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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Well, we want to get back to one of our
Speaker 2: big stories of the day.
Speaker 3: It started last night after the close, when Nvidia reported
Speaker 3: their latest quarterly update. The stock did hit a record.
Speaker 3: In today's trading, it's definitely backed off at ties of
Speaker 3: the session, and though still I will say, like Bloomberg
Speaker 3: has been writing about how it's kind of increasingly growing
Speaker 3: into its scorching valuation every time the chip maker reports earnings.
Speaker 4: Well, that's because it's forecasts of really dwarfed Wall Street
Speaker 4: projections by so much that estimates used to value the
Speaker 4: stock have risen faster than in video shares. It's price
Speaker 4: relative Carol to projected profits that's fallen below thirty nine
Speaker 4: times after it delivered its latest eye popping projection last night.
Speaker 4: That's down from sixty three times before it's May earnings report.
Speaker 3: One last thing, we just talked about it with our
Speaker 3: TV colleagues. The last research firm with the equivalent of
Speaker 3: a celebrating on Nvidia throw in the towel morning Star
Speaker 3: upgrading the chip maker to hold, saying it is much
Speaker 3: more optimistic about the rise of AI workloads and how
Speaker 3: NVIDIAs whyd note should cement itself as an AI chip leader.
Speaker 4: All right, morning Star, jumping on the train with more
Speaker 4: on the company's fundamentals and roll in the semi space
Speaker 4: and the race for all things AI. With us, we
Speaker 4: got Bloomberg News US semi conductor and networking reporter Ian King.
Speaker 4: Also with US Bloomberg Intelligence, a senior semi conductor analyst
Speaker 4: Kun John Sabani, both from our San Francisco bureaus. You know,
Speaker 4: I want to start with you because you've got some
Speaker 4: news post earnings on the company. A big concern that
Speaker 4: a lot of observers have is of a chip shortage.
Speaker 4: Of course, in Vidia relying on TSMC and Samsung for components.
Speaker 4: What did you hear from the CEO, Jensen Huang when
Speaker 4: you asked about this?
Speaker 5: Yeah, I mean really, this was the big thing coming
Speaker 5: in two innings was would they be able to get
Speaker 5: enough chips? There wasn't really that much concern about demand,
Speaker 5: and you know, how to Chavel Johnson afterwards, and he said, look,
Speaker 5: we've been really really working very hard on this. This
Speaker 5: is you know, kind of a major priority for us,
Speaker 5: and here's the progress and we're going to continue to
Speaker 5: keep doing that. And you know, they gave details about
Speaker 5: you know, they see supply increasing for them every quarter
Speaker 5: well into next year, which is really what investors wanted
Speaker 5: to hear.
Speaker 3: Interesting, all right, So Kondan come on in on this.
Speaker 3: Ian definitely highlighting certainly the concern about uh Nvidia. Your
Speaker 3: take on what you heard, what Ian just talked about,
Speaker 3: and just the overall report and outlook.
Speaker 6: Like and the same in the same lines. You know,
Speaker 6: going into the earnings, there were two key factors that
Speaker 6: we outlined in our preview that investors will be looking for.
Speaker 6: One is supply getting better, which they did announce and validated.
Speaker 6: And second was giving some kind of a moment more
Speaker 6: faith to this sustainability of the AI demand, which they
Speaker 6: again highlight to put in context. Data center segment was
Speaker 6: already expected to grow sequentially close to ninety percent, an
Speaker 6: ambitious gold that's something you don't hear regularly. They ended
Speaker 6: up growing one hundred and forty percent. So I think
Speaker 6: this gives some ease that this demand rally does have legs.
Speaker 3: So when the CEO also then founder Jensen Wong says,
Speaker 3: the shift to AI is only beginning. I mean, Ian,
Speaker 3: how do you think about kind of what else is
Speaker 3: to come here? And you know, I was talking with
Speaker 3: some folks here in our newsroom and they said, you know,
Speaker 3: what happens a year from now when those year over
Speaker 3: year comparisons become tougher for the company. Can it really
Speaker 3: continue with this momentum?
Speaker 5: No, I think you've nailed it there with that question.
Speaker 5: This was another magic concern is sustainability. He gave some commentary.
Speaker 5: He said, Look, data centers don't get built over night, right,
Speaker 5: These these things take months, if not years. We know
Speaker 5: our customers plans, so we've got that. You know that
Speaker 5: that wouldn't have of what we know is exactly what's
Speaker 5: going to happen. But in the sort of bridger terms,
Speaker 5: he made the point in the conversation I had with him,
Speaker 5: which is like, look, it's great if chat GPT helps
Speaker 5: a few knowledge workers to write a bit better code,
Speaker 5: helps a few consumers to you know, write an essay
Speaker 5: or help them with an email or something like that.
Speaker 5: But that's all it is. That's not fantastic. What he
Speaker 5: said was what gets him more excited. What he's working on,
Speaker 5: what he thinks needs to happen is it has to
Speaker 5: become entrenched in the economy. Large, heavy industries have to
Speaker 5: transition to using this technology to help with their operations,
Speaker 5: to help with productivity. He's working on that. He's working
Speaker 5: on making that easier for them. As that happens, this
Speaker 5: technology broadens its basis and becomes more pervasive and becomes,
Speaker 5: you know, clearly something that isn't as ephemeral as some
Speaker 5: people would like to believe it.
Speaker 4: Is, Kun John, I want you to hit on that
Speaker 4: a little bit. It makes me think of a conversation
Speaker 4: that had years ago with a friend who worked at
Speaker 4: one of the tech firms. She told me that technology
Speaker 4: was no longer this sector. It was like this layer
Speaker 4: that kind of permeates every little bit of our lives.
Speaker 4: You know, we're on our smartphones doing these things. We're
Speaker 4: at the doctor's office, the doctor's using technology, and it's
Speaker 4: this overarching term, Kun John, what happens Does AI ever
Speaker 4: get to that level and what does it look like
Speaker 4: in a day to day life beyond the beyond industry,
Speaker 4: beyond factory.
Speaker 6: I mean, look, from our perspective, we think of this
Speaker 6: as the when when you had the Internet come in,
Speaker 6: right when you had the iPhone come in. Those technology
Speaker 6: inflection points had a long cycle, almost like a decade
Speaker 6: before it hit a platu. So we think this is
Speaker 6: in the very early innings. This definitely has the ability
Speaker 6: to permeate into our everyday lives. You know, the next
Speaker 6: big step would be large language models or generative AI
Speaker 6: running on your smartphones. So there's definitely room for this
Speaker 6: run here well.
Speaker 3: And I do wonder you know need and we talked
Speaker 3: about this already with you yesterday, and just this concern
Speaker 3: that how do we make sure we continue to be
Speaker 3: smart and now get caught up in the euphoria And
Speaker 3: that's what I think about constantly. Is there a chance
Speaker 3: that some of this optimism doesn't play out? Or does
Speaker 3: this feel like yeah, this makes sense, especially in a
Speaker 3: world where there's so much data and we continue to
Speaker 3: get smarter. It's not just a dump of data, but
Speaker 3: we continue to fine tune it and make it work
Speaker 3: better and smarter for us.
