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Point for investors and the Fed.
Tomorrow morning's monthly jobs report, we'll have that at eight thirty am Wall Street time. The expected upcoming annual January revision to US job growth will be substantial, but probably not as bad as initially estimated, underscoring tim a labor market that is gradually cooling.
With more on what's to watch for, We've got a Bloomberg News Bloomberg Economics US economist start Paul joining us here in the studio along with Bloomberg's Vince Signerella to connect the dots between the data and the markets. Really please to have both of them here in the studio with Stuart. I do want to start with you, what is the number expected tomorrow consensus versus what Bloomberg Economics expects for payrolls.
We're expecting two hundred and fifteen thousand jobs. In January, consensus is closer to around one seventy. But if you listen to the whispers on Wall Street, folks are really inching up towards that two hundred thousand mark. There were strong economic fundamentals throughout the month. We saw hiring accelerating
as reported in pmis adp surprise to the upside. Also, we also do have to take account of the fact that there was a polar vortex in that lower forty eight states, and we also had wildfires in Los Angeles, shaving a few thousand jobs off the January report.
So in other words, they actually the job market might be stronger than we think because of those special instances.
Well, so the amount of hiring in January was relatively robust. But if we think about all those revisions that you are mentioning, it's going to were the base against which we're measuring January payroll growth. As you mentioned, through March of twenty twenty four, we're going to get a downward revision we think of about seven hundred thousand jobs, less
than the eight hundred and eighteen thousand originally estimated. Then we get revisions of the birth death model through the end of twenty twenty four, that's going to shave off. We think about another two hundred and thirty five thousand jobs, bringing total payrolls at the end of twenty twenty four down by about nine hundred and thirty five thousand jobs.
Adding two hundred and fifteen thousand in January is great, but it doesn't mean that we're breaching where that high water mark that we thought we had already set.
All right, So Vince, you know you watch the ins and outs of the market. I mean, do traders care about these kind of revisions?
They didn't last year for whatever reason, might they this year?
They might?
And it might be more of a political hint of things than anything else, especially with all the stuff that's going on and rumors with Doge and all this stuff that maybe things aren't as up and up, if you will. But to serious point, traders are looking for a number closer to two hundred thousand tomorrow. So I think I
agree with him. I think the asymmetric risk is we see a higher number tomorrow, which is definitely going to probably weigh on treasury yields and maybe even on equities at least for the short run.
Evin's how does they contrast to it sort of in weight of importance to I mean, Carol said, it feels like Friday.
Because it's quite a week.
But which where we focused early in early in the week, that was all anyone could talk about. Yeah, what's the distinction there between what traders are focused on, the eco data, what comes out of the White House when it comes to tariff's and trade.
How do you make sense? So it flipped.
I mean, no one cared about jobs when the tariff news was out. When you were looking at twenty five percent tariffs on both Canada and Mexico, ten percent going out to China, that was the big deal. When that was on pause, Bang, back to economic data, back to earnings.
That's now the focus.
A couple of weeks from now, three weeks from now, whenever this pause ends, if we go back to tariff's again, we're going to flip again. It'll be tariff news that weighs. And I said what best and said today in market's not picking up on He basically said, China is going to be the ones eating the cost of these tariffs. That means the tariffs and China are going anywhere and could possibly be increased so that may sort of even things out with both data and tariffs come back into the nature.
Do you agree Stuart, that China is going to be the ones eating the tariffs?
I think when it comes to prices, I do expect China to eat a large chunk of of the tariffs. There are too many margins along which prices can adjust before it gets before consumer goods get to the shell cut field.
Reduce prices ahead of the tariff.
So China can lower trying to can lower their prices as they're heading out of the port. You can end up seeing further dollar appreciation that helps to office at the effect of tariffs. When it comes to consumer prices. When you look within the federal government data and you look at corporate profits, at least in the aggregate, there is room for a compression there. So there are all these margins again against which prices can adjust before get
to the shelves for consumers. So who's gonna end up feeling the pain Probably China a bit more than US consumers for that specific set of goods.
So you're saying, like a manufacturer who manufactures over in China, even though it might be an American company, the manufacturer in China is going to say, we're going to cut your costs, so we're going to eat some of that over there, So that once the tariff has put it on the American consumer, it doesn't feel.
You have manufacturers, you have importers, you have wholesalers, and then you have retailers all along that chain. You have room for compression before consumers feel the pain.
Vince, What is it like though, Like in this environment, like we've seen Donald Trump in the White House before, it does feel a little bit different. But there is a lot coming out investors and trying to figure out what's the sticky stuff. What's the stuff that really sticks around? Is it tariffs? Is it tax cuts? Is it I don't know? Or is it like what is it?
