This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. Those do the ones in today, Those do the world and be lost on away because.
It joins bring back on the memories and the memories, Bring back Memories, Bring back You is a terminate of a member.
Well, It's Bloomberg Business Week, Tim Stenebeck and Bailey Lipswolt's live in the Bloomberg Interactive Brokers Studio. Shares of Micron Technologies up by wow, about three point six percent as we speak right now. The shares of rallied more than sixty percent so far this year. Worth repeating some of the news. The company maintained its quarterly diven end at eleven and a half cents per share. The company is seeing second quarter earnings per share from thirty five cents
to twenty one sense. The consensus was sixty two cents per share. Let's get an instant reaction from Dan Morgan. He joins us this afternoon on Skype. Dan good to have you back with us. He's senior portfolio manager of course at Sunova's trust company. Love it when you join us whenever we have the chip company's report, Micron Technology, you've had five minutes to look at the company's results as shares higher in the after hours before that call takes place.
What are your immediate reactions.
Well, Tim, I think overall, obviously it has to be construed as a very strong beat. I mean, the numbers were kind of moving around on the first quarter. We know they originally came in on sales at four point four billion with a plus or minus two hundred million. Then they raised their guidance to about four point seven and then they beat that number at four point seven to three billion. That was up sixteen percent on the
first quarter. They also guided, as you probably mentioned, going into the second quarter five point one to five point five billion in revenues. Street was looking for four point nine to nine. And then on the bottom line, it was a beat across the board in terms of they didn't lose as much money as everybody expected. Right in the first quarter they only lost ninety five cents, and then going in the second quarter, they're looking for a range of a loss of twenty one to thirty five.
The street was looking for a loss of sixty two. So, you know, just a preliminary look at these numbers, Tim and Bailey, they look very very strong, and it reiterated to give further evidence that the rebound that began in the really the February of twenty twenty three in the chip industry is definitely gaining momentum. We're starting to see that in the memory space.
And with that momentum, what's going to be key in twenty twenty four just looking at the results AI obviously and the spending around that as it relates to data centers is helping, is that what's going to carry Micron in some of those chip making peers, I mean, AI.
Is important for them, probably not going to see that come to fruition until sometime in the second half of next year. They have two products that they currently are working on. One is called double Data Rate DDR. The other one is called high Bandwidth Memory. Those are chips that go into some of these high end AI data servers that you would see let's say with an Nvidia chip going in there, that would be the memory that got would go in to that server. With the Nvidia products,
so that's definitely a big demand cycle for them. The other thing you know we're seeing, guys, is we're seeing a rebound in PCs and we're seeing a rebound in regards to smartphones, which is about thirty one percent of the total chip market. So those were two areas that were really hurting. We had auto and industrial that were previously strong, but we're seeing a nice bounce back after we had that big blip on the upside after COVID.
Hey I'm looking at FAGO on the Bloomberg terminal and it's got a great breakdown of where Micron's revenue actually comes from. So in the physical twenty three, about half came from the US, half internationally, and then when you break down dan international, this is the point Scarlett was making. You had seventeen point four percent of revenue coming from Taiwan and you had fourteen percent of that revenue or fourteen percent of the forty nine percent of revenue international
revenue coming from mainland China excluding Hong Kong. What do investors need to understand when it comes to the China story and Micron.
We know what's interesting is that Micron doesn't have a huge amount of exposure to China. I know that everyone's talking about the restrictions and that was a seven issue.
That's been seventeen and a half percent. Is it nothing? Well, I know, but compared to fourteen percent, I should say.
Yeah, Qualcom has almost sixty percent. That's what I meant when we compare with the shift companies. But yeah, I mean that's going to be the real uh, you know, gorilla in the room as we get into this conference call coming up with the man as a team, I'm sure the analysts are going to really kind of want to zero in on, you know, how much of impact is that going to have in their ability to kind of continue to replicate some of the success they had
in this first quarter in terms of recovery. And you know, you're right. I mean, you take out a certain chunk of that revenue that's huge, and that's part of that recovery story. I guess what I was trying to relate it to is when you look at Micron compared to a lot of the other big chip makers, especially Qualcomm, they have a pretty low exposure of China, but you're right, it's still a pretty high amount of their business. When you're looking at you know, fifteen percent plus.
So is it should should investors be worried about regulatory risk about you know, in the US cracking down on those sales.
Well, I mean it seems like there's regulatory risk now guys in all of these chip companies, right and even Apple, So that's always a risk that's out there. So far, it hasn't really a dramatic impact, Like, for example, Nvidia has a couple of their chips that have been banned and they've been trying to work around it with some chips that meet the specifications. In terms of these concerns that China has raised, they're able to sell in those spaces.
So far, I haven't seen dramatic impacts in terms of, you know, bringing down sales and earning vestments because of the China exposure with the chip players. But it is definitely something that could become a problem down the road, and it could be something that would kind of throw, you know, a stick in the spoke of the wheel here of this great recovery that we're getting in the chip space.
