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Speaker 3: That Miskin joins us now for more mac.
Speaker 4: Good morning to you, Good morning, thanks for having me.
Speaker 3: Great to catch up with you in person as well.
Speaker 2: It's been a while. Let's get into this. Governor Waller,
Speaker 2: is it in ignore and move on? Do you agree
Speaker 2: with Luke kickmore of Aberdeen?
Speaker 4: I actually thought it made a lot of sense.
Speaker 5: I thought Powell in the press conference during the FED
Speaker 5: meeting was you know, he kept saying overtime. It's like
Speaker 5: when I tell my children to clean their room and
Speaker 5: they're like, oh yeah, overtime, all clean the room. You know,
Speaker 5: it just keeps on getting more messy at everything over time,
Speaker 5: you got to be thinking about this more with a priority.
Speaker 5: Inflation is starting to come back, and it just you
Speaker 5: said before data dependent.
Speaker 4: I love that. That's a great way for the Fed
Speaker 4: to think about this.
Speaker 5: But if you're going to revise up your inflation forecast
Speaker 5: and you're going to keep cuts, that's not being data dependent.
Speaker 5: So they have a communication issue right now, and I
Speaker 5: think they're going to have a tough time navigating this
Speaker 5: because the markets are really dependent on them being dubvish,
Speaker 5: and if they push back, I think it's going to
Speaker 5: be tough, but I think they should because they don't
Speaker 5: want to fight.
Speaker 4: This battle all over again later this year.
Speaker 2: Always lovely storytelling, So let's run with it. Let's say
Speaker 2: the claim room is two percent and you're less convince
Speaker 2: they're going to clean it anytime soon. When is the
Speaker 2: bumb market starts to get messia, which essentially is what
Speaker 2: las raz askin.
Speaker 5: So we've seen some that are saying in the position
Speaker 5: with four higher interest rates because of that, the long
Speaker 5: end of the curve would see higher rates if that
Speaker 5: does if they let inflation run like this. But in
Speaker 5: our view, it's just you're seeing a lot of value
Speaker 5: in the bond market yields are already up where in
Speaker 5: an inverted yield curve. This is the longest inversion the
Speaker 5: yield curve ever, So the bond market's a mess in
Speaker 5: a way. Just try and interpret this. In our view
Speaker 5: though we stay inverted. If anything, we see we get
Speaker 5: more inverted. We're actually on the other side. We think
Speaker 5: they're going to take longer to cut, but then they're
Speaker 5: going to cut more than the markets expect because something
Speaker 5: will happen. They've got to push back here. They've got
Speaker 5: to be strong. They've got to be that adult in
Speaker 5: the room and tell the to clean their room. It's hard,
Speaker 5: but right now they're not doing it.
Speaker 1: Well, they're not doing it. They're not being the adults
Speaker 1: in the room. They're basically saying, why don't you throw
Speaker 1: some more things on the floor, because you know what,
Speaker 1: we'll get to it and later.
Speaker 4: And this raises the question, what gives you.
Speaker 1: The conviction that that's the path that they're going to
Speaker 1: take If that's not the signals or the communications that
Speaker 1: they're giving and markets are running with that and they're
Speaker 1: not pushing back.
Speaker 4: Yeah, I just think inflation coming back growth.
Speaker 5: If we are starred, right, the stars of the sky,
Speaker 5: like you remember that analogy. Yeah, yeah, yeah, But if
Speaker 5: this is the utual rate, why isn't the economy slowing,
Speaker 5: Why is an inflation slowing?
Speaker 4: None of that's happening.
Speaker 5: It's hard to say that they're being really restricted with
Speaker 5: high yield spreads at three hundred basis points. They seem
Speaker 5: to be they're trying to turn off the faucet, but
Speaker 5: the shower's still running the water.
Speaker 4: The liquidity is still coming into.
Speaker 5: The market, and you've got to use financial I think
Speaker 5: that the you know, maybe this is a bigger picture conversation,
Speaker 5: but I think the FED needs to be market based
Speaker 5: and not academic based or legal.
