This is Bloomberg Business. Wait 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.
Well, we want to get back to one of our big stories of the day.
It started last night after the close, when Nvidia reported their latest quarterly update. The stock did hit a record. In today's trading, it's definitely backed off at ties of the session, and though still I will say, like Bloomberg has been writing about how it's kind of increasingly growing into its scorching valuation every time the chip maker reports earnings.
Well, that's because it's forecasts of really dwarfed Wall Street projections by so much that estimates used to value the stock have risen faster than in video shares. It's price relative Carol to projected profits that's fallen below thirty nine times after it delivered its latest eye popping projection last night. That's down from sixty three times before it's May earnings report.
One last thing, we just talked about it with our TV colleagues. The last research firm with the equivalent of a celebrating on Nvidia throw in the towel morning Star upgrading the chip maker to hold, saying it is much more optimistic about the rise of AI workloads and how NVIDIAs whyd note should cement itself as an AI chip leader.
All right, morning Star, jumping on the train with more on the company's fundamentals and roll in the semi space and the race for all things AI. With us, we got Bloomberg News US semi conductor and networking reporter Ian King. Also with US Bloomberg Intelligence, a senior semi conductor analyst Kun John Sabani, both from our San Francisco bureaus. You know, I want to start with you because you've got some
news post earnings on the company. A big concern that a lot of observers have is of a chip shortage. Of course, in Vidia relying on TSMC and Samsung for components. What did you hear from the CEO, Jensen Huang when you asked about this?
Yeah, I mean really, this was the big thing coming in two innings was would they be able to get enough chips? There wasn't really that much concern about demand, and you know, how to Chavel Johnson afterwards, and he said, look, we've been really really working very hard on this. This is you know, kind of a major priority for us, and here's the progress and we're going to continue to
keep doing that. And you know, they gave details about you know, they see supply increasing for them every quarter well into next year, which is really what investors wanted to hear.
Interesting, all right, So Kondan come on in on this. Ian definitely highlighting certainly the concern about uh Nvidia. Your take on what you heard, what Ian just talked about, and just the overall report and outlook.
Like and the same in the same lines. You know, going into the earnings, there were two key factors that we outlined in our preview that investors will be looking for. One is supply getting better, which they did announce and validated. And second was giving some kind of a moment more faith to this sustainability of the AI demand, which they again highlight to put in context. Data center segment was already expected to grow sequentially close to ninety percent, an
ambitious gold that's something you don't hear regularly. They ended up growing one hundred and forty percent. So I think this gives some ease that this demand rally does have legs.
So when the CEO also then founder Jensen Wong says, the shift to AI is only beginning. I mean, Ian, how do you think about kind of what else is to come here? And you know, I was talking with some folks here in our newsroom and they said, you know, what happens a year from now when those year over year comparisons become tougher for the company. Can it really continue with this momentum?
No, I think you've nailed it there with that question. This was another magic concern is sustainability. He gave some commentary. He said, Look, data centers don't get built over night, right, These these things take months, if not years. We know our customers plans, so we've got that. You know that that wouldn't have of what we know is exactly what's
going to happen. But in the sort of bridger terms, he made the point in the conversation I had with him, which is like, look, it's great if chat GPT helps a few knowledge workers to write a bit better code, helps a few consumers to you know, write an essay or help them with an email or something like that. But that's all it is. That's not fantastic. What he said was what gets him more excited. What he's working on, what he thinks needs to happen is it has to
become entrenched in the economy. Large, heavy industries have to transition to using this technology to help with their operations, to help with productivity. He's working on that. He's working on making that easier for them. As that happens, this technology broadens its basis and becomes more pervasive and becomes, you know, clearly something that isn't as ephemeral as some people would like to believe it.
Is, Kun John, I want you to hit on that a little bit. It makes me think of a conversation that had years ago with a friend who worked at one of the tech firms. She told me that technology was no longer this sector. It was like this layer that kind of permeates every little bit of our lives.
You know, we're on our smartphones doing these things. We're at the doctor's office, the doctor's using technology, and it's this overarching term, Kun John, what happens Does AI ever get to that level and what does it look like in a day to day life beyond the beyond industry, beyond factory.
I mean, look, from our perspective, we think of this as the when when you had the Internet come in, right when you had the iPhone come in. Those technology inflection points had a long cycle, almost like a decade before it hit a platu. So we think this is in the very early innings. This definitely has the ability to permeate into our everyday lives. You know, the next big step would be large language models or generative AI
running on your smartphones. So there's definitely room for this run here well.
And I do wonder you know need and we talked about this already with you yesterday, and just this concern that how do we make sure we continue to be smart and now get caught up in the euphoria And that's what I think about constantly. Is there a chance that some of this optimism doesn't play out? Or does this feel like yeah, this makes sense, especially in a world where there's so much data and we continue to
get smarter. It's not just a dump of data, but we continue to fine tune it and make it work better and smarter for us.
