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Trump Aims to Cut US Drug Costs by Pegging to Prices Abroad · Bloomberg Intelligence

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  Speaker 2: Alex Stealier alongside plaus we need. This is Bloomberg Intelligence Radio.
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  Speaker 2: We got to cover with the top news and business,
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  Speaker 2: economics and finance through our lens of our Bloomberg Intelligence folks.
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  Speaker 2: They cover two thousand companies and one hundred and thirty
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  Speaker 2: industries all around the world. And thank goodness we have
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  Speaker 2: them because we get a lot of news today, particularly
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  Speaker 2: out of the drug makers from the White House. So
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  Speaker 2: shares of pharmaceutical companies largely trading higher today. As President
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  Speaker 2: Donald Trump's executive order was aimed at cutting US prescription
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  Speaker 2: drug prices, it was sort of like the less bad news.
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  Speaker 2: It was better than feared. One area though, will definitely
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  Speaker 2: be a pharmacy benefit manager. Sam Fazzelli's Boomberg Intelligence director
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  Speaker 2: of Research for Global Industries and senior pharmaceutical analyst, Sam,
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  Speaker 2: can you just walk me through why do we hear
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  Speaker 2: in the US pay more for drug pricing and should
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  Speaker 2: that be reduced?
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  Speaker 3: Yeah? So, Alex, the thing in the US is that
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  Speaker 3: it's a price that's set by negotiation between farmer companies
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  Speaker 3: and insurers, pharmacy benefit managers and payers. It is not
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  Speaker 3: dictated by the government, at least it wasn't until recently,
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  Speaker 3: whereas in Europe and many other countries you have a
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  Speaker 3: single payer and that's the government and they play hardball
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  Speaker 3: so they can get lower prices because that's the way
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  Speaker 3: they operate, and they had. There are many situations where
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  Speaker 3: in the UK the National Institute for Clinical Accident refuses
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  Speaker 3: to believe or accept that a drug has got is
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  Speaker 3: value added, so it's not even offered even at the
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  Speaker 3: negotiated lower price. So that's the issue here, which means
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  Speaker 3: that as soon as innovation happens is out in the market.
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  Speaker 3: In the US, the day that a product is approved,
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  Speaker 3: they can get on and sell it. Over in Europe
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  Speaker 3: it could take a year two years for a drug
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  Speaker 3: to come through, and maybe with this new execut order,
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  Speaker 3: sometimes the companies will go where I'd rather not launch
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  Speaker 3: in Europe.
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  Speaker 4: So is it realistic to expect that drug prices in
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  Speaker 4: the US will come down? Could come down?
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  Speaker 3: The thing is, Paul, if I'm having a tough time
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  Speaker 3: to balance this out. If the intention is for to
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  Speaker 3: get the rest of the world to pay more, which
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  Speaker 3: of course helps the farmer companies. Then I don't see
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  Speaker 3: how that helps the US drug prices come down, right.
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  Speaker 3: If they aren't able to increase prices in Europe, then
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  Speaker 3: the government in the US is saying, well, you should
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  Speaker 3: give us the same prices to giving elsewhere. Then innovation disappears,
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  Speaker 3: because at the end of the day, if you cut
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  Speaker 3: your revenue by half, you won't have and you spend
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  Speaker 3: fifteen percent of that on R and D yes what
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  Speaker 3: your RN defaults simple maths, So how this plays out
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  Speaker 3: would be quite interesting to see. And of course we
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  Speaker 3: have to also remember that there isn't a price in Europe,
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  Speaker 3: so we just check the price. So we go v
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  Speaker 3: in the UK at the effective dose two hundred and
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  Speaker 3: thirty dollars, okay. In the US leader Novo sales it
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  Speaker 3: for four hundred and ninety nine dollars to the director consumer. Okay,
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  Speaker 3: it's about twice as much.
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  Speaker 1: Okay.
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  Speaker 3: So let's say in Europe it goes up to three
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  Speaker 3: hundred during the UK, and how does that change with
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  Speaker 3: the US number? And we don't even know whether the
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  Speaker 3: company actually gives that price, because then there's a little
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  Speaker 3: small print. We have been doing a commerce with the
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  Speaker 3: NHS dot Are commercial deal. So what is the price?
