Bloomberg Markets With Katie Greifeld 01/23/2024

Bloomberg Markets With Katie Greifeld 01/23/2024

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All right. We are 30 minutes into the U.S. trading day. It's Tuesday, January 23rd. Here are the top stories that we're following for you. Earnings season is on shares of G.E. and United Airlines going in opposite directions after reporting their fourth quarter figures.

We're going to break down what we learned and look ahead to who's on deck today, including Netflix. The streaming giant reports after the bell today, but shares are rallying after news broke this morning that Netflix has paid $5 billion for the exclusive rights to WWE Raw. Company's first big move into live events. We'll talk to Nick Conn, WWE president later this hour. And finally, digging into mining, we're going to get a check on the global copper markets and the business of mining with Robert Friedland.

He is the founder of Ivanhoe Mines. I'm Katie Greifeld in New York. Welcome, Bloomberg Markets. And let's start with a check on the indexes right now. Not too much to report you of the S&P 500, the NASDAQ 100 and the Sox, little changed at this moment. Of course, we know these indexes are

coming out of their all time highs, so maybe a little bit of a breather. You check in on the VIX right now trading with a 13 handle. Not much going on. Volatility continuing to drain out of this market. But as we heard from Amy Silverman yesterday, maybe the VIX isn't the best measure of volatility anymore.

So that's the big macro picture. Let's get micro because G.E. stock, it's dropping after missing estimates ahead of its breakup coming in early April. For more on the future of the company, we're joined now by Brooke Sutherland of Bloomberg Opinion. And Brooke, feels like a lackluster and of course, two days is a conglomerate.

I think there's also probably some conservatism baked into these numbers. I mean, Larry Culp has had a history of setting bars that he can successfully jump over since he's been turning this company around. You also have to remember that the stock is just taken off like a rocket ship over the past 12 months. Just on enthusiasm from investors about this finally becoming a much more simplified story and also a cleaner aerospace story. I mean, if you look sort of across the aerospace supply chain, you have Boeing with its fair share of problems.

RTX is a competitor to GE in the engine market. They've had to recall hundreds of their GTF engines because of a defect involving powdered metal. And GE is just a very clean aerospace story. And so I think you're seeing some of those different dynamics play out right now.

And that's a really good point. On, of course, the performance of GE. It was up 95% in 2023. So clearly already a lot of excitement priced into that stock. But talk a little bit more about the breakup. What does the future look like for the

aerospace and the energy business as a standalone companies? Sure. I mean, so this is sort of the last piece of what has been a slow moving breakup over the course of many years. GE has already spun off its health care business. It's divested assets ranging from locomotives, water technologies, if you want to go back that far. And so this is sort of the final piece

of the puzzle where GE will separate out its energy assets, which includes the gas turbines and then also its renewable energy businesses. And that will leave an aerospace company that is primarily an engine manufacturer with some lingering legacy liabilities from the GE capital of old, primarily that long term care insurance business that is in runoff. That has not been a source of negative surprises for GE in the way that it has in the past. And, Brooke, shifting gears a little bit, I do want to get your thoughts on United. Of course, they reported after the bell yesterday.

Stock is definitely riding high this morning. They beat expectations. But I thought this was interesting. CEO Scott Kirby saying that he's disappointed so far in Boeing. What did you make of that? I think it's a really striking comment coming from one of Boeing's biggest customers.

And I think that just speaks to the series of challenges that Boeing has had. This is not by any means the first manufacturing problem for Boeing, nor is it the first time that airlines have had to worry about whether or not their planes are going to be delivered on time or whether Boeing is going to certify its jet models on the timeline that it's promised to customers. And you can just kind of feel the frustration among airlines. It is palpable. And I think what's really interesting is to look at what United does. Scott Kirby talked about that. The company's order for that Max ten jet. That, of course, has not been certified

yet by the FAA. It is anyone's best guess when that might happen. And United is looking at what a future might look like without those Max ten planes. That raises questions of do they look at Airbus jets? You'll be waiting a long while to get those because the waitlist for Airbus is so long right now. But that just makes it a really interesting dynamic of how much market share does Airbus potentially stand to gain from Boeing's continued challenges? Yeah, unfortunately, this is the story that keeps on giving for Boeing. It definitely feels like.

Brooke, it's great to check in with you. That is Brooke Sutherland of Bloomberg Opinion. Now let's get a read on the market with Sara Kunst. She is Clio Capital managing director. Clio Capital, of course, an early stage venture capital fund that invests in pre-seed and seed stage tech and tech enabled investments. It's great to have you with us and I want to pick up where we left off with Brooke because I'm looking through your notes and you write that you like the travel names, but you're not exactly picking winners in the airline industry here. I mean, for one, I am not an aerospace engineer and that seems like what you have to be right now to figure out which planes are going to be able to keep flying.