I mean, again, I think that's a very poignant question, and you know, We went through this with the dot com bust, and that's obviously something that people are drawing parallels with. What I would give you as a response to that, and what I'm hearing is like, look, AI as a concept, which is basically statistical analysis, has been around for a long time. The algorithms that we're using now have been around for decades.
Right.
What's changed is the data that we can now tap to use them and the power that we now have that can actually make that happen. I mean, we just talked about smartphones, right, smart Imagine something that you're carrying in your pocket is capable of taking massive amounts of data that you're generating just by living and walking around and turning that into something useful and productive that helps you with your life. If that happens, and that's what
we're moving towards, and that's creating economic value. And I think that's the key. If you look at all of these applications that are being proposed, whether it's drug discovery, whether it is you know, factory planning, whether it's you know, designing robots, whatever it is, if there is genuine economic value and efficiency and production to be created there, then
it has legs. What we saw at the beginning of the Internet was the promise of that, and then everybody was like, oh, where's the value right, and it came, but it took a while.
Well, Kuntan too, and keeping with what Ian said, you know, we recently had a guest on that about quantum computing and the connection with AI and this idea that you know, you can solve and decode problems much faster than classical computers and it's basically you know, large scale systems and layers and layers. So is that something you also think about, Kunjohan, This role of you know, a whole advanced computing way and the role of AI in all of it.
I mean, look like, just like Ian said, AA has been there for a long time, right, but we're now seeing this big acceleration because we finally have figured out to use this concept like genera d AAI on actually implementing in day to day use cases, at least at the enterprise level. So similarly, I think, look, this concept of quantum computing have been coined for many years, a lot of people have been working on it, but until it comes to the point where you can deploy it
to the masses. I don't I think that's when you'll see another rally over there.
Well, it's really cool stuff and certainly keeping us off engaged guys, Thank you so much, really appreciate the breakdown. Ian King, US semiconductor and networking reporter at Bloomberg News from our San Francisco bureau. Also in our bureau, Cunjon Sabani. He is Bloomberg Intelligence Senior Semiconductor analyst. As we said both there out on the West coast. By the way, shares of Nvidia still up about one point four percent, but way off their best levels of the session.
If 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.
So in the tech world, it wasn't just about Nvidia today.
In fact, that stock's rally ran out of steam, but not so for shares of the infrastructure software company cyber security companies Splunk, soaring up the most since December, closing it a fifty two week high today following earnings and a quarterly update.
After the close last night. Stock is up.
Roughly thirty two percent year to date, so roughly doubling its return in twenty twelve.
Twenty three. Thanks Tim too today's rally.
Yeah. Splunk Reporter is second quarter revenue that beat estimates. It raised it's fullier forecast beyond expectations. Analysts called the results solid overall, noting the better annual recurring revenue as well as the upgraded forecast. We got with us right now. Splunk President and CEO Gary Steele. He joined us on a zoom from San Francisco. Gary, how are you great?
It's great to be here.
You know, we've been hearing a lot about Like we hear from companies. We like to hear how you know their customers are doing because it gives us an idea of the economy. How are your customers doing?
Yeah, it was interesting in our second quarter we saw very much the same macro conditions that we'd seen in prior quarters, and so where it impacted us as we saw some hesitation in cloud migrations because these represent new projects that have to be funded. And while the ROI and getting to the cloud is amazing, you still have to fund the actual migration effort, and then we saw a continued deal scrutiny, so deals alongating or requiring additional signatures.
I think the one positive thing for us is I think we understand it now and I think our team did just a phenomenal job executing within that environment and understanding that, yes, there will be more reviews and more scrutiny on deals, but we executed quite well, really part of the team.
Reviews and scrutiny are one thing, but what about deals falling through?
Again, we saw more consistency in terms of just scrutiny and we and I think there was more. I'd call it just stabilization. So I think going into the court of people knew what dollars they were going to be able to spend, all.
Right, So how would you describe then the corporate IT spend environment generally? Is there a word Gary to say, because I think it helps us in a big way understand kind of what's to come maybe for the rest of the year and what maybe is going on in the economy.
Yeah, I think there's there still remains a high level of scrutiny on every dollar being spent by the IT community. And while I think we've executed well within that environment. We anticipate no change as we work through the second half, we will continue to see this level of scrutiny and hesitations as it relates to us in this category of cloud migration. So we're expecting no change and that's how we've thought about providing our guidance for the go forward quarters.
What's cool talking about you and I got this off your website. Fifteen thousand customers, one hundred and ten countries, Zoom, Intel, Coca Cola, Carnival, Arii, Airbus, and many more. It's the world, it's the universe, if you will. So what types of companies are leading the spend? Which ones might there be some hesitation?
