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Why Merck's Vaccine Exit Is Significant: Mammadova · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Paul Sweeney here accompanied by
• 0:20
  Speaker 1: Matt Miller from Berlin, Germany, again continued newsflow on the
• 0:24
  Speaker 1: healthcare front as it relates to the virus vaccines, what's working,
• 0:28
  Speaker 1: what's not working? To get the latest, we welcome Jalen Mamadova,
• 0:32
  Speaker 1: Global sector lead for healthcare at Third Bridge, based in
• 0:35
  Speaker 1: New York City. Jailn, thanks so much for joining us here.
• 0:38
  Speaker 1: We got some news out here today about merk Uh
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  Speaker 1: that it's vaccine they're pulling, it's not working, and then
• 0:46
  Speaker 1: they kind of pulling back from that. How significant is that?
• 0:50
  Speaker 1: Thanks so much for having me, And it's pretty significant
• 0:53
  Speaker 1: given the low vaccine supply that we have and the
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  Speaker 1: inefficiencies on the logistics fronts for both in fact pers
• 1:00
  Speaker 1: and providers around the coal chain. For m R and
• 1:02
  Speaker 1: AS is really increases our reliance on the expected positive
• 1:06
  Speaker 1: redoubts from J and J and Novo backs, as well
• 1:08
  Speaker 1: as some pipeline candidates like GSC, SINOFFI and some of
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  Speaker 1: the newer platforms that you haven't releasen the media cover
• 1:14
  Speaker 1: as much like back starts, TABLET or CODA Genics, nasal vaccines,
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  Speaker 1: all of those now are going to start mattering. The
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  Speaker 1: other front is on mark, so they have pulled back
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  Speaker 1: on the two. But it's important to also bear in
• 1:25
  Speaker 1: mind that we should still be following a potential reformulation
• 1:29
  Speaker 1: on the delivery front for their VSC platforms, So if
• 1:32
  Speaker 1: you go from intramuscular to potentially intra nasle, you may
• 1:35
  Speaker 1: still see some form of efficacy. The question then is
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  Speaker 1: how far behind is that put them on. Fiser and
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  Speaker 1: Maderna puts extreme pressure in terms of streamlining their manufacturing.
• 1:44
  Speaker 1: Reefs already seen hiccups in terms of you know, accommodating
• 1:48
  Speaker 1: for temperature controlled environments and modernist booster, which will add
• 1:53
  Speaker 1: as a third regiment to be completely protective from the
• 1:56
  Speaker 1: news strains, will be more and more important. On the upside,
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  Speaker 1: though we've seen some loss and scheme on attention in
• 2:03
  Speaker 1: terms of the neutralizing antibody molecules from Lily and the
• 2:07
  Speaker 1: genera on those are going to probably come back, and
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  Speaker 1: we'll see more and more adoption of those as well
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  Speaker 1: as therapeutic products, which is the anti viral that the
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  Speaker 1: work is working on. You know, we we've heard from
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  Speaker 1: so many people UM that this has been an inefficient rollout,
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  Speaker 1: although it seems so much more efficient than the last
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  Speaker 1: time we vaccinated the entire world in a handful of months.
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  Speaker 1: I wonder what you think UM needs to be improved
• 2:32
  Speaker 1: and if you have optimism that it will be. I
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  Speaker 1: do have optimism, and so Biden's bands can technically work, right,
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  Speaker 1: We're already on the path of the news during a
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  Speaker 1: million a day, you can even double that number. But
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  Speaker 1: all of this is going to be predicated on seeing
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  Speaker 1: some form of federal guidance and financing for both providers
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  Speaker 1: and manufactors. So take the provider site, that's a huge
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  Speaker 1: trick up. We don't have the medical staffing. Sub eight
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  Speaker 1: storage is probably going to be even more important now
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  Speaker 1: with Mark falling out of the race, at least in
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  Speaker 1: the New York term, helping them resupply their dry ice,
• 3:06
  Speaker 1: which they either have to do on their own or
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  Speaker 1: both state and expanding their infrastructure on the manufacturing site.
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  Speaker 1: In order for Biden's plan to work, you need seven
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  Speaker 1: point five million production a week for the next nine
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  Speaker 1: to ten weeks between Siser and Maderna for that to happen.