So?
How do you make sense?
I think we have to think the tariffs are going to be here? He ran on tariffs. He's thinking about putting across the board tariffs which nobody's talking about of two and a half percent or higher. It's in the background. He's not even brought it up too much, but it is in the conversation in the White House that two and a half percent to maybe five percent tariffs could come out across the board on every product. We're not
seeing that yet. That may not come forward, but they're they're talking in the White House and it's not practical, but that they're thinking in the White House that they can use tariffs to either reduce or eliminate the income tax. Now, US consumer would obviously love that we'll pay You don't pay a tax unless you buy something. Probably, I mean,
realistically not going to happen that it can compensate. But I believe they think that they can do some form of tariffs to raise some revenue along with the cutting of expenses, that they can cut taxes to appease the voter base, and to just to promise to deliver on what he promised.
You know, I think about what.
You just said, Stuart, because as an economist, you know, you have to figure out again how long these tariffs stick around. If there's more that are put on. I understand that China can eat some of it, perhaps, but there's got to be ultimately an impact on some US companies too.
Sure there are an impact on US companies and.
Growth ultimately maybe here in the US and.
Growth, that's right. So the first element that you have to deal with on the growth when it comes to growth is that before tariffs are implement that you have a surge in imports, and that starts the way on growth. With the implementation of tariffs on Canada and Mexico delayed until March, again, expect to see as much importing of goods from those two trading partners in advance of announced tariffs or any sort of agreement during the first quarter.
So that's going to weigh on growth immediately. Then the growing pains that come with reorienting supply chains does weigh on growth as well. So I'm certainly not dismissing those as a geopolitical tool, though in sort of trying to position the US visa China, it makes sense that Trump would look to keep those tariffs in place where it gets to be a little bit simpler of a relationship,
let's say, with the US and Canada. It doesn't make as much sense to be as harsh with tariffs on Canada, for example, and because most of the net exports that Canada is sending our way are energy products, and Trump isn't going to want to deal with higher energy prices, especially if that does ripple through to.
The gas pump.
If I want to give you the last word on the trade. When you say that the market's not picking up on what you think the president has communicated with regard to tariffs, what exactly do you mean? What do you think where do you think prices should be?
Well, I don't think they're taking it seriously that tariffs are coming. I mean, let's not forget we already have tariffs in China that he imposed in his first term. They're still on the Biden administrations and takes them off, so it's not like he's opposed to doing this. I think what the tariffs and the situation with Canada and Mexico, the thought process on the street was if I'll slap my friends around, imagine what I could do to you China and Europe.
And let's not forget Europe.
He really has the hots for putting tariffs on Europe and they're coming.
They will be coming.
So I think he's going to like counter in Mexico off easy with maybe some minor tariffs just to just because of the fentantal situation until that comes under control of immigration. But I think China and Europe are going to pay the price of this, and the UK eventually as well.
All right, well we're going to be on tariff watch, that's for sure. All right, guys, thank you so much. Vince Nurella here in studio, global macro strategist at Bloomberg News, and of course our Stuart paul Us economist at Bloomberg Economics.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Let's get to our latest on Elon and his work there at the US government the Washington Post. We do want to point out reports that representatives from Elon Musk's DOGE have fed sensitive data from across the Education Department into AI software to probe the agency's programs and spending. This according to two people with knowledge of the DOSE team's actions. Again, this is coming from the Washington Post.
All of this coming on the back of Elon Musk's efforts into the US Treasury, which came to.
Light this past week.
We've been talking about a lot here at Bloomberg, and it brings us to what is the most read story on the Bloomberg today about how Elon and his efficiency team, who have gained access to the Treasury Department's computer network, have caused alarm and sparked a stand up between bureaucrats and President Trump's administration with more. We welcome in Ted Man. He's Bloomberg News, Money and Influence reporter. He's out there
in our DC bureau. Ted a lot of places to go, and we know we heard from the US Treasury Secretary on that. We'll get to that in a moment, but give us an update update in terms of the work that Elon Musk and the Dosee team have been doing specifically at the Treasury and the type of back and forth we've been seeing.
Well, thanks for having me. The work that they're doing is primary, rarely focused on the information systems that flow through the Treasury. That's information on all the payments that the US government makes, all the identifications of programs and individuals, and all of the stores of information that are contained
inside that agency. The fact that this team of relative unknowns were able to so quickly get access to that information alarmed members of both parties in Congress, even Republicans. We reported this morning that five or six Republican senators have privately lodged objections to the White House when that became clear, because it's really unprecedented to have relative newcomers crawling through the very most secret forms of information contained within the Treasury Department.
