October 1, 2025 • 43 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
White House Budget Director Russell Vought is planning to swiftly dismiss federal workers, a sign that Republicans will lean into hardball tactics to pressure Democrats to cave to end a government shutdown.
Vought told House lawmakers Wednesday that some federal agencies will move to terminate workers within one to two days, according to people familiar with the remarks, who requested anonymity to discuss a private meeting.
White House Press Secretary Karoline Leavitt told reporters that layoffs would happen within “two days, imminent, very soon” but declined to give any details about what agencies or positions would be targeted.
President Donald Trump and his team have moved quickly to capitalize on the shutdown to shrink the size of the federal government.
The administration earlier Wednesday halted $18 billion in federal funding for infrastructure projects in New York City, including for the Second Avenue Subway project and Hudson Tunnel Project.
Today's show features:
- Bloomberg Intelligence Senior Policy Analyst Nathan Dean on the US Government Shutting Down
- Her Excellency Noor bint Ali Alkhulaif, CEO of Bahrain Economic Development Board and Kingdom of Bahrain’s Minister of Sustainable Development
- Angie Franks, CEO of Kalderos, and Bloomberg News Health Reporter Damian Garde on the Trump administration securing drug pricing deals with pharmaceutical companies
- Drive to the Close with Alexis Browne Roberts, COO & Portfolio Manager at Alexis Investment Partners
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. 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
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Well, day one the government shutdown, Day one of the
fourth quarter.
Speaker 3 (00:36):
As well, and it's been an interesting one.
Speaker 2 (00:39):
How long is it going to happen? How long is
it going to go on?
Speaker 4 (00:41):
I think it's a big question, right and I think
the duration of this shutdown, you know, that is going
to be a big deal in terms of the impact
we will certainly see. And I think we're all waiting
and watching because the concerns have been whether or not
we start to see workers being cut as the President
has said he would do.
Speaker 2 (00:57):
Yeah, the President well rather, White House Judge Director Russell
Vote is planning to swiftly dismiss federal workers, with layoffs
to happen within two days imminent very soon. According to
White House Press Secretary Caroline Levitt, We're going to continue
to bring you the latest from Washington, DC, and that
includes checking in with Nathan Dean. He's Bloomberg Intelligence senior
policy analysts. He joins us from the nation's capital. Nathan,
(01:19):
you were I don't remember how optimistic you were yesterday.
To be honest, I have to be honest with you.
I feel like you were optimistic in the early part
of the day, and then in the later part of
the day you got less and less optimistic. And certainly
what ended up happening was the government did shut down.
Is there any is the daylight decreasing between Republicans and
Democrats right now.
Speaker 5 (01:38):
At the leadership level.
Speaker 6 (01:39):
Look, they're both in the pasture right now where they're
trying to blame the other. And yesterday it was two
forty one when I told my first client that I
thought it was going to shut down. But I still
feel that it's a little optimistic to say that we
think that this shutdown is going to end probably within
ten days. Now polymarket has it eleven point five days,
So that's the general can you know consensus out there,
But we did see the first time today some bipartisan senators,
(02:03):
not at the leadership level, but at the working level.
I would call it gag on the Senate floor to
potentially talk about a short term CR combined with maybe
some type of effort on Obamacare subsidies. Now they left
for today, they're out for Yamkapor. They won't come back
until Friday. I think that you're going to see more
political rhetoric take place on Friday, and you're not going
(02:23):
to see serious negotiations till over the weekend, because I
remember the House Republicans are still aren't here.
Speaker 5 (02:29):
They come back next week.
Speaker 6 (02:31):
But all that has to happen and keep the government
open is five Democrats need to go and support this.
Because yesterday's vote three Democrats or two Democrats and an
independent that caucuses with the Democrats ended up voting for this.
So Senator Schumer only has a few more days until
I think the pressure for more Democrats will be to
go and say we're going to reopen the government.
Speaker 3 (02:51):
You mentioned CR. Of course that's a continuing resolution. Nathan.
What I'm wondering is are the democrats?
Speaker 4 (02:56):
I mean, what are people saying or what do you
think as you watch the government whether it would have
been democrats or Republicans. Are democrats in this case in
this instance kind of right to put their foot down
on an issue that's very important to their voters or
their constituents in terms of healthcare. And if they don't
put their foot down and they say, all right, let's
not shut down the government, let it go, you guys
(03:17):
say you'll talk to us. Are they silly in not
kind of getting a deal or you know beforehand, you know,
getting some kind of commitment. So an issue that they
say is very important to their American voters. And let's
remember go back to the election. You know, half voted
for the president are a little bit more than half,
right if you look at the popular vote, and the
other half did not.
Speaker 6 (03:39):
You know, shutdowns occur when both parties think that it's
politically advantageous for to shut down to occur. And I
think that's the situation we're still in. There's a lot
of folks that blame Republicans for this. There are a
lot of folks that blame Democrats for this. But from
the democratics perspective, there were two goals I think going
into the shutdown. One was for Senator Schumer to rally
the troops to be seen fighting President Trump, and the
(04:00):
second was to bring attention to the issue of the
Obamacare subsidies that expire at the end of the year. Now,
Senator thun has said that there's going to be no
negotiation on Obamacare subsidies, at least resolving that issue while
the government is shut down, and I believe him on that.
But the Democrats have achieved their first goal, or will
within a few days of being seen as combating President Trump.
The challenge for Senator Schumer at this point is what
(04:22):
is the exit strategy? How do we get out of
this government shutdown? And that's why I think that sometime
next week you will see, like in an unofficial agreement,
unofficial handshake, if you will, that there will be an
effort to deal with these Obamacare subsidies. Because I think
there are some folks in the Republican Party, President Trump included,
who recognize that it may not be beneficial in an
election year for Obamacare subsidies to go up for average Americans.
(04:46):
But let's also remember that the bulk of the Republican
Party most likely wants this to go away. So even
if there is an agreement that says we're going to
kick the candidate till November, these shutdown fights are going
to continue. Probably into the beginning of next year.
Speaker 2 (05:00):
He is into the beginning of next year. Does it
affect the mid terms? I was talking with some colleagues
earlier today, and it seems like voters, like anecdotally, they
don't really remember shutdowns.
Speaker 6 (05:11):
Now, they don't, especially not this far out from November.
I mean, look, it's October first, and we have a
year and some change until the midterms. I don't know
many people are going to go into the voting booth
and say, hey, remember what happened back in October of
last year, And remember the Tea Party somewhat did this
back in twenty thirteen, and the Republicans ultimately ended up
gaining nine seats in the following midterm election of the
(05:31):
following year.
Speaker 5 (05:32):
But I will say is.
Speaker 6 (05:33):
That it's a certainly about momentum. And the Democrats right
now have a very poor approval rating, It's around thirty percent.
And so from the Democratic perspective, why don't we shut
this down? Why don't we rally the troops and rally
the progressive support. Let's support our base, and then we'll
spend the next year in change actually trying to build
some momentum.
Speaker 5 (05:51):
So I can see the case for.
Speaker 6 (05:52):
Why the Democrats would want to shut the government down
because there is plenty of time for them to come
back and get messaging onto other issues.
Speaker 4 (05:58):
Hey, Nathan, what about you know President jd Vance's downplay
plans to use the shutdown to slash services. He says
Republicans don't want to lay anybody off, and that Democrats
would be held responsible for any negative consequences of the
government closure. President Trump has come out, He's been very
clear right talking about, you know, the ability or you know,
to cut some of the federal government jobs. Russell Vote
(06:19):
has certainly we've seen that as well. So are we
expecting that to happen? And if it does happen, you
know who is responsible for that.
Speaker 5 (06:30):
So I think you're going to see signs of that.
Speaker 6 (06:32):
You know, Russell Vote even said just in a House
Republican caucus earlier today that layoffs are and I'm paraphrasing
your imminent in the next day or two. I think
there's some probably some truth behind that. You would also
see additional cancelation of projects. The eighteen billion dollars the
earmarked for those who in New York City in terms
of infrastructure projects, but ultimately it's going to be President
Trump that makes this decision. And I think that President
(06:54):
Trump realizes that widespread layoffs of government workers, it's such
which a broad nature, is not going to be popular
with the American populace. You know, Joe Matthew in Balance
of Power has had several Republicans on this week where
they've asked President Trump to bring a scalpel to this
as opposed to a sledgehammer. So you'll probably see a
notifiaications go out and you'll probably see signs. But as
(07:16):
of right now, I still think it's political posturing not
so much actually a real layoff threat. But again, time
may change, and if this is the if it does happen,
I think it actually could push parties further apart and
potentially extend the shutdown even long.
Speaker 2 (07:30):
Well, we did a deep dive yesterday, as you know,
on Russell vote and his role at OMB and the
DNA that he brings to this role. Does he take
a scalpel when it comes to laying off federal workers?
Speaker 5 (07:44):
Not if he gets his wish.
Speaker 6 (07:45):
I mean, obviously this goes back to Project twenty twenty
five and this idea that where the government is extremely bloated.
Speaker 5 (07:51):
And you know, former.
Speaker 6 (07:52):
OMB director mcmulvaney was on Balance of Power a couple
of weeks ago, and he was jubilant and saying, look this,
I'm excited for RUSS vote because you're going to be
able to dismantle a lot of apparatus of the government.
I'm paraphrasing his works there. But I will say is
that it's not easy to do. Both sides will often
come to Washington and saying, look, there's bloat.
Speaker 5 (08:12):
There are things that we need to cut.
Speaker 6 (08:13):
But it's not easy to do so because there are
things like regulations and statues and laws. And if you
end up cutting folks like we saw what happened with
Doge earlier this year, and you break the law, or
at least you're breaking regulations, or you're breaking what the
American people want.
Speaker 5 (08:26):
You to do, you have to end up hiring them back.
Speaker 4 (08:29):
Hey, Nathan, really quickly fifteen seconds. I mean, who is
President Trump listening to in all of this?
Speaker 5 (08:34):
Jd.
Speaker 4 (08:35):
Vance was very much out front and center and very
much in command earlier today talking about the shutdown. This
is RUSS vote. Just got about ten seconds. Who is
the president listening to?
Speaker 6 (08:43):
Very quickly I think the President is listening to himself,
and I think the President's going to make the decision
that he wants to make.