Speaker 3: A lawyer gonna jump in, Matt, it doesn't matter. This
Speaker 3: is who they are.
Speaker 2: Doesn't this screen buy stocks by some what you've had
Speaker 2: in the last week.
Speaker 5: So historically speaking, usually this is the time late cycle
Speaker 5: where the FED is at the what they think is
Speaker 5: the neutral rain, and you have to be careful because
Speaker 5: it does look good. Usually, get this late cycle pop
Speaker 5: and risk assets as the FED says, hey, we're gonna
Speaker 5: think about cutting or we're not gonna raise rates anymore,
Speaker 5: and then the tide goes out. Well, Warren Buffin quote
Speaker 5: when the tide goes out, you see you're swimming, but
Speaker 5: you want to make sure that you don't have that risk,
Speaker 5: because if it's commercial real estate and it's other things,
Speaker 5: things can break and then all of a sudden, the
Speaker 5: Fed's got to turn.
Speaker 4: And it almost seems like Powell might have something up.
Speaker 5: His sleeve that's saying there's a risk here that that
Speaker 5: isn't on the surface. That I'm playing this a little
Speaker 5: bit easier, and I wouldn't be surprised if there is
Speaker 5: something underneath the surface.
Speaker 1: How frustrating is it to play psychiatrist to J. Powell
Speaker 1: at a time where you feel like it should happen,
Speaker 1: but you think maybe he's playing games with us, Maybe
Speaker 1: in his head he knows something. I mean, this is
Speaker 1: sort of the level that we're at because people can't
Speaker 1: otherwise understand and draw the dots from what we saw
Speaker 1: in the.
Speaker 5: Nating you know, when they do the summary of economic
Speaker 5: projections and all this forward guidance, and back in the
Speaker 5: day that was supposed to help because it was saying, hey,
Speaker 5: we're not doing much and we're just sitting here. Now
Speaker 5: it's almost hurting the fact that you're saying we're going
Speaker 5: to do rate cuts before it gets price in the
Speaker 5: market immediately, and basically that was a rate cut.
Speaker 4: You know, the way I.
Speaker 5: Think about it, almost like fight Club the movie. You
Speaker 5: don't talk about fight Club. That's the first rule. Don't
Speaker 5: talk about rate cuts until you need to talk about
Speaker 5: rate cuts, because if you're going to talk about in advance,
Speaker 5: the market's going to say, great, I'm going to price
Speaker 5: that in, and then that creates the risk on, that
Speaker 5: creates the inflation impulse.
Speaker 4: And now we're going to have to deal with it
Speaker 4: all over again.
Speaker 6: They also up their own inflation target, so you know,
Speaker 6: we've been having this conversation a lot of people about
Speaker 6: it's two points something that the FED actually basically is targeting,
Speaker 6: not no longer two percent. Maybe they're more acceptable of
Speaker 6: a range. Do you agree with that it's possible. I mean,
Speaker 6: after the last meeting, I thought that, I thought.
Speaker 4: Two to three.
Speaker 5: I mean, in the Summary of Economic projections, it doesn't
Speaker 5: taken till twenty twenty six that you see a two
Speaker 5: point zero.
Speaker 4: That's that overtime. That's hey, we'll clean up the.
Speaker 5: Room two years from now, but for then, you know
Speaker 5: it's gonna be bumpy deal, you know. But Emory, it's
Speaker 5: also about the energy sector recently. You know, oil prices
Speaker 5: are coming up. That's so if you had the stocks
Speaker 5: rallying but you didn't have the inflation impulse, that's a
Speaker 5: that's better. But you know, I almost think about March
Speaker 5: madness bracketology right now.
Speaker 4: So energy stocks were actually.
Speaker 5: One of the best performers in the quarter. Oil prices
Speaker 5: up another one percent today. If that keeps going, they're
Speaker 5: going to be hitting gas prices coming up, inflationary impulse,
Speaker 5: and there's other things disruptions of supply chain still going
Speaker 5: on that I think they're gonna have to change their
Speaker 5: tune as the year goes on.
