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BI Weekend: Boeing Deal, Microsoft Job Cuts, US Drug Prices · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence
• 0:11
  Speaker 1: with Alex Steel and Paul Sweeney.
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  Speaker 2: The real ap performance has been in US corporate high yield.
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  Speaker 3: Are the companies lean enough? Have they trimmed all the fats?
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  Speaker 2: The semiconductor business is a really cyclical.
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  Speaker 1: Business, breaking market headlines and corporate news from across the globe.
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  Speaker 3: Do investors like the M and A that we've seen?
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  Speaker 2: These are two big time blue chip companies.
• 0:32
  Speaker 3: Window between the peak and cunt changing super fast.
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  Speaker 1: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio.
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  Speaker 2: Of Today's Bloomberg Intelligence Show, we dig inside the big
• 0:44
  Speaker 2: business stories impacting Wall Street and.
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  Speaker 4: The global markets.
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  Speaker 2: Each and every week we provide in depth research and
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  Speaker 2: data on some of the two thousand companies and one
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  Speaker 2: hundred and thirty industries our analysts cover worldwide. Today, we'll
• 0:54
  Speaker 2: look at why the tech giant Microsoft says it will
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  Speaker 2: cut six thousand workers. Plus we'll disc us how President
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  Speaker 2: Donald Trump is looking to lower drug prices in the US.
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  Speaker 4: But first we begin in the legal space.
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  Speaker 2: Recent research by Bloomberg Intelligence maintains that the Supreme Court
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  Speaker 2: would likely let President Donald Trump fire fed chair j
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  Speaker 2: palell even if market reaction discourages it. It's a subject
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  Speaker 2: of a bipiece titled scotus would likely let Trump fire
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  Speaker 2: Pal even if the markets don't. For more, co hosts
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  Speaker 2: Alex Steel and I were joined by the pieces author
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  Speaker 2: Elliott Stein, Bloomberg Intelligence litigation analyst. Your first asked Elliott,
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  Speaker 2: if it is constitutional for President Trump to fire fedchair Pal.
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  Speaker 5: We're not sure yet, but wait, yeah, the way the
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  Speaker 5: law is playing out is, you know, he's taken a
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  Speaker 5: very expansive view of executive authority and what the president
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  Speaker 5: can do.
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  Speaker 6: You know, we see it with the tariffs. We sorry
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  Speaker 6: with those.
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  Speaker 5: He's taken a lot of actions that presidents haven't done before,
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  Speaker 5: and they're being litigated. And one of the things that
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  Speaker 5: he's done is that he has tied to exert control
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  Speaker 5: over what used to be called independent agencies, so things
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  Speaker 5: like the FTC, the Federal Trade Commission, the NRB, the
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  Speaker 5: National Labor Relations Board. He has removed commissioners at these
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  Speaker 5: agencies even though the statutes that govern these agencies have
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  Speaker 5: what's called the fore cause removal restriction, meaning the president
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  Speaker 5: can only remove them for cause, and he's just firing
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  Speaker 5: them at will.
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  Speaker 6: He's also obviously.
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  Speaker 5: Threatened to do the same with Jerome Powell and maybe
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  Speaker 5: other members.
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  Speaker 6: Of the board.
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  Speaker 5: And his view is that the four cause removal restriction
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  Speaker 5: is unconstitutional because it impinges on his power as the
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  Speaker 5: president under Article two of the Constitution to essentially oversee
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  Speaker 5: the entire executive branch and the Supreme Court. In nineteen
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  Speaker 5: thirty five, there's President saying those four cause removal restrictions
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  Speaker 5: restrictions are constitutional. But more recently the Supreme Court has
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  Speaker 5: sort of try to narrow that precedent and said, at
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  Speaker 5: least with the couple agencies where you only have one director,
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  Speaker 5: those four cause removal restrictions are unconstitutional. And so the president,
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  Speaker 5: President Trump is sort of trying to expand that recent
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  Speaker 5: precedent to these other agencies.
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  Speaker 2: So do we have other I mean, so the Federal
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  Speaker 2: Reserve is one thing. Do we have other agencies that
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  Speaker 2: are in the legal process now where someone's been removed
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  Speaker 2: and we have a suit?
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  Speaker 5: Yeah, exactly. We actually have quite a few of them. So,
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  Speaker 5: you know, he has fired two commissioners at the FTC.
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  Speaker 5: Those are in litigation, sort of the most procedurally advanced
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  Speaker 5: cases at this point are cases where he fired commissioners
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  Speaker 5: at the NRB, the National Labor Relations Board, and also
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  Speaker 5: the Merit Systems Protection Board, which sort of oversees federal
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  Speaker 5: employees and whether you know they're being fired and hired
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  Speaker 5: for merit or not. Those two cases, we have actually
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  Speaker 5: several rulings, and what's interesting is that the judges in
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  Speaker 5: those rulings sort of follow along.
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  Speaker 6: Ideological lines and how they rule.
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  Speaker 5: So the trial court judge was a judge appointed by
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  Speaker 5: President Obama, and she said that the firing of those
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  Speaker 5: commissioners was improper, that it was violated the four cause removal.
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  Speaker 5: Those cases are now an appeal. It's going to be
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  Speaker 5: an argument next week. But we have sort of preliminary
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  Speaker 5: ruins from the appeals court. One panel of three judges,
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  Speaker 5: two of whom were appointed by Republican presidents, said that
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  Speaker 5: President Trump would have been likely to succeed on the merits.
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  Speaker 5: But then that ruling was then revisited by the entire court,
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  Speaker 5: which is dominated by judges is appointed by Democrats, who
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  Speaker 5: said that the firing was improper.
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  Speaker 6: So we're sort of seeing how this might play out.
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  Speaker 3: Is this are we really in a truly partisan judicial
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  Speaker 3: world or Is this just simply different interpretations or a
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  Speaker 3: stricter looser interpretations of the Constitution.
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  Speaker 6: It depends on the issue.
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  Speaker 5: I would say on this issue, it seems like the
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  Speaker 5: judges are essentially ruling along ideological lines, where you have
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  Speaker 5: judges appointed by Republicans saying that the fore cause removal
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  Speaker 5: restriction really does impinge on the president's executive authority, and
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  Speaker 5: you have judges appointed by Democrats saying, you know.
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  Speaker 6: It's okay to put some limits.
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  Speaker 5: The four cause of removal restriction would still allow the
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  Speaker 5: president to fire someone if they did something improper.
