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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moven news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.

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Speaker 2: Let's get back to the strike because we're getting red

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Speaker 2: headlines across the Bloomberg terminal. Now from Sean Fain's Facebook

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Speaker 2: live presentation, he says, the United Autoworkers Union is going

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Speaker 2: to expand its strike, but only against General Motors and Stilantis.

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Speaker 2: They're not going to expand their strike against Ford. Now.

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Speaker 2: I'm not sure what's going to happen to Bronco Production.

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Speaker 2: I'm sure a lot of people want to know about that,

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Speaker 2: so I'll find out and get back to you on it.

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Speaker 2: But they are going to expand their strike against GM.

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Speaker 2: At Silantis, we have Kevin Tyne and standing by on

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Speaker 2: the phone, Bloomberg Intelligence US autos analyst. Wait is he

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Speaker 2: is he there?

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Speaker 3: Yeah?

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Speaker 2: Okay, good, he's on camera. He's not him on the phone.

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Speaker 2: Did you hire him?

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Speaker 1: Probably?

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Speaker 2: Congratulations, he's very good, Kevin, What do you think about this?

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Speaker 2: So it seems like they're getting along a little better

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Speaker 2: with Bill Ford now and historically they do get along

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Speaker 2: better with the Ford Motor Company because of the Ford

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Speaker 2: family and because of Bill. Really with GM and Stilantis,

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Speaker 2: they still have serious beef. How do you read it?

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Speaker 4: Yeah, I mean using it as leverage, right, saying by

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Speaker 4: expanding for Stilanthason GM and holding the line on Ford

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Speaker 4: probably motivates, you know, the competitors to get in there

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Speaker 4: and be a little bit more aggressive with with their

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Speaker 4: negotiating in terms of what they're willing to give. But

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Speaker 4: but you know, it's it's not over yet. You know,

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Speaker 4: there's still probably a ways to go, and and you know,

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Speaker 4: things like this, you might mean the biggest issues or

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Speaker 4: the easiest issue, use the low hanging fruit is handled,

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Speaker 4: but it's probably going to be in the details before

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Speaker 4: anything is really agreed to across the board.

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Speaker 1: Hey, Kevin, is there like you've probably done I'm sure

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Speaker 1: you've done analysis. When does his strike start there hurt

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Speaker 1: them financially? The big three?

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Speaker 4: It's weeks, not you know, not days obviously, And keep

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Speaker 4: in mind too, there's there was a build up of

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Speaker 4: inventory ahead, so there are units on the ground, and

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Speaker 4: you could think of it of a little bit of

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Speaker 4: a working capital shift from one quarter to the next

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Speaker 4: unless it gets you know, very long. The last one

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Speaker 4: was forty days and twenty nineteen against General Motors, and

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Speaker 4: that's significant, right, so, and historically, even though inventory is

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Speaker 4: above where it was a year ago, it's still very low. Historically.

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Speaker 4: I think I calculated it out to start September was

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Speaker 4: probably about forty three days of inventory for the end

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Speaker 4: Street has a whole and typically fifty five to sixty

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Speaker 4: five days is considered manageable. So it's below what's considered

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Speaker 4: you know, a healthy level. And at the worst, these

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Speaker 4: the domestic automakers, they would have eighty ninety days supply

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Speaker 4: in some months, so significantly off that, but but not

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Speaker 4: as bad as it was prior to the to the pandemic.

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Speaker 2: In terms of job security, I mean, we know that

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Speaker 2: they're asking for pay rises. Obviously they also want to

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Speaker 2: be pension, which is seems less likely, although I'd love

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Speaker 2: to hear your take a four day work week, which

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Speaker 2: is like nice, there's no way in hell, right, But

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Speaker 2: they want actual job security. So from GM there's a

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Speaker 2: ton of cars coming, you know, new production. Mary Barros

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Speaker 2: say is they won't need fewer workers for electric vehicles.

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Speaker 2: There's just a massive offering there from Stilantis, not so much.

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Speaker 2: I mean, they have a couple brands that seems like

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Speaker 2: they're about to die out.

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Speaker 4: Yeah, look, and I think it's it's the line of

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Speaker 4: sight is pretty clear, right. So the automakers have made

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Speaker 4: a lot of money in the past couple of years,

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Speaker 4: not even just through the last contract, but probably over

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Speaker 4: the last decade, and it's very easy for the union

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Speaker 4: to point to that and say, we want our share

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Speaker 4: of that. You've been very profitable due to the concessions

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Speaker 4: we've given over the last couple of contracts, all the

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Speaker 4: way through the bankruptcy period, and it's not going to

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Speaker 4: be easy for the manufacturers to hide that, right that

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Speaker 4: you can see that money every day in every filing.

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Speaker 4: But at the same time, the manufacturers can look at

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Speaker 4: the unions and say, but look at our production. Look

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Speaker 4: at our sales volume is way down from the twenty

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Speaker 4: seventeen peak in this country. US sales in twenty seventeen,

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Speaker 4: we're seventeen and a half million. We're running out of

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Speaker 4: fifteen to four. So I think it's going to be

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Speaker 4: the manufacturer's pointing to that and telling the union, we

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Speaker 4: can't give you a whole lot of job security. This

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Speaker 4: market is smaller and it's going to continue to be smaller.

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Speaker 4: Transaction prices will be higher, margins will be better, the

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Speaker 4: money will be there, but we can't guarantee capacity and

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Speaker 4: headcount going forward. We need that flexibility. And then on

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Speaker 4: pensions and healthcare, you know, the manufacturers have a very

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Speaker 4: easy time of directing the eye of the union too.

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Speaker 4: That's what we were bankrupt, remember in twenty two, thousand

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Speaker 4: and nine and twenty ten, and that's the structure we had, right,

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Speaker 4: So two of those three things are a little bit

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Speaker 4: easier for the manufacturer to explain away.

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Speaker 3: The money is not. So I think when.

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Speaker 4: All is said and done, the likelihood is that the

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Speaker 4: manufacturers pay up, but they want that flexibility to adjust

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Speaker 4: the cost structure going forward. And I think, you know,

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Speaker 4: the pension and healthcare going back to the way it

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Speaker 4: was in prior to the bankruptcy period is just a

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Speaker 4: non starter. I don't even think that gets discussed in

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Speaker 4: any seriousness.

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Speaker 1: So I didn't believe you, Kevin A. Couple of years

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Speaker 1: ago when you said the industry was going to go

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Speaker 1: from a mode of seventeen seventeen and a half million

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Speaker 1: production down to you know, something materially less like fifteen

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Speaker 1: and a half or something like that. But once again

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Speaker 1: you were right, and that do you think the union

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Speaker 1: believes that?

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Speaker 4: Well, here's the thing, right is that is that you

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Speaker 4: have to look at at least one other input. Right,

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Speaker 4: everybody wants to talk about volume and the headline of

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Speaker 4: seventeen and a half versus fifteen four, but revenue per

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Speaker 4: unit matters, right, So while production and sales are down,

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Speaker 4: average transaction price is at a record, right, We're heading

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Speaker 4: to fifty thousand dollars, So when you multiply out just

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Speaker 4: back of the envelope, the revenue pool is actually larger.

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Speaker 4: So you know, you have to understand that not every

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Speaker 4: unit is the same as every other unit. You know,

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Speaker 4: a twenty thousand dollars Toyota Corolla is not a sixty

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Speaker 4: five thousand dollars f one point fifty. And this industry

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Speaker 4: is moving towards the latter to say, we just want

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Speaker 4: to sell as many sixty five thousand dollars things as

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Speaker 4: we can. We're willing to give up the bottom.

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Speaker 3: Of that market.

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Speaker 4: It means our volume goes away, but really the revenue

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Speaker 4: pool and the revenue contribution and the profit contribution and

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Speaker 4: your margins are just way better. And I think that's

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Speaker 4: what this industry becomes going forward.

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Speaker 2: By the way, on that note, I wanted originally I

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Speaker 2: was planning on talking with you about the Jeep Grand

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Speaker 2: Wagoneer Obsidian Series three that I'm driving right now, you know,

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Speaker 2: before this hard news crash the party. But that is

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Speaker 2: an extremely expensive vehicle. It's the biggest vehicle Jeep has

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Speaker 2: ever made. The one I'm driving is one hundred and

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Speaker 2: fourteen hundred and fifteen thousand dollars in this trim. And

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Speaker 2: though I love the new Hurricane five to ten, the

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Speaker 2: Inline six, it's amazing, five hundred and ten horse power,

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Speaker 2: five hundred pound feet of torque. For the same price,

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Speaker 2: you can get a Range Rover or a BMW X

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Speaker 2: seven the M sixty version, or a Cadillac Escalade the

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Speaker 2: Ultra super Luxury Platinum version. Like why are they selling

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Speaker 2: these one hundred and thirteen hundred and fourteen thousand dollars Jeeps?

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Speaker 4: Yeah, I mean, then look the average on Grand Wagoneer.

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Speaker 4: I just looked it up. Is one hundred and five

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Speaker 4: thousand is the average, you know, sales weighted, you know,

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Speaker 4: but that's right there with Expedition, it's there with Suburban.

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Speaker 4: That's what you know. Those have become the profit centers

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Speaker 4: because you're sharing platform and components with pickup trucks and

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Speaker 4: now you're just adding content that's pure profits. So you know,

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Speaker 4: that's kind of my point is that, look, if you

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Speaker 4: sell one of those how many you know, dodged darts

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Speaker 4: did you have to sell to get.

