Boston Fed Taps Susan Collins as New President

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube. Search Bloomberg Global News. Our top headline at this hour the Federal Reserve of Boston announcing that Susan Collins, a University of Michigan economists, will be it's new president, marking the first time a black woman will lead one of

the US Central banks twelve districts. Collins succeeds rosen Gren, who resigned from the FED in September, and Collins is to be the FMC voter starting in July. All Right, good to know and some changes. We know that there's a lot of changes going on in the FED in terms of the makeup of the f O m C. Let's get to Bloomberg News economic supporter Steve Matthews. He

is on the phone from our Atlanta bureau. He is our FED watcher and uh, Susan Collins tell us about this significance here, Steve, Yeah, I mean this is a groundbreaking choice. Uh. You know, as a few years back, Raffael Bostic became the first black man to be serving as a FED president with the Atlanta Fed. Uh, and now Susan Collins will become the first black woman ever to be serving as a president of one of the

twelve FED banks. And the FED has been in existence since seven so what you know, hundred and thirteen, fourteen years and there this is it seems light to be talking about this kind of thing happening, but it is happening, and that is a big significance. And for that matter, the Biden administration has talked quite a bit about diversity and trying to have a central bank that looks like America,

you know, and the government that looks like America. And you've just had too uh the deplotment of two African Americans uh to the to the FED Board of Governors, which you know, they're still waiting confirmation Lisa Cook obviously. Uh So it's interesting. I've spent the last few minutes trying to to look back at her monetary policy via and you know, is shea dove, is shea hawk? And

it's like, honestly, we really don't know. That's interesting because that's where my next question was going, What do we know about her policy? I mean, she's got a PhD in economics from m I t uh the Boston Fed saying a statement quote Collins is an international Maccar economist with a lifelong interest in policy and impact on living standards. She has spent you know, I've got she has thirty two papers listed with the National Bureau Economic Research, UH,

and they're almost all on international economy and international developments. Uh. She's written about Korea, She's written about Asia, She's written about currencies, she's written some about China, uh, but not a whole lot about US policy, and not a whole lot and nothing that I've been able to find so far on US monetary policy. The one thing that she's written that might strike some is as interesting, if not controversial, is in the wake of the two thousand uh seven

two thousand nine financial crisis. She was advocating for a week er dollar along with a co author, saying that you know, we needed to boost the the beat up the economic recovery, and one way to do that would be to have a week dollar, which will help the help exporters in particular. I want to bring in our market round table because we're obviously watching a lot of things on this Wednesday and including this headline on the

new head of the Boston fab. Let's bring in Creedy group to markets correspond at Bloomberg News at Bloomberg in our interactive broker studio along with Katie Greifeld, Bloomberg News processor reporter and also Tim's co anchor over on Bloomberg Quick take, Um, Creedy, you watch the markets more broadly, there's a lot going on. We're still getting a lot of big earnings headline like this. How do you think about it? Well, it's not gonna be market moving just yet.

Like Steve was saying, there's no clear indication of where the policy lies. But what is interesting that she will be a voting member in two so when we do get Senate confirmation. But I guess I would assume she will I mean, it kind of seems like it, right, but Steve is going to be the expert on that. She will not need confirmation by anyone that the way the fed uh Bank President's work is. I mean, she

has been approved by the Fed's Board of Governors. There is no additional confirm confirmation needed for her for the Board of Governors, but not for the FED Bank president. I was thinking of Lisa Cook, right, and okay, forgive me so my bad. Yeah, thank you, thank you. Steve. Well, that just amps up the what's at stake here? Right When we do get that indication of what that mon Terrey policy is going to look like, her take is going to look like that's really going to be a

key piece at least for the dot plot um. In terms of the markets, though, I mean, let's just stick with the bond market here. That two percent yield is something that I think is coming up on everyone's horizon. We're looking ating at one nine two on the tenure and it kind of seems like there's a little bit of relief in the markets because we pull back from

that level. A similar story in the oil pulling back from that one oil there's some scary levels that I think stock the stock market investors are kind of watching, and I think the fact that we're not as close as we were a couple of days ago, that's adding to the relief out we got so close to that two mark we did. Hey, Katie Grafel, come on in here. And because just a few minutes ago before we got this news, you were watching the strong tenure treasury auction.