Speaker 1: So what are you buying?
Speaker 5: So we still have the high quality US doocs were
Speaker 5: overweight US verse International.
Speaker 4: We are up in cap. We're trying to find profitable businesses.
Speaker 5: We do not have some of the AI you know,
Speaker 5: the Fomo AI or the crypto, the mind all that.
Speaker 5: So AI wise, you know, Navidia has done pretty well.
Speaker 5: You know, it has put on another trillion of market
Speaker 5: cap last quarter. So we do have tech. We've been
Speaker 5: overweight tech. We like quality, so that helps, but at
Speaker 5: a reasonable price, on the bond side, we have been
Speaker 5: dragging because we've been higher quality.
Speaker 4: We're willing.
Speaker 5: I look at high yield spreads at two ninety I
Speaker 5: think it was last week.
Speaker 4: It was great tweet by the way, you know, because
Speaker 4: we got to watch this.
Speaker 5: So the upside is fifty bases points lowers, the tightest
Speaker 5: in history, or we could go eight to twenty percent higher.
Speaker 5: And that's just another symptom of this market is just
Speaker 5: how tight the spreads are.
Speaker 4: So we're not going after that.
Speaker 5: We have an underweight to high yield overweight, higher quality
Speaker 5: than the bond market.
Speaker 4: We're getting enough on the ball on that overweight to.
Speaker 5: US equities overweight, US large cap have some of the
Speaker 5: tech quality names, but frankly, we're sitting here waiting and
Speaker 5: nothing's on sale, I mean, other than high quality bonds.
Speaker 5: But it's a hard trade because the momentum factor in
Speaker 5: equities is so powered.
Speaker 2: I love how many people don't have a blimback terminal
Speaker 2: and rely on Bramo to get high yeld spread updates, safe,
Speaker 2: safer tide. But the way you talk about them is
Speaker 2: if they are a reflection of complacency and not a
Speaker 2: reflection of strength. Why do you see it as the
Speaker 2: former and not the latter.
Speaker 5: Of the last two times they were this type was
Speaker 5: two thousand and seven, twenty twenty one, the twelve months
Speaker 5: after those real tight levels, high yield was down three
Speaker 5: percent total return, so you got about seven percent yield.
Speaker 5: Total return was negative in two thousand and seven. And
Speaker 5: this is again going back to that Warren Buffer quote
Speaker 5: of the tide goes out, it off and looks the
Speaker 5: best before it turns. The risk on the centiment has
Speaker 5: to be stretched to really feel the reversion.
Speaker 4: And so I still think, I mean, we always think
Speaker 4: about risk management. It's part of our DNA.
Speaker 5: But right now, as everyone else is going to this
Speaker 5: side of the boat, we're saying, hey, there's some stuff
Speaker 5: that's like higher quality, defensive parts of markets.
Speaker 4: That's actually what you should be looking.
Speaker 3: At it at. That's sensible.
Speaker 2: I think we always just think about you know, when
Speaker 2: I hear stuff like this, I always have to think
Speaker 2: about things from the other side. And I'm thinking, right now,
Speaker 2: I'm listening to you the FED just to borrow a
Speaker 2: little bit from sorrow, So I'll do it the other
Speaker 2: way around. The FED can shake the events to anticipate
Speaker 2: and if you get chairm and Power coming out and
Speaker 2: establishing basically having a bus to respond to weaker economic
Speaker 2: data than they would hire inflation points. It probably makes
Speaker 2: economic data even less likely because financial conditions are so
Speaker 2: loose right now when you see credit spreads as tight
Speaker 2: as they are. The way I think about it is,
Speaker 2: we were really worried about the maturity will in twenty five,
Speaker 2: and we've just taken a massive chunk out of it
Speaker 2: in the first quarter of twenty four. The high rates
Speaker 2: less of a thing to worry about three months into
Speaker 2: twenty four that maybe they were at the start of
Speaker 2: the year.
