If anything, we see we get 51 00:02:15,880 --> 00:02:18,160 Speaker 5: more inverted. We're actually on the other side. We think 52 00:02:18,160 --> 00:02:20,119 Speaker 5: they're going to take longer to cut, but then they're 53 00:02:20,120 --> 00:02:23,359 Speaker 5: going to cut more than the markets expect because something 54 00:02:23,400 --> 00:02:25,679 Speaker 5: will happen. They've got to push back here. They've got 55 00:02:25,680 --> 00:02:27,560 Speaker 5: to be strong. They've got to be that adult in 56 00:02:27,600 --> 00:02:30,960 Speaker 5: the room and tell the to clean their room. It's hard, 57 00:02:31,440 --> 00:02:32,880 Speaker 5: but right now they're not doing it. 58 00:02:32,919 --> 00:02:35,280 Speaker 1: Well, they're not doing it. They're not being the adults 59 00:02:35,320 --> 00:02:37,000 Speaker 1: in the room. They're basically saying, why don't you throw 60 00:02:37,080 --> 00:02:38,600 Speaker 1: some more things on the floor, because you know what, 61 00:02:38,600 --> 00:02:39,600 Speaker 1: we'll get to it and later. 62 00:02:39,800 --> 00:02:41,960 Speaker 4: And this raises the question, what gives you. 63 00:02:41,960 --> 00:02:44,480 Speaker 1: The conviction that that's the path that they're going to 64 00:02:44,560 --> 00:02:47,040 Speaker 1: take If that's not the signals or the communications that 65 00:02:47,080 --> 00:02:49,440 Speaker 1: they're giving and markets are running with that and they're 66 00:02:49,440 --> 00:02:50,360 Speaker 1: not pushing back. 67 00:02:50,840 --> 00:02:53,120 Speaker 4: Yeah, I just think inflation coming back growth. 68 00:02:53,240 --> 00:02:56,000 Speaker 5: If we are starred, right, the stars of the sky, 69 00:02:56,200 --> 00:02:58,639 Speaker 5: like you remember that analogy. Yeah, yeah, yeah, But if 70 00:02:58,639 --> 00:03:01,519 Speaker 5: this is the utual rate, why isn't the economy slowing, 71 00:03:01,520 --> 00:03:02,799 Speaker 5: Why is an inflation slowing? 72 00:03:03,080 --> 00:03:04,000 Speaker 4: None of that's happening. 73 00:03:04,120 --> 00:03:06,680 Speaker 5: It's hard to say that they're being really restricted with 74 00:03:06,760 --> 00:03:10,000 Speaker 5: high yield spreads at three hundred basis points. They seem 75 00:03:10,040 --> 00:03:12,280 Speaker 5: to be they're trying to turn off the faucet, but 76 00:03:12,320 --> 00:03:14,840 Speaker 5: the shower's still running the water. 77 00:03:14,880 --> 00:03:16,840 Speaker 4: The liquidity is still coming into. 78 00:03:16,600 --> 00:03:19,440 Speaker 5: The market, and you've got to use financial I think 79 00:03:19,480 --> 00:03:22,400 Speaker 5: that the you know, maybe this is a bigger picture conversation, 80 00:03:22,480 --> 00:03:24,920 Speaker 5: but I think the FED needs to be market based 81 00:03:25,400 --> 00:03:28,000 Speaker 5: and not academic based or legal. 82 00:03:28,160 --> 00:03:31,040 Speaker 3: A lawyer gonna jump in, Matt, it doesn't matter. This 83 00:03:31,120 --> 00:03:31,680 Speaker 3: is who they are. 84 00:03:32,120 --> 00:03:34,480 Speaker 2: Doesn't this screen buy stocks by some what you've had 85 00:03:34,480 --> 00:03:35,200 Speaker 2: in the last week. 86 00:03:35,840 --> 00:03:39,120 Speaker 5: So historically speaking, usually this is the time late cycle 87 00:03:39,160 --> 00:03:41,200 Speaker 5: where the FED is at the what they think is 88 00:03:41,240 --> 00:03:44,320 Speaker 5: the neutral rain, and you have to be careful because 89 00:03:44,320 --> 00:03:46,640 Speaker 5: it does look good. Usually, get this late cycle pop 90 00:03:46,640 --> 00:03:48,680 Speaker 5: and risk assets as the FED says, hey, we're gonna 91 00:03:48,680 --> 00:03:50,720 Speaker 5: think about cutting or we're not gonna raise rates anymore, 92 00:03:50,760 --> 00:03:53,360 Speaker 5: and then the tide goes out. Well, Warren Buffin quote 93 00:03:53,360 --> 00:03:55,840 Speaker 5: when the tide goes out, you see you're swimming, but 94 00:03:55,960 --> 00:03:58,280 Speaker 5: you want to make sure that you don't have that risk, 95 00:03:58,320 --> 00:04:00,840 Speaker 5: because if it's commercial real estate and it's other things, 96 00:04:01,080 --> 00:04:03,040 Speaker 5: things can break and then all of a sudden, the 97 00:04:03,040 --> 00:04:03,720 Speaker 5: Fed's got to turn. 98 00:04:03,760 --> 00:04:06,400 Speaker 4: And it almost seems like Powell might have something up. 99 00:04:06,360 --> 00:04:09,400 Speaker 5: His sleeve that's saying there's a risk here that that 100 00:04:09,600 --> 00:04:12,480 Speaker 5: isn't on the surface. That I'm playing this a little 101 00:04:12,520 --> 00:04:14,960 Speaker 5: bit easier, and I wouldn't be surprised if there is 102 00:04:15,000 --> 00:04:16,080 Speaker 5: something underneath the surface. 103 00:04:16,120 --> 00:04:19,480 Speaker 1: How frustrating is it to play psychiatrist to J. Powell 104 00:04:19,520 --> 00:04:21,360 Speaker 1: at a time where you feel like it should happen, 105 00:04:21,920 --> 00:04:24,880 Speaker 1: but you think maybe he's playing games with us, Maybe 106 00:04:24,920 --> 00:04:26,440 Speaker 1: in his head he knows something. I mean, this is 107 00:04:26,440 --> 00:04:28,360 Speaker 1: sort of the level that we're at because people can't 108 00:04:28,640 --> 00:04:31,840 Speaker 1: otherwise understand and draw the dots from what we saw 109 00:04:32,720 --> 00:04:32,960 Speaker 1: in the. 110 00:04:32,960 --> 00:04:35,200 Speaker 5: Nating you know, when they do the summary of economic 111 00:04:35,200 --> 00:04:37,440 Speaker 5: projections and all this forward guidance, and back in the 112 00:04:37,520 --> 00:04:40,039 Speaker 5: day that was supposed to help because it was saying, hey, 113 00:04:40,040 --> 00:04:42,479 Speaker 5: we're not doing much and we're just sitting here. Now 114 00:04:42,520 --> 00:04:45,480 Speaker 5: it's almost hurting the fact that you're saying we're going 115 00:04:45,520 --> 00:04:47,200 Speaker 5: to do rate cuts before it gets price in the 116 00:04:47,200 --> 00:04:49,960 Speaker 5: market immediately, and basically that was a rate cut. 117 00:04:50,920 --> 00:04:51,800 Speaker 4: You know, the way I. 118 00:04:51,720 --> 00:04:53,839 Speaker 5: Think about it, almost like fight Club the movie. You 119 00:04:53,839 --> 00:04:56,599 Speaker 5: don't talk about fight Club. That's the first rule. Don't 120 00:04:56,600 --> 00:04:59,080 Speaker 5: talk about rate cuts until you need to talk about 121 00:04:59,120 --> 00:05:01,719 Speaker 5: rate cuts, because if you're going to talk about in advance, 122 00:05:01,760 --> 00:05:03,400 Speaker 5: the market's going to say, great, I'm going to price 123 00:05:03,440 --> 00:05:05,800 Speaker 5: that in, and then that creates the risk on, that 124 00:05:05,960 --> 00:05:07,760 Speaker 5: creates the inflation impulse. 