What did the GOP senators take issue with? According to your reporting, the.
Best that we have been able to understand is that there was a feeling that this was a little bit too big brother. That's how one person put it, that
this is going deep into personally identifiable information. There was in the some of the early reporting this sense that the government that these staffers were really getting a very up close and personal view of what individual information was within the Treasury Department, and they were lodging objection to that, saying that it was, you know, the sort of thing that bothered them as being overly invasive and really uncontrolled.
We don't really have any sort of precedent for this kind of behavior.
Who is on the Doze team?
And we're gonna hear a little bit later on this hour and about twenty minutes time or so the Treasury Secretary dressing some of those officials.
But what do we know about who is the DOGE team? And the qualifications well, in.
Terms of people at Treasury, one thing that we reported this morning, which the Secretary confirmed later on in his Bloomberg interview is Tom Krause, who's one of those DOGE officials and is now at Treasury, is someone that's Scott Besson interviewed in December when he was putting together his team, and that in that conversation they discussed this very level of perusal of the forms and systems within the Treasury
Department that is now underway. And what that shows is that while you have Republicans on the Hill being a little unnerved not having expected this to happen, Scott Besson himself is much more on board with this than a lot of people may have previously assumed.
I'm curious what you know. We've learned quite a bit from Scott Bessen thanks to Silia Mosen's interview with him a little earlier today. He did say that he personally vetted Treasury employees and that they only have read only access to federal payment data and there's been no tinkering with the department's payment systems. Does your reporting align.
With that, Yeah, that's been the biggest question, and certainly on the Democratic side of the aisle, there was great alarm at this notion that they were getting in there in these systems and potentially altering code, doing things that went beyond simply looking at this information, which is unusual enough, but actually changing what was in there. So this is the first time we've had the Treasury Secretary saying no,
that was not occurring. They had previously sent a letter to the Hill in response to some lawmakers, including Senator Ron Wyden, but even the letter itself seemed to say that they didn't currently have anything that went beyond read only access. What Besin said today was that no, they had not changed anything or tinkered with those systems about how money flows.
Hey, Ted, my understanding too, is a federal judge temporary limited access to the Treasury payment system.
A group of.
Unions accused the agency of illegally sharing members information with Musk's team, and this is that order that allows only read only access to those two Musk associates, including Kraus.
What's interesting is.
It does sound like the legal system is kicking in, so who in general are bringing suits and might bring more suits to kind of maybe prevent elon Musk and his.
Team, the DOSE team from doing more at Treasury.
Well, in particular, I think you're going to see legal efforts that originate with organized labor because to the extent that DOGE has sort of signaled its ultimate intentions, one of them clearly is to reduce the number of federal employees. And so the unions who defend those workers' rights are starting to agitate essentially to slow this effort down until they can understand what's going on.
That is the most likely.
Initial wave I think of legal action.
I'm curious.
I'm wondering about the potential conflicts of interest here and the concerns about somebody such as Elon Musk with varied business interests competing with companies such as Boeing companies that are Internet service providers with Starlink of course, competing against other NASA contractors with SpaceX. What type of data, even if it's read only, he could have access to that has folks concerned.
Sure.
Sources we've talked to, including former members of the Trump administration first time around and other officials, have pointed to exactly that if you were a businessman with the breadth of interests that Musk has, and you had unfettered access to all of the information in the United States Treasury about what about your competitors' finances, about payments and payment schedules of the US government to them for the contracts that they hold.
We don't know.
To what extent they have or plan to or will look.
Into tax data.
You might want to know a lot more about the taxes of your biggest rivals, you know, the other ev manufacturers. All of that is on the table. And since we've been told that Musk himself will be the one deciding if he has a conflict of interest in what he's up to, the government and the press and the public don't have a lot of assurances that he's not looking at these these stores of information as a way to improve his business propositions.
And that's the important distinction, this conflict of interest or potential conflict of interest, right, ted, I mean Musks classified as this special government employee. This temporary designation limits his term of service one hundred and thirty days out of the year. He doesn't have to provide those financial disclosures and other ethics requirements. So the classification is there because other administrations have brought in outside help, maybe just for
a short term period. The difference is, many would argue, is that you're bringing in a CEO of a publicly held company and companies that you know, in particular SpaceX, you know, have billions of dollars in government contracts with the United States.
That's right.
It's the definition of a conflict of interest to be in the position that he is in right now with continued personal involvement in for profit companies that do business with the government that he's helping to advise and advice. Seems a little like he's going much farther than advising,
it seems like to us from what little they've said. So, yeah, this is an unprecedented situation for someone to have the financial interest he has in his companies while simultaneously dictating the operations of the government.