Speaker 5: Yeah, you still have in all this communication, all this analysis,
Speaker 5: all this you know, analogy, you know, psycho analysis of
Speaker 5: what Powell's thinking.
Speaker 4: But at the end of the day, they haven't done anything.
Speaker 4: So we're still doing QT.
Speaker 5: We still have five and a half, We still have
Speaker 5: this huge maturity wall I mean, Russell twenty and forty
Speaker 5: five percent are not profitable.
Speaker 4: They're gonna there's fifty sixty.
Speaker 5: Percent of those companies that have to refinance in the
Speaker 5: next twelve to eighteen months. Yeah, so if they don't
Speaker 5: do anything, And that's why I actually liked Waller's comments.
Speaker 4: I was like, that's refreshing.
Speaker 3: Just don't do.
Speaker 5: Anything, just let it go, sit on it, be patient.
Speaker 5: But Powell does seem like he wants to cut. I
Speaker 5: think this is going to create more issues than for him.
Speaker 5: And it's you know, it's just a circular feedback.
Speaker 3: It's David shit just romonicus.
Speaker 2: The last couple of weeks to say a chamman that
Speaker 2: wants to count well the tights a co op parade,
Speaker 2: and that's gonna be the outcome that get sets out
Speaker 2: likes it as yet, it's good to see it. Secretary Yellen,
Speaker 2: speaking at an event in Georgia yesterday, saying US manufacturing
Speaker 2: is facing pressure from cheap imports flooding the market. The
Speaker 2: comments ranging from green energy products to electric vehicles. Yellen's
Speaker 2: saying this will be a key isshoe during head next
Speaker 2: trip to China, which is expected in the coming weeks.
Speaker 2: Stave As center At, Executive VP of Care America, joins us.
Speaker 2: Now for more, Steve goomone to you, Moring. Let's talk
Speaker 2: about EV's. It's fantastic to have you with us. You've
Speaker 2: got the EV nine, the EV six over at kir Can.
Speaker 2: We just start with how they're selling because we've heard
Speaker 2: a lot about pushback in this country.
Speaker 3: How are they selling.
Speaker 7: They're selling very well. We'd like to sell more of them,
Speaker 7: but I think there's been a lot of expectation about
Speaker 7: the rate of the transition and that's unknown. And consumers
Speaker 7: are buying the car, they're enjoying the car. The infrastructures
Speaker 7: is a challenge. The whole industry has already received the
Speaker 7: business from the early adopters and now we're getting into
Speaker 7: people that really need the car. This isn't a toy.
Speaker 7: They need to get back and forth. The thing about
Speaker 7: range anxiety is true, but it's more about charging anxiety
Speaker 7: because the cars all go three hundred miles and very
Speaker 7: few people drive three hundred miles at a time. So
Speaker 7: we're very excited. EVE nine's won a lot of awards.
Speaker 7: It's proven what you can do with electric cars at
Speaker 7: three row SUV with that kind of range.
Speaker 2: What are data ship's telling you about what they need
Speaker 2: right now? Where consumer demount is and how can you
Speaker 2: meet that demount.
Speaker 7: Well, when you talk to dealers, their first answer is discounts,
Speaker 7: and that's not selling from strength. I think what we
Speaker 7: need is better infrastructure, and that's where all of This
Speaker 7: is failing in a sense because you can regulate what
Speaker 7: we build, you can't regulate what people buy. And the
Speaker 7: big projects like infrastructure that in the beginning are all
Speaker 7: cash out and then the return is over a long
Speaker 7: period of time. That's kind of like building highways, and
Speaker 7: that's what the government should do, and they've really blown
Speaker 7: it on that.
