May 1, 2025 • 42 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Businessweek columnist and Elon Inc podcast co-host Max Chafkin, and Jennifer Dlouhy, Bloomberg News Senior Reporter, break down the latest Elon Musk news from his 130 days heading-up DOGE, to the confusion around a reported search for a new Tesla CEO. Madison Muller, Bloomberg Health Reporter, explains the latest earnings from Eli Lilly and why CVS is pulling their weight-loss drug in favor of a rival. We get Amazon earnings as they cross with Bloomberg Intelligence Senior U.S. E-Commerce and Retail Analyst Poonam Goyal, as well as Apple earnings with Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman and Bloomberg Technology Co-Host Ed Ludlow. And we Drive to the Close with Max Wasserman, Co-Founder and Senior Portfolio Manager of Miramar Capital.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Steneveek. On Bloomberg Radio.
Speaker 3 (00:32):
Tesla's Sheriff Deny to report that ZAID board members started
a search forach CEO to succeed you on Musk, saying
directors are quote highly confident in his abilities.
Speaker 4 (00:42):
All right. At the same time as Elena's promised to
spend more time at his company, Musk will maintain a
presence in the White House and the President's inner circle,
and we'll continue to work on the initiative from his
microoffice in the West Wing. Both of those stories are
among the most read on the Bloomberg Let's get to
It lots to cover. Bloomberg News Senior reporter Jennifer Lowe
is with us. She is at the White House. Also
(01:03):
here in studio, Bloomberg Business Week columnist Max Chafkin, co
host of the Elon podcast, Elon Inc. Podcast and the
author of the Contrarian Peter Thiel and Silicon Valley's Pursuit
of Power.
Speaker 3 (01:13):
Max is in our macro office, our macro studio.
Speaker 4 (01:17):
Max is going to come in just a moment.
Speaker 5 (01:19):
Jed, we got to start with you.
Speaker 4 (01:20):
You talked with Elon along with some other reporters, set
the scene the chat yesterday, what you all asked about
and what he said.
Speaker 6 (01:27):
Well, I mean, this was really a remarkable opportunity. Remarkable
because we haven't had many of them to hear directly
from Elon Musk as he discusses his government role. Of course,
he's been at you know, cabinet meetings, he's been in
the Oval Office and spoken to reporters occasionally, but in
this moment in the Roosevelt Room with other reporters, he
was really opening up much more about what he's done
(01:49):
over the last one hundred or so days leading the
DOGE effort, the Department of Governmentment efficiency program that he's
been running for President Trump. And you know, he spoke
quite colorfully about, you know, the experience, not just the
one hundred and sixty billion dollars in government savings that
he says he's been able to root out with this
(02:09):
program and cut. You know, he told us about flying
on Air Force One, about staying in the Lincoln bedroom
at at the President's request, and even tucking into, you know,
ice cream from the White House fridge. So it was
really remarkable and it told us a lot about I
think his access to the president, about his status really
(02:31):
in Trump's orbit even as he is making this retreat
from the White House.
Speaker 3 (02:37):
Well Jennifer on that retreat. Investors cheered the news last
week in Tesla that he would be spending more time
away from Washington, d C. Now we're hearing he'll have
this micro office. What can you tell us about how
much time he will be in DC or how much
time he'll be spending on DOGE Moving forward, right, he's.
Speaker 6 (02:56):
He told us that he anticipates spending about two one
to two days a week on average and coming into Washington,
d C. Basically once every other week. So you could
see a situation where he's in town for three days
working and then comes back a couple weeks later. This is,
of course a marked contrast from the beginning of the term,
when you know it was an all hands on deck situation,
(03:17):
really intense, as he described it, and he would spend
you know, seven days a week here sometimes working just
to get into these agencies and start figuring out a
plan for accessing data and examining their spending.
Speaker 5 (03:31):
Max, I want to bring you in.
Speaker 4 (03:32):
You're listening to Jen talk about this conversation kind of
him talking about his time in the White House, and
I think we were all glued to the cabinet meeting
where he had the two hats on. Took him off
and it kind of got he got kind of serious.
Speaker 7 (03:44):
It felt like, yeah, tonally kind of a valedictory tone.
Speaker 5 (03:48):
I don't know, the messaging is a little bit.
Speaker 7 (03:51):
Confusing because on one hand, he's saying, yeah, taking steps back.
Speaker 5 (03:55):
On the other hand, one to two days a week
is a lot of that's a lot of days.
Speaker 7 (04:00):
This is a guy who is running simultaneously five companies.
You know, he's got a lot of responsibilities. Even if
he is, you know, as Jen says, scaling down from
spending like all his time in Washington, spending a significant
chunk of time in Washington.
Speaker 3 (04:15):
Yeah, So on that, Jennifer, the timing that he's doing here. Also,
the figures of one hundred and sixty billion dollars, I
think getting a lot of attention, especially earlier this year,
when or maybe even a few months ago, and we
heard that two trillion dollars was his goal of cutting
from the government. Have we learned if that goal was
over a ten year period, over a five year period,
(04:36):
or how the one hundred and sixty billion dollars sort
of fits into that goal, or if that goal has changed.
Speaker 6 (04:40):
What we do know is that the ambition is clearly
being ratcheted downward. And while he is not willing to
forego reaching, you know, a one trillion dollar target, he
wouldn't rule that out completely. He did say that doing
so on any base would require a lot of you know,
(05:03):
willpower from elected officials, and he's just not sure that
the willpower is there. He wouldn't roll it out, but
it did seem very much like a concession that this
is he's gotten a lot of the easier, lower hanging fruit,
and that this is hard to do on an enduring basis.
And by the way, I'll just say, on his time here,
he is limited as a special government employee to one
(05:25):
hundred and thirty days of service per calendar year.
Speaker 7 (05:28):
Yeah, I mean, and it was two trillion in fact,
was his original claim and that that was an annual number,
that's a budget deficit. When he was at Madison Square
Garden before the election, you know, Howard Lutnik asked him
how much he was going to cut the deficit. He
said easily two trillion or something along those lines. So
it's a huge difference and really an unusual you know,
(05:48):
just for Elon Musk. This is somebody who is kind
of used to projecting dominance, who just tends to go
from victory to victory to victory.
Speaker 5 (05:57):
This is a come down, I mean, and and he is.
Speaker 7 (06:00):
He's doing his best, and I think that's part of
why you're seeing these media availabil as effort to, you know,
to actually have a voice in the story, because it
is it is. It is a it's a failure at
least in the terms that he set for what he
was trying to do.
Speaker 4 (06:14):
Ten before we let you go, I mean to re
assume that Elon will still have a voice or have
the president's ear ongoing, even though he maybe isn't physically
at the White House. There are limitations, right, how many
days he can serve the government in this capacity that
he will still pick up the phone, The President will
still pick up the phone. There will be that constant
(06:35):
communication or has something changed in that relationship.
Speaker 6 (06:39):
You know, there's all the indications are that he will
continue to have this status around the president. I mean,
he's clearly had altercations and disagreements with members of the administration,
and it is perhaps one of the only folks who
can do that right now. He's, as we noted at
the top of this conversation, you know, he's got a
micro office in the West wing of the White House,
(07:00):
and he's not giving that up. You know, office space
in this building is pretty difficult to come by, and
that alone is an indication of the fact that he
has he is stature with a president and that seems
to be enjoyed.
Speaker 4 (07:11):
Did we figure out what a micro office is?
Speaker 3 (07:13):
It's like an office but smaller.
Speaker 4 (07:15):
What is that? I don't know.
Speaker 5 (07:16):
That's just what I'm going Do you have to share desks?
Speaker 4 (07:17):
You know, that's kind of a thing nowadays. I know,
all right, Jen, incredible reporting, So appreciate Jen Deloewey, a
senior reporter at Bloomberg News there at the White House.
We're going to stay with Max though.
Speaker 3 (07:27):
Max I wanted to follow up on one thing that
you said about the status as a special government employee,
because you talk about this a lot on the Elon Inc. Podcast.
How is that defined? If he's planning on spending one
or two days a week still, I mean, yeah, does
that violate that status? How does that work?
Speaker 7 (07:43):
It's my guess is the accounting here can be is
probably a little bit fuzzy. It's one hundred and thirty
work days. Like I don't know if Elon Musk was.
He has been staying here, as Jen was saying, weeks
at a time, essentially in Donald Trump's orbit. Now he's
also been, of course, attending space X meetings, and he's.
Speaker 3 (08:01):
Played video games from his Westling office. If you're playing
video games in the office, does it count as work?
Speaker 2 (08:05):
I don't know.
Speaker 3 (08:06):
I don't know if does account as a work day.
I don't know.
Speaker 4 (08:08):
My suspicion work when you play video games at the air.
Speaker 3 (08:11):
I never play video games at the office.
Speaker 5 (08:13):
My suspicion.
Speaker 7 (08:14):
I mean taking it down from semi full time or
whatever he was to one to two days of days
a week.
Speaker 5 (08:20):
What I think that does is two things. One is it.
Speaker 7 (08:22):
Allows him to tell Tesla's shareholders, hey, I'm not distracted
The second thing is it probably gives them a little
bit of flexibility as far as like not being not going.
Speaker 5 (08:32):
Over that one hundred and thirty days.
Speaker 7 (08:34):
You know, I have to think that he's going to
have as much time in the White House with Donald
Trump as he wants, and the administration will will figure
out a way to account for his time.
Speaker 5 (08:44):
So that's so it's not bringing.
Speaker 4 (08:45):
Along because the President likes this relationship pretty cool and
also because of Elon steep Pockets.
Speaker 7 (08:50):
Yeah, I mean he is a really important I mean
there there's a lot of ink has been spilled about
the sort of popularity of DOGE and the lack there
are of the fact that making these has not, in
addition to falling well short of the claims of deficit reduction,
this has been very unpopular.
Speaker 5 (09:06):
On the other hand, Trump really needs Elon Musk.
Speaker 7 (09:08):
He is the most important donor on the Republican side
right now. He's going to be key if the Republicans
want to do well on the midterms. And you know,
as Trump looks forward to his legacy, you know twenty
twenty eight, who the candidate is going to be. That
person is going to need Elon Musk in their corner.
Speaker 4 (09:24):
Can we ask about you're going there?
Speaker 3 (09:27):
Yeah, go there?
Speaker 4 (09:27):
Does Elon have to be worried about the Tesla board
replacing him? I mean, the board chair has come out
and said nope, but we had another bad data point
for Tesla out of France. So I'm just curious, does
he really have to be worried?
Speaker 5 (09:40):
So this report you're referring to the Wall Street Journal
report that the board had contacted executive search forms. Look,
we're talking about a normal company.