125 00:05:07,480 --> 00:05:08,880 Speaker 4: And now we're going to have to deal with it 126 00:05:08,960 --> 00:05:09,719 Speaker 4: all over again. 127 00:05:09,760 --> 00:05:13,560 Speaker 6: They also up their own inflation target, so you know, 128 00:05:13,560 --> 00:05:15,280 Speaker 6: we've been having this conversation a lot of people about 129 00:05:15,520 --> 00:05:20,080 Speaker 6: it's two points something that the FED actually basically is targeting, 130 00:05:20,160 --> 00:05:22,680 Speaker 6: not no longer two percent. Maybe they're more acceptable of 131 00:05:22,680 --> 00:05:25,479 Speaker 6: a range. Do you agree with that it's possible. I mean, 132 00:05:25,520 --> 00:05:27,720 Speaker 6: after the last meeting, I thought that, I thought. 133 00:05:27,520 --> 00:05:28,080 Speaker 4: Two to three. 134 00:05:28,120 --> 00:05:30,400 Speaker 5: I mean, in the Summary of Economic projections, it doesn't 135 00:05:30,400 --> 00:05:32,400 Speaker 5: taken till twenty twenty six that you see a two 136 00:05:32,520 --> 00:05:33,279 Speaker 5: point zero. 137 00:05:33,839 --> 00:05:36,159 Speaker 4: That's that overtime. That's hey, we'll clean up the. 138 00:05:37,040 --> 00:05:39,560 Speaker 5: Room two years from now, but for then, you know 139 00:05:39,560 --> 00:05:42,400 Speaker 5: it's gonna be bumpy deal, you know. But Emory, it's 140 00:05:42,400 --> 00:05:45,280 Speaker 5: also about the energy sector recently. You know, oil prices 141 00:05:45,279 --> 00:05:48,040 Speaker 5: are coming up. That's so if you had the stocks 142 00:05:48,320 --> 00:05:50,880 Speaker 5: rallying but you didn't have the inflation impulse, that's a 143 00:05:51,160 --> 00:05:53,520 Speaker 5: that's better. But you know, I almost think about March 144 00:05:53,560 --> 00:05:55,159 Speaker 5: madness bracketology right now. 145 00:05:55,240 --> 00:05:57,720 Speaker 4: So energy stocks were actually. 146 00:05:57,400 --> 00:06:00,000 Speaker 5: One of the best performers in the quarter. Oil prices 147 00:06:00,040 --> 00:06:03,480 Speaker 5: up another one percent today. If that keeps going, they're 148 00:06:03,480 --> 00:06:06,480 Speaker 5: going to be hitting gas prices coming up, inflationary impulse, 149 00:06:06,600 --> 00:06:09,120 Speaker 5: and there's other things disruptions of supply chain still going 150 00:06:09,160 --> 00:06:11,520 Speaker 5: on that I think they're gonna have to change their 151 00:06:11,560 --> 00:06:12,680 Speaker 5: tune as the year goes on. 152 00:06:12,760 --> 00:06:13,480 Speaker 1: So what are you buying? 153 00:06:14,279 --> 00:06:16,800 Speaker 5: So we still have the high quality US doocs were 154 00:06:16,839 --> 00:06:18,599 Speaker 5: overweight US verse International. 155 00:06:18,720 --> 00:06:21,440 Speaker 4: We are up in cap. We're trying to find profitable businesses. 156 00:06:21,560 --> 00:06:23,920 Speaker 5: We do not have some of the AI you know, 157 00:06:24,240 --> 00:06:27,760 Speaker 5: the Fomo AI or the crypto, the mind all that. 158 00:06:29,160 --> 00:06:33,360 Speaker 5: So AI wise, you know, Navidia has done pretty well. 159 00:06:33,520 --> 00:06:35,880 Speaker 5: You know, it has put on another trillion of market 160 00:06:35,880 --> 00:06:39,680 Speaker 5: cap last quarter. So we do have tech. We've been 161 00:06:39,720 --> 00:06:42,520 Speaker 5: overweight tech. We like quality, so that helps, but at 162 00:06:42,520 --> 00:06:44,880 Speaker 5: a reasonable price, on the bond side, we have been 163 00:06:44,960 --> 00:06:47,120 Speaker 5: dragging because we've been higher quality. 164 00:06:47,600 --> 00:06:48,120 Speaker 4: We're willing. 165 00:06:48,600 --> 00:06:51,400 Speaker 5: I look at high yield spreads at two ninety I 166 00:06:51,440 --> 00:06:52,320 Speaker 5: think it was last week. 167 00:06:52,560 --> 00:06:55,560 Speaker 4: It was great tweet by the way, you know, because 168 00:06:55,560 --> 00:06:56,240 Speaker 4: we got to watch this. 169 00:06:56,560 --> 00:06:59,560 Speaker 5: So the upside is fifty bases points lowers, the tightest 170 00:06:59,560 --> 00:07:02,400 Speaker 5: in history, or we could go eight to twenty percent higher. 171 00:07:02,640 --> 00:07:04,640 Speaker 5: And that's just another symptom of this market is just 172 00:07:04,720 --> 00:07:05,760 Speaker 5: how tight the spreads are. 173 00:07:05,800 --> 00:07:06,760 Speaker 4: So we're not going after that. 174 00:07:06,800 --> 00:07:09,320 Speaker 5: We have an underweight to high yield overweight, higher quality 175 00:07:09,400 --> 00:07:10,000 Speaker 5: than the bond market. 176 00:07:10,320 --> 00:07:12,600 Speaker 4: We're getting enough on the ball on that overweight to. 177 00:07:12,600 --> 00:07:15,200 Speaker 5: US equities overweight, US large cap have some of the 178 00:07:15,240 --> 00:07:19,640 Speaker 5: tech quality names, but frankly, we're sitting here waiting and 179 00:07:19,680 --> 00:07:22,080 Speaker 5: nothing's on sale, I mean, other than high quality bonds. 180 00:07:22,120 --> 00:07:24,680 Speaker 5: But it's a hard trade because the momentum factor in 181 00:07:24,800 --> 00:07:25,800 Speaker 5: equities is so powered. 