Speaker 1: From a personal perspective, when I was buying a car,
Speaker 1: it wasn't range anxiety, it wasn't charging anxiety. It was
Speaker 1: resale value anxiety, and the fact that it was probably
Speaker 1: going to plunge off a cliff if I got an
Speaker 1: electric vehicle, because right now it's not clear, especially with
Speaker 1: an eight year battery lifespan, how do you address that
Speaker 1: the fact that these cars are not as valuable when
Speaker 1: you resell them, and potentially there could be new technologies
Speaker 1: that come down the pike in that time.
Speaker 7: Absolutely, and when you're buying electric cars that are probably
Speaker 7: more like tech products than they are normal cars, perhaps
Speaker 7: the ownership method's going to change and you may lease
Speaker 7: the car. You may be the first less see on
Speaker 7: the car. It may come back at the end of
Speaker 7: the lease and get a complete refitting and tech upgrade
Speaker 7: like an aircraft does, and then there'll be a second
Speaker 7: less see and you recondition the battery. So there's a
Speaker 7: lot of change coming in terms of how you do things.
Speaker 3: And it might be that.
Speaker 7: You don't own them. And in a sense, you don't
Speaker 7: own a car when you buy it. You only own
Speaker 7: the life of the car.
Speaker 2: You know.
Speaker 1: Jonesman on this point for a long time, and he's
Speaker 1: absolutely correct. It raises this question if policymakers have gotten
Speaker 1: it wrong, if basically the car makers were pushed into
Speaker 1: manufacturing vehicles where there wasn't the demand yet and it
Speaker 1: wasn't clear that that was the right pathway when there
Speaker 1: could have been better ways to get to a more
Speaker 1: efficient future.
Speaker 3: Is that accurate?
Speaker 7: Absolutely, we're being told what to make specifically, and there's
Speaker 7: many ways to skin that cat, so to speak. And
Speaker 7: if you talk to engine designers and emissions engineers, there
Speaker 7: are many things they can do to clean up the cars.
Speaker 7: And there's different technologies batteries. One, there's fuel cells and hydrogen.
Speaker 7: Fuel cells are really wonderful. Their emission is water and
Speaker 7: they're silent, and the question is where to get the hydrogen.
Speaker 7: And I've worked on hydrogen cars for a long time
Speaker 7: and that infrastructure is even less mature than the battery
Speaker 7: charging infrastructure. So I tell everyone that I can find
Speaker 7: in the government. You need an Oppenheimer moment, and you
Speaker 7: need to one feel the crisis, and you need some
Speaker 7: leadership to manage the change.
Speaker 6: The US government now has subsidies for the evs and
Speaker 6: then the EPA. Many people say, this's basically a mandate.
Speaker 6: These are the strongest pollution standards we've ever seen the
Speaker 6: United States. So what should have they done first? Because
Speaker 6: it seems like what you're saying is they got it backwards.
Speaker 7: Yeah, well, there's a lot wrong with the regulation. And
Speaker 7: if you think about it, you've got three different groups
Speaker 7: regulating the auto industry, at least three at least from
Speaker 7: the emissions. You have a NITSO which is regulating CAFE,
Speaker 7: which is a fuel economy. You have EPA for exhaust gases.
Speaker 7: And then you have California steering from the back and
Speaker 7: they're requiring electric vehicles, and there's other states that jump
Speaker 7: on that rule and they're not doing anything about the infrastructure.
Speaker 7: And the challenge you have is you've got too many
Speaker 7: sets of conflicting rules, and in the case of electric vehicles,
Speaker 7: the point is to reduce the CO two and CO two.
Speaker 4: Is not a local problem.
Speaker 7: When you fly over the country, you don't see the
Speaker 7: lines on the ground. It's a global problem. So California
Speaker 7: is a big EV market, you know what, like the
Speaker 7: number three and five are. It's Texas and Florida. They're
Speaker 7: not ZEV states. And my attitude is, well, let people
Speaker 7: buy them where they want to buy them, right now,
Speaker 7: and let's get the job done. So it's all automakers,
Speaker 7: the percentage of evs. You have to sell it for
Speaker 7: the whole country. Don't create these silos and buckets. That's
Speaker 7: killing the industry and it's impossible to manage that.