Speaker 7 (09:48):
This will be nothing, right, the fact that the stock's
been all over the place, He's clearly distracted. Of course
they'd be talking to other companies. And what makes this
crazy and what makes the boards denial not that surprising
is the board has been so behind Elon Musk for years.
And you know, this is the same board who has
been fighting in court to pay him like the largest
(10:08):
bonus you know, in history, despite the fact that Tesla's
stock price has.
Speaker 3 (10:12):
Been very iffy. So so the board, you know, is.
Speaker 5 (10:15):
Very much still in Elon Musk's corner.
Speaker 7 (10:18):
If you look at the makeup of the board, you're
looking at his brother of people he has close relationships to.
So I think you know, a couple of things are
possible here, assuming that the journal sources are legit, which
I do, is that you know, there may be some
opponent on the board who's been talking to search firms,
or perhaps this is somebody on the board trying to
(10:38):
send a message to Elon Musk, trying to get through
to him saying you know, hey, this is real, we
need you to be involved. But in any case, I
wouldn't expect him to be leaving.
Speaker 5 (10:48):
A CEO anytime soon.
Speaker 7 (10:49):
If he were to leave, the stock price would would
be in trouble, be my prediction.
Speaker 3 (10:53):
Some other members of the board. You mentioned Elon's brother
Kimball Musk on the board. He's been on the board
for twenty one years. You've got James Murdoch who's been
on the board for close to eight years, Jeff Straubel
who's been on the board for two years, and then
Joe Gebbia, among others including Kathleen Wilson Thompson, as well
Robin Dnelm, the chair of the board. We should note
(11:14):
Max before we let you go, why do you think
is it still is? Are we still at a point
where Elon is so closely tied to Tesla and Tesla's
future because couldn't some investors or perhaps even institutional investors
see this as like, wait a second, this could actually
be a positive sign for Tesla because it would help
(11:36):
get it beyond the you know, being inextrictly bound to politics.
Speaker 7 (11:40):
Yeah, if you talk to investors, you do hear that view,
but it's very much a minority view. And the reason
it's a minority view I'm saying among Tesla investors, not
necessarily among outside observers, is because the valuation of Tesla
right now is very much not about its automotive ambition.
So if you replaced Elon Musk with a normal CEO,
what you have as a car company. But many of
(12:01):
Tesla's investors don't want to have a car company. They
want to have an AI company. And it's not clear
who runs that company, who can sell the muscles.
Speaker 3 (12:10):
Musk has got an AI company, a second one, he does.
Speaker 7 (12:13):
He has got Xai absolutely, But but you know, Musk
has told this story about driverless taxis and the optimist
robot that's a humanoid robot. And when you look at
the bullish valuations, if you listen to the bulls, they
are not counting on the model three or the model.
Why these the Tesla's kind of normal cars, which are
very successful in their own terms. They're expecting this entirely
(12:35):
new AI driven revenue stream, which really mostly just exists
in Elon Musk's head.
Speaker 5 (12:41):
And if you take Elon Musk out of the equation, how.
Speaker 3 (12:44):
Do you do that model?
Speaker 7 (12:45):
It becomes harder and and people, you know, you're laughing,
but you know, Elon Musk has achieved impressive things. And
from the point of the investors, if anyone can do it,
he can.
Speaker 4 (12:55):
And laughing, but I feel like they're investing in Elon
right and all all the craziness and all the innovation
that comes with him.
Speaker 5 (13:03):
Yeah, pretty good, That's how it goes.
Speaker 4 (13:04):
Thank you, Max Chaffkin, Thank you so much, Bloomberg Business.
We recommnist Max Chafkin, co host of the Elining podcast and,
as we remind you, author of the contrarian Peter Tiel
and Silicon Valley's Pursuit of Power.
Speaker 2 (13:14):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
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Speaker 3 (13:27):
On the sales side, I want to bring on Punham Boyle,
senior analyst for e commerce at Leisure Off Price Retail
for Bloomberg Intelligence. She joins U from New York City
this afternoon. Let's talk about this miss when it comes
to second quarter operating income. The outlook there is that
a result of tariffs? In your view, it.
Speaker 8 (13:45):
Has to be, because when I think about the operating
margin that they just posted with AWS, you know, incredible
near forty percent the downside that we're seeing going into
two Q, I can't think of anything else that could
be driving that and higher costs that they'll have to
orb due to the tariffs.
Speaker 4 (14:02):
Are you surprised that, like we kind of you know,
went through that press release, there's really nothing on tariffs.
There's like that disclosure that kind of dumps everything at
the very bottom of the page. Not surprising to see
that they didn't really address it in the release, And
I guess it's all going to come out on the call.
Speaker 8 (14:18):
Yeah, I think there's going to be a lot of
questions about tariffs. Keep in mind that, you know, Amazon
is directly exposed on the one P side, so roughly
forty percent of its business is where they do have
to deal with tariffs. The other sixty percent, that's three
P the sellers have to deal with them, but Amazon
helps you set the price on its platform to make
it competitive. So there's just a lot of back and
(14:38):
forth that's going on, and with some suppliers they are
working one on one to see where they can help
offset the price increases. But the biggest delta between one
Q and two Q is tariffs. So the guidance that
we see here has to be a result of that
wide net that they've casted.
Speaker 3 (14:56):
You mentioned the ps, but translate for.
Speaker 8 (14:58):
US sure, third party and first party first party when
Amazon owns the goods, so basically they take on the
cost and they directly source it from the supplier. Third
party is if you and I go on to Amazon
and we start selling stuff.
Speaker 3 (15:14):
What's the breakdown in terms of actual goods that are
sold third party versus first party?
Speaker 8 (15:20):
Sure, third party, we estimate is about sixty five percent
and third and first party is about thirty five to
forty percent?
Speaker 3 (15:26):
Okay, sixty four And is there more like third party
is more from China or do we not know than
first party?
Speaker 8 (15:32):
Well we Amazon doesn't tell you how much they get
from China. But just by looking at what's on their
platforms and third party data, irrespective third party or first party,
it's estimated that over seventy percent of what's sold on
the Amazon dot Com platform is from China. So it's
a large, large, large piece of their market place.
Speaker 3 (15:52):
Just to remind everybody, I mean, you you you study
e commerce at leisha off price retail, this is you know,
this is your world. This stuff is made overseas, like
very little of it is made here in the US,
very little.
Speaker 8 (16:05):
I mean food is the only thing we may procure
locally that Amazon sells. Really everything else, the bulk of
what you buy in retail in the US is made
outside of the US. It doesn't matter who you are.
Speaker 4 (16:18):
What I don't know, Okay, I'll let him have a moment.
Speaker 5 (16:23):
You know what's.
Speaker 4 (16:23):
Interesting put in We kind of just laugh that Normally
when we're talking Amazon, we're all over Amazon Web Services
and it's like, oh yeah, that retail business. So what
an interesting kind of report to go through and what
we're focusing on. I do want to point out though,
that AWS reported first quarter sales gain seventeen percent to
twenty nine point three billion, in line with analyst testaments.
It was the unit's slowest growth in a year. So
(16:46):
it does feel like I don't know, like, what do
we get out of that.
Speaker 8 (16:51):
I think it's okay, I mean, okay, I'm going to
see businesses pull forward spend, pulled back on spend. There's
still a lot of momentum here on the AWS side.
And really, you know, while the sales were just in line,
the margin was incredible thirty nine percent operating margins thirty
nine point five percent roughly, that's huge. Consensus is looking
(17:11):
for about thirty five percent. So we do think, you know,
this business will abb and flow and you'll have high margins,
you'll have low margins depending on where they invest. But
the long term potential of AWS is still pretty sizable
and there's a long runway here.
Speaker 3 (17:26):
Okay. So if we think about this in the context
of what we heard from what we've heard from other
companies thus far, what we heard from Microsoft yesterday, and
as a reminder, I mean, you cover the e commerce
at leisure, the off price retail. How do you think
about this in terms of the retail world, like the
Walmart's of the world, the targets of the world. How
does this report sort of inform the way we should
(17:48):
be thinking about and investor should be thinking about those
other companies.
Speaker 8 (17:52):
I think if Amazon's facing these tariff headwinds, so is
everyone else, including Walmart, including smaller companies, medium sized companies,
And really there is no escape from this unless we
see things come from here. The one hundred and forty
five percent here iff that you see on China is sizable.
If that stays that way, the consumer is going to
(18:13):
be paying higher prices. We will see some out of
stocks on shelves in the coming months, as most companies
have halted shipments from China, and it's not going to
be an overnight switch to take everything that you make
in China to somewhere.
Speaker 3 (18:27):
Else, or even impossible for something. Some analysts have said, well,
you said empty shelves, where are we going to see them?
What do you think we'll see them?
Speaker 4 (18:35):
Saw empty shelves in like a drugstore, But I don't
know that's because everybody.
Speaker 3 (18:39):
Stole everything there.
Speaker 7 (18:40):
Terrible.
Speaker 3 (18:40):
I don't you know how this works.
Speaker 5 (18:42):
I know it's always a little war perspective.
Speaker 4 (18:44):
Go ahead, BuNos, Sorry, well, you.
Speaker 8 (18:46):
Won't see empty shelves on Amazon but you will see
out of stocks. In fact, you know, I was just
browsing the web randomly and I started to see some
things that just said out of stock, like we'll let
you know when it comes back. So I think you'll
start to see inventory. Actually that that comes out of
China be put on hold and we don't know when
it'll come back. Because unless you raise the prices or
(19:07):
double them, you're not making the same margin.
Speaker 3 (19:10):
On what's the consumer's willingness to pay for this stuff. Because,
as I was mentioning to Caroline, if we see these
price increases across the board, if we see them a Target,
if we see them at Walmart, It's not like this
is an Amazon specific story. We're going to see this everywhere.
At what point does the consumer throw in the towel
and say, I'm not going to do this. I'm not
going to pay.
Speaker 8 (19:28):
I think the consumer will say I'm not going to
pay when prices go up thirty forty percent, right, it's
going to get more expensive. And if they say they
don't pay, it means before they bought ten things, now
they'll buy three things. Where are they buying those three things?
Are they going to trade down from a national brand
to a private brand. Are they going to buy more
staples that they can you know, like staple colors that
(19:50):
they can reuse, recycle reware, and wear less fashion that
goes out of style quickly. There's going to be trade
offs if prices rise materially. That said, we you think that,
you know, people will just switch brands, They'll switch options
where they can get things cheaper. We're going into the
back half in just a few months, and that's the
peak selling season of retail. When you think about toys,
(20:13):
specifically right for the holidays, when you think of back
to school. Yeah, I mean, what do you get your
kids if you're not going to get them the barbie
and you're not going to pay you know.