And Dan, I'm just looking at the release and some of the comments from management basically talking about business fundamentals improving throughout twenty twenty four, but already talking about record industry tam for twenty twenty five. Is that an all a concern or surprised to hear and see companies already looking to twenty five when we haven't even flipped the calendar to twenty four.
Well, I think everyone's looking forward to this recovery coming to fruition. And you know, as you start to move out of the hole that we had in the probably about the first quarter of twenty three. You know, how long is the typical chip cycle. Typically they don't last
that long. So I think you're seeing already people kind of building in that will continue to see the recovery through this year as it continues to work into some of these other spaces I mentioned before, like industrial and auto, And then the question is when does this peak out and we start to go the other way, and you know, how can we forecast that and how much carry through will we have and will China be a catalyst that leads up to this this turn again in the cycle.
So again everyone kind of looking ahead, right, Everybody trades these stocks on what's going to happen six months to twelve months down the road.
As if we could know what's going to happen six to twelve months down the road, right, I guess.
That's what Tim knows. He's not going to tell us what's that?
I said, Tim knows, but.
He's just yeah, exactly, that's what.
That's why I'm doing this because I can see the BacT like, hey, hey, Dan, you know to that end talking about the AI impact here. It's something that the company CEO calls out quite a bit in the press release this afternoon, and I'm wondering where you think we are in terms of value capture from the AI rush, specifically for Micron, Like how much more room is there to run when it comes to AI.
I think that's a great opportunity for them going forward. I mean, there's been a lot of studies out that have kind of thrown some numbers around. For example, in twenty three they expect total d RAM revenues from AI to be about sixteen percent, and then by twenty twenty seven to expand to fifty six percent, and then along the way, obviously you're creeping up in terms of overall
revenues being generated from AI. But to me, that's probably the biggest opportunity I talked about earlier in the conversation about how these chips are paired up with a lot of these Nvidia AI chips, and you know, Nvidia continues to do extremely well. AMD's got some new AI products coming out, So I think that's going to be the greatest opportunity going forward, just because you guys know that the memory market is extremely cyclical. It's a very commoditized industry.
They have to compete against Samsung and at Mail and all these other players in the space, so it's it's a tough, tough sled. So how do you carve out an opportunity for growth for yourself, and that is to align yourself with some of these AI chip makers and continue to garner a larger share of that overall AI
memory space. And it's obviously going to be a huge growth component within memory, which is huge, right, takes away some of the cyclicality that we typically have in PCs and servers and smartphones and the other things that are out there that obviously create this this up and down cycle in memory.
Yeah, and we only have about thirty seconds left, but looking at the charts in Nvidia, more than two hundred percent, AMD one to ten. Broadcom had doubled so far here today before pulling back a bit. What stocks do you like with in the semispace.
Well, you mentioned a lot of them. I mean, obviously in Vidio is a holding of ours. Qualcomm they have the A one hundred chip that should go into smartphones. We like Broadcom. They reported a couple of weeks ago they had a pretty good report. They mentioned some of the strengths of getting in their Jericho three, which is
their AI offering in terms of growth. So those would be some of the names you know that We've been kind of focusing on TIS in there too, but they've been a little bit underwater with the auto industrial space being so weak. But though would be some top names that you just mentioned that we're currently on our buy list.
Dan, We love it when you join us.
Usually it's on days when chip companies report earnings, and that's been quite a bit recently.
Really appreciate it.
Dan Morgan, senior portfolio manager at so Novus Trust Company, joining us on the phone from Atlanta.
This is Bloomberg Business Week.
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Well, you saw the alercs last night.
Donald Trump ineligible to serve as US president because of his actions inciting the January sixth, twenty twenty one attack on the US Capitol. That's Colorada's highest court's finding. This is an unprecedented ruling that's headed for the US Supreme Court, no doubt.
Here's what happened.
Colorada Supreme Court issued this ruling late Tuesday, which barred Trump from the states March fifth primary ballot, but stayed the decision to allow the former president to appeal, which his campaign said he plans to do. He has until January fourth, By the way, under the state's court ruling. It's a legal story, but it's also a political story with wide ranging implications for both politics and legal stuff.
For the legal side, we turned to June Grosso. She's Bloomberg News, a legal analyst and host of Bloomberg Law weeknights at ten pm Wall Street Time on Bloomberg Radio.
To find out all the legal stuff.
You just listened to June for the political side, we turned to Jody Schneider, political news director at Bloomberg Television and Radio. She joins us from our Washington, DC bureau. Jody, I want to start with you to get the politics side of this. What did we you know, what's the sort of day two here with the other Republicans and with what Trump is saying about this ruling.
Yeah, it's not a terrible surprise from the former president is basically saying that this is something that has been concocted to try to keep him out of the race and blames Democrats. What's more interesting to me is that the other candidates in the race, people who are running against him for the Republican nomination, they're singing that same tune, and they're saying they would rather win at the ballot
box than via the courts. So the Republicans, including Republicans in the House, have really been standing with Trump in this.