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  Speaker 3: In terms of say the Supreme Court issuing and a
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  Speaker 3: ruling that then is ignored, is there precedent for that
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  Speaker 3: like over history?
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  Speaker 5: Well, we've actually sort of seen it with TikTok right,
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  Speaker 5: where the Supreme Court upheld the TikTok ban and the
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  Speaker 5: president instructed his attorney general to ignore the ruling and
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  Speaker 5: ignore the ban. So we have sort of started to
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  Speaker 5: see some issues like that. But in this case I
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  Speaker 5: expected Supreme Court to if if he fight well on
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  Speaker 5: this issue, generally I expect the Supreme Court to side
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  Speaker 5: with President Trump.
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  Speaker 2: Interesting, so what happens when a president defies the Supreme Court.
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  Speaker 4: Like in TikTok, nothing right so.
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  Speaker 5: Far, nothing so TikTok's still The remedy is for Congress to.
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  Speaker 6: Impeach the president and then the Senate.
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  Speaker 5: To convict, highly unlikely in this political environment.
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  Speaker 3: I also like pushed out the rights. It sort of
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  Speaker 3: feels very blurry. It doesn't feel like he completely ignored
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  Speaker 3: it's it's like we're working on it.
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  Speaker 6: We're just pushing out the deadline.
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  Speaker 5: That feels a little differense Yes, that's essentially what he's doing.
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  Speaker 6: But at the same time, there's a law that Congress.
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  Speaker 5: Passed that said, you know, it has to be banned
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  Speaker 5: by a particular date. The Supreme Court upheld that law,
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  Speaker 5: and he's essentially ignoring the details of the law. I
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  Speaker 5: agree with you, he is using that as a reason,
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  Speaker 5: but the law is still on the books and it's.
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  Speaker 2: In violation our Thanks to Elliot Stein, Bloomberg Intelligence litigation analyst,
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  Speaker 2: we moved next to some of the news in the
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  Speaker 2: aerospace industry this week. We heard that China has removed
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  Speaker 2: a month long ban on airlines taking delivery of Boeing planes,
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  Speaker 2: and this follows a breakthrough in trade talks between the
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  Speaker 2: US and China that temporarily slash terrace on each side.
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  Speaker 2: The resumption of deliveries to China will be an immediate
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  Speaker 2: boost of Boeing, with around fifty Boeing jets to be
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  Speaker 2: delivered to China this year. For more co hosts, Alex
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  Speaker 2: Steele and I were joined by George Ferguson, Bloomberg Intelligence
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  Speaker 2: Senior Aerospace, Defense and Airlines analyst. We first asked George
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  Speaker 2: for his take on this week's news.
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  Speaker 7: I think what it means for Boeing in the short
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  Speaker 7: term is that they could probably get you know, some
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  Speaker 7: of these inventory airplanes they've built. They're sitting on Tarmax,
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  Speaker 7: they're maintaining them, costs bowing a lot of money. They
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  Speaker 7: can get them delivered into China. Serium expects thirty four
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  Speaker 7: of those airplanes to go in through the remainder of
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  Speaker 7: the year. They can get them delivered into China, get
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  Speaker 7: them off their books, you know, sort of get rid
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  Speaker 7: of that extra expense they it costs for them to
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  Speaker 7: manage those airplanes, so they could just get onto focusing
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  Speaker 7: on the factory floor and building brand new airplanes. So
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  Speaker 7: I think it's a positive. We'll see how long it lasts.
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  Speaker 7: But it's definitely a positive.
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  Speaker 3: Was this sort of baked into the US China trade
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  Speaker 3: talk or was this irrespective?
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  Speaker 7: Do you have an idea now, I'm not sure what's
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  Speaker 7: baked into the US China talks. I do think that
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  Speaker 7: there's an opportunity here for Boeing to get to even
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  Speaker 7: new orders from China. We haven't really seen material orders
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  Speaker 7: out of China since twenty eighteen, so last decade before
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  Speaker 7: the pandemic. Relations have been a bit strained since then.
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  Speaker 7: I think it's just it's one more piece of evidence
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  Speaker 7: that shows Look, as the US and China get into
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  Speaker 7: negotiations over trade, you're going to see heavy fracturing, and
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  Speaker 7: then you know, we see the markets kind of get
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  Speaker 7: very distressed about that. But behind the scenes, there's discussions about,
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  Speaker 7: you know, putting that relationship back together, and Boeing probably
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  Speaker 7: factors in high in those negotiations, and so I think
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  Speaker 7: you could go from a, hey there's despair here to hey,
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  Speaker 7: look there's a three hundred airplane order for Boeing coming
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  Speaker 7: out of China. So it's going to be a real
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  Speaker 7: up and down I think roller coaster.
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  Speaker 2: Here, George, are there airplane manufacturers in China?
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  Speaker 4: Or do they depend solely on Boeing and Airbus.
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  Speaker 7: They depend largely on Boeing and Airbus. There is a manufacturer, Comac,
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  Speaker 7: you know, they've been building a seven thirty seven, a
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  Speaker 7: three twenty you know, you know, substitute. They call it
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  Speaker 7: the Comac C nine one nine. The airplane's rolling out slowly.
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  Speaker 7: I think we saw fifteen or twenty deliveries last year.
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  Speaker 7: This is a country that probably needs at least one
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  Speaker 7: hundred and fifty narrow bodies a year, so not going
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  Speaker 7: to fulfill all their needs. There's about that many flying
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  Speaker 7: right now, and when we look at the flying statistics
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  Speaker 7: for that airplane, it's not flying as frequently as a
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  Speaker 7: three twenties and seven thirty seven. So it's it seems
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  Speaker 7: to us that the maturity that product isn't there yet
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  Speaker 7: for the Chinese to substitute out all of the Western jets.
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  Speaker 3: Right, So there's still a little bit of a way
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  Speaker 3: to go. You also have to wonder it's just in
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  Speaker 3: general the comeback that Boeing has been able to make. George,
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  Speaker 3: how would you describe the situation that Boeing is and
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  Speaker 3: now versus a couple of years ago?
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  Speaker 7: Yeah, you know, I think this year is what we
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  Speaker 7: expected last year to be before the door came off
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  Speaker 7: on the or the door plug and the Alaska chat.
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  Speaker 7: We're starting to see good flow through the factory and
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  Speaker 7: the delivery numbers we've seen. We're starting to see them
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  Speaker 7: deliver that inventory of built airplanes. Like I said that
• 10:38
  Speaker 7: Dragon costs pretty heavily. We're hearing good things about supply chain.