Speaker 4 (20:22):
You can only get them two barbies?
Speaker 3 (20:23):
Barbies only two dollars.
Speaker 4 (20:26):
Sorry, uh no, I'm just repeating you know what we've heard. Hey,
one last question I will say though, with the Amazon cart,
like when you put them in and like you automatically
see the value, like if things start to get more expensive,
like you might pull back thirty seconds. Top question you
think must be asked on the Amazon call?
Speaker 8 (20:44):
How are we weathering this tariff storm that we're going into,
especially you know, with three piece sellers, how are they
going to control that. Amazon is still an attractive place
where value is seen because they don't have a control
on prices for everything.
Speaker 4 (20:58):
All right, gonna leave it there, Hey put it. Thank
you so much, super super good conversation. Puna mcgoyle, Senior
analyst for e Commerce, ath Leisure, off Price Retail for
Bloomberg Intelligence.
Speaker 2 (21:09):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 4 (21:27):
You know ed Ledo still with us too, of course,
co host of Bloomberg Technology, and we want to bring
into the fold. Mark German back with us, Managing editor
for Global Consumer Tech out there in our San Francisco bureau.
All right, so Apple down about two point seven percent.
Speaker 5 (21:41):
Mark.
Speaker 4 (21:41):
We know you really are interested mostly in the call,
but the numbers are out. What if anything is of
interest here or you think is notable.
Speaker 9 (21:49):
I mean, overall revenue is up five percent every year,
so obviously that's a good thing. You saw iPhone sales
be slightly expectations from Wall Street, so that's a good thing.
Show some solid momentum for the iPhone sixteen E. Notice
that Tim Cook mentioned the sixteen e in particular versus
the pro models, which generate the most amount of revenue
(22:10):
for Apple. Obviously, Mac did a little bit better than expected,
iPad better than expected, but we saw some softness on
China services as well as wearables, Home and Accessories, Wearable's
Home and Accessories. The softness there continues. It's been this
way for several quarters. That's sort of surprising given the
momentum that we've seen in the past on the Apple
(22:31):
Watch and the AirPods and some of those peripheral products.
Services still pretty considerable double digit growth, but not at
the same level that Wall Street was anticipating. Services in
particular is quite interesting because that's going to probably be
a real headwind for Apple in the coming years now
that they're needing to adjust some of their app store
policies in relation to commissions. And then, of course we
(22:52):
have the Google Search deal overhanging all of this stuff.
That's a double digit billion dollar annual revenue stree for Apple.
That may also go away depending on where the US
government goes with this trial against Google.
Speaker 3 (23:06):
A lack of a lack of commentary though, and maybe
we'll get it on the call. I know you're looking
for it about supply chains and about tariffs. Do you
think that's why investors are sending shares down ahead of
this call?
Speaker 8 (23:15):
No?
Speaker 9 (23:15):
I think it's because of the continued softness in China
in particular. Obviously, China's Apple's third biggest market. China really
swings the pendulum here and when it comes to Apple
shares going up or down on earnings calls, And in
this case, we're at an annual decline, certainly an able
decline compared to where Apple was two years ago in
China this time around, and then missing Wall Street expectations
(23:39):
by about half a billion dollars. So definitely not a
good sign for Apple and China. And I think investors,
or at least those analysts on the call are gonna
have a lot of questions about that. But I hope
they do dig into tariffs as much as possible.
Speaker 10 (23:51):
Hey, Mark, I just want to go to the iPhone beat,
because it all comes back to the iPhone sometimes. Right,
forty six point eighty four billion. Estimate was forty fur
five point ninety four. The third party data showed a
lot of consumer electronics flying around the planet in the
first three months of this year. Do you see any
sort of evidence just from the pure number that this
(24:11):
was people buying handsets front running tariffs in anticipation that
maybe prices might go up in the future.
Speaker 9 (24:19):
I don't think the front running of purchases to avoid
price hikes in the future really happened until you know,
mid late April, when that's already within Apple's third quarter.
So I don't think that any of the iPhone sales
numbers that we're seeing here really were influenced by people
trying to get ahead of tariff price hikes. I mean,
Trump made his announcement in early April, and this was
(24:41):
not really in the public consciousness until then, which again
is the start of the third quarter for Apple. So
I think the impact there will be in the current quarter,
and I'm looking forward to hearing any guidance that Apple
gives on the call which may give us a taste
of how the iPhone's going to do in this current period.
Speaker 4 (24:57):
Well, go ahead, Carol, what do you think they're going
to say, in terms of price increases, it's something you
gave us a heads up on earlier, you know, in
terms of margins impact, and then price increases, you know,
in this tariff filled environment. So do you think we'll
get any kind of clarity or specifics on that.
Speaker 9 (25:14):
So, if I was a betting man, at least one
analyst is going to ask about the potential of price increases.
And if I remained a betting man, I would say,
Tim Cook would say, we'll see nothing to announce today,
and then maybe if we're lucky. Talk about how they
think about these types of things.
Speaker 3 (25:33):
Well, how does Apple do price increases?
Speaker 9 (25:35):
Well, they really don't. I mean, the iPhone price has
been stagnant for the most part. There are some exemptions
over the past you know, seven, eight, nine years, so
they really don't do price increases. And so when they
do make the price increase, they're going to do it
from a position of strength. They're going to focus on
installment plans, They're going to focus on carrier deals, and
(25:56):
they're going to focus about on the technologies that they've
implemented over last decade to make the iPhone more valuable.
They're going to talk about how useful the phone is
how it's equivalent to X number of cups of coffee
is a year, et cetera. And they're definitely not going
to mention tariffs as a reason because they saw what
that did to Amazon the other day.
Speaker 4 (26:17):
Well said, Well said, looking forward to your reporting after
the call as well. Mark Mark German, Managing editor for
Global Consumer Tech Bloomberg News out there in our San
Francisco bureau. So ed just got about thirty seconds here.
I mean, what are you thinking about? Is it just
again Terriff's for Apple or Amazon? Like I don't know.
Speaker 10 (26:34):
Yeah, point Like, if it wasn't that front running on
the iPhone, then what was the beat people still in
love with the iPhone? Just I think that's a really
basic question. But again, all we've got to go off
on the right now is that we noticed that Apple
added the word trade right, one single word to the
boiler plate in the forward guidance or financial disclosures disclaimer and.
Speaker 5 (26:53):
Both of them.
Speaker 3 (26:54):
Yeah, surprised Apple didn't have that in there already, given
what we knew about this administration, and they that those risks.
Speaker 4 (27:00):
Are listened supply chain the idea, you know what.
Speaker 3 (27:03):
Happened in twenty seventeen. Two. Yeah, but hey.
Speaker 4 (27:06):
Ed Lolo, thank you so much for a moment.
Speaker 2 (27:09):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (27:24):
Also out with an update, ELI Lilly shares falling as
much as twelve percent earlier in the session, the biggest
intry day drop going back to October. Shares now down
ten and a half percent. This after CBS announced a
plan to drop its blockbuster weight loss of drug zet
Bound from its preferred list making rival wey govi more
widely available. Madison Mueller is Bloomberg News Health reporter. She
(27:46):
joins us here in the Bloomberg Interactive Brokers studio. So
Lily maintained sales guidance. Zet Bound performed in line with
Wall Street's expectations, but investors who've been hoping for more
explosive growth were underwhelmed. Are we seeing prices here?
Speaker 1 (28:01):
Yeah, that is what is definitely starting to happen here.
I mean, coming on the heels of the news that
we discussed earlier this week, which was that Nova Nordisk
was partnering or working with some telehealth companies to distribute
via or to distribute pens of its blockbuster drug would
go V at a lower cost. And now we're seeing
Novo partner with CVS retail pharmacies and CVS is Drug
(28:24):
Benefits Manager Unit to provide more cost savings for patients
and for health plans that cover weight loss drugs. So
it's definitely hitting up.
Speaker 4 (28:33):
Is it just negotiating or is it I mean, we've
talked with you too that there's similar drugs, but they're
not all exactly the same. So I'm just a little
curious about fat you.
Speaker 1 (28:42):
Said, yeah, I mean that is part of the interesting thing.
I mean, Lily has said and they were saying today
that the price of the medication, they purposefully priced it lower,
I mean for competitive reasons. It came onto the market
after Novo Nordisks drug. Lily's drugs Utbound, is a little
bit more effective, but both drugs work really well for
weight loss. Lily's drug costs around one thousand dollars a month,
(29:02):
while Novo's is about thirteen hundred dollars a month, but
those the higher list prices mean that drug makers, when
they're negotiating with these PBMs, can provide greater discounts, bigger rebates,
So in some ways it actually turns out to be
a benefit when they're at the negotiating table. But those
that's one of the things, and we were talking about
this earlier.
Speaker 2 (29:21):
There's not a lot of.
Speaker 1 (29:24):
Clarity about how these negotiations work, what happens behind the scenes,
and that's not something that we're probably going to get
anytime soon.
Speaker 3 (29:30):
So was today's stock move all about this CBS news?
Speaker 1 (29:33):
Yeah, I mean, in part, I think it sort of
compounded the underwhelming results that you mentioned earlier. I mean,
it was a good quarter for Lily, but their expectations
for this company are so high now that they just
can't really afford to have a a you know, inline quarter.
Investors were looking for more growth and looking for zep
bound sales that sort of smash past X estimates like
(29:55):
they did last year, and that's just not what happened.
So it was just a little bit disappointing, I think.
And then and then seeing the CVS news, it was
interesting because CVS and Lily both reported earnings today, so
we've sort of got to see this happen in real time.
Speaker 4 (30:10):
All right, So I mean I don't know, can can
this change? I mean, how much of it is about
the GLP one still for Lily, like we always talk
about the pipeline and.
Speaker 3 (30:19):
Other things, it's like more than a seven hundred million
dollar company at this point.
Speaker 1 (30:21):
Yes, so she helps us like put this in perspective,
and that is really that valuation is really about weight
loss struggs. But the thing is Lily's, like you just mentioned,
their pipeline. People are so excited about Lily's pipeline because
not only do they have zep bound, which is, like
we said earlier, a little bit more effective, but they
also have a weight loss pill that's coming pretty soon,
(30:42):
as early as twenty twenty six, the CEO has said,
and that is thought to be the next big thing
in this market. They are far ahead of the competition
when it comes to that, and they're going to continue
to sort of dominate this space.
Speaker 4 (30:54):
So can the one follow in terms of the PBMs?
And you know, negotiating, so you know, if they come
with a pill, is that a whole separate negotiation because
it's a different form of delivery versus an injection.