TED.
We should note there are quite a few supporters of Elon Musk and what he's doing. Look no further than the replies to what he posts on his own social media platform, X. What are you hearing publicly from folks inside and outside the government about? Yeah, the government maybe is spending too much money, Maybe there does need to be some controls, Maybe there needs to be some modernization of these systems.
What are we hearing there?
I mean, those are all conventional platitudes of American politics. Everyone always says they're for the government spending less money on things they don't like, and for the government to be more modern and to operate more efficiently, and to spend taxpayer dollars. Wisely, these are not new sentiments, and certainly he's getting I think a lot of support from people who feel like maybe this is the way to all to the government in ways that it has not been shaken up.
So roughly in the past.
So there is support for that, and even some of the Republican lawmakers who have privately been a little leery of some of the ways they've been going about their business over the past couple of weeks, are still sticking by Musk. Personally, no one is registering any objections either to Musk or to Trump with some of these early actions, not on the Republican side, so certainly they are acting
as if they have a mandate. And on the Republican side, there has not been a lot of nothing really in the way of public resistance to this, only some private concerns.
Ted after you and the team doing the reporting on this and what's going on at US Treasury and listening to the Treasury secretary talk with Seleia of Bloomberg's lah Mosen in her interview and what he had to say about the dose involvement. Do you have more questions that do you feel like that, ultimately, if the Treasury Secretary said Nope, you can't.
Do that, that that would be it.
Or do you feel like it's more of a collaborative question where the President might weigh in or Elon certainly wields a fair amount of power right now.
Taking the Secretary at his word, I don't think we really know the answer to that question because we don't know what request for access or our abilities to change things might come from Musk or Doze or someone working for him today, tomorrow, or next week. We haven't gotten there yet. We don't know who will have to say no to him. We don't know if they will say no to him. And ultimately, if Musk appeals to President Trump because someone has not given him what he wanted,
we don't know what Trump would do. So that is a dynamic that remains unknown. Despite what Bessant has said about not allowing them to tinker with the payment system. Yet I would also note that in Besson's interview today with Silea, what he said was that this DOGE operation is a purely operational review, that it's not ideological, and that's just totally contradicted by the things that Musk is
saying publicly. He's saying he's referred to USA IDEA as a criminal organization, and he's bragged about feeding it into the wood chippers. So those are two different accounts of what they're up to, and we don't really know what the truth is yet.
All right, Ted Man, thank you so much.
Bloomberg News, Money and influencer reporter, joining us from our Bloomberg News bureau in Washington, DC.
This is the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern up on applecar Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty.
We are watching shares of Hilton worldwide, the stock ralling to a record intran day right now, just up under just under five percent. The hotel company did report fourth quarter earnings. The company's forecast for full year just at EPs did miss analyst estimates, but they were encouraged by the outlook for revenue per available room growth. We're talking about RevPAR as. It highlights Hilton's plans to expand to new markets. The news I should point outlifting others in
the hotel group, including Merritt and Hyatt. Shares of Hilton, by the way, up about ten percent year to date. They were up about thirty five percent in twenty twenty four.
It's great to have the president and CFO of Hilton joining us, Kevin Jacobs joining us from McLean Virginia.
Kevin, good to have you with us. Talk to us about growth.
Because you've added one hundred and seventy one properties to your global network.
How much more are you planning to do?
Yeah?
First of all, Tim and Carol, thanks for having me again. It's great to be on with you. Look, I think how much more is a difficult question to answer. We actually added, you know, almost one hundred thousand rooms to our system just in twenty twenty four, but we signed over one hundred and fifty thousand new rooms into our development pipeline. Our development pipeline is now just about half a million rooms, with just about half of that of those half.
A million rooms under construction.
We grew net units seven point three percent in twenty twenty four, and we've gave guidance that we would grow six to seven percent in twenty twenty five. And so and we think that growth trajectory can continue. So I think, you know, there's a great fundamental setup for travel around the world with a rapidly growing middle class that has shown, you know, time and time again that they want to travel.
And if people have the ability to travel, build travel.
So we, you know, grow our system in response to travel demand around the world, and in partnership with our owners, our hotel owners and developers who are allocating their capital to accommodate that growth. And so I don't want to use a lot of hyperbole and say the guy's the limit.
But you know, we're very excited about our growth trajectory.
But you want to say the sky's the limit?
No, actually, and I did.
So there you go, Kevin, What I want to ask you? What really?
Tim and I both perked up when you said middle class, you know, demand, because we constantly talk about there is no middle class or the middle class feel strained at this point. We talked with is that, the head of Travago, and they talked about, I think more higher end travel that's going on. Tell us about that sector of your business, what you are seeing and what do you mean by middle class? What are the rooms that they are looking for, the types of destinations they are looking for.