Speaker 6: By the administration has been very happy with the Inflation
Speaker 6: Reduction Act, able to get over the finish line. But
Speaker 6: Trump is threatening to ratchet back. How concerned are you
Speaker 6: about that?
Speaker 7: Yeah, So someone asked me last night what's the biggest
Speaker 7: threat that I see in this business? And I said,
Speaker 7: it's an existential threat and they said, oh, it's a
Speaker 7: China something else said, No, that's that's competition, or okay
Speaker 7: with that, it's government policy and this whip sawing. We're
Speaker 7: making decisions that last thirty.
Speaker 4: Or forty years.
Speaker 7: When you build factories and establish supply chains and to
Speaker 7: have the government policy change from on off on off,
Speaker 7: it's nuts.
Speaker 4: It's just nuts.
Speaker 2: I means you need to be riddy in both. So
Speaker 2: can we talk about the EV plump in Georgia. Can
Speaker 2: you tell me whether that's going to be dedicated to
Speaker 2: the Baunttery pat vehicles or not.
Speaker 3: How flexible would that plump be?
Speaker 7: So that's a great question. The original concept is EVS
Speaker 7: and it also includes a battery plant. So because you
Speaker 7: always want to have the big heavy components right near
Speaker 7: the factory, it might be in the future because you
Speaker 7: always want that factory running full speed with everything you
Speaker 7: can do, it might be we also build other cars there.
Speaker 3: Now.
Speaker 7: We have another factory in West Georgia that's been around
Speaker 7: for a long time and we build tell your ide
Speaker 7: in Sorrento and other great cars there. One of the
Speaker 7: things that we've done is we made room and we're
Speaker 7: building EV nine there now. So and most of an
Speaker 7: electric vehicle is the same as internal combustion. At some
Speaker 7: point it goes this way or that way, and we're
Speaker 7: building EV nine. We're going to introduce it later this year.
Speaker 7: So it might be that we're going to balance the
Speaker 7: capacities with other products.
Speaker 3: How easy is it to do that?
Speaker 2: I've tried to get some information some county from GM
Speaker 2: and struggled, So maybe kick and help me out a
Speaker 2: little bit more to talkle between hybrids, evs, and total
Speaker 2: combustion engine vehicles in a single plant. How easy to
Speaker 2: tackle between the three?
Speaker 7: The biggest hybrid vehicle isn't that different. So it has
Speaker 7: an engine, has a fuel tank, it also has a
Speaker 7: electric motor attached to the engine, and a battery pack.
Speaker 7: It's a smaller battery pack, and EV is a totally
Speaker 7: different beast because it's driven by electric motors at the wheels.
Speaker 7: So at some point when you're building the body and
Speaker 7: the car, it's either going to be born as an
Speaker 7: EV or born as internal combustion and that's where the
Speaker 7: difference is. So at some point on the line, you
Speaker 7: go this way, you go that way. I think the
Speaker 7: biggest challenge is the supply chain because you have different parts,
Speaker 7: so you have to have different motors coming in and
Speaker 7: battery packs. But inside the factory you're either jacking up
Speaker 7: engines or you're jacking battery packs, and it's not that exciting.
Speaker 1: When you talk about the supply chain. You mentioned this earlier.
Speaker 1: You don't worry about China, that's just competition. Do you
Speaker 1: think increasingly the gating off of different auto industries depending
Speaker 1: on the country is problematic for your business, even if
Speaker 1: it might benefit you in the short run in terms
Speaker 1: of restricting competition on the margins with certain areas.
Speaker 3: Yeah, well you don't.
Speaker 7: My background's in economics, actually, and you don't want to
Speaker 7: restrict competition because it breeds laziness and weakness. So competition
Speaker 7: is a good thing. You don't like it when somebody
Speaker 7: can beat you, and often you get beaten because the
Speaker 7: difference is between the nations and you just have to
Speaker 7: get better.