Speaker 1 (31:05):
Yeah, I mean, that is the question. I mean, the
thought is that the pills will be priced lower to
begin with, because they're easier to manufacture. Pills are typically
a little bit cheaper. But Novo has a pill on
the market right now called Rybelsis that doesn't work as
well for weight loss, but it's around the same price
as at Zempics. So it sort of is to be
(31:26):
determined what will happen with the pricing war, but the
expectation is that it will be a little bit cheaper
on pricing.
Speaker 3 (31:31):
You and the team out with a story about a
price war here, reminding us that Novo reached a deal
with HIMS and Hers this week along with two other
telehealth medicine providers, for a month's supply starting at four
hundred ninety nine dollars. This is a wee gov before
subscription fees. Leli Lily announcing expanded partnership with weight Watchers
on April twenty ninth. How low is this price going
to go?
Speaker 1 (31:52):
That's the question, I mean, and I think that that's
what investors were worried about.
Speaker 3 (31:56):
Price price worth great for consumers exactly, not good for investors.
Speaker 1 (32:00):
And we've seen these companies get and we say in
the story publicly lambasted for the prices of their drugs.
I mean, Bernie Sanders called the CEO of Novo Nordisk
into a hearing last year and then really railed him
on the price of these of these medications. And they
are bringing the prices down, and they are expanding accessibility options,
affordability options for patients. But I think investors were concerned
(32:22):
what this means for Lily. Are they going to lose
out on share because of this?
Speaker 4 (32:25):
Where is it manufactured? Is it he all here?
Speaker 1 (32:27):
So far they do. Their supply chains are sort of
all over the place. No holl makes some of the
drug here. They do, they make some in Denmark. Same
with Lily. The first step happens in Ireland, a lot
more happens here. So they are also potentially exposed to Tariff's.
Speaker 4 (32:42):
Madison Muller the best health reporter here at Bloomberg News.
Check her out on the Bloomberg.
Speaker 1 (32:47):
MC.
Speaker 7 (32:48):
No.
Speaker 4 (32:48):
I'll bet you let me drive.
Speaker 5 (32:49):
Oh no, no, no no.
Speaker 7 (32:51):
This is not a toy drug.
Speaker 5 (32:54):
Honey, please gravels wait, I want to try.
Speaker 1 (32:58):
It's a good question, good time.
Speaker 3 (33:05):
This is the drive to the clothes.
Speaker 5 (33:07):
Plums for music.
Speaker 2 (33:08):
Well, Briar Jona don on Bloomberg Radio.
Speaker 4 (33:12):
All right, TikTok, everybody, about eighteen minutes to go until
we wrap up the trade on this first trading day
of May May one, twenty twenty five. Charlie just breaking
down the numbers along with Jordan, and you can see that, Yeah,
up about one percent on the S and P five hundred,
all our best levels of the session. And you've got
really those big tech names continuing to push the nowstak
(33:33):
one hundred higher, up about one point six percent. In particular,
Meta and Microsoft. We talked about it earlier after the day,
after the clothes we get the a's of the mag.
Speaker 3 (33:41):
Seven Airbnb, no Am Jen no.
Speaker 4 (33:45):
Oh no, no funny, how that works?
Speaker 3 (33:48):
Apple and Amazon?
Speaker 4 (33:49):
That's what you're talking about, Okay, exactly.
Speaker 3 (33:51):
Hey, let's see what Max Wasserman has to say about this.
He's founder and senior portfolio manager at Mirra Mark Capital. Max.
I don't want to talk about these individual names with you.
We're going to have plenty on that in just a
few minutes. I want to hear your thoughts on the
macro environment right now, given that we've seen such a
rally over the last few days. Hard to believe that
April ended the way it did given the selling that
(34:12):
we saw in the first part of the month. Yeah,
it's great to be here.
Speaker 11 (34:17):
It's fascinating to see all the turmoil that's taking place
in the marketplace based on commentary out of the White House.
But if you look behind that and you look at
what's happening in the economy, we are seeing signs of
economy slowing down and you're still seeing embedded inflation. So
the question becomes, will the Fed take that embedded inflation
and hold off We'll look at the tariffs as a
(34:38):
transitory inflation that can be that needs to be dealt with,
or can just leave it alone. But we see the
economy slowing down, we see the consumer eventually being hurt
by that, and if the tariffs again, it's hard to
handicap that because he keeps making exceptions all the time, right,
I mean, you just heard the latest thing about Iran
with oil, So it becomes very challenge. But we think
this market is slowing down, and we think the consumer
(35:00):
is going to be hurt by that, and we think
the market needs to reflect that, and we think it
is for the most part. But there's areas of pockets
where technology they're still gravitating to that right now, Hey,
do you feel.
Speaker 4 (35:11):
Like with confiction max that you can say, Okay, this
is our market for the rest of twenty twenty five
or it could change dramatically for the better for the worse.
Speaker 3 (35:20):
Yeah.
Speaker 11 (35:21):
I don't think you can do conviction for an afternoon
with this White House. I mean, every single time you
hear about a tariff, you hear an exception, and you're
going to hear that tonight. It's going to be interesting
to hear from the two companies this evening. But now
I mean mentioning names. One of the companies get seventy
percent of their products they sell to Americas from China,
so that has to be inflationary unless they get an exemption.
(35:42):
But the question becomes planning or investing. You have to
really take a long term look and not trade this
short term because the information's changing by the hour. But
we do see good companies out there that have been
hit hard that you know, over six, twelve, eighteen months
should be in good investments paying a good dividend.
Speaker 5 (36:01):
So we like that.
Speaker 11 (36:02):
But the short term, you know, fasten your seatbelt and
they say and put the trays in the upright position,
because it all depends on what the White House says,
and then next week, what does the Fed say about this?
Speaker 3 (36:15):
Max, you can name names if you want. You feel
free too.
Speaker 11 (36:18):
Sure, I mean, I mean, it's interesting to see what
is amagon Amazon going to say seventy percent of their
goods are coming from China, basically over two and a
half times what they sell from here. So what kind
of inflation is that going to be we all say,
and how they going to handle it?
Speaker 3 (36:32):
I think it'll be under an extra microscope given what
we heard earlier this week after that punch Bowl News
report sort of the back and forth from the White
House about what ended up happening or or what you know,
a call between Bezos and the President regarding being transparent
about those prices and where that's coming from. There was
a lot of back and forth there, So I think
(36:52):
there will be a lot of questions about the impact
on consumers. That's and you know, typically typically Amazon is
a story that has to do less with retail and
more with AWS, and we kind of got the preview
of AWS yesterday with Microsoft. Okay, so that's some views
on tariffs. What about the inflationary side of things, and
that's certainly related to tariffs. How are you looking at
(37:14):
about the inflation path forward?
Speaker 11 (37:18):
I still think it's stubborn, you know, we still think
it's embedded in there, and we would not be for
the FED cutting because we think inflation is still built
into the marketplace.
Speaker 3 (37:27):
Which where specifically because we're seeing a moveway and oil prices,
we're seeing lower oil prices. Where are you seeing inflation embedded?
Speaker 11 (37:33):
And well, basically you're seeing the consumer spending. You know,
they're telling you that the prices went up a little bit.
Speaker 3 (37:39):
There.
Speaker 11 (37:39):
You're also seeing in the fact that housing right, well
people aren't buying housing, but the cost of basically maintaining
your home, you know, if you want to do repairs
in your home, the cost of the wood, the cost
of the products. We're seeing that as an issue. You're
also seeing the fact that goods that are being bought
are higher than they were. So the question really becomes
is if the consumers anticipating higher rates or slow down
(38:01):
they pull back on the spending. So well, yeah, you
looked earlier about the cloud, but you look at the
impact to consumer if they're facing day to day you
look at companies like Procter and Gamble, it's telling you
they're facing that issue with the products they're being selling.
You know, that's the basics of what's them to the home.
So the inflation still there. Yes, energy has come down
a little bit, and yes, you know if they say
(38:23):
food prices. But still when you look at it, the
consumer is slowing down the spending. But is that is
that going to be permanent? I don't know, because I
can't tell you what we look like inflation. I think
the Fed is too early to act. I think they
need to be more patient because what you don't want
them to do is jump the gun cut rates. And
then you have the White House change of you know,
(38:45):
the issue on tariffs, and next thing you know, you
have inflation ticking up again. And I do think stagflation
is a very big concern here, all right.
Speaker 4 (38:52):
So hmm, net net As you say, things can change,
you know rapidly, we live it every day, every minute hour.
Having said that, do you believe that things will settle
at some point where higher tariffs though they're not the
tariffs that they were, that there's going to be some
(39:12):
higher level of tariffs and disruptions as supply chains, some
maybe are brought indeed back to the United States, and
things are changing that could ultimately lead to a very
different investment environment going forward, a different level of profitability
for companies here in the United States. I mean, what's
(39:32):
the long term game that you think might be very
different for the investment environment.
Speaker 11 (39:39):
Well, it's hard to predict the long term game because
if you see.
Speaker 4 (39:42):
Are you saying it could just go back to the
way it was before.
Speaker 5 (39:46):
I think it's going to go back the way it was.
Speaker 11 (39:47):
But I think the market's reflecting disruption, right if you
look at takeout technology, the market's reflecting it. Consumers are reflecting,
and energy stocks are reflecting it. Healthcare showing disruptions. And
you have to ask yourself what's actually being and moved
back here? I mean, what's happening really, not what's being
talked about, but what's actually being moved here. Semiconductors are
getting exceptions, but you have to look at what's happening
(40:08):
with Taiwan. So long term, I am bullish, but I
think you're going to be choppy from the next two quarters.
I think the second half of the year as we
get through this and really settle into what tariffs are
really going to look like, and the companies have the
ability to plan for it, and the consumers get used
to what they have to deal with, and then you'll
know where the FED is do. I think the Fed's
(40:29):
going to cut interest rates to the fourth quarter probably.
I don't want them to cut earlier because that means
the economy is really slowing down.
Speaker 5 (40:36):
But it's hard to tell.
Speaker 11 (40:37):
I mean, if you look at right now, they said
GDP was negative, but that was a pull forward from
all the imports. People were front loading that. So the
question becomes employment. Employment. A lot of the problems that
you just had was New York related. Was a big uptick.
But you have to wait. The economy is still strong,
but we're seeing really good signs of a slowdown. I
(40:57):
think the second half of the year, everybody be more
adjusted to what we're actually dealing with, and I think
that's going to create an incredible investment opportunity. Yep, you
can look longer than three to six months, and.
Speaker 4 (41:07):
We do know that you are finding opportunities. Visa waste management,
there's a couple of companies that you definitely have been buying.