Takeaways from that, Yeah, there is bonds right now, is why we're not anywhere in two percent striking distance. You saw that the tenure treasury auction from the Treasury Department, it was it saw the lowest amount awarded to primary

dealers ever. Reminder these investors, they have to bid at auction, so to see such a low allotment there, that really speaks to how much demand there is for bonds right now, which is really interesting because we're going to get a very hot CPI report tomorrow potentially, Yeah, big deal, And it's exciting that Susan Collins is a wild card. We don't know how she's going to be looking at those

numbers tomorrow. So you did fun but inflation right in terms of these fixed income investments just kind of eats away at the returns. I know, but I mean there's a lot of talk that maybe this will be the peak cp I print, that we're going to start to get lower, cooler readings from here. So I mean, if that's the bet, you probably want to be buying bonds right now. All right, we gotta run, guys, Thank you

so much. Are thanks to Katie and Creedy Credy. We back lit bit later on with her chart of the day, and of course our thanks to Bloomberg News Economics reporter Steve Matthews on that breaking news the Boston Fed with a new head. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. The investors definitely loving companies that increase their prices, and that includes the next one that we're going to talk about.

We're mentioning Chippotle Mexican Girl shares jumping about ten percent most's last summer. Following last night's quarterly update, it showed that fourth quarter sales COMP sales adjusted EPs all topping estimates. Company also raising its outlook. The company CEO, Brian Nichols sang on the call he's not seeing any signs and inflation is slowing down. Specifically Tim highlighting higher beef colls, saying the company may have to raise prices again also

raise wages. Well, let's bring in Jack hard Tongue, chief financial officer for Chippotle Mexican Drill. He joins us on via zoom from Chicago, so folks watching on YouTube certainly see him there. Jack. How are you. I'm great. How are you guys doing. We're doing well. Thanks. I want to jump right into it with the with the with

the price s power. Considering the rising input costs that you guys called out yesterday in your earnings release, help us understand how much pricing power you have to raise the price of items on the menu in order to combat those higher input costs. Yeah, you know, it's one of these kind of mysteries if you will, TI, and that you kind of hope you never find out the reason. The reason is, if you find out, it means you've raised prices too high and it and it means customers

are resisting. We've always been very thoughtful whenever we've had to raise prices, including in this environment, and frankly, every other restaurant company, grocers, everyone is raising prices. So we still think that we're kind of you know, at or maybe a little bit behind the media and what companies are doing. And so, um, what we want to do is we we while we think that we can raise prices for we'll watch and see how the inflation environment unfold.

We do think we've got additional pricing power and if we need to, we'll spend it, but we'll look at other things like efficiencies and um, you know, are there other ways to find some you know, cause sating opportunities and if there aren't, and if we have to raise prices, will we'll do that, But it won't be the first thing we'll do. Where Jack, are you seeing the costs rise the most and the quickest? Is it wages or

is it on the commodity side? Yeah, well, you know way, wages really increased a lot last year, and in our case, we took a big stair step. We increased our wages by about fifteen percent for all of our restaurant employees. Um, and that was you know a big impact. And then we did that in the April May timeframe. That's when it became clear to us that there was a in balance between the demand that we and other companies had for labor as the economy was opening up, and then

the people coming back into the workforce that helped us significantly. UM. That allowed us to retain our existing people, that allowed us to increase application flow. You know, we're growing company, so we're constantly hiring people. Um. And so that allowed us to stabilize the workforce to the point where right now we feel like we're in a good labor position. It's not it's not like we're completely you know, over

the challenge. It's still a challenge, but we're as good of a labor staffing position now as we were even before the pandemic. And uh, you know, I don't know that every company could say that right now. Hey Jack, do you feel like, in terms of the labor shortages and the crunch that we're hitting peak and that things will start to get better? And same same side, the same questions on on the pricing side of things. Do you feel like we're getting kind of inflation peak? If