Speaker 5: I mean, again, I think that's a very poignant question,
Speaker 5: and you know, We went through this with the dot
Speaker 5: com bust, and that's obviously something that people are drawing
Speaker 5: parallels with. What I would give you as a response
Speaker 5: to that, and what I'm hearing is like, look, AI
Speaker 5: as a concept, which is basically statistical analysis, has been
Speaker 5: around for a long time. The algorithms that we're using
Speaker 5: now have been around for decades.
Speaker 1: Right.
Speaker 5: What's changed is the data that we can now tap
Speaker 5: to use them and the power that we now have
Speaker 5: that can actually make that happen. I mean, we just
Speaker 5: talked about smartphones, right, smart Imagine something that you're carrying
Speaker 5: in your pocket is capable of taking massive amounts of
Speaker 5: data that you're generating just by living and walking around
Speaker 5: and turning that into something useful and productive that helps
Speaker 5: you with your life. If that happens, and that's what
Speaker 5: we're moving towards, and that's creating economic value. And I
Speaker 5: think that's the key. If you look at all of
Speaker 5: these applications that are being proposed, whether it's drug discovery,
Speaker 5: whether it is you know, factory planning, whether it's you know,
Speaker 5: designing robots, whatever it is, if there is genuine economic
Speaker 5: value and efficiency and production to be created there, then
Speaker 5: it has legs. What we saw at the beginning of
Speaker 5: the Internet was the promise of that, and then everybody
Speaker 5: was like, oh, where's the value right, and it came,
Speaker 5: but it took a while.
Speaker 3: Well, Kuntan too, and keeping with what Ian said, you know,
Speaker 3: we recently had a guest on that about quantum computing
Speaker 3: and the connection with AI and this idea that you know,
Speaker 3: you can solve and decode problems much faster than classical
Speaker 3: computers and it's basically you know, large scale systems and
Speaker 3: layers and layers. So is that something you also think about, Kunjohan,
Speaker 3: This role of you know, a whole advanced computing way
Speaker 3: and the role of AI in all of it.
Speaker 6: I mean, look like, just like Ian said, AA has
Speaker 6: been there for a long time, right, but we're now
Speaker 6: seeing this big acceleration because we finally have figured out
Speaker 6: to use this concept like genera d AAI on actually
Speaker 6: implementing in day to day use cases, at least at
Speaker 6: the enterprise level. So similarly, I think, look, this concept
Speaker 6: of quantum computing have been coined for many years, a
Speaker 6: lot of people have been working on it, but until
Speaker 6: it comes to the point where you can deploy it
Speaker 6: to the masses. I don't I think that's when you'll
Speaker 6: see another rally over there.
Speaker 3: Well, it's really cool stuff and certainly keeping us off
Speaker 3: engaged guys, Thank you so much, really appreciate the breakdown.
Speaker 3: Ian King, US semiconductor and networking reporter at Bloomberg News
Speaker 3: from our San Francisco bureau. Also in our bureau, Cunjon Sabani.
Speaker 3: He is Bloomberg Intelligence Senior Semiconductor analyst. As we said
Speaker 3: both there out on the West coast. By the way,
Speaker 3: shares of Nvidia still up about one point four percent,
Speaker 3: but way off their best levels of the session.
Speaker 1: If you're listening to the Bloomberg Business Week podcast, catch
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Speaker 2: So in the tech world, it wasn't just about Nvidia today.
Speaker 3: In fact, that stock's rally ran out of steam, but
Speaker 3: not so for shares of the infrastructure software company cyber
Speaker 3: security companies Splunk, soaring up the most since December, closing
Speaker 3: it a fifty two week high today following earnings and
Speaker 3: a quarterly update.
Speaker 2: After the close last night. Stock is up.
Speaker 3: Roughly thirty two percent year to date, so roughly doubling
Speaker 3: its return in twenty twelve.
Speaker 2: Twenty three. Thanks Tim too today's rally.
Speaker 4: Yeah. Splunk Reporter is second quarter revenue that beat estimates.
Speaker 4: It raised it's fullier forecast beyond expectations. Analysts called the
Speaker 4: results solid overall, noting the better annual recurring revenue as
Speaker 4: well as the upgraded forecast. We got with us right now.
Speaker 4: Splunk President and CEO Gary Steele. He joined us on
Speaker 4: a zoom from San Francisco. Gary, how are you great?
Speaker 7: It's great to be here.
Speaker 4: You know, we've been hearing a lot about Like we
Speaker 4: hear from companies. We like to hear how you know
Speaker 4: their customers are doing because it gives us an idea
Speaker 4: of the economy. How are your customers doing?
Speaker 7: Yeah, it was interesting in our second quarter we saw
Speaker 7: very much the same macro conditions that we'd seen in
Speaker 7: prior quarters, and so where it impacted us as we
Speaker 7: saw some hesitation in cloud migrations because these represent new
Speaker 7: projects that have to be funded. And while the ROI
Speaker 7: and getting to the cloud is amazing, you still have
Speaker 7: to fund the actual migration effort, and then we saw
Speaker 7: a continued deal scrutiny, so deals alongating or requiring additional signatures.
Speaker 7: I think the one positive thing for us is I
Speaker 7: think we understand it now and I think our team
Speaker 7: did just a phenomenal job executing within that environment and
Speaker 7: understanding that, yes, there will be more reviews and more
Speaker 7: scrutiny on deals, but we executed quite well, really part
Speaker 7: of the team.
Speaker 4: Reviews and scrutiny are one thing, but what about deals
Speaker 4: falling through?
Speaker 7: Again, we saw more consistency in terms of just scrutiny
Speaker 7: and we and I think there was more. I'd call
Speaker 7: it just stabilization. So I think going into the court
Speaker 7: of people knew what dollars they were going to be
Speaker 7: able to spend, all.
Speaker 3: Right, So how would you describe then the corporate IT
Speaker 3: spend environment generally? Is there a word Gary to say,
Speaker 3: because I think it helps us in a big way
Speaker 3: understand kind of what's to come maybe for the rest
Speaker 3: of the year and what maybe is going on in
Speaker 3: the economy.
Speaker 7: Yeah, I think there's there still remains a high level
Speaker 7: of scrutiny on every dollar being spent by the IT community.
Speaker 7: And while I think we've executed well within that environment.
Speaker 7: We anticipate no change as we work through the second half,
Speaker 7: we will continue to see this level of scrutiny and
Speaker 7: hesitations as it relates to us in this category of
Speaker 7: cloud migration. So we're expecting no change and that's how
Speaker 7: we've thought about providing our guidance for the go forward quarters.
Speaker 3: What's cool talking about you and I got this off
Speaker 3: your website. Fifteen thousand customers, one hundred and ten countries, Zoom, Intel,
Speaker 3: Coca Cola, Carnival, Arii, Airbus, and many more. It's the world,
Speaker 3: it's the universe, if you will. So what types of
Speaker 3: companies are leading the spend? Which ones might there be
Speaker 3: some hesitation?
