Trade issues, Re-branding and Luxury Beds

don't buy it right now. The trade talk is way more powerful than the actual effects, at least according to traders. But are they taking things seriously enough and joining us down to talk about that. Alberto Gallo, Partner and portfolio manager of macro Strategies at Algebras UK Limited. Uh, coming to us from London. Alberto, we always love having you on.

Thank you so much for being with us. So you know, we heard President Trump of say We're gonna go ahead with tariffs on our our allies, the allies responding with absolute anger, markets totally shrugging it all off. Are they to senguine? I believe that markets are a little bit complacent,

especially emerging markets. It's true that we had a very bad week last week, but generally speaking, we see an escalation in UH trade conflicts and UM the policies of the Trump administration is implementing we'll bring growth back to the US out of emerging markets. So what we're seeing actually in the credit space is a reprising of spreads across UH, some of the weakest emerging markets like Argentina and Turkey, but also some of the other ones like

brazili and Mexico. And we think that these UM, these carry trades will continue to be under pressure. First it was currency is now even harder, even local currency debt, and then hard currency debt are repricing UM and also Europe will be on the more pressure because Europe depends very much on exports to emerging market. So you know, it's a stronger dollar trend even though we have some relief today, and it's a trend of divergence, not goldilocks,

so the opposite of what we had last year. Alberto, how much of what you're saying, which is weaker as a prices in the in the European Union as well as an emerging markets, how much of that hinges on escalating trade tensions and how much do you think that just will happen based on where we are right now in the economic cycle. There's two things. One is that the trade tensions, as you said, have a potential to become worse. And geo political risk also is relatively high

in the Middle East. So all these things can can hinder global trade. The second fear that we have is that after a week Q one, some economies may just not regain the momentum they have lost. So in the in the Eurozone, for example, you've seen a pretty weak Q one. The level of growth, the level of p m I are very good, but momentum is fading. And so what you should do, if if you are a policymakers now is to do a physical stimulus to um

to UH push growth higher. And we know that some core European countries have a surplus um like Germany, France that they can spend, but there is lack of willingness to to use this um. So for the moment we are in a slowdown um, you know, in a slowdown of momentum. Well, Alberto, Italy doesn't seem to have any

reticence about spending money that they don't have. And I'm curious about whether you believe Italy's problems are over because they have a new finance minister, Giovanni Tria, and I believe that in the past he has actually said that the euro is a rigged system in favor of Germany. Well, the Eurozone is favor in Germany, that is a fact.

There's a making his study which shows that Germany is gaining around two and fifty billion euros in savings from being in the Eurozone by funding a negative yields and by having an exchange rate which is lower than than a potential dodge Mark would be. So some of these benefits are not being redistributed. But it's also true that Germany cannot bear the weight of saving all the periphery countries and Italy hasn't done the reforms it should have done.

So you know, the truth is in the middle at least been very much the UM the target of all the migrant flows, together with Spain in Greece from North Africa, and so it has been under a particular physical strain to um to host all the all the migrants. Around almost a million people arrived in the last few years. So I would say the euro exit fear is has been a it overdone Italy doesn't want to exit. Three out of four Italians want to stay in the European

Union and in the Eurozone. But maybe a little bit of slack on the physical side. The pro growth measures are needed in the periphery where you still have very high youth unemployment. Okay, So Alberto, I want to put you on the spot. What would make you actually trade

on some of the trade talk? In other words, you know what, what so far have we heard with respect to rhetoric that has actually affected your investing thesis and uh and made you shift around your portfolio generally, I would say we have already shifted towards a less positive stance on some of the emerging market country's debt which we were invested in last year. So we have reduced exposure to some of the riskiest countries in emerging markets.

We have actually hedged or overheaged um some of the weakest ones like Turkey or Argentina and also Brazilian Mexico which face elections this year. We're not looking for a crisis, but there is a potential for repricing because the FED is hiking so liquidit is going away from em back to America to dollar assets, so some of these carry

trades that were so profitable aren't profitable anymore. And also that you know, the trade escalation could be a negative growth driver for countries that export to the to the US, for for China and all the countries that rely on on on China. UM and all these things are you know, if you look at valuations, they're not really priced in UM.

There's been a very good year last year for emerging markets debt and equity, and and you know this year we had a small a small correction, but you know, spreads in emerging market debt are still near record lows. Thanks very much, Alberto Gallo, portfolio manager. Ahead of macro Strategies, Algebra Investments joining us from London. The shares of Merk

are higher by nearly two percent right now. This comes after the results of a follow up to follow up studies having to do with advanced melanoma showing that Merk's

key true to drug demonstrated long term survival benefits. Here to tell us more about this and other wonders of the scientific world attending the American Society of Clinical Oncology conference in Chicago is none other than our healthcare reporter for stocks Tatiana Dar and she joins us now and I recommend you follow Tatiana on Twitter at Tatiana Dor. That's D A R I double E when it comes to being on Twitter. Tatiana tell us about this meeting.