And Jody, I'm just looking through Bloomberg News Morning Console poll from last week had Trump leading Biden by five percentage points among registered voters and had to head match across seven swing states. Colorado had voted for Hillary Clinton and Joe Biden the last two elections. But when you look at this decision, what can it mean for the presidential election given those polls.
Well, the polls are it's still early, and a lot of people are focused on the polls about the primaries. The general is still eleven months away. So there's two ways to look at this. If Trump wins, and he may well at the Supreme Court, he nominated and got several of those people on the Supreme Court who are now serving, that he will get some credence with Republican voters. But where he really needs to win is in those seven swing states, and it will be hard for him
to win with just the Republican base. And how does this look to some of those independent voters.
Grosso come on in here, legal analyst for Bloomberg and he's host to Bloomberg Law weeknights at ten pm Wall Street Time on Bloomberg Radio. What did the Colorado Supreme Court decide?
Here?
So, the Colorado Supreme Court decided that and this has been sort of a legal debate that was started by some conservative scholars actually whether or not under Section three of the Fourteenth Amendment, which was passed around after the Confederacy to prevent Confederates from getting into taking office. Whether the language in it, there's a couple of problems, always a couple of problems. First of all, it doesn't talk
about what an insurrection is. It doesn't say what it means to engage in an insurrection, so that's a question that's open. And also what it says the language is that officers of the United States who'd take an oath to support the constitution. It mentioned some officers. It doesn't mention the president, so that's another question. Does it apply
to the president. So in this case, the lower court found that, yes, there was an insurrection, Yes Donald Trump incided that insurrection, but found that Donald Trump was not that the presidency was not one of the offices that you could that take place, or that one of the officers that section three of the Fourteenth Amendment applies to. The Colorado Supreme Court said, yes, there was an insurrection,
Yes Donald Trump incited it. But the Fourteenth Amendment, Section three does apply to presidents, and if you look at the history, it makes sense that it would apply to presidents. Because someone said to me, well, you know, Jefferson Davis, does that mean that he could have run for president? Because the Fourteenth Amendment didn't apply to him, so it sort of makes sense historically.
So what's the legal route that President Trump could take now in order to get back on the ballot.
The Supreme Court is the only route. I mean, this can't appeal.
The Colorado Supreme Court decision. Well, he could appeal it the colorad of Supreme Court.
No, that's that's the high court in Colorado.
So the next it's not like New York where we have the Supreme Court is the middle court.
So he has to go to the Supreme Court.
And you know, the justices here on the Colorado Supreme Court knew what was going to happen because they gave him enough time to appeal to the Supreme Court. And also the language in this more than two hundred page opinion was full of terms about how they know how significant this is. They know it's unprecedented, and you know it's going to be in the Supreme Court's hands whether or not to take the case, which most people I've
spoken to say, there's really almost no choice. The Supreme Court has to take the case because you know otherwise what will happen in different states across the country are going to have some states like Minnesota. The Supreme Court there said, no, this doesn't apply any any party member. Any party can put whoever they want on the primary ballot. So what's going to happen with the primary is what's
going to happen with the election itself. So I think that all bets are the Screenport will take the case.
And Jody, you mentioned this about the GOP and candidates that Trump is running against standing with him. Is there a route that this would play into his hands in any way?
Well, I think certainly. The former president is very good at taking things that happen outside the political arena, for instance in the courts and with his indictments and charges,
and turning it into part of his narrative. And the narrative is the Democrats are afraid of him, and they don't want him to be the candidate, and some in his own party don't want it to be the candidate because he could win and they know that that is and he will certainly make this case or try to make this case with this as well, again, because this is the narrative that they are against me, they're victimizing me, they are using the judicial system where they control it
to try to get at me, and in this case, he will probably you know, he has working with him in terms of trying to make that argument. The fact that all of the members of the Colorado Supreme Court were appointed by democratic governors, So he will make it political even if it is not entirely political. He will
not make it about January sixth entirely. And that is something, interestingly, we haven't heard a lot from and those supporting him on this, the Republicans who were supporting him saying this is about not using the courts to decide who gets on the ballot. They haven't said a whole lot about the insurrectionist claims.
And just to follow following up on that point, yes, he will say that it's all political, and yes, the justices were all democratic appointed, but it was a four to three decision. So three of those justices, including the chief Justice of the Colorado Supreme Court, voted against using the fourteenth Amendment.
And jine, we only have about forty seconds here, stakehourts correct me if I'm wrong. Minnesota and Michigan ruled against similar lawsuits. What could this mean for other lawsuits from different states wanting to remove Trump from the ballot?
So they would each go their own way, but the Supreme Court will decide whether the Fourteenth Amendment applies. But this is under Colorado law, So that's sort of a question of law that I cannot answer in forty seconds.
All right, Well, we appreciate you trying. Thank you so much. A big thank you to June Grasso. She is Bloomberg News Legal analyst and host of Bloomberg Law weeknights at ten pm Wall Street Time on Bloomberg Radio. And also huge thank you to Jody Schneider, Political News director at Bloomberg Television and Radio. She's now based in our Washington, DC bureau, where she joined us. From this afternoon.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Jo Say Alexa, play Bloomberg eleven thirty and tim.