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  Speaker 1: And you need some assistance on the shipping and container
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  Speaker 1: companies as well as distribution mechanisms with with McKesson. All
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  Speaker 1: in all, we need a central distribution system in the
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  Speaker 1: US that helps accommodates for the sub eight storage and
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  Speaker 1: those special containers. Assistance for companies like Sterling Ultracold that
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  Speaker 1: are working on coaching solutions UH to enable the use
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  Speaker 1: of mobile clinics that are really going to become important
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  Speaker 1: in the next few months. So Jaalen, A lot of
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  Speaker 1: things need to fall into place, A lot of things
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  Speaker 1: need to happen that you just enumerated. How confident are
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  Speaker 1: you that this administration can get it done in a
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  Speaker 1: reasonable period of time? I this year, I'm confident because
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  Speaker 1: the tone has changed, right, it's a it's a more
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  Speaker 1: our experts are confident will say it this way because
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  Speaker 1: the tone has changed. But I do have to say
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  Speaker 1: operation work speed. The previous administration, it did put a
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  Speaker 1: lot of the involves the seeds into place that needed
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  Speaker 1: to happen for Biden's plan to work, So we shouldn't
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  Speaker 1: dismiss that. And our experts see that there have been
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  Speaker 1: a lot of progress made with operational work, see that
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  Speaker 1: would even make the hundred millions possible in a hundred days.
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  Speaker 1: But the tone of the Biden administration has changed and
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  Speaker 1: we are more confident, are experts are more confident that
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  Speaker 1: we will be seeing financing where it needs be in
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  Speaker 1: terms of having a convergence between even take federally owned
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  Speaker 1: material and commercially owned material across the four or five
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  Speaker 1: pipeline candidates that are more near term. And then this
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  Speaker 1: week's before outstanding, you know, without sounding at all political, um,
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  Speaker 1: the Trump administrat had already ramped up vaccinations to a
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  Speaker 1: level that would achieve Biden's goals, right, I mean, by
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  Speaker 1: the time President Biden came into office, we were already
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  Speaker 1: vaccinating in the US almost a million people a day.
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  Speaker 1: So all he has to do is not do worse
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  Speaker 1: then the Trump administration. The point that they had reached,
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  Speaker 1: is that really a concern for you that President Biden's
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  Speaker 1: administration will now do worse because of a lack of
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  Speaker 1: funding or production bottlenecks. So it's not so there's only
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  Speaker 1: so much that can happen at the federal level, which
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  Speaker 1: is why we bring it back to the financing component.
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  Speaker 1: The cold chain is not entirely developed in this country.
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  Speaker 1: I'm not even talking about the ultra culture cold chain,
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  Speaker 1: ultra ultra you know, sub ad Storge. It's all going
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  Speaker 1: to come down to how stream lights the properties are
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  Speaker 1: at that level. Right with Mirk falling out and now
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  Speaker 1: that we have Fiser Madurnam potentially J and J, that
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  Speaker 1: still puts a lot of pressure on two of the
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  Speaker 1: most complicated logistically speaking, vaccine candidates where you're seeing increased
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  Speaker 1: vaccine wastage. So that's where the issue is going to
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  Speaker 1: be with the Biden administration, not so much as you know,
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  Speaker 1: in comparing the two administrations, is not going to be
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  Speaker 1: so much in the implementation, but so much in Shakespeain
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  Speaker 1: the MAZE action funds, right, because if you look at
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  Speaker 1: the supply chain right hand, our focuses in streamlining, there's
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  Speaker 1: manufacturing in efficiencies. That really comes down to UH financing
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  Speaker 1: in some form of federal guidance, and that's what's going
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  Speaker 1: to dictate whether or not the Biden administration will prove
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  Speaker 1: to be successful. And hey, j we have about thirty
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  Speaker 1: seconds left. The emerging markets, I mean the existing developed
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  Speaker 1: markets have their own challenge. Just talk to us about
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  Speaker 1: the emerging markets. What's the plan there? The plan I
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  Speaker 1: mean COVID will probably in the low middle income countries
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  Speaker 1: will get vaccinated by your end we'll see in addition
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  Speaker 1: of by middle of next year and probably completion by
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  Speaker 1: two so that would be that would be the timeline. Jalen,
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  Speaker 1: thank you so much for joining us. We appreciate it
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  Speaker 1: always getting your thoughts to Jalen Momodova, Glomal sector lead
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  Speaker 1: for healthcare for Third Bridge. So, mad, I guess the
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  Speaker 1: key issue here is obviously funding here in the States, uh,
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  Speaker 1: some central distribution um and then hopefully we can get
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  Speaker 1: you know, it's more out of you know, Johnson and Johnson.