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  Speaker 7: They're going to pull Spirit Arrow Systems into Boeing by midyear.
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  Speaker 7: That was a big part of their problems. I think
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  Speaker 7: pulling them in helps them control quality at Spirit. So
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  Speaker 7: I think this story this year should be all about
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  Speaker 7: improving quality, improving throughput in the factory in the back half,
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  Speaker 7: some good cash generation. So I think this year is
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  Speaker 7: whatever they thought last year would be, which could be
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  Speaker 7: a pretty good year.
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  Speaker 2: So where are you, George and your model in terms
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  Speaker 2: of seven thirty seven kind of build rate here? Because
• 11:13
  Speaker 2: I know that just with the economic model for Boeing
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  Speaker 2: that just drives cash flow the more planes I can
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  Speaker 2: get through the line.
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  Speaker 7: We're looking for like a forty five to fifty percent
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  Speaker 7: increase in seven thirty seven deliveries this year, so really
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  Speaker 7: head a increase, and again that's going to be the
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  Speaker 7: big driver of cash generation for the company over the
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  Speaker 7: year and probably the ex the year. A build rate
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  Speaker 7: per month of thirty eight, we think even maybe into
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  Speaker 7: the forties kind of build rate, which is an area
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  Speaker 7: where they should be able to generate some profits.
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  Speaker 2: Our thanks to George ferguson Bloomberg Intelligence, senior Aerospace, Defense
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  Speaker 2: and Airlines analysts. Coming up, we'll continue with more on
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  Speaker 2: the planemaker Boeing, which landed its biggest ever aircraft order.
• 11:56
  Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
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  Speaker 2: different research on two thousand companies and one hundred and
• 12:01
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  Speaker 4: Via b I go on the terminal. I'm Paul Sweeney.
• 12:07
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• 12:27
  Speaker 2: We continue with more news from the planemaker Boeing. This week,
• 12:31
  Speaker 2: Boeing landed its biggest ever aircraft order, with Qatar Airways
• 12:34
  Speaker 2: agreeing to purchase up to two hundred and ten wide
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  Speaker 2: body aircraft, including the seven eighty seven Dreamlier and the
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  Speaker 2: seven seventy seven X model. It's a deal worth ninety
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  Speaker 2: six billion dollars and this comes a year after Boeing
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  Speaker 2: slogged through a deep executive shakeup and prolonged crisis.
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  Speaker 4: For more.
• 12:51
  Speaker 2: Co hosts Alex Steele and I were joined by Sid
• 12:54
  Speaker 2: Phillip Bloomberg, Deputy team leader for Global Aviation. You first
• 12:58
  Speaker 2: as Sid for his take on this week's news.
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  Speaker 8: This is a significant deal for Boeing because they can
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  Speaker 8: sort of add another sort of milestone order to their backlog,
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  Speaker 8: especially for their seven eighty seven, which is the sort
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  Speaker 8: of state of the art white body jet, as well
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  Speaker 8: as potentially for the Triple seven X, which is again
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  Speaker 8: a jet that Kataraways has ordered and is still to
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  Speaker 8: be certified. And so as airlines sort of look to
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  Speaker 8: the next generation of aircraft that they're looking to order,
• 13:24
  Speaker 8: this is sort of these are these You're going to
• 13:26
  Speaker 8: see these mega deals coming up where everyone's looking to
• 13:29
  Speaker 8: sort of replace their current generation planes with newer models
• 13:33
  Speaker 8: which are more advanced, better fuel economy, and that sort
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  Speaker 8: of great for Boeing in terms of just building out
• 13:38
  Speaker 8: that backlog and sort of selling out aircraft past the
• 13:41
  Speaker 8: end of the decade.
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  Speaker 3: What is the delivery time for something like this, But
• 13:46
  Speaker 3: it's clearly had some operational execution issues exactly.
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  Speaker 8: I mean Boeing has been struggling to deliver both the
• 13:51
  Speaker 8: seven eight seven as well as seven three seven Max
• 13:53
  Speaker 8: and get the seven Triple seven X, which is their
• 13:56
  Speaker 8: latest sort of generation aircraft certified. So it is not
• 14:00
  Speaker 8: clear on the details for what the sort of intricacies
• 14:03
  Speaker 8: of this Qatar deal are, but potentially these will sort
• 14:06
  Speaker 8: of play out and go out into the next decade
• 14:08
  Speaker 8: because I mean, they've got a significant backlogo aircraft that
• 14:10
  Speaker 8: need to deliver in the short term. So this is
• 14:13
  Speaker 8: not going to be an aircraft deal that sort of
• 14:15
  Speaker 8: happens in the next two or three years. Is going
• 14:17
  Speaker 8: to be a drawn out deal that goes into the
• 14:20
  Speaker 8: next decade.
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  Speaker 2: Well, Bombing's finally digging itself out of its hole from
• 14:23
  Speaker 2: the last several years, so that kind of goes to
• 14:25
  Speaker 2: the big question said, it's all about production, you know,
• 14:29
  Speaker 2: getting planes off that and people just like George Ferguson
• 14:31
  Speaker 2: fro Bloomberg Intelligence says, just focus on the seven thirty
• 14:34
  Speaker 2: seven Max deliveries.
• 14:35
  Speaker 4: That's the number.
• 14:37
  Speaker 2: Is there a sense that Boeing's making improvements there?
• 14:40
  Speaker 8: We have seen Boeing deliveries inch up, and we've sort
• 14:43
  Speaker 8: of they've had sort of milestone in terms of just
• 14:45
  Speaker 8: hitting better production levels on the sevent three seven, And
• 14:49
  Speaker 8: we've heard from Aline customers, including United Airlines, saying that
• 14:53
  Speaker 8: the deliveries of the seven three seven Max are sort
• 14:55
  Speaker 8: of going up and they're waiting on the seven eighty seven,
• 14:58
  Speaker 8: which is the aircraft that we understand that airways ordered.
• 15:01
  Speaker 8: That's also going to be sort of key to getting
• 15:03
  Speaker 8: production and profitability going.
• 15:06
  Speaker 3: What other kind of pitch can Boeing make to outstrip
• 15:09
  Speaker 3: air Bus? Because in a duopoly market, and I appreciate
• 15:12
  Speaker 3: that China has some smaller players, but if you're dealing
• 15:14
  Speaker 3: with a duopoly, like I mean, people got to buy
• 15:17
  Speaker 3: your planes exactly.