Speaker 7: You know, we sell pretty consistent behavior across verticals our
Speaker 7: business we've had as an example, we do a lot
Speaker 7: of work with the government and governments around the world.
Speaker 7: That's been relatively consistent for us and a big growth opportunity. Today,
Speaker 7: roughly two thirds of our business is domestic, one third
Speaker 7: is international. We continue to see a lot of opportunit
Speaker 7: unity working with the international customers to take advantage of
Speaker 7: the capabilities we can offer. But from a buying point
Speaker 7: of view, buying perspective, it was pretty consistent around the globe.
Speaker 3: Can we talk about what you guys do, because you
Speaker 3: also have your own AI offerings, which I know you
Speaker 3: guys put out last month, but cybersecurity company, I feel
Speaker 3: like that's a big bucket, right, infrastructure software company big bucket?
Speaker 2: So just walk for those who might.
Speaker 3: Not be familiar familiar with your you know, almost nineteen
Speaker 3: billion dollar market cap company, which they should be, tell
Speaker 3: us about exactly what you do.
Speaker 1: You bet.
Speaker 7: We help organizations drive digital resilience across their cyber environment.
Speaker 7: So how do we ensure that they're well protected and
Speaker 7: they understand what's going on in their cyber environment. This
Speaker 7: is particularly important as we face new sec disclosure requirements
Speaker 7: where you have to notify your shareholders within four days
Speaker 7: of a material event. You know, we're at the core
Speaker 7: of helping organizations figure out what the heck happened and
Speaker 7: how can you meet that four day deadline? And then
Speaker 7: we extend broadly into the observability market, meaning how work
Speaker 7: core to helping organizations keep their digital applications up and
Speaker 7: running so that their customers can get access to all
Speaker 7: of those services, So helping them understand if something happens
Speaker 7: to one of those applications, what's going on and how
Speaker 7: do you get it up and running quickly and try
Speaker 7: to anticipate those events. Where AI plays a role for
Speaker 7: us is helping across security and broader infrastructure anticipate things,
Speaker 7: so trying to get better outcomes faster, so teams can
Speaker 7: be more efficient in what they do every day. So
Speaker 7: and for example in the security operations center, just making
Speaker 7: it easier to operate and get to better outcomes faster
Speaker 7: without all the manual work.
Speaker 3: So with the AI euphoria, how do you think about
Speaker 3: it in terms of is it really something that this
Speaker 3: next gen AI, generative AI really going to take so
Speaker 3: many different industries to a different level. It's the real
Speaker 3: mcgilla if you will.
Speaker 7: Yeah, No, I'm super enthusiastic about it. I feel like
Speaker 7: we can deliver much better outcomes for our customers leveraging
Speaker 7: the power of AI and simple things that we've already introduced.
Speaker 7: So to use plunk, you use you interact with it
Speaker 7: with a proprietary language. Well, with generative AI, we can
Speaker 7: give you a human interface. So just ask what you
Speaker 7: want and we will help you go find it and
Speaker 7: do it. And so then we generate all that proprietary
Speaker 7: language on your behalf and you don't have to have
Speaker 7: that knowledge or understanding. So our ability to take down
Speaker 7: the skills required make it so much easier to interact
Speaker 7: with our product. We're very bullish on that. You know,
Speaker 7: it's still early and I think there's a lot of
Speaker 7: hype in the market generally, but I think at the
Speaker 7: end of the day, we can make a real difference
Speaker 7: in one who can interact with their product and then
Speaker 7: the outcomes that can be delivered as a result of that.
Speaker 7: And this is a journey. It doesn't happen overnight, but
Speaker 7: we can continue to chip away at this and make
Speaker 7: real progress. I think it will be informational in our
Speaker 7: industry because we deal with such rich data sets and
Speaker 7: in that world you can get great outcomes from AI.
Speaker 4: When when you're leveraging the when you're leveraging AI for
Speaker 4: your customers, who are the suppliers that you're using. Are
Speaker 4: you getting chips from Nvidio? Are you getting chips from AMD?
Speaker 7: So we think about it from a cloud perspective, and
Speaker 7: so we're going to the cloud service providers and we're
Speaker 7: leveraging the cloud service providers to be able to deliver
Speaker 7: those AI capabilities. We're not directly buying or setting up
Speaker 7: data centers. We're not directly buying in Vidio chips and
Speaker 7: systems housing in Vidio chips. We're going to the cloud
Speaker 7: service providers to get those capabilities.
Speaker 4: Look in Amazon Web Services or.
Speaker 7: Microsoft Amazon Amazon. We just announced a relationship with Microsoft
Speaker 7: as it relates to bringing our native cloud solutions to
Speaker 7: the Azure platform. And then we have a relationship with
Speaker 7: Google as well for GCP. So we find demand across
Speaker 7: those and we're leveraging their relationships ultimately all the way
Speaker 7: through the chip providers.
Speaker 3: How much do those relationship kind of impact your top
Speaker 3: and bottom lines or give you kind of some window
Speaker 3: into consistency for growth for your company.
Speaker 7: So one, they're very critical. There are critical strategic partners
Speaker 7: for us. There's two dynamics here. One is we allow
Speaker 7: our customers to buy through the marketplaces of each of
Speaker 7: those cloud service providers, meaning you can go and leverage
Speaker 7: the credits you have for AWS or now with our
Speaker 7: relationship with Microsoft, you can leverage your Azure credits, so
Speaker 7: it makes buying easier. And then we work closely with
Speaker 7: them to ensure you get a great technical outcome. So
Speaker 7: you guys asking about chips et cetera. We can make
Speaker 7: sure that we're well tuned for whatever systems they bring
Speaker 7: to bear, and how we can make sure that our
Speaker 7: customers are getting the maximum TCO.
Speaker 4: I want to end Gary, just kind of where we
Speaker 4: begin and getting your view on what the economy looks like.
Speaker 4: There are a lot of questions as we wait to
Speaker 4: hear from j Pal tomorrow about what the economy looks like.
Speaker 4: Just in the last forty five seconds that we have
Speaker 4: with you, what's your read.
Speaker 7: I believe we were going to see the same for
Speaker 7: some period of time. We haven't. We haven't built that
Speaker 7: into we haven't built any improvement into our guidance. And
Speaker 7: I think that I believe we're in a soft landing
Speaker 7: mode that we're going to continue to see some conservatism,
Speaker 7: but we'll work our way out of this over time.
Speaker 3: Well, So enjoyed our conversation with you, Be well and
Speaker 3: look forward to next time. It's Plunk President and CEO
Speaker 3: Gary Steele joining us on Zoom from San Francisco.
Speaker 1: As we said, you're listening to the Bloomberg Business Week podcast.
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Speaker 4: Well, although masks have come off for many of us,
Speaker 4: and for the most part, many of us are back
Speaker 4: to normal, even if that normal is a bit different,
Speaker 4: COVID is still here and a lot of people right now, Carol,
Speaker 4: are still getting it. I don't know if you saw this.