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  Speaker 3: How is the US government going to find that price
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  Speaker 3: unless they incorporated into the trade agreements that they're doing,
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  Speaker 3: which is what should be happening here.
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  Speaker 2: So going for So what about the PBMs, So that
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  Speaker 2: was singled out the pharmacy benefit managers as were the
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  Speaker 2: middleman between insurers and the government and then drug makers,
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  Speaker 2: et cetera. What role do they really have and are
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  Speaker 2: they the ones most at risk?
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  Speaker 3: I would say they are the ones most at risk.
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  Speaker 3: I would say they should have always been the ones
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  Speaker 3: most at risk because I don't understand the reason they
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  Speaker 3: exist in the middle. I mean, that's the I can
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  Speaker 3: show you a chart of how the US payment system works,
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  Speaker 3: and it varies by insurance. You can you can go
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  Speaker 3: from one job to another and the cost of your
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  Speaker 3: drug goes up, right because you have a different insurance,
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  Speaker 3: but from one state to another. So it's it's that
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  Speaker 3: just really isn't is untenable? And it's nice to see
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  Speaker 3: that the government, the administration is not talking about making
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  Speaker 3: it easier to sell directly to consumers. So let me
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  Speaker 3: give you an example. We have data on the terminal
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  Speaker 3: that gives you an ability to calculate what a drug
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  Speaker 3: revenue should have been in the past quarter volume times price. Right,
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  Speaker 3: then you go and see what they actually reported. Sometimes
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  Speaker 3: for Insulince, for instance, is eighty percent lower eighty percent?
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  Speaker 3: Now the PBM say, I know, we passed that on
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  Speaker 3: back to the to medical party. Why do you even
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  Speaker 3: take it? Why do we need to pay an administrator
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  Speaker 3: in the middle here?
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  Speaker 4: That's great, soci What are your companies within your food
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  Speaker 4: chain there in a big farmer. What are they saying,
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  Speaker 4: Because this issue is new, We've been plaining about high
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  Speaker 4: drug prices forever. What are they saying as to what
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  Speaker 4: is likely to really happen.
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  Speaker 3: They're not saying very much, Paul, you know, and in
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  Speaker 3: this center circumstances, the best thing to do is to
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  Speaker 3: keep your head down and see how things work out.
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  Speaker 3: And of course today it's only just come out. So
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  Speaker 3: I think they all to a t say the PBMs
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  Speaker 3: are a problem, we need to get rid of it.
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  Speaker 3: That so let's say that, But that's not today, That's
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  Speaker 3: been going on for ten years. They also say Europe
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  Speaker 3: should pay more, But they also say that when you
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  Speaker 3: do the net price calculation in many instances. I actually
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  Speaker 3: send you a code from Pascalsorio, the Astrisenica CEO, saying
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  Speaker 3: that actually, in many cases the prices end up being
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  Speaker 3: about the same, maybe a little bit different. So all
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  Speaker 3: of that needs to be taken into account, and we
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  Speaker 3: need to decide if they're going to push Europe higher
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  Speaker 3: to pay more. Is the US also happy to move
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  Speaker 3: some of the R and D to Europe? Maybe that's
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  Speaker 3: something that the governments will ask for. Fine, we'll pay more,
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  Speaker 3: but bring some of your R and D here, bring
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  Speaker 3: more manufacturing here, same arguments.
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  Speaker 2: So twenty seconds, the drugstocks are higher. Does this make
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  Speaker 2: sense to you?
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  Speaker 3: Yeah, Well, as you said, you got it right at
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  Speaker 3: the beginning, Alex that this is not as bad as
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  Speaker 3: people expected. And also I think we're in a world
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  Speaker 3: where sometimes the president uses his power to really push
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  Speaker 3: people into a into action, and then when he gets
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  Speaker 3: what he wants, the action isn't as bad as sir.
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  Speaker 2: All right, Sam, thanks a lot, Sam Fazelli, Bloomberg Intelligence.
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  Speaker 2: We really appreciate you.