Well, the second part. First, look, we have a growing luxury business.
Right Our Walder Conrad brands you know, continue do really well broadly in luxury lifestyle. Half of our signings last year we're in that segment. So we serve the upper
end really well. But if you think about the addressable market for travel, it's broadly, you know, the middle classes around the world to travel, and we have brands that you know, starting with Waldorf, but going all the way down to spark Our, our premium economy conversion brand, True is our new new build you know, mid scale brand and and and everywhere in between and so our you know, our overarching strategies we want to accommodate you know, any
traveler anywhere they want to be in the world for any travel need they have, and that goes up and down the spectrum of price points but it's really if you think about the addressable market for travel, it is it is, broadly speaking, the number of middle class people on.
The planet geographically. Where are you seeing strength and where you seeing weakness?
I mean, in terms of growth or fundamentals? Are both?
I want to know fundamentals.
I mean, we're not really seeing weakness.
You know, our fourth quarter exceeded our expectations were we grew revpart, which is our metric for same store sales, three and a half percent, two point seven percent growth for the year. We're in a situation where capacity editions are relatively constrained.
You know, is measured in the US, it's about one percent.
A little bit harder to track globally, but broadly speaking, you know, call it one percent growth. Around the world, demand is probably growing a little bit better than that too, or better. So that gives you a little bit of pricing power. And then with inflation, you're willing to you're able to take some price and so our guidance for a system wide for the year is two to three percent.
The US probably at the lower end of that range, China probably at the lower end of that range, and then other parts of the world like Europe, the Middle East, and Asia Pacific ex China, you know, sort of growing at the at the higher end of that range, if not higher mid single digit growth. Hey, ken really not weakness and fundamentals anywhere.
In the world.
Interesting in the US though, specifically any difference between business versus leisure travel demand and how that's trending and what that might mean for profitability.
Yeah, I mean quarter over quarter, you know, coming out of COVID obviously saw a lot you know, a little bit of a mix shift or actually in COVID like a big mixshift, but then coming out of COVID a little bit of a mixshift, call it four or five points of mix of our business to levels of leisure travel that were historically higher than they had been. That's sort of normalizing it did. It varies quarter over quarter, but all of our segments were strong in the fourth quarter.
So leisure leisure transient grew four percent in the fourth quarter, Business transient grew three and group business grew three.
We think that.
Business transient as it continues to recover, and particularly group which is on a lag because you know, the bigger the group and bigger the meeting, the longer it takes to plan, and so group business tends to be on a lag, and so we think group and business transient will lead the way with leisure being a little bit softer. But that's not because it's really softening per se, but it's more just kind of tougher comps.
Hey, listen, you also when you were kind of going through geographies, you mentioned China in particular. We've been wondering, you know, any indication that the domestic hotel bookings, that the weakness that you guys have seen in China last year has ameliorated with some sign of improvement, any more color you can give us around the business there.
Yeah, I mean our expectation is that it will grow this year. You mentioned you know, you're right, the comps are easier, right, We were down about five percent last year.
We do think will be up a little bit this year.
The other thing you're seeing in China that you have to think about in those numbers is yet you know, yeah, their consumer is a little bit weaker than it's been in the past, but they're now they've now opened up cross border travel, right, So some of the reason that domestic China is a little bit softer is because you have a portion of Chinese travelers who are going outside of China, which is benefiting our business just broadly in Japan and the rest of and the rest of the APEC outside of.
China, everybody's going to Japan. That's the whole thing we keep hearing, Kenvin.
We're asking everybody we talked to about how Washington is affecting their business and the transition there. In your view, how has US business sentiment changed since the presidential election? How does that make you think about Hilton's twenty twenty five room price and occupants, the outlook in the wake of tariffs, a potential trade war, and just overall sentiment.
Yeah, Look, I think I think start with overall sentiment is generally more positive, right, I mean, I think about for whatever your views are on all these various issues, I think you know, broadly, the expectations for the environment around regulatory issues, taxation, you know, fiscal policy, et cetera, are that it's going to be supportive of economic growth. There are some other things. Yeah, trade wars and tariffs
you know, tend to be can be tricky. But I think all that's it's early days to know what's going to happen for all that stuff, and you know, bakes into our guidance that I you know that I won't repeat.
Because I said it earlier.