Speaker 4: Just yesterday, the New York City Department of Health said
Speaker 4: that cases in the city are on the rise and
Speaker 4: some people should consider wearing a mask and crowded indoor settings.
Speaker 3: Listen, We've had folks with masks back in the office
Speaker 3: who were getting over having COVID. We're also learning more
Speaker 3: about the virus in its aftermath. A study published this
Speaker 3: week in the journal Nature found that people who were
Speaker 3: never sick enough to be hospitalized for acute COVID still
Speaker 3: had a higher risk than uninfected people of developing long
Speaker 3: COVID related disorders such as dangerous blood cloths, diabetes, and lung, gastrointestinal,
Speaker 3: and muscule skeletal disease. Two years later, well.
Speaker 4: Very pleased to have with us, doctor Andy Peckosh, President
Speaker 4: Professor excuse me, of Molecular Microbiology and Immunology at the
Speaker 4: Johns Hopkins University Bloomberg School of Public Health. I almost
Speaker 4: gave you a promotion there, doctor Peckosh. But it's good
Speaker 4: to have you with us Health Conserve Well, yes, President.
Speaker 4: In my book, how's that we should know that the Bloomberg
Speaker 4: School Public Hell that is supported by Michael R. Bloomberg,
Speaker 4: founder of Bloomberg LP and Bloomberg Philanthropies. Doctor Petter is
Speaker 4: good to have you with us right now. I want
Speaker 4: to start with the new variants that we're seeing right
Speaker 4: now and why we're seeing this up to it's summer.
Speaker 4: What's going on?
Speaker 8: Well, you know, COVID nineteen has never really left us.
Speaker 8: We were fortunate over the past few months to have
Speaker 8: very low numbers of cases, but we were still having cases,
Speaker 8: and we were still seeing viruses that were essentially doing
Speaker 8: what viruses do. They mutate, they change so that they
Speaker 8: can keep circulating in the population. We were just seeing
Speaker 8: that at a very low level. We're not sure what
Speaker 8: the factors are that are driving this surge of cases
Speaker 8: right now, but you know, I think it's important to
Speaker 8: note that case numbers are low, as you had mentioned,
Speaker 8: but this is the time to remember, you know, what
Speaker 8: is it that we're going to be doing if we
Speaker 8: do come up COVID nineteen positive, and to remember that
Speaker 8: there are very vulnerable parts of the population who should
Speaker 8: perhaps pay a little bit more attention and take more
Speaker 8: care to avoid being infected.
Speaker 3: Andy, how are you guys thinking at Johns Hopkins about
Speaker 3: where we are in the COVID cycle and virus? Is
Speaker 3: it something becoming more akin to kind of the annual
Speaker 3: flu Are you thinking about that or is it still
Speaker 3: something maybe a little bit more serious or could be
Speaker 3: again something more serious.
Speaker 8: Well, in terms of disease, it's clear that influence itself
Speaker 8: is dangerous. COVID nineteen is even more dangerous than influenza.
Speaker 8: It causes more hospitalizations on a per case basis, causes
Speaker 8: more deaths on a per case basis, So we really
Speaker 8: consider COVID nineteen as seriously, if not more seriously than influenza.
Speaker 4: Is that across different age groups or is that does
Speaker 4: that include kids? Also?
Speaker 8: It is across age groups. The relative risk though is
Speaker 8: very different. Right, So while COVID is more dangerous in
Speaker 8: young kids than influenza. The case numbers and the numbers
Speaker 8: of severe cases are much lower there than if you
Speaker 8: compare it to let's say, individuals over the age of
Speaker 8: sixty five.
Speaker 4: Wait a second, hold on, I want to make sure
Speaker 4: I understand this. Influenza is not as dangerous in kids
Speaker 4: as covid is.
Speaker 8: COVID causes more severe disease in children across the board
Speaker 8: than influenza.
Speaker 4: Would that's really interesting. I mean, influenza's the flu shot.
Speaker 4: When you have young kids, like the flu shot is
Speaker 4: the one you really want them to get. I don't
Speaker 4: feel like it. I don't feel like the COVID vaccine
Speaker 4: is being pushed as hard for young children as flu shots.
Speaker 8: And in some ways you're correct. Now we're waiting for
Speaker 8: the CDC guidance to come out for this year's fall
Speaker 8: COVID vaccinations, but certainly, if you look across the board,
Speaker 8: the American Pediatric Association recommends school children get COVID nineteen
Speaker 8: vaccinations in the same way they recommend getting flu vaccinations.
Speaker 8: So the vaccines that we have, it's important to note
Speaker 8: they work, they're safe and irrespective of age. If you
Speaker 8: get the vaccine, you can reduce the likelihood of severe disease,
Speaker 8: and you can most likely reduce the chance of spreading
Speaker 8: the virus to other individuals.
Speaker 3: So there's a chance to reawait the guidance on the
Speaker 3: vaccines for this fall that not everybody needs to have it,
Speaker 3: Is that fair?
Speaker 8: Yeah, it's certainly clear that if you're in some of
Speaker 8: these high risk groups for COVID nine, for severe COVID
Speaker 8: nineteen over the age of sixty five, if you have
Speaker 8: if you're immuno compromised in any way, if you have
Speaker 8: certain medical conditions that make you more predisposed to severe disease,
Speaker 8: you know, I'm virtually positive that all those groups will
Speaker 8: be recommended to get our COVID nineteen vaccine. You know,
Speaker 8: the benefits of vaccination in other age groups are a
Speaker 8: little less clear, simply because you don't have as many
Speaker 8: severe cases in those groups. But when you look at
Speaker 8: the viruses that have been circulating now, when you look
Speaker 8: at what people were vaccinated with, the virus is circulating
Speaker 8: now very different from the vaccine. So it would really
Speaker 8: make sense for almost everybody to consider getting a COVID
Speaker 8: nineteen vaccine right now, because it'll help them much much
Speaker 8: more in terms of limiting their chance of getting an.
Speaker 4: Infection right now, are in the fall when the new
Speaker 4: one comes out in the fall, Okay, because we don't
Speaker 4: have access to that one yet.
Speaker 1: Correct.
Speaker 8: Correct, that one should be rolling out middle of September,
Speaker 8: end of September or so. And again, before that rolls out,
Speaker 8: we should be getting some clear guidance from the CDC
Speaker 8: about who they strongly recommend to get it and who
Speaker 8: they think should get it.
Speaker 4: Okay. When our producer mentioned this subject on the call
Speaker 4: this morning, I was like, wait, what, This is kind
Speaker 4: of crazy, but he brought to our attention big thanks
Speaker 4: to Paul Brennan and everyone else in the control room,
Speaker 4: that they're actually you could benefit by getting all of
Speaker 4: your COVID shots in the same arm each time you
Speaker 4: go and get another shot. Have you seen this research?
Speaker 8: Yeah, there's one. There's a one in a publication in
Speaker 8: particular that recently came out that suggest that if you
Speaker 8: get the shot in the same arm, that you have
Speaker 8: a slightly higher response, particularly in something we call T
Speaker 8: cell responses, which is a separate arm of the immune
Speaker 8: system from the antibodies that we always talk about after vaccines.