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  Speaker 2: All right, let's get some of the logistics here on
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  Speaker 2: the policy side. Nathan Dean, Bloomberg Intelligence Senior policy analyst,
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  Speaker 2: joins us. Now, so a couple of things to dissect. Obviously,
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  Speaker 2: one is the executive order for Big Farman drugp pricing.
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  Speaker 2: The others, of course US and China slashing tariffs. Here's
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  Speaker 2: what I don't really understand. If we're going to go
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  Speaker 2: back to tariffs that were roughly where they were before
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  Speaker 2: the one hundred and forty five percent and one hundred
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  Speaker 2: and twenty five percent on the respective countries, why are
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  Speaker 2: we getting the sort of celebratory tone in the market.
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  Speaker 5: Well, I think it's just because of the idea of
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  Speaker 5: this pause. You know that the worst case scenario is
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  Speaker 5: maybe not the worst case scenario. But you know, I
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  Speaker 5: go back to what Treasury Secretary Scott Besson said this
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  Speaker 5: morning in his interview with Jonathan Farrow. You know, and
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  Speaker 5: I'm paraphrasing here, he said, Look, you know the one
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  Speaker 5: hundred and forty five percent was because of China's retaliatory nature.
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  Speaker 5: You know, if you go back to April second and
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  Speaker 5: look at the liberation day of that thirty four percent.
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  Speaker 5: It's a little bit more in line today with.
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  Speaker 4: That thirty percent.
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  Speaker 5: So I think the market is going to wake up
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  Speaker 5: in the next day or so and realize that tariffs
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  Speaker 5: are going to remain elevated. Yes, it's not going to
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  Speaker 5: be as much as one hundred and forty five percent,
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  Speaker 5: and that's a good thing. And maybe it opens up
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  Speaker 5: the boats so that they can start coming into the
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  Speaker 5: West coast of the United States and we begin to,
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  Speaker 5: you know, alleviate this idea of you know, shelves being
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  Speaker 5: empty and so forth. That but elevated tariffs are still
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  Speaker 5: going to be here, and that's going to be the norm.
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  Speaker 5: We're really working towards this kiddy scenario where it's like
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  Speaker 5: a ten percent baseline tariff, maybe a little bit higher
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  Speaker 5: for other countries like China, with special exemptions, maybe for automobile, automobiles,
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  Speaker 5: pharmaceutical tech, you name it.
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  Speaker 4: Hey, Nathan, to what extent died politics player role here,
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  Speaker 4: folks on the hill, maybe Republicans saying to this White House, hey,
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  Speaker 4: we got some elections coming up, and if we're talking
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  Speaker 4: about these super high tariffs that could be a problem
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  Speaker 4: for US.
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  Speaker 5: Yeah, I think there was probably more politics here than
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  Speaker 5: the White House was probably letting on. And I think
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  Speaker 5: it's not so much the elections, but more so of
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  Speaker 5: those Fourth of July barbecues, because you know, if you
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  Speaker 5: think about it, and if you believe the idea that
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  Speaker 5: you know, these a lot of these ships in the
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  Speaker 5: coming into the West Coast and the United States are
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  Speaker 5: down thirty to forty percent. These are these ships that
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  Speaker 5: are bringing over items for the Christmas retail season. And
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  Speaker 5: if you begin to see the combination of you know,
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  Speaker 5: President Trump's comments on well maybe American children don't need
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  Speaker 5: two dolls or thirty dollars, they get two dolls with
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  Speaker 5: some empty store shelves, and with the idea that maybe
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  Speaker 5: that we're going to get to a situation where small
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  Speaker 5: businesses are really harmed from this. I think this was
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  Speaker 5: sort of the White House's way of saying, look, you know,
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  Speaker 5: we need to also try and save some face here.
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  Speaker 5: You know, I didn't think they were going to go
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  Speaker 5: down to thirty percent, you know, I think they around
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  Speaker 5: sixty eighty percent is where you would have asked me
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  Speaker 5: on Friday. I would have said, but you know they're
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  Speaker 5: going to thirty percent. It does give the market a
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  Speaker 5: lot of breathing room. Yes, we have lots of negotiations
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  Speaker 5: that have to take place over the next ninety days,
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  Speaker 5: but it's something the market can actually work with in
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  Speaker 5: terms of clarity purposes.