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  Speaker 1: That's the next pharmaceutical company that we're really waiting on. Well,
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  Speaker 1: I think you make also an incredibly important point with
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  Speaker 1: your last question. You know, we've got to vaccinate the
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  Speaker 1: whole world. So even if the US is successful, the UK,
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  Speaker 1: Germany and France, if you if you leave all of
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  Speaker 1: the rest of the countries in the world without vaccinations,
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  Speaker 1: then they just spread a new variant and you have
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  Speaker 1: a new problem. Yep, absolutely so um, as we heard
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  Speaker 1: from Jalen, Uh, that is probably not likely till two.
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  Speaker 1: So uh, this is going to be an issue for
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  Speaker 1: some time. But again, uh, the vaccines are getting out
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  Speaker 1: and hopefully they can be ramped up in terms of timing. Matt. Thanks,
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  Speaker 1: what's for joining us today. We appreciate you. You're coming along.
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  Speaker 1: That was fun. Well, when we take a look at
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  Speaker 1: the large global airlines we saw the story of was
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  Speaker 1: a dramatic decline in passenger air travel commercially. How about
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  Speaker 1: on the private side. That's checking with Thomas Floor. He's
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  Speaker 1: a chairman and founder of Vistol Glober also the leader
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  Speaker 1: of the new private jet platform XO Thomas. Next, much
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  Speaker 1: for joining us here. You know, I think you know
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  Speaker 1: a lot of our audience is certainly familiar when they
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  Speaker 1: look at the Uniteds of the world, the Deltas of
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  Speaker 1: the world, the European airlines saw dramatic declines in air travel.
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  Speaker 1: What happened to the private jet industry? Hey, how are you? Uh,
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  Speaker 1: very very good question. I mean, what do we really
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  Speaker 1: saw with the what I call the destruction of the
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  Speaker 1: commercial infrastructure is the fact that you know, the the
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  Speaker 1: the uh CEO is the chairman, the the the important
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  Speaker 1: business leader around the globe. They still needed to travel
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  Speaker 1: and uh, we're not the ending on the load factor.
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  Speaker 1: So what happened was that the private jet industry really
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  Speaker 1: filled a gap and whilst overall travel was down, the
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  Speaker 1: addressable market has really uh multiplied in in in in
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  Speaker 1: the sense that there's a McKinsey study that up to
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  Speaker 1: people who can actually afford to fly on business sheds,
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  Speaker 1: they never did. They used the commercial infrastructure, and um,
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  Speaker 1: that is really a traumatic shift where people were before,
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  Speaker 1: you know, and maybe we're offering demo flights to show
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  Speaker 1: people the time effectiveness of business judge were now actually
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  Speaker 1: paying for them that because that was the only way
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  Speaker 1: to get from a certain destination to another destination. I
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  Speaker 1: can understand that, especially during a pandemic, it's a lot
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  Speaker 1: more attractive to fly private. UM. I flew commercial once
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  Speaker 1: during this pandemic and it's an experience that I never
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  Speaker 1: ever ever want to repeat. On the other hand, UM Thomas,
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  Speaker 1: there's been some events like Davos, which I'm sure must
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  Speaker 1: be a huge part of the private jet business. I mean,