Speaker 4 (08:49):
All right, kind to leave it there, you rock. Nathan Dean,
Bloomberg Intelligence Senior policy analyst jointing US from Washington, DC.
Speaker 2 (08:56):
Stay with us more from Bloomberg Business Week Daily coming
up this.
Speaker 1 (09:04):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five 's during
this listen on alvl karplay and Android Atto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 4 (09:17):
Bahrain has emerged as a key economic and security partner
for Washington, hosting several US military assets, including the US
Navy's fifth Fleet and the Branch's Central Command. And you
might recall over this past summer a meeting at the
White House where Bahrain's Crown prints pledged seventeen billion dollars
worth of investments in the United States. While our next
guest is focusing on bringing investments into Bahrain. Joining us
(09:41):
is her Excellency nor Bent al al Kulaif.
Speaker 3 (09:44):
She is CEO of the Bahrain.
Speaker 4 (09:46):
Economic Development Board and also the Kingdom's Minister of Sustainable Development.
She is in our Bloomberg News La Bureau. I'm so delighted,
your excellency that we could spend some time with you.
Bloomberg has reported a lot about the Middle East at large,
how it's transitioning, taking moves to broaden out the region's economy,
making investments in sports, tourism, technology, and a lot more.
(10:09):
Tell us about for Bahrain, about attracting investments in the
digital and tech world, your mission, who has invested so far,
give us some size and scope if you would.
Speaker 7 (10:20):
Absolutely. First of all, Carol's exciting to be with you
today and looking forward to the conversation as well. So
thank you so much for hosting me today. And I
always find it very helpful to start with maybe a
thirty second elevator pitch about beading. For those that are
not familiar with the country. Bahrain is a small island
part of the Golf Corporation Council. As a country, historically
(10:42):
it's been a strategic maritime state, so it was always
considered as a transit, as a hub, as a gateway
to the region and a transit for trade growing east
and west. And that's also started because of the perling
industry in Bahrain. But fast forward till today, we still
readin that role and that really underpins our ethos or
(11:05):
our DNA of being business friendly and we need to
cut our economy today people think Bahrain it's an oil
exported country. In reality and on the ground, our GDP
is eighty five percent non oil. Financial services sector is
the largest contributor to our economy, followed by manufacturing. But
our other strategic sectors that we focus on our tourism, logistics, technology,
(11:29):
but also we have the education and the healthcare. So
you can see that diversification was achieved through attracting investment
into the country, being very open and allowing investors to
come and take advantage of the region and what's happening,
and using Bahrain as their testing ground as their base.
So it's been really interesting times, especially with the growth
(11:49):
that is happening in the region at the moment.
Speaker 2 (11:51):
Well, you're in our Los Angeles Bureau now ostensibly in
Los Angeles to help attract investment to the country. Can
you talk a little bit about who you're meeting with
the type of investment that you're hoping to attract.
Speaker 7 (12:04):
It's been a variety actually of companies and sectors that
we've had conversations with, and I have to say it's
been very, very interesting. We've always in Bahrain admired specifically
if the technology sector of the US and having direct
conversations with theirs, innovators, with the founders or the people
that are really close to not just what's happening at
(12:24):
the moment and what consumers have, but really also what
is expected to come going forward. So a lot of
discussions about technology and how Batratan can support that, but
also we've had discussions on manufacturing. We've had discussions even
on the film industry, and we do that. And the
way we look at Bahrain and that we were able
to talk about those different industries is because when we
(12:46):
assess our market in Bahrain, we look at various things.
We look at what is the infrastructure that I have
at the moment, what are the regulations that I have,
what is the human capital that I have? And how
can that serve international companies in various sectors is and
what would be beneficial for them to come and take
advantage of the business environment.
Speaker 2 (13:06):
Is it a difficult thing to do in a world
that is increasingly going I don't want to say the
world's going America first, but countries are increasingly looking inward.
You mentioned the film industry and meetings that you're having
out there. Just this week, the President said he's imposing
a one hundred percent tariff on foreign made movies. How
much more difficult does that make your job trying to
attract those folks to Bahrain.
Speaker 7 (13:29):
Look, we acknowledge and we see the President Trump is
doing in terms of attracting more local investments. And actually,
if you look at the region and Betting and the
rest of the GCC, we actually mirror that sentiment. A
lot of the countries are trying to bring in investments
into the region. But we also believe it's not as
zero sum game. Some companies would need to have presence
(13:52):
in both regions, not necessarily just one, in order to
achieve the results that they want, even locally here in
the US, and we're talking to some of those companies
that need the input. Other companies actually need to be
closer by nature to their consumers, and giving the growth
in the demand and the growth in the consumer base
in the Middle East and specifically the GCC, a lot
of the companies would need that presence closer to the consumer.
(14:15):
So we're having a lot of conversations with companies about that,
but we very much understand what is happening here in
the US, and we try to do our best to
support those companies. The first thing we do with companies
is ask what are your growth plans, what are your strategies,
how can we support you in the region, and what
can Barin do for you, Because we honestly believe that
(14:37):
their success means our success. So their success in the
region means they will stay here for the foreseeable future,
which means they've become part of our ecosystem and part
of our economic development.
Speaker 4 (14:49):
Your excellency, I'm curious to what's the competitive landscape as
you buy for investments in capital. I mean, yes, your
country versus other Golf nations, they've got similar ambitions we
report about all the time.
Speaker 3 (15:01):
So what is that competitive landscape like?
Speaker 7 (15:05):
First of all, it's absolutely exciting to see all of
the countries having their Vision twenty thirties, Virgin twenty fifties,
really focusing on economic development, and the region really has
complementary economies, certainly for betraying the way we see ourselves
and view ourselves. It's economy that complements what is happening
in the rest of the region. We very much look
at what's happening and we invite companies to come and
(15:26):
use Bahrain as a base to test those concepts and
those ideas that they have. Again, it's a small country,
you can do our country wide roll out really easily.
But also we always look at our competitive advantage. For US,
cost competitiveness is really important. We continue to monitor how
much it costs not just to set up your business,
but also for your moving people internationally, how much does
(15:47):
it cost for them to live there, to put their
kids in school, to use the health system and Bahrain.
The other thing that we have is connectivity. So speaking
of the US, we have a free trade agreement with
the US. We have this a seput agreement, but also
we have free trade agreements and investment agreements with about
thirty percent of the world GDP because as a small country,
we have to make sure that companies can reach wider
(16:09):
consumer base. But we also what's really important for US
is that we work very closely with the private sector.
So the government and the private sector works as one
unit in Bahtray and we have that ethos off the
team betraying concept. And as I as I said, we
always start with what do you need and how can
I support you? And we have examples of where we've
(16:31):
introduced a new legislation or a new regulation in response
or request by the private sector. And maybe AWS is
a great example in that case because they've said, what
can you do for us in terms of the regulation,
and we said, how about data jurisdiction law where the
data hosted and behraanustrated as an embassy, so me as
a better I cannot access that data and it actually
could only be accessed by a US court request.
Speaker 2 (16:55):
You mentioned Amazon, and I'm looking at a report coming
from mortor Intelligence talks about some of the big tech
companies in Bahrain. Oracle, Amazon, IBM, Microsoft are among them.
Here in the US, we've been thinking a lot about
immigration with regard to the H one B visa issues
that have come up in recent weeks and the confusion
here in the US about that, and I think one
(17:16):
piece of the conversation that has been lost is certainly
the US wants to make sure that it employees or
that companies are paying for it. Sounds like paying for
these visas. Is there an opportunity for Bahrain to come
in and take some of that talent that could work
at a US tech company that would be from outside
of the US, and instead work at a US tech
(17:36):
company in Bahrain.
Speaker 7 (17:39):
As I've said, our human capital for US is really
really important. So we not only invest in the human
capital in Bahrain, and we have a lot of programs
we subsidize training for Bahrains, but it's also very important
to US as a country in economy to bring in
international talent. So a few years back, coming out of COVID,
as part of our economic recovery plan, we've launched our
(18:01):
Golden Residency Program, which allows investors, retirees, entrepreneurs, talent to
come in betterin stay for an extend period of time.
It's ten years, renewable automatically for them and their families,
and that allows a lot of international companies should they
wish to do. That's but also a lot of individuals
to move their people into beatying and take advantage of
(18:23):
not just the program, but also all of the other
business benefits that you get by being in Hey.
Speaker 4 (18:29):
One of the things I want to ask, and I
know high tech and technology is certainly of interest and
I'm just curious when it comes to big AI data centers.
I mean, as you would imagine, your excellency, we spend
so much time talking about the build out, the investments,
the money flowing into anything and everything data. Curious if
you guys, if the country and your office are considering
(18:52):
backing AI data centers such as what we've seen and
cutter that they've done with Blue Owl.
Speaker 7 (18:57):
Yeah, absolutely, it's important. I mean it's coming, it's not
it's already there. So we've had a WS set up
the first hyperscale data center in the Middle East in
Beatty in a few years back. And again, as I mentioned,
the reason they chose better is because of the regulation,
but also the strength of the human capital you mentioned Oracle.
But we also have some regional and local investments for
(19:18):
data centers, so we're definitely seeing growth in that region
where international companies that wish to use that and take
advantage could come and plug and play and take advantage
of the data centers already available. But really because of
the demand, there's a lot of potential and opportunities for
companies that still wish to have data centers in the
region to come also and take advantage of that.
Speaker 4 (19:42):
So I am curious. You said very optimistic. What's the
biggest hurdle obstacle right now in you attracting further investment.
What's the thing that's difficult in terms of what you do.
Speaker 7 (19:55):
I wouldn't say difficult, but we have to have a
lot of conversation to explain the business environment and talk
about their characteristics, what makes us different. But it's all
very very exciting, So we don't mind that at all.
Speaker 4 (20:09):
And I also do think about you know, something that's
certainly been front and front of mind for us excuse me,
and certainly coming off the UN General Assembly, and you know,
watching the turmoil that we've seen in the in the
in the region, how important is that to the folks
that you're talking with. It's companies, big name companies that
we know other investors in terms of investing. Obviously not
(20:31):
every kingdom or area within the Middle East is the same,
but you know, the turmoil and certainly the war that
we've seen between Israel and Hamas, how much of that
the political situation sometimes slows things down.