So any market environment, there are opportunities. Next time, we'll
talk more about the specifics of that. Max Fasserman, founder,
senior portfolio manager at mir or More Capital, around five
hundred million in assets under management, joining us from Northbrook, Illinois.
Speaker 5 (41:27):
Folks.
Speaker 3 (41:28):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(41:49):
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Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
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Daily Podcast with Carol Masser and Tim Steneveek. On Bloomberg Radio.
Speaker 3 (00:32):
Tesla's Sheriff Deny to report that ZAID board members started
a search forach CEO to succeed you on Musk, saying
directors are quote highly confident in his abilities.
Speaker 4 (00:42):
All right. At the same time as Elena's promised to
spend more time at his company, Musk will maintain a
presence in the White House and the President's inner circle,
and we'll continue to work on the initiative from his
microoffice in the West Wing. Both of those stories are
among the most read on the Bloomberg Let's get to
It lots to cover. Bloomberg News Senior reporter Jennifer Lowe
is with us. She is at the White House. Also
(01:03):
here in studio, Bloomberg Business Week columnist Max Chafkin, co
host of the Elon podcast, Elon Inc. Podcast and the
author of the Contrarian Peter Thiel and Silicon Valley's Pursuit
of Power.
Speaker 3 (01:13):
Max is in our macro office, our macro studio.
Speaker 4 (01:17):
Max is going to come in just a moment.
Speaker 5 (01:19):
Jed, we got to start with you.
Speaker 4 (01:20):
You talked with Elon along with some other reporters, set
the scene the chat yesterday, what you all asked about
and what he said.
Speaker 6 (01:27):
Well, I mean, this was really a remarkable opportunity. Remarkable
because we haven't had many of them to hear directly
from Elon Musk as he discusses his government role. Of course,
he's been at you know, cabinet meetings, he's been in
the Oval Office and spoken to reporters occasionally, but in
this moment in the Roosevelt Room with other reporters, he
was really opening up much more about what he's done
(01:49):
over the last one hundred or so days leading the
DOGE effort, the Department of Governmentment efficiency program that he's
been running for President Trump. And you know, he spoke
quite colorfully about, you know, the experience, not just the
one hundred and sixty billion dollars in government savings that
he says he's been able to root out with this
(02:09):
program and cut. You know, he told us about flying
on Air Force One, about staying in the Lincoln bedroom
at at the President's request, and even tucking into, you know,
ice cream from the White House fridge. So it was
really remarkable and it told us a lot about I
think his access to the president, about his status really
(02:31):
in Trump's orbit even as he is making this retreat
from the White House.
Speaker 3 (02:37):
Well Jennifer on that retreat. Investors cheered the news last
week in Tesla that he would be spending more time
away from Washington, d C. Now we're hearing he'll have
this micro office. What can you tell us about how
much time he will be in DC or how much
time he'll be spending on DOGE Moving forward, right, he's.
Speaker 6 (02:56):
He told us that he anticipates spending about two one
to two days a week on average and coming into Washington,
d C. Basically once every other week. So you could
see a situation where he's in town for three days
working and then comes back a couple weeks later. This is,
of course a marked contrast from the beginning of the term,
when you know it was an all hands on deck situation,
(03:17):
really intense, as he described it, and he would spend
you know, seven days a week here sometimes working just
to get into these agencies and start figuring out a
plan for accessing data and examining their spending.
Speaker 5 (03:31):
Max, I want to bring you in.
Speaker 4 (03:32):
You're listening to Jen talk about this conversation kind of
him talking about his time in the White House, and
I think we were all glued to the cabinet meeting
where he had the two hats on. Took him off
and it kind of got he got kind of serious.
Speaker 7 (03:44):
It felt like, yeah, tonally kind of a valedictory tone.
Speaker 5 (03:48):
I don't know, the messaging is a little bit.
Speaker 7 (03:51):
Confusing because on one hand, he's saying, yeah, taking steps back.
Speaker 5 (03:55):
On the other hand, one to two days a week
is a lot of that's a lot of days.
Speaker 7 (04:00):
This is a guy who is running simultaneously five companies.
You know, he's got a lot of responsibilities. Even if
he is, you know, as Jen says, scaling down from
spending like all his time in Washington, spending a significant
chunk of time in Washington.
Speaker 3 (04:15):
Yeah, So on that, Jennifer, the timing that he's doing here. Also,
the figures of one hundred and sixty billion dollars, I
think getting a lot of attention, especially earlier this year,
when or maybe even a few months ago, and we
heard that two trillion dollars was his goal of cutting
from the government. Have we learned if that goal was
over a ten year period, over a five year period,
(04:36):
or how the one hundred and sixty billion dollars sort
of fits into that goal, or if that goal has changed.
Speaker 6 (04:40):
What we do know is that the ambition is clearly
being ratcheted downward. And while he is not willing to
forego reaching, you know, a one trillion dollar target, he
wouldn't rule that out completely. He did say that doing
so on any base would require a lot of you know,
(05:03):
willpower from elected officials, and he's just not sure that
the willpower is there. He wouldn't roll it out, but
it did seem very much like a concession that this
is he's gotten a lot of the easier, lower hanging fruit,
and that this is hard to do on an enduring basis.
And by the way, I'll just say, on his time here,
he is limited as a special government employee to one
(05:25):
hundred and thirty days of service per calendar year.
Speaker 7 (05:28):
Yeah, I mean, and it was two trillion in fact,
was his original claim and that that was an annual number,
that's a budget deficit. When he was at Madison Square
Garden before the election, you know, Howard Lutnik asked him
how much he was going to cut the deficit. He
said easily two trillion or something along those lines. So
it's a huge difference and really an unusual you know,
(05:48):
just for Elon Musk. This is somebody who is kind
of used to projecting dominance, who just tends to go
from victory to victory to victory.
Speaker 5 (05:57):
This is a come down, I mean, and and he is.
Speaker 7 (06:00):
He's doing his best, and I think that's part of
why you're seeing these media availabil as effort to, you know,
to actually have a voice in the story, because it
is it is. It is a it's a failure at
least in the terms that he set for what he
was trying to do.
Speaker 4 (06:14):
Ten before we let you go, I mean to re
assume that Elon will still have a voice or have
the president's ear ongoing, even though he maybe isn't physically
at the White House. There are limitations, right, how many
days he can serve the government in this capacity that
he will still pick up the phone, The President will
still pick up the phone. There will be that constant
(06:35):
communication or has something changed in that relationship.
Speaker 6 (06:39):
You know, there's all the indications are that he will
continue to have this status around the president. I mean,
he's clearly had altercations and disagreements with members of the administration,
and it is perhaps one of the only folks who
can do that right now. He's, as we noted at
the top of this conversation, you know, he's got a
micro office in the West wing of the White House,
(07:00):
and he's not giving that up. You know, office space
in this building is pretty difficult to come by, and
that alone is an indication of the fact that he
has he is stature with a president and that seems
to be enjoyed.
Speaker 4 (07:11):
Did we figure out what a micro office is?
Speaker 3 (07:13):
It's like an office but smaller.
Speaker 4 (07:15):
What is that? I don't know.
Speaker 5 (07:16):
That's just what I'm going Do you have to share desks?
Speaker 4 (07:17):
You know, that's kind of a thing nowadays. I know,
all right, Jen, incredible reporting, So appreciate Jen Deloewey, a
senior reporter at Bloomberg News there at the White House.
We're going to stay with Max though.
Speaker 3 (07:27):
Max I wanted to follow up on one thing that
you said about the status as a special government employee,
because you talk about this a lot on the Elon Inc. Podcast.
How is that defined? If he's planning on spending one
or two days a week still, I mean, yeah, does
that violate that status? How does that work?
Speaker 7 (07:43):
It's my guess is the accounting here can be is
probably a little bit fuzzy. It's one hundred and thirty
work days. Like I don't know if Elon Musk was.
He has been staying here, as Jen was saying, weeks
at a time, essentially in Donald Trump's orbit. Now he's
also been, of course, attending space X meetings, and he's.
Speaker 3 (08:01):
Played video games from his Westling office. If you're playing
video games in the office, does it count as work?
Speaker 2 (08:05):
I don't know.
Speaker 3 (08:06):
I don't know if does account as a work day.
I don't know.
Speaker 4 (08:08):
My suspicion work when you play video games at the air.
Speaker 3 (08:11):
I never play video games at the office.
Speaker 5 (08:13):
My suspicion.
Speaker 7 (08:14):
I mean taking it down from semi full time or
whatever he was to one to two days of days
a week.
Speaker 5 (08:20):
What I think that does is two things. One is it.
Speaker 7 (08:22):
Allows him to tell Tesla's shareholders, hey, I'm not distracted
The second thing is it probably gives them a little
bit of flexibility as far as like not being not going.
Speaker 5 (08:32):
Over that one hundred and thirty days.
Speaker 7 (08:34):
You know, I have to think that he's going to
have as much time in the White House with Donald
Trump as he wants, and the administration will will figure
out a way to account for his time.
Speaker 5 (08:44):
So that's so it's not bringing.
Speaker 4 (08:45):
Along because the President likes this relationship pretty cool and
also because of Elon steep Pockets.
Speaker 7 (08:50):
Yeah, I mean he is a really important I mean
there there's a lot of ink has been spilled about
the sort of popularity of DOGE and the lack there
are of the fact that making these has not, in
addition to falling well short of the claims of deficit reduction,
this has been very unpopular.
Speaker 5 (09:06):
On the other hand, Trump really needs Elon Musk.
Speaker 7 (09:08):
He is the most important donor on the Republican side
right now. He's going to be key if the Republicans
want to do well on the midterms. And you know,
as Trump looks forward to his legacy, you know twenty
twenty eight, who the candidate is going to be. That
person is going to need Elon Musk in their corner.
Speaker 4 (09:24):
Can we ask about you're going there?
Speaker 3 (09:27):
Yeah, go there?
Speaker 4 (09:27):
Does Elon have to be worried about the Tesla board
replacing him? I mean, the board chair has come out
and said nope, but we had another bad data point
for Tesla out of France. So I'm just curious, does
he really have to be worried?
Speaker 5 (09:40):
So this report you're referring to the Wall Street Journal
report that the board had contacted executive search forms. Look,
we're talking about a normal company.
Speaker 7 (09:48):
This will be nothing, right, the fact that the stock's
been all over the place, He's clearly distracted. Of course
they'd be talking to other companies. And what makes this
crazy and what makes the boards denial not that surprising
is the board has been so behind Elon Musk for years.
And you know, this is the same board who has
been fighting in court to pay him like the largest
(10:08):
bonus you know, in history, despite the fact that Tesla's
stock price has.