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  Speaker 1: I look at the airfield there in Switzerland and see,
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  Speaker 1: you know, it seems like all of the private jets
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  Speaker 1: in the world go there once a year, and this
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  Speaker 1: year they didn't. Can you feel something like that the
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  Speaker 1: cancelation of Davos UM well, look, I mean there is
• 10:24
  Speaker 1: it's kind of like a very popular event and so
• 10:27
  Speaker 1: therefore it's kind of like covered by the press. But
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  Speaker 1: the the the the the market is a lot bigger
• 10:34
  Speaker 1: than just the Davos type of thing. People would make
• 10:37
  Speaker 1: the example of Super Bowl and what have you. I
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  Speaker 1: can only look at our data and our data at
• 10:44
  Speaker 1: at this the global which you know, you know, we
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  Speaker 1: have the two brands. We have this the jet which
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  Speaker 1: really offers an alternative two aircraft ownership, and then we
• 10:51
  Speaker 1: have the digital marketplace, which is flying so and at
• 10:56
  Speaker 1: the flying level for example UM which sell memberships and
• 11:01
  Speaker 1: so access to our fleet. We're seeing a three x
• 11:04
  Speaker 1: in sign up of new members. And this is even
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  Speaker 1: if you compare Q two, which was the kind of
• 11:11
  Speaker 1: like the center of the of the of the downturn
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  Speaker 1: of in due to COVID, we had over the year
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  Speaker 1: before a three x wall members signing up. Because people
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  Speaker 1: want access to a to a world infrastructure which gets
• 11:28
  Speaker 1: them from A to B. And and so what I'm
• 11:31
  Speaker 1: saying and what I was seeing on before, is that yes,
• 11:34
  Speaker 1: there is less line than zoom other technologies that really
• 11:37
  Speaker 1: makes it possible day to communicate. But there is still
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  Speaker 1: a very very big activity of flights UH in demand
• 11:45
  Speaker 1: today and that's what we are seeing in our traffic
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  Speaker 1: data and both at the Vistitute level as well as
• 11:51
  Speaker 1: at the as the Excel level. So Thomas, you talked about,
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  Speaker 1: so that that increases the demands that you saw last year.
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  Speaker 1: Give us a sense of kind of the breakdown between
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  Speaker 1: business versus personal slash leisure, because I think the expectation
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  Speaker 1: or the belief is that most of private jet aviation
• 12:09
  Speaker 1: is business related m hm. And I think this is correct.
• 12:12
  Speaker 1: I mean, if I had to give a more or
• 12:16
  Speaker 1: less balanced break that, I'd say, it's it's still eight
• 12:20
  Speaker 1: business and twenty leisure. Um, it's it's before. Let's let's
• 12:25
  Speaker 1: take somebody needed to go from from Boston to Desmond
• 12:28
  Speaker 1: in the Midwest, and and maybe today you can get there,
• 12:32
  Speaker 1: but you need to change the airport. So now you're
• 12:34
  Speaker 1: having your your exposure, your your health exposure to three
• 12:38
  Speaker 1: airports and two airplanes. And today you know a couple
• 12:43
  Speaker 1: of executives get together and say, okay, well four people flying,
• 12:47
  Speaker 1: let's charter a plane. Uh go there in the morning,
• 12:51
  Speaker 1: come back in the evening, having a safe travel bubble.
• 12:54
  Speaker 1: And I think that's that's really one of the other
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  Speaker 1: drivery with that in the private jet industry, we're we're
• 13:00
  Speaker 1: able to create these travel bubbles that everybody's tested from
• 13:05
  Speaker 1: the driver taking you to the airplane. You're not going
• 13:07
  Speaker 1: through a terminal building. You're actually pulling up in front
• 13:10
  Speaker 1: of the airplane, and the pilots are tested and you
• 13:14
  Speaker 1: go there at the pallets are not allowed to leave
• 13:16
  Speaker 1: the airplane. Look, there's there's no way it could be
• 13:18
  Speaker 1: worse timas than commercial flight. I mean there's zero social distancing.
• 13:21
  Speaker 1: You're shoved together like sardines and a bus from the
• 13:23
  Speaker 1: airport to the plane, and then no one knows how
• 13:25
  Speaker 1: to properly wear a mask. Let me ask you about
• 13:28
  Speaker 1: the infrastructure because I've been watching the UH this signal
• 13:32
  Speaker 1: takeover battle. UM it's a company that helps fuel private
• 13:36
  Speaker 1: jets and provides passenger Medagine do you see UH this
• 13:40
  Speaker 1: market growing fast? I mean, does the infrastructure grow with
• 13:43
  Speaker 1: the popular area in the demand. Yes, I mean we
• 13:47
  Speaker 1: we have Look, I mean we went through and we
• 13:51
  Speaker 1: have very clear signals internally here were we continue to expand.