you will? Yeah, I don't think either are over. I think labor is going to continue to go up, but I would expect there won't be another kind of shock, like like when we we were kind of at the leading edge when we raise prices in the May or wages in the May June time. Frank most other hospitality and restaurant companies have followed since then. I think they're going to be increases, meaningful increases, but I don't expect

that there will be another fifteen percent jump. What we're seeing right now is there are pockets where when there are shortages that you're gonna have to maybe raise wages at a in a preemptive manner rather than just, you know, rather than risking falling behind you know, the wages in that market. From a commodity standpoint, most of our channel has been in beef. That's been throughout the year, and

in the fourth quarter it hit us again. Freight as well, especially we get a lot of our packaging in from outside the US, and freight has been a real challenge, not only just to get enough supply because there's such bottlenecks at the boards, but also the cost of freight is going up significantly. Our outlook suggests that um nothing is going to ease in terms of material or great an inflation to let the earliest later in the year, maybe not even until Wow. So it sticks around for

a while. Hey, I'm curious about wages too, because that's something that we've talked to a lot of economists, Jack, that that stays with you, that cost. And I'm curious, I've spent a lot of time with your previous administration that you guys pride yourself and holding onto workers and grooming them to move up the chain. So will those higher labor costs be problematic maybe down the road. No. In fact, we still pride ourselves on our people culture.

You know, we we promoted nineteen thousand people last year. That's that's what you do when you have a thriving, growing company. Um, We've like the idea that when crew join us today, that they can join us for a job today, but that can turn into a career over time, and even that they don't stay with chipotlea their entire career. We will teach them skills like how to cook in a real restaurant, will teach them how to leave people, will teach them how to run a business. And if

they say with us, that's fantastic. If not, if they're still going to learn life skills. And so we run all of our restaurants where unique in the restaurant industry where we have almost three thousand restaurants. None of them are franchised. So we need to have the ability to hire great people, to develop great people, and and to give them opportunities to move into management roles. And that's

that's alive and well. Edge Fully, Hey, I want to talk a little bit about growth and expansion physical expansion here. In your release yesterday, you said, based on those successive small town locations that are delivering unit economics at or better than traditional Chipotle locations, you are now you now believe there can be at least seven thousand Chippotle restaurants in North America, up from that prior goal of six

thousand restaurants. Talk to us about the competition for real estate here and how difficult it is to actually find compelling real estate opportunities in a market like this. Yeah, you know, it's always been a challenge. There's always broke companies out there. But um, we do really well. And the reason we do well is that, as I mentioned, we're company owned, so we can make quick decisions. We have a dynamite real estate development team and so they're

out there. They know the brokers, they know the sites, they know how to dig great sites. UM. And when we show up and knock on the door of a landlord or developer and we're interested in space, they love to have chuppote L in their UM in their development.

The reason is we bring traffic to their development. And so if we're in a center where there's five or six or seven different tenants there, UM, they can count on the fact that Chippotele will bring a lot of people to their center, they will recognize some of the other tenants as well. UM. So UM you know, so we get a lot of attention and we're one of

the preferred tenants out there. UM. We also have been very successful in not just securing the sites, but also getting the approval to get a chapot Lang, which that's

our version of a digital drive through UM. And even if we don't have a free standard and it's a it's a great convenience for our customers and our landlords and developers have been working really well with us to make sure we can get the chippot Lane and so that's that's because we really bring um, you know, something to their center that they're really after, and that's that's

more foot traffic That's what I wanted to ask you though. Um, you guys out at your first digital only chippot Lane restaurant. I believe it was late last year. Uh in New York State. How's that going in? Is there? What are the expansion plans with that? Yeah, it's it's actually really good. We have to now fully digital restaurants. What that means is there's no front line. So if you walk into a restaurant, you're not going to see a front line with a register where you can order and then pay.

Everything has to be ordered ahead. You can order ahead and pick up um in in one of the two cases we've got chipot Lane, so you can order ahead, not get out of your car. You still can get out of your car and walk into the restaurant if you if you like, and our team will treat you to great experience, but you have to order ahead there.