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  Speaker 2: I also wonder if there's breathing room now in terms
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  Speaker 2: of dealing with a tax bill and focusing on deregulation,
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  Speaker 2: what's the timing of both of those things there?
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  Speaker 5: Well, So for the tax bill, this tariff announcement actually
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  Speaker 5: hurts it a little bit from the standpoint that the
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  Speaker 5: House Republicans were hoping to use two trillion dollars worth
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  Speaker 5: of teriff revenue to help pay for this bill, which
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  Speaker 5: is north of five trillion dollars. And you know, if
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  Speaker 5: you come out and say, look, we're going to go
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  Speaker 5: back to a ten percent baseline tariff for everybody at least,
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  Speaker 5: what the situation is turning out to be, you're not
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  Speaker 5: going to get anywhere close to that two trillion dollars.
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  Speaker 5: So now the question is how you're going to pay
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  Speaker 5: for it. Now, there's going to be some markups this
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  Speaker 5: week House Energy and Commerce, House Ways and Means Committee.
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  Speaker 5: By this time tomorrow you'll know exactly where the House
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  Speaker 5: efforts are in terms of gutting things like the IRA
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  Speaker 5: or changing the tax provisions of this country. But what
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  Speaker 5: we're telling our clients is just remember the House is
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  Speaker 5: throwing the kitchen sync in with this bill. They're throwing
• 10:20
  Speaker 5: in things that we don't think will even pass the
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  Speaker 5: Senate parliamentarian and wouldn't even get under the what they
• 10:25
  Speaker 5: call the bird Rule, wouldn't even fly through that. So
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  Speaker 5: look for everything to be thrown in and then things
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  Speaker 5: to be scaled back. The biggest question though, is how
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  Speaker 5: you're going to pay for it, And I don't think
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  Speaker 5: anybody on Capitol Hill, on the Republican side, knows how
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  Speaker 5: they're going to pay for it at this point. And
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  Speaker 5: as a result, there is a possibility this may not
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  Speaker 5: be permanent. They may be pulling it back and saying,
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  Speaker 5: you know, maybe it's only worth four to six years
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  Speaker 5: worth of tax extensions.
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  Speaker 4: What are the dates that we need to pay attention
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  Speaker 4: to it, because quite frankly, I am not paying attention.
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  Speaker 4: I am overwhelmed. But you tell me the data I
• 10:54
  Speaker 4: need to pay attention here from what we're going to
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  Speaker 4: hear from Congress.
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  Speaker 5: So for the next two weeks. They're going to see
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  Speaker 5: this debate in the so lots of headline risks, but
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  Speaker 5: again it's just the headline risks. Ultimately, we think a
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  Speaker 5: House vote will probably come at the end of this month,
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  Speaker 5: or probably more likely in June. That's when the Senate's
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  Speaker 5: going to get it. The Senate's going to say thank.
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  Speaker 4: You very much.
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  Speaker 5: They're going to essentially throw it out, and then they're
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  Speaker 5: going to say, look, we will take you and do
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  Speaker 5: whatever we want and send it back to you. We
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  Speaker 5: think that's going to happen around the fourth of July
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  Speaker 5: time frame. This is also under the assumption that the
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  Speaker 5: debt ceiling remains in this bill, because if the Treasury
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  Speaker 5: Secretary Scott Besson said the x state for that debt
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  Speaker 5: ceiling is in August, Congress needs to wrap this up
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  Speaker 5: before then. So we're thinking ultimate passage in that mid
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  Speaker 5: to late July timeframe. If the debt ceiling provision is
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  Speaker 5: script out, if there's nowhere, if they aren't anywhere close to,
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  Speaker 5: you know, coming to a deal, they'll have to do
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  Speaker 5: the debt ceiling separately. And then the real deadline for
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  Speaker 5: this is probably going to be the October November time frame.
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  Speaker 2: In terms of then the market as we sort of
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  Speaker 2: look ahead to that, what's going to be the next
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  Speaker 2: catalyst within the first next week or week and a half.
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  Speaker 4: What are you looking for?