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Speaker 2: Anywhere near that?

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Speaker 4: And you probably lost money on every Dodge Dart, which

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Speaker 4: is why it doesn't exist anymore.

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Speaker 3: You know.

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Speaker 2: So the old world the hornet coming out.

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Speaker 4: Yeah, well the old world would be like, run production

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Speaker 4: on hornet all day long and then figure out how

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Speaker 4: to sell it. And it's like the new model is

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Speaker 4: going to be, Hey, if we can sell one or

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Speaker 4: two Grand Wagoneers, we can cut production of hornet. Which

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Speaker 4: is why I say in this contract negotiation, you know,

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Speaker 4: the manufacturers need to protect that flexibility going forward, saying

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Speaker 4: this is going to be a smaller market because we're

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Speaker 4: selling more expensive things.

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Speaker 1: Man's if I were an investor, I'd be like, I

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Speaker 1: like this auto industry better than the old auto industry.

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Speaker 2: Yeah, for sure.

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Speaker 1: This industry's more, more problem and that's w Kevin has

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Speaker 1: been telling us for years. That's where it's going.

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Speaker 2: But if you're a UAW were feel that way.

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Speaker 1: No, absolute opposite, Kevin Tinny, thanks so much for joining us.

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Speaker 1: Kevin is our lead auto analyst for Bloomberg Intelligence.

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Speaker 5: You're listening to the team Ken's are Live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot com,

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Speaker 5: the iHeartRadio app and the Bloomberg Business app, or listen

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Speaker 5: on demand wherever you get your podcasts.

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Speaker 2: Now. Yesterday, Paul and I were talking with a gentleman

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Speaker 2: who said, you know, one of the big problems in

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Speaker 2: terms of battery production is that a lot of the

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Speaker 2: stuff is mined elsewhere, and then most of it is

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Speaker 2: processed in China. Yep, China, China. So our next guest

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Speaker 2: is hoping to change that a little bit. Nevade Alum

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Speaker 2: joins us. He's president CEO of Evolution and they are

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Speaker 2: working on a I guess cobalt processing plant in Yuma, Arizona,

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Speaker 2: which should supply when it's up to speed about a

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Speaker 2: million batteries? What a year, Nevade? Is that an annual

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Speaker 2: figure that you want to be a cobalt for a

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Speaker 2: million batteries a year?

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Speaker 6: Yes, that's correct, Matt, one million a year. You know,

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Speaker 6: right now.

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Speaker 7: There's thirty cobalt processing facilities in China and zero in

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Speaker 7: North America, so you know we need to catch up here.

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Speaker 7: That's and you know, luckily we started this process a

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Speaker 7: few years ago before the IRA and the other laws,

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Speaker 7: and now we're catching a nice ailwind.

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Speaker 6: So it's going really well.

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Speaker 2: Well, do you get any financing benefits from that? Tax

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Speaker 2: breaks from that legislation? I mean, are there subsidies that

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Speaker 2: you can take advantage of here?

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Speaker 6: Yeah?

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Speaker 7: Absolutely, though I will say we were going to do

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Speaker 7: this plant without those.

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Speaker 6: Subsidies, but it's a great help for us for sure.

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Speaker 2: So how much are you going to spend to build

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Speaker 2: this plant? I know that Uma because I read in

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Speaker 2: a local newspaper expects to have a ton of revenue

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Speaker 2: sort of as a job as a knock on effect

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Speaker 2: jobs and everything. But how much youre going to spend

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Speaker 2: to build it? And when are you gonna be done

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Speaker 2: making it all?

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Speaker 1: A park?

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Speaker 7: Around three hundred million dollars and it'll be done in

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Speaker 7: twenty twenty six.

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Speaker 6: We think, all.

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Speaker 1: Right, so what actually happens at a cobalt processing facility

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Speaker 1: and how does that how's that part of the whole

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Speaker 1: battery situation.

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Speaker 7: So cobolt is a really important metal, uh for EV batteries,

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Speaker 7: for normal regulation and for energy density and for you know,

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Speaker 7: giving you long range and good cold weather performance. It's

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Speaker 7: also extremely important in aerospace and defense. It's used in

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Speaker 7: hypersonic missiles and stealth bombers. So it's a really critical

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Speaker 7: material for the United States to have self sufficiency in.

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Speaker 7: So what we do is we take cobalt hydroxide, so

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Speaker 7: already processed cobalt that is processed in Africa, and then

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Speaker 7: it'll come here to the United States instead of going

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Speaker 7: to China. And you know what the Chinese do is

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Speaker 7: they just process it there and then send it back

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Speaker 7: to the United States for the cars here such as

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Speaker 7: Tesla and other electric automakers. But we want to skip

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Speaker 7: the China step, just bring it straight here to America,

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Speaker 7: process it into cobalt sulfate, which is the salt that

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Speaker 7: goes into the cathode portion of the EV battery. And

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Speaker 7: sell it to the new plants that have been announced

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Speaker 7: in the United States by General Motors, LG, Samsung Ford.

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Speaker 7: You know, they're spending billions of dollars building these what

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Speaker 7: they call battery precursor plants. They're going to use nickel sulfate,

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Speaker 7: cobalt sulfate, manganese sulfate and put it all together and

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Speaker 7: make a battery pack.

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Speaker 2: Now I've seen I guess a rendering of the plant

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Speaker 2: in Yuma, and one of the things you immediately notice, Paul,

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Speaker 2: check this out. Yeah, giant colar facility, even bigger than

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Speaker 2: the actual processing plant. So I know, you guys want

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Speaker 2: to be carbon neutral. This is all going to be

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Speaker 2: powered by the sun.

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Speaker 7: Yes, Indeed, Yuma County is the sunniest county in the

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Speaker 7: United States, so it's it's pretty easy, we think, to

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Speaker 7: do the full on solar power one hundred percent solar,

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Speaker 7: no greenhouse gas, is, no propane, no diesel.

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Speaker 6: So we also are.

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Speaker 7: Going to be benefiting the local farmers by selling them

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Speaker 7: back some of our excess solar production at cost. They're

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Speaker 7: losing a lot of hydro power from.

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Speaker 6: The lower levels on the Colorado.

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Speaker 7: River, so they're very excited about our coming in and

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Speaker 7: building this facility there.

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Speaker 2: Well, I heard that you know you like Yuma, not

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Speaker 2: only because I guess apparently your wife is from Yuma

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Speaker 2: for one thing.

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Speaker 6: That's right.

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Speaker 2: It's also very sunny, low cost of living, low regulatory

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Speaker 2: kind of hassle there, but it's close to like all

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Speaker 2: the used batteries coming back out of California is what

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Speaker 2: I read. So are you recycling cobalt there?

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Speaker 6: We will. We intend to recycle as well.

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Speaker 7: So you know, our first phase is to build a

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Speaker 7: sulfate facility, which is sort of I think the easy,

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Speaker 7: easier thing. It's a very established to tchnology around the world.

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Speaker 7: As I said, there's thirty of these plants in China.

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Speaker 7: And then as more and more batteries are spent and

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Speaker 7: used up, we want to recycle some of those into

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Speaker 7: turning them around and getting the cobalt back out of them.

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Speaker 7: And then lastly we want to add a cobalt metal

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Speaker 7: facility for aerospace and defense.

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Speaker 6: So that's part of the strategic.

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Speaker 7: Reserve announced by the President under the Defense Production Act.

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Speaker 1: How do you think you will be able to compete

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Speaker 1: against the Chinese? They actually have much greater scale, presumably

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Speaker 1: government support to some level. How do you think about

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Speaker 1: the competitive environment.

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Speaker 7: Well, you know, there is no cobalt mined in China either.

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Speaker 7: They all take it out of Africa, so we're competing

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Speaker 7: with them in Africa. We're going to bring it here

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Speaker 7: instead of taking to China, and so logistically we save money.

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Speaker 7: The other great thing about Yuma County and where we

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Speaker 7: are is right on the border of California and Mexico.

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Speaker 7: So we need to come through the port of Long

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Speaker 7: Beach or the port of Ensenada with our inputs. So

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Speaker 7: and it's only three hours by truck from Ensenada or

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Speaker 7: Long Beach. So I think logistically it's the great spot

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Speaker 7: we're on in State eight. We're on the up railroad,

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Speaker 7: so we we picked it. Also because logistics are important

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Speaker 7: in these in these kinds of deals.

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Speaker 1: What is it I mean from a competitive perspective? Again,

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Speaker 1: can you will you be competing on price to your

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Speaker 1: customers here? Can you because of the lower presumably the

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Speaker 1: lower logistics costs of nothing else away from China?

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Speaker 7: Yeah, Well, look, it's it's a combination of price, and

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Speaker 7: we would have been competing on price initially, but more

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Speaker 7: now there's tariffs on Chinese sul faith, there's the IRA

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Speaker 7: regulations about Chinese inputs that come in to the EV

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Speaker 7: battery supply chain. You know, there's a lot of new

311
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Speaker 7: laws that are sort of helping us compete on price,

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Speaker 7: so we may be able to charge us higher price

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Speaker 7: than we might have ordinarily, you know if there were

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Speaker 7: none of these laws.