Speaker 4: I don't even remember what armor I always do.
Speaker 3: I do my like left because I'm a right handed
Speaker 3: so I feel like if it gets sore, like that's
Speaker 3: how I do it.
Speaker 2: Yeah, go ahea.
Speaker 8: Yeah. And I think it's clear that you know, the
Speaker 8: effects there were significant, but the antibody responses were the
Speaker 8: same irrespective of which arm you got it into, or
Speaker 8: how many or whether you alternated there. So it's probably
Speaker 8: one of those interesting subtle things, but it's certainly not
Speaker 8: something that we should lease sleepover. If you're going in
Speaker 8: to get a vaccine, it's much much better to get
Speaker 8: the vaccine in either arm than to not get the vaccine.
Speaker 3: Are we getting complacent and not getting ready for the
Speaker 3: next kind of virus that hits us? And just got
Speaker 3: about twenty five seconds.
Speaker 8: Yeah, I think it's really it's really important for us
Speaker 8: to stay aware. We're seeing cases of well parasites like
Speaker 8: malaria UH in here in Maryland. We're seeing UH infections
Speaker 8: with tropical viruses in Florida. We have to be aware
Speaker 8: that new viruses can show up for a number of reasons,
Speaker 8: and we have to keep our guard up for them.
Speaker 3: Right we've been talking to about climate change. A warmer
Speaker 3: environment certainly fertile ground for creating all of this. Doctor
Speaker 3: Andy Pecosh, thank you so much. We lean on you, guys.
Speaker 3: Professor of Molecular Microbiology and Menology at the Johns Hopkins University,
Speaker 3: Bloomberg School of Public of course, supported by Michael R.
Speaker 2: Bloomberg Founder Bloomberg Op. This is Bloomberg Radio.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebek on Bloomberg Radio.
Speaker 4: Words love it well, the domestic cover story of the
Speaker 4: new issue of Bloomberg Business Week really speaks to Carolyn May.
Speaker 4: It's because Carol loves getting shots.
Speaker 7: No.
Speaker 4: It has the words tick tick. It also depicts the
Speaker 4: distinctive bullseye rash around a tick bite that can indicate
Speaker 4: transmission of lime disease. You also might remember earlier this month,
Speaker 4: Carol and I were speaking with a professor of molecular
Speaker 4: microbiology and aminology about lime disease, and Carol you asked
Speaker 4: on air, if we can give our dogs vaccines against
Speaker 4: lime disease, then why can't we get vaccinated?
Speaker 9: Yeah?
Speaker 3: I mean I give my dog medication like it right
Speaker 3: to make sure that they.
Speaker 4: Well, you know what you could do. You could go
Speaker 4: ask the vet for a little bit of that.
Speaker 3: That's crazy, all right, Well, it is a real question.
Speaker 3: And it turns out that there used to be a
Speaker 3: lime vaccine. Back in nineteen ninety eight, the company that's
Speaker 3: now GSK got approval for something called limerex I believe
Speaker 3: it said it was the first lime vaccine for humans,
Speaker 3: but tim the.
Speaker 4: Shot failed, yeah, for a host of reasons. Now, after
Speaker 4: more than two decades, a pandemic and hundreds of thousands,
Speaker 4: if not millions, of lime disease cases, phase three trials
Speaker 4: are underway for a lime vaccine from Pfizer and the
Speaker 4: drug maker of val Neva, and it's expected to be
Speaker 4: available in twenty twenty six. This story by Kristin V.
Speaker 4: Brown and Naha Cotten Kristin Bloomberg News healthcare reporter. She's
Speaker 4: on the phone from Brooklyn, also with us as Bloomberg
Speaker 4: Business Week editor Joel Webber in our Bloomberg Interactive at
Speaker 4: Broker's studio. The story is in the upcoming new issue
Speaker 4: of Bloomberg BusinessWeek magazine. It's on newsstands later this week,
Speaker 4: already online at Bloomberg dot com, slash BusinessWeek and on
Speaker 4: the Bloomberg terminal. So Joel why why don't we have
Speaker 4: a line these vaccines?
Speaker 10: That there was so much I've learned reading this story,
Speaker 10: and I was deeply grateful for Kristin and Naha's work
Speaker 10: on it because it revealed so much about the state
Speaker 10: of the world, like we had a vaccine, we had
Speaker 10: a line vaccine. If you live in the Northeast and
Speaker 10: you do anything outside in warm summer months, you know
Speaker 10: how terrifying it is to go, you know, walk around
Speaker 10: in tall grass and come out with a lot with tics,
Speaker 10: which it really and lime disease is so mysterious and
Speaker 10: yet so devastating to a lot of people. And as
Speaker 10: we've seen in the decades since this vaccine that was
Speaker 10: on the market for a number of years before it disappeared,
Speaker 10: the case, the number of cases has exploded and they're
Speaker 10: just ticks everywhere. And that's part of why interest in
Speaker 10: a vaccine remains and why this partnership, the one that
Speaker 10: Pfizer's leading is really interesting. It never failed, yes, and
Speaker 10: that's an important thing because it actually worked, But it
Speaker 10: met America in a world that was just beginning to
Speaker 10: wrestle with vaccine skepticism, and that's what doomed it back then.
Speaker 10: But it wasn't like it didn't work, and if anything,
Speaker 10: the technology was amazing and and really counterintuitive to what
Speaker 10: I think you would expect of a vaccine. And the
Speaker 10: what we're going to see, probably from Pfizer if it
Speaker 10: gets approved, is basically doubling down on that same approach.
Speaker 10: So Kristin, what was what was an intro? What was
Speaker 10: novel about the approach of the Limericks vaccine from nineteen
Speaker 10: ninety eight, and and where where does that bring Pfizer?
Speaker 11: Yeah, so I am a huge nerd that I'm going
Speaker 11: to nerd out here for a minute. This is a
Speaker 11: really neat vaccine because of the way it works. So
Speaker 11: most vaccines they just you know, take a little bit
Speaker 11: of a pathogen a virus during this case of bacteria,
Speaker 11: and they take it and introduce it to your body
Speaker 11: so that your body starts making antibodies to it, so
Speaker 11: when you encounter it, your body fights it. In this case,
Speaker 11: your body makes antibodies to something that's in the tick.
Speaker 11: So when a tick latches onto you and are drinking
Speaker 11: your blood, the antipathy.
Speaker 10: Because it sounds so much fun, like so much fun.
Speaker 11: Yeah, so fun, so fun, so so uh so when
Speaker 11: the tick lapses onto you. The antibodies are there in
Speaker 11: your blood. Go into the tick while it's drinking your
Speaker 11: blood and kill this bacteria, which looks a lot like
Speaker 11: the silly pasta. Kills the bacteria while it's in the
Speaker 11: tick before it can go into you. So so the bacteria,
Speaker 11: you know, if all goes according to plan, never even
Speaker 11: enters your body, which is why it's so different from
Speaker 11: from other vaccines and why I personally think it's super
Speaker 11: freak and eat.