These are early days. These are early experiments. We do think there's gonna be opportunities for what we call a seam location, meaning you could have a lot of totally restaurants in a certain trade area and then there's an underserved area kind of in the middle that might be a great spot for a smaller restaurant that has just chicot lane um and no frontline ordering. So UM, it's early days and we'll find where these make the most sense. But they're up both thoughts to a great start in

that same vein digital sales. For one, for the full year forty five point six percent of sales. Carol mentioned how they shot up during the pandemic. What's a way for investors to think about that digital versus physical mix when we do get to the other side of the pandemic, where does it stabilize? Yeah, you know, our our guests, and it really is just a guess that it probably bounces at about at or in that low forty percent range.

When we look at our markets throughout the country and others, you know, different markets have have had different impacts from covid um and they have come out of covid faster or slower. When we look at the ones that were least impacted, um, they didn't fall below at range. And when we look at the fort of digital sales today, the is are mostly our loyal customers. They come very often, they tend to spend more, and they really like the

digital channel. The convenience of digital Once you get into our app once you sign up as a loyalty member, is so easy that our customers tend to stick with it. So I would see that will probably stay in this you know, load and mid range UM, and then we'll bounce up from there as more and more customers discovery digital. The reality is, even though it's almost forty percent of our business, the majority, the largest group of our customers

have never tried digital. So there's still a big opportunity for us. Hey, Jack, just got about a minute or so left here. You've been at to potl for what twenty years? You've seen a lot at that name alone McDonald's before that. You understand this industry. But this is an interesting time coming off a pandemic. Uh. We love to hear from the c suite. What's top of mind for you right now? Yeah, I mean the most important thing to me and our entire executive team is people. Um.

I mean, we have a food ethos um. We really take pride in the quality of food that we source, the quality food that we cook in the restaurant. But all of that with great people. That means great people on the front lines, it means great managers for the two fifty restaurants we're going to open up, you know during this year. It means great people in our office

as well to support our restaurants. The reason we are company owned in that franchise is it takes a lot of hard work, a lot of care and a commitment to a purpose to actually care about the food, how we source it, how we cook and training customers a great experience. And so as long as we have a great pipeline of people joining Chipotle developing into the management ranks, we'll have a bright, bright bright future. That's that's that's something that's going to be a high priority really in

any environment for us. All right. The only thing that would have made it this better is having some guacamole with you. I'm just gonna say in the house, but you're making me hungry me as well. Um, Jack, thank you so much. Hello to all of your team, and we really appreciate it. That's of course Jack Carton. He's the chief financial officer of Chipotle Mexican Grill. On the Zoom from Chicago, this stock it is one of the performers on the S and P five hundred today. You're

listening to Bloomberg Bus. This Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Super Bowl yep, it's this weekend big matchup between the Bengals and the Rams and Bloomberg I got sum my microphone on Go Bengals. The cover story of Bloomberg Business Week this week is about the Big Game and the betting apps that want you to come for the game. And then you know it,

Tim staying Gamble forever. Yeah, and you're certainly seeing the ad spend to accompany their desire to actually get you on the platforms. Joel Weber is that at Bloomberg Business Weeki's with us in the Bloomberg Interactive Broker studio. Peter Robisson Projects and investigated investigations reporter for Bloomberg News. He

joins us on the phone from Seattle. Joel, it certainly feels like, and it's clear reading this story by by Peter and Ira, that there has been this sea change when it comes to the acceptance of sports betting from something that was illegal and you know, prevented people from joining halls of fames, uh, to something that is actually being embraced by the league's What happened uh, the smartphone.

It's kind of kind of true though, I think, um, what with the story really goes into here is the look everybody's We've long seen what sports gambling can do, and there it's always been a concern that the integrity of the game would be in question. Um and and

that is a legitimate concern. As as Peter and Ira write in the story, basically every every sport in every league around the world that has had to deal with legal betting has had to confront this question of like is does this have the potential to undermine the sanctity of the game? And uh, that was a thing that the NFL obsessed over for years and did not want to embrace uh gambling. And then it was just like never mind and and part of that was the money.