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Speaker 2: All right, it's I think a fascinating story, and we're

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Speaker 2: finally starting to see movement, maybe because it's.

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Speaker 1: Climate Week and we saw a bunch of these folks

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Speaker 1: this week.

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Speaker 2: No, I mean, I mean in terms of bringing processing

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Speaker 2: here because Nevade, I don't know how much you talk

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Speaker 2: with other people in the kind of battery supply chain,

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Speaker 2: but I imagine we must be trying to bring a

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Speaker 2: lot more processing of cobalt, lithium and rare earths to

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Speaker 2: the US at some point.

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Speaker 6: Right, Yes, it's all happening.

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Speaker 7: It's it's hundreds of billions of dollars of investment, real

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Speaker 7: you know, team effort, Lots of big corporations, as I mentioned, LG,

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Speaker 7: General Motors, Samsung. They've announced billion dollar plants in Georgia,

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Speaker 7: South Carolina, Tennessee, even Arizona. LG is building in a

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Speaker 7: five and a half billion dollar plant just up the road.

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Speaker 6: In Phoenix, just south of Phoenix.

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Speaker 7: So that you know, is going to help us sell

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Speaker 7: our product into the United States.

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Speaker 2: Yeah, so it's moving. Yeah, the infrastructure, the supply chain

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Speaker 2: is moving here.

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Speaker 1: That's right, all right, Neved, thanks so much for joining us.

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Speaker 1: Nevade Alam he is a president and CEO of Evolution

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Speaker 1: there in getting into the battery business and the processing

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Speaker 1: of all the cobolt and all that kind of stuff.

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Speaker 5: You're listening to the tape cancer Live program Bloomberg Markets

341
00:18:23,400 --> 00:18:26,800
Speaker 5: weekdays at ten am Eastern on Bloomberg Radio, the tune

342
00:18:26,840 --> 00:18:29,800
Speaker 5: in app, Bloomberg dot Com, and the Bloomberg Business App.

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00:18:29,840 --> 00:18:32,639
Speaker 5: You can also listen live on Amazon Alexa from our

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00:18:32,680 --> 00:18:37,720
Speaker 5: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: It is United Nations General Assembly Week here in New York.

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Speaker 1: And then we've got lots of unga, lots of stuff happened,

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Speaker 1: lots of terrible traffic. But one of the key areas

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Speaker 1: is Russia and various sanctions on Russia as it relates

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Speaker 1: to the Ukraine War. One area that is going to

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Speaker 1: come up for discussion very soon is going to be

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Speaker 1: banned on Russian diamonds, so we went to get to

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Speaker 1: the bottom of that. We could do that with our

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Speaker 1: next guest on Core Daga, CEO of Ongara and Encore,

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Speaker 1: thanks so much for joining us again here talk to

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Speaker 1: us about just remind us what you do at Angara.

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Speaker 5: Sure.

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Speaker 8: So, at Angara we are vertically integrated online jewelers. So

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Speaker 8: we do everything from cutting and polishing gemstones, to designing jewelry,

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Speaker 8: to manufacturing jewelry to retailing over the web in over

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Speaker 8: thirty countries.

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Speaker 6: All right.

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Speaker 2: So I all right, So I had a question on

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Speaker 2: a slightly dip before we get into that business, on

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Speaker 2: a slightly different thing. I always kind of wonder, isn't

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Speaker 2: Wharton the grad school? And I see some people who

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Speaker 2: do the undergraduate thing at Wharton, But isn't that Penn.

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Speaker 8: Yes, so Wharton is one of the schools in Penn.

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Speaker 8: But it is undergrad and grad school.

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Speaker 6: All right.

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Speaker 2: So you go to Wharton, you study finance there in entrepreneurship,

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Speaker 2: then you go get your MBA from Harvard. I've heard

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Speaker 2: of it trade school. You decide I'm going to become

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Speaker 2: a jeweler.

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Speaker 3: Yeah.

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Speaker 8: So interestingly, I grew up in the jewelry business, so

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Speaker 8: I've kind of played with gemstones a say, age of five.

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Speaker 8: I always thought I would never come into the industry

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Speaker 8: because it is pretty antiquated and old fashioned, as you

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Speaker 8: can imagine. But after work and I went to McKenzie.

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Speaker 8: My largest project was turning around a major jewelry retailer,

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Speaker 8: and that's when I fell in love with the trade again.

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Speaker 8: I saw a lot of opportunities, especially online.

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Speaker 1: So here we are.

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Speaker 2: So you could have just gone straight to the jewelry business.

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Speaker 2: You didn't need to stop. You didn't need to stop

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Speaker 2: at McKenzie, You didn't need to stop at Harvard, right,

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Speaker 2: But what did you learn at those places that gave

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Speaker 2: you an edge now in this business?

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Speaker 8: So, I think the industry is one of the most

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Speaker 8: fragmented industries out there. So when you compare it to

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Speaker 8: any other part of retail. So for example, Signet, which

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Speaker 8: is the number one jeweler in the US, only has

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Speaker 8: less than ten percent market share you compared to something

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Speaker 8: like a best By, which has a much more dominant position.

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Speaker 8: So the idea was, how do we structure the industry

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Speaker 8: in a way that allows us to get to that

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Speaker 8: scale where we can really dominate the industry?

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Speaker 1: All Right, so one of the news items you and

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Speaker 1: I were talking about it before is Russia. Russia supplies

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Speaker 1: a lot of diamonds. Then they're going to I guess

401
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Speaker 1: the G seven is gonna put some sanctions on it

402
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Speaker 1: or something like that. What's what's happening there.

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Speaker 8: Yeah, So in a couple of weeks there's likely to

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Speaker 8: be a ban announced, and the ban would be for

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Speaker 8: all Russian diamonds. So just as a precursor to this,

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Speaker 8: April twenty twenty two, the Biden administration is issued in

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Speaker 8: executive order to ban Russian diamonds. So this has already

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Speaker 8: been done by the US and UK. The key difference

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Speaker 8: here is twofold. One is instead of two countries, it's

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Speaker 8: seven countries. And second, and I think far more importantly,

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Speaker 8: is the previous band was only on rough. Now the

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Speaker 8: thing is for rough diamonds, those get exported typically from

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Speaker 8: Russia to India, China or Antwerp, and in this case,

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Speaker 8: the cutting and polishing happens in those centers and those

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Speaker 8: are then substantially transformed goods, so they are no longer

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Speaker 8: considered Russian diamonds. So that previous band really had no teeth.

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Speaker 8: This is very different because they're thinking about prohibiting cutting

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Speaker 8: and polished Russian diamonds from entering any of the G seven,

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Speaker 8: which is really sixty five percent of the total market demand.

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Speaker 2: This is what we do with Russian goods that we

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Speaker 2: want to put sanctions on them, so you know we're serious.

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Speaker 2: But they can send the goods to India or China

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Speaker 2: to get finished and then we'll buy them. Yeah, you

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Speaker 2: know exactly.

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Speaker 1: Russian terms of how big is Russian terms of being

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Speaker 1: a supplier.

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Speaker 8: So Russian diamond market is roughly four billion. There was

428
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Speaker 8: four billion in exports back in twenty twenty one before

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Speaker 8: the war. Just you know, just to compare that to

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Speaker 8: the overall GDP. Overall Russian GDP in twenty twenty one

431
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Speaker 8: was one point seven trillion, So you're really talking about

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Speaker 8: point two percent of the market. To the previous point,

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Speaker 8: it is more optics than reality because point two percent

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Speaker 8: is a pretty small part of the overall market to change.

435
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Speaker 1: All right, So where where do you typically get your diamonds?

436
00:23:10,840 --> 00:23:14,480
Speaker 8: So we typically buy from siteholders, which are the customers

437
00:23:14,480 --> 00:23:18,040
Speaker 8: of Dibber's. So typically Botswan and Sort is our number

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Speaker 8: one source. So we started avoiding Russian diamonds back in

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00:23:21,440 --> 00:23:23,359
Speaker 8: twenty twenty two when the ban in the US was

440
00:23:23,400 --> 00:23:27,119
Speaker 8: announced preemptively. So for US it doesn't really affect us

441
00:23:27,160 --> 00:23:29,320
Speaker 8: because we don't source Russian diamonds in any case.

442
00:23:30,560 --> 00:23:36,159
Speaker 2: How fungible are these stones? I mean, how would you

443
00:23:36,480 --> 00:23:40,520
Speaker 2: know if a diamond came, you know, cut, polished, finished,

444
00:23:40,600 --> 00:23:42,399
Speaker 2: out of Russia. It doesn't have any kind of like

445
00:23:42,760 --> 00:23:43,960
Speaker 2: microchip inside it.

446
00:23:44,000 --> 00:23:47,720
Speaker 8: There's no tag, right, It's hard, and that's why this

447
00:23:47,840 --> 00:23:51,080
Speaker 8: ban is going to be especially difficult to enforce. But

448
00:23:51,480 --> 00:23:55,159
Speaker 8: the idea behind it is really implementing blockchain technology and

449
00:23:55,280 --> 00:23:58,719
Speaker 8: ledger systems throughout the supply chain to be able to

450
00:23:59,040 --> 00:24:02,399
Speaker 8: figure out what's going from Russia versus elsewhere. And honestly,

451
00:24:02,440 --> 00:24:04,399
Speaker 8: I think it's actually kind of great because all of

452
00:24:04,400 --> 00:24:08,520
Speaker 8: a sudden traceability becomes enforced in the diamond industry, which

453
00:24:08,560 --> 00:24:11,000
Speaker 8: is great soul. We can make sure we don't get

454
00:24:11,000 --> 00:24:13,080
Speaker 8: any conflict diamonds, blood diamonds and the like.

