Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller. Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moving news. Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast.

Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller. Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moving news. Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast.

I let's getting a little bit more insight on the macro front and the developments here. Because it's that debt ceiling debate. It's taking over the markets, I would argue, overshadowing some of the other stories like inflation, Chinese growth, geopolitics. There's a lot of doom and gloom out there, but let's not dwell on the bad. Let's bring in Bloomberg Intelligence analysts, Audrey child Freeman, our chief g ten FX strategist over at Bloomberg Intelligence, and Dwayne Wright, senior government analysts with BI as well. Dwayne, I want to start with you and talk to us a little bit about the developments here. I believe M Kevin McCarthy has now said that there are negotiations happening this morning. But what's the sticking point? What can't they agree on.

I let's getting a little bit more insight on the macro front and the developments here. Because it's that debt ceiling debate. It's taking over the markets, I would argue, overshadowing some of the other stories like inflation, Chinese growth, geopolitics. There's a lot of doom and gloom out there, but let's not dwell on the bad. Let's bring in Bloomberg Intelligence analysts, Audrey child Freeman, our chief g ten FX strategist over at Bloomberg Intelligence, and Dwayne Wright, senior government analysts with BI as well. Dwayne, I want to start with you and talk to us a little bit about the developments here. I believe M Kevin McCarthy has now said that there are negotiations happening this morning. But what's the sticking point? What can't they agree on.

Well, thanks. I think it's the same conversation we've been having over the last or we've been hearing about over the last couple of weeks, and this is yet another mini storm that we think will end up before we get to the calm. It ends up being around what level of spending cuts do Republicans want and then they're willing to accept. What level of spending cuts are Democrats willing to agree to?

Well, thanks. I think it's the same conversation we've been having over the last or we've been hearing about over the last couple of weeks, and this is yet another mini storm that we think will end up before we get to the calm. It ends up being around what level of spending cuts do Republicans want and then they're willing to accept. What level of spending cuts are Democrats willing to agree to?

And there's about one.

And there's about one.

Hundred and thirty billion dollars golf between the two parties. You know, we're talking about going back to last year's spending or working from this year spending. There's other policies at play related to unspent COVID money. There's what to do about defense spending. As much as Republicans want to dial down or dial back the spending on discretionary spent funding, they also want to increase spending on the defense side, which Democrats have said is is a bit of a non starter. And then you have all these other policies that deal with some of the social safety net programs. Should we have work requirements for healthcare, specifically in the Medicaid program? Democrats have said no, and Republicans want to expand on work requirements into healthcare. So a lot of the sticking points that we saw that we're all in the Republican House past bill that Democrats said no to, those are still on the table, and those are still the sticking points that they're trying to work through.

Hundred and thirty billion dollars golf between the two parties. You know, we're talking about going back to last year's spending or working from this year spending. There's other policies at play related to unspent COVID money. There's what to do about defense spending. As much as Republicans want to dial down or dial back the spending on discretionary spent funding, they also want to increase spending on the defense side, which Democrats have said is is a bit of a non starter. And then you have all these other policies that deal with some of the social safety net programs. Should we have work requirements for healthcare, specifically in the Medicaid program? Democrats have said no, and Republicans want to expand on work requirements into healthcare. So a lot of the sticking points that we saw that we're all in the Republican House past bill that Democrats said no to, those are still on the table, and those are still the sticking points that they're trying to work through.

Audrey.

Audrey.

I want to bring you in here because we've seen the dollar rising for the most part over the course of the month of May, Bloomberg Dollar Index up again today. I want to get your take how are markets pricing in these debt ceiling concerns, specifically around the dollar.

I want to bring you in here because we've seen the dollar rising for the most part over the course of the month of May, Bloomberg Dollar Index up again today. I want to get your take how are markets pricing in these debt ceiling concerns, specifically around the dollar.

So the dollar rebound has to be seen really up to quite a long period of under performance, and the market a couple of weeks, a few weeks ago, as you said, started to look quite underweight dollar, and I suspect, you know, if you go into this as the debt ceiling deadlines looms and uncertainty continues to increase with regard to that matter, I suspect that there will be an incentive to close those underweight dollar position and just wait and see what happens, because there's an element of uncertainty on the impact that default would have on the dollar. Obviously, it's negative, it's structurally negative. It adds onto the whole theme of the dollarization. However, in the near term, if that leads to financial market ternal which I suspect it would, and that means funding problems that could actually push the dollar higher. So I kind of feel that's one of the reasons why the dollar has been pushing higher in the past, in the past few weeks, but I feel there's no strong conviction at the moment in the market.

So the dollar rebound has to be seen really up to quite a long period of under performance, and the market a couple of weeks, a few weeks ago, as you said, started to look quite underweight dollar, and I suspect, you know, if you go into this as the debt ceiling deadlines looms and uncertainty continues to increase with regard to that matter, I suspect that there will be an incentive to close those underweight dollar position and just wait and see what happens, because there's an element of uncertainty on the impact that default would have on the dollar. Obviously, it's negative, it's structurally negative. It adds onto the whole theme of the dollarization. However, in the near term, if that leads to financial market ternal which I suspect it would, and that means funding problems that could actually push the dollar higher. So I kind of feel that's one of the reasons why the dollar has been pushing higher in the past, in the past few weeks, but I feel there's no strong conviction at the moment in the market.

Yeah, it feels purely defensive essentially, when you're looking at kind of the way some of the speculative funds are positioning Audie to follow upon that. Though, as soon as this dollar debate kind of disappears, or there's a solution or resolution of some sort, it's a no brainer trade and unwinding of that essentially dollar weakness.

Yeah, it feels purely defensive essentially, when you're looking at kind of the way some of the speculative funds are positioning Audie to follow upon that. Though, as soon as this dollar debate kind of disappears, or there's a solution or resolution of some sort, it's a no brainer trade and unwinding of that essentially dollar weakness.

I think. So, However, compared to two or three months ago, where you know, it was the compelling trade to have on, there's a kind of fresh element of uncertainty creeping into the market. In particular, I would mention the pace of the Chinese economic recovery and the implications that would have for the global economic outlook for currencies like the euro the US dollar. So the answer to your question is yes, but I don't. I think there's a little it's a little bit less straightforward than it was. Let's say, you know, in kind of early early January.

I think. So, However, compared to two or three months ago, where you know, it was the compelling trade to have on, there's a kind of fresh element of uncertainty creeping into the market. In particular, I would mention the pace of the Chinese economic recovery and the implications that would have for the global economic outlook for currencies like the euro the US dollar. So the answer to your question is yes, but I don't. I think there's a little it's a little bit less straightforward than it was. Let's say, you know, in kind of early early January.

Duine, I want to bring you back in here. Talk us through the timeline for the next couple of Oh boy, we're running very close to that X date, that June first X date. Talk us through the timeline of what you're hearing from wamakers.

Duine, I want to bring you back in here. Talk us through the timeline for the next couple of Oh boy, we're running very close to that X date, that June first X date. Talk us through the timeline of what you're hearing from wamakers.