Speaker 3 (10:12):
Been very iffy. So so the board, you know, is.
Speaker 5 (10:15):
Very much still in Elon Musk's corner.
Speaker 7 (10:18):
If you look at the makeup of the board, you're
looking at his brother of people he has close relationships to.
So I think you know, a couple of things are
possible here, assuming that the journal sources are legit, which
I do, is that you know, there may be some
opponent on the board who's been talking to search firms,
or perhaps this is somebody on the board trying to
(10:38):
send a message to Elon Musk, trying to get through
to him saying you know, hey, this is real, we
need you to be involved. But in any case, I
wouldn't expect him to be leaving.
Speaker 5 (10:48):
A CEO anytime soon.
Speaker 7 (10:49):
If he were to leave, the stock price would would
be in trouble, be my prediction.
Speaker 3 (10:53):
Some other members of the board. You mentioned Elon's brother
Kimball Musk on the board. He's been on the board
for twenty one years. You've got James Murdoch who's been
on the board for close to eight years, Jeff Straubel
who's been on the board for two years, and then
Joe Gebbia, among others including Kathleen Wilson Thompson, as well
Robin Dnelm, the chair of the board. We should note
(11:14):
Max before we let you go, why do you think
is it still is? Are we still at a point
where Elon is so closely tied to Tesla and Tesla's
future because couldn't some investors or perhaps even institutional investors
see this as like, wait a second, this could actually
be a positive sign for Tesla because it would help
(11:36):
get it beyond the you know, being inextrictly bound to politics.
Speaker 7 (11:40):
Yeah, if you talk to investors, you do hear that view,
but it's very much a minority view. And the reason
it's a minority view I'm saying among Tesla investors, not
necessarily among outside observers, is because the valuation of Tesla
right now is very much not about its automotive ambition.
So if you replaced Elon Musk with a normal CEO,
what you have as a car company. But many of
(12:01):
Tesla's investors don't want to have a car company. They
want to have an AI company. And it's not clear
who runs that company, who can sell the muscles.
Speaker 3 (12:10):
Musk has got an AI company, a second one, he does.
Speaker 7 (12:13):
He has got Xai absolutely, But but you know, Musk
has told this story about driverless taxis and the optimist
robot that's a humanoid robot. And when you look at
the bullish valuations, if you listen to the bulls, they
are not counting on the model three or the model.
Why these the Tesla's kind of normal cars, which are
very successful in their own terms. They're expecting this entirely
(12:35):
new AI driven revenue stream, which really mostly just exists
in Elon Musk's head.
Speaker 5 (12:41):
And if you take Elon Musk out of the equation, how.
Speaker 3 (12:44):
Do you do that model?
Speaker 7 (12:45):
It becomes harder and and people, you know, you're laughing,
but you know, Elon Musk has achieved impressive things. And
from the point of the investors, if anyone can do it,
he can.
Speaker 4 (12:55):
And laughing, but I feel like they're investing in Elon
right and all all the craziness and all the innovation
that comes with him.
Speaker 5 (13:03):
Yeah, pretty good, That's how it goes.
Speaker 4 (13:04):
Thank you, Max Chaffkin, Thank you so much, Bloomberg Business.
We recommnist Max Chafkin, co host of the Elining podcast and,
as we remind you, author of the contrarian Peter Tiel
and Silicon Valley's Pursuit of Power.
Speaker 2 (13:14):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app, or watch US live on YouTube.
Speaker 3 (13:27):
On the sales side, I want to bring on Punham Boyle,
senior analyst for e commerce at Leisure Off Price Retail
for Bloomberg Intelligence. She joins U from New York City
this afternoon. Let's talk about this miss when it comes
to second quarter operating income. The outlook there is that
a result of tariffs? In your view, it.
Speaker 8 (13:45):
Has to be, because when I think about the operating
margin that they just posted with AWS, you know, incredible
near forty percent the downside that we're seeing going into
two Q, I can't think of anything else that could
be driving that and higher costs that they'll have to
orb due to the tariffs.
Speaker 4 (14:02):
Are you surprised that, like we kind of you know,
went through that press release, there's really nothing on tariffs.
There's like that disclosure that kind of dumps everything at
the very bottom of the page. Not surprising to see
that they didn't really address it in the release, And
I guess it's all going to come out on the call.
Speaker 8 (14:18):
Yeah, I think there's going to be a lot of
questions about tariffs. Keep in mind that, you know, Amazon
is directly exposed on the one P side, so roughly
forty percent of its business is where they do have
to deal with tariffs. The other sixty percent, that's three
P the sellers have to deal with them, but Amazon
helps you set the price on its platform to make
it competitive. So there's just a lot of back and
(14:38):
forth that's going on, and with some suppliers they are
working one on one to see where they can help
offset the price increases. But the biggest delta between one
Q and two Q is tariffs. So the guidance that
we see here has to be a result of that
wide net that they've casted.
Speaker 3 (14:56):
You mentioned the ps, but translate for.
Speaker 8 (14:58):
US sure, third party and first party first party when
Amazon owns the goods, so basically they take on the
cost and they directly source it from the supplier. Third
party is if you and I go on to Amazon
and we start selling stuff.
Speaker 3 (15:14):
What's the breakdown in terms of actual goods that are
sold third party versus first party?
Speaker 8 (15:20):
Sure, third party, we estimate is about sixty five percent
and third and first party is about thirty five to
forty percent?
Speaker 3 (15:26):
Okay, sixty four And is there more like third party
is more from China or do we not know than
first party?
Speaker 8 (15:32):
Well we Amazon doesn't tell you how much they get
from China. But just by looking at what's on their
platforms and third party data, irrespective third party or first party,
it's estimated that over seventy percent of what's sold on
the Amazon dot Com platform is from China. So it's
a large, large, large piece of their market place.
Speaker 3 (15:52):
Just to remind everybody, I mean, you you you study
e commerce at leisha off price retail, this is you know,
this is your world. This stuff is made overseas, like
very little of it is made here in the US,
very little.
Speaker 8 (16:05):
I mean food is the only thing we may procure
locally that Amazon sells. Really everything else, the bulk of
what you buy in retail in the US is made
outside of the US. It doesn't matter who you are.
Speaker 4 (16:18):
What I don't know, Okay, I'll let him have a moment.
Speaker 5 (16:23):
You know what's.
Speaker 4 (16:23):
Interesting put in We kind of just laugh that Normally
when we're talking Amazon, we're all over Amazon Web Services
and it's like, oh yeah, that retail business. So what
an interesting kind of report to go through and what
we're focusing on. I do want to point out though,
that AWS reported first quarter sales gain seventeen percent to
twenty nine point three billion, in line with analyst testaments.
It was the unit's slowest growth in a year. So
(16:46):
it does feel like I don't know, like, what do
we get out of that.
Speaker 8 (16:51):
I think it's okay, I mean, okay, I'm going to
see businesses pull forward spend, pulled back on spend. There's
still a lot of momentum here on the AWS side.
And really, you know, while the sales were just in line,
the margin was incredible thirty nine percent operating margins thirty
nine point five percent roughly, that's huge. Consensus is looking
(17:11):
for about thirty five percent. So we do think, you know,
this business will abb and flow and you'll have high margins,
you'll have low margins depending on where they invest. But
the long term potential of AWS is still pretty sizable
and there's a long runway here.
Speaker 3 (17:26):
Okay. So if we think about this in the context
of what we heard from what we've heard from other
companies thus far, what we heard from Microsoft yesterday, and
as a reminder, I mean, you cover the e commerce
at leisure, the off price retail. How do you think
about this in terms of the retail world, like the
Walmart's of the world, the targets of the world. How
does this report sort of inform the way we should
(17:48):
be thinking about and investor should be thinking about those
other companies.
Speaker 8 (17:52):
I think if Amazon's facing these tariff headwinds, so is
everyone else, including Walmart, including smaller companies, medium sized companies,
And really there is no escape from this unless we
see things come from here. The one hundred and forty
five percent here iff that you see on China is sizable.
If that stays that way, the consumer is going to
(18:13):
be paying higher prices. We will see some out of
stocks on shelves in the coming months, as most companies
have halted shipments from China, and it's not going to
be an overnight switch to take everything that you make
in China to somewhere.
Speaker 3 (18:27):
Else, or even impossible for something. Some analysts have said, well,
you said empty shelves, where are we going to see them?
What do you think we'll see them?
Speaker 4 (18:35):
Saw empty shelves in like a drugstore, But I don't
know that's because everybody.
Speaker 3 (18:39):
Stole everything there.
Speaker 7 (18:40):
Terrible.
Speaker 3 (18:40):
I don't you know how this works.
Speaker 5 (18:42):
I know it's always a little war perspective.
Speaker 4 (18:44):
Go ahead, BuNos, Sorry, well, you.
Speaker 8 (18:46):
Won't see empty shelves on Amazon but you will see
out of stocks. In fact, you know, I was just
browsing the web randomly and I started to see some
things that just said out of stock, like we'll let
you know when it comes back. So I think you'll
start to see inventory. Actually that that comes out of
China be put on hold and we don't know when
it'll come back. Because unless you raise the prices or
(19:07):
double them, you're not making the same margin.
Speaker 3 (19:10):
On what's the consumer's willingness to pay for this stuff. Because,
as I was mentioning to Caroline, if we see these
price increases across the board, if we see them a Target,
if we see them at Walmart, It's not like this
is an Amazon specific story. We're going to see this everywhere.
At what point does the consumer throw in the towel
and say, I'm not going to do this. I'm not
going to pay.
Speaker 8 (19:28):
I think the consumer will say I'm not going to
pay when prices go up thirty forty percent, right, it's
going to get more expensive. And if they say they
don't pay, it means before they bought ten things, now
they'll buy three things. Where are they buying those three things?
Are they going to trade down from a national brand
to a private brand. Are they going to buy more
staples that they can you know, like staple colors that
(19:50):
they can reuse, recycle reware, and wear less fashion that
goes out of style quickly. There's going to be trade
offs if prices rise materially. That said, we you think that,
you know, people will just switch brands, They'll switch options
where they can get things cheaper. We're going into the
back half in just a few months, and that's the
peak selling season of retail. When you think about toys,
(20:13):
specifically right for the holidays, when you think of back
to school. Yeah, I mean, what do you get your
kids if you're not going to get them the barbie
and you're not going to pay you know.
Speaker 4 (20:22):
You can only get them two barbies?
Speaker 3 (20:23):
Barbies only two dollars.
Speaker 4 (20:26):
Sorry, uh no, I'm just repeating you know what we've heard. Hey,
one last question I will say though, with the Amazon cart,
like when you put them in and like you automatically
see the value, like if things start to get more expensive,
like you might pull back thirty seconds. Top question you
think must be asked on the Amazon call?