Speaker 2: Steve, this was one of the most revealing conversations, honest
Speaker 2: conversations I've had about the automat because for a long
Speaker 2: long time, and appreciate the transparency the policymaker appears. It's
Speaker 2: put you in a very very complicated place, and we appreciate.
Speaker 3: Your time this morning, sir. Thank you, my pleasure, Thank you, Steve.
Speaker 2: Steve is sent to there of Kia America Max CEO.
Speaker 2: Robert Davis joins us now for more. Rob good morning
Speaker 2: to you, very good morning. Can we talk about that
Speaker 2: approval yesterday, how much of a breakthrough.
Speaker 8: Well, you know, this is really, we think something special.
Speaker 8: The disease we are hopefully able now to really make
Speaker 8: a difference in is pulmonary arterial hypertension. And this is
Speaker 8: a rare disease. It's not a well known disease, but
Speaker 8: it's a devastating disease.
Speaker 4: You know, this is a disease that.
Speaker 8: Primarily affects women in the prime of life age thirty
Speaker 8: to sixty. Mortality rates of forty three percent in five years,
Speaker 8: so you can imagine in pack not only to the patient,
Speaker 8: but to the family of people who otherwise are in
Speaker 8: the prime of life. Is really tragic, thankfully, and hopefully
Speaker 8: we'll make a difference in that. This drug now we're
Speaker 8: bringing forward, it's called wind Revere, is a biologic. It's
Speaker 8: a first in class medicine. It's a new mechanism of
Speaker 8: action called an active and signaling inhibitor. And what it
Speaker 8: actually does is potentially remodels the blood vessels, your arterior vessels,
Speaker 8: that allows them.
Speaker 3: To open up.
Speaker 8: Because what pH does it causes your blood vessels and
Speaker 8: your lungs to thicken and narrow, which ultimately leads to
Speaker 8: heart disease.
Speaker 3: How often do you take this? Every three weeks? How
Speaker 3: does this work?
Speaker 8: Yeah, so it's a three week subcutaneous injection. Can be
Speaker 8: done by the patient or caregiver, and so this would
Speaker 8: be something you would administer we expect most people do
Speaker 8: in home.
Speaker 1: I wish we could go into a whole segment about
Speaker 1: how you come up with these names when vera key
Speaker 1: trutou We can do that another time. You want to
Speaker 1: get a sense though, that this whole idea of how
Speaker 1: you got into this through an acquisition to partner with someone,
Speaker 1: and then what the importance is of looking beyond some
Speaker 1: of the mainstays like cancer, is sort of that diversity
Speaker 1: that we were just hearing about.
Speaker 8: Yeah, well, you know, obviously we are a science led,
Speaker 8: science driven company, and this came about because we were
Speaker 8: already starting to look into this space. So our cardiovascular
Speaker 8: teams within MERK we're doing work in this space. When
Speaker 8: they saw the data from a company called Acceleron that
Speaker 8: had this asset, they came to me and said, you know,
Speaker 8: we're excited this can be a difference maker, and that's
Speaker 8: why we moved on this and it really now is
Speaker 8: a foundational element in our broader cardiovascular and cardio metabolic portfolio.
Speaker 8: So it is one where we see the value diversification. Obviously,
Speaker 8: we're a leader in oncology, we're a leader in vaccines,
Speaker 8: We're increasingly moving into immunology, and this move into cardiometabolic space,
Speaker 8: which is significant for us.
Speaker 1: There are a lot of people who are listening who
Speaker 1: invest increasingly in healthcare, and all they want to hear about.
Speaker 3: Is what's your solution for weight loss?
Speaker 4: Because that's really the.
Speaker 1: Reason why so many people have gone into the healthcare
Speaker 1: stocks and into the industry.
Speaker 4: You are working on a.
Speaker 1: GLP one type of drug, but it's not for weight loss,
Speaker 1: it's for fatty liver. Why are you approaching this differently
Speaker 1: and not necessarily directed at the weight loss itself and
Speaker 1: more on some of the illness that potentially some of
Speaker 1: the some of it can cause.