Well, they're still talking, and I think there's a big question as to whether June first is the real X date or if it's something after that. You know, up to maybe last week or early this week, the Secretary jan had been very strong in terms of saying June one is the X date, and then kind of got a little squishy, which I think served as a bit of a pressure release valve as far as these conversations go. But there there are going to be at some point over the next week or so that pressure is going to ramp up as we get to June first, and potentially maybe get past June first. And you got to think about it from a procedural standpoint. In the House and even in the Senate, once a deal is reached between the President and the Speaker, it's going to take about three days to get out of the House. And that's because Speaker McCarthy has said any bill that gets passed out of the House longmakers will have three days to review. So you have to build in seventy two hours. You don't have to build in some more time to potentially get it through a Senate that may not want to move on it as quickly, depending on whether you're on the right or left, and you don't like the deal and you want to slow things down. And so I think as we're looking at the timeline over the next several days, you really need to start to see something happen by around the first in order to really get a bill don it and really stave off potential default.

Well, they're still talking, and I think there's a big question as to whether June first is the real X date or if it's something after that. You know, up to maybe last week or early this week, the Secretary jan had been very strong in terms of saying June one is the X date, and then kind of got a little squishy, which I think served as a bit of a pressure release valve as far as these conversations go. But there there are going to be at some point over the next week or so that pressure is going to ramp up as we get to June first, and potentially maybe get past June first. And you got to think about it from a procedural standpoint. In the House and even in the Senate, once a deal is reached between the President and the Speaker, it's going to take about three days to get out of the House. And that's because Speaker McCarthy has said any bill that gets passed out of the House longmakers will have three days to review. So you have to build in seventy two hours. You don't have to build in some more time to potentially get it through a Senate that may not want to move on it as quickly, depending on whether you're on the right or left, and you don't like the deal and you want to slow things down. And so I think as we're looking at the timeline over the next several days, you really need to start to see something happen by around the first in order to really get a bill don it and really stave off potential default.

The X date, I think such a crucial thing to talk about, because yes, it's June first, regarding headlines right now, the Janney Ellen reaffirms that June first deadline. But at the end of the day, look at what some of these Wall Street banks are saying. The range goes from June first to June fifteenth, and then you have the real market bears. You're saying, actually the real X state for the markets is May twenty six, so right before that Memorial Day weekend. Audrey Child Freeman of Bloomberg Intelligence, we think he has always along with Dwayne Wright, thank you as well, our senior government analyst with Bloomberg Intelligence. Folks. The doom and gloom is just going to ramp up from here.

The X date, I think such a crucial thing to talk about, because yes, it's June first, regarding headlines right now, the Janney Ellen reaffirms that June first deadline. But at the end of the day, look at what some of these Wall Street banks are saying. The range goes from June first to June fifteenth, and then you have the real market bears. You're saying, actually the real X state for the markets is May twenty six, so right before that Memorial Day weekend. Audrey Child Freeman of Bloomberg Intelligence, we think he has always along with Dwayne Wright, thank you as well, our senior government analyst with Bloomberg Intelligence. Folks. The doom and gloom is just going to ramp up from here.

Is making me a little bit scared, as he was talking about all those how long it needs in order to just get past these procedural votes.

Is making me a little bit scared, as he was talking about all those how long it needs in order to just get past these procedural votes.

Yes, I feel bad for those staffers. Stick with us. This is Bloomberg.

Yes, I feel bad for those staffers. Stick with us. This is Bloomberg.

You're listening to the teenth ken'sher live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business or listen on demand wherever you get your podcast.

You're listening to the teenth ken'sher live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business or listen on demand wherever you get your podcast.

Let's bring in some experts here. Diana Rossero, Pana equity research analyst over at Bloomberg Intelligence, joins us alongside a personal favorite of mine and a Dallas resident. Again another reason to love him, Brendan Case, our Bloomberg News retail reporter. Brendan I want to start with you here the difference between a slowing consumer and a collapsing consumer. Are we there yet?

Let's bring in some experts here. Diana Rossero, Pana equity research analyst over at Bloomberg Intelligence, joins us alongside a personal favorite of mine and a Dallas resident. Again another reason to love him, Brendan Case, our Bloomberg News retail reporter. Brendan I want to start with you here the difference between a slowing consumer and a collapsing consumer. Are we there yet?

Well, I think that we have to stick with slowing for the moment, and we're definitely seeing signs of that all over the place, you know, starting with Target and Walmart, you know, saying that last week, plenty of additional signs. Now. Pet Co reported results today. Not a huge company obviously, but sort of an interesting category because people tend to spend pretty heavily on their pets. And there again, you know, they're seeing strong business in the essentials such as food, but a pullback from the kind of toys and leashes that people would buy more of in good times. I don't think that we're ready to talk about a collapse yet, but I do think it's a watch item. And you know, I don't think that anybody would say that we've hit bottom at this point.

Well, I think that we have to stick with slowing for the moment, and we're definitely seeing signs of that all over the place, you know, starting with Target and Walmart, you know, saying that last week, plenty of additional signs. Now. Pet Co reported results today. Not a huge company obviously, but sort of an interesting category because people tend to spend pretty heavily on their pets. And there again, you know, they're seeing strong business in the essentials such as food, but a pullback from the kind of toys and leashes that people would buy more of in good times. I don't think that we're ready to talk about a collapse yet, but I do think it's a watch item. And you know, I don't think that anybody would say that we've hit bottom at this point.

Diana Brendan just mentioned some of that discrepancy we've seen between us spending on things like food, both for humans and for pets. It turns out as well against the sort of discretionary items, whether it's leashes, collars, and toys at Petco or electronics perhaps at places like Walmart. I mean, how much pressure does this actually put on the companies in terms of margin, like, aren't they happy that things that people are still buying their stuff?

Diana Brendan just mentioned some of that discrepancy we've seen between us spending on things like food, both for humans and for pets. It turns out as well against the sort of discretionary items, whether it's leashes, collars, and toys at Petco or electronics perhaps at places like Walmart. I mean, how much pressure does this actually put on the companies in terms of margin, like, aren't they happy that things that people are still buying their stuff?

Yes? So basically what I got from the call earlier this morning from Petco was that there's a bifurcation of the consumer. You have consumers that are very dedicated to the health and wellness of their pets, and even on consumables such as food, you have people trying to buy premium food, which obviously is more expensive than regular pet food. So there's that, but there's also that seeking for value that you see for Target and Walmart. Now this is obviously the second part. The seeking value is a little bit problematic for companies because usually the essentials are lower margin. They tend to be lower margin compared to the discretionary category. So you will see, in addition to labor and all of the supply chain costs increasing in the past couple of years, you see an added pressure of lower margin items being more in demand.

Yes? So basically what I got from the call earlier this morning from Petco was that there's a bifurcation of the consumer. You have consumers that are very dedicated to the health and wellness of their pets, and even on consumables such as food, you have people trying to buy premium food, which obviously is more expensive than regular pet food. So there's that, but there's also that seeking for value that you see for Target and Walmart. Now this is obviously the second part. The seeking value is a little bit problematic for companies because usually the essentials are lower margin. They tend to be lower margin compared to the discretionary category. So you will see, in addition to labor and all of the supply chain costs increasing in the past couple of years, you see an added pressure of lower margin items being more in demand.

So that is then necessarily a function of that kind of recessionary call. It feels like essentially that you're going to start tracking the higher end consumer to more perhaps generic goods, at least in the case of Walmart for example, When does that slow completely from from the consumer's point of view.

So that is then necessarily a function of that kind of recessionary call. It feels like essentially that you're going to start tracking the higher end consumer to more perhaps generic goods, at least in the case of Walmart for example, When does that slow completely from from the consumer's point of view.