Um so, so Peter like, this has been a sea change just within the last couple of years. What makes this year's Super Bowl especially the one to watch when it comes to sports betting, Well, one big thing that changed is that online sports betting is now legal in New York and you saw a massive, massive uptake, more

than a million people created new accounts. Um and the thing that the light bulb moment for me was was reading a report from Golden Sacks, which which pointed out that these apps over time might each have fifteen million customers, and that's the number who watch a usual NFL game, And so when you have that many eyeballs and that many people coming regularly on your site, it gives you

a lot of power. And in a lot of other countries that the gambling sites are are the way people watch these games, and it's it's the filter through which the games are watched, which which seems like a really big deal for for all these sports over time. What I find so fat well, what I find fascinating He just wants to talk about the now Go bank was I got it, um. But what I think is interesting the MLB was early uh in on on draft kings,

Robert Kraft, Jerry Jones. I mean colleges they went from like not doing anything to all of a sudden they're investing in big time and there's meetings kind of I feel like, was it was a craft Sun who brokered kind of a meeting with one of the betting apps. Like it's just interesting how entrenched it's become. Yeah, there there there was preparation behind the scenes for this moment, even before the Supreme Court opened the floodgates with its

ruling legalizing sports betting outside of Nevada. In even before that, as we report in the story, Roger Goodell met with Jason Robbins from Draft Kings UH in a Boston suburb with the craft with with Robert Kraft and his son and UH fantasy. As another person we talked to said, you know, fantasy was really the wedge that helped these leagues get comfortable. It was almost like a soft launch for for gain bling. And it also showed the leagues

and everybody how popular this is. Okay, the question of purity, how do they keep it pure? It's a really good question and it sounds like one that the league is still working out itself. We we talked to the chief compliance officer for the NFL and they have developed an

online training course. They have stepped up their discussions with league personnel about what information can be shared outside the league because with so many prop bets, including what color is the gatorade going to be that's dumped on the coach's head, there's a lot of potential what what what color is it going to be? Blue? Right? And I guess one distinction is that those bets that tend to

be on offshore books, which are are less regulated. But the point remains that there's a lot of potential for uh, for shenanigans, and so the league is trying to get ahead of that. They've also had workshops with players where they bring in what they've called bad guys who have been caught before, you know, trying to groom players in six games. And you know that the skeptics will say that that you can't you know, do that uh with complete success and and really any one case it's gonna

it creates a huge perception problem. Uh. And and you know you saw that even in the Premier League recently where a yellow card given late in the match has has you know, caused a fury on on Twitter with people claiming that that there's somehow a fixed So it just it changes the way people watch games. When when betting is so entrenched, how much money is you know slashing around here for the NFL, Like, what's the what's

they're they're taking all this It's it's already substantial. It's in the hundreds of millions, you know, just just one deal that the NFL signed with the data provider is reportedly worth a hundred and twenty million a year to it, and over time, they're they're talking a billion a year, which is a lot of money for a league that Uh. In the pandemic year, it took in twelve billion, so uh and Goldman's talking, you know, thirty thirty billion plus over time just in the US. UM. You know, you

mentioned the data providers there. That was the thing that I learned in the story. Can you talk more about what what's happening in the back ends and and that that data because those are those are companies that many people may not have heard of. Yeah, and and and they're fascinating companies. It's companies. Um. One of them is called Genius, and others called sport Radar in some cases you know, again, the leagues are taking equity investments in

these companies. So the NFL has a stake in Genius. And what these companies do really is they go to events around the world and they collect they do a live feed of the game, they collect data from it, they collect statistics, and those statistics and the feed let's sports books around the world. Uh, lay odds on on you know, both the game them and events during the game, and it's it's you know, it's incredible how many events

are covered. Some of these companies are covering, you know, hundred thousand, two hundred thousand plus events a year, even in lower tier leagues. Hey, Peter. One of the promises that or at least the selling points that these apps are and services are making to the leagues is this idea of engagement and the way that it drives engagement two levels that the teams want to see in the

leagues want to see. What do we know about the relationship between the way that people bet, who bets and to what extent they actually pay more attention and tune in and see the ads in the games? Well, I know, Genius has a statistic that people are more likely to watch a game if if they're placing a bet on it. You know, certainly if your money is at stake, you're you're more likely to watch or at least to watch a portion of it. Uh So that's one big factor.