182 00:07:25,840 --> 00:07:27,760 Speaker 2: I love how many people don't have a blimback terminal 183 00:07:27,800 --> 00:07:31,400 Speaker 2: and rely on Bramo to get high yeld spread updates, safe, 184 00:07:31,520 --> 00:07:33,480 Speaker 2: safer tide. But the way you talk about them is 185 00:07:33,520 --> 00:07:36,400 Speaker 2: if they are a reflection of complacency and not a 186 00:07:36,400 --> 00:07:38,840 Speaker 2: reflection of strength. Why do you see it as the 187 00:07:38,880 --> 00:07:40,120 Speaker 2: former and not the latter. 188 00:07:40,160 --> 00:07:42,080 Speaker 5: Of the last two times they were this type was 189 00:07:42,080 --> 00:07:46,000 Speaker 5: two thousand and seven, twenty twenty one, the twelve months 190 00:07:46,040 --> 00:07:50,080 Speaker 5: after those real tight levels, high yield was down three 191 00:07:50,160 --> 00:07:53,040 Speaker 5: percent total return, so you got about seven percent yield. 192 00:07:53,040 --> 00:07:56,200 Speaker 5: Total return was negative in two thousand and seven. And 193 00:07:56,200 --> 00:07:58,200 Speaker 5: this is again going back to that Warren Buffer quote 194 00:07:58,200 --> 00:08:00,520 Speaker 5: of the tide goes out, it off and looks the 195 00:08:00,560 --> 00:08:04,360 Speaker 5: best before it turns. The risk on the centiment has 196 00:08:04,400 --> 00:08:06,880 Speaker 5: to be stretched to really feel the reversion. 197 00:08:07,320 --> 00:08:08,880 Speaker 4: And so I still think, I mean, we always think 198 00:08:08,880 --> 00:08:10,640 Speaker 4: about risk management. It's part of our DNA. 199 00:08:11,400 --> 00:08:13,600 Speaker 5: But right now, as everyone else is going to this 200 00:08:13,640 --> 00:08:15,920 Speaker 5: side of the boat, we're saying, hey, there's some stuff 201 00:08:15,960 --> 00:08:19,040 Speaker 5: that's like higher quality, defensive parts of markets. 202 00:08:19,520 --> 00:08:20,880 Speaker 4: That's actually what you should be looking. 203 00:08:20,680 --> 00:08:21,600 Speaker 3: At it at. That's sensible. 204 00:08:21,600 --> 00:08:23,200 Speaker 2: I think we always just think about you know, when 205 00:08:23,200 --> 00:08:24,680 Speaker 2: I hear stuff like this, I always have to think 206 00:08:24,720 --> 00:08:27,320 Speaker 2: about things from the other side. And I'm thinking, right now, 207 00:08:27,360 --> 00:08:29,720 Speaker 2: I'm listening to you the FED just to borrow a 208 00:08:29,720 --> 00:08:31,400 Speaker 2: little bit from sorrow, So I'll do it the other 209 00:08:31,400 --> 00:08:33,599 Speaker 2: way around. The FED can shake the events to anticipate 210 00:08:33,640 --> 00:08:35,160 Speaker 2: and if you get chairm and Power coming out and 211 00:08:35,520 --> 00:08:38,319 Speaker 2: establishing basically having a bus to respond to weaker economic 212 00:08:38,400 --> 00:08:41,240 Speaker 2: data than they would hire inflation points. It probably makes 213 00:08:42,080 --> 00:08:45,200 Speaker 2: economic data even less likely because financial conditions are so 214 00:08:45,240 --> 00:08:47,120 Speaker 2: loose right now when you see credit spreads as tight 215 00:08:47,160 --> 00:08:49,120 Speaker 2: as they are. The way I think about it is, 216 00:08:49,160 --> 00:08:51,920 Speaker 2: we were really worried about the maturity will in twenty five, 217 00:08:52,240 --> 00:08:54,520 Speaker 2: and we've just taken a massive chunk out of it 218 00:08:54,679 --> 00:08:57,199 Speaker 2: in the first quarter of twenty four. The high rates 219 00:08:57,360 --> 00:08:59,160 Speaker 2: less of a thing to worry about three months into 220 00:08:59,240 --> 00:09:01,480 Speaker 2: twenty four that maybe they were at the start of 221 00:09:01,480 --> 00:09:01,760 Speaker 2: the year. 222 00:09:02,400 --> 00:09:06,160 Speaker 5: Yeah, you still have in all this communication, all this analysis, 223 00:09:06,240 --> 00:09:08,679 Speaker 5: all this you know, analogy, you know, psycho analysis of 224 00:09:08,679 --> 00:09:09,520 Speaker 5: what Powell's thinking. 225 00:09:09,559 --> 00:09:11,280 Speaker 4: But at the end of the day, they haven't done anything. 226 00:09:11,840 --> 00:09:13,600 Speaker 4: So we're still doing QT. 227 00:09:13,760 --> 00:09:15,600 Speaker 5: We still have five and a half, We still have 228 00:09:15,720 --> 00:09:18,840 Speaker 5: this huge maturity wall I mean, Russell twenty and forty 229 00:09:18,840 --> 00:09:20,240 Speaker 5: five percent are not profitable. 230 00:09:20,280 --> 00:09:21,800 Speaker 4: They're gonna there's fifty sixty. 231 00:09:21,559 --> 00:09:23,480 Speaker 5: Percent of those companies that have to refinance in the 232 00:09:23,520 --> 00:09:26,120 Speaker 5: next twelve to eighteen months. Yeah, so if they don't 233 00:09:26,120 --> 00:09:28,200 Speaker 5: do anything, And that's why I actually liked Waller's comments. 234 00:09:28,200 --> 00:09:29,480 Speaker 4: I was like, that's refreshing. 235 00:09:30,160 --> 00:09:31,079 Speaker 3: Just don't do. 236 00:09:31,080 --> 00:09:34,120 Speaker 5: Anything, just let it go, sit on it, be patient. 237 00:09:35,520 --> 00:09:37,679 Speaker 5: But Powell does seem like he wants to cut. I 238 00:09:37,760 --> 00:09:40,120 Speaker 5: think this is going to create more issues than for him. 239 00:09:40,320 --> 00:09:42,080 Speaker 5: And it's you know, it's just a circular feedback. 240 00:09:42,280 --> 00:09:44,040 Speaker 3: It's David shit just romonicus. 241 00:09:44,120 --> 00:09:45,760 Speaker 2: The last couple of weeks to say a chamman that 242 00:09:45,800 --> 00:09:47,440 Speaker 2: wants to count well the tights a co op parade, 243 00:09:47,440 --> 00:09:49,000 Speaker 2: and that's gonna be the outcome that get sets out 244 00:09:49,400 --> 00:10:01,360 Speaker 2: likes it as yet, it's good to see it. Secretary Yellen, 245 00:10:01,440 --> 00:10:04,480 Speaker 2: speaking at an event in Georgia yesterday, saying US manufacturing 246 00:10:04,520 --> 00:10:07,600 Speaker 2: is facing pressure from cheap imports flooding the market. The 247 00:10:07,600 --> 00:10:11,480 Speaker 2: comments ranging from green energy products to electric vehicles. Yellen's 248 00:10:11,480 --> 00:10:13,600 Speaker 2: saying this will be a key isshoe during head next 249 00:10:13,640 --> 00:10:15,840 Speaker 2: trip to China, which is expected in the coming weeks. 