Well, I think it has to do with consumer sentiment, has a lot in play obviously unemployment or lack thereof. It seems that obviously this is an unusual economic quote unquote downturn because unemployment seems to be quite low compared to you know, previous recessions or slow Dance or something like that. So yeah, I would say it's mostly on a consumer consumer sentiment, and I think how comfortable they feel with the feature sure and their ability to pay their bills going forward.

Well, I think it has to do with consumer sentiment, has a lot in play obviously unemployment or lack thereof. It seems that obviously this is an unusual economic quote unquote downturn because unemployment seems to be quite low compared to you know, previous recessions or slow Dance or something like that. So yeah, I would say it's mostly on a consumer consumer sentiment, and I think how comfortable they feel with the feature sure and their ability to pay their bills going forward.

Brendan, what have you heard from some of these executives about the potential for the consumer to just like simply hit a wall, stop going to stores, stop going online simply because the inflationary pressures on their pocketbook are too much, or or what would it take. Essentially, have any executives kind of address this, You.

Brendan, what have you heard from some of these executives about the potential for the consumer to just like simply hit a wall, stop going to stores, stop going online simply because the inflationary pressures on their pocketbook are too much, or or what would it take. Essentially, have any executives kind of address this, You.

Know, I don't think that that that is something that they've really wrung the alarm bell about. They're talking much more about slowing and if you take a step back from some of the kind of the big mass market retailers for one second, you know, there's still signs of strength out there too, you know, sort of surprisingly strong sales at Abercrombie and Fitch. You know, we've heard about this morning. You know, there's signs of progress even at Cohl's right now, so more of a mixed bag than a sense of things falling apart. But it said, if you listen to Walmart and Target, they're both pretty cautious about the second half. And I think that one thing that's going through their minds is that the rate increases from the FED tightening financial conditions. You know, a lot of that is probably still an effect that we have yet to feel the full force of. And so you know, there they are taking a very cautious view, albeit without talking about consumers just flat out hitting a wall.

Know, I don't think that that that is something that they've really wrung the alarm bell about. They're talking much more about slowing and if you take a step back from some of the kind of the big mass market retailers for one second, you know, there's still signs of strength out there too, you know, sort of surprisingly strong sales at Abercrombie and Fitch. You know, we've heard about this morning. You know, there's signs of progress even at Cohl's right now, so more of a mixed bag than a sense of things falling apart. But it said, if you listen to Walmart and Target, they're both pretty cautious about the second half. And I think that one thing that's going through their minds is that the rate increases from the FED tightening financial conditions. You know, a lot of that is probably still an effect that we have yet to feel the full force of. And so you know, there they are taking a very cautious view, albeit without talking about consumers just flat out hitting a wall.

Yeah, when you think of that sort of looking ahead timeline, do you draw any consensus from what you've heard about when things might start looking up again?

Yeah, when you think of that sort of looking ahead timeline, do you draw any consensus from what you've heard about when things might start looking up again?

It feels like it's too soon to talk about that. You know. It feels like the question that's in the front of the mind for the big retailers is okay, is this going to get worse? You know, do we end up having a recession? If so, when it doesn't feel as though they are talking yet about kind of seeing you know, rays of light in the distant horizon. It feels much more like, you know, watchful, waiting, lots of caution and just not wanting to not wanting to promise too much.

It feels like it's too soon to talk about that. You know. It feels like the question that's in the front of the mind for the big retailers is okay, is this going to get worse? You know, do we end up having a recession? If so, when it doesn't feel as though they are talking yet about kind of seeing you know, rays of light in the distant horizon. It feels much more like, you know, watchful, waiting, lots of caution and just not wanting to not wanting to promise too much.

So Diana, in our last minute or so here talk to us about today's earning story with Cole's kss is the taker folks hied by about eight and a half percent for the stock Diana about forty five seconds. What did Coles do?

So Diana, in our last minute or so here talk to us about today's earning story with Cole's kss is the taker folks hied by about eight and a half percent for the stock Diana about forty five seconds. What did Coles do?

Right?

Right?

Yeah, I think.

Yeah, I think.

Going back to what we said earlier, is the consumer seeking value and having that alternative for them. It seems that that drove a lot of their sales as well, So, you know, like going back to what Brennan said, it's it's consumers just being cautious and the executive of these companies recognizing that we're you know, it's difficult out there right now, and I think it's going to be darker before it starts to be light again.

Going back to what we said earlier, is the consumer seeking value and having that alternative for them. It seems that that drove a lot of their sales as well, So, you know, like going back to what Brennan said, it's it's consumers just being cautious and the executive of these companies recognizing that we're you know, it's difficult out there right now, and I think it's going to be darker before it starts to be light again.

Brendan ten seconds, putting on the spot anythin ad.

Brendan ten seconds, putting on the spot anythin ad.

I'm going to watch Best Buying Costco on Thursday. A lot of signals there about discretionary spending and higher end consumers.

I'm going to watch Best Buying Costco on Thursday. A lot of signals there about discretionary spending and higher end consumers.

Well, we will definitely have you both back. We thank you as always, Diana, Rossaropena, equity research analyst over at Bloomberg Intelligence, and Brendan Case, our star retail reporter over in Dallas, Texas.

Well, we will definitely have you both back. We thank you as always, Diana, Rossaropena, equity research analyst over at Bloomberg Intelligence, and Brendan Case, our star retail reporter over in Dallas, Texas.

You're listening to the tape cancer our live program, Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.

You're listening to the tape cancer our live program, Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.

And the Bloomberg Business App.

And the Bloomberg Business App.

You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

Yeah.

Yeah.

I've been so excited for this discussion, Creaty, because we're going to talk about NOOM and the potential for weight loss drugs to be part of this overall discussion on health. We bring in Linda Anagawa, chief of Medicine, as well as our Sam Fizzelli. He's a senior pharma analyst with Bloomberg Intelligence. Linda, you were brought on to to expand the ability of NOOM to bring in these weight loss drugs. Take us through the thinking here, because this isn't NOOM all about discipline and improving your healthiness of your lifestyle, and yet we're turning to medication potentially to bring down weight in people who are obese.

I've been so excited for this discussion, Creaty, because we're going to talk about NOOM and the potential for weight loss drugs to be part of this overall discussion on health. We bring in Linda Anagawa, chief of Medicine, as well as our Sam Fizzelli. He's a senior pharma analyst with Bloomberg Intelligence. Linda, you were brought on to to expand the ability of NOOM to bring in these weight loss drugs. Take us through the thinking here, because this isn't NOOM all about discipline and improving your healthiness of your lifestyle, and yet we're turning to medication potentially to bring down weight in people who are obese.

Yeah.

Yeah.

Absolutely.

Absolutely.

I'll tell you about NeoMed, where a program dedicated to fighting the disease of obesity using all of the best available scientific tools that we have. And what makes us unique is that we are still combining our suite of personalized psychological tools along with telehealth services to help people achieve not just the lasting weight loss, but also the improved health outcomes.

I'll tell you about NeoMed, where a program dedicated to fighting the disease of obesity using all of the best available scientific tools that we have. And what makes us unique is that we are still combining our suite of personalized psychological tools along with telehealth services to help people achieve not just the lasting weight loss, but also the improved health outcomes.

I mean, that's so interesting because these gop one drugs seem to really be a game changer in the overall idea of weight loss. Whether it's ozempig, whether it's the various other options out there, how do you fit these in for someone who's coming to noom med. So the introduction of the new, highly effective anti obesity medicines, without a doubt, have revolutionized this landscape for sustainable weight loss, you know, but for the millions of Americans taking these medications, lasting success is really not often achievable without having that anchor in behavioral change. I mean, as a doctor, I've prescribed these medications hundreds of times and I've seen some people even gain weight on them. So new med really has the only clinical program that's built on our best in class flagship behavior change platform. And that gives us an incredibly powerful way to address both the biology as well as the psychology that's necessary in the fight against obesity.