I mean. The other factor we get into in the stories is just the possibility of addiction that that you know, as one person pointed out, uh, you know that that you know, people between the men between the ages of fourteen to thirty five are especially likely to gamble. I think that that increase in rates already, that is like such an important point in this because it looks like a ton of fun, Like there's all these funny prop beds.

Then it's like, oh, by the way, you know, eighteen to thirty five, Like, can you imagine how many people are going to get addicted out of this because it seems like nothing. And then it's like, oh, wow, that just drained my bank account. That's your future cover story. You know it's coming. Well, you know, we can start with this one and we'll see where it goes. Well,

I think it's interesting to have this story. We've got the Super Bowl, and then of course you've got the former Miami Dolphins head coach Brian Flores his suit, which included a claim that the owner of the team had offered him money to throw the game for each games high for the next year. This is going to be a big conversation, continues to be ahead of the Super Bowl. Um our. Thanks you, Joe Weber, Editor of BusinessWeek. Peter Robinson,

Projects and Investigations reporter at Bloomberg News. The cover story check it out. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Another stock jumping on earnings today or its latest quarterly update. Have A Pharmaceutical up about seven percent after reporting that fourth quarter earnings beat estimates. Core Schultz as president and CEO of tv A Pharmaceutical, on the phone from Parsippany,

New Jersey. Core, how are you. I'm very fine. How are you doing doing well? Thanks? Hey, I want to just briefly touch on the quarter and then jump into some other stuff. Um T have A shares up seven percent now. It was up nine percent in or day after reporting those earnings. Whilst Fargo says two could be the trough for TV sales even as growth remains elusive. Where are you going for growth? We will go in for growth in our key products. So we have two

products on the market. Jovi for prevention on migraine, which is a verificacious, convenient solution for people suffering from chronic migraine during check once a month or once every third month. It's the longest acting anti cyp in the marketplace, and it gives you a really significant reduction in your micraine days. So that's one product is penetrating nicely in US and Europe right now and that will be driving growth in

calling coming ten years, I would say. And then we have Osteto, which is the product that is indicated for two things. One is Huntington's disease Korea and Huntington's at least involuntary movements and tart of this keynesia, which is also significant involuntary movements that really disturb, you know, people's lives and and it's really difficult to have a job and function socially when you have these involuntary movements. And

Osteto is currently doing very well, growing nicely. It will sort of surpass a billion dollars this year, and we see that it's a huge potential because tart of this keynesia has not been treated in the past, because there's been no drug to treat it, and now we have this possibility. And right now, out of the probably five hundred thousand people suffering from chart of dyskinesia, there's less than six percent being on on therapy and getting help.

So another big growth driver. And the third thing is that this year we hope to get approval mid year from FDA on a new long acting antipsychotic therapy sparred on l AI in a new and improved way of long acting. Most antipsychotics that are long acting treating for people who suffer from mental illness is long acting by a depot that is injected in some muscular so a long needle that injects the depot deep into your muscle tissue.

This is a new and better product that's subcutaneous, so a small, thin needle, very short, very easy to inject. And it's really important because when you suffer from schizophrenia, every time you relapse, you actually lose some of your cognitive function of your brain. So you want people not to relapse. You want them on long acting play oky. But if it's painful and inconvenient and people go for the oral tablets and then they go off the tablets at some point in time to get a psychosis, and

it's real bad news for them. So this will be would be good for patients and we hope to launch this year. Well. Court we appreciate that, and and because our investors and not our investors, but the investment audience and certainly our listeners want to know what's coming down the pipeline. Having said that, I feel like they don't think it's a clean story until all of the lawsuits

and litigation over the opioid settlements is done. You guys did do million dollar opioid settlement with Texas that was on February four. More deals maybe ahead, at least that's what our Bloomberg intelligence team is writing. And you have said that you might pay as much as three point six billion in US settlements. Are we talking about cash settlements?