Speaker 7 (20:46):
You absolutely need safety and stability for companies to thrive,
for the economy to grow, and for us in Betty
and the region as a whole. We've always advocated for
a piece, We've always played a part on a regional level,
on an international level to advocate for piece and stability,
and we continue to do that. At the same time,
(21:08):
the countries are very much focused on their economic strategies,
economic plans, and we continue to have conversations with companies
and for those that have any doubt, we just say
come and talk to us. We will show you, We
will explain to you that the current business environment, but
we are blessed to have to have a very stable
and a safe business environment.
Speaker 4 (21:28):
I have one last question too, and I'm just curious
when you do have questions with investors, obviously well known companies,
big companies. I'm sure folks do their homework, but what
is the thing that you think they don't really understand
about Bahrain And in terms of the economy and what
you guys are doing.
Speaker 7 (21:44):
I think how diversified the economy is something probably people
do not realize. And given the journey, and we've had
a long journey off reform, our journey in reform, in
achieving the diversification that we've achieved today with eighty five
percent of the economy being not oil, with a large
manufacturing sector in nuge for financial services sector and others
as well. It's something people do not realize and what
(22:06):
that means is for years and years, for decades, were
built knowledge and know how in our people, in our infrastructure,
in our regulation and the way we do business and
the way we work with the private sector as well.
So that's something that I think always surprises people when
we talk to them.
Speaker 4 (22:22):
Well, we're so glad we could get some time with you.
We know we had some technical difficulties earlier, so we
really appreciate you sticking around and so that we could
have a conversation.
Speaker 3 (22:31):
Thank you. Thank you again.
Speaker 4 (22:32):
Her excellently nor bent Ali al Kulaife. She is CEO
of the Bahrain Economic Development Board, also the Kingdom's Minister
of Sustainable Development.
Speaker 3 (22:41):
She's joining us from our LA bureau.
Speaker 1 (22:44):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five ys During
that listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (22:58):
Wall Street had long feared that President and Trump would
follow through with threats to impose aggressive drug pricing policies,
eroding the pharmaceutical industry's profitability and depressing share prices. Those fears,
though largely laid to rest this week after Pfizer cut
a deal with the White House, the company negotiating a
three year reprieve on drug import tariffs in exchange for
a promise to reduce what it charges Medicaid. Here's why.
(23:20):
As your CEO Albert Borla at the White House yesterday
alongside President Trump.
Speaker 8 (23:24):
The big winner of this deal clearly will be the
American pace.
Speaker 3 (23:29):
There is no doubt about it.
Speaker 8 (23:31):
They are the ones that will see significant impact in
their ability to buy medicines. But I would argue that
it is not the only winner. I think who else
is a winner here? It is American innovation and American economy.
Speaker 5 (23:47):
We're going to have another meeting next week on this.
Speaker 6 (23:49):
We have another great company coming in similar kind of numbers,
but we're going to show you some one thousand percent
drops in prices.
Speaker 3 (23:58):
There has never been anything like this in the history
of medicine.
Speaker 2 (24:02):
That was President Trump you just heard, and Pfizer CEO
Albert Borla at the White House yesterday. Pfizer shares surgeon
close to seven percent yesterday. They're up more than seven
percent today. I just hope my high school math teacher
is not listening about one thousand percent drop.
Speaker 3 (24:16):
Yeah, because we're not going.
Speaker 2 (24:18):
To get into for another day the math mathing there,
but it's for another day.
Speaker 4 (24:22):
I want to bring in drugstocks overall in the last
two days, not just Pfiser up about ten percent in
the past two days, the whole group.
Speaker 2 (24:29):
Let's bring in Damien Garde. He's Bloomberg News health reporter.
He's been very busy. He's taken some time to join
us here in the Bloomberg Interactive Brokers studio. Are drug
price is going to go down as a result of this.
Speaker 9 (24:40):
For the vast majority of Americans. No, I sincerely doubt it.
There's no reason to conclude that based on what we
learned at least yesterday from Albert Borla in the Oval
Office and the promises that Pfizer has made. We can
get into the nitty gritty, but I think the main
thing the promise to Medicaid. An important caveat there is
that that patients on Medicaid, Medicaid already pays the lowest
(25:03):
price available in the United States. It is legally obligated
to get that. So the notion that Pfeiser making a
commitment to lower that further would change the out of
pocket costs for patients, I just don't think there's much there.
And furthermore, in terms of Pfiser's business, only about five
percent of that business accounts for doing business with medicaid.
That's where business probably too many times. And I think
(25:25):
the main thing that should drive the reaction here is
that in this announcement, Pfizer, which has a fiduciary duty
to maximize its profits and to update shareholders on its guidance,
did not update its guidance. The company said this thing
that ostensibly means we're going to make less money, at
least that's how the president characterized it, but didn't actually
say we're going to make less money, which of course
(25:45):
legally they're required to do. I feel like that through
line is maybe the lens maybe not cynicism, but the
lens of reality that people should look at these announcements.
Speaker 2 (25:54):
Look no further than the share price reaction.
Speaker 4 (25:56):
I said, yes, sir, I'm like, why is this stock
rallying They're going to make less money? I just made
no sense everyone's like, well, it's all about the tiiff thing,
and I'm like, true, and that is certainly a part
of it.
Speaker 3 (26:06):
But I'm like, they're going to make less money. How
can this be a good thing?
Speaker 9 (26:09):
Right? So, I think the relief that you're seeing in
the share price reaction is twofold or maybe even threefold one.
It alleviates the threat that the Trump administration was really
going to come down hard with an aggressive policy that
would be on the books, that would really constrain what
drug companies could charge. Instead, we get this voluntary, relatively
vague promise from Pfizer that is expected to set a
(26:30):
template for the company's peers, Eli, Lilly, Murke, etc. They
will probably all have their day at the Oval Office
to do a similar kind of dog and pony show.
And then furthermore, what's established is that if you make
those promises, you get a reprieve from tariffs. Which is
the other kind of overhang for the entire sector, is
this fear that the import of medicines from Europe would
face levies. Of the President has said one hundred two
(26:50):
hundred percent. The notion that if you just go out
there and say we're going to follow what the administration
wants on drug pricing. We get that alleviation.
Speaker 4 (26:57):
DEBI just quickly, just to be fair, I mean, viser
come back and said this is going to impact us
financially or it's not going to haven't gotten any clarification
from the company on this.
Speaker 9 (27:07):
They have not. There hasn't been a follow on filing
with the SEC kind of making clear that they're restating
any guidance. And furthermore, what they've said is that the
terms of their agreement with the White House are confidential,
so respectfully, we can only conclude what's been said publicly.
Speaker 2 (27:20):
Damien, sit tight. We're going to bring in Angie Frank.
She's CEO of the private health company calder Rose. The
firm does drug discount management. It uses AI as well
as communicating with different parties involved in the negotiating process
to get consumers the best prices. She joins us from Wisconsin. Angie,
I'll ask you the same question that I asked Damien,
because you're right in the middle of this drug pricing thing.
(27:42):
Are drug price is going to come down as a
result of what we saw at the White House yesterday.
Speaker 10 (27:47):
I think what Damian said there's some truth to that.
I think at the end of the day, we won't
all feel it immediately, but I do think drug prices
are going to come down. I think the announcement yesterday
is a big change to this system, and it is
the first step in what I think will be multiple steps.
We're certainly opening up more channels for patients to access
(28:10):
their drugs at more affordable prices. And I think the
underlying the medicaid price that states currently pay is going
to come down. Based on Pfizer's announcement yesterday.
Speaker 9 (28:24):
Well, that's interesting. What would the mechanism for that be,
because that's what I found myself wondering even yesterday in
the announcement, which granted was lacking key details for obvious reasons,
is very new, but why would this kind of set
in motion a snowball that would end with patients paying
less at the pharmacy count?
Speaker 5 (28:40):
Yeah?
Speaker 10 (28:41):
Yeah, so I think, you know, if you look at
the overall list prices starting to come down to an
MFN like number, and that opening yes most favored Nations exactly,
and that opening up more channels for patients to access
their drugs at lower rates. I do think the direct
(29:03):
model that the website that was also announced yesterday, which
opens up a channel for patients to be purchasing directly
at lower costs, could really have a ripple effect on
the way benefits are offered and how employers and self
insured employers start constructing benefit plans that give their employees
(29:23):
access to drugs which may bypass other players in the system,
the traditional players in the system, middlemen that have been
making money off of off of drug pricing and discounts
and rebate models that really didn't benefit patients directly. So
I think I think the new channels being opened up
and the new price point at Max's most favored nation
(29:47):
will over the longer term, have a pretty significant impact.
Speaker 4 (29:51):
Nothing confuses me as much as like picking up prescription
and q pons and pharmacy benefits. And I don't know,
it's just kind of crazy, Damien. The PBMs pharmacy benefit managers,
they are being looked at closely like another layer that
drives up costs, and so that is certainly part of
the narrative here.
Speaker 3 (30:07):
So does that potentially.
Speaker 4 (30:09):
Remove that in what we heard from the President and
the CEO of Pfizer yesterday, But then throw in this
trump OURX, Like what role is that play.
Speaker 9 (30:19):
That we need to see play out. But I think
through the eyes of Pfizer and certainly people in the
pharmaceutical industry, there is an optimism and maybe a hope
that the agreement announced yesterday, if in fact it's a
template for other companies, will shift the White House's attention
away from pharmaceutical manufacturers and toward the PBMs and the
other middleman that you mentioned. And I think to Angie's point,
(30:39):
there is a potential that trump our X, this sort
of direct to patient offering that we've heard about. You know,
there are arguments is suggest how popular that might be,
How many people who don't have insurance would be willing
to pay out of pocket hundreds or even thousands of
dollars a year for a medicine.
Speaker 2 (30:54):
Is that what trump our X would offer is an
insurance like this is not covered by insurance.