I mean, that's so interesting because these gop one drugs seem to really be a game changer in the overall idea of weight loss. Whether it's ozempig, whether it's the various other options out there, how do you fit these in for someone who's coming to noom med. So the introduction of the new, highly effective anti obesity medicines, without a doubt, have revolutionized this landscape for sustainable weight loss, you know, but for the millions of Americans taking these medications, lasting success is really not often achievable without having that anchor in behavioral change. I mean, as a doctor, I've prescribed these medications hundreds of times and I've seen some people even gain weight on them. So new med really has the only clinical program that's built on our best in class flagship behavior change platform. And that gives us an incredibly powerful way to address both the biology as well as the psychology that's necessary in the fight against obesity.

I want to bring in Sam Fizzelli here. He leads our pharma coverage over at Bloomberg Intelligence. Sam double question here, first set the stage for us in terms of the landscape of the industry and of these products, and then you know, feel free to ask one to question yourself.

I want to bring in Sam Fizzelli here. He leads our pharma coverage over at Bloomberg Intelligence. Sam double question here, first set the stage for us in terms of the landscape of the industry and of these products, and then you know, feel free to ask one to question yourself.

Oh sure, thank you, thanks for having me on. So obviously, there's been drugs that have been in development or used for many years for obesity, but very few of them have actually been successful, really commercially until recently because the percentage of weight loss that they were giving, perhaps some of the side effect issues that they had were just basically not going conducive to use. Now we've got these drugs which have got pretty good safety at least in diabetic patients, have been used for years, not that these doses though, and now you get significant efficacy. And I think doctor Anagawa you've mentioned in the company's mentioned in the press release the twelve point odd percent twelve point four percent, I think that you get with we go V at sixty eight weeks whereas now soon we're going to have Lily's to zeppetite or which is the same agent used in Munjaro for diabetes, which is clocking it around eighteen percent proceed word just at weight loss. So these are significant numbers, and I think both companies are trying to even push it further. Where do you think that would go in terms of the level of interest Do you think there would be major switching or do you think there's so much demand that between the two drugs, people will take whatever they can get their hands on.

Oh sure, thank you, thanks for having me on. So obviously, there's been drugs that have been in development or used for many years for obesity, but very few of them have actually been successful, really commercially until recently because the percentage of weight loss that they were giving, perhaps some of the side effect issues that they had were just basically not going conducive to use. Now we've got these drugs which have got pretty good safety at least in diabetic patients, have been used for years, not that these doses though, and now you get significant efficacy. And I think doctor Anagawa you've mentioned in the company's mentioned in the press release the twelve point odd percent twelve point four percent, I think that you get with we go V at sixty eight weeks whereas now soon we're going to have Lily's to zeppetite or which is the same agent used in Munjaro for diabetes, which is clocking it around eighteen percent proceed word just at weight loss. So these are significant numbers, and I think both companies are trying to even push it further. Where do you think that would go in terms of the level of interest Do you think there would be major switching or do you think there's so much demand that between the two drugs, people will take whatever they can get their hands on.

You know, I think that the landscape of these medications is going to continue to evolve. Absolutely. Turzeppetite is going to take us another step forward in what we are able to offer our patients suffering from this disease. What Neom's really looking to though, is not even what's immediately available, but what's coming down the horizon in the next two years, five years. And I think fundamentally, at the core of things, we still have to remember, sorry that as good as the drug trials look, they were all done with lifestyle change hand and hand, and so that still fundamentally has to be our anchor.

You know, I think that the landscape of these medications is going to continue to evolve. Absolutely. Turzeppetite is going to take us another step forward in what we are able to offer our patients suffering from this disease. What Neom's really looking to though, is not even what's immediately available, but what's coming down the horizon in the next two years, five years. And I think fundamentally, at the core of things, we still have to remember, sorry that as good as the drug trials look, they were all done with lifestyle change hand and hand, and so that still fundamentally has to be our anchor.

Oh, I absolutely agree. I think the you know, there's no point just reducing food intake and not changing a lifestyle to try and get more exercise, more correct eating. So and that's I'm assuming the main push that you're putting in there, but actually thinking about drugs because at the end of the day, I'm a drug analyst. If you think forward and you see these the combination of lifestyle and the drugs, do you think it will make a big difference to people if they didn't have to inject themselves and one day there were some orals available. Do you think that's that would be a big plus for fitting into the whole regime that you were thinking about.

Oh, I absolutely agree. I think the you know, there's no point just reducing food intake and not changing a lifestyle to try and get more exercise, more correct eating. So and that's I'm assuming the main push that you're putting in there, but actually thinking about drugs because at the end of the day, I'm a drug analyst. If you think forward and you see these the combination of lifestyle and the drugs, do you think it will make a big difference to people if they didn't have to inject themselves and one day there were some orals available. Do you think that's that would be a big plus for fitting into the whole regime that you were thinking about.

I definitely do. And there certainly are drugs in development that have oral formulations, and not only will those probably be more acceptable to patients, my other hope is that they might be less expensive as well, which would allow us to improve access to them or broadly.

I definitely do. And there certainly are drugs in development that have oral formulations, and not only will those probably be more acceptable to patients, my other hope is that they might be less expensive as well, which would allow us to improve access to them or broadly.

Doctor Linda, I mean, I want to ask, because the thing about these drugs, I guess the bad side of these drugs is that once you're on them, it seems like you're on them forever, or else you gain the weight back. How do you at noon think about this, because you know, if these drugs become a part of that treatment option. It feels weird to be on these drugs forever, especially when you know the weight loss that you're hoping for. Maybe not you know that large.

Doctor Linda, I mean, I want to ask, because the thing about these drugs, I guess the bad side of these drugs is that once you're on them, it seems like you're on them forever, or else you gain the weight back. How do you at noon think about this, because you know, if these drugs become a part of that treatment option. It feels weird to be on these drugs forever, especially when you know the weight loss that you're hoping for. Maybe not you know that large.

It's a great question. New's point of view is that we may be able to drive even better health improvements than the drugs alone, because we've got significant published, peer reviewed studies in over fifty journals that show that our principles of psychological change, when applied to our patients and users, actually drive better long term outcomes than the standard of care. So I think the jury is out on whether every single patient will absolutely need these medications.

It's a great question. New's point of view is that we may be able to drive even better health improvements than the drugs alone, because we've got significant published, peer reviewed studies in over fifty journals that show that our principles of psychological change, when applied to our patients and users, actually drive better long term outcomes than the standard of care. So I think the jury is out on whether every single patient will absolutely need these medications.

Lifelong doctor, you interestingly segued into the idea of outcomes. We are awaiting some controlled, sizeable data for cardiovascular risk reduction of these drugs potentially. Do you think that's clearly if you then add better eating and more exercise to that, you're going to amplify that benefit. But do you think that's really important that the drugs do show that they're reducing cardival vascular risk. Do you think that your patients physicians are all looking for that.

Lifelong doctor, you interestingly segued into the idea of outcomes. We are awaiting some controlled, sizeable data for cardiovascular risk reduction of these drugs potentially. Do you think that's clearly if you then add better eating and more exercise to that, you're going to amplify that benefit. But do you think that's really important that the drugs do show that they're reducing cardival vascular risk. Do you think that your patients physicians are all looking for that.