• 13:55
  Speaker 1: We we have more demand than we can fulfill on
• 13:58
  Speaker 1: our own sleep. This such a day has a hundred
• 14:01
  Speaker 1: thirty aircraft and we're planning to go to about one
• 14:04
  Speaker 1: six because we're every day of the year we're about
• 14:09
  Speaker 1: over subscribed and which we then need to sub charter
• 14:12
  Speaker 1: and hence this is this is the demand. So I
• 14:16
  Speaker 1: think you're bought on. Overall people travel less, but the
• 14:20
  Speaker 1: addressable market is so much bigger, and it was One
• 14:23
  Speaker 1: other interesting thing is that Thomas and we're running out
• 14:27
  Speaker 1: of time and we're gonna have to leave it there,
• 14:28
  Speaker 1: but will certainly follow up with you on the private
• 14:31
  Speaker 1: jet aviation industry experiencing some growth here. That's Thomas Floord,
• 14:35
  Speaker 1: chairman and founder of Vista Global. Today we're joined by
• 14:40
  Speaker 1: Matt Miller from Berlin, Germany. Well, some active managers had
• 14:45
  Speaker 1: quite in terms of performance. Our next guest is certainly
• 14:49
  Speaker 1: one of them, Peter Anderson. He's the founder of Anderson
• 14:51
  Speaker 1: Capital Management based in Boston. A return last year versus
• 14:56
  Speaker 1: the SMP, A similar return actually in twenty nineteen as well.
• 14:59
  Speaker 1: Let's get a s it's a kind of how he
• 15:01
  Speaker 1: did it and what he's thinking about. Peter, thanks so
• 15:06
  Speaker 1: much for joining us here. What were the winners for
• 15:09
  Speaker 1: you last year? What worked for you? Well, you know,
• 15:12
  Speaker 1: I stuck to basics. I have to tell you that
• 15:14
  Speaker 1: I've been doing this since Paul, and I will tell
• 15:18
  Speaker 1: you that me was the most difficult year ever to invest.
• 15:23
  Speaker 1: There were so many uncertainties. Of course the virus headlining that,
• 15:27
  Speaker 1: and um I really didn't change any of my discipline.
• 15:31
  Speaker 1: What I've tried to find our stocks that are common sense, uh,
• 15:36
  Speaker 1: easy to understand situations, and so some of the top
• 15:41
  Speaker 1: performers actually were pet care stocks. I own a company
• 15:45
  Speaker 1: called Trupanion, which is an insurance company health insurance company
• 15:50
  Speaker 1: for animals. That stock has gone through the roof because
• 15:54
  Speaker 1: the fundamentals are so appealing. Only one percent of pets
• 15:59
  Speaker 1: out there are have health insurance. So can you imagine
• 16:02
  Speaker 1: if we double just to two percent, that the revenues
• 16:06
  Speaker 1: of that company with double. So it's things like that.
• 16:07
  Speaker 1: I tried to keep my eye on the center ring
• 16:10
  Speaker 1: of this three ring circus to worry, and sometimes it
• 16:13
  Speaker 1: takes a lot of discipline, but if you do, I
• 16:16
  Speaker 1: think it does pay off. I have my dog Steve
• 16:19
  Speaker 1: insured to the eye teeth. I mean he's insured if
• 16:24
  Speaker 1: he breaks your stuff, he's insured if you break his stuff. Um,
• 16:27
  Speaker 1: and of course if he needed anything beyond what insurance
• 16:30
  Speaker 1: to pay for, I'd sell a car to pay for Steve.
• 16:34
  Speaker 1: You are, yeah, well, yes, people will pay anything for
• 16:40
  Speaker 1: their pets, So that's a smart strategy, Pete. And congratulations
• 16:43
  Speaker 1: on I mean, back to back plus gains is insanely good.
• 16:48
  Speaker 1: But um, you know, does this keep working? Um? Can you?
• 16:54
  Speaker 1: Can you still bet on these? Uh common sense value?