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  Speaker 5: So I think it's going to really be the House
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  Speaker 5: deficit Republicans. You know, this is Representative Chip Roy for example,
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  Speaker 5: he just tweeted out about twenty minutes ago that he
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  Speaker 5: is not going to vote for a bill that he
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  Speaker 5: in his words, would add twenty trillion dollars to the deficit. Now,
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  Speaker 5: I'm not going to say that we think we'll go
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  Speaker 5: that far, but you are going to see a lot
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  Speaker 5: of statements from Republicans who are not happy with this legislation.
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  Speaker 5: And it's just part of the negotiation. So look for this.
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  Speaker 5: Towardo sort of seesaw moment of yes, we have a deal, No,
• 12:21
  Speaker 5: we don't have a deal. But I think for the
• 12:22
  Speaker 5: next two weeks you're going to see more negative headlines
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  Speaker 5: than positives.
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  Speaker 4: And then sometimes maybe around Memorial Day.
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  Speaker 5: I think the Republicans will start to get a better
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  Speaker 5: idea of what that plan is going to look like
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  Speaker 5: in order to get House passage.
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  Speaker 2: All right, great stuff. Really appreciate Nathan Nathan Dean Bloomberg
• 12:36
  Speaker 2: Intelligence senior policy analyst. Joining us there.
• 12:40
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live
• 12:44
  Speaker 1: weekdays at ten am Eastern on Apple, Coarcklay and Android
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• 12:50
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 12:54
  Speaker 4: Let's get right to our next guest, James Aboute. Joins
• 12:57
  Speaker 4: is managing director and chief investment officer of Course Center
• 13:00
  Speaker 4: Asset Management. James, we wake up this morning, it seems
• 13:05
  Speaker 4: like maybe the trade environments not that terrible, not that strict.
• 13:10
  Speaker 4: What do you make about it? And what do you
• 13:11
  Speaker 4: make of the markets move today?
• 13:14
  Speaker 6: Well, clearly, you know the announcement that the US is
• 13:17
  Speaker 6: going to cut tariffs on Chinese goods of thirty percent
• 13:20
  Speaker 6: from one hundred and forty five percent for ninety days,
• 13:24
  Speaker 6: and then China is going to cut tariffs in the
• 13:26
  Speaker 6: US because the ten percent from one hundred twenty five
• 13:29
  Speaker 6: is good news.
• 13:30
  Speaker 7: It's a it's a truce again. This is a ninety
• 13:33
  Speaker 7: day cooling off period, though, I'll have to see what develops,
• 13:36
  Speaker 7: you know, unfortunately, what we see with President Trump though,
• 13:39
  Speaker 7: as he continues to negotiate against himself in public. It's
• 13:43
  Speaker 7: a little like watching the same person playing twins, like
• 13:46
  Speaker 7: Michael B. Jordan on Sinners who played the actor or
• 13:49
  Speaker 7: the actor who played the Winkeelwash twins in the movie
• 13:52
  Speaker 7: The Social Network. It's like the same person negotiating against themselves.
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  Speaker 7: So I think market's going to remain volerable, and it
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  Speaker 7: might be a country's best interest to just stall on
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  Speaker 7: reaching a trade agreement with the United States, given how
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  Speaker 7: we seem to be able to negotiate against ourselves and
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  Speaker 7: lowering barriers.
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  Speaker 2: But to that point, does the market understand that there
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  Speaker 2: is some kind of a trump put So is the
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  Speaker 2: reaction function on the initial headline now going to just
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  Speaker 2: be a little different.
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  Speaker 7: It's possible, But you know, at the end of the day,
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  Speaker 7: what we really need to see is the US convert
• 14:27
  Speaker 7: this current relationship. And China is the best example of
• 14:30
  Speaker 7: a significant trade deficit in return for capital inflows, namely
• 14:36
  Speaker 7: into our treasury market, with a trade deficit that somehow
• 14:39
  Speaker 7: equals you know, inbound fixed investment. I think there's a
• 14:43
  Speaker 7: lot of probability that we can accomplish that with the
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  Speaker 7: EU in Japan, I'm not so sure we can accomplish
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  Speaker 7: that with China.