• 15:18
  Speaker 8: I mean, we have a duopoly in at the moment.
• 15:21
  Speaker 6: And does that change it all? You think? It sort
• 15:24
  Speaker 6: of has.
• 15:24
  Speaker 8: Changed a little bit in terms of just the sort
• 15:27
  Speaker 8: of there's a lot of politics behind aircraft orders again,
• 15:29
  Speaker 8: and that's something that we've seen where Trump's been announcing
• 15:33
  Speaker 8: these mega Boeing orders. I mean, he announced a deal
• 15:35
  Speaker 8: for thirty planes in Saudi Arabia, and so there is
• 15:38
  Speaker 8: a lot of politics attached to aircraft orders. But at
• 15:40
  Speaker 8: the same time, both Airbus and Boeing are sort of
• 15:43
  Speaker 8: sold out of aircraft until the end of the decades.
• 15:46
  Speaker 8: So it is sort of you you're notching up all
• 15:48
  Speaker 8: these orders. But at the same time, the biggest thing
• 15:51
  Speaker 8: that airlines are talking about is give me my plane,
• 15:53
  Speaker 8: because that's really the biggest question where airlines are saying
• 15:57
  Speaker 8: that plane deliveries are delayed, and the air Bus is
• 16:00
  Speaker 8: repeatedly talked about. How supply chain issues continue to haunt
• 16:03
  Speaker 8: the industry now five years after the pandemic.
• 16:06
  Speaker 2: Yeah, which I can't imagine, although again I'm what I
• 16:09
  Speaker 2: understand is one of the bottlenecks is labor getting the
• 16:13
  Speaker 2: This is not just you know, sitting then assembly line
• 16:16
  Speaker 2: and hitting a hammer. You've got to be really, really
• 16:19
  Speaker 2: skilled at labor, and during the pandemic you lost a
• 16:21
  Speaker 2: lot of that and retraining these folks are getting new
• 16:24
  Speaker 2: people in it.
• 16:25
  Speaker 4: I'm hearing that's a big problem.
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  Speaker 8: Labor is a major problem as well as I mean,
• 16:29
  Speaker 8: just one part being shot holds up the entire production line.
• 16:33
  Speaker 8: I mean, you have millions of parts that go into
• 16:34
  Speaker 8: an aircraft, and e US and Boeing are the final
• 16:37
  Speaker 8: assembly lines where the plane actually gets put together. But
• 16:40
  Speaker 8: then if parts are not available in the sort of process,
• 16:44
  Speaker 8: you can't actually build those planes. And that's where the
• 16:46
  Speaker 8: bottlenecks come up because you have smaller suppliers who are
• 16:50
  Speaker 8: struggling financially. You've got parts in short supply. I mean
• 16:54
  Speaker 8: EBUS talks about it's sort of it's whack a mole
• 16:56
  Speaker 8: where you get one part sorted out and something else,
• 17:00
  Speaker 8: and so it's really a question of getting that supply
• 17:03
  Speaker 8: chain to sort of hum along nicely and then actually
• 17:05
  Speaker 8: building those planes and delivering those planes because you've now
• 17:08
  Speaker 8: got record backlogs at both Boeing and Airbus.
• 17:11
  Speaker 3: So are they exemmed from tariff issues?
• 17:14
  Speaker 8: That's again a really important question. No one's quite clear
• 17:17
  Speaker 8: about in terms of what the tariff impact is going
• 17:20
  Speaker 8: to be because for fifty years almost that the aviation
• 17:23
  Speaker 8: industry has largely functioned tariff free, and the tariffs added
• 17:27
  Speaker 8: complexity to it. Because now everyone's not quite sure if
• 17:30
  Speaker 8: aircraft are example, I mean, you've seen like all sorts
• 17:33
  Speaker 8: of industry players and industry groups making representations to President
• 17:37
  Speaker 8: Trump saying that we would like to have tariffs removed
• 17:40
  Speaker 8: on aircraft and aircraft parts, and so we're trying to
• 17:43
  Speaker 8: see where that sort of actually lands up, because potentially
• 17:47
  Speaker 8: aircraft manufacturers and airlines may have to pay tariffs on
• 17:50
  Speaker 8: planes depending on what they're in and what parts they have.
• 17:53
  Speaker 2: Our thanks to Sid Phillip, Bloomberg Deputy team leader for
• 17:56
  Speaker 2: Global Aviation. We move next to news in the tech space.
• 17:59
  Speaker 2: This we heard that the tech giant Microsoft will cut
• 18:02
  Speaker 2: six thousand workers across the company to reduce management layers.
• 18:05
  Speaker 2: This will amount to less than three percent of total
• 18:08
  Speaker 2: headcount for more. Co hosts Alex Deal and I were
• 18:10
  Speaker 2: joined by anorak Rana, Bloomberg Intelligence technology analyst. First ask
• 18:14
  Speaker 2: anarog for his take on why Microsoft is cutting jobs.
• 18:18
  Speaker 9: The numbers three percent does not say much, but at
• 18:21
  Speaker 9: the same time, Microsoft is not hiring at the same
• 18:23
  Speaker 9: pace that it used to. And I think one of
• 18:26
  Speaker 9: the areas where it is deploying AI is coding or
• 18:29
  Speaker 9: you know R and D. That's an area where we
• 18:31
  Speaker 9: anticipate productivity to improve because of the tools we have,
• 18:36
  Speaker 9: and not anticipating headcount to grow.
• 18:38
  Speaker 10: Up.
• 18:38
  Speaker 9: Second thing, Microsoft is investing very heavily in AI right now.
• 18:42
  Speaker 9: The capex is going to be extremely high, you know,
• 18:45
  Speaker 9: as North doos eighty billion dollars for the next twelve months,
• 18:49
  Speaker 9: and you know that they have to offset some of
• 18:51
  Speaker 9: that pressure on gross margins with cuts on the operating
• 18:55
  Speaker 9: expense side so that the net operating margin doesn't get impacted.
• 18:58
  Speaker 9: So I think I think it's a little bit of
• 19:00
  Speaker 9: all the above.
• 19:01
  Speaker 3: Was this a surprise, not really.