Speaker 8: Yeah, well, so the mechanism you're talking about, we have
Speaker 8: a GLP one glucagon dual agonist, and this is important
Speaker 8: because while it brings weight loss benefits frankly similar to
Speaker 8: what you'd see with the zepic, our primary focus, as
Speaker 8: you point out, is fatty liver disease, which is a
Speaker 8: really an untreated area today, and our view of this
Speaker 8: space is obesity is important, but increasingly it's the cool
Speaker 8: mobidities around obesity. It's you know, it's heart disease, it's diabetes,
Speaker 8: it's liver disease. And so if we can affect those
Speaker 8: and bring outcomes that benefit patients clinically, there they get
Speaker 8: the weight benefit. But then as you think about reimbursement,
Speaker 8: as you think about value, that's where the value comes
Speaker 8: to society because actually we're making people more healthy than.
Speaker 4: Just losing weight.
Speaker 1: Is this mostly a coverage play? Essentially, it's easier for
Speaker 1: this to get reimbursed and ensured. And that's one reason
Speaker 1: why if you gear it as some of the illnesses,
Speaker 1: you won't have to get into the whole debate that's
Speaker 1: percolating elsewhere.
Speaker 2: Yeah.
Speaker 8: Well, again from a Mirkent perspective, it starts with the
Speaker 8: patient at the center, so we see this as a
Speaker 8: disease that needs to be dealt with. But yes, I
Speaker 8: think the benefit of this is if you can show outcome,
Speaker 8: if you can show that there's something beyond just a
Speaker 8: weight loss than your ability to be and reimbursed and
Speaker 8: the ability to show value to society is different.
Speaker 4: It will be different.
Speaker 6: But to your point, if obesity leads to so many
Speaker 6: other health issues, at some point, will insurance government even
Speaker 6: be able to put this under their plans.
Speaker 8: We would expect so, yes, for sure, and I think
Speaker 8: you're already starting to see that start to shift. And
Speaker 8: it will be the outcomes driven approaches that drive that,
Speaker 8: for sure.
Speaker 2: We started this conversation by talking about this new drug
Speaker 2: that you've developed, got approval, stock runaway high. Yesterday I
Speaker 2: was going through the cost, so the cost could be
Speaker 2: about two hundred and forty two thousand dollars a year.
Speaker 2: I've always struggled with this and I want you to
Speaker 2: explain to me why is it so much more expensive
Speaker 2: in America compared to say, the prices that I see
Speaker 2: for drugs abroad in Europe in the UK. What explains
Speaker 2: that difference?
Speaker 8: Yeah, Well, you know, it's hard to do in apples
Speaker 8: to apples comparison. If you look at what drugs are
Speaker 8: as a percentage of total health care spend in the
Speaker 8: United States, they run about fourteen to fifteen percent. If
Speaker 8: you look across Europe, for instance, it's about the same.
Speaker 8: It's about twelve to thirteen percent. So the reality of
Speaker 8: it is that healthcare as a total area, not just drugs,
Speaker 8: in the United States is more expensive. The percentage of
Speaker 8: cost of drugs in the United States is equal to
Speaker 8: what it is outside the United States. So it's hard
Speaker 8: to just take one element of the healthcare system and say,
Speaker 8: let's focus on it, not understanding the broader questions. You know,
Speaker 8: if you're in the United States, the thing we benefit
Speaker 8: from you get the fastest access, You get the most
Speaker 8: access to the most innovative medicine, driven by an industry
Speaker 8: that is based here in the United States and exports
Speaker 8: to the world. You know, so we need to look
Speaker 8: at the totality of what we see as really three elements.
Speaker 8: You have to think about access, affordability, but then also
Speaker 8: making sure you're protecting the innovation ecosystem that we value
Speaker 8: in this country.
Speaker 2: Rub we appreciate the breakthrough, that's for sure. In the
Speaker 2: last twenty four hours of major breakthrough. Thank you very
Speaker 2: much for being with us. Robert Davis there the merc CEO.
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