Is our best thinking on that, which is just look generally. I think we think, generally speaking, if you look at survey data, if you talk to customers, if you talk to people that run businesses around the country, I think people are generally more optimistic since the election, and we suspect in the near term that that's going to continue to support fundamentals. What happens, you know, specifically around certain policy decisions, I think, you know, some of them could
be head when some of them could be tailwinds. But again, the broadly the fundamental setup in our business with capacity editions in check, demand growth. Yeah, the picture for demand growth and the prospects for a recession seem pretty low. A little bit of inflation around the world, and then US, you know, continuing to take share, both in terms of accommodating customers and then in terms of our share of
the development pipeline. You know, we're nearly twenty percent of the rooms under construction around the world and five percent of the in place supplies.
So Kevin, we got to run so glad we got some time with you, Kevin Jacobs, President CEO CFO, I should say of Hilton joining us on Business Week.
You are listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
We got a snapshot of what's going on in big pharma thanks to results from two big players. Pfizer reported on Tuesday, Eli Lilly reporting results this morning. You know you've got that going on, and then you've also got Robert F. Kennedy Junior clearing a Senate panel, making his way toward confirmation next week. It's something certainly big pharma has been watching Tim for more.
We're joined by Jeff Meacham, Managing director and global head of Healthcare over at City Bank. Shares of Lily hire right now by just about three percent. The earnings forecast came in line with analyst estimates. Jeff, there was some discussion on the call about whether Lily is it all concerned about demand given the weird supply chain dynamics that have led to two consecutive sales misses. Lily brushed off those concerns. Are investors right to be concerned?
Yeah, it's a great question, Tim, And by the way, thank thanks for having me. You know, demand is is by far, I think one of the bigger, you know, bigger picture concerns for Lily. If you don't have demand, just the stock really is not going to work. But I'd say three Q and four Q the disappointments that we saw, I think we're mostly related to inventories and we've done physician checks, You've done looking at all the
the you know, the competitors, including Novo. Demand is is unequivocally strong for you know, for obesity, and it's still very very strong for.
Diabetes as well. So I feel very good about the picture.
I'd say it's that day's move when the stock is really a bit of a relief that there's now a beatable bar on top and bottom line and that there's less I think anxiety right over over trying to beat bigger, you know, numbers that are really kind of outsize, I mean.
And going you know, just staying with the obesity market, Jeff, I mean, you know, what are the latest numbers in terms of the potential for this market, and are these numbers do they continue to go up?
Yeah, A good question, Carl, Yeah, I mean, I think if you look at the end of the decade, clearly we're talking about this being well more than one hundred billion dollar market. Diabetes should be a very big component of that. But obesity, I think is you know, is
obviously in its you know, hyper growth phase. No one's talking about obesity being a twenty five thirty percent penetration kind of market, you know, even being one hundred billion dollars potential for GLB ones or more, we're talking about still a ten p ten fifty percent penetration in obesity. So there's a lot of room to go. Even if pricing collapses, you still have I think much stronger likelihood that you know, people want to go on the drugs.
But the other thing that that's not really talked about is that you have a bunch of other indications sleep that in the heart failure or chronic kitting disease. Literally just announced hypertension with their new oral or foglypron So the totality of indications that could address you know, you know, it probably could be multiples right of the current you know, diabetes market, there's a lot of these indications that are obviously related.
Is this likely to be this class of drugs the largest, you know, kind of drug group ever in the pharmaceutical industry.
I think so it's and it's not that you know there we're just talking about a simple weight loss drug in obesity or HbA once see kind of management and diabetes. I mean, these drugs reduce you know, risk of death of cardiovascuar disease. You know, they lower lipids, they lower blood pressure. So the totality of the benefit is very dramatic.
And I think if you look at the ven diagram of overlapping indications, you know, certainly any diabetes and obesity are at the core, but there's a ton of other indications that you know, Lily and Novo haven't even talked about, but still could easily be addressed.
But it's all basically right, lose weight. I'm not trying to be silly about it or stupid about it, but it's the concept of you know, obesity and the problems that that creates on an individual, but that you you know, courtesy of a drug, lose weight, and.
Then so many other health ailments go away.
So that you're you're you're right that losing weight is by far the biggest, biggest component of it, but we also see in a lot of these trial readouts, you know, things like changes in behavior reduction and compulsive behaviors.
So it's more than just the weight.
There is sort of the gut brain access, you know, a piece of it which is still have yet to be fully you know, vetted out, but certainly you know, there are other mechanisms in place besides just sort of reducing for example, the time that you know food goes through the gut and that is.
A direct result of losing weight.
There's you know, probably I don't know, pap a dozen you know, sort of mechanisms that are in play kind of in the background that I think we haven't really fully vetted yet.