Absolutely? I mean, weight is really just one barometer and it's not the greatest barometer of overall health. So if there's clear cardiovascular risk reduction, I think hopefully that will make the case for coverage by payers stronger, because that's one of the things that does steiny us in our attempt to treat this disease of obesity.

Absolutely? I mean, weight is really just one barometer and it's not the greatest barometer of overall health. So if there's clear cardiovascular risk reduction, I think hopefully that will make the case for coverage by payers stronger, because that's one of the things that does steiny us in our attempt to treat this disease of obesity.

So one of the issues with these new drugs has been supply shortages because people who don't necessarily qualify as obese in a sense have been pushing for these drugs. I mean, take Hollywood, or take just people who have a couple extra pounds. How do you see this from New Med's perspective as being can you deliver this drug for people who you know, maybe don't have some of these same medical concerns caused by obesity.

So one of the issues with these new drugs has been supply shortages because people who don't necessarily qualify as obese in a sense have been pushing for these drugs. I mean, take Hollywood, or take just people who have a couple extra pounds. How do you see this from New Med's perspective as being can you deliver this drug for people who you know, maybe don't have some of these same medical concerns caused by obesity.

New Med is really committed to strict qualification of any of our patients who may be seeking a prescription from us, and one of the ways that we do this is not just greeting people by BMI, but utilizing video visits, which many in the space do not do as well as metabolic blood testing. Again to help us risks stratify which patients are more likely to achieve the best benefits from these drugs, and for whom it's really less critical. There's always a shared decision making process between our clinicians and our patients, and ultimately the clinicians are the ones who make that decision. They make that call.

New Med is really committed to strict qualification of any of our patients who may be seeking a prescription from us, and one of the ways that we do this is not just greeting people by BMI, but utilizing video visits, which many in the space do not do as well as metabolic blood testing. Again to help us risks stratify which patients are more likely to achieve the best benefits from these drugs, and for whom it's really less critical. There's always a shared decision making process between our clinicians and our patients, and ultimately the clinicians are the ones who make that decision. They make that call.

Doctor Linda Onigawa, Chief Medicine over at NOOM, alongside Bi's at Sam Fazelio. We thank you both. Is Bloomberg.

Doctor Linda Onigawa, Chief Medicine over at NOOM, alongside Bi's at Sam Fazelio. We thank you both. Is Bloomberg.

You're listening to the Team Can't Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcast.

You're listening to the Team Can't Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcast.

It's all about health, but health with a twist.

It's all about health, but health with a twist.

Health and drugs maybe kind of encompassing this. And I'm so interested to speak to our next guest because he has his finger on the pulse of the marijuana industry and stuff. I've only been back in the United States a short period of time, and I swear I spell weed everywhere in New York City.

Health and drugs maybe kind of encompassing this. And I'm so interested to speak to our next guest because he has his finger on the pulse of the marijuana industry and stuff. I've only been back in the United States a short period of time, and I swear I spell weed everywhere in New York City.

It's been one of the biggest surprises Park Avenue at five pm. Is it just it overwhelms you. It's a truly New York experience of folks. Just so you guys know, Smoon Foxman was in the Middle East for three years, three and a half three and a half year she covered all of that FIFA coverage.

It's been one of the biggest surprises Park Avenue at five pm. Is it just it overwhelms you. It's a truly New York experience of folks. Just so you guys know, Smoon Foxman was in the Middle East for three years, three and a half three and a half year she covered all of that FIFA coverage.

Ain't no weed there illegal, It's completely illegal, and even for medical purposes I believe, which is a medical purposes of marijuana. Is something we're going to talk to our next guest about because this is just an exploding space. Clearly, everyone acknowledges that there are benefits for people who are going through any number of health issues.

Ain't no weed there illegal, It's completely illegal, and even for medical purposes I believe, which is a medical purposes of marijuana. Is something we're going to talk to our next guest about because this is just an exploding space. Clearly, everyone acknowledges that there are benefits for people who are going through any number of health issues.

Yeah, and a fun fact, I should say it's an exploding space now. But I think when it first kind of I want to say, at least ticked off in the markets, it was like twenty eighteen. The only reason I remember that because that was one of my very first beats at Bloomberg I was the video game in Cannabis reporter for stocks. It's true, before it was like an actual coverage area they gave. They gave the girl who's never played a video game in her life video game in cannabis stocks to cover. So that was fun. Let's ring in our next guest, Morgan Patsia, the co founder of Poseidon Investment Management, talking a little bit about investing in this market. But before we do that, talk up to us about how you got interested, where where this kind of passion came from.

Yeah, and a fun fact, I should say it's an exploding space now. But I think when it first kind of I want to say, at least ticked off in the markets, it was like twenty eighteen. The only reason I remember that because that was one of my very first beats at Bloomberg I was the video game in Cannabis reporter for stocks. It's true, before it was like an actual coverage area they gave. They gave the girl who's never played a video game in her life video game in cannabis stocks to cover. So that was fun. Let's ring in our next guest, Morgan Patsia, the co founder of Poseidon Investment Management, talking a little bit about investing in this market. But before we do that, talk up to us about how you got interested, where where this kind of passion came from.

Sure, well, thank you for having me. We started my sister and I, Emily started beside him back in twenty thirteen, so we're about to celebrate our tenure anniversary since we founded the company. We lost our parents to cancer when we were young, and our parents were believers that the war on drugs was unjust should be ended. My mom was a nutritious she saw the health benefits of hemp as like a superfood, and my dad thought cannabis was something that should be a rightful choice as an American citizen instead of just only having alcohol if you want to just relax at the end of the day kind of thing. And when he was in hospice, one of the nurses offered him cannabis and that was in the nineties, so very not okay, and so he didn't do it, and we just felt that that was wrong, should have been available, and shouldn't have felt a stigma or a negative association to his family to not do something like that. So that was why we started the firm. We saw it as an opportunity, as an opportunity for change, but also from a capital perspective as well.

Sure, well, thank you for having me. We started my sister and I, Emily started beside him back in twenty thirteen, so we're about to celebrate our tenure anniversary since we founded the company. We lost our parents to cancer when we were young, and our parents were believers that the war on drugs was unjust should be ended. My mom was a nutritious she saw the health benefits of hemp as like a superfood, and my dad thought cannabis was something that should be a rightful choice as an American citizen instead of just only having alcohol if you want to just relax at the end of the day kind of thing. And when he was in hospice, one of the nurses offered him cannabis and that was in the nineties, so very not okay, and so he didn't do it, and we just felt that that was wrong, should have been available, and shouldn't have felt a stigma or a negative association to his family to not do something like that. So that was why we started the firm. We saw it as an opportunity, as an opportunity for change, but also from a capital perspective as well.

So now you're on the investment side of this. Clearly the regulations still differ from state to state. Is overcoming that sort of the biggest hurdle from an investment side, or what needs to happen to make this industry, I guess go a little bit more mainstream.

So now you're on the investment side of this. Clearly the regulations still differ from state to state. Is overcoming that sort of the biggest hurdle from an investment side, or what needs to happen to make this industry, I guess go a little bit more mainstream.