Speaker 9 (30:58):
It would be a cash pay business. And so we
assume that the majority of customers for it would be
uninsured or underinsured, because otherwise they could get the drugs
much cheaper through their insurance carrier. But the opportunity, and
I realize we're getting kind of in weeds here. The
opportunity is that if one of those direct offerings were
selling instead to employers rather than patients themselves, then they
would be truly bypassing the middlemend that exists. This is
(31:20):
sort of the Mark Cuban model that's drugs exactly. So
if Trump and you know, I'm using my imagination here there,
this is not something anybody's announced. If trump Orex, the
website that has not yet launched but has been described,
were to expand its aperture to include employers, then we
could be talking about legitimate savings for all parties involved
and a huge change to the way it's done.
Speaker 2 (31:40):
Now, Angie, come on back in here and talk a
little bit about the innovation side of things, because Albert
Gourla at the White House yesterday said it's not just
the American patient that who will be a big winner,
but it would also be the American innovation and the
American economy. Perhaps there are those out there who might say, okay, well,
if companies drug companies aren't able to make as much
(32:00):
money from the drugs that they sell, R and D
in this space might suffer. We know it's expensive to
run the clinical trials and to do the the R
and D. What do you think it means for American
innovation when it comes to pharmaceuticals, well.
Speaker 10 (32:13):
I think it was great. I agree with Albert on
all points. I think it's great for America that we're
moving manufacturing and that level of innovation, job creation, et
cetera to the US. When you when you simplify the
supply chain and the pricing mechanisms for our current you know,
(32:35):
drug pricing model. When you simplify that today, there's that
we lack so much transparency and how prices are established
and who gets which price. And to your point earlier, Carol,
where you mentioned you know, the coupons and the copays
and all these things are so confusing. They're confusing by
by design. People are making a lot of money off
(32:55):
of that confusion and that opacity. When you simplify and
I have more transparency, you have less waste in the system,
and that waste will feed the top of the funnel.
That will be dollars that can go directly to the
top of the innovation funnel and enable manufacturers to continue
to work on and innovate more drugs and more medication
(33:18):
therapies that help patients with life saving and life changing conditions.
So it takes two and a half billion dollars to
bring a drug to market, so every dollar of waste
compromises our ability to invest in more and more therapies.
So I think it's going to have a tremendous impact
over the long run.
Speaker 4 (33:37):
And you just got about a minute left. I mean,
just talk to us about what you do. It's a
data engine, it's information you have. It looks like a
couple of different constituencies that you work with, But just
give us an idea and what that tells you about
kind of the drug industry and drug pricing industry what
you have been seeing.
Speaker 10 (33:55):
Yeah, we really have a technology platform will re ingest
you know, large volumes of data. We apply logic and
rules around various pricing programs and discounts and rebates, and
then we ensure price integrity that the right price is
going to the right set of patients and the right
(34:16):
for that particular therapy. So we're really driving quite a
bit of price integrity in the system. The constituents that
we work with include both pharmaceutical manufacturers and providers, and
we really believe fundamentally that ensuring that the providers and
the manufacturers can work more closely directly together, benefits Americans,
(34:38):
benefits patients, benefits innovative.
Speaker 3 (34:41):
Ten seconds, Damien, who we're going to hear from next?
What's CEO?
Speaker 9 (34:44):
The expectation is that Eli Lilly will be the next
company to take the stage. The President has said their
name constantly without totally giving it away. But like I said,
the expectation also is that all of the major peers
will have their day at the OLAL office.
Speaker 3 (34:55):
All right, well, we will be watching, listening, reading your reporting.
Thank you so much.
Speaker 4 (34:58):
Angie Franks. Of course, CEO of calderis joining us from Wisconsin.
Damien Gardey, health reporter at Bloomberg News. Here in our
Bloomberg Interactive Brokers studio, this is Bloomberg Business Week Daily.
Speaker 2 (35:09):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (35:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
this listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us.
Speaker 4 (35:28):
Live on YouTube. Stock's hire A bit of a rally underway.
We're staying near our highs of the session. On the
equity side of things. We've seen yields move back a
bit on expectations that yes, indeed, we'll get another FED
rate cut later on. This month, we did have some
weak private jobs data we're talking about ADP, those numbers
coming in definitely below estimate street estimate.
Speaker 2 (35:51):
So shedding of thirty two thousand versus estimates of a
gain of fifty one thousand.
Speaker 3 (35:56):
That's a bit of a reverse.
Speaker 2 (35:57):
That's exactly where I want to start with. Alexis Brown,
Robert's COO and portfolio manager at Alexis Investment Partners. They've
got around one hundred and eighty five million dollars in
assets under management. She's back with us from Montgomery, Texas. Alexis,
welcome back. I want to start with the labor market
and your view on it. Thirty two thousand job shed
in private payrolls today, fifty one thousand added was the survey.
(36:20):
Is the labor market cracking?
Speaker 4 (36:23):
Well?
Speaker 9 (36:23):
Hi, First of all, thanks so much for having me
back on.
Speaker 11 (36:27):
No, I don't think it's necessarily cracking. It is definitely
weakening a bit, but we're heading into a different seasonal
period once we get through October, so it'll be interesting
to see what happens from there. I think the reason
why job numbers were being a little bit more looked
at today is it because of the government shutdown and
(36:47):
the probability that we won't get a job number on Friday.
But I think there's a lot of other factors happening
in markets that are going to affect things more than
necessarily the job market death.
Speaker 5 (37:00):
And we'll have to see what.
Speaker 11 (37:01):
This spurs the FED to do, and if this is
just a little bit more fuel to the fire for
the FED to continue cutting rates.
Speaker 3 (37:09):
All right, So let's talk about those factors.
Speaker 4 (37:10):
And I guess what I'm always most interested when we
talk to somebody who is managing money, big or small,
if you will, is what their clients are saying, what
investors are saying.
Speaker 3 (37:19):
Are they giving you new money to.
Speaker 4 (37:21):
Invest or they're saying, let's back off, let's put something
in something safer. Are they buying gold, because it seems
like everybody's buying gold this year. So give us some
color about what you are doing or what your clients
want to do with their investments right now.
Speaker 11 (37:35):
Yeah. So we're tactical managers, so a lot of our
clients and all of our clients really have a lot
of trust in us to make the changes necessary in
their portfolios and really adapt to changing conditions. So we
have seen clients adding new money to portfolios, especially as
we've worked through the low's last April and continuing onward.
(37:57):
For example, in our tactical portfolios, we've really changed our
equity positions throughout the past year, going from over over
lead on in equities slightly getting all the way up
to almost ninety percent on a seventy percent benchmark equity
portfolio to now being slightly underweted about sixty five percent,
and within those having a lot of fluctuations as we've
(38:20):
seen markets change, and respecting the fact that we're up
four percent in the past month, seven percent in the
past quarter, fifteen percent year to date, and just law
of average when we're aiming to do like a ten
to twelve percent on that seventy percent benchmark equity exposure.
Having that ability to change our equity as well as diversify.
(38:41):
We do own gold, in fact, that's our largest position.
We're at just under nine percent gold right now in
that tactical portfolio.
Speaker 2 (38:51):
I want to understand how much upside you see in
the S and P five hundred right now or US stocks,
I guess more generally, Bank of America out with a
note that it says the sentiment indicates that it's hardly euphoric.
They essentially have this indicator, it's the cell side indicator.
It retracts recommended allocations to US equities among different Wall
Street strategists. It remained flat in September fifty five and
(39:13):
a half percent compared to the dot com bubble in
two thousand saw cell side equity allocations search above seventy percent,
and then in two thousand and seven clearing sixty five percent.
So essentially BAA saying there's more room to run? Do
you agree?
Speaker 11 (39:28):
I would agree. I do think that there is a
lot of cash on the sidelines. When you talk about sentiment,
that's a really interesting story. We tend to look at
the AAII Bull Bear sentiment ratio survey, and while there
has been an uptake in bulls, there has actually been
even more of an uptake in bears compared to historical averages.
(39:48):
So there is some room to run on that front. Now,
we aren't necessarily euphoric at this point, Like I said,
we're about it in neutral allocation, just respecting how far
we've come so far this year, so we are looking
still to participate in future gains. Heading into this year,
we did a Fibonacci retlacement just simply looking at the
(40:11):
breakdown in April to the lows and if we were
to have an equal move back up, and that got
us to about a sixty four hundred to sixty seven
hundred range on the S and P. Obviously we're knocking
on that sixty seven hundred today, but I did also
look at potentially reaching seven thousand and coming back. So
I think it'll be interesting to see from here where
(40:33):
we wind up. But there are a lot of reasons
to still be positive on the market, but perhaps not
quite as strong as we were heading into this year.
Speaker 3 (40:43):
All right, So what's your biggest worry in this environment?
Speaker 4 (40:46):
One of the things that we talked with when we
began our show, and we had a conversation with yes
Alan McCartney over at UBS. She actually has alignment partners
at UBS, and it was like, the complacency that we're
seeing the market is really low, and that doesn't need
to be certainly the indicator that tells all, but there
is feels like there's a lot of folks thinking that
(41:09):
this momentum will continue. What is the thing, what is
the thing that you keep your eye on that says that, well,
maybe there is problems like the you know, today's labor data.
Speaker 11 (41:20):
So I would think that the main thing that we're
looking at right now that gives us a little bit
of pause is just valuations being a little bit rich
and once again just respecting how far we've already come
in such a short time period and just recognizing that
perhaps that means that we'll have some room to pull back.
And honestly, there's a lot of strong parts to the
(41:42):
market right now, though, as you pointed out, momentum. We
are strong believers in momentum and innovation, and it tends
to be that if there's a strong Q three which
obviously this was a very strong Q three in markets,
that that momentum tends to carry forward through Q four.
That being said, we are still watching evaluations and the
(42:03):
different moving factors, for example, federal reserve policy, seeing how
that affects things going forward. If there is a pullback
heading through Q four, we're probably going to be biased
to actually buy into that, although more patient than we
have been prior to reaching these valuations, but if we
(42:23):
run up a lot through Q four. That would probably
be our indicator to pull back exposure a little bit.
Speaker 4 (42:28):
Hey, one last thing, just got thirty forty seconds here, Alexis,
what about that AI trade? How much are your investors saying, yeah,
give me exposure or and if so, how do they
want that exposure?
Speaker 3 (42:40):
Just quickly. We like AI, Like.