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  Speaker 4: All right, James as a chief investment officer and somebody
• 14:53
  Speaker 4: manages money other folks' money.
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  Speaker 7: What do you do here?
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  Speaker 4: How's your world changed in the last four or five months?
• 15:00
  Speaker 8: Here? Well?
• 15:03
  Speaker 6: Where of the belief that the risk of recession has
• 15:06
  Speaker 6: been reduced.
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  Speaker 7: So clearly when you think about that, you know what
• 15:09
  Speaker 7: sector should investors be looking at? And we've been very
• 15:13
  Speaker 7: much pounding the table that US regional banks are poised
• 15:16
  Speaker 7: to benefit from number of tailwinds. One's a steepening yield curve,
• 15:21
  Speaker 7: better loan activity, some degree of acceleration in M and A,
• 15:25
  Speaker 7: and even amasing of a regulatory environment. So you know,
• 15:29
  Speaker 7: when you look at the regional banks after the recent
• 15:32
  Speaker 7: sell off that we had, with many trading at price
• 15:34
  Speaker 7: the tangible book multiples just above one, they have what
• 15:38
  Speaker 7: we believe to be the best asymmetrical opportunity in the market,
• 15:42
  Speaker 7: and see them as a prime beneficiary of increased US
• 15:46
  Speaker 7: on shoring and a movement of supply chains to domestic manufacturers.
• 15:50
  Speaker 7: So you know, for us, the source of funds that
• 15:52
  Speaker 7: people should be looking at are consumer stables. Giving the
• 15:56
  Speaker 7: recent disappointment and not really being very defensive at all,
• 15:59
  Speaker 7: and even the magnific since seven. We think the terrific
• 16:02
  Speaker 7: opportunity for you know, active management now is really quite unprecedented,
• 16:08
  Speaker 7: and this pivotal moment away from the magnificent seven away
• 16:11
  Speaker 7: as the year progresses, might be quite strong.
• 16:14
  Speaker 2: All right, James, really appreciate it. Thank you so much.
• 16:16
  Speaker 2: I don't end your position at all. Jams about day, Benagin,
• 16:19
  Speaker 2: Director and chief investment officer at a Center Asset Management.
• 16:24
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 16:28
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• 16:31
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• 16:35
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• 16:39
  Speaker 4: You know, So we've already got some agreements here. I
• 16:42
  Speaker 4: guess one hundred and forty five percent US levies almost
• 16:44
  Speaker 4: Chinese imports. That's going to come down to thirty percent,
• 16:46
  Speaker 4: one hundred and twenty five percent Chinese duties on US goods.
• 16:49
  Speaker 4: That will drop the ten percent for three months to
• 16:52
  Speaker 4: get the country's time to negotiate a broader agreement, so
• 16:55
  Speaker 4: maybe they can get something done and maybe a discussion
• 16:57
  Speaker 4: between the two leaders can accelerate that.
• 16:59
  Speaker 2: Yeah, and that raises the question of what do you
• 17:01
  Speaker 2: do with the markets?
• 17:02
  Speaker 3: Right?
• 17:02
  Speaker 2: So you look at the rally and you're like, oh,
• 17:03
  Speaker 2: you have lots of optimism, etc. But I wonder in
• 17:06
  Speaker 2: reality how much of that is actually funds. You've got
• 17:08
  Speaker 2: a couple of things going on right, Commodity trading advisors
• 17:11
  Speaker 2: so they're called CTAs. You have volatility controlled funds. You
• 17:14
  Speaker 2: have hedge funds where they sort of shift around based
• 17:17
  Speaker 2: on how much risk they're allowed to kind of carry,
• 17:19
  Speaker 2: based on what the markets actually do. So City says
• 17:22
  Speaker 2: that CTAs have flipped long on the S and P,
• 17:24
  Speaker 2: their max long on the Nest at one hundred and
• 17:26
  Speaker 2: now covering shorts in the Russell two thousand based on
• 17:30
  Speaker 2: moves this morning, and that if you see kind of
• 17:33
  Speaker 2: a change in the S and P, you're going to
• 17:34
  Speaker 2: have to add on to this, meaning that just because
• 17:37
  Speaker 2: you see a rally doesn't mean it's real extended fundamentals.