250 00:10:16,040 --> 00:10:20,000 Speaker 2: Stave As center At, Executive VP of Care America, joins us. 251 00:10:20,000 --> 00:10:22,559 Speaker 2: Now for more, Steve goomone to you, Moring. Let's talk 252 00:10:22,559 --> 00:10:24,920 Speaker 2: about EV's. It's fantastic to have you with us. You've 253 00:10:24,920 --> 00:10:27,240 Speaker 2: got the EV nine, the EV six over at kir Can. 254 00:10:27,280 --> 00:10:28,880 Speaker 2: We just start with how they're selling because we've heard 255 00:10:28,880 --> 00:10:31,199 Speaker 2: a lot about pushback in this country. 256 00:10:31,240 --> 00:10:32,080 Speaker 3: How are they selling. 257 00:10:32,480 --> 00:10:35,319 Speaker 7: They're selling very well. We'd like to sell more of them, 258 00:10:35,360 --> 00:10:38,559 Speaker 7: but I think there's been a lot of expectation about 259 00:10:38,559 --> 00:10:44,319 Speaker 7: the rate of the transition and that's unknown. And consumers 260 00:10:44,320 --> 00:10:47,479 Speaker 7: are buying the car, they're enjoying the car. The infrastructures 261 00:10:47,520 --> 00:10:53,080 Speaker 7: is a challenge. The whole industry has already received the 262 00:10:53,160 --> 00:10:56,880 Speaker 7: business from the early adopters and now we're getting into 263 00:10:57,040 --> 00:10:59,320 Speaker 7: people that really need the car. This isn't a toy. 264 00:10:59,360 --> 00:11:01,800 Speaker 7: They need to get back and forth. The thing about 265 00:11:01,880 --> 00:11:06,079 Speaker 7: range anxiety is true, but it's more about charging anxiety 266 00:11:06,120 --> 00:11:09,000 Speaker 7: because the cars all go three hundred miles and very 267 00:11:09,000 --> 00:11:12,000 Speaker 7: few people drive three hundred miles at a time. So 268 00:11:12,880 --> 00:11:16,600 Speaker 7: we're very excited. EVE nine's won a lot of awards. 269 00:11:16,679 --> 00:11:19,640 Speaker 7: It's proven what you can do with electric cars at 270 00:11:19,640 --> 00:11:23,120 Speaker 7: three row SUV with that kind of range. 271 00:11:23,280 --> 00:11:25,240 Speaker 2: What are data ship's telling you about what they need 272 00:11:25,320 --> 00:11:27,480 Speaker 2: right now? Where consumer demount is and how can you 273 00:11:27,520 --> 00:11:28,360 Speaker 2: meet that demount. 274 00:11:28,400 --> 00:11:31,720 Speaker 7: Well, when you talk to dealers, their first answer is discounts, 275 00:11:32,400 --> 00:11:35,480 Speaker 7: and that's not selling from strength. I think what we 276 00:11:35,559 --> 00:11:40,680 Speaker 7: need is better infrastructure, and that's where all of This 277 00:11:40,880 --> 00:11:45,319 Speaker 7: is failing in a sense because you can regulate what 278 00:11:45,360 --> 00:11:49,240 Speaker 7: we build, you can't regulate what people buy. And the 279 00:11:49,240 --> 00:11:52,480 Speaker 7: big projects like infrastructure that in the beginning are all 280 00:11:52,559 --> 00:11:55,800 Speaker 7: cash out and then the return is over a long 281 00:11:55,840 --> 00:11:58,600 Speaker 7: period of time. That's kind of like building highways, and 282 00:11:58,600 --> 00:12:01,080 Speaker 7: that's what the government should do, and they've really blown 283 00:12:01,120 --> 00:12:02,240 Speaker 7: it on that. 284 00:12:03,160 --> 00:12:05,480 Speaker 1: From a personal perspective, when I was buying a car, 285 00:12:05,520 --> 00:12:08,400 Speaker 1: it wasn't range anxiety, it wasn't charging anxiety. It was 286 00:12:08,400 --> 00:12:10,560 Speaker 1: resale value anxiety, and the fact that it was probably 287 00:12:10,559 --> 00:12:12,080 Speaker 1: going to plunge off a cliff if I got an 288 00:12:12,080 --> 00:12:15,520 Speaker 1: electric vehicle, because right now it's not clear, especially with 289 00:12:15,559 --> 00:12:18,839 Speaker 1: an eight year battery lifespan, how do you address that 290 00:12:18,920 --> 00:12:21,360 Speaker 1: the fact that these cars are not as valuable when 291 00:12:21,400 --> 00:12:24,599 Speaker 1: you resell them, and potentially there could be new technologies 292 00:12:24,600 --> 00:12:25,760 Speaker 1: that come down the pike in that time. 293 00:12:25,840 --> 00:12:29,240 Speaker 7: Absolutely, and when you're buying electric cars that are probably 294 00:12:29,320 --> 00:12:33,760 Speaker 7: more like tech products than they are normal cars, perhaps 295 00:12:33,760 --> 00:12:37,680 Speaker 7: the ownership method's going to change and you may lease 296 00:12:37,720 --> 00:12:40,080 Speaker 7: the car. You may be the first less see on 297 00:12:40,120 --> 00:12:41,920 Speaker 7: the car. It may come back at the end of 298 00:12:41,920 --> 00:12:45,360 Speaker 7: the lease and get a complete refitting and tech upgrade 299 00:12:45,400 --> 00:12:47,640 Speaker 7: like an aircraft does, and then there'll be a second 300 00:12:47,760 --> 00:12:51,160 Speaker 7: less see and you recondition the battery. So there's a 301 00:12:51,160 --> 00:12:53,400 Speaker 7: lot of change coming in terms of how you do things. 302 00:12:53,440 --> 00:12:54,680 Speaker 3: And it might be that. 303 00:12:54,559 --> 00:12:56,840 Speaker 7: You don't own them. And in a sense, you don't 304 00:12:56,840 --> 00:12:58,800 Speaker 7: own a car when you buy it. You only own 305 00:12:59,200 --> 00:13:00,000 Speaker 7: the life of the car. 306 00:13:00,559 --> 00:13:00,760 Speaker 2: You know. 307 00:13:00,880 --> 00:13:02,560 Speaker 1: Jonesman on this point for a long time, and he's 308 00:13:02,600 --> 00:13:05,640 Speaker 1: absolutely correct. It raises this question if policymakers have gotten 309 00:13:05,679 --> 00:13:09,720 Speaker 1: it wrong, if basically the car makers were pushed into 310 00:13:10,000 --> 00:13:13,000 Speaker 1: manufacturing vehicles where there wasn't the demand yet and it 311 00:13:13,040 --> 00:13:15,360 Speaker 1: wasn't clear that that was the right pathway when there 312 00:13:15,400 --> 00:13:17,440 Speaker 1: could have been better ways to get to a more 313 00:13:17,480 --> 00:13:18,319 Speaker 1: efficient future. 