Why is this this clinical oncology conference so important to companies? Yes, thanks so much for having me them so we have. It's important because we have really the biggest UH and the most prominent doctors and cancer and in the fields of oncology attending this meeting to really stay on top of the research and innovation in this field. And this year it appears that Mark is a clear winner here because they just posted data in UM stage four lung

key answer. These are really patients that have no other options and the most important finding here is that their drug, key Truda, was able to help patients live longer than those on chemos therapy. So this studies really positions the company to UM allow patients to avoid chemotherapy altogether and just go on Truda, and the benefit there was from four to eight months. That's a remarkable UM benefit, you know for those patients who really don't have a lot

of options. So Mark a winner one loser Nectar Therapeutics. You just put out a story noting that it has lost a third of its value today after a study that it put out. Can you tell us more about that? Yes, exactly so. And the last time I check you was about a quarter. I think that they are they lost or even more than that. It's incredible the move. Investors are really punishing Nectar Therapeuts here, and that's because expectations

were really high going into the conference. This is a company that's presented very promising results of its drug in combination with bristol um squibbed up pivo and uh those results. The big question for investor here has been will those promising results called up in a bigger patient population, And unfortunately we have seen as those response rates come down

and melanoma and kidney cancer. Well, the company has been assuring investors that yet too early to tell and rush to conclusions about the drugs benefit because they've only presented data on patients that happened on the treatment for just a couple of months. So they will have up an state later in the year. But you know, today it looks like investors are have been really disappointed so far. Tatiana how do you describe to people this world of gene editing, because that seems to be such a hot

area when it comes to investments and also scientific advances. Yes, I'm um uh, probably the best way to describe it right now, you know, in science fiction, because this is really something. It's just incredible to have um doctors being able to you know, and scientists being able to edit your DNA information so that it can provide a cure for some diseases that have genetic mutations and have no other alternative today. But it's very early, and you know,

we've seen and we've learned with Christmas Therapeutics. The FDA has put a hold on a trial that they haven't even started, and that's because there is still a lot of questions when it comes to doing this in people. We have data in animals. We know it works on agriculture with plants. With animals, we don't know yet if it works in humans and if it's sad enough. Tell us about a company called Bluebird Bio. They're based in Cambridge, and of course the Bloomberg one or six one Boston, Newburyport.

Tell us about Bluebird Bio. The shares are up about three and a half percent today. Yes, Blue was also subject to a pretty interesting debate here at the conference, they posted data showing that their drug I delayed the progression of a melanoma in patients by almost about a year. And if you compare that to the current standard of care or the current treatments that patients are getting, they're

only seeing a benefit of about four months. So you know, that's an impressive benefit of almost double the current benefit that they're getting. But the question for investors, also based on high expectations um on primary results, has been if they can provide a larger benefit, and I think investors were looking for something closer to fifteen months. But doctors, you know, again, I guess they had those conversations over the weekend they said, this is a very solid result

a year versus the four months we're currently seeing. Tatiana, I'm wondering, just if you take a step back, whether there's been any discussion about President Trump's talk of lowering

drug prices given the fact that these are largely pharmaceutical companies. Uh, well, not so much, Lisa, that this conference is very, very focused on the latest innovation in on colloge here and I guess that that the talk has in town has been anti TUDA and also on combination approaches, because unfortunately we're seeing a great benefit and lung cancer patients, but there are lots of other cancers and lots of other

patients who currently don't have many options. So doctors are trying to um to to see what the latest innovation there is. Tatiana, thank you so much for being with us. It's always a fascinating conference. We look forward to your reports out of it. Tatiana Darier, Healthcare reporter for Boomberg. Reporting from the American Society of Clinical Oncology Winners and losers emerging as these companies reveal tests and uh studies that show whether or not their their strategies are effective.