455
00:24:13,680 --> 00:24:15,720
Speaker 1: Talk to us about the diamond market today, how's it

456
00:24:15,760 --> 00:24:17,760
Speaker 1: been over the last year or two or is it?

457
00:24:17,960 --> 00:24:19,840
Speaker 1: Are diamonds more expensive less expensive?

458
00:24:20,280 --> 00:24:24,280
Speaker 8: So natural diamonds have been getting crushed so since their

459
00:24:24,359 --> 00:24:29,919
Speaker 8: peak in mid twenty twenty two, they are down roughly

460
00:24:30,000 --> 00:24:31,639
Speaker 8: thirty five to fifty percent.

461
00:24:31,400 --> 00:24:34,600
Speaker 1: In wise of value. A few reasons.

462
00:24:34,640 --> 00:24:37,600
Speaker 8: One is that there is a natural lack of demand

463
00:24:37,800 --> 00:24:40,439
Speaker 8: in China as well as the US, which are the

464
00:24:40,440 --> 00:24:44,840
Speaker 8: two major consumers of diamonds, and people are going out

465
00:24:44,880 --> 00:24:47,240
Speaker 8: a lot more. They're eating out, traveling, and a lot

466
00:24:47,280 --> 00:24:49,560
Speaker 8: of that consumption power is going there. But I think

467
00:24:49,560 --> 00:24:51,520
Speaker 8: the bigger issue is lab grown diamonds.

468
00:24:51,840 --> 00:24:53,720
Speaker 1: And you guys do lab grown diamonds, right.

469
00:24:53,600 --> 00:24:56,600
Speaker 8: We have launched lab grown and so a few interesting

470
00:24:56,640 --> 00:24:59,399
Speaker 8: statistics on lab grown Back in twenty eighteen, it was

471
00:24:59,400 --> 00:25:02,960
Speaker 8: like two percent the market. This last year, thirty six

472
00:25:03,119 --> 00:25:06,720
Speaker 8: percent of engagement rings sold were labrown engagement rings. Over

473
00:25:06,960 --> 00:25:10,600
Speaker 8: half of current diamond distribution in the US is lab grown,

474
00:25:11,080 --> 00:25:15,200
Speaker 8: So really they've taken off it's a perfect substitute chemically, physically, optically,

475
00:25:15,200 --> 00:25:18,440
Speaker 8: the same discounts ranging anywhere from seventy five to ninety

476
00:25:18,440 --> 00:25:19,120
Speaker 8: percent of their name.

477
00:25:19,119 --> 00:25:19,439
Speaker 6: Wow.

478
00:25:20,480 --> 00:25:25,440
Speaker 2: So basically I get my wife a lab grown diamond, Yeah,

479
00:25:26,080 --> 00:25:28,359
Speaker 2: if I give her a two carrot honker on a

480
00:25:28,400 --> 00:25:32,800
Speaker 2: platinum ring, she will be just as pleased as if

481
00:25:32,800 --> 00:25:34,600
Speaker 2: I gave her like a real blood.

482
00:25:34,359 --> 00:25:38,040
Speaker 8: Diamond, well, not a blood diamond. Per se, but a

483
00:25:38,119 --> 00:25:41,800
Speaker 8: natural diamonds call it yes, yeah, so absolutely, and she.

484
00:25:41,800 --> 00:25:44,080
Speaker 2: Takes it down to Wilson Jewelers and Scarsdale. They're not

485
00:25:44,080 --> 00:25:44,840
Speaker 2: going to know the difference.

486
00:25:44,960 --> 00:25:46,480
Speaker 8: They will not. The only way you can know the

487
00:25:46,480 --> 00:25:48,679
Speaker 8: difference is if you send it to the GIA or

488
00:25:48,720 --> 00:25:52,040
Speaker 8: IGI or another certification lab and there's small traces of

489
00:25:52,119 --> 00:25:56,720
Speaker 8: nitrogen in natural diamonds that do not exist in lab room.

490
00:25:56,760 --> 00:25:58,640
Speaker 8: That's really the only way you'll be able to tell

491
00:25:58,680 --> 00:25:59,080
Speaker 8: the difference.

492
00:25:59,080 --> 00:26:01,680
Speaker 2: But it's visually. I'm never buying a real diamond a game.

493
00:26:01,800 --> 00:26:03,720
Speaker 1: Yeah, I mean, boy, if I had known that back

494
00:26:03,760 --> 00:26:05,840
Speaker 1: in the day, they didn't have them that guy, I know,

495
00:26:05,920 --> 00:26:08,280
Speaker 1: I know, I know, I know. Trust me. Ancor Daga,

496
00:26:08,320 --> 00:26:11,640
Speaker 1: thanks so much for joining us. Acre Daga, CEO of ANGAA.

497
00:26:13,080 --> 00:26:16,480
Speaker 5: You're listening to the team. Ken's are Live program Bloomberg

498
00:26:16,520 --> 00:26:19,919
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot com,

499
00:26:20,000 --> 00:26:23,120
Speaker 5: the iHeartRadio app and the Bloomberg Business App, or listen

500
00:26:23,200 --> 00:26:25,320
Speaker 5: on demand wherever you get your podcasts.

501
00:26:27,200 --> 00:26:31,200
Speaker 1: Let's talk med tech Boston Scientific. I have no idea

502
00:26:31,280 --> 00:26:33,480
Speaker 1: what they do, but it's a big company. It's like

503
00:26:33,520 --> 00:26:36,879
Speaker 1: eighty billion dollars in market cap stocks up sixteen percent.

504
00:26:36,960 --> 00:26:38,200
Speaker 2: Do they make medical hardware?

505
00:26:38,359 --> 00:26:39,120
Speaker 1: Medical devices?

506
00:26:39,200 --> 00:26:39,280
Speaker 9: Right?

507
00:26:39,280 --> 00:26:41,800
Speaker 1: Stuff StuffYeah stuff that you know, so it's medical devices.

508
00:26:41,800 --> 00:26:44,000
Speaker 1: Matt Hendrickson, he knows what they do. He's a senior

509
00:26:44,040 --> 00:26:47,679
Speaker 1: equity analyst covering the med tech business with Bloomberg Intelligence

510
00:26:48,359 --> 00:26:51,240
Speaker 1: Boston Scientific. Just give me the thirty seconds. What did

511
00:26:51,240 --> 00:26:53,680
Speaker 1: they do and why do we care?

512
00:26:53,800 --> 00:26:54,000
Speaker 3: Yeah?

513
00:26:54,000 --> 00:26:57,520
Speaker 10: They make stuff okay, like stints, right, So they make stints.

514
00:26:57,520 --> 00:26:59,360
Speaker 3: It started off with stints and then it turned into

515
00:26:59,359 --> 00:26:59,840
Speaker 3: heart vale.

516
00:27:00,080 --> 00:27:02,240
Speaker 10: This turns into and what some of the products we'll

517
00:27:02,280 --> 00:27:04,760
Speaker 10: probably talk about is the Watchmen device, which goes into

518
00:27:04,760 --> 00:27:08,639
Speaker 10: the heart. They create catheters and then they go into endoscopy,

519
00:27:08,760 --> 00:27:13,240
Speaker 10: so singles use scopes to help with you know, various

520
00:27:13,920 --> 00:27:15,119
Speaker 10: endoscopic procedures.

521
00:27:15,240 --> 00:27:18,040
Speaker 1: All right, So like splunk splunk, except what the people

522
00:27:18,200 --> 00:27:20,560
Speaker 1: splunk for people? Okay, now that makes sense, I get

523
00:27:20,640 --> 00:27:24,159
Speaker 1: it now. During the pandemic, hospitals were overloaded with just

524
00:27:24,320 --> 00:27:27,560
Speaker 1: dealing with COVID patients, so people weren't doing surgeries and

525
00:27:27,600 --> 00:27:30,439
Speaker 1: procedures and things like that. And that's not good for

526
00:27:30,480 --> 00:27:33,359
Speaker 1: a company like uh Post and Scientific or Metronic or

527
00:27:33,359 --> 00:27:33,800
Speaker 1: something like that.

528
00:27:33,960 --> 00:27:37,080
Speaker 10: No, they need procedural volume, especially in the cardiology side

529
00:27:37,119 --> 00:27:40,720
Speaker 10: to get their organic revenue growth, which is kind of

530
00:27:40,720 --> 00:27:44,800
Speaker 10: the key driver for their valuation all those aspects.

531
00:27:44,840 --> 00:27:47,840
Speaker 3: Once the hospital beds are filled with COVID patients.

532
00:27:47,600 --> 00:27:51,760
Speaker 10: They couldn't do heart procedures. That that's mostly in the

533
00:27:51,800 --> 00:27:53,240
Speaker 10: back mirror.

534
00:27:53,400 --> 00:27:56,119
Speaker 1: So now are we back to more normalized.