You know, we sell pretty consistent behavior across verticals our business we've had as an example, we do a lot of work with the government and governments around the world. That's been relatively consistent for us and a big growth opportunity. Today, roughly two thirds of our business is domestic, one third is international. We continue to see a lot of opportunit unity working with the international customers to take advantage of
the capabilities we can offer. But from a buying point of view, buying perspective, it was pretty consistent around the globe.
Can we talk about what you guys do, because you also have your own AI offerings, which I know you guys put out last month, but cybersecurity company, I feel like that's a big bucket, right, infrastructure software company big bucket?
So just walk for those who might.
Not be familiar familiar with your you know, almost nineteen billion dollar market cap company, which they should be, tell us about exactly what you do.
You bet.
We help organizations drive digital resilience across their cyber environment. So how do we ensure that they're well protected and they understand what's going on in their cyber environment. This is particularly important as we face new sec disclosure requirements where you have to notify your shareholders within four days of a material event. You know, we're at the core of helping organizations figure out what the heck happened and
how can you meet that four day deadline? And then we extend broadly into the observability market, meaning how work core to helping organizations keep their digital applications up and running so that their customers can get access to all of those services, So helping them understand if something happens to one of those applications, what's going on and how do you get it up and running quickly and try
to anticipate those events. Where AI plays a role for us is helping across security and broader infrastructure anticipate things, so trying to get better outcomes faster, so teams can be more efficient in what they do every day. So and for example in the security operations center, just making it easier to operate and get to better outcomes faster without all the manual work.
So with the AI euphoria, how do you think about it in terms of is it really something that this next gen AI, generative AI really going to take so many different industries to a different level. It's the real mcgilla if you will.
Yeah, No, I'm super enthusiastic about it. I feel like we can deliver much better outcomes for our customers leveraging the power of AI and simple things that we've already introduced. So to use plunk, you use you interact with it with a proprietary language. Well, with generative AI, we can give you a human interface. So just ask what you want and we will help you go find it and do it. And so then we generate all that proprietary language on your behalf and you don't have to have
that knowledge or understanding. So our ability to take down the skills required make it so much easier to interact with our product. We're very bullish on that. You know, it's still early and I think there's a lot of hype in the market generally, but I think at the end of the day, we can make a real difference in one who can interact with their product and then the outcomes that can be delivered as a result of that.
And this is a journey. It doesn't happen overnight, but we can continue to chip away at this and make real progress. I think it will be informational in our industry because we deal with such rich data sets and in that world you can get great outcomes from AI.
When when you're leveraging the when you're leveraging AI for your customers, who are the suppliers that you're using. Are you getting chips from Nvidio? Are you getting chips from AMD?
So we think about it from a cloud perspective, and so we're going to the cloud service providers and we're leveraging the cloud service providers to be able to deliver those AI capabilities. We're not directly buying or setting up data centers. We're not directly buying in Vidio chips and systems housing in Vidio chips. We're going to the cloud service providers to get those capabilities.
Look in Amazon Web Services or.
Microsoft Amazon Amazon. We just announced a relationship with Microsoft as it relates to bringing our native cloud solutions to the Azure platform. And then we have a relationship with Google as well for GCP. So we find demand across those and we're leveraging their relationships ultimately all the way through the chip providers.
How much do those relationship kind of impact your top and bottom lines or give you kind of some window into consistency for growth for your company.
So one, they're very critical. There are critical strategic partners for us. There's two dynamics here. One is we allow our customers to buy through the marketplaces of each of those cloud service providers, meaning you can go and leverage the credits you have for AWS or now with our relationship with Microsoft, you can leverage your Azure credits, so it makes buying easier. And then we work closely with them to ensure you get a great technical outcome. So
you guys asking about chips et cetera. We can make sure that we're well tuned for whatever systems they bring to bear, and how we can make sure that our customers are getting the maximum TCO.
I want to end Gary, just kind of where we begin and getting your view on what the economy looks like. There are a lot of questions as we wait to hear from j Pal tomorrow about what the economy looks like. Just in the last forty five seconds that we have with you, what's your read.
I believe we were going to see the same for some period of time. We haven't. We haven't built that into we haven't built any improvement into our guidance. And I think that I believe we're in a soft landing mode that we're going to continue to see some conservatism, but we'll work our way out of this over time.
Well, So enjoyed our conversation with you, Be well and look forward to next time. It's Plunk President and CEO Gary Steele joining us on Zoom from San Francisco.
As we said, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Well, although masks have come off for many of us, and for the most part, many of us are back to normal, even if that normal is a bit different, COVID is still here and a lot of people right now, Carol, are still getting it. I don't know if you saw this. Just yesterday, the New York City Department of Health said that cases in the city are on the rise and some people should consider wearing a mask and crowded indoor settings.