As worries around the pandemic faded, consumers took to the skies, with airline traffic more than doubling its COVID era bottom as the travel industry for business storms back while the Jump and travel to see Taylor Swift or Beyonce dominated headlines. I don't know if you made a trip out we see some of those cities, but those cities benefited vastly from those concerts. Calendar for conferences, though, and conventions are now packed. Next month we have cees in Las Vegas,
JP Morgan Healthcare Conference at San Francisco. Flick ahead to March, you have south By Southwest taking over Austin. As meetings and exhibitions bring in millions for host cities, better diversity and equality at these events is something that's critical for them. That's why we're talking with Jason Dunn. He's the CEO at the AT National Coalition for Black National Coalition of
Black Meeting Professionals. Joining us now on zoom from Cincinnati. Jason, your organization is an advocacy group that promotes the positive financial impact of travelers of color. How does your organization work to prove the diversity of these meetings and what can that do for the events as well as the cities hosting them.
Well, I appreciate that and thanks for having me. What two days one is? Our organization was created forty years ago this year, and the focus was always to empower, educate, and influence policy of black professionals over hospitality and black travelers. And what that means is that we have gave the value of what conventions and black leisure travelers give internationally and domestic and that number is one hundred and twenty
nine billion dollars. And so our founders were frankly around the table and said, how do we benefit this and how what we do to make sure that cities who are the very cities who are progressive cities, who are in tune with the changes of the demographics, gain or
earn these dollars. And we understand that the one hundred and twenty nine billion dollars that we bring to to destinations also are recycled and also influence jobs and influenced policy in addition to the quality of life and retaining talent and bringing corporations to destinations who believe in diversity. And that's what we've been talking about. That's what we've been doing for forty years and we've been successful this far.
Jason, where are some of the target cities that your organization has its eyes on? I mean, where are the cities that are doing a good job of this, and maybe the targets aren't necessarily cities that are doing a good job, but they could be doing a better job.
Well.
I think it's a couple of things. One is, there are cities who have done a great great over the past years, as your irregular metropolitan cities like New Orleans, Detroit, Washington, d C, Atlanta, Cincinnati to some extent, and Cleveland and places like that. But also there are there are are cities who are evolving who understand that in order to retain diverse talent, in order to retain or gain corporations, and in order to help with the commerce of a destination,
that they have to be more reverse. And we're seeing people up cities like Austin, Texas who are or who is welcome Black Tech Week and black organizations who are in technology have went there as well in cities like Orlando and or Miami who are recognizing the international flair that our organizations bring in our leisure travels bring as well.
And Jason, you joined ncb MP in November last year from visit Cincinnati. What changes have you been able to implement in that thirteen month stretch and what does twenty twenty four, look.
Like, yeah, I appreciate that. So I think for us, we have been more excited about wide in our base. So it's not just conventions and meetings, but also sports. Many of our members are in sports and have in fact, when our members are have the largest kickball tournament in the country. And yeah, I laughed too when I really got the data about that too. So wow, really, I know you've been doing.
Now I want to be part of that.
I thought you were going to find Jason. I thought you were going to talk about Cincinnati FC. I mean, no, I what a season, What a season you guys had.
Hey listen, go hey, I'm with them as well. But we're talking about the members. The members are vast and wide, and many of our associations and organizations are in every single market. Again not just suck convictions, but also the sports and entertainment. And you reference Beyonce, So Beyonce would
not go to destinations whom are not welcoming. And so those are the things that we kind of in the background have advocated for and saying that if you want these dollars, you have to show diversity one and two, Yeah, who you welcome and being a progressive site, and so we've done that and doing that consistently. In twenty twenty four, we're focused on building that bridge internationally. We know that that Asia and Africa specifically our destinations for our members
who want to create that international flair. And we know that as the country in the world is more global, we have to be in those discussions and meeting and understanding what's around the world. And that's what we're doing now. On twenty twenty four.
And Jason, you mentioned black US leisure travelers spent nearly one hundred and thirty billion dollars on domestic and international travel. That was back in twenty nineteen. How is that evolving since the pandemic and what factors are playing into how travelers are selecting their destinations.
Yeah, so I thank for that. So again welcoming policies one two. People are frankly being more stingy with their time and more strategic in where they're going, and so I believe that. And also travel has eased up as relates to to prices, so it's more it's not as expensive to travel as it was before. So people are taking purposeful destination trips and conventions are going to places
where they want to grow. And so as again to be relevant, you have to have a global kind of conversation, a global interest and then many of our associations are looking at the world, not just the nation. And so I think as we begin to broaden our scope, we talk about what those interests are. We talk about how tourism it ties to development, how tourism ties to jobs,
and how tourism ties to economic sustainability for destinations. Everybody's aligned with that, and so people are being stingy with what they're talking about. They're being stingy with where they're spending their money, and they're purposeful on where they're going and how to aligns for their personal values. And so that that's what we've seen in the past couple of years, since twenty nineteen, since the study was dead.