Speaker 11 (42:42):
I said, big big proponents of innovation. We're not in
the business of finding the next Apple and Google. We'd
rather go ahead and invest in those strong fortress balance
sheet companies. But really the exciting part of AI to
us is how it will affect the market in general
and all these other companies, say a Walmart, a Caterpillar,
that will use AI to boost productivity rather than specifically
(43:05):
trying to find that sexy AI play it.
Speaker 3 (43:07):
SAP, all right, Going to leave it there.
Speaker 4 (43:09):
Hey, good to check in with you, Alexis Brown Robert
COO and portfolio manager at Alexis Investment Partners around one
hundred and eighty five million dollars in assets under management,
joining us once again from Montgomery, Texas.
Speaker 1 (43:21):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(43:42):
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(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Well, day one the government shutdown, Day one of the
fourth quarter.
Speaker 3 (00:36):
As well, and it's been an interesting one.
Speaker 2 (00:39):
How long is it going to happen? How long is
it going to go on?
Speaker 4 (00:41):
I think it's a big question, right and I think
the duration of this shutdown, you know, that is going
to be a big deal in terms of the impact
we will certainly see. And I think we're all waiting
and watching because the concerns have been whether or not
we start to see workers being cut as the President
has said he would do.
Speaker 2 (00:57):
Yeah, the President well rather, White House Judge Director Russell
Vote is planning to swiftly dismiss federal workers, with layoffs
to happen within two days imminent very soon. According to
White House Press Secretary Caroline Levitt, We're going to continue
to bring you the latest from Washington, DC, and that
includes checking in with Nathan Dean. He's Bloomberg Intelligence senior
policy analysts. He joins us from the nation's capital. Nathan,
(01:19):
you were I don't remember how optimistic you were yesterday.
To be honest, I have to be honest with you.
I feel like you were optimistic in the early part
of the day, and then in the later part of
the day you got less and less optimistic. And certainly
what ended up happening was the government did shut down.
Is there any is the daylight decreasing between Republicans and
Democrats right now.
Speaker 5 (01:38):
At the leadership level.
Speaker 6 (01:39):
Look, they're both in the pasture right now where they're
trying to blame the other. And yesterday it was two
forty one when I told my first client that I
thought it was going to shut down. But I still
feel that it's a little optimistic to say that we
think that this shutdown is going to end probably within
ten days. Now polymarket has it eleven point five days,
So that's the general can you know consensus out there,
But we did see the first time today some bipartisan senators,
(02:03):
not at the leadership level, but at the working level.
I would call it gag on the Senate floor to
potentially talk about a short term CR combined with maybe
some type of effort on Obamacare subsidies. Now they left
for today, they're out for Yamkapor. They won't come back
until Friday. I think that you're going to see more
political rhetoric take place on Friday, and you're not going
(02:23):
to see serious negotiations till over the weekend, because I
remember the House Republicans are still aren't here.
Speaker 5 (02:29):
They come back next week.
Speaker 6 (02:31):
But all that has to happen and keep the government
open is five Democrats need to go and support this.
Because yesterday's vote three Democrats or two Democrats and an
independent that caucuses with the Democrats ended up voting for this.
So Senator Schumer only has a few more days until
I think the pressure for more Democrats will be to
go and say we're going to reopen the government.
Speaker 3 (02:51):
You mentioned CR. Of course that's a continuing resolution. Nathan.
What I'm wondering is are the democrats?
Speaker 4 (02:56):
I mean, what are people saying or what do you
think as you watch the government whether it would have
been democrats or Republicans. Are democrats in this case in
this instance kind of right to put their foot down
on an issue that's very important to their voters or
their constituents in terms of healthcare. And if they don't
put their foot down and they say, all right, let's
not shut down the government, let it go, you guys
(03:17):
say you'll talk to us. Are they silly in not
kind of getting a deal or you know beforehand, you know,
getting some kind of commitment. So an issue that they
say is very important to their American voters. And let's
remember go back to the election. You know, half voted
for the president are a little bit more than half,
right if you look at the popular vote, and the
other half did not.
Speaker 6 (03:39):
You know, shutdowns occur when both parties think that it's
politically advantageous for to shut down to occur. And I
think that's the situation we're still in. There's a lot
of folks that blame Republicans for this. There are a
lot of folks that blame Democrats for this. But from
the democratics perspective, there were two goals I think going
into the shutdown. One was for Senator Schumer to rally
the troops to be seen fighting President Trump, and the
(04:00):
second was to bring attention to the issue of the
Obamacare subsidies that expire at the end of the year. Now,
Senator thun has said that there's going to be no
negotiation on Obamacare subsidies, at least resolving that issue while
the government is shut down, and I believe him on that.
But the Democrats have achieved their first goal, or will
within a few days of being seen as combating President Trump.
The challenge for Senator Schumer at this point is what
(04:22):
is the exit strategy? How do we get out of
this government shutdown? And that's why I think that sometime
next week you will see, like in an unofficial agreement,
unofficial handshake, if you will, that there will be an
effort to deal with these Obamacare subsidies. Because I think
there are some folks in the Republican Party, President Trump included,
who recognize that it may not be beneficial in an
election year for Obamacare subsidies to go up for average Americans.
(04:46):
But let's also remember that the bulk of the Republican
Party most likely wants this to go away. So even
if there is an agreement that says we're going to
kick the candidate till November, these shutdown fights are going
to continue. Probably into the beginning of next year.
Speaker 2 (05:00):
He is into the beginning of next year. Does it
affect the mid terms? I was talking with some colleagues
earlier today, and it seems like voters, like anecdotally, they
don't really remember shutdowns.
Speaker 6 (05:11):
Now, they don't, especially not this far out from November.
I mean, look, it's October first, and we have a
year and some change until the midterms. I don't know
many people are going to go into the voting booth
and say, hey, remember what happened back in October of
last year, And remember the Tea Party somewhat did this
back in twenty thirteen, and the Republicans ultimately ended up
gaining nine seats in the following midterm election of the
(05:31):
following year.
Speaker 5 (05:32):
But I will say is.
Speaker 6 (05:33):
That it's a certainly about momentum. And the Democrats right
now have a very poor approval rating, It's around thirty percent.
And so from the Democratic perspective, why don't we shut
this down? Why don't we rally the troops and rally
the progressive support. Let's support our base, and then we'll
spend the next year in change actually trying to build
some momentum.
Speaker 5 (05:51):
So I can see the case for.
Speaker 6 (05:52):
Why the Democrats would want to shut the government down
because there is plenty of time for them to come
back and get messaging onto other issues.
Speaker 4 (05:58):
Hey, Nathan, what about you know President jd Vance's downplay
plans to use the shutdown to slash services. He says
Republicans don't want to lay anybody off, and that Democrats
would be held responsible for any negative consequences of the
government closure. President Trump has come out, He's been very
clear right talking about, you know, the ability or you know,
to cut some of the federal government jobs. Russell Vote
(06:19):
has certainly we've seen that as well. So are we
expecting that to happen? And if it does happen, you
know who is responsible for that.
Speaker 5 (06:30):
So I think you're going to see signs of that.
Speaker 6 (06:32):
You know, Russell Vote even said just in a House
Republican caucus earlier today that layoffs are and I'm paraphrasing
your imminent in the next day or two. I think
there's some probably some truth behind that. You would also
see additional cancelation of projects. The eighteen billion dollars the
earmarked for those who in New York City in terms
of infrastructure projects, but ultimately it's going to be President
Trump that makes this decision. And I think that President
(06:54):
Trump realizes that widespread layoffs of government workers, it's such
which a broad nature, is not going to be popular
with the American populace. You know, Joe Matthew in Balance
of Power has had several Republicans on this week where
they've asked President Trump to bring a scalpel to this
as opposed to a sledgehammer. So you'll probably see a
notifiaications go out and you'll probably see signs. But as
(07:16):
of right now, I still think it's political posturing not
so much actually a real layoff threat. But again, time
may change, and if this is the if it does happen,
I think it actually could push parties further apart and
potentially extend the shutdown even long.
Speaker 2 (07:30):
Well, we did a deep dive yesterday, as you know,
on Russell vote and his role at OMB and the
DNA that he brings to this role. Does he take
a scalpel when it comes to laying off federal workers?
Speaker 5 (07:44):
Not if he gets his wish.
Speaker 6 (07:45):
I mean, obviously this goes back to Project twenty twenty
five and this idea that where the government is extremely bloated.
Speaker 5 (07:51):
And you know, former.
Speaker 6 (07:52):
OMB director mcmulvaney was on Balance of Power a couple
of weeks ago, and he was jubilant and saying, look this,
I'm excited for RUSS vote because you're going to be
able to dismantle a lot of apparatus of the government.
I'm paraphrasing his works there. But I will say is
that it's not easy to do. Both sides will often
come to Washington and saying, look, there's bloat.
Speaker 5 (08:12):
There are things that we need to cut.
Speaker 6 (08:13):
But it's not easy to do so because there are
things like regulations and statues and laws. And if you
end up cutting folks like we saw what happened with
Doge earlier this year, and you break the law, or
at least you're breaking regulations, or you're breaking what the
American people want.
Speaker 5 (08:26):
You to do, you have to end up hiring them back.
Speaker 4 (08:29):
Hey, Nathan, really quickly fifteen seconds. I mean, who is
President Trump listening to in all of this?
Speaker 5 (08:34):
Jd.
Speaker 4 (08:35):
Vance was very much out front and center and very
much in command earlier today talking about the shutdown. This
is RUSS vote. Just got about ten seconds. Who is
the president listening to?
Speaker 6 (08:43):
Very quickly I think the President is listening to himself,
and I think the President's going to make the decision
that he wants to make.
Speaker 4 (08:49):
All right, kind to leave it there, you rock. Nathan Dean,
Bloomberg Intelligence Senior policy analyst jointing US from Washington, DC.
Speaker 2 (08:56):
Stay with us more from Bloomberg Business Week Daily coming
up this.
Speaker 1 (09:04):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five 's during
this listen on alvl karplay and Android Atto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 4 (09:17):
Bahrain has emerged as a key economic and security partner
for Washington, hosting several US military assets, including the US
Navy's fifth Fleet and the Branch's Central Command. And you
might recall over this past summer a meeting at the
White House where Bahrain's Crown prints pledged seventeen billion dollars
worth of investments in the United States. While our next
guest is focusing on bringing investments into Bahrain. Joining us
(09:41):
is her Excellency nor Bent al al Kulaif.