• 17:40
  Speaker 4: Yep, it's so fabulous.
• 17:41
  Speaker 3: Point.
• 17:41
  Speaker 4: That's good. I love Storic Kaiser from the folks over
• 17:44
  Speaker 4: at City with his notes are very clear and easy
• 17:47
  Speaker 4: to understand. I appreciate getting those notes. Let's go to
• 17:50
  Speaker 4: a pro here. Brent Standardge, President Consumer and Business banking
• 17:54
  Speaker 4: at Huntington Bank. Hey, bring, We've got it. Just tremendous
• 17:57
  Speaker 4: amounts of volatilty so far here in twenty twenty five.
• 18:00
  Speaker 4: When you go sit down with your corporate clients, how
• 18:04
  Speaker 4: is it reflected in their activity? Are they sitting on
• 18:06
  Speaker 4: their hands? Are they trying to move forward? What are
• 18:08
  Speaker 4: you hearing? Well?
• 18:10
  Speaker 8: Paul, First of all, thank you for having us on
• 18:12
  Speaker 8: the show. We are closely monitoring all the developments that
• 18:16
  Speaker 8: relate to the broader economy, and today's announcement is clearly
• 18:19
  Speaker 8: another data point. Our focus has been on our customers
• 18:23
  Speaker 8: and what we're hearing specifically from our customers is really
• 18:25
  Speaker 8: more of a wait and see. All of the events
• 18:28
  Speaker 8: of the last few months have introduced a higher level
• 18:31
  Speaker 8: of uncertainty and as a result, many of our customers
• 18:34
  Speaker 8: are waiting to see what will happen and delaying some
• 18:39
  Speaker 8: decisions to obtain more certainty.
• 18:42
  Speaker 2: So, based on that, what are the expansion plans for
• 18:46
  Speaker 2: Huntington Like you are you doubling down?
• 18:48
  Speaker 3: Here?
• 18:48
  Speaker 2: Are you staying? Are you holding pat Because a lot
• 18:50
  Speaker 2: of companies are just like, we're in a weight and
• 18:52
  Speaker 2: see mode. We're delaying, but we're not abandoning kind of projects.
• 18:55
  Speaker 2: How are you guys thinking.
• 18:56
  Speaker 8: About it, Well, we're continuing forward with our investment plans.
• 19:00
  Speaker 8: This is an important proof point for our organic growth story.
• 19:05
  Speaker 8: We're very bullish about our opportunity that exists in the Carolinas.
• 19:09
  Speaker 8: It's a fast growing, dynamic market. We already have thirty
• 19:11
  Speaker 8: thousand customers there. Our approach and culture have allowed us
• 19:15
  Speaker 8: to attract some really fantastic and talented individuals. And our
• 19:19
  Speaker 8: business model really resonates in the market, which is around
• 19:22
  Speaker 8: local and bringing highly qualified bankers with local relationships to
• 19:27
  Speaker 8: those customers, supported with national expertise. And so we believe
• 19:32
  Speaker 8: that in times like this, those customers and those relationships
• 19:36
  Speaker 8: are even more important, and so we're continuing forward with
• 19:39
  Speaker 8: our investment plans, not just in the Carolinas, but across
• 19:42
  Speaker 8: the country.
• 19:44
  Speaker 4: What are the areas that for your clients that you
• 19:47
  Speaker 4: find most attractive? What are the sectors that you guys
• 19:50
  Speaker 4: like right now as you approach your corporate clients.
• 19:53
  Speaker 8: Well, our business model is based on having relationships with
• 19:56
  Speaker 8: middle market, commercial and small business customers, and we do
• 20:01
  Speaker 8: that across a wide variety of different industries, and then
• 20:04
  Speaker 8: we support those local relationships with industry expertise, so we're
• 20:09
  Speaker 8: not focused in on a specific industry. We're more focused
• 20:13
  Speaker 8: on medium and small businesses and supporting their day to
• 20:18
  Speaker 8: day needs.
• 20:21
  Speaker 2: Talk to me about the concerns that your customers are
• 20:23
  Speaker 2: talking about and their needs and how that might have changed.