Listen, We've had folks with masks back in the office who were getting over having COVID. We're also learning more about the virus in its aftermath. A study published this week in the journal Nature found that people who were never sick enough to be hospitalized for acute COVID still had a higher risk than uninfected people of developing long COVID related disorders such as dangerous blood cloths, diabetes, and lung, gastrointestinal, and muscule skeletal disease. Two years later, well.
Very pleased to have with us, doctor Andy Peckosh, President Professor excuse me, of Molecular Microbiology and Immunology at the Johns Hopkins University Bloomberg School of Public Health. I almost gave you a promotion there, doctor Peckosh. But it's good to have you with us Health Conserve Well, yes, President. In my book, how's that we should know that the Bloomberg School Public Hell that is supported by Michael R. Bloomberg,
founder of Bloomberg LP and Bloomberg Philanthropies. Doctor Petter is good to have you with us right now. I want to start with the new variants that we're seeing right now and why we're seeing this up to it's summer. What's going on?
Well, you know, COVID nineteen has never really left us. We were fortunate over the past few months to have very low numbers of cases, but we were still having cases, and we were still seeing viruses that were essentially doing what viruses do. They mutate, they change so that they can keep circulating in the population. We were just seeing
that at a very low level. We're not sure what the factors are that are driving this surge of cases right now, but you know, I think it's important to note that case numbers are low, as you had mentioned, but this is the time to remember, you know, what is it that we're going to be doing if we do come up COVID nineteen positive, and to remember that there are very vulnerable parts of the population who should perhaps pay a little bit more attention and take more care to avoid being infected.
Andy, how are you guys thinking at Johns Hopkins about where we are in the COVID cycle and virus? Is it something becoming more akin to kind of the annual flu Are you thinking about that or is it still something maybe a little bit more serious or could be again something more serious.
Well, in terms of disease, it's clear that influence itself is dangerous. COVID nineteen is even more dangerous than influenza. It causes more hospitalizations on a per case basis, causes more deaths on a per case basis, So we really consider COVID nineteen as seriously, if not more seriously than influenza.
Is that across different age groups or is that does that include kids? Also?
It is across age groups. The relative risk though is very different. Right, So while COVID is more dangerous in young kids than influenza. The case numbers and the numbers of severe cases are much lower there than if you compare it to let's say, individuals over the age of sixty five.
Wait a second, hold on, I want to make sure I understand this. Influenza is not as dangerous in kids as covid is.
COVID causes more severe disease in children across the board than influenza.
Would that's really interesting. I mean, influenza's the flu shot. When you have young kids, like the flu shot is the one you really want them to get. I don't feel like it. I don't feel like the COVID vaccine is being pushed as hard for young children as flu shots.
And in some ways you're correct. Now we're waiting for the CDC guidance to come out for this year's fall COVID vaccinations, but certainly, if you look across the board, the American Pediatric Association recommends school children get COVID nineteen vaccinations in the same way they recommend getting flu vaccinations. So the vaccines that we have, it's important to note
they work, they're safe and irrespective of age. If you get the vaccine, you can reduce the likelihood of severe disease, and you can most likely reduce the chance of spreading the virus to other individuals.
So there's a chance to reawait the guidance on the vaccines for this fall that not everybody needs to have it, Is that fair?
Yeah, it's certainly clear that if you're in some of these high risk groups for COVID nine, for severe COVID nineteen over the age of sixty five, if you have if you're immuno compromised in any way, if you have certain medical conditions that make you more predisposed to severe disease, you know, I'm virtually positive that all those groups will
be recommended to get our COVID nineteen vaccine. You know, the benefits of vaccination in other age groups are a little less clear, simply because you don't have as many severe cases in those groups. But when you look at the viruses that have been circulating now, when you look at what people were vaccinated with, the virus is circulating
now very different from the vaccine. So it would really make sense for almost everybody to consider getting a COVID nineteen vaccine right now, because it'll help them much much more in terms of limiting their chance of getting an.
Infection right now, are in the fall when the new one comes out in the fall, Okay, because we don't have access to that one yet.
Correct.
Correct, that one should be rolling out middle of September, end of September or so. And again, before that rolls out, we should be getting some clear guidance from the CDC about who they strongly recommend to get it and who they think should get it.
Okay. When our producer mentioned this subject on the call this morning, I was like, wait, what, This is kind of crazy, but he brought to our attention big thanks to Paul Brennan and everyone else in the control room, that they're actually you could benefit by getting all of your COVID shots in the same arm each time you go and get another shot. Have you seen this research?
Yeah, there's one. There's a one in a publication in particular that recently came out that suggest that if you get the shot in the same arm, that you have a slightly higher response, particularly in something we call T cell responses, which is a separate arm of the immune system from the antibodies that we always talk about after vaccines.