Speaker 3 (09:44):
She is CEO of the Bahrain.
Speaker 4 (09:46):
Economic Development Board and also the Kingdom's Minister of Sustainable Development.
She is in our Bloomberg News La Bureau. I'm so delighted,
your excellency that we could spend some time with you.
Bloomberg has reported a lot about the Middle East at large,
how it's transitioning, taking moves to broaden out the region's economy,
making investments in sports, tourism, technology, and a lot more.
(10:09):
Tell us about for Bahrain, about attracting investments in the
digital and tech world, your mission, who has invested so far,
give us some size and scope if you would.
Speaker 7 (10:20):
Absolutely. First of all, Carol's exciting to be with you
today and looking forward to the conversation as well. So
thank you so much for hosting me today. And I
always find it very helpful to start with maybe a
thirty second elevator pitch about beading. For those that are
not familiar with the country. Bahrain is a small island
part of the Golf Corporation Council. As a country, historically
(10:42):
it's been a strategic maritime state, so it was always
considered as a transit, as a hub, as a gateway
to the region and a transit for trade growing east
and west. And that's also started because of the perling
industry in Bahrain. But fast forward till today, we still
readin that role and that really underpins our ethos or
(11:05):
our DNA of being business friendly and we need to
cut our economy today people think Bahrain it's an oil
exported country. In reality and on the ground, our GDP
is eighty five percent non oil. Financial services sector is
the largest contributor to our economy, followed by manufacturing. But
our other strategic sectors that we focus on our tourism, logistics, technology,
(11:29):
but also we have the education and the healthcare. So
you can see that diversification was achieved through attracting investment
into the country, being very open and allowing investors to
come and take advantage of the region and what's happening,
and using Bahrain as their testing ground as their base.
So it's been really interesting times, especially with the growth
(11:49):
that is happening in the region at the moment.
Speaker 2 (11:51):
Well, you're in our Los Angeles Bureau now ostensibly in
Los Angeles to help attract investment to the country. Can
you talk a little bit about who you're meeting with
the type of investment that you're hoping to attract.
Speaker 7 (12:04):
It's been a variety actually of companies and sectors that
we've had conversations with, and I have to say it's
been very, very interesting. We've always in Bahrain admired specifically
if the technology sector of the US and having direct
conversations with theirs, innovators, with the founders or the people
that are really close to not just what's happening at
(12:24):
the moment and what consumers have, but really also what
is expected to come going forward. So a lot of
discussions about technology and how Batratan can support that, but
also we've had discussions on manufacturing. We've had discussions even
on the film industry, and we do that. And the
way we look at Bahrain and that we were able
to talk about those different industries is because when we
(12:46):
assess our market in Bahrain, we look at various things.
We look at what is the infrastructure that I have
at the moment, what are the regulations that I have,
what is the human capital that I have? And how
can that serve international companies in various sectors is and
what would be beneficial for them to come and take
advantage of the business environment.
Speaker 2 (13:06):
Is it a difficult thing to do in a world
that is increasingly going I don't want to say the
world's going America first, but countries are increasingly looking inward.
You mentioned the film industry and meetings that you're having
out there. Just this week, the President said he's imposing
a one hundred percent tariff on foreign made movies. How
much more difficult does that make your job trying to
attract those folks to Bahrain.
Speaker 7 (13:29):
Look, we acknowledge and we see the President Trump is
doing in terms of attracting more local investments. And actually,
if you look at the region and Betting and the
rest of the GCC, we actually mirror that sentiment. A
lot of the countries are trying to bring in investments
into the region. But we also believe it's not as
zero sum game. Some companies would need to have presence
(13:52):
in both regions, not necessarily just one, in order to
achieve the results that they want, even locally here in
the US, and we're talking to some of those companies
that need the input. Other companies actually need to be
closer by nature to their consumers, and giving the growth
in the demand and the growth in the consumer base
in the Middle East and specifically the GCC, a lot
of the companies would need that presence closer to the consumer.
(14:15):
So we're having a lot of conversations with companies about that,
but we very much understand what is happening here in
the US, and we try to do our best to
support those companies. The first thing we do with companies
is ask what are your growth plans, what are your strategies,
how can we support you in the region, and what
can Barin do for you, Because we honestly believe that
(14:37):
their success means our success. So their success in the
region means they will stay here for the foreseeable future,
which means they've become part of our ecosystem and part
of our economic development.
Speaker 4 (14:49):
Your excellency, I'm curious to what's the competitive landscape as
you buy for investments in capital. I mean, yes, your
country versus other Golf nations, they've got similar ambitions we
report about all the time.
Speaker 3 (15:01):
So what is that competitive landscape like?
Speaker 7 (15:05):
First of all, it's absolutely exciting to see all of
the countries having their Vision twenty thirties, Virgin twenty fifties,
really focusing on economic development, and the region really has
complementary economies, certainly for betraying the way we see ourselves
and view ourselves. It's economy that complements what is happening
in the rest of the region. We very much look
at what's happening and we invite companies to come and
(15:26):
use Bahrain as a base to test those concepts and
those ideas that they have. Again, it's a small country,
you can do our country wide roll out really easily.
But also we always look at our competitive advantage. For US,
cost competitiveness is really important. We continue to monitor how
much it costs not just to set up your business,
but also for your moving people internationally, how much does
(15:47):
it cost for them to live there, to put their
kids in school, to use the health system and Bahrain.
The other thing that we have is connectivity. So speaking
of the US, we have a free trade agreement with
the US. We have this a seput agreement, but also
we have free trade agreements and investment agreements with about
thirty percent of the world GDP because as a small country,
we have to make sure that companies can reach wider
(16:09):
consumer base. But we also what's really important for US
is that we work very closely with the private sector.
So the government and the private sector works as one
unit in Bahtray and we have that ethos off the
team betraying concept. And as I as I said, we
always start with what do you need and how can
I support you? And we have examples of where we've
(16:31):
introduced a new legislation or a new regulation in response
or request by the private sector. And maybe AWS is
a great example in that case because they've said, what
can you do for us in terms of the regulation,
and we said, how about data jurisdiction law where the
data hosted and behraanustrated as an embassy, so me as
a better I cannot access that data and it actually
could only be accessed by a US court request.
Speaker 2 (16:55):
You mentioned Amazon, and I'm looking at a report coming
from mortor Intelligence talks about some of the big tech
companies in Bahrain. Oracle, Amazon, IBM, Microsoft are among them.
Here in the US, we've been thinking a lot about
immigration with regard to the H one B visa issues
that have come up in recent weeks and the confusion
here in the US about that, and I think one
(17:16):
piece of the conversation that has been lost is certainly
the US wants to make sure that it employees or
that companies are paying for it. Sounds like paying for
these visas. Is there an opportunity for Bahrain to come
in and take some of that talent that could work
at a US tech company that would be from outside
of the US, and instead work at a US tech
(17:36):
company in Bahrain.
Speaker 7 (17:39):
As I've said, our human capital for US is really
really important. So we not only invest in the human
capital in Bahrain, and we have a lot of programs
we subsidize training for Bahrains, but it's also very important
to US as a country in economy to bring in
international talent. So a few years back, coming out of COVID,
as part of our economic recovery plan, we've launched our
(18:01):
Golden Residency Program, which allows investors, retirees, entrepreneurs, talent to
come in betterin stay for an extend period of time.
It's ten years, renewable automatically for them and their families,
and that allows a lot of international companies should they
wish to do. That's but also a lot of individuals
to move their people into beatying and take advantage of
(18:23):
not just the program, but also all of the other
business benefits that you get by being in Hey.
Speaker 4 (18:29):
One of the things I want to ask, and I
know high tech and technology is certainly of interest and
I'm just curious when it comes to big AI data centers.
I mean, as you would imagine, your excellency, we spend
so much time talking about the build out, the investments,
the money flowing into anything and everything data. Curious if
you guys, if the country and your office are considering
(18:52):
backing AI data centers such as what we've seen and
cutter that they've done with Blue Owl.
Speaker 7 (18:57):
Yeah, absolutely, it's important. I mean it's coming, it's not
it's already there. So we've had a WS set up
the first hyperscale data center in the Middle East in
Beatty in a few years back. And again, as I mentioned,
the reason they chose better is because of the regulation,
but also the strength of the human capital you mentioned Oracle.
But we also have some regional and local investments for
(19:18):
data centers, so we're definitely seeing growth in that region
where international companies that wish to use that and take
advantage could come and plug and play and take advantage
of the data centers already available. But really because of
the demand, there's a lot of potential and opportunities for
companies that still wish to have data centers in the
region to come also and take advantage of that.
Speaker 4 (19:42):
So I am curious. You said very optimistic. What's the
biggest hurdle obstacle right now in you attracting further investment.
What's the thing that's difficult in terms of what you do.
Speaker 7 (19:55):
I wouldn't say difficult, but we have to have a
lot of conversation to explain the business environment and talk
about their characteristics, what makes us different. But it's all
very very exciting, So we don't mind that at all.
Speaker 4 (20:09):
And I also do think about you know, something that's
certainly been front and front of mind for us excuse me,
and certainly coming off the UN General Assembly, and you know,
watching the turmoil that we've seen in the in the
in the region, how important is that to the folks
that you're talking with. It's companies, big name companies that
we know other investors in terms of investing. Obviously not
(20:31):
every kingdom or area within the Middle East is the same,
but you know, the turmoil and certainly the war that
we've seen between Israel and Hamas, how much of that
the political situation sometimes slows things down.
Speaker 7 (20:46):
You absolutely need safety and stability for companies to thrive,
for the economy to grow, and for us in Betty
and the region as a whole. We've always advocated for
a piece, We've always played a part on a regional level,
on an international level to advocate for piece and stability,
and we continue to do that. At the same time,
(21:08):
the countries are very much focused on their economic strategies,
economic plans, and we continue to have conversations with companies
and for those that have any doubt, we just say
come and talk to us. We will show you, We
will explain to you that the current business environment, but
we are blessed to have to have a very stable
and a safe business environment.