We'll have to have conferences completely recovered since the pandemic, because there was this big concern for airlines that you know, business travelers who pay more because they buy tickets at the front of the plane, and they buy tickets during the week, and they buy tickets, you know, only only
a few days ahead of time. So they spend more money with airlines there was a concern that people are going to be using zoom and Google meet and teams or whatever for meetings instead of going to these conferences. Are you seeing that or has have conferences overall completely recovered and then some since the pandemic.
Yeah, So I would say different different segments we see recovery. Our particular markets are recession proof, and so what that means is that we're going to meet because our organizations are steeped in in tie to social justice, tie to economic.
Recession proof, but not necessarily pandemic proof.
You're correct, because I'm not talking about recession.
I'm talking about, you know, just a change in habits post pandemic with people not traveling much.
Yeah.
No, you're correct. So what I was getting to is that there's a balance. So each organization had to shift and so yes, there is the virtual peace for this more more convenient for people to move back and forth. But also it forces conventions to be more purposeful on why they meet and what they're offering people when they come.
And so the numbers, yes, have come back, but we've seen growth in several categories as relates to larger conventions versus international nationals versus domestic and so those things have balanced out over over time. But yes, we see a positive trend that conventions are coming back. Yes, the people are the hybrid meetings have been more welcome, meaning than they were before. And then there's a balance on content that brings people to conventions versus why they've been in
the past. So I think it's very purposeful and that people are intentional about why they travel, where they're going and who they're going to meet.
Jason, we got to leave it there.
Jason Dunn is executive chief executive Officer at the National Coalition of Black Meeting Professionals. Joining us on zoom from Cincinnati, Ohio.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
Nice music choice. Paul Brennan.
Well, as we mentioned the forthcoming issue of Bloomberg Business Week, it's on news stands tomorrow. It's the Longevity Issue. It tells some of the stories of the billions of dollars that are being spent to live longer or age slower in the never ending Quest for the Fountain of Youth or to be Forever Young. Stories in there also delve into the science behind the concept and how researchers are making headway when it comes to longevity. And that's where
the cover story comes in. It's by Kristin V. Brown, healthcare reporter for Bloomberg News. She writes about how the biggest breakthrough in longevity may start with metapo. As I mentioned, this story is in the upcoming new issue of Bloomberg Business Week. You can pick it up on news stands tomorrow. It's already online at Bloomberg dot com, Slash business Week and on the Bloomberg terminal. With more, we are joined by Kristin B. Brown, healthcare reporter for Bloomberg News here
in our Bloomberg Interactive Broker's Studio. The story starts with mice. With mice, yes, how do they play into this?
Well, So, mice, as many people may know, are a very common model animal in scientific research, and this scientist in particular was giving mice ovarian tumors to try and figure out whether a hormone called AMH that both men and women produce lots of, whether that hormone could treat the ovarian tumors, and when he did that, he gave them this AMH gene therapy. And when he did that,
he realized something incredible was happening. Whether they actually treated the tumors or not, I don't know, But one thing they did do is make the ovaries of the mice shrink. He said they looked like the ovaries of newborn mice. And what that suggested to him was that it was almost like a reverse aging process, that this hormone reversed
the aging of the mice's ovaries. And as any one with ovaries, nos, as your ovaries age, they age much faster than the rest of your body, and eventually that means you can't have a baby, eventually go through menopause, which is horrible for many women. So this indicated that he might be onto something huge, something that could really solve a lot of problems that women face as the reproductive system ages.
And are we seeing this AMH or other types of science being used in more advanced animals, like more similar animals cats, dogs.
Cats, Yeah, you must have read the story. I was very excited to get a cat reference into the story. As a crazy cat lady. Yeah, so AMAH could have a lot of potential uses because it does have this really powerful sway over the whole reproductive system. And so his first thought was, actually, well, maybe I could make a better birth control with less side effects, and so he decided to test that in cats and cats it's a permanent birth control instead of removing their reproductive organs.
They worked with the Cincinnati Zoo and they gave cats this AIMH gene therapies similar to what he gave the mice, and the cats were no longer able to get pregnant without having to lose their reproductive organs, which is not a pleasant experience.
So how can scientists and researchers extrapolate what's happening in the ovaries and apply that across a broad spectrum for longevity?
Right, So what's really interesting about the ovaries beyond just the idea that you might be able to slow menopause or extend a woman's number of fertile years. Incredible on their own, Incredible on their own. Yeah, But so it's really hard to study aging in general because there's not a great you know, we can study it in mice, but how similar ourvice really to humans. Right, we can only learn so much about aging in humans by studying animals that age much faster. Right, A mouse has a
much faster life cycle. So it's better to study these things. But it's not similar enough to humans to really know how it would do in humans, how these therapies would do in humans. But the ovaries, they are a human organ and they happen to be a human organ that ages at twice the rate of the rest of the body. But it also ages in a very short period of time. When women hits her thirties, her reproductive system starts all of a sudden. Her ovaries in particular, start aging very quickly.