314 00:13:18,520 --> 00:13:19,160 Speaker 3: Is that accurate? 315 00:13:19,400 --> 00:13:24,600 Speaker 7: Absolutely, we're being told what to make specifically, and there's 316 00:13:24,720 --> 00:13:27,000 Speaker 7: many ways to skin that cat, so to speak. And 317 00:13:27,040 --> 00:13:33,440 Speaker 7: if you talk to engine designers and emissions engineers, there 318 00:13:33,480 --> 00:13:38,160 Speaker 7: are many things they can do to clean up the cars. 319 00:13:38,200 --> 00:13:43,319 Speaker 7: And there's different technologies batteries. One, there's fuel cells and hydrogen. 320 00:13:43,360 --> 00:13:47,880 Speaker 7: Fuel cells are really wonderful. Their emission is water and 321 00:13:48,200 --> 00:13:52,000 Speaker 7: they're silent, and the question is where to get the hydrogen. 322 00:13:52,160 --> 00:13:54,400 Speaker 7: And I've worked on hydrogen cars for a long time 323 00:13:54,800 --> 00:13:58,680 Speaker 7: and that infrastructure is even less mature than the battery 324 00:13:58,760 --> 00:14:03,360 Speaker 7: charging infrastructure. So I tell everyone that I can find 325 00:14:03,360 --> 00:14:07,079 Speaker 7: in the government. You need an Oppenheimer moment, and you 326 00:14:07,720 --> 00:14:10,440 Speaker 7: need to one feel the crisis, and you need some 327 00:14:10,559 --> 00:14:12,760 Speaker 7: leadership to manage the change. 328 00:14:13,040 --> 00:14:15,320 Speaker 6: The US government now has subsidies for the evs and 329 00:14:15,320 --> 00:14:18,000 Speaker 6: then the EPA. Many people say, this's basically a mandate. 330 00:14:18,120 --> 00:14:21,400 Speaker 6: These are the strongest pollution standards we've ever seen the 331 00:14:21,440 --> 00:14:24,280 Speaker 6: United States. So what should have they done first? Because 332 00:14:24,280 --> 00:14:26,400 Speaker 6: it seems like what you're saying is they got it backwards. 333 00:14:26,880 --> 00:14:29,600 Speaker 7: Yeah, well, there's a lot wrong with the regulation. And 334 00:14:29,640 --> 00:14:31,840 Speaker 7: if you think about it, you've got three different groups 335 00:14:31,920 --> 00:14:34,800 Speaker 7: regulating the auto industry, at least three at least from 336 00:14:34,800 --> 00:14:38,120 Speaker 7: the emissions. You have a NITSO which is regulating CAFE, 337 00:14:38,200 --> 00:14:41,560 Speaker 7: which is a fuel economy. You have EPA for exhaust gases. 338 00:14:41,880 --> 00:14:45,440 Speaker 7: And then you have California steering from the back and 339 00:14:45,640 --> 00:14:50,240 Speaker 7: they're requiring electric vehicles, and there's other states that jump 340 00:14:50,280 --> 00:14:53,760 Speaker 7: on that rule and they're not doing anything about the infrastructure. 341 00:14:54,520 --> 00:14:58,480 Speaker 7: And the challenge you have is you've got too many 342 00:14:58,480 --> 00:15:03,000 Speaker 7: sets of conflicting rules, and in the case of electric vehicles, 343 00:15:06,000 --> 00:15:09,880 Speaker 7: the point is to reduce the CO two and CO two. 344 00:15:09,720 --> 00:15:10,800 Speaker 4: Is not a local problem. 345 00:15:10,800 --> 00:15:12,520 Speaker 7: When you fly over the country, you don't see the 346 00:15:12,560 --> 00:15:16,800 Speaker 7: lines on the ground. It's a global problem. So California 347 00:15:16,840 --> 00:15:19,640 Speaker 7: is a big EV market, you know what, like the 348 00:15:19,720 --> 00:15:23,120 Speaker 7: number three and five are. It's Texas and Florida. They're 349 00:15:23,120 --> 00:15:27,840 Speaker 7: not ZEV states. And my attitude is, well, let people 350 00:15:27,840 --> 00:15:29,360 Speaker 7: buy them where they want to buy them, right now, 351 00:15:29,360 --> 00:15:31,640 Speaker 7: and let's get the job done. So it's all automakers, 352 00:15:32,200 --> 00:15:35,320 Speaker 7: the percentage of evs. You have to sell it for 353 00:15:35,400 --> 00:15:39,000 Speaker 7: the whole country. Don't create these silos and buckets. That's 354 00:15:39,160 --> 00:15:42,400 Speaker 7: killing the industry and it's impossible to manage that. 355 00:15:43,320 --> 00:15:45,280 Speaker 6: By the administration has been very happy with the Inflation 356 00:15:45,320 --> 00:15:47,440 Speaker 6: Reduction Act, able to get over the finish line. But 357 00:15:47,480 --> 00:15:49,760 Speaker 6: Trump is threatening to ratchet back. How concerned are you 358 00:15:49,800 --> 00:15:50,200 Speaker 6: about that? 359 00:15:50,320 --> 00:15:53,240 Speaker 7: Yeah, So someone asked me last night what's the biggest 360 00:15:53,320 --> 00:15:57,160 Speaker 7: threat that I see in this business? And I said, 361 00:15:57,160 --> 00:15:59,520 Speaker 7: it's an existential threat and they said, oh, it's a 362 00:15:59,600 --> 00:16:02,720 Speaker 7: China something else said, No, that's that's competition, or okay 363 00:16:02,760 --> 00:16:06,200 Speaker 7: with that, it's government policy and this whip sawing. We're 364 00:16:06,240 --> 00:16:09,400 Speaker 7: making decisions that last thirty. 365 00:16:09,160 --> 00:16:09,760 Speaker 4: Or forty years. 366 00:16:09,760 --> 00:16:13,800 Speaker 7: When you build factories and establish supply chains and to 367 00:16:13,840 --> 00:16:17,520 Speaker 7: have the government policy change from on off on off, 368 00:16:18,000 --> 00:16:18,680 Speaker 7: it's nuts. 369 00:16:19,040 --> 00:16:19,800 Speaker 4: It's just nuts. 370 00:16:19,920 --> 00:16:21,320 Speaker 2: I means you need to be riddy in both. So 371 00:16:21,320 --> 00:16:24,240 Speaker 2: can we talk about the EV plump in Georgia. Can 372 00:16:24,280 --> 00:16:26,080 Speaker 2: you tell me whether that's going to be dedicated to 373 00:16:26,080 --> 00:16:27,520 Speaker 2: the Baunttery pat vehicles or not. 374 00:16:27,640 --> 00:16:29,000 Speaker 3: How flexible would that plump be? 375 00:16:29,240 --> 00:16:33,120 Speaker 7: So that's a great question. The original concept is EVS 376 00:16:33,480 --> 00:16:36,240 Speaker 7: and it also includes a battery plant. So because you 377 00:16:36,280 --> 00:16:38,640 Speaker 7: always want to have the big heavy components right near 378 00:16:38,680 --> 00:16:41,920 Speaker 7: the factory, it might be in the future because you 379 00:16:41,920 --> 00:16:44,640 Speaker 7: always want that factory running full speed with everything you 380 00:16:44,680 --> 00:16:47,440 Speaker 7: can do, it might be we also build other cars there. 