So we are today. We're at twenty three adult use legal states in the country. When we started there were zero. We just have Minnesota join and there's something like I think thirty nine medical states. But you're right, it's all patchwork. Some states are doing it better than others. Some are thriving, some are struggling a bit, with illicit markets still being very prevalent. And we look at every state and analyze if it's attractive or not from a capital deployment perspective, and you can see it in how the companies perform. You can look at it from their margin profiles, if you're looking at gross margins, operating margins. Even today we're talking about free cash flows for some of the largest, most scaled businesses in the country. But it is a very fragmented space. It creates a lot of opportunity for consolidation as these businesses need to reach scale. Even though you know ultimately the way we look at the industry today will look drastically different in ten years, it's still very much an emerging market. So we think even though we've gone from zero to thirty billion in annual sales in this country, we're still at the beginning.

So we are today. We're at twenty three adult use legal states in the country. When we started there were zero. We just have Minnesota join and there's something like I think thirty nine medical states. But you're right, it's all patchwork. Some states are doing it better than others. Some are thriving, some are struggling a bit, with illicit markets still being very prevalent. And we look at every state and analyze if it's attractive or not from a capital deployment perspective, and you can see it in how the companies perform. You can look at it from their margin profiles, if you're looking at gross margins, operating margins. Even today we're talking about free cash flows for some of the largest, most scaled businesses in the country. But it is a very fragmented space. It creates a lot of opportunity for consolidation as these businesses need to reach scale. Even though you know ultimately the way we look at the industry today will look drastically different in ten years, it's still very much an emerging market. So we think even though we've gone from zero to thirty billion in annual sales in this country, we're still at the beginning.

Blue button. So how you said in the next ten years or so, in the next ten years, we'll have two maybe three new presidential elections, and how does that change that growth prospect?

Blue button. So how you said in the next ten years or so, in the next ten years, we'll have two maybe three new presidential elections, and how does that change that growth prospect?

So great question and one of the biggest challenges we're having is the states are progressing, but we need the federal government to also proceed. And like last week, Emily and I were just in DC meeting with senators and trade groups and lobbyists and the like, because we have the Safe Banking Initiative that's currently going through regular order, first time ever hearing a banking reform in the Senate. But we need these We need the federal government to catch up. We need banking reform so that we're read the same as any other business. We need tax reform. We have this very owner's two ad tax code that we have to deal with, So there's a lot of work to do at the federal level and to your point, presidential cycles. Where we fit in all of that is a great question. But we're just trying to proceed forward, at least from a legislative perspective and getting some primary pieces in place, and we think that will unlock a lot of growth. It certainly is helpful from a social justice perspective and also from a small business and safety perspective. Is to have the federal government finally recognize that we are in American industry.

So great question and one of the biggest challenges we're having is the states are progressing, but we need the federal government to also proceed. And like last week, Emily and I were just in DC meeting with senators and trade groups and lobbyists and the like, because we have the Safe Banking Initiative that's currently going through regular order, first time ever hearing a banking reform in the Senate. But we need these We need the federal government to catch up. We need banking reform so that we're read the same as any other business. We need tax reform. We have this very owner's two ad tax code that we have to deal with, So there's a lot of work to do at the federal level and to your point, presidential cycles. Where we fit in all of that is a great question. But we're just trying to proceed forward, at least from a legislative perspective and getting some primary pieces in place, and we think that will unlock a lot of growth. It certainly is helpful from a social justice perspective and also from a small business and safety perspective. Is to have the federal government finally recognize that we are in American industry.

Would the Safe Banking Act be a good step? I know that's something that various that seems to be gaining a little bit of moment. Talk to me about how important that is.

Would the Safe Banking Act be a good step? I know that's something that various that seems to be gaining a little bit of moment. Talk to me about how important that is.

It's important because right now we are not treated the same. We are treated at a disadvantage to every other industry basically in this country. And that really hurts the small businesses the most because if you're large enough, you do have access to some primitive level banking. But we need this from a much more from a depth perspective, and we need to start somewhere. And so that's the way we think about Safe Banking is this is a starting point. It's already passed the House seven times, but This is the first time it's actually been heard in the Senate. We just had our first hearing last week went pretty well. It does seem like we have a decent amount of bipartisan support to get this through at least to a floor vote, as long as it doesn't get expanded too much. If it stays pretty well focused, we think it's something that can get done. And that's what we were talking with them about last week, and it was great to see some of the minority groups traded groups also supporting this initiative and saying we need to be inclusive of capital markets because safe banking is a pretty narrow bill, but if you think about banking and financial services, it's kind of hard to just have a piece of it. You need the whole thing for the whole ecosystem and the movement of money to work.

It's important because right now we are not treated the same. We are treated at a disadvantage to every other industry basically in this country. And that really hurts the small businesses the most because if you're large enough, you do have access to some primitive level banking. But we need this from a much more from a depth perspective, and we need to start somewhere. And so that's the way we think about Safe Banking is this is a starting point. It's already passed the House seven times, but This is the first time it's actually been heard in the Senate. We just had our first hearing last week went pretty well. It does seem like we have a decent amount of bipartisan support to get this through at least to a floor vote, as long as it doesn't get expanded too much. If it stays pretty well focused, we think it's something that can get done. And that's what we were talking with them about last week, and it was great to see some of the minority groups traded groups also supporting this initiative and saying we need to be inclusive of capital markets because safe banking is a pretty narrow bill, but if you think about banking and financial services, it's kind of hard to just have a piece of it. You need the whole thing for the whole ecosystem and the movement of money to work.

Thinking about your investments as well, what sorts of companies really attract your attention? Where is their development in the marijuana space, because I feel like there are so many growers now that's maybe the less exciting piece for many investors.

Thinking about your investments as well, what sorts of companies really attract your attention? Where is their development in the marijuana space, because I feel like there are so many growers now that's maybe the less exciting piece for many investors.

Yep, we think access is really important at this part of the industry's life cycle. So what that means is retail being able to get direct access to the consumer in a legal way, because we think that is one of the best ways of combating the illicit market and seeing markets, you know, seeing new municipalities or new states that open up and create programs. Michigan is a great example of a state that has seen a high conversion rate of taking market share from the illicit market. It's a good program, low pricing, lots of retail accessibility.

Yep, we think access is really important at this part of the industry's life cycle. So what that means is retail being able to get direct access to the consumer in a legal way, because we think that is one of the best ways of combating the illicit market and seeing markets, you know, seeing new municipalities or new states that open up and create programs. Michigan is a great example of a state that has seen a high conversion rate of taking market share from the illicit market. It's a good program, low pricing, lots of retail accessibility.

You said, retail accessibility, which brings us kind of to more of a institutional of embracing almost of the sector. Why haven't we seen more of that?

You said, retail accessibility, which brings us kind of to more of a institutional of embracing almost of the sector. Why haven't we seen more of that?

Our investor base to date has been family offices and Highnight Wath individuals. Institutions have been held largely outside because of things like not having federal banking access, and so that keeps a lot of institutional capital on the sidelines, and we think that does open up for a lot of change, and especially when you add in capital markets too. You know, if you look at right now, the public companies trade on the CSE, the OTC. They're not on listed exchanges, and so their volumes are a fraction size because of participation is a fraction of the size, and so we think there's huge steps forward that can happen when institutional capital can really start to participate.

Our investor base to date has been family offices and Highnight Wath individuals. Institutions have been held largely outside because of things like not having federal banking access, and so that keeps a lot of institutional capital on the sidelines, and we think that does open up for a lot of change, and especially when you add in capital markets too. You know, if you look at right now, the public companies trade on the CSE, the OTC. They're not on listed exchanges, and so their volumes are a fraction size because of participation is a fraction of the size, and so we think there's huge steps forward that can happen when institutional capital can really start to participate.