• 20:28
  Speaker 8: Well, going back to a previous comment, it has introduced uncertainty. Obviously,
• 20:34
  Speaker 8: not being aware of what a product will cost or
• 20:38
  Speaker 8: how the supply chain may be impacted causes businesses to
• 20:43
  Speaker 8: stop and consider. And we're seeing changes almost every day,
• 20:48
  Speaker 8: and businesses are figuring it out and they're talking to
• 20:51
  Speaker 8: their own suppliers, and that's clearly leads to uncertainty. So
• 20:56
  Speaker 8: as these decisions are made, as things become more clear,
• 21:00
  Speaker 8: we believe businesses will continue and resume any investment that's
• 21:07
  Speaker 8: been delayed.
• 21:08
  Speaker 4: So, you know, a lot of folks are concerned that
• 21:11
  Speaker 4: with tariffs, it's kind of the small, mid sized businesses
• 21:15
  Speaker 4: that might be impacted the most. The inability to take
• 21:17
  Speaker 4: costs increases and pass them through to customers on like
• 21:20
  Speaker 4: say Walmart or something. Is that what you're hearing from
• 21:23
  Speaker 4: your customers, Well, I don't think they know at this point.
• 21:27
  Speaker 8: Clearly, this is a time for us to be closer
• 21:30
  Speaker 8: to customers and be able to support them regardless of
• 21:34
  Speaker 8: the economic scenario.
• 21:35
  Speaker 4: And we believe that we're well.
• 21:37
  Speaker 8: Positioned to do this, but I don't think they know
• 21:39
  Speaker 8: at this point everyone or every business certainly is impacted
• 21:45
  Speaker 8: and supplies chains are impacted, and we want to be
• 21:48
  Speaker 8: there to support them as they make decisions day to day.
• 21:50
  Speaker 8: But at this point it's a little bit early to
• 21:52
  Speaker 8: know that there.
• 21:53
  Speaker 2: Was a lot of deposit competition for savings that seem
• 21:56
  Speaker 2: to then hit the pause button.
• 21:59
  Speaker 4: Where do you are we in deposit.
• 22:01
  Speaker 2: Beta and how do you stay competitive?
• 22:04
  Speaker 8: Well, we're very, very fortunate that we have a very
• 22:07
  Speaker 8: granular deposit base. In fact, if you look at the
• 22:11
  Speaker 8: percentage of deposits that we have their FDIC insured, it's
• 22:14
  Speaker 8: the highest in our peer group.
• 22:16
  Speaker 4: And that deposit base has been quite stable for us.
• 22:18
  Speaker 8: In fact, we've been able to grow it at a
• 22:20
  Speaker 8: period of time when others have not been successful. So
• 22:24
  Speaker 8: we're continuing to see that same trend. We've been very
• 22:28
  Speaker 8: successful at continuing to grow the deposit portfolio. Obviously, as
• 22:32
  Speaker 8: rates come down, interest expense and the cost of that
• 22:34
  Speaker 8: deposit book has come down, and we will continue to
• 22:38
  Speaker 8: monitor that closely, but it is the deposit environment has
• 22:44
  Speaker 8: been competitive for some period of time, and I would
• 22:46
  Speaker 8: say there hasn't been dramatic changes in the last number
• 22:50
  Speaker 8: of months.
• 22:52
  Speaker 4: All right, Brent, thank you so much. We appreciate A.
• 22:53
  Speaker 4: Bri Stanbridge. He is President Consumer and Business Banking at
• 22:58
  Speaker 4: Huntington Bank in Columbus, Ohio. That is the bank of
• 23:03
  Speaker 4: mister Matthew Miller. So how about that talk about if
• 23:07
  Speaker 4: Grangler depositor right there. So we'd like to speak to
• 23:11
  Speaker 4: some of these bankers at the mid market, but a
• 23:13
  Speaker 4: should get a sense of kind of how the corporate
• 23:16
  Speaker 4: and mid size and middle market companies you're behaving and
• 23:18
  Speaker 4: are they investing, how are they investing, So those bankers
• 23:21
  Speaker 4: give us a good view there.
• 23:22
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