Speaker 4: Wait, that's incredible.
Speaker 9: It is pretty good, you know, isn't it?
Speaker 3: Kind of though, like how the limes like the stuff
Speaker 3: we give our dogs like it kind of because it
Speaker 3: repels the ticks, like kind of off.
Speaker 10: The dog, is it?
Speaker 4: Girl's gonna come in wearing one of those collars.
Speaker 10: Don't do that well, and don't take the dog vaccine.
Speaker 2: It's always Kristin. It's always blown my mind. I'm like,
Speaker 2: what we've been given.
Speaker 3: I've been getting stuff to my pups for a long time, Like,
Speaker 3: why is it that we haven't gotten something?
Speaker 2: Is it the same kind of dynamic or not even close?
Speaker 11: Well, well, yeah, no it is. It is the same dynamic.
Speaker 11: So first of all, I should say people don't take
Speaker 11: the vaccine from your dog. I think we should just
Speaker 11: put that up there.
Speaker 10: In a little recent history of people going into vets
Speaker 10: to get stuff they probably shouldn't have used. That's not
Speaker 10: encourage that.
Speaker 11: I'm I'm pretty sure people have done this, but it's
Speaker 11: not not advised. But but yeah, I mean what happened
Speaker 11: was after Limericks, the original shot was pulled for market,
Speaker 11: you had competitors that were coming to market that were like, oh, this,
Speaker 11: this isn't like in so hot, and so some of
Speaker 11: them pivoted and went into veterinary medicine, where there was
Speaker 11: a lot less sort of apprehension about the idea of
Speaker 11: a vaccine. So so some of some of the veterinary
Speaker 11: vaccines I believe are very similar technology to to this.
Speaker 10: Humans don't use it, don't use it, do not try sposure.
Speaker 10: But okay, I mean, Kristin, here we are two decades
Speaker 10: after this vaccine disappeared. Why did it disappear if it worked?
Speaker 9: Right?
Speaker 1: Okay.
Speaker 11: So one of the reasons I love the story of
Speaker 11: the lime disease vaccine so much is that it's really
Speaker 11: the story of how we feel about vaccines in general.
Speaker 11: In a nutshell, people are weird about vaccines, and we're
Speaker 11: weird about them for good reason. First of all, there's
Speaker 11: something we give to healthy people, so our tolerance for
Speaker 11: side effects is just less. You know, people don't want
Speaker 11: to endure horrible side effects for something they may or
Speaker 11: may not ever get in the future. And the other
Speaker 11: thing is I think there's just a little bit of
Speaker 11: a nick factor with like what you're going to put
Speaker 11: what it means as a bacteri he's going to go
Speaker 11: inside me. But so so for the Limeyers. In the
Speaker 11: case of Limerix, it came on the market at the
Speaker 11: time when the modern vaccine hesitancy movement was basically erupting.
Speaker 11: You had Andrew Wakefield who suggested that the childhood MMR
Speaker 11: vaccine could cause autism. That was in the UK. Here
Speaker 11: in the United States, you had people concerned that are
Speaker 11: preservative in vaccines was also causing autism. You had a
Speaker 11: real problem with another vaccine for another illness. Not vaccine
Speaker 11: got pulled from market, and so you had all this
Speaker 11: stuff happening that were making people, you know, for the
Speaker 11: first time in a long time, really raise their vaccines.
Speaker 11: You know, prior to that, vaccines were viewed as this
Speaker 11: you know, amazing public health tool, and the narrative was
Speaker 11: just starting to shift as limericks comes to market. And
Speaker 11: the other thing that happened was one of disease wasn't
Speaker 11: a big deal at that point, not really. There were
Speaker 11: sixteen thousand cases a year reported, mostly in the Northeast,
Speaker 11: and you know, the FDA did approve it, but one
Speaker 11: of the Recommendations committee members actually called it a yuppie
Speaker 11: is a yuppie vaccine. He said, you know this isn't
Speaker 11: like like basically the cost of administering this vaccine is
Speaker 11: not worth it for how many cases of lime there
Speaker 11: are ear So you had all this stuff kind of
Speaker 11: going on that set this vaccine up to fail. And
Speaker 11: then when it came to market, people started reporting side
Speaker 11: effects and immediately, because there was so much bubbling concern
Speaker 11: about other vaccines, people latched onto that. And you know,
Speaker 11: it didn't get pulled because it didn't work or because
Speaker 11: it was harmful. It got pulled because those things made
Speaker 11: no one want it, and if nobody's buying it, it
Speaker 11: wasn't really worth it to keep it on the market. So,
Speaker 11: you know, fast forward, we have lots of lime disease.
Speaker 4: Now, well that's what I wanted to talk to you about,
Speaker 4: Kristin fast forward to twenty twenty three Andrew Wakefield's study
Speaker 4: and report. The paper has been discredited. We still are
Speaker 4: in an environment where there's skepticism about vaccines. Just look
Speaker 4: at the uptake of the COVID vaccine and also of
Speaker 4: course of the flu vaccine annually. But what's different about
Speaker 4: lime disease? Ticks? Where people get lime disease and the
Speaker 4: market right now, right.
Speaker 11: Lot of parallels in our world right now to when
Speaker 11: lime marks came on the market. Right, you have vaccine hesitancy,
Speaker 11: probably at higher levels than it was back in nineteen
Speaker 11: eighty eight and the aftermath of a global pandemic. But
Speaker 11: on the other hand, we have so much more lime disease.
Speaker 11: Some estimates suggest as many as almost five hundred thousand
Speaker 11: cases a year in the United States being diagnosed increase.
Speaker 11: There was so much lime disease, and I think that
Speaker 11: there's this real fear of it, you know. I joke
Speaker 11: sometimes that like that take is the new Jaws. Right,
Speaker 11: You're not afraid of going in the ocean the summer time,
Speaker 11: you're afraid of going into the woods.
Speaker 4: I'm way more afraid of ticks than I am of sharks.
Speaker 11: Yeah, me too, me too, absolutely, So I think that,
Speaker 11: you know, when we think about how this vaccine will do,
Speaker 11: it's a real question mark because you have this push pull.
Speaker 11: There's way more fear of blind disease, way more awareness
Speaker 11: of it, and way more of the disease, but there's
Speaker 11: also way more vaccine hesitancy, and given this shot is
Speaker 11: so similar to limericks in many ways, if it can
Speaker 11: be hard to read the tea LEAs and know how
Speaker 11: all be received by the public once it's out there.
Speaker 10: I'm trying to think if there was a way to
Speaker 10: do this cover that looked like the Jaws movie poster,
Speaker 10: you know, but with like a little tiny tick. I
Speaker 10: don't think it's going to scare you in the same
Speaker 10: way since the tick's so small. But you know, we
Speaker 10: did our best, so okay. So Pfizer's got this partnership
Speaker 10: with Valneva, they are not alone. Moderna has also got
Speaker 10: an mRNA based thing that maybe is a little farther
Speaker 10: along since the Pfizer efforts in Phase three trials, Christen,
Speaker 10: But how big of an opportunity does Pharma think this
Speaker 10: vaccine could be?