• 19:04
  Speaker 9: I mean three percent to me does not come as
• 19:06
  Speaker 9: a surprise. Three percent is you know, in an environment
• 19:09
  Speaker 9: like right now where companies are not anticipating the real
• 19:13
  Speaker 9: attrition rate. So on a normalized basis, if a company
• 19:16
  Speaker 9: is seeing attrition employee attrition between ten to fifteen percent,
• 19:19
  Speaker 9: we're not seeing that right now, so the company has
• 19:21
  Speaker 9: to do something in order to get back to the
• 19:23
  Speaker 9: normal range of their financial planning. So it is I said,
• 19:27
  Speaker 9: this doesn't sound too much to me, but they could
• 19:29
  Speaker 9: be a little bit more based on you know, who
• 19:32
  Speaker 9: they are trying to get rid of. If it's higher
• 19:34
  Speaker 9: on the paychecks, then I think it has to do with,
• 19:37
  Speaker 9: you know, protecting your margins.
• 19:40
  Speaker 2: An Rock talk to us about just what the investment
• 19:42
  Speaker 2: thesis is regarding Microsoft right now, given some of the
• 19:45
  Speaker 2: tariff uncertainty, given some of the geopolitics uncertainty, what's the
• 19:49
  Speaker 2: call on Microsoft these days?
• 19:51
  Speaker 9: You know, for the last few years we have been
• 19:53
  Speaker 9: saying this is probably one of the cleanest stories in
• 19:55
  Speaker 9: AI and software land because it doesn't get impacted with tariffs.
• 20:00
  Speaker 9: There is some marginal secondary impact because of you know,
• 20:03
  Speaker 9: if we do get into an economic slowdown, But the
• 20:06
  Speaker 9: real benefit for them is they are hosting chat GPT,
• 20:09
  Speaker 9: the most favorite app of consumers right now, and they
• 20:13
  Speaker 9: get the benefit of that. So if you have let's say,
• 20:15
  Speaker 9: you know that your user base goes from two hundred
• 20:17
  Speaker 9: million users to three hundred to four hundred now we
• 20:19
  Speaker 9: are close to about five hundred million users, it really
• 20:23
  Speaker 9: helps Microsoft because they are hosting that app, and as
• 20:26
  Speaker 9: those users use chapid chat GPT for a longer period
• 20:29
  Speaker 9: of time, they get to make more money. So I
• 20:31
  Speaker 9: think that's really one of the bigger benefits where they
• 20:33
  Speaker 9: are offsetting the risk that we are seeing that other
• 20:36
  Speaker 9: software vendors are seeing because of the lack of headcount
• 20:39
  Speaker 9: growth across the tech landscape.
• 20:43
  Speaker 3: So based on that, do we think that We're going
• 20:45
  Speaker 3: to see other tech companies follow suit in this particular way.
• 20:48
  Speaker 3: Like if Microsoft is a creme de la crem as
• 20:51
  Speaker 3: you see it, who's next.
• 20:54
  Speaker 9: So Alex, when you look at it, as I said,
• 20:55
  Speaker 9: three percent does not scare me as much. But if
• 20:58
  Speaker 9: over the next six months we start companies come out
• 21:00
  Speaker 9: and say, well, I'm laying off like seven to ten
• 21:03
  Speaker 9: percent of my workforce, that is concerning. Because that's concerning
• 21:06
  Speaker 9: for two reasons. One, these companies do buy software from
• 21:10
  Speaker 9: other companies, such as a work Day or a sales force,
• 21:13
  Speaker 9: because these two companies are seeing some pressure on their
• 21:17
  Speaker 9: seat growth because their end customers are not hiding as much.
• 21:21
  Speaker 9: So lack of hiding is concerned not just for the
• 21:24
  Speaker 9: companies or the industry themselves, but for the software landscape
• 21:27
  Speaker 9: as well, because primarily this is a seat based monetization model.
• 21:32
  Speaker 2: An RAG before we got all enmeshed in terroris. Over
• 21:35
  Speaker 2: the last few months, we seemingly talk to you every
• 21:38
  Speaker 2: day about the AI story that's kind of full off
• 21:40
  Speaker 2: the radar screen a little bit here for I think
• 21:42
  Speaker 2: Global Wall Street, not for you guys. What is the
• 21:46
  Speaker 2: AI story today? Where what's the feeling in the marketplace?
• 21:49
  Speaker 2: About AI as a growth story for tech.
• 21:52
  Speaker 9: Yeah, one of the things code one of the things
• 21:54
  Speaker 9: that deep Seat did for the entire space was divided
• 21:58
  Speaker 9: the space in two different buckets. Was the AI infrastructure
• 22:01
  Speaker 9: play and the other one is more on the application
• 22:04
  Speaker 9: side of it. And Microsoft I think guided them a
• 22:07
  Speaker 9: little bit towards that framework because when you look at it,
• 22:10
  Speaker 9: Microsoft is really focused on the inferencing side of it,
• 22:14
  Speaker 9: which is hosting the applications. Things that are more on
• 22:17
  Speaker 9: the infrastructure side, whether it's the chip building from Nvidia
• 22:20
  Speaker 9: or a recent hype like core Viv, they have not
• 22:23
  Speaker 9: done as well as some of the other vendors because
• 22:26
  Speaker 9: people are wondering, why do I need to play the
• 22:28
  Speaker 9: infrastructure game because it's CAPEX heavy and we do not
• 22:31
  Speaker 9: know how things are going to shape up in the
• 22:33
  Speaker 9: next two to three years. One thing is sort of
• 22:36
  Speaker 9: certain that even after three years, the number of use
• 22:39
  Speaker 9: cases on AI is going to rise. So you want
• 22:42
  Speaker 9: to be on the application or the inference side of
• 22:44
  Speaker 9: things rather than the infrastructure side of things.
• 22:47
  Speaker 3: Right, and that's going to be a lot more profitable
• 22:49
  Speaker 3: going forward, But it also requires something very different. At
• 22:52
  Speaker 3: the end of the day, Right, you're going to have
• 22:54
  Speaker 3: basically locations that are closer to the actual use point, right,
• 22:58
  Speaker 3: so closer to where I am and where you are,
• 23:00
  Speaker 3: versus out in the middle of nowhere, but you have
• 23:02
  Speaker 3: a huge heavy load. How does that change either investment
• 23:05
  Speaker 3: or power usage, et cetera.