So you could test these therapies, these longevity therapies that people think might intervene in aging broadly, more broadly, right, not just in one organ system. Like wrapamycin. You could see if it has an impact on the ovaries, and that's a much better indication in some ways of whether it might have an indication in humans for longevity than by studying my So it could be a really great sort of testing proving ground for other therapies.
What's the funding dynamic right now? I know it's been a long story about women's health not receiving the funding or their share of the share of funding that you would expect. How does longevity and the potential for longevity play into that?
Oh my gosh, this is one of those things that any woman who reads this figure are like, what that if women were not forced to be included in clinical trials in the United States until like, very very recently.
I think it's so crazy.
Yeah, I think it was two thousand and nineteen ninety three, nineteen ninety three. Thank you, I don't have it in front of me. Yeah, that's so recent was I was in kindergarten then before they started including women in clinical trials, And that's because there hasn't been interest in women's health. But there's a lot of interest in longevity, and you know, lots of people in Silicon Valley wanting to live forever.
And so once you cast the problem of the ovaries as a problem not just of women's health, but of health for everyone, all of the major diseases are diseases of aging, right, heart disease, dementia. They're all diseases brought on by agents. So once you cast the problem of women's health, it's one that's related to that, there's been a lot more interest in funding startups and funding scientists who are doing.
This work based on your reporting and what you saw reporting out this piece. Help promising is the research that's being done.
Well, it's promising enough that I have convinced myself will never have to go through menopause. I'm thirty seven. I don't know how realistic that is. I don't know how realistic that is, but I do think that there's really really promising work that is starting to enter human clinical trials. Not the mouth stuff that's not quite there yet, that's a couple of years away. But there's some researchers at Columbia who are doing something with a popular anti aging
drug called rapamycin that is entering trials now. They're unrolling people. And so I think that while we may not have a way to pause menopause sorry anytime soon, I do think that we will very soon out of this research have better indications of how to treat infertility, of how to treat the symptoms of menopause when people are going
through it. So I think that this work is very promising in that regard, in that for the first time in a very long time, we're having interest in just looking at the basic biology of female reproduction and understanding how it works. And I think that's going to lead to many very big breakthroughs and.
Christ And this may be a dumb question in terms of a clinical trial, though, if you're treating cancer, you can at least compare a placebo versus someone who's on a drug and how much longer they live. How do you study the reproduction like that women's reproduction and whether these work or not.
That's a good question. Well, so in previous studies they have looked at some of the signaling in the ovaries of women who are slightly older, right like forties thirties versus younger women, and you can see the rapid decline.
So if you know what to expect at different ages, and you looked at a large group of people that I think you could see whether you're obviously there's a variation from person to person, but I think that you can see whether it's looking more like what you would expect of a younger ovary for example.
And you go ahead, No, I guess coming back to the timeline, drug development's risky, it's expensive. Are there companies that are funding or a lot of these studies being done at universities.
Yeah, both both. There are some companies in the space. One of the big companies that I write about that came out of the guy doing the amazing mouse work, Aviva. They say that their first therapy, which will be for infertility, is a couple of years away from clinical trials, and their second therapy is, you know, maybe a couple of years behind. Not so, I mean, which which is not a long time in the time time scale of clinical trials.
So our companies that are working on bringing this stuff to the clinics soon.
Christian, you made this comment that stuck with me, which is in Silicon Valley, a lot of people are interested in longevity, and that's certainly what we see. And we talked to Ashley Advance yesterday, who you know, had the chance to go and visit this lab that and startup that you know has one hundred and eighty million dollars in funding from Sam Waltman, a huge figure in Silicon Valley.
Right now, do you think we're to the point where the idea of longevity, the study of longevity, the search for the fountain of youth has gone beyond you know, these tech billionaires, yes, and is now more widespread.
Yeah, I definitely do. And I think that you have to separate the people who want to, you know, put their brain in some kind of freezer box, in a computer leader or something. Those guys, the sort of transhumanists, from the people who really want to understand the biological mechanisms at the root of aging, because you know, we really don't understand so much of why aging occurs.
Right.
Obviously, time, environment, it wears on the body. But once you begin to unpack at a molecular level what's happening, then you can certainly intervene in it in some way. How much effect we can have, who knows, But I think that we're starting to see interest in not just the sort of pie and the sky transhumanist Silicon Valley billionaire stuff, but the stuff that's doing the basic science that will one day lead to better drugs, better therapies.
Well, it makes me have the question about the way that drug companies approach this, which is treating things that lead to death, things that you mentioned in your article cancer heart disease, trying to solve for those things rather than solving for preventing those things. It's like two different approaches here.
Yeah, it's two different approaches, and I think a lot of that comes down to it's hard to know. Like we talked about why the ovary is such a good model for this, right, how do you know if your aging therapy is working? You have to follow people for a really long time, which doesn't mean they won't happen eventually.
Right.
But in drug development, a lot of what happens is we figure out something works, but we don't know why it works. With aging research, we're trying to figure out why do things stop working, and then how do we intervene in that? So it is fundamentally two different approaches, and I think that they're both valid, right, But to intervene in aging, I think we're really going to have to understand the fundamental basic biology here, which is stuff that takes a lot of time and a lot of money.