Speaker 11: Yeah, I mean I think that there's a lot of
Speaker 11: a lot of enthusiasm. I think that we think that
Speaker 11: this could be not we think I think that there
Speaker 11: is suspicion that this could be a really big market,
Speaker 11: especially because lime is not in the Northeast now right
Speaker 11: because of global warming, Because you know, population has just
Speaker 11: grown and we've moved into heavily wooded areas and built
Speaker 11: housing tracks there. You know, we encountered ticks more, and
Speaker 11: we encounter them all up and down the East Coast,
Speaker 11: we encounter them in the Midwest. We encountered them in California,
Speaker 11: where I'm from now, So there's national awareness and concern
Speaker 11: about this now too. But like I said, at the
Speaker 11: same time, I don't think that we should underestimate how
Speaker 11: scared many people are of vaccines, how suspicious they are
Speaker 11: of them in the aftermath a lot of pandemic.
Speaker 3: Sorry go ahead, no, no, don't be sorry. This is incredible, Kristen.
Speaker 3: You know what's also interesting. I was going to kind
Speaker 3: of make a joke because once it hits you know,
Speaker 3: one of the real Housewives of Beverly Hills, then it's
Speaker 3: a real story.
Speaker 2: But there actually has.
Speaker 3: Been a lot of celebrities. I mean that was a
Speaker 3: whole story arc, and I think we are increasingly seeing
Speaker 3: I've known people who work and elsewhere. I think we
Speaker 3: all know somebody. But there's been a lot of high
Speaker 3: profile people Alec Baldwin, Amy Schumer, Ben Stiller, like some
Speaker 3: other famous people who have come out and talked about
Speaker 3: the impact of it.
Speaker 11: Yes, absolutely, I mean I have a very close friend
Speaker 11: who suffers from what is now called post treatment line
Speaker 11: and watching her battle it is one of the reasons
Speaker 11: I got so interested in this in the first place.
Speaker 11: I'm an outdoors woman and I have peeled many a
Speaker 11: tick off my body and every time just crossed my fingers.
Speaker 11: And I think people are are tired of just, you know,
Speaker 11: facing the question of do I want to go for
Speaker 11: a nice hike and risk getting lines easier? Do I
Speaker 11: want to stand play today? I think lots and lots
Speaker 11: of people are tired of a way.
Speaker 10: I'm tired of waiting to But do I really have
Speaker 10: to wait three more years?
Speaker 11: I think Unfortunately, Yes, the projections are this will hit
Speaker 11: the market in twenty twenty six.
Speaker 4: You know what, maybe you could sign up to be
Speaker 4: al in the clinical try.
Speaker 10: I mean, there's hope right there, don't don't. Don't go
Speaker 10: to the stuff at home for my dog. You're welcome
Speaker 10: to you.
Speaker 4: Still it works, It works, going to.
Speaker 10: Go down about as easily as I'm sure it goes
Speaker 10: down for your dog.
Speaker 3: Incredible reporting and so timely, Kristin.
Speaker 2: Thank you so much. Kristin Brown, healthcare reporter at Bloomberg News.
Speaker 3: This is the domestic cover story of the new issue
Speaker 3: of Bloomberg business Week, which is out on newsstands now,
Speaker 3: on the Bloomberg and at Bloomberg dot com, Slash business Week,
Speaker 3: and of course, as always are thanks to the editor
Speaker 3: of BusinessWeek, Jill Weber.
Speaker 4: Joel if you had to pick ticks off? Is that
Speaker 4: a personal question there?
Speaker 10: It's inevitable if you live in the Northeast, you find
Speaker 10: ticks on you.
Speaker 3: I've spent hours picking him off my dog.
Speaker 2: It's not fun, not fun. Medicine doesn't always work. All right, guys,
Speaker 2: this is Bloomberg Radio.
Speaker 1: Brom.
Speaker 8: A Journal.
Speaker 3: How about you let me drive?
Speaker 10: Oh no, no, no, no, who's gone drive?
Speaker 1: Honey? Please, I'll do the riding gravels.
Speaker 7: Let's mate, I want to try it.
Speaker 6: It's the question that.
Speaker 1: This is the drive to the globe punk thing well
Speaker 1: by around yeld Down on Bluebird Radio.
Speaker 3: All Right, just got under eighteen minutes left in today's
Speaker 3: trading session, and we've got an interesting one, Charlie, of course,
Speaker 3: just breaking down the numbers. Equities near their loads of
Speaker 3: the session, despite those blowout numbers from Nvidia.
Speaker 2: It is way off.
Speaker 3: It's high, and you've got the Nasdaq way off. It's high,
Speaker 3: as we heard, down about one point six percent.
Speaker 2: So it's a very risk off trade today.
Speaker 4: The opposite of what we saw from yesterday. Carol, Yeah,
Speaker 4: you know, how did you describe it? Everything is awesome.
Speaker 3: It was broad based buy like you really saw it,
Speaker 3: and you really saw investors moving in. It's interesting though,
Speaker 3: it does feel like a little bit of a wait
Speaker 3: and see mode. We got some strong economic news. We
Speaker 3: talked about that with Mike here in the US. Expectations
Speaker 3: for some strong economic growth. We see that from the
Speaker 3: Atlanta Fed. And so what does it mean ultimately from
Speaker 3: Fed members? Worries about inflation picking up again? So does
Speaker 3: Ja Powell have to be a little bit more hawkish
Speaker 3: than Duvish Tomorrow?
Speaker 4: We 's see what's top of mind for our next guest.
Speaker 4: Nadia Lovell is a senior US equity strategist at UBS
Speaker 4: Global Wealth Management. She joins us on Zoom once again
Speaker 4: from New York City, Natia, how are.
Speaker 9: You, I well, thanks for having me.
Speaker 4: It's good to have you back. What's top of mind
Speaker 4: for you on a day like today when we're seeing
Speaker 4: such a selloff.
Speaker 9: I think we are more focused on, of course, what's going.
Speaker 12: To happen at Jackson Hole tomorrow, and then of course
Speaker 12: next week will be labor market data. I think what
Speaker 12: we're seeing in the market right now is that this
Speaker 12: pullback on risk off center. And remember, liquidity is kind
Speaker 12: of low this time of year, in August, and so
Speaker 12: it's not surprising to see people take a little bit
Speaker 12: of risk off of the table ahead of the I'll
Speaker 12: come and Labor Day Aliday.
Speaker 9: So I think that's what you're seeing.
Speaker 3: To be honest, I do feel like we're all like
Speaker 3: so tired figuring out what will if they do, what
Speaker 3: won't they do? Like it doesn't get us anywhere, right
Speaker 3: because ultimately, if that's going to do, what it's going
Speaker 3: to do when it meets next Nattie at it's a
Speaker 3: September meeting.
Speaker 2: So what do you think is constructive?
Speaker 3: What is the data that you look for whether it's
Speaker 3: economic data, whether it's valuations, whether it's an earnings report,
Speaker 3: whether it's technicals. What is it that says to you
Speaker 3: something interesting and productive is happening to the upside or downside.