• 16:59
  Speaker 1: Name as we as we bounce back from if we
• 17:03
  Speaker 1: hopefully bounce back from pandemic. I would say with great courage, yes,
• 17:09
  Speaker 1: it is more applicable now than it's ever been. And
• 17:13
  Speaker 1: the reason I say that are there's so many um
• 17:16
  Speaker 1: narratives out there now right about other types of industries,
• 17:20
  Speaker 1: say cryptocurrency, which compare that to say dog food. I mean,
• 17:25
  Speaker 1: just as an extreme example, right, because I also own
• 17:28
  Speaker 1: Fresh Pet, which is a animal food producer. But when
• 17:34
  Speaker 1: you look at cryptocurrency, I have no idea how that works,
• 17:37
  Speaker 1: and I at least have the courage to tell people that,
• 17:40
  Speaker 1: you know, most people have only a superficial knowledge of
• 17:44
  Speaker 1: how cryptocurrency works, yet they plow into that. So I
• 17:47
  Speaker 1: think more than ever, we are tempted. You know, I
• 17:50
  Speaker 1: was talking about a three ring circus and the other
• 17:52
  Speaker 1: two rings. There's a lot of things going on that
• 17:55
  Speaker 1: can distract us from our main focus. One of them
• 17:58
  Speaker 1: is cryptocurrency. Another one I inc and I know this
• 18:01
  Speaker 1: is against most opinion out there, is the electric vehicle market.
• 18:06
  Speaker 1: They're great cars, but they only they're less than five
• 18:09
  Speaker 1: percent of the total addressable market. So we need to
• 18:12
  Speaker 1: stay focused on this. And I think more than ever,
• 18:15
  Speaker 1: common sense, simple to understand stories will win the day.
• 18:20
  Speaker 1: Peter's you know, I would say, since the September time frame,
• 18:24
  Speaker 1: if you will, kind of a rotation trade in the
• 18:26
  Speaker 1: equity markets from some of the tried and true big
• 18:29
  Speaker 1: tech names that have led the way really since the
• 18:31
  Speaker 1: financial crisis, the Amazons, the Apples of the world, into
• 18:33
  Speaker 1: some more cyclical names. How do you view that trade? Well,
• 18:37
  Speaker 1: I view that kind of the way most people are
• 18:40
  Speaker 1: looking at, uh the big spending bill that the government
• 18:44
  Speaker 1: is UH projecting and the stimulus all that, and that
• 18:49
  Speaker 1: does tie in with these rotations. However, I think timing
• 18:53
  Speaker 1: those rotations is a fool's errand and I never tried
• 18:57
  Speaker 1: to time markets like that. Of what I do is
• 18:59
  Speaker 1: I say to myself, for instance, cyber security, is that
• 19:02
  Speaker 1: a rotational type industry? Absolutely not, no matter what's going
• 19:06
  Speaker 1: on in the country, if we're in a cyclical mode, uh,
• 19:10
  Speaker 1: ben or value or growth, whatever however you want to
• 19:12
  Speaker 1: call it. Cybersecurity names like Palo Alto and cyber Arc
• 19:17
  Speaker 1: are there to stay. They are endurable. Uh, They're durable
• 19:22
  Speaker 1: companies that I think will surpass anything in terms of
• 19:26
  Speaker 1: trying to time markets back and forth like that. If
• 19:29
  Speaker 1: he you know, um, James Carvill used to say, if
• 19:33
  Speaker 1: there were a reincarnation, he wanted to come back as
• 19:35
  Speaker 1: the bond market because the bond market was the boss
• 19:39
  Speaker 1: and everyone was afraid of the bond market. But um,
• 19:42
  Speaker 1: that's really not the case. I even saw US debt
• 19:46
  Speaker 1: financing costs are going to be the lowest they've been
• 19:48
  Speaker 1: in like four years this year. Um, is that going
• 19:52
  Speaker 1: to stay that way? Because that's really been a huge
• 19:54
  Speaker 1: tail wind. Fantastic points you're making, because of course, the
• 19:58
  Speaker 1: other narrative out there now is uh, inflation, and people
• 20:03
  Speaker 1: are very, very worried about interest rates going up, etcetera.