• 23:07
  Speaker 9: That's probably one of the most important questions out there
• 23:09
  Speaker 9: right now. So somebody like a Microsoft is saying, for
• 23:12
  Speaker 9: my training needs, I will go to those data centers
• 23:15
  Speaker 9: that are out in the boondogs and middle of nowhere,
• 23:17
  Speaker 9: and that could be my data center, or I could
• 23:20
  Speaker 9: lease it from somebody like a Corview. But for the
• 23:23
  Speaker 9: application side, I'm going to create or lease smaller data
• 23:26
  Speaker 9: centers that are well connected where I'm going to do
• 23:28
  Speaker 9: the infrancing or from the user point of view.
• 23:31
  Speaker 2: Our thanks to Anna rog Rana Bloomberg Intelligence. Technology analysts
• 23:34
  Speaker 2: coming up on the program will break down how the
• 23:36
  Speaker 2: Chinese AI start a deep seek became world famous. You're
• 23:40
  Speaker 2: listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth
• 23:43
  Speaker 2: research and data on two thousand companies and.
• 23:45
  Speaker 4: One hundred and thirty industries.
• 23:47
  Speaker 2: You can access Bloomberg Intelligence via bi go on the terminal.
• 23:50
  Speaker 4: I'm Paul Sweeney. This is bloomber.
• 24:00
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 24:03
  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 24:07
  Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
• 24:10
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 24:14
  Speaker 4: We move next to news in a pharmaceutical space.
• 24:16
  Speaker 2: This week, President Donald Trump sign an executive order to
• 24:19
  Speaker 2: lower drug prices in the US. You order as drugmakers
• 24:22
  Speaker 2: to lower prices voluntarily or face regulatory measures. Pharmaceutical companies
• 24:26
  Speaker 2: had expected and feared action on drug prices. However, the
• 24:30
  Speaker 2: order was far weaker than they anticipated. For more on
• 24:32
  Speaker 2: drug prices, co host Alex Steel and I were joined
• 24:34
  Speaker 2: by Sam Fazzelli, Bloomberg Intelligence, Director of Research for Global
• 24:38
  Speaker 2: Industries and senior pharmaceuticals analysts.
• 24:40
  Speaker 4: We first asked Sam to walk us.
• 24:41
  Speaker 2: Through why we pay more for drug pricing in the
• 24:44
  Speaker 2: US and whether that should be reduced.
• 24:46
  Speaker 10: The thing in the US is that it's a price
• 24:49
  Speaker 10: that's set by negotiation between farma companies and insurers, pharmacy
• 24:55
  Speaker 10: benefit managers, and payers. It is not dictated by the government,
• 25:00
  Speaker 10: still wasn't until recently, whereas in Europe and many other
• 25:03
  Speaker 10: countries you have a single payer, and that's the government,
• 25:06
  Speaker 10: and they play hardball so they can get lower prices
• 25:09
  Speaker 10: because that's the way they operate, and they had. There
• 25:12
  Speaker 10: are many situations where in the UK the National Institute
• 25:15
  Speaker 10: for Clinical Accident refuses to believe or accept that a
• 25:19
  Speaker 10: drug has got its value added, so it's not even
• 25:22
  Speaker 10: offered even at the negotiated lower price. So that's the
• 25:27
  Speaker 10: issue here, which means that as soon as innovation happens
• 25:29
  Speaker 10: is out in the market in the US, the day
• 25:31
  Speaker 10: that the product is approved, they can get on and
• 25:33
  Speaker 10: sell it. Over in Europe it could take a year
• 25:36
  Speaker 10: two years for a drug to come through, and maybe
• 25:38
  Speaker 10: with this new executive order sometimes the companies will go
• 25:42
  Speaker 10: where I'd rather not launch in Europe.
• 25:45
  Speaker 2: So is it realistic to expect that drug prices in
• 25:49
  Speaker 2: the US will come down?
• 25:51
  Speaker 4: Could come down?
• 25:53
  Speaker 10: See the thing is, Paul, if I'm having a tough
• 25:56
  Speaker 10: time to balance this out. If the intention is for
• 25:59
  Speaker 10: to get the rest of the world to pay more,
• 26:02
  Speaker 10: which of course helps the farmer companies, then I don't
• 26:05
  Speaker 10: see how that helps the US drug prices come down.
• 26:08
  Speaker 9: Right.
• 26:10
  Speaker 10: If they aren't able to increase prices in Europe, then
• 26:15
  Speaker 10: then the government in the US is saying, well, you
• 26:17
  Speaker 10: should give us the same prices to giving elsewhere. Then
• 26:21
  Speaker 10: innovation disappears because at the end of the day, if
• 26:23
  Speaker 10: you cut your revenue by half, you won't have and
• 26:27
  Speaker 10: you spend fifteen percent of that on R and D
• 26:29
  Speaker 10: as what your RND faults simple maths. So how this
• 26:33
  Speaker 10: plays out would be quite interesting to see. And of
• 26:36
  Speaker 10: course we have to also remember that there isn't a
• 26:38
  Speaker 10: price in Europe. So we just check the price of
• 26:40
  Speaker 10: we go V in the UK at the effective dose
• 26:43
  Speaker 10: two hundred and thirty dollars okay. In the US, literally
• 26:47
  Speaker 10: the Novo sells it for four hundred ninety nine dollars
• 26:50
  Speaker 10: to the direct to consumer. Okay, it's about twice as much, okay.
• 26:54
  Speaker 10: So let's say in Europe it goes up to three
• 26:56
  Speaker 10: hundred dur in the UK, and how does that change
• 26:59
  Speaker 10: the US number? And we don't even know whether the
• 27:03
  Speaker 10: company actually gives that price because then there's a little
• 27:06
  Speaker 10: small print. We have been doing a commer with the
• 27:09
  Speaker 10: NHS that are commercial deal, So what is the price?
• 27:12
  Speaker 10: How is the US government going to find that price
• 27:14
  Speaker 10: unless they incorporated into the trade agreements that they're doing,
• 27:17
  Speaker 10: which is what should be happening.
• 27:19
  Speaker 3: Here, So going for so what about the PBMs, So
• 27:24
  Speaker 3: that was singled out the pharmacy benefit managers as sort
• 27:26
  Speaker 3: of the middlemen between insurers and the government and the
• 27:30
  Speaker 3: drug makers, et cetera. What role do they really have
• 27:34
  Speaker 3: and are they the ones most at risk?
• 27:38
  Speaker 10: I would say they are the ones most at risk.