Yeah, and I mean if you're a pension fund, it's hard to go to justify to your participants. It's just hard to go and justify that if it's not necessarily legal everywhere. You know, there have been sort of consolidation of some of these sellers of various cannabis products or hemp products. How much is there some threat that pharma will come in and start distributing more and potentially push out the more interesting players in the space.

Yeah, and I mean if you're a pension fund, it's hard to go to justify to your participants. It's just hard to go and justify that if it's not necessarily legal everywhere. You know, there have been sort of consolidation of some of these sellers of various cannabis products or hemp products. How much is there some threat that pharma will come in and start distributing more and potentially push out the more interesting players in the space.

You know, good question. We look at pharma is largely participating more in a traditional pharmaceutical path where they would want to take drugs, do like the FDA and do that kind of stuff like GW Pharma did years ago. We see other CpG or alcohol tobacco like industries being more attracted to run it through their similar kind of pipelines. For example, the WSWA, I can't remember the acronym right now, but it's the I think it's a wholesale wine and spirits trade group. They want to be the national distributor of cannabis. So right now they're lobbying in DC saying we should be the ones to run this because we already have all of this infrastructure to do that. And understand that makes a lot of sense when we're talking about interstate commerce post federal legalization, but right now we're still, you know, a couple of steps behind that, talking about retail access, getting these states legalized, and as I mentioned, you know, banking reform, taxation. Those are we think, are you know, steps ahead before interstate commerce?

You know, good question. We look at pharma is largely participating more in a traditional pharmaceutical path where they would want to take drugs, do like the FDA and do that kind of stuff like GW Pharma did years ago. We see other CpG or alcohol tobacco like industries being more attracted to run it through their similar kind of pipelines. For example, the WSWA, I can't remember the acronym right now, but it's the I think it's a wholesale wine and spirits trade group. They want to be the national distributor of cannabis. So right now they're lobbying in DC saying we should be the ones to run this because we already have all of this infrastructure to do that. And understand that makes a lot of sense when we're talking about interstate commerce post federal legalization, but right now we're still, you know, a couple of steps behind that, talking about retail access, getting these states legalized, and as I mentioned, you know, banking reform, taxation. Those are we think, are you know, steps ahead before interstate commerce?

A fascinating topic. I know Simone Foxman could probably ask you a million more questions. Morgan Paseia, co founder, managing partner beside An Investment Management, We thank you as always.

A fascinating topic. I know Simone Foxman could probably ask you a million more questions. Morgan Paseia, co founder, managing partner beside An Investment Management, We thank you as always.

You're listening to the tape.

You're listening to the tape.

Can's our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.

Can's our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.

And the Bloomberg Business App.

And the Bloomberg Business App.

You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty.

You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty.

As they try to really crack down. That's our next guest, this Keith the wrong enough? Then all over that gi the does that count as inflation? Price increases from.

As they try to really crack down. That's our next guest, this Keith the wrong enough? Then all over that gi the does that count as inflation? Price increases from.

Netflix typically has hasn't it. They've done a really I think they've been really consistent in kind of raising their prices, you know, every twelve to eighteen months, and we've kind of seen the same I think a behavior pattern from consumers. Right, there's always that initial backlash. You'll see cancel Netflix kind of trending all over the place. But then eventually I think the dust settles and people kind of come back because they do have the content that everybody wants.

Netflix typically has hasn't it. They've done a really I think they've been really consistent in kind of raising their prices, you know, every twelve to eighteen months, and we've kind of seen the same I think a behavior pattern from consumers. Right, there's always that initial backlash. You'll see cancel Netflix kind of trending all over the place. But then eventually I think the dust settles and people kind of come back because they do have the content that everybody wants.

Yeah, I mean we saw some I guess weakness out of I think Spain it was people moving away from being Netflix subscribers simply because they, you know, because of policies that were extra policing on using each other's accounts. How crucial are.

Yeah, I mean we saw some I guess weakness out of I think Spain it was people moving away from being Netflix subscribers simply because they, you know, because of policies that were extra policing on using each other's accounts. How crucial are.

Gauesse.

Gauesse.

How big a reaction could we see in these numbers As this comes to the United States in terms of subscribers.

How big a reaction could we see in these numbers As this comes to the United States in terms of subscribers.

I think there's going to be a lot of near term volatility and noise. I think there's absolutely no way to sugarcoat that. Remember, there are you know, our Netflix has identified about one hundred million households across the world that are currently using Netflix but not paying for it. Over a third of those are currently in the United States. And so this is by far their biggest market, and so you know, the crackdown obviously, and management has said this as well, they don't expect this to necessarily go smoothly. They do expect some kind of resistance from customers. But I think what they're eventually seeing. And you brought up Spain and they had rolled out this experimental kind of password policing in a few markets Spain and Portugal, you know, New Zealand and Canada were some of the bigger ones. And in Canada, what they actually did was they did see that initial kind of negative reaction, but then you know, customers then finally came around and they said that they have managed to not only get back customers who canceled, but also kind of increase the subscriber base. So I think what they're hoping for is, you know, when this is all, when all is said and done, it does eventually help not only boost our pool but also the subscriber base. But that might take a little bit of time. I don't think it's I don't I don't think we're necessarily going to see this in numbers like next quarter. It's definitely going to take a while to play up so.

I think there's going to be a lot of near term volatility and noise. I think there's absolutely no way to sugarcoat that. Remember, there are you know, our Netflix has identified about one hundred million households across the world that are currently using Netflix but not paying for it. Over a third of those are currently in the United States. And so this is by far their biggest market, and so you know, the crackdown obviously, and management has said this as well, they don't expect this to necessarily go smoothly. They do expect some kind of resistance from customers. But I think what they're eventually seeing. And you brought up Spain and they had rolled out this experimental kind of password policing in a few markets Spain and Portugal, you know, New Zealand and Canada were some of the bigger ones. And in Canada, what they actually did was they did see that initial kind of negative reaction, but then you know, customers then finally came around and they said that they have managed to not only get back customers who canceled, but also kind of increase the subscriber base. So I think what they're hoping for is, you know, when this is all, when all is said and done, it does eventually help not only boost our pool but also the subscriber base. But that might take a little bit of time. I don't think it's I don't I don't think we're necessarily going to see this in numbers like next quarter. It's definitely going to take a while to play up so.

How does this actually work when you crack down on password sharing, Doesn't that kind of violate privacy to some extent? Doesn't it include kind of tracking down IP addresses and what's your work, what's your home, what's your commute? How does this work in practice?

How does this actually work when you crack down on password sharing, Doesn't that kind of violate privacy to some extent? Doesn't it include kind of tracking down IP addresses and what's your work, what's your home, what's your commute? How does this work in practice?

I mean Netflix has already been doing that. So you know, if you kind of sign out outside of your home, for instance, they you know, ask you to kind of confirm that it's you. So so they've already been doing this, And what they're doing right now is they're trying to identify a primary household, you know, again using that IP address, and they're basically saying that anybody outside of that primary household will need to pay.

I mean Netflix has already been doing that. So you know, if you kind of sign out outside of your home, for instance, they you know, ask you to kind of confirm that it's you. So so they've already been doing this, And what they're doing right now is they're trying to identify a primary household, you know, again using that IP address, and they're basically saying that anybody outside of that primary household will need to pay.