Speaker 3: When it comes to the trade.
Speaker 12: We are very much focused on the earnings outlook. I
Speaker 12: think you make a great point in terms of the
Speaker 12: macro having dominated a lot of stuff this year, But
Speaker 12: I think that you're now moving to our stage where
Speaker 12: the earnest outlook is going.
Speaker 9: To matter even more.
Speaker 12: We know that valuation levels are quite elevated this year.
Speaker 12: Much of the market performance has been driven by that.
Speaker 12: I would say, in terms about our review on the ernestago,
Speaker 12: we think it has improved a bit coming out of
Speaker 12: a second quarter. We do think that the earnings recession
Speaker 12: that we've been called in force it's last year is
Speaker 12: now behind us, as the second quarter probably marks the
Speaker 12: trough and earning. So we're looking for recovering the second
Speaker 12: half of the year for a full year of about.
Speaker 9: Roughly flat earnings.
Speaker 12: But we think a lot of this is already priced
Speaker 12: in at this stage, just given how elevated valuations are.
Speaker 4: I want to go back to what you said about
Speaker 4: all eyes on Jackson Hole. What are you going to?
Speaker 4: What do you expect to hear from j Powell that
Speaker 4: could move markets?
Speaker 12: I think we expect to hear a little, certainly a
Speaker 12: little bit of more hawkish tone from J Powell compared
Speaker 12: to when market expectations might be. We do think though,
Speaker 12: that the last rake hike was the July meeting. We're
Speaker 12: looking for the terminal rate to settle in right where
Speaker 12: it is at five and a quarter of five and
Speaker 12: a half percent, but we can't real at the possibility
Speaker 12: of another rake hike. We know that the macro data
Speaker 12: has been coming in stronger than expected, and so that
Speaker 12: could give the bad sum world go room to do
Speaker 12: additional one additional high lator this year. We know that
Speaker 12: that's already sort of their base case in from the
Speaker 12: June SEP. But the Fed does recognize that there's longer
Speaker 12: ary of relaxed to their monetary policy, and this cycle
Speaker 12: is so unique it's very difficult to determine what those
Speaker 12: lags will be and how long it will be left.
Speaker 12: But I think the focus is more around how long
Speaker 12: does the FED stay at these levels?
Speaker 9: How long does rate stay high?
Speaker 12: And we don't think an additional twenty five basis points
Speaker 12: is going to break the camel back.
Speaker 9: It's more how long that load stays on the camels.
Speaker 2: Tim knows.
Speaker 3: I'm like, I'm going to kill you for going back
Speaker 3: to FED talk.
Speaker 4: She like she I have surprised she didn't kill while
Speaker 4: giving answer.
Speaker 6: Kidding me.
Speaker 2: So wait, So what you say.
Speaker 4: We're done with Nvidia?
Speaker 3: Cares there since you went there to Nadia? So I mean,
Speaker 3: do you feel confident enough and your thinking about monetary
Speaker 3: policy in the US and what US central bankers will
Speaker 3: do to trade on it or no?
Speaker 9: At this stage?
Speaker 12: No, I mean we think that, like I said, we
Speaker 12: think that the FED is done, and we do expect
Speaker 12: that rate cuts will happen in twenty twenty four, and
Speaker 12: the markets keeps pushing those out at this point.
Speaker 9: So we think that the sort of you know in lane.
Speaker 12: With market expectations, and it's less more about like what
Speaker 12: the fat does and actually how the economy does in
Speaker 12: response to the fat, what the fat has already done.
Speaker 3: So are you worried about consumers? Because I think about
Speaker 3: student debt. I think about you know, all those balance
Speaker 3: sheets that we're doing so well, and you know, credit card,
Speaker 3: whether it's Macy's.
Speaker 4: What do they say about delinquencies rising faster than expected?
Speaker 9: Right, exactly.
Speaker 3: So that's the thing that you know, we know how
Speaker 3: important the consumer is in terms of our US economy here,
Speaker 3: So how do you think about that?
Speaker 9: You know, we're getting a mixed picture of the consumer.
Speaker 12: We know that July retail sale is really overshot to
Speaker 12: the upside. I would say, even throughout their owning season,
Speaker 12: we've been hearing some concerns around this consumer, even from
Speaker 12: the consumer product companies. Consumers are becoming more measured and
Speaker 12: targeted with their spending and it's becoming difficult to pass
Speaker 12: along those price increases and as you noted, the retail
Speaker 12: sale environment reach our earnings this past week. I would say,
Speaker 12: some of these companies we have to recognize that they
Speaker 12: do have some idiosyncratic issues.
Speaker 9: But you know, there are.
Speaker 12: Clearly podcasts of weakness when we are looking at the
Speaker 12: credit card delinquency data, and also delinquency rates have been
Speaker 12: picking up in auto loans, and of course, as you mentioned, uh,
Speaker 12: you know, resumption of student debt repayment in October is
Speaker 12: a potential headwind. But I would say, given the labor
Speaker 12: market is so strong, we're not overly concerned about the consumer.
Speaker 12: We do expect the consumer spending too slow, but we
Speaker 12: don't expect.
Speaker 9: It to fall off of a cliff.
Speaker 4: It's almost like, you know, the first, the favorite word
Speaker 4: Carol of executives and press releases is AI this quarter
Speaker 4: and last quarter.
Speaker 9: Right.
Speaker 4: Second, the favorite word for retailers is shrinkage. That's the
Speaker 4: industry term. It's true, it's the industry term that refers
Speaker 4: to just throw it all in. Well, it's the industry
Speaker 4: term that refers to, yeah, the kitchen sink to everything,
Speaker 4: but it includes theft. And I'm wondering, Nadia, if if
Speaker 4: if that how you read into that? Is that a
Speaker 4: sign of what's happening in the economy or do you
Speaker 4: think it's a it's a way that these these companies
Speaker 4: can blame poor sales or poor margins.
Speaker 9: No, we do think that shrink is real.
Speaker 12: It's been an issue for quite some time, you know,
Speaker 12: and it's become even more organized. It's not your everyday
Speaker 12: consumer that's walking in and just walking out with things
Speaker 12: onto their shouloads without pain for it. So we do
Speaker 12: think it is an issue, and you know, maybe AI
Speaker 12: can help and technology can help solve some of these
Speaker 12: issues for the retailers.
Speaker 9: But about outside of that, we do think that there
Speaker 9: is clearly.
Speaker 12: Softening indiscretionary spending and some of these retailers are being
Speaker 12: affected by that.
Speaker 9: Also.
Speaker 12: You know, you know, we've seen a pickup in online
Speaker 12: sales in July, dominated by Prime Day, so I think
Speaker 12: that there's been some loss of market share there as well.
Speaker 3: All right, we're gonna leave it on that note, Nadia,
Speaker 3: I take care. I know it's only Thursday, but I
Speaker 3: know the weekends just around the corner. So into hers
Speaker 3: Nattie Levell level. She is senior US Equity Strategies at
Speaker 3: UBS Global Wealth Management amzoom in New York City.
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