The advertising industry has been rapidly changing. In one company in particular is trying to reflect that change in itself. Joining us now is John Seafort Cifert. Excuse me, John cifer, Chairman and chief executive officer of ogilvie H. He is here in our eleven three oh studio. So tomorrow is a big day. You are rebranded, rebranding but also refounding this agency. Tell us what's happening exactly. Well, Tomorrow is really a milestone in the nearly thirty month journey that

we've been going through to transform the company. Uh, we're nearly seventy years old, will be seventy in this coming September, since David Ogilvy founded the company in New York, and we're probably going through the biggest business transformation in our company's history. We're pulling down all the silos, all the specialist divisions that have been built up over years, and really trying to bring it all together and connect it as one company. Tomorrow is what we're calling our refounding

affectionately and David's honor. He started the company as one brand, and so tomorrow we're reintroducing the brand to our fifteen thousand plus employees, all in the context of giving them greater clarity on really the founding purpose of of why Ogilvy exists, which we believe it's to make our clients brands matter in an incredibly chaotic, fast paced, changing world where technology and social media and so many other factors

have change the way brands are built today. John, I remember the booklet that David Ogilvie would offer to all new employees. It was called what we Believe and how we behave, and he described Ogilvy as a teaching hospital. And I'm wondering if you can use your own experience of joining Ogilvy. Uh, you didn't even get out of college.

I believe you were an intern and Bill Phillips took you on and you just war people down to accept You tell people a little bit of your story and how that kind of exemplifies this idea of what we believe in how we behave. Well, you're touching on exactly the motivation for why we want to do this refounding, because I do believe in my personal story it is

a story of the brand Um. I was fortunate enough to have a family friend who works for David Ogilvie, and she um she was concerned that, as a sort of c student at the University of Southern California who spent more time with his friends and at parties, I might need a little kick in the butt to get my act together. And so she appealed to then uh president of Ogilvie and may theer in the u S

Bill Phillips, to give me a summer job. So I showed up on the doorstep in June of nine seventy nine, with nothing more than a business card from Bill that said, give this guy a summer job and uh and and that's what happened. So I am a product of the system of a commitment to teach someone who knew almost nothing about either advertising or business or marketing UH, to help help bring out my kind of I guess natural inclination to work hard and and and learn from an

amazing group of people. So the message is staying the same. The backdrop, though, has changed dramatically. In the past few years have been somewhat difficult for the advertising business and for ogilvie UM and I want you to talk a little bit about why. Well. One of the things that give us such conviction about the changes we're making and the motivation to to refound the brand, so to speak, is that we are seeing unprecedented change within our client organizations.

They themselves and their industries are in a complete state of disruption, whether that is through new business models, new brands that have come onto the scene with none of the legacy challenges of of their cost structure, their innovation pipeline, their access to capital, and are really innovating in a much more dynamic, much faster way to the needs and interests of the the end consumer than we've ever seen,

certainly that I've ever seen in my lifetime. And with that disruption has come a lot of pressure on these businesses to get their own cost structures in line, simplify and and get the complexity of out of their own business systems, and then think about brand building in a modern way, which is, how do you connect everything from your promise, your values, the point of view you have in the marketplace to the things that matter in terms of how do I buy your products and services by

my mobile phone or how do I, you know, enjoy an experience that transforms the way I think about your value to me in my life. So every client we we have right now is going through this kind of set of changes. What's the biggest change in skills that employees at Ogilvie need to have in order to be successful today? We are training them in the spirit of

teaching hospital to think holistically. We absolutely need specialist skills, be it in understanding the coding that goes behind the technology that serves a consumer through a mobile device or or or through UH through some other form of of digital experience, but we also need people to see the whole brand to understand that the trust that's built through employees and their belief in what they're selling and how they serve and what they promise to customers can be

fulfilled by the institution of the clients themselves. And so we think of almost every audience reg later's employees and consumers, the partners that many of our clients are now doing

business with. All of these audiences are vital. For those companies and brands that don't have a holistic view of it and can see how to connect the dots, we think those companies are going to suffer to either new brands or brands that transform faster, and to us, that's the future of of where this is all going from a brandom business perspective. Are there's some things that don't change.

For example, Uh, I remember reading something about how you got promoted early on in your career, and it was about a breakfast buffet, and I'm wondering if you could just quickly tell that story and about how it doesn't matter what you do, but everything you do has to be exceptional to the point of trying to make that connection with the client no exactly. I mean, I um it was. It still befuddles me to some extent. But

I used to work on the Mattel toys business. We used to make hundreds of toy commercials every year, primarily for showing at what was called the Wayfair to see which of the major retailers would accept a new toy and uh. We used to screen these rough cut commercials of these different toy commercials at seven in the morning in Los Angeles because it was the only way to clients could come see the films, give you comments, and then get back to their offices through the horrendous l

A traffic. And so one morning, normally we would just put out some simple you know, bagels and orange jues and things, and I thought to myself, you know, this is kind of boring. Let's try and spice this up. So I went and bought fresh orange juice for everybody.