One of the things I've also been interested in is this new ad tier that you can get Netflix more cheaply if you don't mind seeing some ads I think lower margin business, but more subscribers. You know, how does what is what's your forecast? In terms of how that piece of the puzzle plays out?

One of the things I've also been interested in is this new ad tier that you can get Netflix more cheaply if you don't mind seeing some ads I think lower margin business, but more subscribers. You know, how does what is what's your forecast? In terms of how that piece of the puzzle plays out?

Yeah, so that's again again relatively new to the advertising game. They haven't necessarily disclosed too many metrics, although they did give a number just a few days ago in terms of the number of monthly active users that they have got so far on the platform, and it was I think fairly impressive and more than what people were expecting. So they already have about five million monthly active users. That translates to roughly about one to maybe one and a half million people who are probably paying for the advertising tier. But again that now wasn't necessarily disclosed by Netflix. That's just an estimate that's out there. Again, it's small potatoes compared to like the big player in the field, which is Hulu, which probably has about twenty five million people on the ad based here, so still long ways to go. But Netflix itself has said that they do expect their advertising business to eventually become bigger than Hulu, probably contribute to about ten to fifteen percent of their total revenue. So they are looking at this, They are, you know, in this for the long game. They are looking at advertising as becoming a substantial portion of their revenue stream.

Yeah, so that's again again relatively new to the advertising game. They haven't necessarily disclosed too many metrics, although they did give a number just a few days ago in terms of the number of monthly active users that they have got so far on the platform, and it was I think fairly impressive and more than what people were expecting. So they already have about five million monthly active users. That translates to roughly about one to maybe one and a half million people who are probably paying for the advertising tier. But again that now wasn't necessarily disclosed by Netflix. That's just an estimate that's out there. Again, it's small potatoes compared to like the big player in the field, which is Hulu, which probably has about twenty five million people on the ad based here, so still long ways to go. But Netflix itself has said that they do expect their advertising business to eventually become bigger than Hulu, probably contribute to about ten to fifteen percent of their total revenue. So they are looking at this, They are, you know, in this for the long game. They are looking at advertising as becoming a substantial portion of their revenue stream.

So KEITHA, do we ever see Netflix offering some sort of products similar to that of Hulu or even cable and that they're offering kind of live programming, live TV, live coverage of events like I don't know the coronation or sports or anything like that is that Netflix's future.

So KEITHA, do we ever see Netflix offering some sort of products similar to that of Hulu or even cable and that they're offering kind of live programming, live TV, live coverage of events like I don't know the coronation or sports or anything like that is that Netflix's future.

So they have dabbled a little bit, you know with live programming, but I wouldn't necessarily say that they want to go into it in a big way again, you know, Netflix, the whole genesis of Netflix has kind of been the uh, the anti pieces of live programming, right, it has to be on demand. Having said that, though, I mean, you know, I don't think they're necessarily averse to trying out things. I mean, you know, we kind of saw you know, different I guess, different flavors of it, whether it's you know, a reunion for a dating series or even you know, a baking competition, So they are trying different things. Again, I just don't think it would necessarily be a big focus for them going forward.

So they have dabbled a little bit, you know with live programming, but I wouldn't necessarily say that they want to go into it in a big way again, you know, Netflix, the whole genesis of Netflix has kind of been the uh, the anti pieces of live programming, right, it has to be on demand. Having said that, though, I mean, you know, I don't think they're necessarily averse to trying out things. I mean, you know, we kind of saw you know, different I guess, different flavors of it, whether it's you know, a reunion for a dating series or even you know, a baking competition, So they are trying different things. Again, I just don't think it would necessarily be a big focus for them going forward.

A reunion for a dating series either. Are you a Love Island watcher? Am I sensing that?

A reunion for a dating series either. Are you a Love Island watcher? Am I sensing that?

Sure?

Sure?

I am all for the work, all for the job, I get it.

I am all for the work, all for the job, I get it.

Geez.

Geez.

What about the gaming piece of the equation? Netflix said that they were kind of experimenting with that. How is that going?

What about the gaming piece of the equation? Netflix said that they were kind of experimenting with that. How is that going?

So again, we you know, it's been just like what they've said with their advertising strategy, which is, you know, kind of a crawl, walk run approach. It's been very similar in the gaming field also, so again they have not necessary so they what they have done is they've gone out and they've bought a lot of these smaller independence studios. They haven't made any big, splashy acquisition, and I think the general thinking is, yes, they have a few games on their service. I don't think it's necessarily moved the needle in terms of membership. Maybe it has deepened some level of engagement, but I think ultimately, if they really want to make a big you know, if they really want to kind of you know, move or do something game changing in in kind of the gaming space, I think they have to finally make an acquisition because so far we haven't necessarily seen any significant you know, engagement metrics or even membership metrics.

So again, we you know, it's been just like what they've said with their advertising strategy, which is, you know, kind of a crawl, walk run approach. It's been very similar in the gaming field also, so again they have not necessary so they what they have done is they've gone out and they've bought a lot of these smaller independence studios. They haven't made any big, splashy acquisition, and I think the general thinking is, yes, they have a few games on their service. I don't think it's necessarily moved the needle in terms of membership. Maybe it has deepened some level of engagement, but I think ultimately, if they really want to make a big you know, if they really want to kind of you know, move or do something game changing in in kind of the gaming space, I think they have to finally make an acquisition because so far we haven't necessarily seen any significant you know, engagement metrics or even membership metrics.

Can you speculate which acquisition or any potential targets that they might be interested in.

Can you speculate which acquisition or any potential targets that they might be interested in.

It's very hard to say at this point, just kind of given the regulatory environment out here, I'm not sure the regulators are generally in favor of big tech or even media tech kind of going after a big company, which is why they've kind of kept it. But they've done. You know, just these very very small, kind of independent studios. They're more kind of in that build mode. But eventually, I think everybody's fair game, right, whether it's an electronic arts or a take too, it just it just is going to come down to what makes the most sense for them and their portfolio.

It's very hard to say at this point, just kind of given the regulatory environment out here, I'm not sure the regulators are generally in favor of big tech or even media tech kind of going after a big company, which is why they've kind of kept it. But they've done. You know, just these very very small, kind of independent studios. They're more kind of in that build mode. But eventually, I think everybody's fair game, right, whether it's an electronic arts or a take too, it just it just is going to come down to what makes the most sense for them and their portfolio.

Keita, I gotta ask, are you a Bridgerdon fan?

Keita, I gotta ask, are you a Bridgerdon fan?

I am? I absolutely loved the new season the Queen Charlotte.

I am? I absolutely loved the new season the Queen Charlotte.

Yes, oh my gosh, I'm obsessed. Someone have you seen it?

Yes, oh my gosh, I'm obsessed. Someone have you seen it?

I haven't seen it, but I have read all the Bridgerton books.

I haven't seen it, but I have read all the Bridgerton books.

Okay, that doesn't come on. This is enough segment.

Okay, that doesn't come on. This is enough segment.

I love it.

I love it.

I gotta say, I just finished Queen Charlotte and I cried, absolutely cried. Keitha your thoughts thirty seconds.

I gotta say, I just finished Queen Charlotte and I cried, absolutely cried. Keitha your thoughts thirty seconds.

Oh, I absolutely loved it. And I loved how they kind of brought in that whole historical element. I mean, this was, you know, a part of history with think jeorsh the third. I thought it was done really really well. The emotional aspect of course, the set's, the costume, the actors, I mean everything. Just absolutely loved it, just like you Treaty, Yeah.