• 27:40
  Speaker 10: I would say they should have always been the ones
• 27:42
  Speaker 10: most at risk, because I don't understand the reason they
• 27:47
  Speaker 10: exist in the middle. I mean, that's the I can
• 27:49
  Speaker 10: show you a chart of how the US payment system works,
• 27:52
  Speaker 10: and it varies by insurance. You can go from one
• 27:55
  Speaker 10: job to another and the cost of your drug goes up,
• 27:58
  Speaker 10: right because you have a different insurance from one state
• 28:00
  Speaker 10: to another. So it's it's that just really isn't is untenable?
• 28:04
  Speaker 10: And it's nice to see that the government administration is
• 28:07
  Speaker 10: not talking about making it easier to sell directly to consumers.
• 28:11
  Speaker 10: So let me give you an example. We have data
• 28:13
  Speaker 10: on the terminal that gives you an ability to calculate
• 28:16
  Speaker 10: what a drug revenue should have been in the past
• 28:19
  Speaker 10: quarter volume times price, right, then you go and see
• 28:23
  Speaker 10: what they actually reported. Sometimes for Insulince, for instance, is
• 28:27
  Speaker 10: eighty percent lower eighty percent. Now the PBM say, I
• 28:31
  Speaker 10: know we passed that on back to the to medical party.
• 28:34
  Speaker 10: Why do you even take it? Why do we need
• 28:36
  Speaker 10: to pay an administrator in the middle here?
• 28:39
  Speaker 6: That's great.
• 28:39
  Speaker 2: So what are your companies within your food chain there
• 28:42
  Speaker 2: in a big farmer.
• 28:43
  Speaker 4: What are they sayings?
• 28:45
  Speaker 2: Because this issue is new, we've been plaining about high
• 28:47
  Speaker 2: drug prices forever.
• 28:49
  Speaker 4: What are they saying as to what is likely to
• 28:51
  Speaker 4: really happen.
• 28:53
  Speaker 10: They're not saying very much, Paul, you know, and in
• 28:55
  Speaker 10: this certal circumstances, the best thing to do is to
• 28:57
  Speaker 10: keep your head down and see how how things work out.
• 29:00
  Speaker 10: And of course today has only just come out, so
• 29:03
  Speaker 10: I think they all to a t say the PBMs
• 29:06
  Speaker 10: are a problem, we need to get rid of it.
• 29:08
  Speaker 10: That so let's say that. But that's not today, that's
• 29:10
  Speaker 10: been going on for ten years. They also say Europe
• 29:14
  Speaker 10: should pay more. But they also say that when you
• 29:16
  Speaker 10: do the net price calculation, in many instances I actually
• 29:19
  Speaker 10: sent you a code from Pascalsorio, the Astrisenica CEO, saying
• 29:24
  Speaker 10: that actually in many cases the prices end up being
• 29:26
  Speaker 10: about the same, maybe a little bit different. So all
• 29:28
  Speaker 10: of that needs to be taken into account, and we
• 29:30
  Speaker 10: need to decide if they're going to push Europe higher
• 29:34
  Speaker 10: to pay more. Is the US also happy to move
• 29:37
  Speaker 10: some of the R and D to Europe. Maybe that's
• 29:38
  Speaker 10: something that the European governments will ask for. Fine, will
• 29:41
  Speaker 10: pay more, but bring some of your R and D here,
• 29:43
  Speaker 10: Bring more manufacturing here. Oh.
• 29:45
  Speaker 2: Thanks to Sam Fazelli, Bloomberg Intelligence, Director of Research for
• 29:48
  Speaker 2: Global Industries and senior pharmaceuticals analyst.
• 29:51
  Speaker 4: This week we focused on a Bloomberg.
• 29:52
  Speaker 2: Big Takes story entitled deep Seeks Tech mad man is
• 29:55
  Speaker 2: threatening US dominance over AI. You can find it on
• 29:58
  Speaker 2: the Bloomberg dot com and the Terminal. The story looks
• 30:01
  Speaker 2: at how Chinese AI startup Deep Seek became world famous
• 30:04
  Speaker 2: and swallowed a trillion dollars of stock value from Nvidia
• 30:08
  Speaker 2: and other big tech companies. For more, co host Alex
• 30:10
  Speaker 2: Steele and I spoke with Austin Carr, Bloomberg Technology Reporter.
• 30:14
  Speaker 2: First asked Austin to give us more background on deep
• 30:17
  Speaker 2: Seek and the individual behind it.
• 30:19
  Speaker 11: Deep Seek, as you'll recall, gained a lot of attention
• 30:22
  Speaker 11: a few months ago when it released its new R
• 30:24
  Speaker 11: one reasoning model as well as another one called V three,
• 30:27
  Speaker 11: And the big deal about this was they sort of
• 30:30
  Speaker 11: claimed to have trained it without access to a lot
• 30:32
  Speaker 11: of the most cutting edge in Nvidia chips, and they
• 30:35
  Speaker 11: also trained their models for a lot less, at least
• 30:38
  Speaker 11: on the surface than a lot of the model's equivalent
• 30:41
  Speaker 11: models here have been trained in the US, and that
• 30:44
  Speaker 11: raised a lot of questions about some of the fundamental
• 30:47
  Speaker 11: notions about how many chips are needed to train these
• 30:50
  Speaker 11: big AI models and how much it's going to cost
• 30:53
  Speaker 11: to develop them. The reason it was also a big
• 30:55
  Speaker 11: deal was just because the startup was sort of very mysterious.
• 30:59
  Speaker 11: There had not been much written about them before sort
• 31:01
  Speaker 11: of January twenty twenty five, and we spent a lot
• 31:04
  Speaker 11: of time the last couple of months talking to about
• 31:07
  Speaker 11: a dozen former employees that worked for this company, it's
• 31:10
  Speaker 11: founder Leong win Feng, as well as forty sources closed
• 31:13
  Speaker 11: to the Chinese AI scene, to really just give you
• 31:16
  Speaker 11: a sense of how their sort of market is developing
• 31:19
  Speaker 11: very differently than what's happening in the US, which is
• 31:22
  Speaker 11: they're doing a lot more with less and sort of
• 31:24
  Speaker 11: just trying to innovate despite the constraints that the US
• 31:28
  Speaker 11: has placed on it with all its export controls.
• 31:31
  Speaker 6: How did he do it?
• 31:32
  Speaker 3: How is he able to undercut the price in such
• 31:35
  Speaker 3: a tremendous way.