I don't even remember what armor I always do.
I do my like left because I'm a right handed so I feel like if it gets sore, like that's how I do it.
Yeah, go ahea.
Yeah. And I think it's clear that you know, the effects there were significant, but the antibody responses were the same irrespective of which arm you got it into, or how many or whether you alternated there. So it's probably one of those interesting subtle things, but it's certainly not something that we should lease sleepover. If you're going in to get a vaccine, it's much much better to get the vaccine in either arm than to not get the vaccine.
Are we getting complacent and not getting ready for the next kind of virus that hits us? And just got about twenty five seconds.
Yeah, I think it's really it's really important for us to stay aware. We're seeing cases of well parasites like malaria UH in here in Maryland. We're seeing UH infections with tropical viruses in Florida. We have to be aware that new viruses can show up for a number of reasons, and we have to keep our guard up for them.
Right we've been talking to about climate change. A warmer environment certainly fertile ground for creating all of this. Doctor Andy Pecosh, thank you so much. We lean on you, guys. Professor of Molecular Microbiology and Menology at the Johns Hopkins University, Bloomberg School of Public of course, supported by Michael R.
Bloomberg Founder Bloomberg Op. This is Bloomberg Radio.
You're listening to Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.
Words love it well, the domestic cover story of the new issue of Bloomberg Business Week really speaks to Carolyn May. It's because Carol loves getting shots.
No.
It has the words tick tick. It also depicts the distinctive bullseye rash around a tick bite that can indicate transmission of lime disease. You also might remember earlier this month, Carol and I were speaking with a professor of molecular microbiology and aminology about lime disease, and Carol you asked on air, if we can give our dogs vaccines against lime disease, then why can't we get vaccinated?
Yeah?
I mean I give my dog medication like it right to make sure that they.
Well, you know what you could do. You could go ask the vet for a little bit of that.
That's crazy, all right, Well, it is a real question. And it turns out that there used to be a lime vaccine. Back in nineteen ninety eight, the company that's now GSK got approval for something called limerex I believe it said it was the first lime vaccine for humans, but tim the.
Shot failed, yeah, for a host of reasons. Now, after more than two decades, a pandemic and hundreds of thousands, if not millions, of lime disease cases, phase three trials are underway for a lime vaccine from Pfizer and the drug maker of val Neva, and it's expected to be available in twenty twenty six. This story by Kristin V.
Brown and Naha Cotten Kristin Bloomberg News healthcare reporter. She's on the phone from Brooklyn, also with us as Bloomberg Business Week editor Joel Webber in our Bloomberg Interactive at Broker's studio. The story is in the upcoming new issue of Bloomberg BusinessWeek magazine. It's on newsstands later this week, already online at Bloomberg dot com, slash BusinessWeek and on the Bloomberg terminal. So Joel why why don't we have a line these vaccines?
That there was so much I've learned reading this story, and I was deeply grateful for Kristin and Naha's work on it because it revealed so much about the state of the world, like we had a vaccine, we had a line vaccine. If you live in the Northeast and you do anything outside in warm summer months, you know how terrifying it is to go, you know, walk around in tall grass and come out with a lot with tics, which it really and lime disease is so mysterious and
yet so devastating to a lot of people. And as we've seen in the decades since this vaccine that was on the market for a number of years before it disappeared, the case, the number of cases has exploded and they're just ticks everywhere. And that's part of why interest in a vaccine remains and why this partnership, the one that
Pfizer's leading is really interesting. It never failed, yes, and that's an important thing because it actually worked, But it met America in a world that was just beginning to wrestle with vaccine skepticism, and that's what doomed it back then. But it wasn't like it didn't work, and if anything, the technology was amazing and and really counterintuitive to what
I think you would expect of a vaccine. And the what we're going to see, probably from Pfizer if it gets approved, is basically doubling down on that same approach. So Kristin, what was what was an intro? What was novel about the approach of the Limericks vaccine from nineteen ninety eight, and and where where does that bring Pfizer?
Yeah, so I am a huge nerd that I'm going to nerd out here for a minute. This is a really neat vaccine because of the way it works. So most vaccines they just you know, take a little bit of a pathogen a virus during this case of bacteria, and they take it and introduce it to your body so that your body starts making antibodies to it, so when you encounter it, your body fights it. In this case, your body makes antibodies to something that's in the tick.
So when a tick latches onto you and are drinking your blood, the antipathy.
Because it sounds so much fun, like so much fun.
Yeah, so fun, so fun, so so uh so when the tick lapses onto you. The antibodies are there in your blood. Go into the tick while it's drinking your blood and kill this bacteria, which looks a lot like the silly pasta. Kills the bacteria while it's in the tick before it can go into you. So so the bacteria, you know, if all goes according to plan, never even enters your body, which is why it's so different from from other vaccines and why I personally think it's super freak and eat.