Is that a real number? And what's the timeline? So what we talk about is a mixture of cash and product, and we, of course, being the largest generic manufact during the world, doing more medicine than anybody else, we have the locky position that we can provide products that are

needed to combat the opioid epidemic. And what we have agreed with Texas is that we're providing a hundred fifty million dollars in cash over fifteen years, and we are providing generic knock and spray, which is a product used when people have an overdose situation. So it's a very useful product to fight overdose deaths. And this product, by the way, is actually manufactured in our facility in Salt Lake City on a dedicated line we have there. So it's also you know, good good for the US that

it's a US manufactured product we're supplying. But core you know that there are some lawyers for some of the plain TIFFs that question the value of the drug component, the cost of that um and our skeptical, you know, skeptical about you know, basing maybe every any kind of national deal on what what what happened in the Texas settlement?

So what do your expect patients? Will it continue to be this combination of drugs and maybe a smaller cash component, or might you have to pony up some significant cash going forward to to put this completely behind you? You know, what you're seeing in Texas is really that we have changed the mixture, because if you go back a bit more than two years when we had the framework settlement with the state ages where both Johnson Johnson, the three

distributors and we came up with a solution. The solution for j n J and the distributors were sold based on cash and we were the only ones having a combination of cash and product. Back then, it was two million dollars in cash and twenty three billion dollars in product. Now we have of course switched that dramatically around now you could say with the Luciana settlement and with the Texas settlement. And in the Texas settlement the value is two thirds cash one third product. So there's been a

significant change. And it's no secret that the plane of lawyers, they don't get fees based on the product. So of course from there earns perspective, it's much better to see cast and product, and you could see I think the mix we have now in Texas is both very good for the population in Texas people suffering from sofistance Altimore, profitable for the planing lawyers. Everybody has to agree. At

the end of the day. It makes me optimistic we can reach a nationwide settlement by the end of the year. It just quickly, yes, no, within the next two months, is all right. I gotta run court. Thank you so much. I wish we had more time, course salts to his president, chief executive officer Teva Pharmaceutical on the phone from Precipiti in New Jersey. Excuse me, but we are definitely seeing the stock move higher in the trade today now, But you want me drive? Oh no, no, no, no home please,

I'll do the right gravels. I don't want to drive. It's good question, good drive. This is the drive to the Globe Radio. All right, everybody, we are just about ten and a half minutes away from the closing bail and what's been another busy week for earnings. We've got a bunch coming after the clothes in concluding, of course, Walt Disney Company. That's the big one. Uber Sonos, Ye, don't forget about supply chain questions when it comes to

Sonos and Mattel. And also as people are getting out in the world post pandemic, maybe they're not so into buying sound systems and the light right for their home. That's an important question that we're gonna ask CEOs Patrick Spence tomorrow when we interview. We will, indeed, all right,

we're gonna break it all down after the closing. The meantime, let's get some thoughts from our next guest, our drive to the closed guest Eric Jackson back with us, founder president of the Toronto based hedgephone E M J Capital with us on the phone once again in Toronto. Eric, good to have you back. How are you and I'm doing great. How are you guys doing? Okay? Doing okay? Uh, exhausted already here, but that's why we love this world. Um. Hey, we've been doing this a lot. We've been checking in

with managers now that we're in a new year. How did twenty one turn out for you guys in terms of performance? Because you you, we know you were like what back in but curious about how last year played out? Well,

it was. It was a challenging year for sure. I think that they growth and tech stocks in particular, UM probably topped out for one in mid February, and so we're really almost coming up on a one year anniversary of that date, where you know, you've you've had a few pockets, uh in those twelve months where things have

rallied back, but uh, it's been a huge correction. So I don't know if a year ago, basically folks were already anticipating the interest rate discussions that we've been deep into over these class whatever four or five in six weeks um. But but growth stocks and small cap stocks and the Russell stocks you know haven't really had a hard time. So uh, it's been challenging for sure. It's been it was its big, big change from for sure.