• 20:08
  Speaker 1: And there's tons of work being done on that. And
• 20:11
  Speaker 1: I think it's not as simple as most people think
• 20:13
  Speaker 1: when they say, well, there's a stimulus plan that equals inflation,
• 20:18
  Speaker 1: that equals higher rates. I don't foresee rates increasing for
• 20:23
  Speaker 1: the next two years, and I think that puts me
• 20:25
  Speaker 1: on a very uh a minority group of talking about
• 20:29
  Speaker 1: interest rates. But the common sense application of this again,
• 20:33
  Speaker 1: I just go back to this, is that the FED
• 20:35
  Speaker 1: is not going to make any movement right now because
• 20:38
  Speaker 1: we have to recover from the virus. Hey, Peter, thank
• 20:40
  Speaker 1: you so much for joining us. Always appreciate getting your thoughts.
• 20:43
  Speaker 1: Peter Anderson, founder of Anderson Capital Management, two years plus return.
• 20:51
  Speaker 1: Certainly getting it right in the equity markets. A lot
• 20:54
  Speaker 1: more coming up. Sweeney here, accompanied by Matt Miller from
• 20:59
  Speaker 1: her in Germany. Let's take a look at the theater business. Um.
• 21:03
  Speaker 1: You know, it's really obviously most of the theaters around
• 21:05
  Speaker 1: the world have been closed since the beginning this pandemic,
• 21:08
  Speaker 1: really crushing their balance sheets, and one of them, a
• 21:11
  Speaker 1: MC the largest, is trying to shore up its balance sheet.
• 21:14
  Speaker 1: Cat Doherty joins us. She's a high yield distressed debt
• 21:17
  Speaker 1: and bankruptcy reporter from Bloomberg News joined us on the phone.
• 21:21
  Speaker 1: Kat talked to us about a MC again, the world's
• 21:23
  Speaker 1: largest theater operator, really filling the pain of this pandemic
• 21:27
  Speaker 1: and what it's done to theater tendance. What's it doing
• 21:29
  Speaker 1: with its balance sheet? Well, the latest today is just
• 21:33
  Speaker 1: a string of actions that it's taken since the peak
• 21:36
  Speaker 1: of the pandemic, when it saw a number of its
• 21:39
  Speaker 1: theaters closed a majority um last spring, and now they've
• 21:43
  Speaker 1: reopened about three hundred to four hundred of those in
• 21:48
  Speaker 1: the US, but still they're seeing attendance at all time lows.
• 21:52
  Speaker 1: So today they announced new financing that they secured. This
• 21:56
  Speaker 1: is a combination of debt and equity. They've been going
• 22:01
  Speaker 1: to the equity markets to raise new capital and they're
• 22:05
  Speaker 1: using that capital to try to get through the next
• 22:09
  Speaker 1: few months, really looking for the summer when they're hoping
• 22:14
  Speaker 1: the vaccine will be UM largely used and they'll see
• 22:19
  Speaker 1: movie goers back in their seats. I don't know about you,
• 22:22
  Speaker 1: but I will be the first person there. I mean
• 22:26
  Speaker 1: when when they open back up. I used to go
• 22:28
  Speaker 1: to the movies every week, you know. Um, and it's
• 22:31
  Speaker 1: killing me that I can't do any of this stuff. Uh.
• 22:34
  Speaker 1: What does a m C say about their expected rebound. Well,
• 22:38
  Speaker 1: they're hoping that a lot of their movie goers are
• 22:41
  Speaker 1: just like you, that there is pent up demand and
• 22:43
  Speaker 1: that there are many users viewers that want to be
• 22:47
  Speaker 1: back in the seats of the theater seeing the movies
• 22:50
  Speaker 1: on the big screen and not just at home. We've
• 22:53
  Speaker 1: seen a lot of pressure even before the pandemic, with
• 22:57
  Speaker 1: consumers shifting to Netflix and other streaming services. UM, but
• 23:01
  Speaker 1: others do want to see these movies, uh, in an
• 23:06
  Speaker 1: experience that's unlike any other. UM, when you're seeing it
• 23:09
  Speaker 1: in front of a big screen away from your home. UM.
• 23:12
  Speaker 1: And I think that the pandemic has has just is
• 23:16
  Speaker 1: accelerated a lot of those problems that they were seeing before. UM.
• 23:20
  Speaker 1: But then again, it could also be creating this pent
• 23:22
  Speaker 1: up demand. It just remains to be seen. We're going
• 23:24
  Speaker 1: to have to watch for um the openings, UM when
• 23:30
  Speaker 1: certain states are lifting the limitations that are currently in place.