Wait, that's incredible.
It is pretty good, you know, isn't it?
Kind of though, like how the limes like the stuff we give our dogs like it kind of because it repels the ticks, like kind of off.
The dog, is it?
Girl's gonna come in wearing one of those collars.
Don't do that well, and don't take the dog vaccine.
It's always Kristin. It's always blown my mind. I'm like, what we've been given.
I've been getting stuff to my pups for a long time, Like, why is it that we haven't gotten something?
Is it the same kind of dynamic or not even close?
Well, well, yeah, no it is. It is the same dynamic. So first of all, I should say people don't take the vaccine from your dog. I think we should just put that up there.
In a little recent history of people going into vets to get stuff they probably shouldn't have used. That's not encourage that.
I'm I'm pretty sure people have done this, but it's not not advised. But but yeah, I mean what happened was after Limericks, the original shot was pulled for market, you had competitors that were coming to market that were like, oh, this, this isn't like in so hot, and so some of them pivoted and went into veterinary medicine, where there was a lot less sort of apprehension about the idea of
a vaccine. So so some of some of the veterinary vaccines I believe are very similar technology to to this.
Humans don't use it, don't use it, do not try sposure. But okay, I mean, Kristin, here we are two decades after this vaccine disappeared. Why did it disappear if it worked?
Right?
Okay.
So one of the reasons I love the story of the lime disease vaccine so much is that it's really the story of how we feel about vaccines in general. In a nutshell, people are weird about vaccines, and we're weird about them for good reason. First of all, there's something we give to healthy people, so our tolerance for side effects is just less. You know, people don't want to endure horrible side effects for something they may or
may not ever get in the future. And the other thing is I think there's just a little bit of a nick factor with like what you're going to put what it means as a bacteri he's going to go inside me. But so so for the Limeyers. In the case of Limerix, it came on the market at the time when the modern vaccine hesitancy movement was basically erupting. You had Andrew Wakefield who suggested that the childhood MMR
vaccine could cause autism. That was in the UK. Here in the United States, you had people concerned that are preservative in vaccines was also causing autism. You had a real problem with another vaccine for another illness. Not vaccine got pulled from market, and so you had all this stuff happening that were making people, you know, for the first time in a long time, really raise their vaccines.
You know, prior to that, vaccines were viewed as this you know, amazing public health tool, and the narrative was just starting to shift as limericks comes to market. And the other thing that happened was one of disease wasn't a big deal at that point, not really. There were sixteen thousand cases a year reported, mostly in the Northeast, and you know, the FDA did approve it, but one of the Recommendations committee members actually called it a yuppie
is a yuppie vaccine. He said, you know this isn't like like basically the cost of administering this vaccine is not worth it for how many cases of lime there are ear So you had all this stuff kind of going on that set this vaccine up to fail. And then when it came to market, people started reporting side effects and immediately, because there was so much bubbling concern about other vaccines, people latched onto that. And you know, it didn't get pulled because it didn't work or because
it was harmful. It got pulled because those things made no one want it, and if nobody's buying it, it wasn't really worth it to keep it on the market. So, you know, fast forward, we have lots of lime disease.
Now, well that's what I wanted to talk to you about, Kristin fast forward to twenty twenty three Andrew Wakefield's study and report. The paper has been discredited. We still are in an environment where there's skepticism about vaccines. Just look at the uptake of the COVID vaccine and also of course of the flu vaccine annually. But what's different about lime disease? Ticks? Where people get lime disease and the market right now, right.
Lot of parallels in our world right now to when lime marks came on the market. Right, you have vaccine hesitancy, probably at higher levels than it was back in nineteen eighty eight and the aftermath of a global pandemic. But on the other hand, we have so much more lime disease. Some estimates suggest as many as almost five hundred thousand cases a year in the United States being diagnosed increase. There was so much lime disease, and I think that there's this real fear of it, you know. I joke
sometimes that like that take is the new Jaws. Right, You're not afraid of going in the ocean the summer time, you're afraid of going into the woods.
I'm way more afraid of ticks than I am of sharks.
Yeah, me too, me too, absolutely, So I think that, you know, when we think about how this vaccine will do, it's a real question mark because you have this push pull. There's way more fear of blind disease, way more awareness of it, and way more of the disease, but there's also way more vaccine hesitancy, and given this shot is so similar to limericks in many ways, if it can be hard to read the tea LEAs and know how all be received by the public once it's out there.
I'm trying to think if there was a way to do this cover that looked like the Jaws movie poster, you know, but with like a little tiny tick. I don't think it's going to scare you in the same way since the tick's so small. But you know, we did our best, so okay. So Pfizer's got this partnership
with Valneva, they are not alone. Moderna has also got an mRNA based thing that maybe is a little farther along since the Pfizer efforts in Phase three trials, Christen, But how big of an opportunity does Pharma think this vaccine could be?