And we've got to talk about RFK Junior and what he could mean for drug makers or vaccine makers. Do you think he'll be more focused on food? Do you think he'll be more focused on pharmaceutical companies. During the early parts of his hearing, there was a lot of focus on pharmaceutical companies and funding. How are you viewing his likely confirmation?
Yep, Yeah, I'd say overall, I think there's very high probability that he is ultimately confirmed. I think food is less controversial, you know, for sure. I think the only thing really here is, you know, how strong is the food lobbying group as sort of pushing back on some of the changes. But in the in the pharma world though, you know, no one's talking about and he's not talking
about pulling vaccines from the market. All really is is maybe recommendations coming down from for example CDC or FDA. I think it's just transparency is the main objective there. The other debates really are IRA discounting, you know, is it going to be still a direct negotiation between CMS and drug companies or is it going to be another mechanism like you know, lowest price in the G twenty, most favored nation discounting.
You know, we'll see.
But there's only a couple of hot button issues really.
That that you know that we have.
But I would say his his his hearing though, I think really validated the fact that you know, he's not going to govern with the same kind of, you know, off the cuff kind of commentary that that he had on podcasts for example, prior to the election.
Interesting well, and it's interesting and just you know, got about a minute left to your Fizer also came out with their earnings.
That was on February fourth, so a couple of days ago. Stock was traded lower.
The CEO Albert Borla talking about having I believe dinner with Robert F.
Kennedy Junior.
I think the President, he said, had introduced him, and also saying I feel cautiously optimistic that they will be very, very prudent with everything that they do, referring to Kennedy and the Trump administration. Good that they're having a conversation, expectations too in terms of policy, and just got about thirty forty seconds here.
Yeah, yeah, yeah, for sure.
I would say the main thing coming from Trump and the public commentary is really that no matter what, the biotech and pharma industries are one of the more innovative sectors that we have in the US, and I think if you have aggressive discounting mechanisms, if you reduce access to the drugs, I think you're going to mute the impact of that. And so I think there has to
be a bit of a balance. And Bobby Kennedy and Trump and a lot of the other folks working with RFKJ across healthcare that you're going to help with that.
But but it is, it is.
It's good to recognize though that the sort of the innovation and the access to novel drugs is really kind of at the at the forefront of a lot of the policies.
Great staff, Jeff already looking forward to next time. Jeff Meachen, Managing director of Global head of Healthcare at City Bank. Shares of Eli Lilly up about thirteen percent this year, Pfizer down about three percent here to date.
This is Bloomberg.
Mac.
I'll bet you let me drive.
Oh no, no, no no, this is not a twenty Who's.
Going to drug a please?
I'll do.
Let's wat I want to drive.
It's a good question.
This is the drive to the clothes.
Plums for me? Effect well driver Jona Don.
On Bloomberg Radio.
All right, TikTok, everybody, Just about eighteen nineteen minutes left in today's trading session before we get to the clothes on this Thursday, and then some big earnings. We keep talking about Amazon, but that's not the only one reporting. Take to Expedia, microchip Technology, ELF beauty, Pinterest affirm so just a few companies that are coming out after the clothes, We're going to be busy.
Which one are you most excited about?
Come on, Amazon?
No, I thought you're going to say you have no favorite children.
You mean when it comes to earning. I don't know. Amazon will be an interesting one.
Just because of the size of it, the mic, the cloud, the AI, the you know, all of it.
WS.
I'm curious what Jim Smigel is focused on, his chief investment officer over at SI. I see, I's got about four undred and seventy six billion dollars in assets under management. Back with us from Oaks, Pennsylvania, Jim, how are you?
I'm doing well, suburban Philadelphia. I'm focused on Go Birds this week?
Okay, I bet you are. You're busy.
Hey, are you going to have a chance to actually watch the game or are you going to be focused on what we hear from the White House when it comes to tariffs or any other breaking news?
I will, I will cut out Sunday evening and block everything out.
And he's only focused on the big easy for sure.
Okay.
The reason I ask is because that's certainly what I think a lot of folks did last Sunday when they were hearing from the White House about reports of tariffs and the news that we did get.
How are you watching the Grammys? Is that what you were saying?
No, were you watching the gull Okay? I was like trying to read up on tariffs. You know there was stuff that yes, Trade representative website, are those sorts of things? How are you looking at the uncertainty there?
You know, we are, like most, I think, trying to take a little bit of a longer term view. I mean these initial kind of forays, particularly when it relates to Mexico and Canada. I think President Trump did kind of attach enough of a border and fentanyl issue to those tariffs that we weren't overly surprised that they kind of came off, or were at least that can was kicked down the road for for thirty days.