Well, one of the numbers that stood out to me was in the story you have, the market for longevity drugs could reach more than forty four billion dollars within the next decade.
I look at that.
Everyone wants to talk about GLP ones and that's one hundred billion dollar market value. So I'm surprised that there's not more funding and more of an advance miant from private equity venture capital. Given that, I mean, it's more than double. But that's not a small pool of money, right.
Yeah, it's not.
It's not a small pool of money. But I think that the time scale and how hard it is to know whether it's working does make it a riskier intervention versus weight loss. You know, you either lose the weight or you don't, so it's easier.
Everyone's on it.
Everyone's on it, so we're told, so I hear. Uh, Okay.
We only have a couple of minutes left, but I wanted to make sure to get to other stories that you've written recently, because you've been very busy. It's not just the cover story of Bloomberg Business. You also have a story out about sick shaming, pushing Americans to take too much cold medicine. We're talking about this during the break, and it's like, what's going on here, Because when we're in you know, quote unquote lockdowns, when we're all working
from home, we were never sick. Now everyone's coming back to the office, kids are back in school, in daycare. I'm sick all the time. And we're just like mainlining suit of then is that what's going on?
Yeah?
Okay, so this story actually came out of a personal experience of my own. I've started just carrying around cough drops, and I take them all the time, even if the reason I have a cough is because I swallowed something weird or you know, it's wintertime. It's very dry in the Bloomberg offices right now, so my makes my throat always dry. So I just pop cough drops even when I'm not sick.
You can know that I can to you for coffee.
Yeah, yeah, I have. I have a huge stash in my desk, so come on by. And I started to wonder are other people doing this?
Is it good for you?
It can't be good for you to take this main cough drops. I mean the calories alone, right, got to add up. That's why you need the GLP ones. Anyways, So so we looked into it. I looked into it with a great reporter, Kaye Lapara, and we found that absolutely, you can take too much cough and cold medicine. It is not a good idea, and that this is a
thing that is happening. People feel pressure to go to work to go to Thanksgiving dinner, to go to happy hours even though they're not feeling great, but they don't want to have people looking at them giving them that look like why are you here even though you're six? So people are just doing what I'm doing and taking tons of cough medicine.
And just looking at some of the numbers. I mean, US sales of upper respiratory over the counter medications of twenty three percent to almost twelve billion dollars in the fifty two weeks through early December.
Great for them, bad for us. It's bad for us.
Yeah, totally. I mean, I feel like I'm coming down to something just talking about this.
Probably got up from me. Yeah, just kidding.
Well, I'll get some cough drops from me. Okay. Hey. Check out all of Christian's stories, available on the.
Bloomberg Terminal and at Bloomberg dot com, and pick up the new issue of Bloomberg BusinessWeek. It's the Longevity issue, on newstands tomorrow. It's already online at Bloomberg dot com, slash business Week and on the Bloomberg Terminal. Kristin B. Brown is healthcare reporter for Bloomberg News. Joining us this afternoon and the Bloomberg Interactive broke your studio.
This is BusinessWeek.
A journal.
Yeah, I bet you let me drive.
Oh no, no, no, no, holright please, I'll do the gravel.
Excuse me, I want to drive.
It's good question.
Chan.
This is the Drive to the Clothes.
Comm thing well by around Hulda Dawn on Bluebird Radio.
I've seen a little bit of a sell off, as you just heard from Charlie Pellett.
Down one point one percent.
On the S and P five hundred, the nasdack down one point two percent, of doubt down nine tenths of one percent late day sell off. Here we are just under eighteen minutes from the close of trading on this Wednesday afternoon. Let's get to Alan Zaffron. He's the founding partner in co CEO at I e Q Capital. He joins us on Zoom from Foster City, California for our Drive to the Clothes. Alan, it's been a bit of time since we spoke to you.
How are you.
I'm doing just great And Bailey, thanks for having me on your show today.
Well, thanks so much for joining us.
Hey, I know a lot of your focus is I'll turn Native's privates real estate, but I do want to get your thoughts on the equity rally that we've seen since October twenty seven. Look today, notwithstanding we're still up about fifteen percent since then.
Is this warranted, Well.
It's warranted if you think we're going to get this proverbial soft landing, I would tell you we remain a bit guarded or cautious if you look. The entirety of the move is based on the fact that the FED is going to be cutting rates next year.
And what's difference.
The FED is totally going to cut rates three times twenty five basis points each. The market's built in an expectation they're going to cut rates six times by one and a half percent. That might be a little bit too ahead of itself. So our view is it's difficult to grow profits at twelve percent for two consecutive years in an environment where there's still a lot of challenges in the economy. We are a bit skeptical that earnings will go quite as much as the markets have forecasts.
So I think this overbought roty is a bit ahead of itself.
How much ahead of itself, you know, from a.