381 00:16:47,680 --> 00:16:47,840 Speaker 3: Now. 382 00:16:47,920 --> 00:16:50,600 Speaker 7: We have another factory in West Georgia that's been around 383 00:16:50,600 --> 00:16:52,400 Speaker 7: for a long time and we build tell your ide 384 00:16:52,400 --> 00:16:56,200 Speaker 7: in Sorrento and other great cars there. One of the 385 00:16:56,240 --> 00:16:59,640 Speaker 7: things that we've done is we made room and we're 386 00:16:59,680 --> 00:17:03,960 Speaker 7: building EV nine there now. So and most of an 387 00:17:03,960 --> 00:17:06,639 Speaker 7: electric vehicle is the same as internal combustion. At some 388 00:17:06,720 --> 00:17:09,879 Speaker 7: point it goes this way or that way, and we're 389 00:17:09,960 --> 00:17:13,480 Speaker 7: building EV nine. We're going to introduce it later this year. 390 00:17:13,800 --> 00:17:16,560 Speaker 7: So it might be that we're going to balance the 391 00:17:16,640 --> 00:17:19,360 Speaker 7: capacities with other products. 392 00:17:19,359 --> 00:17:20,560 Speaker 3: How easy is it to do that? 393 00:17:20,720 --> 00:17:23,040 Speaker 2: I've tried to get some information some county from GM 394 00:17:23,040 --> 00:17:24,840 Speaker 2: and struggled, So maybe kick and help me out a 395 00:17:24,880 --> 00:17:28,640 Speaker 2: little bit more to talkle between hybrids, evs, and total 396 00:17:28,680 --> 00:17:31,639 Speaker 2: combustion engine vehicles in a single plant. How easy to 397 00:17:31,640 --> 00:17:33,159 Speaker 2: tackle between the three? 398 00:17:33,600 --> 00:17:36,959 Speaker 7: The biggest hybrid vehicle isn't that different. So it has 399 00:17:37,000 --> 00:17:39,119 Speaker 7: an engine, has a fuel tank, it also has a 400 00:17:39,600 --> 00:17:42,480 Speaker 7: electric motor attached to the engine, and a battery pack. 401 00:17:42,560 --> 00:17:45,119 Speaker 7: It's a smaller battery pack, and EV is a totally 402 00:17:45,160 --> 00:17:48,080 Speaker 7: different beast because it's driven by electric motors at the wheels. 403 00:17:48,440 --> 00:17:51,919 Speaker 7: So at some point when you're building the body and 404 00:17:51,960 --> 00:17:54,880 Speaker 7: the car, it's either going to be born as an 405 00:17:54,880 --> 00:17:58,280 Speaker 7: EV or born as internal combustion and that's where the 406 00:17:58,359 --> 00:18:00,919 Speaker 7: difference is. So at some point on the line, you 407 00:18:00,960 --> 00:18:03,320 Speaker 7: go this way, you go that way. I think the 408 00:18:03,600 --> 00:18:07,680 Speaker 7: biggest challenge is the supply chain because you have different parts, 409 00:18:08,200 --> 00:18:11,600 Speaker 7: so you have to have different motors coming in and 410 00:18:11,920 --> 00:18:16,040 Speaker 7: battery packs. But inside the factory you're either jacking up 411 00:18:16,040 --> 00:18:21,200 Speaker 7: engines or you're jacking battery packs, and it's not that exciting. 412 00:18:20,800 --> 00:18:23,000 Speaker 1: When you talk about the supply chain. You mentioned this earlier. 413 00:18:23,040 --> 00:18:26,200 Speaker 1: You don't worry about China, that's just competition. Do you 414 00:18:26,280 --> 00:18:30,520 Speaker 1: think increasingly the gating off of different auto industries depending 415 00:18:30,600 --> 00:18:34,560 Speaker 1: on the country is problematic for your business, even if 416 00:18:34,880 --> 00:18:37,040 Speaker 1: it might benefit you in the short run in terms 417 00:18:37,080 --> 00:18:40,479 Speaker 1: of restricting competition on the margins with certain areas. 418 00:18:40,560 --> 00:18:41,840 Speaker 3: Yeah, well you don't. 419 00:18:42,720 --> 00:18:45,280 Speaker 7: My background's in economics, actually, and you don't want to 420 00:18:45,320 --> 00:18:51,480 Speaker 7: restrict competition because it breeds laziness and weakness. So competition 421 00:18:51,560 --> 00:18:53,480 Speaker 7: is a good thing. You don't like it when somebody 422 00:18:53,520 --> 00:18:56,560 Speaker 7: can beat you, and often you get beaten because the 423 00:18:56,560 --> 00:19:00,040 Speaker 7: difference is between the nations and you just have to 424 00:19:00,080 --> 00:19:00,560 Speaker 7: get better. 425 00:19:01,160 --> 00:19:03,720 Speaker 2: Steve, this was one of the most revealing conversations, honest 426 00:19:03,760 --> 00:19:05,800 Speaker 2: conversations I've had about the automat because for a long 427 00:19:05,840 --> 00:19:09,199 Speaker 2: long time, and appreciate the transparency the policymaker appears. It's 428 00:19:09,200 --> 00:19:12,359 Speaker 2: put you in a very very complicated place, and we appreciate. 429 00:19:11,960 --> 00:19:14,520 Speaker 3: Your time this morning, sir. Thank you, my pleasure, Thank you, Steve. 430 00:19:14,520 --> 00:19:27,160 Speaker 2: Steve is sent to there of Kia America Max CEO. 431 00:19:27,400 --> 00:19:29,600 Speaker 2: Robert Davis joins us now for more. Rob good morning 432 00:19:29,640 --> 00:19:31,439 Speaker 2: to you, very good morning. Can we talk about that 433 00:19:31,480 --> 00:19:33,560 Speaker 2: approval yesterday, how much of a breakthrough. 434 00:19:33,880 --> 00:19:37,800 Speaker 8: Well, you know, this is really, we think something special. 435 00:19:38,080 --> 00:19:41,080 Speaker 8: The disease we are hopefully able now to really make 436 00:19:41,119 --> 00:19:45,040 Speaker 8: a difference in is pulmonary arterial hypertension. And this is 437 00:19:45,080 --> 00:19:47,679 Speaker 8: a rare disease. It's not a well known disease, but 438 00:19:47,720 --> 00:19:49,000 Speaker 8: it's a devastating disease. 