535
00:27:55,680 --> 00:27:58,359
Speaker 10: If anything, we're kind of going still through kind of

536
00:27:58,359 --> 00:28:01,879
Speaker 10: this backlogs. We're kind of getting an extra tailwind in enitionship.

537
00:28:01,359 --> 00:28:06,199
Speaker 2: Operations maybe as opposed to revenge travel, although surely that

538
00:28:07,160 --> 00:28:09,400
Speaker 2: is happening. I mean it must be happening.

539
00:28:09,560 --> 00:28:13,480
Speaker 10: Well someone I mean for Boston, I mean someone who

540
00:28:13,680 --> 00:28:16,120
Speaker 10: can probably wait a year or two for a procedure.

541
00:28:16,200 --> 00:28:18,320
Speaker 10: Now they're going back to their doctor like hey, I'm

542
00:28:18,400 --> 00:28:21,040
Speaker 10: ready now, and you know, the doctor's like, great, we.

543
00:28:21,000 --> 00:28:22,800
Speaker 3: Need the volume. We need to make our money, so

544
00:28:22,960 --> 00:28:23,320
Speaker 3: come on.

545
00:28:23,320 --> 00:28:23,760
Speaker 6: In, all right.

546
00:28:23,800 --> 00:28:26,959
Speaker 1: So Boston Scientific had an investor day. What was kind

547
00:28:27,000 --> 00:28:28,439
Speaker 1: of the message they wanted to get across.

548
00:28:28,520 --> 00:28:31,719
Speaker 10: Well, the big thing was so we talked about organic

549
00:28:31,760 --> 00:28:34,960
Speaker 10: growth being kind of the driver for valuation. They were

550
00:28:34,960 --> 00:28:37,320
Speaker 10: traditionally in the high single digit so they were in

551
00:28:37,400 --> 00:28:39,400
Speaker 10: six to eight percent. Was kind of their long term

552
00:28:39,440 --> 00:28:45,480
Speaker 10: project or long term outlook. Or goal, and so this

553
00:28:45,480 --> 00:28:48,120
Speaker 10: this meeting this week, they bumped it up to eight

554
00:28:48,200 --> 00:28:50,920
Speaker 10: to ten percent. Okay, so it's and this is a

555
00:28:50,920 --> 00:28:53,520
Speaker 10: company that's making fourteen expected to make fourteen.

556
00:28:53,240 --> 00:28:54,960
Speaker 3: Billion dollars in sales this year.

557
00:28:55,040 --> 00:28:58,240
Speaker 10: So we're not talking about some small company making additional

558
00:28:58,400 --> 00:29:00,600
Speaker 10: like two million dollars to get to that growth. You're

559
00:29:00,640 --> 00:29:04,200
Speaker 10: talking about very incremental growth to kind of drive that

560
00:29:04,360 --> 00:29:06,479
Speaker 10: eight to time pent organic growth.

561
00:29:06,680 --> 00:29:08,760
Speaker 1: So what did the market. Had the market respond to that?

562
00:29:09,200 --> 00:29:10,880
Speaker 3: They were They were up two percent, and so so

563
00:29:10,920 --> 00:29:12,160
Speaker 3: far this week they're still up.

564
00:29:12,480 --> 00:29:15,960
Speaker 1: Well, so what's driving is it? What's driving this growth here?

565
00:29:16,000 --> 00:29:18,040
Speaker 2: I mean, is they also make I mean they do

566
00:29:18,200 --> 00:29:20,160
Speaker 2: M and A right, and they just do a deal yep.

567
00:29:20,280 --> 00:29:23,320
Speaker 10: So yeah, they just acquired a company called Relievant, which

568
00:29:23,360 --> 00:29:27,040
Speaker 10: is the procedure in your vertebrate to ablate the nerves

569
00:29:27,080 --> 00:29:27,800
Speaker 10: to help.

570
00:29:27,600 --> 00:29:29,520
Speaker 3: With that lower back pain essentially.

571
00:29:29,640 --> 00:29:30,040
Speaker 9: Wow.

572
00:29:30,240 --> 00:29:32,480
Speaker 2: Yeah, that sounds like a good thing, but it hurts

573
00:29:32,520 --> 00:29:33,920
Speaker 2: to even think about that procedure.

574
00:29:34,360 --> 00:29:35,960
Speaker 1: People say back is the worst.

575
00:29:36,400 --> 00:29:37,920
Speaker 2: Yeah, can't get it all.

576
00:29:37,880 --> 00:29:40,320
Speaker 1: Right, So what's so what's your call on Boston Scientific?

577
00:29:40,760 --> 00:29:40,880
Speaker 9: Well?

578
00:29:40,920 --> 00:29:44,680
Speaker 3: I think I mean right now it's trading at about you.

579
00:29:44,600 --> 00:29:48,160
Speaker 1: Can't read those numbers. The font on his page of

580
00:29:48,200 --> 00:29:51,040
Speaker 1: his compage, give me, give me this. It is the

581
00:29:51,080 --> 00:29:54,200
Speaker 1: smallest font. Yeah, it's like, forget about it. You can't

582
00:29:54,240 --> 00:29:54,800
Speaker 1: read that.

583
00:29:54,760 --> 00:29:56,959
Speaker 3: It's my little chie cheek. Yeah, okay exactly, but it's

584
00:29:57,280 --> 00:29:58,560
Speaker 3: training twenty four times.

585
00:29:58,800 --> 00:30:03,280
Speaker 10: Pe got that eight percent growth, the call should be

586
00:30:03,320 --> 00:30:07,360
Speaker 10: that investor or the analyst, the consensus should be upping

587
00:30:07,400 --> 00:30:10,160
Speaker 10: their estimates and that should be getting you know, normally,

588
00:30:10,200 --> 00:30:12,680
Speaker 10: when you say eight to ten percent, you know the

589
00:30:12,680 --> 00:30:13,840
Speaker 10: street goes at nine percent.

590
00:30:13,920 --> 00:30:15,040
Speaker 3: Yeah, r down in the middle.

591
00:30:15,280 --> 00:30:17,040
Speaker 10: If you get that nine percent growth, you should be

592
00:30:17,040 --> 00:30:19,200
Speaker 10: able to see that multiple go up to something that's

593
00:30:19,200 --> 00:30:21,320
Speaker 10: more like like the twenty eight times range. And so

594
00:30:21,400 --> 00:30:23,719
Speaker 10: that's kind of the big call, as they kind of

595
00:30:23,880 --> 00:30:26,480
Speaker 10: you know, during the meeting, they kept saying the next level,

596
00:30:26,520 --> 00:30:28,560
Speaker 10: the next level, the next level. Right, Well, if they're

597
00:30:28,560 --> 00:30:31,000
Speaker 10: able to be able to achieve that growth and get

598
00:30:31,040 --> 00:30:33,920
Speaker 10: too closer to ten percent versus the eight percent, they'll

599
00:30:33,960 --> 00:30:35,480
Speaker 10: get to that next level in the multiple.

600
00:30:35,560 --> 00:30:38,320
Speaker 2: By the wait, I mean, who else is there? If

601
00:30:38,360 --> 00:30:39,800
Speaker 2: I want a stent, I'm probably going to get it

602
00:30:39,800 --> 00:30:41,480
Speaker 2: from Boston Scientific, right, Well.

603
00:30:41,320 --> 00:30:44,120
Speaker 10: I mean, yeah, a stent is a stent is you're

604
00:30:44,160 --> 00:30:46,680
Speaker 10: gonna get is either a bit Metronic or Boston, but

605
00:30:46,680 --> 00:30:49,120
Speaker 10: those are kind of the slower growing side. This is

606
00:30:49,560 --> 00:30:51,600
Speaker 10: some of their key growth drivers beside the M and

607
00:30:51,680 --> 00:30:53,560
Speaker 10: A is going to be the Watchman device. Now that's

608
00:30:53,560 --> 00:30:56,120
Speaker 10: a product that's going from like a two billion dollar

609
00:30:56,240 --> 00:30:57,080
Speaker 10: market to.

610
00:30:57,160 --> 00:30:58,320
Speaker 1: What's the Watchmen device.

611
00:30:58,360 --> 00:30:59,320
Speaker 3: Watchmen is for.

612
00:30:59,400 --> 00:31:03,240
Speaker 10: Its device that closes the left atrial appendage in the heart,

613
00:31:03,560 --> 00:31:06,760
Speaker 10: and essentially what it does is that appendage for people

614
00:31:06,760 --> 00:31:10,360
Speaker 10: with atrial fibrillation, holds blood in that little appendage, it

615
00:31:10,440 --> 00:31:13,120
Speaker 10: clots and then it turns into a stroke risk. They

616
00:31:13,120 --> 00:31:17,480
Speaker 10: close that appendage with this device and then therefore essentially

617
00:31:17,760 --> 00:31:20,960
Speaker 10: removing the risk of blood clotting in that appendage and then.

618
00:31:20,840 --> 00:31:22,160
Speaker 3: Going up to the brain for a stroke.

619
00:31:22,480 --> 00:31:24,520
Speaker 2: But did we not need that appendage to begin with?

620
00:31:24,560 --> 00:31:26,880
Speaker 3: I mean, you know, that's what they found out over time,

621
00:31:26,960 --> 00:31:27,600
Speaker 3: is that no, they didn't.