Yeah, I mean I think that there's a lot of a lot of enthusiasm. I think that we think that this could be not we think I think that there is suspicion that this could be a really big market, especially because lime is not in the Northeast now right because of global warming, Because you know, population has just grown and we've moved into heavily wooded areas and built housing tracks there. You know, we encountered ticks more, and we encounter them all up and down the East Coast,
we encounter them in the Midwest. We encountered them in California, where I'm from now, So there's national awareness and concern about this now too. But like I said, at the same time, I don't think that we should underestimate how scared many people are of vaccines, how suspicious they are of them in the aftermath a lot of pandemic.
Sorry go ahead, no, no, don't be sorry. This is incredible, Kristen. You know what's also interesting. I was going to kind of make a joke because once it hits you know, one of the real Housewives of Beverly Hills, then it's a real story.
But there actually has.
Been a lot of celebrities. I mean that was a whole story arc, and I think we are increasingly seeing I've known people who work and elsewhere. I think we all know somebody. But there's been a lot of high profile people Alec Baldwin, Amy Schumer, Ben Stiller, like some other famous people who have come out and talked about the impact of it.
Yes, absolutely, I mean I have a very close friend who suffers from what is now called post treatment line and watching her battle it is one of the reasons I got so interested in this in the first place. I'm an outdoors woman and I have peeled many a tick off my body and every time just crossed my fingers. And I think people are are tired of just, you know, facing the question of do I want to go for a nice hike and risk getting lines easier? Do I
want to stand play today? I think lots and lots of people are tired of a way.
I'm tired of waiting to But do I really have to wait three more years?
I think Unfortunately, Yes, the projections are this will hit the market in twenty twenty six.
You know what, maybe you could sign up to be al in the clinical try.
I mean, there's hope right there, don't don't. Don't go to the stuff at home for my dog. You're welcome to you.
Still it works, It works, going to.
Go down about as easily as I'm sure it goes down for your dog.
Incredible reporting and so timely, Kristin.
Thank you so much. Kristin Brown, healthcare reporter at Bloomberg News.
This is the domestic cover story of the new issue of Bloomberg business Week, which is out on newsstands now, on the Bloomberg and at Bloomberg dot com, Slash business Week, and of course, as always are thanks to the editor of BusinessWeek, Jill Weber.
Joel if you had to pick ticks off? Is that a personal question there?
It's inevitable if you live in the Northeast, you find ticks on you.
I've spent hours picking him off my dog.
It's not fun, not fun. Medicine doesn't always work. All right, guys, this is Bloomberg Radio.
Brom.
A Journal.
How about you let me drive?
Oh no, no, no, no, who's gone drive?
Honey? Please, I'll do the riding gravels.
Let's mate, I want to try it.
It's the question that.
This is the drive to the globe punk thing well by around yeld Down on Bluebird Radio.
All Right, just got under eighteen minutes left in today's trading session, and we've got an interesting one, Charlie, of course, just breaking down the numbers. Equities near their loads of the session, despite those blowout numbers from Nvidia.
It is way off.
It's high, and you've got the Nasdaq way off. It's high, as we heard, down about one point six percent.
So it's a very risk off trade today.
The opposite of what we saw from yesterday. Carol, Yeah, you know, how did you describe it? Everything is awesome.
It was broad based buy like you really saw it, and you really saw investors moving in. It's interesting though, it does feel like a little bit of a wait and see mode. We got some strong economic news. We talked about that with Mike here in the US. Expectations for some strong economic growth. We see that from the Atlanta Fed. And so what does it mean ultimately from Fed members? Worries about inflation picking up again? So does Ja Powell have to be a little bit more hawkish than Duvish Tomorrow?
We 's see what's top of mind for our next guest. Nadia Lovell is a senior US equity strategist at UBS Global Wealth Management. She joins us on Zoom once again from New York City, Natia, how are.
You, I well, thanks for having me.
It's good to have you back. What's top of mind for you on a day like today when we're seeing such a selloff.
I think we are more focused on, of course, what's going.
To happen at Jackson Hole tomorrow, and then of course next week will be labor market data. I think what we're seeing in the market right now is that this pullback on risk off center. And remember, liquidity is kind of low this time of year, in August, and so it's not surprising to see people take a little bit of risk off of the table ahead of the I'll come and Labor Day Aliday.
So I think that's what you're seeing.
To be honest, I do feel like we're all like so tired figuring out what will if they do, what won't they do? Like it doesn't get us anywhere, right because ultimately, if that's going to do, what it's going to do when it meets next Nattie at it's a September meeting.
So what do you think is constructive?