Speaker 4 (21:28):
I have one last question too, and I'm just curious
when you do have questions with investors, obviously well known companies,
big companies. I'm sure folks do their homework, but what
is the thing that you think they don't really understand
about Bahrain And in terms of the economy and what
you guys are doing.
Speaker 7 (21:44):
I think how diversified the economy is something probably people
do not realize. And given the journey, and we've had
a long journey off reform, our journey in reform, in
achieving the diversification that we've achieved today with eighty five
percent of the economy being not oil, with a large
manufacturing sector in nuge for financial services sector and others
as well. It's something people do not realize and what
(22:06):
that means is for years and years, for decades, were
built knowledge and know how in our people, in our infrastructure,
in our regulation and the way we do business and
the way we work with the private sector as well.
So that's something that I think always surprises people when
we talk to them.
Speaker 4 (22:22):
Well, we're so glad we could get some time with you.
We know we had some technical difficulties earlier, so we
really appreciate you sticking around and so that we could
have a conversation.
Speaker 3 (22:31):
Thank you. Thank you again.
Speaker 4 (22:32):
Her excellently nor bent Ali al Kulaife. She is CEO
of the Bahrain Economic Development Board, also the Kingdom's Minister
of Sustainable Development.
Speaker 3 (22:41):
She's joining us from our LA bureau.
Speaker 1 (22:44):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five ys During
that listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (22:58):
Wall Street had long feared that President and Trump would
follow through with threats to impose aggressive drug pricing policies,
eroding the pharmaceutical industry's profitability and depressing share prices. Those fears,
though largely laid to rest this week after Pfizer cut
a deal with the White House, the company negotiating a
three year reprieve on drug import tariffs in exchange for
a promise to reduce what it charges Medicaid. Here's why.
(23:20):
As your CEO Albert Borla at the White House yesterday
alongside President Trump.
Speaker 8 (23:24):
The big winner of this deal clearly will be the
American pace.
Speaker 3 (23:29):
There is no doubt about it.
Speaker 8 (23:31):
They are the ones that will see significant impact in
their ability to buy medicines. But I would argue that
it is not the only winner. I think who else
is a winner here? It is American innovation and American economy.
Speaker 5 (23:47):
We're going to have another meeting next week on this.
Speaker 6 (23:49):
We have another great company coming in similar kind of numbers,
but we're going to show you some one thousand percent
drops in prices.
Speaker 3 (23:58):
There has never been anything like this in the history
of medicine.
Speaker 2 (24:02):
That was President Trump you just heard, and Pfizer CEO
Albert Borla at the White House yesterday. Pfizer shares surgeon
close to seven percent yesterday. They're up more than seven
percent today. I just hope my high school math teacher
is not listening about one thousand percent drop.
Speaker 3 (24:16):
Yeah, because we're not going.
Speaker 2 (24:18):
To get into for another day the math mathing there,
but it's for another day.
Speaker 4 (24:22):
I want to bring in drugstocks overall in the last
two days, not just Pfiser up about ten percent in
the past two days, the whole group.
Speaker 2 (24:29):
Let's bring in Damien Garde. He's Bloomberg News health reporter.
He's been very busy. He's taken some time to join
us here in the Bloomberg Interactive Brokers studio. Are drug
price is going to go down as a result of this.
Speaker 9 (24:40):
For the vast majority of Americans. No, I sincerely doubt it.
There's no reason to conclude that based on what we
learned at least yesterday from Albert Borla in the Oval
Office and the promises that Pfizer has made. We can
get into the nitty gritty, but I think the main
thing the promise to Medicaid. An important caveat there is
that that patients on Medicaid, Medicaid already pays the lowest
(25:03):
price available in the United States. It is legally obligated
to get that. So the notion that Pfeiser making a
commitment to lower that further would change the out of
pocket costs for patients, I just don't think there's much there.
And furthermore, in terms of Pfiser's business, only about five
percent of that business accounts for doing business with medicaid.
That's where business probably too many times. And I think
(25:25):
the main thing that should drive the reaction here is
that in this announcement, Pfizer, which has a fiduciary duty
to maximize its profits and to update shareholders on its guidance,
did not update its guidance. The company said this thing
that ostensibly means we're going to make less money, at
least that's how the president characterized it, but didn't actually
say we're going to make less money, which of course
(25:45):
legally they're required to do. I feel like that through
line is maybe the lens maybe not cynicism, but the
lens of reality that people should look at these announcements.
Speaker 2 (25:54):
Look no further than the share price reaction.
Speaker 4 (25:56):
I said, yes, sir, I'm like, why is this stock
rallying They're going to make less money? I just made
no sense everyone's like, well, it's all about the tiiff thing,
and I'm like, true, and that is certainly a part
of it.
Speaker 3 (26:06):
But I'm like, they're going to make less money. How
can this be a good thing?
Speaker 9 (26:09):
Right? So, I think the relief that you're seeing in
the share price reaction is twofold or maybe even threefold one.
It alleviates the threat that the Trump administration was really
going to come down hard with an aggressive policy that
would be on the books, that would really constrain what
drug companies could charge. Instead, we get this voluntary, relatively
vague promise from Pfizer that is expected to set a
(26:30):
template for the company's peers, Eli, Lilly, Murke, etc. They
will probably all have their day at the Oval Office
to do a similar kind of dog and pony show.
And then furthermore, what's established is that if you make
those promises, you get a reprieve from tariffs. Which is
the other kind of overhang for the entire sector, is
this fear that the import of medicines from Europe would
face levies. Of the President has said one hundred two
(26:50):
hundred percent. The notion that if you just go out
there and say we're going to follow what the administration
wants on drug pricing. We get that alleviation.
Speaker 4 (26:57):
DEBI just quickly, just to be fair, I mean, viser
come back and said this is going to impact us
financially or it's not going to haven't gotten any clarification
from the company on this.
Speaker 9 (27:07):
They have not. There hasn't been a follow on filing
with the SEC kind of making clear that they're restating
any guidance. And furthermore, what they've said is that the
terms of their agreement with the White House are confidential,
so respectfully, we can only conclude what's been said publicly.
Speaker 2 (27:20):
Damien, sit tight. We're going to bring in Angie Frank.
She's CEO of the private health company calder Rose. The
firm does drug discount management. It uses AI as well
as communicating with different parties involved in the negotiating process
to get consumers the best prices. She joins us from Wisconsin. Angie,
I'll ask you the same question that I asked Damien,
because you're right in the middle of this drug pricing thing.
(27:42):
Are drug price is going to come down as a
result of what we saw at the White House yesterday.
Speaker 10 (27:47):
I think what Damian said there's some truth to that.
I think at the end of the day, we won't
all feel it immediately, but I do think drug prices
are going to come down. I think the announcement yesterday
is a big change to this system, and it is
the first step in what I think will be multiple steps.
We're certainly opening up more channels for patients to access
(28:10):
their drugs at more affordable prices. And I think the
underlying the medicaid price that states currently pay is going
to come down. Based on Pfizer's announcement yesterday.
Speaker 9 (28:24):
Well, that's interesting. What would the mechanism for that be,
because that's what I found myself wondering even yesterday in
the announcement, which granted was lacking key details for obvious reasons,
is very new, but why would this kind of set
in motion a snowball that would end with patients paying
less at the pharmacy count?
Speaker 5 (28:40):
Yeah?
Speaker 10 (28:41):
Yeah, so I think, you know, if you look at
the overall list prices starting to come down to an
MFN like number, and that opening yes most favored Nations exactly,
and that opening up more channels for patients to access
their drugs at lower rates. I do think the direct
(29:03):
model that the website that was also announced yesterday, which
opens up a channel for patients to be purchasing directly
at lower costs, could really have a ripple effect on
the way benefits are offered and how employers and self
insured employers start constructing benefit plans that give their employees
(29:23):
access to drugs which may bypass other players in the system,
the traditional players in the system, middlemen that have been
making money off of off of drug pricing and discounts
and rebate models that really didn't benefit patients directly. So
I think I think the new channels being opened up
and the new price point at Max's most favored nation
(29:47):
will over the longer term, have a pretty significant impact.
Speaker 4 (29:51):
Nothing confuses me as much as like picking up prescription
and q pons and pharmacy benefits. And I don't know,
it's just kind of crazy, Damien. The PBMs pharmacy benefit managers,
they are being looked at closely like another layer that
drives up costs, and so that is certainly part of
the narrative here.
Speaker 3 (30:07):
So does that potentially.
Speaker 4 (30:09):
Remove that in what we heard from the President and
the CEO of Pfizer yesterday, But then throw in this
trump OURX, Like what role is that play.
Speaker 9 (30:19):
That we need to see play out. But I think
through the eyes of Pfizer and certainly people in the
pharmaceutical industry, there is an optimism and maybe a hope
that the agreement announced yesterday, if in fact it's a
template for other companies, will shift the White House's attention
away from pharmaceutical manufacturers and toward the PBMs and the
other middleman that you mentioned. And I think to Angie's point,
(30:39):
there is a potential that trump our X, this sort
of direct to patient offering that we've heard about. You know,
there are arguments is suggest how popular that might be,
How many people who don't have insurance would be willing
to pay out of pocket hundreds or even thousands of
dollars a year for a medicine.
Speaker 2 (30:54):
Is that what trump our X would offer is an
insurance like this is not covered by insurance.
Speaker 9 (30:58):
It would be a cash pay business. And so we
assume that the majority of customers for it would be
uninsured or underinsured, because otherwise they could get the drugs
much cheaper through their insurance carrier. But the opportunity, and
I realize we're getting kind of in weeds here. The
opportunity is that if one of those direct offerings were
selling instead to employers rather than patients themselves, then they
would be truly bypassing the middlemend that exists. This is
(31:20):
sort of the Mark Cuban model that's drugs exactly. So
if Trump and you know, I'm using my imagination here there,
this is not something anybody's announced. If trump Orex, the
website that has not yet launched but has been described,
were to expand its aperture to include employers, then we
could be talking about legitimate savings for all parties involved
and a huge change to the way it's done.