622
00:31:27,600 --> 00:31:29,080
Speaker 10: It's kind of the same thing as your appendix, you

623
00:31:29,200 --> 00:31:30,920
Speaker 10: kind of it's kind of just sticking out there and

624
00:31:30,960 --> 00:31:32,000
Speaker 10: you don't need it, and you can.

625
00:31:31,840 --> 00:31:34,040
Speaker 3: Cut it off. They were cutting it off.

626
00:31:34,200 --> 00:31:37,560
Speaker 10: Now this is a non surgical procedure for being able

627
00:31:37,560 --> 00:31:38,200
Speaker 10: to do the same thing.

628
00:31:38,280 --> 00:31:41,200
Speaker 1: Yeah, all right, So talk to us just more broadly

629
00:31:41,200 --> 00:31:42,800
Speaker 1: about the medical device business.

630
00:31:42,840 --> 00:31:46,360
Speaker 2: What's thea you mentioned a couple Abbot, Medtronic. I know

631
00:31:46,440 --> 00:31:49,000
Speaker 2: Striker because I love the name and they make you know,

632
00:31:49,080 --> 00:31:49,960
Speaker 2: hips and stuff.

633
00:31:51,040 --> 00:31:53,920
Speaker 3: Edward's Life Sciences, Yep, they're they're doing heart valves yep.

634
00:31:54,080 --> 00:31:56,120
Speaker 3: So that's you know, everything.

635
00:31:56,600 --> 00:32:00,800
Speaker 10: Everything is trying to minimize kind of the openness of surgery.

636
00:32:00,840 --> 00:32:04,840
Speaker 10: So it's all minimally invasive procedure. So you know, you're

637
00:32:04,880 --> 00:32:07,280
Speaker 10: just the last one was Edwards. They have taken an

638
00:32:07,400 --> 00:32:11,760
Speaker 10: open heart procedure and have created a technology that you

639
00:32:11,840 --> 00:32:13,040
Speaker 10: take a catheter and.

640
00:32:12,920 --> 00:32:14,520
Speaker 3: You don't have to open the heart. You can just

641
00:32:14,560 --> 00:32:15,960
Speaker 3: go straight up through the or earth.

642
00:32:16,200 --> 00:32:18,600
Speaker 10: It's like it looks like a little like spy like

643
00:32:18,840 --> 00:32:21,080
Speaker 10: in the spy movies, those little like cameras, like those

644
00:32:21,080 --> 00:32:21,720
Speaker 10: snakes around.

645
00:32:21,800 --> 00:32:22,640
Speaker 3: Yeah, it's kind of just.

646
00:32:22,600 --> 00:32:25,480
Speaker 10: Like that, and it delivers the valve and there it's done.

647
00:32:25,520 --> 00:32:29,360
Speaker 10: There it's been but the medtech sector has been hit

648
00:32:29,440 --> 00:32:32,920
Speaker 10: hard because of kind of the g LP trend that's

649
00:32:32,960 --> 00:32:36,520
Speaker 10: going on. What's the goop trin the GOLP drugs that

650
00:32:36,560 --> 00:32:40,440
Speaker 10: are coming out for obesity.

651
00:32:40,520 --> 00:32:44,880
Speaker 2: Yes, true, gov we go v and I would sell

652
00:32:44,920 --> 00:32:47,240
Speaker 2: a medical device company because I think there's gonna be

653
00:32:47,320 --> 00:32:49,960
Speaker 2: less prestigures, because gonna be you're not gonna you're not

654
00:32:49,960 --> 00:32:54,080
Speaker 2: gonna be nearly as at risk of a heart attack

655
00:32:54,160 --> 00:32:56,959
Speaker 2: or stroke if you don't weigh three hundred pounds. So

656
00:32:57,120 --> 00:32:59,720
Speaker 2: if you used to weigh three hundred pounds and you

657
00:32:59,800 --> 00:33:02,240
Speaker 2: go it an ozepic shot once a week or I

658
00:33:02,280 --> 00:33:03,480
Speaker 2: don't know, once a month, however it.

659
00:33:03,440 --> 00:33:07,360
Speaker 3: Works sometime it's daily or yeah.

660
00:33:07,480 --> 00:33:10,280
Speaker 2: Pill forms as well. So if you can take these

661
00:33:10,400 --> 00:33:13,800
Speaker 2: drugs and get into better shape, you're not gonna need

662
00:33:13,840 --> 00:33:14,560
Speaker 2: a stint.

663
00:33:15,040 --> 00:33:17,000
Speaker 3: That's that's the that's the thesis going on right now.

664
00:33:17,000 --> 00:33:17,400
Speaker 9: Wow.

665
00:33:17,800 --> 00:33:20,840
Speaker 3: But I mean there's there's a lot of caveats too.

666
00:33:20,880 --> 00:33:25,160
Speaker 10: There's zimmer Bioment, for example, it's another orthopedic company like Striker.

667
00:33:25,520 --> 00:33:28,160
Speaker 10: Their CEO came out and said, hey, some of these

668
00:33:28,160 --> 00:33:31,040
Speaker 10: patients who were too obese for surgery, if they take

669
00:33:31,080 --> 00:33:34,080
Speaker 10: these weight loss drugs, then they'll be healthy enough to

670
00:33:34,240 --> 00:33:36,920
Speaker 10: get their knee replacement or to get their hip replacement.

671
00:33:37,360 --> 00:33:37,479
Speaker 3: Uh.

672
00:33:37,520 --> 00:33:39,000
Speaker 10: And then the other thing too is you know there's

673
00:33:39,120 --> 00:33:41,400
Speaker 10: data coming out. I mean, the diabetes companies have been

674
00:33:41,400 --> 00:33:43,840
Speaker 10: trying to fight back hard on this, but they're showing

675
00:33:44,040 --> 00:33:47,080
Speaker 10: data that these patients who are taking these glps, these

676
00:33:47,120 --> 00:33:50,239
Speaker 10: weight loss drugs, they're they're not taking them after a year,

677
00:33:50,280 --> 00:33:51,640
Speaker 10: they're not taking them after two years.

678
00:33:51,640 --> 00:33:53,240
Speaker 3: So it's you know, and it's something.

679
00:33:53,000 --> 00:33:54,200
Speaker 2: Where but they keep the weight off.

680
00:33:54,520 --> 00:33:56,880
Speaker 3: No, So these they try.

681
00:33:56,680 --> 00:33:57,760
Speaker 2: These, they don't keep the weight off.

682
00:33:57,960 --> 00:34:00,640
Speaker 3: And half of these patients are like just dropping out

683
00:34:00,680 --> 00:34:01,760
Speaker 3: after a year even more.

684
00:34:01,960 --> 00:34:04,280
Speaker 2: But so they lose weight, They lose a year and

685
00:34:04,280 --> 00:34:06,360
Speaker 2: then they're like I liked being fat.

686
00:34:06,800 --> 00:34:09,600
Speaker 10: I see it as like, do you want to keep

687
00:34:10,239 --> 00:34:12,920
Speaker 10: you know, injecting yourself with this every single day or

688
00:34:12,960 --> 00:34:13,759
Speaker 10: even once a week.

689
00:34:13,840 --> 00:34:15,680
Speaker 3: It's you know, it's a it's it's a lot.

690
00:34:15,840 --> 00:34:18,320
Speaker 2: And yeah, but so as being obese, Yeah, so I

691
00:34:18,320 --> 00:34:20,839
Speaker 2: would probably rather object inject myself.

692
00:34:21,040 --> 00:34:22,960
Speaker 10: Probably, But I also at the same time, if you

693
00:34:23,120 --> 00:34:25,360
Speaker 10: keep injecting yourself and then you know there is bariatric

694
00:34:25,440 --> 00:34:28,920
Speaker 10: surgery as kind of that you know, safe safety net there.

695
00:34:28,920 --> 00:34:30,920
Speaker 2: Then you go like this would be interesting to hear.

696
00:34:30,960 --> 00:34:34,760
Speaker 2: I I mean, I wonder if beriatric surgery is better

697
00:34:35,440 --> 00:34:40,080
Speaker 2: or worse the band in terms of in terms of

698
00:34:40,120 --> 00:34:41,960
Speaker 2: losing the weight and keeping it off. I wonder which

699
00:34:41,960 --> 00:34:43,000
Speaker 2: one's better longer term.

700
00:34:43,680 --> 00:34:45,560
Speaker 3: We hear more about that kind of in this third

701
00:34:45,640 --> 00:34:46,080
Speaker 3: quarter call.

702
00:34:46,120 --> 00:34:48,239
Speaker 10: And so that's could be intuitive surgical, and that's gonna

703
00:34:48,239 --> 00:34:48,840
Speaker 10: be metronic.

704
00:34:48,920 --> 00:34:51,919
Speaker 3: And yeah, it's a it's a stay tuned type of dude.

705
00:34:51,920 --> 00:34:53,359
Speaker 2: What a fascinating industry to.

706
00:34:53,320 --> 00:34:54,880
Speaker 3: Cover it is?

707
00:34:54,640 --> 00:34:56,400
Speaker 1: It is, it's good stuff. I mean, the whole healthcare

708
00:34:56,480 --> 00:34:58,799
Speaker 1: space is just you got it. It's just it's never

709
00:34:58,840 --> 00:35:01,920
Speaker 1: going away. It's always a growth industry. You're always going

710
00:35:02,000 --> 00:35:03,640
Speaker 1: to have a job if you're in the helpcare well.