• 23:35
  Speaker 1: And I guess another problem CAT is Okay, let's say
• 23:38
  Speaker 1: you open up the theaters, is there going to be
• 23:42
  Speaker 1: movies to actually see, we've seen a lot of the
• 23:44
  Speaker 1: big studios, you know, kind of throwing in the talent
• 23:47
  Speaker 1: and putting their you know, their their big movies, releasing
• 23:50
  Speaker 1: them on their streaming services. So what's the future of
• 23:53
  Speaker 1: supply of quality content for these movie theaters? That's right.
• 23:57
  Speaker 1: We've seen a number of delays UM toe into the summer.
• 24:02
  Speaker 1: A lot are going straight to streaming services like HBO
• 24:06
  Speaker 1: Max UM and every time that those announcements get made
• 24:10
  Speaker 1: UM A, MC and other large cinema companies Regal Cinema's parent, UM,
• 24:16
  Speaker 1: we see a reaction in the market, at least UM
• 24:20
  Speaker 1: to whether or not it's going to affect UM consumer's
• 24:24
  Speaker 1: decision to return and also UM whether or not, as
• 24:28
  Speaker 1: you say, they'll be able to see content in the
• 24:30
  Speaker 1: theaters UM. So that's something that we're we're monitoring UM,
• 24:35
  Speaker 1: and we're also looking to see what effects it might
• 24:39
  Speaker 1: have on the media industry UM in Hollywood, whether UM
• 24:44
  Speaker 1: the makers are going to be shifting to more permanent
• 24:47
  Speaker 1: decisions that UM are going to impact cinemas, including AMC's
• 24:52
  Speaker 1: ability to continue going forward. Yeah, you know, I've heard
• 24:57
  Speaker 1: tales that Hollywood's power or was consolidated. UM amidst the
• 25:03
  Speaker 1: Spanish flu because cinema couldn't be made overseas at the time.
• 25:08
  Speaker 1: And you have to wonder if now, um, you know
• 25:11
  Speaker 1: that the the the base for making movies will shift away.
• 25:16
  Speaker 1: You know, more and more people Tom Cruise is the
• 25:18
  Speaker 1: example that I'm sure we all read about are making
• 25:21
  Speaker 1: movies overseas because they just don't have the uh, the
• 25:24
  Speaker 1: ability to do it in Hollywood. And I also wonder
• 25:27
  Speaker 1: if there will be enough content. You know, it takes
• 25:30
  Speaker 1: it takes a while to make a movie. You can't
• 25:32
  Speaker 1: do this in a week. So even after the vaccine,
• 25:33
  Speaker 1: after we've got hurt immunity, it's not clear that everybody
• 25:37
  Speaker 1: is going to be UM, you know, is going to
• 25:39
  Speaker 1: have something and they can that's right. However, we've seen
• 25:43
  Speaker 1: companies like Netflix UM that are announcing big plans to
• 25:49
  Speaker 1: create content UM that's surpassing what they've done in the past.
• 25:53
  Speaker 1: So there are situations that are showing that it's doable.
• 25:58
  Speaker 1: UM that it's the limitation are there, but there's ways
• 26:01
  Speaker 1: around it. A lot of these studios are having to
• 26:05
  Speaker 1: shoot but under major limitations. UM. They're having their actors
• 26:10
  Speaker 1: go through testing UM daily and making sure that they
• 26:14
  Speaker 1: can return to work and shoot for for future content,
• 26:18
  Speaker 1: but under restrictions and making sure that they're doing this
• 26:21
  Speaker 1: all um, you know, piecemeal, um and under the law.
• 26:27
  Speaker 1: Hey Cat, thanks so much for joining us. We appreciate
• 26:29
  Speaker 1: that Cat already high yield distressed debt and bankers reporter
• 26:31
  Speaker 1: for Bloomberg News. Thanks for listening to Bloomberg Markets podcast.
• 26:36
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 26:40
  Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm
• 26:43
  Speaker 1: on Twitter at Bonnie Quinn. And Paul Sweeney I'm on
• 26:46
  Speaker 1: Twitter at p p Sweeney. Before the podcast, you can
• 26:49
  Speaker 1: always catch us worldwide at Bloomberg Radio