Speaker 2 (31:40):
Now, Angie, come on back in here and talk a
little bit about the innovation side of things, because Albert
Gourla at the White House yesterday said it's not just
the American patient that who will be a big winner,
but it would also be the American innovation and the
American economy. Perhaps there are those out there who might say, okay, well,
if companies drug companies aren't able to make as much
(32:00):
money from the drugs that they sell, R and D
in this space might suffer. We know it's expensive to
run the clinical trials and to do the the R
and D. What do you think it means for American
innovation when it comes to pharmaceuticals, well.
Speaker 10 (32:13):
I think it was great. I agree with Albert on
all points. I think it's great for America that we're
moving manufacturing and that level of innovation, job creation, et
cetera to the US. When you when you simplify the
supply chain and the pricing mechanisms for our current you know,
(32:35):
drug pricing model. When you simplify that today, there's that
we lack so much transparency and how prices are established
and who gets which price. And to your point earlier, Carol,
where you mentioned you know, the coupons and the copays
and all these things are so confusing. They're confusing by
by design. People are making a lot of money off
(32:55):
of that confusion and that opacity. When you simplify and
I have more transparency, you have less waste in the system,
and that waste will feed the top of the funnel.
That will be dollars that can go directly to the
top of the innovation funnel and enable manufacturers to continue
to work on and innovate more drugs and more medication
(33:18):
therapies that help patients with life saving and life changing conditions.
So it takes two and a half billion dollars to
bring a drug to market, so every dollar of waste
compromises our ability to invest in more and more therapies.
So I think it's going to have a tremendous impact
over the long run.
Speaker 4 (33:37):
And you just got about a minute left. I mean,
just talk to us about what you do. It's a
data engine, it's information you have. It looks like a
couple of different constituencies that you work with, But just
give us an idea and what that tells you about
kind of the drug industry and drug pricing industry what
you have been seeing.
Speaker 10 (33:55):
Yeah, we really have a technology platform will re ingest
you know, large volumes of data. We apply logic and
rules around various pricing programs and discounts and rebates, and
then we ensure price integrity that the right price is
going to the right set of patients and the right
(34:16):
for that particular therapy. So we're really driving quite a
bit of price integrity in the system. The constituents that
we work with include both pharmaceutical manufacturers and providers, and
we really believe fundamentally that ensuring that the providers and
the manufacturers can work more closely directly together, benefits Americans,
(34:38):
benefits patients, benefits innovative.
Speaker 3 (34:41):
Ten seconds, Damien, who we're going to hear from next?
What's CEO?
Speaker 9 (34:44):
The expectation is that Eli Lilly will be the next
company to take the stage. The President has said their
name constantly without totally giving it away. But like I said,
the expectation also is that all of the major peers
will have their day at the OLAL office.
Speaker 3 (34:55):
All right, well, we will be watching, listening, reading your reporting.
Thank you so much.
Speaker 4 (34:58):
Angie Franks. Of course, CEO of calderis joining us from Wisconsin.
Damien Gardey, health reporter at Bloomberg News. Here in our
Bloomberg Interactive Brokers studio, this is Bloomberg Business Week Daily.
Speaker 2 (35:09):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (35:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
this listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us.
Speaker 4 (35:28):
Live on YouTube. Stock's hire A bit of a rally underway.
We're staying near our highs of the session. On the
equity side of things. We've seen yields move back a
bit on expectations that yes, indeed, we'll get another FED
rate cut later on. This month, we did have some
weak private jobs data we're talking about ADP, those numbers
coming in definitely below estimate street estimate.
Speaker 2 (35:51):
So shedding of thirty two thousand versus estimates of a
gain of fifty one thousand.
Speaker 3 (35:56):
That's a bit of a reverse.
Speaker 2 (35:57):
That's exactly where I want to start with. Alexis Brown,
Robert's COO and portfolio manager at Alexis Investment Partners. They've
got around one hundred and eighty five million dollars in
assets under management. She's back with us from Montgomery, Texas. Alexis,
welcome back. I want to start with the labor market
and your view on it. Thirty two thousand job shed
in private payrolls today, fifty one thousand added was the survey.
(36:20):
Is the labor market cracking?
Speaker 4 (36:23):
Well?
Speaker 9 (36:23):
Hi, First of all, thanks so much for having me
back on.
Speaker 11 (36:27):
No, I don't think it's necessarily cracking. It is definitely
weakening a bit, but we're heading into a different seasonal
period once we get through October, so it'll be interesting
to see what happens from there. I think the reason
why job numbers were being a little bit more looked
at today is it because of the government shutdown and
(36:47):
the probability that we won't get a job number on Friday.
But I think there's a lot of other factors happening
in markets that are going to affect things more than
necessarily the job market death.
Speaker 5 (37:00):
And we'll have to see what.
Speaker 11 (37:01):
This spurs the FED to do, and if this is
just a little bit more fuel to the fire for
the FED to continue cutting rates.
Speaker 3 (37:09):
All right, So let's talk about those factors.
Speaker 4 (37:10):
And I guess what I'm always most interested when we
talk to somebody who is managing money, big or small,
if you will, is what their clients are saying, what
investors are saying.
Speaker 3 (37:19):
Are they giving you new money to.
Speaker 4 (37:21):
Invest or they're saying, let's back off, let's put something
in something safer. Are they buying gold, because it seems
like everybody's buying gold this year. So give us some
color about what you are doing or what your clients
want to do with their investments right now.
Speaker 11 (37:35):
Yeah. So we're tactical managers, so a lot of our
clients and all of our clients really have a lot
of trust in us to make the changes necessary in
their portfolios and really adapt to changing conditions. So we
have seen clients adding new money to portfolios, especially as
we've worked through the low's last April and continuing onward.
(37:57):
For example, in our tactical portfolios, we've really changed our
equity positions throughout the past year, going from over over
lead on in equities slightly getting all the way up
to almost ninety percent on a seventy percent benchmark equity
portfolio to now being slightly underweted about sixty five percent,
and within those having a lot of fluctuations as we've
(38:20):
seen markets change, and respecting the fact that we're up
four percent in the past month, seven percent in the
past quarter, fifteen percent year to date, and just law
of average when we're aiming to do like a ten
to twelve percent on that seventy percent benchmark equity exposure.
Having that ability to change our equity as well as diversify.
(38:41):
We do own gold, in fact, that's our largest position.
We're at just under nine percent gold right now in
that tactical portfolio.
Speaker 2 (38:51):
I want to understand how much upside you see in
the S and P five hundred right now or US stocks,
I guess more generally, Bank of America out with a
note that it says the sentiment indicates that it's hardly euphoric.
They essentially have this indicator, it's the cell side indicator.
It retracts recommended allocations to US equities among different Wall
Street strategists. It remained flat in September fifty five and
(39:13):
a half percent compared to the dot com bubble in
two thousand saw cell side equity allocations search above seventy percent,
and then in two thousand and seven clearing sixty five percent.
So essentially BAA saying there's more room to run? Do
you agree?
Speaker 11 (39:28):
I would agree. I do think that there is a
lot of cash on the sidelines. When you talk about sentiment,
that's a really interesting story. We tend to look at
the AAII Bull Bear sentiment ratio survey, and while there
has been an uptake in bulls, there has actually been
even more of an uptake in bears compared to historical averages.
(39:48):
So there is some room to run on that front. Now,
we aren't necessarily euphoric at this point, Like I said,
we're about it in neutral allocation, just respecting how far
we've come so far this year, so we are looking
still to participate in future gains. Heading into this year,
we did a Fibonacci retlacement just simply looking at the
(40:11):
breakdown in April to the lows and if we were
to have an equal move back up, and that got
us to about a sixty four hundred to sixty seven
hundred range on the S and P. Obviously we're knocking
on that sixty seven hundred today, but I did also
look at potentially reaching seven thousand and coming back. So
I think it'll be interesting to see from here where
(40:33):
we wind up. But there are a lot of reasons
to still be positive on the market, but perhaps not
quite as strong as we were heading into this year.
Speaker 3 (40:43):
All right, So what's your biggest worry in this environment?
Speaker 4 (40:46):
One of the things that we talked with when we
began our show, and we had a conversation with yes
Alan McCartney over at UBS. She actually has alignment partners
at UBS, and it was like, the complacency that we're
seeing the market is really low, and that doesn't need
to be certainly the indicator that tells all, but there
is feels like there's a lot of folks thinking that
(41:09):
this momentum will continue. What is the thing, what is
the thing that you keep your eye on that says that, well,
maybe there is problems like the you know, today's labor data.
Speaker 11 (41:20):
So I would think that the main thing that we're
looking at right now that gives us a little bit
of pause is just valuations being a little bit rich
and once again just respecting how far we've already come
in such a short time period and just recognizing that
perhaps that means that we'll have some room to pull back.
And honestly, there's a lot of strong parts to the
(41:42):
market right now, though, as you pointed out, momentum. We
are strong believers in momentum and innovation, and it tends
to be that if there's a strong Q three which
obviously this was a very strong Q three in markets,
that that momentum tends to carry forward through Q four.
That being said, we are still watching evaluations and the
(42:03):
different moving factors, for example, federal reserve policy, seeing how
that affects things going forward. If there is a pullback
heading through Q four, we're probably going to be biased
to actually buy into that, although more patient than we
have been prior to reaching these valuations, but if we
(42:23):
run up a lot through Q four. That would probably
be our indicator to pull back exposure a little bit.
Speaker 4 (42:28):
Hey, one last thing, just got thirty forty seconds here, Alexis,
what about that AI trade? How much are your investors saying, yeah,
give me exposure or and if so, how do they
want that exposure?
Speaker 3 (42:40):
Just quickly. We like AI, Like.
Speaker 11 (42:42):
I said, big big proponents of innovation. We're not in
the business of finding the next Apple and Google. We'd
rather go ahead and invest in those strong fortress balance
sheet companies. But really the exciting part of AI to
us is how it will affect the market in general
and all these other companies, say a Walmart, a Caterpillar,
that will use AI to boost productivity rather than specifically
(43:05):
trying to find that sexy AI play it.
Speaker 3 (43:07):
SAP, all right, Going to leave it there.
Speaker 4 (43:09):
Hey, good to check in with you, Alexis Brown Robert
COO and portfolio manager at Alexis Investment Partners around one
hundred and eighty five million dollars in assets under management,
joining us once again from Montgomery, Texas.
Speaker 1 (43:21):
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(43:42):
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