• 31:37
  Speaker 11: Well, I think that's one of the big topics that
• 31:40
  Speaker 11: we explore in the story. We trace it actually back
• 31:42
  Speaker 11: to the history. Leong Win Fang had started a quant
• 31:45
  Speaker 11: fund back in about twenty fifteen twenty sixteen, and you
• 31:49
  Speaker 11: actually see a lot of those sort of quant sensibilities
• 31:52
  Speaker 11: looking for efficiencies in the market, which they later applied
• 31:56
  Speaker 11: to their AI models. It was sort of a sort
• 31:59
  Speaker 11: of spinoff off of what they were doing with that
• 32:01
  Speaker 11: quant fund that became Deep Seek. One of the big
• 32:03
  Speaker 11: things they did was called mixture of experts, basically a
• 32:07
  Speaker 11: lot of the sort of when you used CHATCHYPT back
• 32:09
  Speaker 11: in the day, you asked it a question, it activated
• 32:11
  Speaker 11: the entire model. So think of that like your entire
• 32:14
  Speaker 11: brain is activated just for the question two plus two.
• 32:17
  Speaker 11: What Deep Seat did that was a little bit different
• 32:19
  Speaker 11: was chop it up into what are called experts. So
• 32:22
  Speaker 11: every time you ask a question, it actually routes that
• 32:24
  Speaker 11: to the particular part of the brain that is expert
• 32:26
  Speaker 11: in math, or expert in physics, or expert in cooking
• 32:29
  Speaker 11: what have you. So it's a lot more efficient approach.
• 32:32
  Speaker 11: But the downside is it risks hallucinating more or perhaps
• 32:35
  Speaker 11: sending the question to the wrong part of the brain.
• 32:37
  Speaker 11: But that's one of the techniques that they use to
• 32:38
  Speaker 11: really bring this model to life for a lot cheaper
• 32:41
  Speaker 11: and according to the Deep Seek, with a lot less
• 32:44
  Speaker 11: or a lot fewer of in vidio chips than to
• 32:47
  Speaker 11: a lot of the Western players like open Ai have
• 32:49
  Speaker 11: access to.
• 32:51
  Speaker 2: I guess one of the things that surprised people, maybe
• 32:53
  Speaker 2: scared some people, is how deep Seak was able to
• 32:56
  Speaker 2: make so much progress when supposedly all these Western sanctions
• 33:01
  Speaker 2: on technology going to China didn't really seem to slow
• 33:03
  Speaker 2: it down at all.
• 33:04
  Speaker 4: What's the statistic?
• 33:05
  Speaker 11: I think that's that's one of the big ironies actually,
• 33:08
  Speaker 11: if incidentally, I had interviewed Jensen Huang from the CEO
• 33:11
  Speaker 11: of Vidia in May twenty twenty three, and that was
• 33:14
  Speaker 11: the very month, coincidentally that you know, on the other
• 33:17
  Speaker 11: side of the world, China was, you know, getting started
• 33:20
  Speaker 11: with deep Seek, and Jensen told me at the time,
• 33:22
  Speaker 11: you know, one of his big concerns about export controls
• 33:25
  Speaker 11: is it's actually just going to incentivive Chinese chip makers
• 33:28
  Speaker 11: to work a lot harder to develop chips that can
• 33:30
  Speaker 11: compete within videas. But the other nearer term threat is
• 33:34
  Speaker 11: actually software makers sort of their constraints from the sources
• 33:38
  Speaker 11: that we've talked too close to Deep Seek are actually
• 33:40
  Speaker 11: what really drove this company to develop workarounds do a
• 33:43
  Speaker 11: lot more with less, and that's become a sort of
• 33:45
  Speaker 11: founding DNA of a lot of the Chinese startups that
• 33:48
  Speaker 11: we've talked to, a lot of these what are called
• 33:49
  Speaker 11: Ai dragons across Beijing and Hangzhou that are doing a
• 33:53
  Speaker 11: lot more with a less access to compute. And I
• 33:56
  Speaker 11: think that that's, you know, I think the other sort
• 33:59
  Speaker 11: of component of that is they almost have this national
• 34:01
  Speaker 11: pride that we've heard resonate throughout our interviews that really
• 34:05
  Speaker 11: doesn't exist in the US in quite the same way.
• 34:07
  Speaker 11: No one's you know, quite as excited or you know,
• 34:10
  Speaker 11: we don't think of Sam Altman necessarily as a celebrity
• 34:13
  Speaker 11: as the same way as in China. People descend on
• 34:16
  Speaker 11: that campus, the Deep Seek office just to see pictures
• 34:19
  Speaker 11: of him. It seems like a national hero they are,
• 34:22
  Speaker 11: just because he's over able to overcome these constraints, and
• 34:25
  Speaker 11: I think that's a really interesting component of the AI
• 34:27
  Speaker 11: scene in China, which we don't have puite in the US.
• 34:30
  Speaker 3: So about forty five seconds here, what's to prevent the
• 34:33
  Speaker 3: AI companies here in the US doing the same thing
• 34:35
  Speaker 3: that Deep Seek does.
• 34:38
  Speaker 11: There's really not I mean, that's one of the things
• 34:40
  Speaker 11: that you know, they did make their models open source
• 34:43
  Speaker 11: for the so the most part they did, you know,
• 34:46
  Speaker 11: unveil some of their secret sauce, but they didn't quite
• 34:48
  Speaker 11: explain all the techniques and how they did them under
• 34:51
  Speaker 11: the hood. But that said, yes, I mean that was
• 34:53
  Speaker 11: part of the really compelling things. By making this model
• 34:55
  Speaker 11: open source, they really have this ethos. One of the
• 34:57
  Speaker 11: first quotes they put with their first public announcement was
• 35:01
  Speaker 11: takis cheap, show me the code. And so they have
• 35:04
  Speaker 11: this really aggressive, let me prove it to you attitude
• 35:06
  Speaker 11: that I think in the US space, with these proprietary models,
• 35:09
  Speaker 11: they're not willing to do. And I think the difference
• 35:12
  Speaker 11: here is that Deep Seek having an open source approach
• 35:14
  Speaker 11: is really putting the pressure on Google and Open Eye
• 35:18
  Speaker 11: to do something similar or at least undercut the costs
• 35:22
  Speaker 11: of their models. And you can get the same completing
• 35:24
  Speaker 11: power for thirty six dollars through deep Seek, as it
• 35:27
  Speaker 11: would cost one thousand dollars in Open AI.
• 35:29
  Speaker 2: All right, Thanks to Austin Carr, Bloomberg Technology Reporter.
• 35:32
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