Let's talk about valuations, you get to somewhere around maybe five to ten percent ahead of itself, not twenty or thirty. The market's trading right now just under nineteen and a half times forecasted earnings. If you look in the last twenty years, the market is traded a little less than nineteen times forward earnings. If you look over twenty five years,
the market's traded about seventeen times forward earnings. So the market's probably a little bit ahead of itself with full anticipation if rate hikes are over, cuts are coming, but there's probably a bit too much near term enthusiasm. Albeit the long term constructive view on the American economy means the same equities are part of a well diversified portfolio, and you can't deny that you still need to have some equity exposure.
And alan with that in mind, how what derails this? Is it the fact that the Fed may not provide double the cuts? Is it a recession? Is it inflation being more stubborn than people were expecting? What drives that.
Drives it? Is both directions if the Fed is trying to needle, so on the one hand, you want inflation a work its way softly down without mitigating complete denial of economic growth. On the other hand, you just don't want a recession. So what we need to see in particular is that wage costs as well as input costs come down enough that companies can actually generate profit margins. And yet the same token, the speed of wets consumer
consumers spend needs to still maintain some constancy. What we're seeing is credit card defaults are starting to creep up a bit. There's a concern that of unemployment rates begin to move up, that will in fact takeaway from consumer spending, which is seventy percent of the economy, and therefore earnings
won't be quite as robust as one might imagine. The art of threading the needle is can companies still grow earnings something next year in multiple state these levels of rates are coming down, They probably can, But looking for another twenty five percent up here in the s and P five hundred is probably outlandishly optimistic.
Yeah, and looking at that diversification away you mentioned equen he's being a part of a portfolio. High quality debt seems to be something that's very much in vogu. Where are you looking and what do you see opportunities for twenty twenty four. If we aren't going to see a continued move higher for equities.
I think it's barbeled. On the one hand, you absolutely want exposure to very high quality bonds, whether it's treasuries or investment grade municipal bonds. Yields are still very high relative to ten year time frame, and they're a nice
diversifier under most conditions relative to risk on assets like equities. Conversely, given that short rates are so high, you can still access floating rate private credit type structures even in the public markets through things like interval funds, which are just basically mutual funds that don't give you daily liquidity but still allow investors to get access to floating rate debt across a wide arranged companies that is yielding over ten
percent currently. So Barbell the middle we're less excited about publicly traded day on, day off high yield bonds aren't quite as compelling because if the economy softens, typically prices of high yield bar drop a bit, spreads widen, and right now is probably not the right time to be
in that component of the bond market. But the Barbell is very high quality bond to offset risk from equities and floating rate loans, particularly more issued to private companies right now, seems to be a nice barbell around a stock portfolio.
Allan, do you think we saw the top of the ten year when yields hit about five percent.
Yes, we in fact believe we have found that to be the case. The reason we believe that to be the case is with the economy is in fact going to slow from here. We do think inflation has peaked. We do believe the Fed will inevitably have to make some rate cuts. And the easiest way to think about it is when you buy a tenure treasury bond, it's the same as buying a three month treasure bill forty consecutive three month periods of time, and a three month treasure bill is more or less tied to the Fed
funds rate. So if you think the Fed is going to lower its rates for the next year or so, and you think about where it's sustainable rate is, it tells you that a tenure yield is probably too high, or it was too high when it was at five percent. So, in fact, we think now is an opportune time to have some of that exposure to longer term bonds because we think those long term yields have peaked or peaked back in October when the tenure hit five percent.
Well, Allen, you mentioned stability. What does a stable tenure look like?
What does a stable tenure yield look like? A stable tenure yield is a FED is basically what a three month treasury bill gives you, plus a modest premium for the factor you're locking up your money for ten years, So you have to work backwards. Where should a three month treasury bill be? It should probably be somewhere a little bit around where the long term new Fed funds neutral rate is. A FED fund's neutral rate is effectively the short term rate that enables for two percent inflation
and modest economic growth without a recession. So the Fed believes that rate is somewhere around two to two and a half percent. So maybe a three month treasury bill of some around two and a half to two and three quarters percent. You add on your premium for time, and maybe you're at a three and a half percent long term tenure treasure yield as an aspirational place to be. We're still in an elevated inflation level, so with a tenure trading at around four percent today, it's actually three
point eighty six today. We're working our way down slowly towards that three and a half percent. And of course, when you buy a long term bond, you're also getting more income historically than you do with short rates, So we would argue we're working our way towards a stable ten year yield. We're not quite there yet.
Alan, just about twenty seconds left. Just give us some details of what you think of recession in twenty twenty four could look like.
Well, a recession in twenty twenty four comes from the fact that it turns out consumers have overspent all their savings and a post COVID high, they don't spend a lot of money. When we get past the holiday season, it turns out retailers and other service providers over anticipate how much consumption would come. They end up haf to cutting jobs, which in turn further cuts consumption. That leads to an unfortunate spiral and a recession.
Alan Zaffron, Happy holidays.
If we don't connect between now and the end of the year, really appreciate you joining us and joining us throughout the years here on Bloomberg Business Week. Alan Zaffron is founder and founding partner and co CEO at Iq Capital. Joining us on zoom from Foster City, California. You're listening to Bloomberg BusinessWeek, and this is Bloomberg.
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