Speaker 8 (20:44):
How are we weathering this tariff storm that we're going into,
especially you know, with three piece sellers, how are they
going to control that. Amazon is still an attractive place
where value is seen because they don't have a control
on prices for everything.
Speaker 4 (20:58):
All right, gonna leave it there, Hey put it. Thank
you so much, super super good conversation. Puna mcgoyle, Senior
analyst for e Commerce, ath Leisure, off Price Retail for
Bloomberg Intelligence.
Speaker 2 (21:09):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on applecar Play
and Android Auto with the Bloomberg Business app. You can
also listen live on Amazon Alexa from our flagship New
York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 4 (21:27):
You know ed Ledo still with us too, of course,
co host of Bloomberg Technology, and we want to bring
into the fold. Mark German back with us, Managing editor
for Global Consumer Tech out there in our San Francisco bureau.
All right, so Apple down about two point seven percent.
Speaker 5 (21:41):
Mark.
Speaker 4 (21:41):
We know you really are interested mostly in the call,
but the numbers are out. What if anything is of
interest here or you think is notable.
Speaker 9 (21:49):
I mean, overall revenue is up five percent every year,
so obviously that's a good thing. You saw iPhone sales
be slightly expectations from Wall Street, so that's a good thing.
Show some solid momentum for the iPhone sixteen E. Notice
that Tim Cook mentioned the sixteen e in particular versus
the pro models, which generate the most amount of revenue
(22:10):
for Apple. Obviously, Mac did a little bit better than expected,
iPad better than expected, but we saw some softness on
China services as well as wearables, Home and Accessories, Wearable's
Home and Accessories. The softness there continues. It's been this
way for several quarters. That's sort of surprising given the
momentum that we've seen in the past on the Apple
(22:31):
Watch and the AirPods and some of those peripheral products.
Services still pretty considerable double digit growth, but not at
the same level that Wall Street was anticipating. Services in
particular is quite interesting because that's going to probably be
a real headwind for Apple in the coming years now
that they're needing to adjust some of their app store
policies in relation to commissions. And then, of course we
(22:52):
have the Google Search deal overhanging all of this stuff.
That's a double digit billion dollar annual revenue stree for Apple.
That may also go away depending on where the US
government goes with this trial against Google.
Speaker 3 (23:06):
A lack of a lack of commentary though, and maybe
we'll get it on the call. I know you're looking
for it about supply chains and about tariffs. Do you
think that's why investors are sending shares down ahead of
this call?
Speaker 8 (23:15):
No?
Speaker 9 (23:15):
I think it's because of the continued softness in China
in particular. Obviously, China's Apple's third biggest market. China really
swings the pendulum here and when it comes to Apple
shares going up or down on earnings calls, And in
this case, we're at an annual decline, certainly an able
decline compared to where Apple was two years ago in
China this time around, and then missing Wall Street expectations
(23:39):
by about half a billion dollars. So definitely not a
good sign for Apple and China. And I think investors,
or at least those analysts on the call are gonna
have a lot of questions about that. But I hope
they do dig into tariffs as much as possible.
Speaker 10 (23:51):
Hey, Mark, I just want to go to the iPhone beat,
because it all comes back to the iPhone sometimes. Right,
forty six point eighty four billion. Estimate was forty fur
five point ninety four. The third party data showed a
lot of consumer electronics flying around the planet in the
first three months of this year. Do you see any
sort of evidence just from the pure number that this
(24:11):
was people buying handsets front running tariffs in anticipation that
maybe prices might go up in the future.
Speaker 9 (24:19):
I don't think the front running of purchases to avoid
price hikes in the future really happened until you know,
mid late April, when that's already within Apple's third quarter.
So I don't think that any of the iPhone sales
numbers that we're seeing here really were influenced by people
trying to get ahead of tariff price hikes. I mean,
Trump made his announcement in early April, and this was
(24:41):
not really in the public consciousness until then, which again
is the start of the third quarter for Apple. So
I think the impact there will be in the current quarter,
and I'm looking forward to hearing any guidance that Apple
gives on the call which may give us a taste
of how the iPhone's going to do in this current period.
Speaker 4 (24:57):
Well, go ahead, Carol, what do you think they're going
to say, in terms of price increases, it's something you
gave us a heads up on earlier, you know, in
terms of margins impact, and then price increases, you know,
in this tariff filled environment. So do you think we'll
get any kind of clarity or specifics on that.
Speaker 9 (25:14):
So, if I was a betting man, at least one
analyst is going to ask about the potential of price increases.
And if I remained a betting man, I would say,
Tim Cook would say, we'll see nothing to announce today,
and then maybe if we're lucky. Talk about how they
think about these types of things.
Speaker 3 (25:33):
Well, how does Apple do price increases?
Speaker 9 (25:35):
Well, they really don't. I mean, the iPhone price has
been stagnant for the most part. There are some exemptions
over the past you know, seven, eight, nine years, so
they really don't do price increases. And so when they
do make the price increase, they're going to do it
from a position of strength. They're going to focus on
installment plans, They're going to focus on carrier deals, and
(25:56):
they're going to focus about on the technologies that they've
implemented over last decade to make the iPhone more valuable.
They're going to talk about how useful the phone is
how it's equivalent to X number of cups of coffee
is a year, et cetera. And they're definitely not going
to mention tariffs as a reason because they saw what
that did to Amazon the other day.
Speaker 4 (26:17):
Well said, Well said, looking forward to your reporting after
the call as well. Mark Mark German, Managing editor for
Global Consumer Tech Bloomberg News out there in our San
Francisco bureau. So ed just got about thirty seconds here.
I mean, what are you thinking about? Is it just
again Terriff's for Apple or Amazon? Like I don't know.
Speaker 10 (26:34):
Yeah, point Like, if it wasn't that front running on
the iPhone, then what was the beat people still in
love with the iPhone? Just I think that's a really
basic question. But again, all we've got to go off
on the right now is that we noticed that Apple
added the word trade right, one single word to the
boiler plate in the forward guidance or financial disclosures disclaimer and.
Speaker 5 (26:53):
Both of them.
Speaker 3 (26:54):
Yeah, surprised Apple didn't have that in there already, given
what we knew about this administration, and they that those risks.
Speaker 4 (27:00):
Are listened supply chain the idea, you know what.
Speaker 3 (27:03):
Happened in twenty seventeen. Two. Yeah, but hey.
Speaker 4 (27:06):
Ed Lolo, thank you so much for a moment.
Speaker 2 (27:09):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (27:24):
Also out with an update, ELI Lilly shares falling as
much as twelve percent earlier in the session, the biggest
intry day drop going back to October. Shares now down
ten and a half percent. This after CBS announced a
plan to drop its blockbuster weight loss of drug zet
Bound from its preferred list making rival wey govi more
widely available. Madison Mueller is Bloomberg News Health reporter. She
(27:46):
joins us here in the Bloomberg Interactive Brokers studio. So
Lily maintained sales guidance. Zet Bound performed in line with
Wall Street's expectations, but investors who've been hoping for more
explosive growth were underwhelmed. Are we seeing prices here?
Speaker 1 (28:01):
Yeah, that is what is definitely starting to happen here.
I mean, coming on the heels of the news that
we discussed earlier this week, which was that Nova Nordisk
was partnering or working with some telehealth companies to distribute
via or to distribute pens of its blockbuster drug would
go V at a lower cost. And now we're seeing
Novo partner with CVS retail pharmacies and CVS is Drug
(28:24):
Benefits Manager Unit to provide more cost savings for patients
and for health plans that cover weight loss drugs. So
it's definitely hitting up.
Speaker 4 (28:33):
Is it just negotiating or is it I mean, we've
talked with you too that there's similar drugs, but they're
not all exactly the same. So I'm just a little
curious about fat you.
Speaker 1 (28:42):
Said, yeah, I mean that is part of the interesting thing.
I mean, Lily has said and they were saying today
that the price of the medication, they purposefully priced it lower,
I mean for competitive reasons. It came onto the market
after Novo Nordisks drug. Lily's drugs Utbound, is a little
bit more effective, but both drugs work really well for
weight loss. Lily's drug costs around one thousand dollars a month,
(29:02):
while Novo's is about thirteen hundred dollars a month, but
those the higher list prices mean that drug makers, when
they're negotiating with these PBMs, can provide greater discounts, bigger rebates,
So in some ways it actually turns out to be
a benefit when they're at the negotiating table. But those
that's one of the things, and we were talking about
this earlier.
Speaker 2 (29:21):
There's not a lot of.
Speaker 1 (29:24):
Clarity about how these negotiations work, what happens behind the scenes,
and that's not something that we're probably going to get
anytime soon.
Speaker 3 (29:30):
So was today's stock move all about this CBS news?
Speaker 1 (29:33):
Yeah, I mean, in part, I think it sort of
compounded the underwhelming results that you mentioned earlier. I mean,
it was a good quarter for Lily, but their expectations
for this company are so high now that they just
can't really afford to have a a you know, inline quarter.
Investors were looking for more growth and looking for zep
bound sales that sort of smash past X estimates like
(29:55):
they did last year, and that's just not what happened.
So it was just a little bit disappointing, I think.
And then and then seeing the CVS news, it was
interesting because CVS and Lily both reported earnings today, so
we've sort of got to see this happen in real time.
Speaker 4 (30:10):
All right, So I mean I don't know, can can
this change? I mean, how much of it is about
the GLP one still for Lily, like we always talk
about the pipeline and.
Speaker 3 (30:19):
Other things, it's like more than a seven hundred million
dollar company at this point.
Speaker 1 (30:21):
Yes, so she helps us like put this in perspective,
and that is really that valuation is really about weight
loss struggs. But the thing is Lily's, like you just mentioned,
their pipeline. People are so excited about Lily's pipeline because
not only do they have zep bound, which is, like
we said earlier, a little bit more effective, but they
also have a weight loss pill that's coming pretty soon,
(30:42):
as early as twenty twenty six, the CEO has said,
and that is thought to be the next big thing
in this market. They are far ahead of the competition
when it comes to that, and they're going to continue
to sort of dominate this space.
Speaker 4 (30:54):
So can the one follow in terms of the PBMs?
And you know, negotiating, so you know, if they come
with a pill, is that a whole separate negotiation because
it's a different form of delivery versus an injection.
Speaker 1 (31:05):
Yeah, I mean, that is the question. I mean, the
thought is that the pills will be priced lower to
begin with, because they're easier to manufacture. Pills are typically
a little bit cheaper. But Novo has a pill on
the market right now called Rybelsis that doesn't work as
well for weight loss, but it's around the same price
as at Zempics. So it sort of is to be
(31:26):
determined what will happen with the pricing war, but the
expectation is that it will be a little bit cheaper
on pricing.