711
00:35:03,680 --> 00:35:06,400
Speaker 2: And lately I've been looking at like pictures of FDR

712
00:35:06,640 --> 00:35:08,640
Speaker 2: or pictures of ideas, say it looked like one hundred

713
00:35:08,680 --> 00:35:10,000
Speaker 2: years old and they died when they were sixty.

714
00:35:10,040 --> 00:35:12,920
Speaker 1: Matt Hundredston's senior ecodanalysts covering all the medtech space for

715
00:35:12,960 --> 00:35:15,680
Speaker 1: Bloomberg Intelligence, joining us live here in our Bloomberg Interactive

716
00:35:15,680 --> 00:35:17,400
Speaker 1: broker studio. This is Bloomberg.

717
00:35:17,840 --> 00:35:20,960
Speaker 5: You're listening to the tape Cat's are live program Bloomberg

718
00:35:21,000 --> 00:35:24,600
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

719
00:35:24,680 --> 00:35:27,919
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

720
00:35:27,920 --> 00:35:30,759
Speaker 5: You can also listen live on Amazon Alexa from our

721
00:35:30,760 --> 00:35:35,840
Speaker 5: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

722
00:35:37,080 --> 00:35:38,600
Speaker 1: Let's look at the M and A front here. We've

723
00:35:38,600 --> 00:35:40,160
Speaker 1: got a big M and A trade looks like it

724
00:35:40,200 --> 00:35:46,320
Speaker 1: actually might close. Microsoft Activision sixty nine billion dollars. We

725
00:35:46,440 --> 00:35:50,280
Speaker 1: got some approval I think from the UK's regulatory body.

726
00:35:50,280 --> 00:35:52,440
Speaker 1: That was kind of the last one to fall. Jennifer

727
00:35:52,560 --> 00:35:56,439
Speaker 1: rejoins us. She's a senior litigation analyst. She focuses on antitrust.

728
00:35:56,480 --> 00:35:58,759
Speaker 1: It is right down her alley. She does that off

729
00:35:58,760 --> 00:36:02,640
Speaker 1: for Bloomberg Intelligence. So, Jen, what did the UK authority's

730
00:36:03,400 --> 00:36:05,959
Speaker 1: rule here on this Microsoft Activision deal?

731
00:36:07,320 --> 00:36:10,080
Speaker 9: Well, Paul, at long last, it finally looks like this

732
00:36:10,120 --> 00:36:12,920
Speaker 9: deal is going to close. What they have said is

733
00:36:12,920 --> 00:36:16,560
Speaker 9: that a new remedy that Microsoft proposed about a month

734
00:36:16,600 --> 00:36:20,360
Speaker 9: ago or so is probably sufficient to cure the concerns

735
00:36:20,400 --> 00:36:22,960
Speaker 9: they had about the deal. That it looks likely that

736
00:36:23,000 --> 00:36:26,080
Speaker 9: it's sufficient. This is a provisional decision, and so what

737
00:36:26,120 --> 00:36:29,200
Speaker 9: they will do now is listen to comments by interested

738
00:36:29,280 --> 00:36:33,120
Speaker 9: public other entities to participate in the market, and then

739
00:36:33,160 --> 00:36:36,080
Speaker 9: at some point after October sixth, issue of final ruling.

740
00:36:36,120 --> 00:36:39,239
Speaker 9: But really, Paul, this is called provisional, but this is it.

741
00:36:39,320 --> 00:36:41,479
Speaker 9: I mean, they're going to ultimately clear this deal, there's

742
00:36:41,480 --> 00:36:42,359
Speaker 9: no doubt in my mind.

743
00:36:43,160 --> 00:36:45,640
Speaker 2: The weird thing to me was, if you're going to

744
00:36:45,680 --> 00:36:47,880
Speaker 2: do a big M and a transaction, I get that

745
00:36:47,920 --> 00:36:52,239
Speaker 2: you need to have the US regulators approve it, right

746
00:36:52,360 --> 00:36:54,399
Speaker 2: and I get because it's a massive market, I get

747
00:36:54,440 --> 00:36:56,719
Speaker 2: that you're going to have to have Europe approve it.

748
00:36:57,280 --> 00:36:59,960
Speaker 2: But England do they really matter that much anymore?

749
00:37:01,480 --> 00:37:04,560
Speaker 9: Well, I guess they do now they've made a big

750
00:37:04,600 --> 00:37:08,160
Speaker 9: splash in the antitrust world. You know, the UK used

751
00:37:08,160 --> 00:37:11,560
Speaker 9: to be part of the European Union before Brexit, so

752
00:37:12,160 --> 00:37:15,680
Speaker 9: it didn't really issue its own opinions with respect to

753
00:37:15,719 --> 00:37:18,360
Speaker 9: these big global mergers that were big enough to trigger

754
00:37:18,719 --> 00:37:21,239
Speaker 9: European Commission review. You know, there might have been other

755
00:37:21,320 --> 00:37:24,880
Speaker 9: deals that actually did trigger just only UK review in

756
00:37:24,920 --> 00:37:27,520
Speaker 9: which the UK was still involved, but for the most part,

757
00:37:27,560 --> 00:37:30,920
Speaker 9: when you had these big acquisitions like Microsoft activisions, you

758
00:37:31,200 --> 00:37:34,759
Speaker 9: didn't have the UK independently involved. And now they are,

759
00:37:35,160 --> 00:37:37,240
Speaker 9: and I think they really want to flex their muscles.

760
00:37:37,239 --> 00:37:40,640
Speaker 9: They want to show that they are a real antidrus regulator.

761
00:37:40,760 --> 00:37:43,839
Speaker 2: I mean, obviously that would common as tongue in cheek.

762
00:37:43,880 --> 00:37:47,000
Speaker 2: So if you're British and you're offended. Please don't email

763
00:37:47,040 --> 00:37:49,839
Speaker 2: my boss. They do have sixty seven million people, but

764
00:37:49,960 --> 00:37:52,480
Speaker 2: again it's only sixty seven million people in the UK.

765
00:37:53,680 --> 00:37:55,840
Speaker 2: What other regulators do I have to worry about?

766
00:37:57,000 --> 00:37:57,400
Speaker 6: Am I am?

767
00:37:57,440 --> 00:37:59,680
Speaker 2: I going to the Indonesian regulator. They have a lot

768
00:37:59,719 --> 00:38:02,040
Speaker 2: of people, Well what about India? Do they look at

769
00:38:02,040 --> 00:38:03,400
Speaker 2: the M and a deal?

770
00:38:03,640 --> 00:38:07,759
Speaker 9: You know, you know what people don't notice. But I'll

771
00:38:07,840 --> 00:38:10,799
Speaker 9: tell you what. When these deals get filed, sometimes they're

772
00:38:10,840 --> 00:38:14,279
Speaker 9: filed with over one hundred jurisdictions. There are they could

773
00:38:14,280 --> 00:38:17,480
Speaker 9: be fire out filed in Azerbijan. There are so many

774
00:38:17,600 --> 00:38:21,160
Speaker 9: jurisdictions with competition authorities, so you know there's a whole

775
00:38:21,200 --> 00:38:23,680
Speaker 9: group within these law firms. We have to assess every

776
00:38:23,719 --> 00:38:26,640
Speaker 9: single jurisdiction globally where a deal has to get filed,

777
00:38:26,719 --> 00:38:29,319
Speaker 9: where it might trigger the thresholds for that country or

778
00:38:29,320 --> 00:38:34,040
Speaker 9: that jurisdiction. But in reality, the jurisdictions that really have

779
00:38:34,200 --> 00:38:36,520
Speaker 9: the law behind them and I think the will to

780
00:38:36,640 --> 00:38:41,320
Speaker 9: actually block a deal are primarily the US, EU, China

781
00:38:41,480 --> 00:38:42,200
Speaker 9: and now UK.

782
00:38:43,000 --> 00:38:45,480
Speaker 1: Yeah, it's interesting. So I mean I saw some reporting

783
00:38:45,600 --> 00:38:47,719
Speaker 1: jen which kind of goes to what you said to

784
00:38:48,040 --> 00:38:49,560
Speaker 1: that the what you're talking about about the UK, and

785
00:38:49,600 --> 00:38:53,399
Speaker 1: the UK says, hey, you know, we're going to kind

786
00:38:53,400 --> 00:38:56,160
Speaker 1: of prove this one here, but you better be careful

787
00:38:56,160 --> 00:38:58,080
Speaker 1: what you bring to us because we're going to be

788
00:38:58,480 --> 00:39:00,880
Speaker 1: We're not going to be a pushover here. So I

789
00:39:00,920 --> 00:39:03,520
Speaker 1: guess that if you're an anti trust m and a lawyer,

790
00:39:03,560 --> 00:39:04,680
Speaker 1: you got to keep that into account.