439 00:19:49,880 --> 00:19:51,240 Speaker 4: You know, this is a disease that. 440 00:19:51,280 --> 00:19:54,200 Speaker 8: Primarily affects women in the prime of life age thirty 441 00:19:54,240 --> 00:19:58,359 Speaker 8: to sixty. Mortality rates of forty three percent in five years, 442 00:19:58,440 --> 00:20:01,360 Speaker 8: so you can imagine in pack not only to the patient, 443 00:20:01,520 --> 00:20:04,240 Speaker 8: but to the family of people who otherwise are in 444 00:20:04,240 --> 00:20:09,120 Speaker 8: the prime of life. Is really tragic, thankfully, and hopefully 445 00:20:09,280 --> 00:20:11,960 Speaker 8: we'll make a difference in that. This drug now we're 446 00:20:11,960 --> 00:20:16,159 Speaker 8: bringing forward, it's called wind Revere, is a biologic. It's 447 00:20:16,200 --> 00:20:18,560 Speaker 8: a first in class medicine. It's a new mechanism of 448 00:20:18,600 --> 00:20:22,240 Speaker 8: action called an active and signaling inhibitor. And what it 449 00:20:22,280 --> 00:20:26,320 Speaker 8: actually does is potentially remodels the blood vessels, your arterior vessels, 450 00:20:26,720 --> 00:20:27,560 Speaker 8: that allows them. 451 00:20:27,440 --> 00:20:27,919 Speaker 3: To open up. 452 00:20:27,920 --> 00:20:30,520 Speaker 8: Because what pH does it causes your blood vessels and 453 00:20:31,160 --> 00:20:35,119 Speaker 8: your lungs to thicken and narrow, which ultimately leads to 454 00:20:35,520 --> 00:20:36,119 Speaker 8: heart disease. 455 00:20:36,440 --> 00:20:38,240 Speaker 3: How often do you take this? Every three weeks? How 456 00:20:38,280 --> 00:20:38,760 Speaker 3: does this work? 457 00:20:38,840 --> 00:20:42,280 Speaker 8: Yeah, so it's a three week subcutaneous injection. Can be 458 00:20:42,359 --> 00:20:45,920 Speaker 8: done by the patient or caregiver, and so this would 459 00:20:45,960 --> 00:20:48,320 Speaker 8: be something you would administer we expect most people do 460 00:20:48,400 --> 00:20:48,760 Speaker 8: in home. 461 00:20:49,359 --> 00:20:50,920 Speaker 1: I wish we could go into a whole segment about 462 00:20:50,960 --> 00:20:52,719 Speaker 1: how you come up with these names when vera key 463 00:20:52,760 --> 00:20:54,680 Speaker 1: trutou We can do that another time. You want to 464 00:20:54,680 --> 00:20:57,000 Speaker 1: get a sense though, that this whole idea of how 465 00:20:57,040 --> 00:21:00,560 Speaker 1: you got into this through an acquisition to partner with someone, 466 00:21:00,640 --> 00:21:03,840 Speaker 1: and then what the importance is of looking beyond some 467 00:21:03,880 --> 00:21:06,560 Speaker 1: of the mainstays like cancer, is sort of that diversity 468 00:21:06,560 --> 00:21:07,600 Speaker 1: that we were just hearing about. 469 00:21:07,880 --> 00:21:11,440 Speaker 8: Yeah, well, you know, obviously we are a science led, 470 00:21:11,520 --> 00:21:15,280 Speaker 8: science driven company, and this came about because we were 471 00:21:15,320 --> 00:21:19,480 Speaker 8: already starting to look into this space. So our cardiovascular 472 00:21:19,520 --> 00:21:22,320 Speaker 8: teams within MERK we're doing work in this space. When 473 00:21:22,320 --> 00:21:25,560 Speaker 8: they saw the data from a company called Acceleron that 474 00:21:25,720 --> 00:21:28,919 Speaker 8: had this asset, they came to me and said, you know, 475 00:21:28,960 --> 00:21:32,400 Speaker 8: we're excited this can be a difference maker, and that's 476 00:21:32,400 --> 00:21:34,960 Speaker 8: why we moved on this and it really now is 477 00:21:35,000 --> 00:21:40,480 Speaker 8: a foundational element in our broader cardiovascular and cardio metabolic portfolio. 478 00:21:40,560 --> 00:21:43,920 Speaker 8: So it is one where we see the value diversification. Obviously, 479 00:21:43,920 --> 00:21:46,719 Speaker 8: we're a leader in oncology, we're a leader in vaccines, 480 00:21:46,920 --> 00:21:51,679 Speaker 8: We're increasingly moving into immunology, and this move into cardiometabolic space, 481 00:21:51,680 --> 00:21:53,119 Speaker 8: which is significant for us. 482 00:21:53,119 --> 00:21:54,480 Speaker 1: There are a lot of people who are listening who 483 00:21:54,520 --> 00:21:57,720 Speaker 1: invest increasingly in healthcare, and all they want to hear about. 484 00:21:57,560 --> 00:21:59,080 Speaker 3: Is what's your solution for weight loss? 485 00:21:59,119 --> 00:21:59,840 Speaker 4: Because that's really the. 486 00:21:59,840 --> 00:22:02,120 Speaker 1: Reason why so many people have gone into the healthcare 487 00:22:02,119 --> 00:22:03,400 Speaker 1: stocks and into the industry. 488 00:22:03,880 --> 00:22:04,720 Speaker 4: You are working on a. 489 00:22:04,720 --> 00:22:08,040 Speaker 1: GLP one type of drug, but it's not for weight loss, 490 00:22:08,200 --> 00:22:11,200 Speaker 1: it's for fatty liver. Why are you approaching this differently 491 00:22:11,400 --> 00:22:14,760 Speaker 1: and not necessarily directed at the weight loss itself and 492 00:22:14,840 --> 00:22:17,840 Speaker 1: more on some of the illness that potentially some of 493 00:22:17,880 --> 00:22:19,720 Speaker 1: the some of it can cause. 494 00:22:19,960 --> 00:22:22,800 Speaker 8: Yeah, well, so the mechanism you're talking about, we have 495 00:22:22,840 --> 00:22:27,600 Speaker 8: a GLP one glucagon dual agonist, and this is important 496 00:22:27,880 --> 00:22:30,800 Speaker 8: because while it brings weight loss benefits frankly similar to 497 00:22:30,840 --> 00:22:33,560 Speaker 8: what you'd see with the zepic, our primary focus, as 498 00:22:33,560 --> 00:22:36,479 Speaker 8: you point out, is fatty liver disease, which is a 499 00:22:36,520 --> 00:22:40,040 Speaker 8: really an untreated area today, and our view of this 500 00:22:40,119 --> 00:22:44,160 Speaker 8: space is obesity is important, but increasingly it's the cool 501 00:22:44,200 --> 00:22:48,760 Speaker 8: mobidities around obesity. It's you know, it's heart disease, it's diabetes, 502 00:22:48,960 --> 00:22:52,240 Speaker 8: it's liver disease. And so if we can affect those 503 00:22:52,280 --> 00:22:56,360 Speaker 8: and bring outcomes that benefit patients clinically, there they get 504 00:22:56,359 --> 00:22:59,040 Speaker 8: the weight benefit. But then as you think about reimbursement, 505 00:22:59,320 --> 00:23:02,320 Speaker 8: as you think about value, that's where the value comes 506 00:23:02,359 --> 00:23:05,520 Speaker 8: to society because actually we're making people more healthy than. 507 00:23:05,440 --> 00:23:06,120 Speaker 4: Just losing weight. 