Speaker 3 (31:31):
You and the team out with a story about a
price war here, reminding us that Novo reached a deal
with HIMS and Hers this week along with two other
telehealth medicine providers, for a month's supply starting at four
hundred ninety nine dollars. This is a wee gov before
subscription fees. Leli Lily announcing expanded partnership with weight Watchers
on April twenty ninth. How low is this price going
to go?
Speaker 1 (31:52):
That's the question, I mean, and I think that that's
what investors were worried about.
Speaker 3 (31:56):
Price price worth great for consumers exactly, not good for investors.
Speaker 1 (32:00):
And we've seen these companies get and we say in
the story publicly lambasted for the prices of their drugs.
I mean, Bernie Sanders called the CEO of Novo Nordisk
into a hearing last year and then really railed him
on the price of these of these medications. And they
are bringing the prices down, and they are expanding accessibility options,
affordability options for patients. But I think investors were concerned
(32:22):
what this means for Lily. Are they going to lose
out on share because of this?
Speaker 4 (32:25):
Where is it manufactured? Is it he all here?
Speaker 1 (32:27):
So far they do. Their supply chains are sort of
all over the place. No holl makes some of the
drug here. They do, they make some in Denmark. Same
with Lily. The first step happens in Ireland, a lot
more happens here. So they are also potentially exposed to Tariff's.
Speaker 4 (32:42):
Madison Muller the best health reporter here at Bloomberg News.
Check her out on the Bloomberg.
Speaker 1 (32:47):
MC.
Speaker 7 (32:48):
No.
Speaker 4 (32:48):
I'll bet you let me drive.
Speaker 5 (32:49):
Oh no, no, no no.
Speaker 7 (32:51):
This is not a toy drug.
Speaker 5 (32:54):
Honey, please gravels wait, I want to try.
Speaker 1 (32:58):
It's a good question, good time.
Speaker 3 (33:05):
This is the drive to the clothes.
Speaker 5 (33:07):
Plums for music.
Speaker 2 (33:08):
Well, Briar Jona don on Bloomberg Radio.
Speaker 4 (33:12):
All right, TikTok, everybody, about eighteen minutes to go until
we wrap up the trade on this first trading day
of May May one, twenty twenty five. Charlie just breaking
down the numbers along with Jordan, and you can see that, Yeah,
up about one percent on the S and P five hundred,
all our best levels of the session. And you've got
really those big tech names continuing to push the nowstak
(33:33):
one hundred higher, up about one point six percent. In particular,
Meta and Microsoft. We talked about it earlier after the day,
after the clothes we get the a's of the mag.
Speaker 3 (33:41):
Seven Airbnb, no Am Jen no.
Speaker 4 (33:45):
Oh no, no funny, how that works?
Speaker 3 (33:48):
Apple and Amazon?
Speaker 4 (33:49):
That's what you're talking about, Okay, exactly.
Speaker 3 (33:51):
Hey, let's see what Max Wasserman has to say about this.
He's founder and senior portfolio manager at Mirra Mark Capital. Max.
I don't want to talk about these individual names with you.
We're going to have plenty on that in just a
few minutes. I want to hear your thoughts on the
macro environment right now, given that we've seen such a
rally over the last few days. Hard to believe that
April ended the way it did given the selling that
(34:12):
we saw in the first part of the month. Yeah,
it's great to be here.
Speaker 11 (34:17):
It's fascinating to see all the turmoil that's taking place
in the marketplace based on commentary out of the White House.
But if you look behind that and you look at
what's happening in the economy, we are seeing signs of
economy slowing down and you're still seeing embedded inflation. So
the question becomes, will the Fed take that embedded inflation
and hold off We'll look at the tariffs as a
(34:38):
transitory inflation that can be that needs to be dealt with,
or can just leave it alone. But we see the
economy slowing down, we see the consumer eventually being hurt
by that, and if the tariffs again, it's hard to
handicap that because he keeps making exceptions all the time, right,
I mean, you just heard the latest thing about Iran
with oil, So it becomes very challenge. But we think
this market is slowing down, and we think the consumer
(35:00):
is going to be hurt by that, and we think
the market needs to reflect that, and we think it
is for the most part. But there's areas of pockets
where technology they're still gravitating to that right now, Hey,
do you feel.
Speaker 4 (35:11):
Like with confiction max that you can say, Okay, this
is our market for the rest of twenty twenty five
or it could change dramatically for the better for the worse.
Speaker 3 (35:20):
Yeah.
Speaker 11 (35:21):
I don't think you can do conviction for an afternoon
with this White House. I mean, every single time you
hear about a tariff, you hear an exception, and you're
going to hear that tonight. It's going to be interesting
to hear from the two companies this evening. But now
I mean mentioning names. One of the companies get seventy
percent of their products they sell to Americas from China,
so that has to be inflationary unless they get an exemption.
(35:42):
But the question becomes planning or investing. You have to
really take a long term look and not trade this
short term because the information's changing by the hour. But
we do see good companies out there that have been
hit hard that you know, over six, twelve, eighteen months
should be in good investments paying a good dividend.
Speaker 5 (36:01):
So we like that.
Speaker 11 (36:02):
But the short term, you know, fasten your seatbelt and
they say and put the trays in the upright position,
because it all depends on what the White House says,
and then next week, what does the Fed say about this?
Speaker 3 (36:15):
Max, you can name names if you want. You feel
free too.
Speaker 11 (36:18):
Sure, I mean, I mean, it's interesting to see what
is amagon Amazon going to say seventy percent of their
goods are coming from China, basically over two and a
half times what they sell from here. So what kind
of inflation is that going to be we all say,
and how they going to handle it?
Speaker 3 (36:32):
I think it'll be under an extra microscope given what
we heard earlier this week after that punch Bowl News
report sort of the back and forth from the White
House about what ended up happening or or what you know,
a call between Bezos and the President regarding being transparent
about those prices and where that's coming from. There was
a lot of back and forth there, So I think
(36:52):
there will be a lot of questions about the impact
on consumers. That's and you know, typically typically Amazon is
a story that has to do less with retail and
more with AWS, and we kind of got the preview
of AWS yesterday with Microsoft. Okay, so that's some views
on tariffs. What about the inflationary side of things, and
that's certainly related to tariffs. How are you looking at
(37:14):
about the inflation path forward?
Speaker 11 (37:18):
I still think it's stubborn, you know, we still think
it's embedded in there, and we would not be for
the FED cutting because we think inflation is still built
into the marketplace.
Speaker 3 (37:27):
Which where specifically because we're seeing a moveway and oil prices,
we're seeing lower oil prices. Where are you seeing inflation embedded?
Speaker 11 (37:33):
And well, basically you're seeing the consumer spending. You know,
they're telling you that the prices went up a little bit.
Speaker 3 (37:39):
There.
Speaker 11 (37:39):
You're also seeing in the fact that housing right, well
people aren't buying housing, but the cost of basically maintaining
your home, you know, if you want to do repairs
in your home, the cost of the wood, the cost
of the products. We're seeing that as an issue. You're
also seeing the fact that goods that are being bought
are higher than they were. So the question really becomes
is if the consumers anticipating higher rates or slow down
(38:01):
they pull back on the spending. So well, yeah, you
looked earlier about the cloud, but you look at the
impact to consumer if they're facing day to day you
look at companies like Procter and Gamble, it's telling you
they're facing that issue with the products they're being selling.
You know, that's the basics of what's them to the home.
So the inflation still there. Yes, energy has come down
a little bit, and yes, you know if they say
(38:23):
food prices. But still when you look at it, the
consumer is slowing down the spending. But is that is
that going to be permanent? I don't know, because I
can't tell you what we look like inflation. I think
the Fed is too early to act. I think they
need to be more patient because what you don't want
them to do is jump the gun cut rates. And
then you have the White House change of you know,
(38:45):
the issue on tariffs, and next thing you know, you
have inflation ticking up again. And I do think stagflation
is a very big concern here, all right.
Speaker 4 (38:52):
So hmm, net net As you say, things can change,
you know rapidly, we live it every day, every minute hour.
Having said that, do you believe that things will settle
at some point where higher tariffs though they're not the
tariffs that they were, that there's going to be some
(39:12):
higher level of tariffs and disruptions as supply chains, some
maybe are brought indeed back to the United States, and
things are changing that could ultimately lead to a very
different investment environment going forward, a different level of profitability
for companies here in the United States. I mean, what's
(39:32):
the long term game that you think might be very
different for the investment environment.
Speaker 11 (39:39):
Well, it's hard to predict the long term game because
if you see.
Speaker 4 (39:42):
Are you saying it could just go back to the
way it was before.
Speaker 5 (39:46):
I think it's going to go back the way it was.
Speaker 11 (39:47):
But I think the market's reflecting disruption, right if you
look at takeout technology, the market's reflecting it. Consumers are reflecting,
and energy stocks are reflecting it. Healthcare showing disruptions. And
you have to ask yourself what's actually being and moved
back here? I mean, what's happening really, not what's being
talked about, but what's actually being moved here. Semiconductors are
getting exceptions, but you have to look at what's happening
(40:08):
with Taiwan. So long term, I am bullish, but I
think you're going to be choppy from the next two quarters.
I think the second half of the year as we
get through this and really settle into what tariffs are
really going to look like, and the companies have the
ability to plan for it, and the consumers get used
to what they have to deal with, and then you'll
know where the FED is do. I think the Fed's
(40:29):
going to cut interest rates to the fourth quarter probably.
I don't want them to cut earlier because that means
the economy is really slowing down.
Speaker 5 (40:36):
But it's hard to tell.
Speaker 11 (40:37):
I mean, if you look at right now, they said
GDP was negative, but that was a pull forward from
all the imports. People were front loading that. So the
question becomes employment. Employment. A lot of the problems that
you just had was New York related. Was a big uptick.
But you have to wait. The economy is still strong,
but we're seeing really good signs of a slowdown. I
(40:57):
think the second half of the year, everybody be more
adjusted to what we're actually dealing with, and I think
that's going to create an incredible investment opportunity. Yep, you
can look longer than three to six months, and.
Speaker 4 (41:07):
We do know that you are finding opportunities. Visa waste management,
there's a couple of companies that you definitely have been buying.
So any market environment, there are opportunities. Next time, we'll
talk more about the specifics of that. Max Fasserman, founder,
senior portfolio manager at mir or More Capital, around five
hundred million in assets under management, joining us from Northbrook, Illinois.
Speaker 5 (41:27):
Folks.
Speaker 3 (41:28):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(41:49):
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