I think, well, just to jump in, just to jump in, I think that for a lot of people, that may make sense for Mexico, but there's been concern about, well, what's the actual measuring stick? If only you know, sub fifty pounds of fetanyl came into the US from Canada last year.
Yeah, if you dig into that a little bit more.
There was a there was a huge British Columbia bust of a fentantal lab. You know that when you hear the fifty pound numbers, that's what gets caught, you know. I think the reality is is it's a very long forest border to the north, and I would imagine that those in the Justice Department are where that that is a bit more. That is a bit more than what maybe the headlines of fifty pounds wouldn't suggest.
That's a good point, all right, So a lot coming at us earnings. You've got whatever comes out of Washington in terms of policy or changes.
You know, it was interesting.
We've been kicking around story that has come out on the Bloombergers want to pull it up here, and this has to do with what President Trump might do in terms of as he moves on to one of his next priorities, tax priorities, and outlining some of them in a meeting with Republican lawmakers, including ending perhaps the carried interest tax break, expanding the state and local tax deduction.
Yeah. I live in a high so yeah that'll make me happy.
But having said that, tax policy is going to play into certainly the amount of money that potentially is out there in the economy also could play into the inflationary pressure. So how do you roll into how that might mean investors might want to think about their portfolio at this point.
Maybe it's true.
So yeah, I think there's a little bit of that, right, we're seeing that with a bit of the tarirists, because that's what twenty twenty five is, particularly this first six months is going to be this big balancing act. You know, one, are the positives that we're going to see from deregulation, from lower taxes, from a physical stimulus perspective. Are we going to balance that out from potential inflationary pressures coming
from tariffs? I mean, this is this is really what we're all faced with, and and you know, as this administration is prone to there's going to be a lot of headlines before there's actually action.
So the only really way for.
The investor to kind of handle this is take a slightly longer term view.
We think that balancing act.
Does leave us positive risk assets here in the short term, but you know, we're keeping our eye on yet ro on rates.
We're keeping our eye on that magical five percent level.
That's kind of our guide for twenty five to see when things start, we start getting a bit nervous, and perhaps investors should get a bit nervous as well. You know, tomorrow, excuse me, the employment report very very important.
Terrh Palell kind of.
Really blew off that part of the FEDS mandate at the last press conference, saying, look, we think we think the employment situation is perfect right now. There's a chance the whisper number being one seventy. We also get revisions tomorrow, which is very very important. That's something that can actually be a market moving event if that tilts this kind of Goldilock.
Scenario with the employment situation one way or the other.
We talked about that earlier.
Paul.
Yeah, Hey, Jim, in your view, was the FED chair Uh? Was he right to sort of shrug off the concerns about labor. I mean, it was just a few months ago that labor was it seemed to be more of a priority when it came to that duel mandate. Do you think he's right here?
I think he's a little too confident because you went back to my notion of this balancing act with regulation and tax cuts on one side, tariffs and immigration reform on the other.
It kind of comes down to this wage pressure issue. Is there a chance that as we get through the first.
Quarter and into the second quarter, we see some wage pressures building that could make things a bit more difficult for the Fed And the story that they can look past employment and focus on inflation is kind of their real real problem.
Child. Hey, one thing I wanted to ask you.
There was a story out there on this coming from JP Morgan's global quantitative and derivative strategist, that investor sentiment across the so called mom and pop traders reaching the highest level on records. So we're talking about retail traders. Is that a positive sign in your view?
It's a positive sign in one way, and that what's really been working in the market for the last twelve months is momentum, and that's kind of a bit of a sign that that momentum is probably going to continue in the near term. From a timing perspective, when you've got to kind of get that massive amount of optimism, you're always asking yourself in the back of your mind, there are we getting closed or calling you top? We have all these earnings coming out. That's really what twenty
twenty five is going to be Ken earnings deliver. We don't see a lot of multiple expansion from here. Not surprisingly, we do see and I think this was mentioned a bit earlier. Financials actually are having a great year. That broadening out of equity performance. It's something we do back to continue and that could actually make the mom and pop trade one that is correct, It's just not going to be driven from the same concentrated players as we've been seeing.
All Right, we're gonna leave it on that note.
Really appreciate the overview, Jim, take care of have a great weekend.
Good luck on the big game.
Although I am kind of ye Kansas City Chefs fan, so I'm a Giants fan, So I can't is that what it is?
Is that it is?
It has nothing to do with you don't want to wear a Giant.
It's like anything else, Philadelphia, What nothing to do with anything else?
Like, No, it's not the tailor thing. Yeah, which is it's kind of interesting.
I don't know.
It was, you know, interesting in last year.
What everyone was talking about it last year nobody were right, Yeah, nobody really.
Cares keep track?
Okay, I don't know.
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