Well it's so interesting though, Eric, because like about a year ago we had you on the program, if my memory serves me, read a couple of companies that you talked about. UM. One included up Start, which finished the year wow up two. Also, I know you were bullish a year ago on Bombardier that had a great year

up close to two. So were you I mean, talked about your positioning in those if you can, and and to what extent that you know helped performance for you in UM both were you know, big big positives for sure, UM both incredibly UM you know, sort of tell the tape tale of the tape of the whole markets because with up Start you're talking about syntact that came public in December to really no fanfare and no one was paying attention to it. It's IPO price is twenty dollars.

Peaked up last year just over four dollars UM. Then it bottomed two and a half weeks ago. I think it was like seventy four dollars and now too as today it's up to like I think it was like a hundred to ten last time I look today, So huge, huge, moves. UM, so I own, I'll start I own Bombardier. UM. Bombardier was more kind of like a you know, a company that was sort of left for debt and had a great run last year as has approved, like like the private check company was not it was not going to

default on any debt. UM, and so it's been it's a lot less bottle bottles tell in comparison, but you know, yeah, positioning wise to him, I mean, to go through that kind of a draw down, I mean, you have to learn to take profits along the way with some of these big moves. But nothing changed operationally in either business or you know, in most growth or tech businesses. That's been the funny part, especially the last three or four months.

Nothing's changed operationally for most of these companies, but the markets basically freaked out. Everything got sold a lot of these names. You know, we're off fifty seven. So even today, even though like some of these stocks have bounced just the last couple of weeks, there's still there's still you know, I would say the majority of growth technages out there that that are still majorly discounted. So you have to do your work. You have to like look into them. Um,

and don't just trust them. So the main narrative that you hear on radio or TV where you have the people come on and say, oh, you can't buy growth or tech stocks and this rising very great environment. I only want to, you know, buy stocks and I can drop on my feet and value stocks and this and that. I mean you just yesterday this company Joe, you know, basically a flying taxi company. No revenue was up. I

think it's up another eight percent today. So you know, you gotta you gotta do your own homework and make make the best desistence for yourself. So is it easier to be long or short right now? Uh? It's easier to be long right now, I'd say for sure, Carol, because you know, even some of the most um beat up stocks. Um, you know that we're easy shorts just maybe like a month ago or six weeks ago, Uh have all been levitating. So um, you know it's you have to watch your short's. I mean, like like look

at Peloton for example. You know that's that's sort of like a cautionary tale and massive you want to get leaning too far one way being sure of stock. I mean as of yesterday, I think Peloton was year today at up six percent for the year, while Facebook was down thirty five percent. So that's funny, hey, um, because we don't think about those two in comparison. Right, Hey, Eric, wondering about some stocks that you know you're looking at

that your bullish on. Let's start with National Cash Register ticker n CR. Why are you optimistic? Well, it's it's like a it's a it's a pure value play. Um, you know, it's it's uh, most people don't even know it's still of stock, but it's it's still around. It's got two big businesses, one that caters to kind of retail and restaurants selling you know, self serve checkout machines, that sort of thing, and then another vertical, which is

focused on a t M s and banks. And so it's even though they totally transformed their business over the last couple of years and now something like over seven percent of revenues are recurring as opposed to one time revenues. Uh, it's it's just a really cheap stock. Um, you know that has sort of been forgotten about. So yesterday they had an earnings and called the announced that they basically or the board is exploring their options. So it's a

forty dollar stock today or forty three uh. My analysis suggests that it's worth over a hundred bucks if the pieces were sold off. So that's one where um, you know, I'm happy to hold it and all ways to thinks the play out, it seems like the management is kind of throwing in the town now because they're sort of set up with being ignored. So that's that's definitely one that's UH. I think has UH is one to watch. Well. We always enjoyed talking with you and really appreciated Eric. Thanks.

Eric Jackson, foundering president of E m J Capital, joining us on the phone from Toronto. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, soundcrowd, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News m RH