508 00:23:06,920 --> 00:23:10,800 Speaker 1: Is this mostly a coverage play? Essentially, it's easier for 509 00:23:10,840 --> 00:23:15,000 Speaker 1: this to get reimbursed and ensured. And that's one reason 510 00:23:15,040 --> 00:23:17,280 Speaker 1: why if you gear it as some of the illnesses, 511 00:23:17,680 --> 00:23:19,520 Speaker 1: you won't have to get into the whole debate that's 512 00:23:19,520 --> 00:23:20,399 Speaker 1: percolating elsewhere. 513 00:23:20,480 --> 00:23:20,680 Speaker 2: Yeah. 514 00:23:20,680 --> 00:23:24,879 Speaker 8: Well, again from a Mirkent perspective, it starts with the 515 00:23:24,920 --> 00:23:26,840 Speaker 8: patient at the center, so we see this as a 516 00:23:26,880 --> 00:23:29,560 Speaker 8: disease that needs to be dealt with. But yes, I 517 00:23:29,600 --> 00:23:33,200 Speaker 8: think the benefit of this is if you can show outcome, 518 00:23:33,640 --> 00:23:36,600 Speaker 8: if you can show that there's something beyond just a 519 00:23:36,640 --> 00:23:39,320 Speaker 8: weight loss than your ability to be and reimbursed and 520 00:23:39,359 --> 00:23:42,560 Speaker 8: the ability to show value to society is different. 521 00:23:42,600 --> 00:23:43,280 Speaker 4: It will be different. 522 00:23:43,359 --> 00:23:45,560 Speaker 6: But to your point, if obesity leads to so many 523 00:23:45,560 --> 00:23:49,280 Speaker 6: other health issues, at some point, will insurance government even 524 00:23:49,320 --> 00:23:50,720 Speaker 6: be able to put this under their plans. 525 00:23:51,320 --> 00:23:53,880 Speaker 8: We would expect so, yes, for sure, and I think 526 00:23:53,920 --> 00:23:56,320 Speaker 8: you're already starting to see that start to shift. And 527 00:23:56,359 --> 00:23:59,760 Speaker 8: it will be the outcomes driven approaches that drive that, 528 00:24:00,359 --> 00:24:00,720 Speaker 8: for sure. 529 00:24:00,760 --> 00:24:03,000 Speaker 2: We started this conversation by talking about this new drug 530 00:24:03,040 --> 00:24:06,560 Speaker 2: that you've developed, got approval, stock runaway high. Yesterday I 531 00:24:06,600 --> 00:24:08,600 Speaker 2: was going through the cost, so the cost could be 532 00:24:08,640 --> 00:24:10,640 Speaker 2: about two hundred and forty two thousand dollars a year. 533 00:24:10,760 --> 00:24:12,399 Speaker 2: I've always struggled with this and I want you to 534 00:24:12,440 --> 00:24:14,320 Speaker 2: explain to me why is it so much more expensive 535 00:24:14,320 --> 00:24:16,560 Speaker 2: in America compared to say, the prices that I see 536 00:24:16,600 --> 00:24:19,400 Speaker 2: for drugs abroad in Europe in the UK. What explains 537 00:24:19,640 --> 00:24:20,280 Speaker 2: that difference? 538 00:24:20,440 --> 00:24:22,560 Speaker 8: Yeah, Well, you know, it's hard to do in apples 539 00:24:22,600 --> 00:24:25,880 Speaker 8: to apples comparison. If you look at what drugs are 540 00:24:25,920 --> 00:24:28,080 Speaker 8: as a percentage of total health care spend in the 541 00:24:28,160 --> 00:24:31,400 Speaker 8: United States, they run about fourteen to fifteen percent. If 542 00:24:31,440 --> 00:24:33,960 Speaker 8: you look across Europe, for instance, it's about the same. 543 00:24:34,000 --> 00:24:36,600 Speaker 8: It's about twelve to thirteen percent. So the reality of 544 00:24:36,640 --> 00:24:41,040 Speaker 8: it is that healthcare as a total area, not just drugs, 545 00:24:41,040 --> 00:24:43,760 Speaker 8: in the United States is more expensive. The percentage of 546 00:24:43,880 --> 00:24:46,359 Speaker 8: cost of drugs in the United States is equal to 547 00:24:46,400 --> 00:24:48,560 Speaker 8: what it is outside the United States. So it's hard 548 00:24:48,600 --> 00:24:51,480 Speaker 8: to just take one element of the healthcare system and say, 549 00:24:51,520 --> 00:24:54,679 Speaker 8: let's focus on it, not understanding the broader questions. You know, 550 00:24:54,680 --> 00:24:56,840 Speaker 8: if you're in the United States, the thing we benefit 551 00:24:56,880 --> 00:25:00,359 Speaker 8: from you get the fastest access, You get the most 552 00:25:00,400 --> 00:25:04,360 Speaker 8: access to the most innovative medicine, driven by an industry 553 00:25:04,800 --> 00:25:08,359 Speaker 8: that is based here in the United States and exports 554 00:25:08,359 --> 00:25:11,040 Speaker 8: to the world. You know, so we need to look 555 00:25:11,080 --> 00:25:14,480 Speaker 8: at the totality of what we see as really three elements. 556 00:25:14,480 --> 00:25:18,440 Speaker 8: You have to think about access, affordability, but then also 557 00:25:18,520 --> 00:25:22,679 Speaker 8: making sure you're protecting the innovation ecosystem that we value 558 00:25:22,720 --> 00:25:23,400 Speaker 8: in this country. 559 00:25:23,600 --> 00:25:25,480 Speaker 2: Rub we appreciate the breakthrough, that's for sure. In the 560 00:25:25,520 --> 00:25:27,439 Speaker 2: last twenty four hours of major breakthrough. Thank you very 561 00:25:27,520 --> 00:25:30,880 Speaker 2: much for being with us. Robert Davis there the merc CEO. 562 00:25:32,000 --> 00:25:35,560 Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best 563 00:25:35,560 --> 00:25:38,880 Speaker 2: in markets, economics, angio politics. You can watch the show 564 00:25:38,960 --> 00:25:41,879 Speaker 2: live on Bloomberg TV weekday mornings from six am to 565 00:25:42,040 --> 00:25:45,800 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 566 00:25:45,920 --> 00:25:48,159 Speaker 2: or anywhere else you listen, and as always, on the 567 00:25:48,160 --> 00:25:50,719 Speaker 2: Bloomberg Terminal and the Bloomberg Business apps