I got this amazing array of of Danish and fruit and and everything, and the meeting went so well, I think, probably because some of this stuff put people in a better mood than they came in that my supervisor came to me a week later and said, you know, the way you handled yourself in that meeting was phenomenal. I didn't do anything but bring the catering. It. We think your account super our senior account executive material. Uh, congratulations.

So but it was really just to your point. It was a foundation of go the extra make the extra effort and and and create a client experience that people remember and make sure that people eat well. Yeah, I'm just gonna say that I've learned throughout my career Pete, feed people well, good things happen. Thanks very much. John Seifert is the chairman and the chief executive of Ogilvy, their division of w p P. And congratulations and best

wishes on your refounding. Uh, this is going to be an exceptional time in the world of appetizing in a world of mass production, one company remains committed to hand made items, specifically hand made beds and linen's And joining us now is Yan right. He is the executive chairman of Houstins and they are based in Sweden, and it's a pleasure to have him here in our eleven three y OHD studio. Yean, thank you very much for being here.

Give people just a little a brief history of this is a fifth generation family owned business and you start. The business started by making saddles and now it makes mattresses as well as other items to help you sleep better. Yes, my grandfather's grandfather also master saddler, and he founded the company twenty two on March eighteen hundred fifty two. So we are on a mission to sorry people, to make

people's lives better. And the focus have been on belts since the start and only on belts, Son and accessories hundred sounds since nineteen seventeen. So I was reading through your catalog and the mattresses can go from four thousand dollars up to more than a hundred and dollars depending on what you customize them. They are a luxury product

made from natural ingredients and handcrafted. I'm trying to understand how the business has changed for you, because when I travel on the subway in New York City, I see a lot of advertisements for for Caspers or uh, you know, name your mattress shop. It seems like it has gotten more competitive and more crowded with companies that don't have the same kind of overhead. Well, it's a lot of

crap out there in the jungle. The keys that the consumer are intelligence and they recognized they have a lack of sleep, they are sleep deprivated and so on. So they are looking for for some things that really changed that and what other product would be better for your health? What other product would be better for your beauty? And sleeping really really good in the Hastin's path, have you seen business expand substantially over the past few years. Yes,

we are growing rapidly. We've been growing rapidly for almost forty years and right now we are growing pcent in the United States this year compared last year growth were We are are aiming for more than growth and we do that in ten of our top markets. How much how much does this sort of hinge on the population of wealthy individuals and how that's increased. Um, I don't know. Of course, they need to sleep, but everyone needs to sleep.

So we are on a mission to reach any consumer that from four thousand dollars and upwards, anyone that prioritize to live better, to have a better life, be happier and look younger and sleep. But they are we are here for them. Tell us about your plans in specifically in India, because as I was noting that you have You've got a franchise model there and you have really tried to expand the business and maybe just give us a little bit of look better. Why you you selected India, Well,

we are working with farty seven countries right now. India is one of them. It's maybe a coincidence that you picked India. But we have a growth rate. I saw the morning's figures. We have a growth rate compared to last year. We have plus two thousand percent in India. So we are working. We have local partners, that is, people that have discovered our product. They sleep in our product themselves and they feel that our mission to make this world a better place and how people sar people

to sleep better is amazing thing. So so I'm wondering. You know a lot of people talk about the input costs. You know, the commodity prices have been increasing, and I'm wondering, from your perspective, have you seen that it is getting more expensive not only to source materials but also to pay people to actually do the labor. Well, of course labor costs, but but we are located in Sweden, so we have the usual increase and we have very qualified labor.

But I love him. It's like people live well in Sweden. I'm like you, and the this isn't an issue in Sweden. I know Swedenly swedenly isn't the low cost country to produce, but we do that because we want to have the highest quality. What about the commodity prices, Well, we source the highest and best quality materials and of course the prices go up, but they are following index. It's it's nothing special. Also, just to mention it because it may not be evident, but your beds can be found in

hotels as well as in cruise ships. That's another more And it's not just the stationary market. Uh, Is that something that you're also pursuing. We are not prioritized that. We have started very recently working with the hospitality. So it has only been individuals that have been sleeping on our beds. Someone they have started sleeping in hastins. They want it in their yacht, they want it in our airplane. So we supply our planes and we can customize whatever

you want. Yeah, and right, thank you so much for being with us. Young right, executive chairman of Hostins, talking about the importance of sleep and him he doesn't need to convince me, does he needs to convince you, not at all. But I I just spend more time getting up earlier now I do, yes, all right, so I get older. Well, you know, in fairness, my bed often gets shared. It's certainly early morning by the little pitter pattern that comes tramping in and it's wid spy. Yeah.

They disturbed my sleep plenty, exactly. Um, thank you very much for being with us. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa abramowits one before the podcast. You can always catch us worldwide on Bloomberg Radio