791
00:39:04,719 --> 00:39:08,600
Speaker 9: These days, you know, absolutely, I think it's getting harder

792
00:39:08,600 --> 00:39:11,640
Speaker 9: and harder. I mean, just the fact that the FTC

793
00:39:11,800 --> 00:39:14,520
Speaker 9: and DJ are changing a lot of rules, making it

794
00:39:14,560 --> 00:39:17,880
Speaker 9: more onerous actually to notify the deal to the regulators,

795
00:39:17,960 --> 00:39:22,239
Speaker 9: more expensive as well, and have these extended review timelines

796
00:39:22,320 --> 00:39:25,319
Speaker 9: and have become very unpredictable. Now you have to deal

797
00:39:25,360 --> 00:39:28,719
Speaker 9: also with this unpredictable CMA in the UK, and I

798
00:39:28,760 --> 00:39:32,240
Speaker 9: think that it just adds to the uncertainty of deals

799
00:39:32,239 --> 00:39:34,120
Speaker 9: that makes it harder and harder for the merger arbe

800
00:39:34,120 --> 00:39:38,080
Speaker 9: treasures to actually do what they do. And I think,

801
00:39:38,120 --> 00:39:39,759
Speaker 9: you know what I'm thinking about right now is the

802
00:39:39,800 --> 00:39:42,239
Speaker 9: Adobe Sigma deal because I wonder what the UK is

803
00:39:42,239 --> 00:39:43,960
Speaker 9: going to do on that one. It's moved into a

804
00:39:44,000 --> 00:39:46,640
Speaker 9: phase two on it, and I could see the UK

805
00:39:46,800 --> 00:39:49,440
Speaker 9: actually being one of those regulators that tries to block

806
00:39:49,480 --> 00:39:49,919
Speaker 9: that deal.

807
00:39:50,560 --> 00:39:53,720
Speaker 1: Hey, Jen. I mean on the banking side, we usually

808
00:39:53,800 --> 00:39:57,200
Speaker 1: charged a percentage of the deal size as our fee,

809
00:39:57,200 --> 00:39:59,600
Speaker 1: and that got negotiated up front, that percentage. How does

810
00:39:59,640 --> 00:40:02,719
Speaker 1: it work on the legal side? Is it still all

811
00:40:02,760 --> 00:40:05,640
Speaker 1: about hours? Billable hours? So I mean a case like

812
00:40:05,760 --> 00:40:08,759
Speaker 1: this with all the anti trust must have been just

813
00:40:08,800 --> 00:40:11,200
Speaker 1: a juicy yeah, juicy deal for the lawyers.

814
00:40:11,360 --> 00:40:14,680
Speaker 9: Yeah, oh yeah, it's all about hours. And I'll tell

815
00:40:14,680 --> 00:40:18,239
Speaker 9: you the attorney's logs and serious hours. When these jurisdictions

816
00:40:18,280 --> 00:40:21,680
Speaker 9: go into those in depth investigations, they are rigorous. They

817
00:40:21,719 --> 00:40:23,400
Speaker 9: take a lot of work. I mean, that's what I

818
00:40:23,440 --> 00:40:26,360
Speaker 9: spent most of my legal practice doing was responding to

819
00:40:26,400 --> 00:40:29,080
Speaker 9: these second requests from the Federal Trade Commission in the

820
00:40:29,080 --> 00:40:31,920
Speaker 9: Department of Justice, and they ask for a lot of data,

821
00:40:32,040 --> 00:40:35,720
Speaker 9: a lot of information, a lot of responses to questions.

822
00:40:35,800 --> 00:40:40,279
Speaker 9: There are depositions, there are interviews of company executives. It

823
00:40:40,360 --> 00:40:42,719
Speaker 9: takes a lot of time, and when it's so protracted

824
00:40:42,760 --> 00:40:46,000
Speaker 9: like Microsoft activision, with appeals and going in to court,

825
00:40:46,360 --> 00:40:49,839
Speaker 9: it is expensive. Those lawyers did very well, by the way.

826
00:40:50,040 --> 00:40:53,520
Speaker 2: On that note, and kind of an aside, but do

827
00:40:53,560 --> 00:40:56,440
Speaker 2: you round up to the nearest hour? I mean, if

828
00:40:56,520 --> 00:41:00,200
Speaker 2: you're if you're driving home to Westchester and you a

829
00:41:00,239 --> 00:41:02,839
Speaker 2: lawyer for one of these cases and somebody calls you

830
00:41:02,960 --> 00:41:05,880
Speaker 2: from the company to talk about it, and it's like

831
00:41:05,920 --> 00:41:08,160
Speaker 2: a five minute conversation. Is that one billable hour?

832
00:41:09,840 --> 00:41:10,280
Speaker 6: No?

833
00:41:10,280 --> 00:41:13,080
Speaker 9: No, Now, I will say that every law firm has

834
00:41:13,160 --> 00:41:16,160
Speaker 9: different rules about what becomes a billable hour and what

835
00:41:16,280 --> 00:41:18,920
Speaker 9: doesn't become a billable hour. I can only vouch for

836
00:41:18,960 --> 00:41:21,360
Speaker 9: the firm I work for, which was very careful about

837
00:41:21,360 --> 00:41:23,360
Speaker 9: these things, and a five minute call would not have

838
00:41:23,440 --> 00:41:26,520
Speaker 9: been a billable hour. But if those five minute calls

839
00:41:26,520 --> 00:41:28,920
Speaker 9: start to add up, you know, maybe you have a

840
00:41:28,920 --> 00:41:29,839
Speaker 9: billable hour there.

841
00:41:30,360 --> 00:41:31,080
Speaker 6: And it also.

842
00:41:30,880 --> 00:41:34,080
Speaker 9: Sometimes depends on how much do the legal counsel within

843
00:41:34,120 --> 00:41:36,560
Speaker 9: the company push back on those bills, because they do

844
00:41:36,640 --> 00:41:38,560
Speaker 9: and they can, and you.

845
00:41:38,520 --> 00:41:41,560
Speaker 1: Know see in my experience, it's been, well, quarter hours

846
00:41:41,600 --> 00:41:43,319
Speaker 1: you get built for like a five minute phone call,

847
00:41:43,320 --> 00:41:44,760
Speaker 1: you'd get built a quarter hour.

848
00:41:44,880 --> 00:41:46,680
Speaker 2: Right, Well, that makes more sense.

849
00:41:47,400 --> 00:41:50,400
Speaker 1: Yeah, and Jen, how about the senior partner just devolved

850
00:41:50,400 --> 00:41:53,759
Speaker 1: away from Michigan, I mean, no Microsoft, Microsoft, to just

851
00:41:53,840 --> 00:41:56,520
Speaker 1: kind of how they make money. So the senior partners

852
00:41:56,560 --> 00:41:59,560
Speaker 1: at these white che New York law firms, do they

853
00:41:59,600 --> 00:42:01,800
Speaker 1: still have the bill hours or they just take a salary.

854
00:42:03,280 --> 00:42:06,560
Speaker 9: Oh no, they bill hours, everybody built. Yeah, no, they

855
00:42:06,600 --> 00:42:09,239
Speaker 9: bill hours and it goes to the client. I mean, look,

856
00:42:09,440 --> 00:42:12,000
Speaker 9: I haven't done practicing on now for about eight years,

857
00:42:12,000 --> 00:42:14,160
Speaker 9: but as far as I know, things haven't changed. And

858
00:42:14,400 --> 00:42:16,640
Speaker 9: the senior partners have to keep the calendar just the

859
00:42:16,680 --> 00:42:19,439
Speaker 9: same way the associates do and log all their time,

860
00:42:19,560 --> 00:42:20,400
Speaker 9: bill their hours.

861
00:42:20,560 --> 00:42:23,120
Speaker 1: That is just no way to live a life, right, Yeah.

862
00:42:23,160 --> 00:42:24,960
Speaker 2: I feel like the bankers may have it figured out,

863
00:42:24,960 --> 00:42:25,759
Speaker 2: but maybe I'm wrong.

864
00:42:25,920 --> 00:42:27,920
Speaker 1: Yeah, I don't know. The lawyers do just fine as

865
00:42:27,920 --> 00:42:29,600
Speaker 1: far as I can tell you. All right, Jen, thanks

866
00:42:29,600 --> 00:42:31,880
Speaker 1: so much for joining us giving us a little primer

867
00:42:31,960 --> 00:42:34,480
Speaker 1: on how to how you earn your money in the

868
00:42:34,560 --> 00:42:37,240
Speaker 1: law firm. So your bill hours, I guess. Jennifer Ree,

869
00:42:37,280 --> 00:42:41,000
Speaker 1: senior litigation analyst covering the anti hour costs.

870
00:42:40,960 --> 00:42:43,040
Speaker 2: At one of the top white shoe law firms.

871
00:42:43,080 --> 00:42:45,680
Speaker 1: Boy, I don't know. Five hundred hour, thousand dollars an hour,

872
00:42:45,760 --> 00:42:49,279
Speaker 1: definitely over a thousand, over a thousand bank all right.

873
00:42:49,360 --> 00:42:52,040
Speaker 1: I mean I don't know if I would break down

874
00:42:52,080 --> 00:42:54,040
Speaker 1: my deal feed into hours, and I don't know how

875
00:42:54,040 --> 00:42:54,719
Speaker 1: that would be looking.

876
00:42:54,920 --> 00:42:58,000
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

877
00:42:58,000 --> 00:43:01,800
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

878
00:43:01,880 --> 00:43:05,600
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

879
00:43:05,800 --> 00:43:07,719
Speaker 2: at Matt Miller nineteen seventy three.

880
00:43:08,160 --> 00:43:10,640
Speaker 1: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.

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Speaker 1: Before the podcast, you can always catch us worldwide at

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Speaker 1: Bloomberg Radio