What is the data that you look for whether it's economic data, whether it's valuations, whether it's an earnings report, whether it's technicals. What is it that says to you something interesting and productive is happening to the upside or downside. When it comes to the trade.
We are very much focused on the earnings outlook. I think you make a great point in terms of the macro having dominated a lot of stuff this year, But I think that you're now moving to our stage where the earnest outlook is going.
To matter even more.
We know that valuation levels are quite elevated this year. Much of the market performance has been driven by that. I would say, in terms about our review on the ernestago, we think it has improved a bit coming out of a second quarter. We do think that the earnings recession that we've been called in force it's last year is now behind us, as the second quarter probably marks the trough and earning. So we're looking for recovering the second half of the year for a full year of about.
Roughly flat earnings.
But we think a lot of this is already priced in at this stage, just given how elevated valuations are.
I want to go back to what you said about all eyes on Jackson Hole. What are you going to? What do you expect to hear from j Powell that could move markets?
I think we expect to hear a little, certainly a little bit of more hawkish tone from J Powell compared to when market expectations might be. We do think though, that the last rake hike was the July meeting. We're looking for the terminal rate to settle in right where it is at five and a quarter of five and a half percent, but we can't real at the possibility
of another rake hike. We know that the macro data has been coming in stronger than expected, and so that could give the bad sum world go room to do additional one additional high lator this year. We know that that's already sort of their base case in from the June SEP. But the Fed does recognize that there's longer ary of relaxed to their monetary policy, and this cycle is so unique it's very difficult to determine what those lags will be and how long it will be left.
But I think the focus is more around how long does the FED stay at these levels?
How long does rate stay high?
And we don't think an additional twenty five basis points is going to break the camel back.
It's more how long that load stays on the camels.
Tim knows.
I'm like, I'm going to kill you for going back to FED talk.
She like she I have surprised she didn't kill while giving answer.
Kidding me.
So wait, So what you say.
We're done with Nvidia?
Cares there since you went there to Nadia? So I mean, do you feel confident enough and your thinking about monetary policy in the US and what US central bankers will do to trade on it or no?
At this stage?
No, I mean we think that, like I said, we think that the FED is done, and we do expect that rate cuts will happen in twenty twenty four, and the markets keeps pushing those out at this point.
So we think that the sort of you know in lane.
With market expectations, and it's less more about like what the fat does and actually how the economy does in response to the fat, what the fat has already done.
So are you worried about consumers? Because I think about student debt. I think about you know, all those balance sheets that we're doing so well, and you know, credit card, whether it's Macy's.
What do they say about delinquencies rising faster than expected?
Right, exactly.
So that's the thing that you know, we know how important the consumer is in terms of our US economy here, So how do you think about that?
You know, we're getting a mixed picture of the consumer.
We know that July retail sale is really overshot to the upside. I would say, even throughout their owning season, we've been hearing some concerns around this consumer, even from the consumer product companies. Consumers are becoming more measured and targeted with their spending and it's becoming difficult to pass along those price increases and as you noted, the retail
sale environment reach our earnings this past week. I would say, some of these companies we have to recognize that they do have some idiosyncratic issues.
But you know, there are.
Clearly podcasts of weakness when we are looking at the credit card delinquency data, and also delinquency rates have been picking up in auto loans, and of course, as you mentioned, uh, you know, resumption of student debt repayment in October is a potential headwind. But I would say, given the labor market is so strong, we're not overly concerned about the consumer. We do expect the consumer spending too slow, but we don't expect.
It to fall off of a cliff.
It's almost like, you know, the first, the favorite word Carol of executives and press releases is AI this quarter and last quarter.
Right.
Second, the favorite word for retailers is shrinkage. That's the industry term. It's true, it's the industry term that refers to just throw it all in. Well, it's the industry term that refers to, yeah, the kitchen sink to everything, but it includes theft. And I'm wondering, Nadia, if if if that how you read into that? Is that a sign of what's happening in the economy or do you think it's a it's a way that these these companies can blame poor sales or poor margins.
No, we do think that shrink is real.
It's been an issue for quite some time, you know, and it's become even more organized. It's not your everyday consumer that's walking in and just walking out with things onto their shouloads without pain for it. So we do think it is an issue, and you know, maybe AI can help and technology can help solve some of these issues for the retailers.
But about outside of that, we do think that there is clearly.
Softening indiscretionary spending and some of these retailers are being affected by that.
Also.
You know, you know, we've seen a pickup in online sales in July, dominated by Prime Day, so I think that there's been some loss of market share there as well.
All right, we're gonna leave it on that note, Nadia, I take care. I know it's only Thursday, but I know the weekends just around the corner. So into hers Nattie Levell level. She is senior US Equity Strategies at UBS Global Wealth Management amzoom in New York City.
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