But, you know, I think that the booking platforms that conglomerates are super interesting right now. I like booking, I like Expedia. I think that in part because the costs are all over the place with extreme weather all over the place, if your plane gets grounded and you still need to go somewhere, you are on a booking app looking for everything from a bus ticket to a hotel room or a rental car. And so I think that they're a great way to play this sort of record travel that we keep seeing without having to decide, you know, which airline is going to bear the brunt of some of these, you know, plane issues. So let's get specific here. I noted that, of course, you're talking about Kayak, you're talking about Expedia. And we think about 20, 23.

2023 was a great name for a lot of those names. Expedia up 73% last year alone. How much good news is priced in similar to what we're seeing with GE today? So I don't think that the good news is all priced in there. When you look at those p e ratios, they're not insane. These are legacy tech companies that have done a good job of buying up a lot of new things. You know, booking owns OpenTable, which isn't something that you always think about. And and so as we've seen sort of these

returns to kind of going out more and whether it's business or travel or pleasure, you know, we're really seeing that across that conglomerate. I like that there's not sort of a single bet there that, hey, it will be cruises or would certainly have had a huge year this last year, or it will be hotels or it will be any one thing. It's sort of a play on the sector, which is do you think that people are back traveling again? And the data shows the answer is very much a yes.

And Sara, let's stick with this valuation conversation and extend it out. I don't want to get too macro here, but it's really striking to me that you take a look at the S&P 500. It's at its record highs right now. If you look back to January 2022, the last time we were at these levels, ten year Treasury yields were around 1.6, 1.7%. Right now, they're above 4%.

Clearly, it feels like the public markets have worked through that higher rate reality. Has it been absorbed in the private markets yet? The private markets are always behind. I think this is going to be a really big year to tell.

At 21 was such an unprecedented year and 20. In terms of how much money went into the private markets that a lot of these companies, when they saw the interest rates go down, when they started getting calls from their investors, that, hey, you need to make that burn last four years. They they cut you know, they cut part of the teams. They cut the burn. So a lot of these companies are sitting on, you know, tens of millions of dollars of cash, hundreds of millions in some cases. And because the yield, the yields are so high in sort of money market funds, a lot of them are able to virtually fund their companies off of that interest without really touching the principal while they kind of figure out, hey, how do we get profitable in this in this new environment that that wants us to actually make money and not just cool stocks. And so I think that some of that reckoning will start to come in the coming year because people haven't been raising for so long.

But companies have been smart about cash flow and so they're able to kick the can a little bit, kick the can a little bit. Does that apply to the transition from public to private, those big cash hoards that you're talking about? Does that mean that some of these names don't necessarily need to tap the IPO market here? Well, that's sort of a different question because you end up talking about the liquidity piece of it, right? So you have early employees at companies like the Stripes of the World who they have been sitting on that equity in many cases for for up to a decade. They've maybe participated in a tender offer here, and they're sold a little bit on the secondary. Same with the big investors, same with the early stage angel investors. So there's a there's a one in a need for

liquidity that's a little bit different than the day to day cash flow needs of the businesses. And so some of them might IPO. The M&A window feels like it is completely been pretty much nailed shut as we see one acquisition after another gets baked by various regulators. And so I think that we will see more companies like Reddit, like she and say, hey, maybe it's time to go test the markets and go public this year. I'm not going to ask you when IPOs come back, that feels like too easy of a question. I'm going to put a little bit of a spin on it here. Sarah, You think about life in the public markets. We've seen Birkenstock, Klaviyo,

Instacart, they've all gone public and they've all kind of floundered, kind of traded sideways since their debuts. Do you think that's giving some of those would be IPO candidates that you mentioned? A little bit of pause here. It's tough because those 2021 valuations were so high that these companies can be doing incredibly well on all the numbers, but their trading price isn't necessarily great compared to their IPO price, much less compared to their last round of private funding. And we saw that I think with with ALM as well just because it is hard to live up to a valuation that was probably a little bit ridiculous in the first place. And Sara, before we let you go, I do want to get your thoughts on Netflix. Obviously a lot of news around that name

this morning. They do report after the bell. We won't see that reflected in the numbers we're going to get tonight. But how do you how are you thinking about this tax deal in the in the the context of Netflix and their future? As always, it is somehow a great day to be Vince McMahon. You know, I think that this is a

tremendous deal for TECO. That's a lot of money it'll be interesting to see with Netflix. Does this pull in a new subscriber base. It's certainly cheaper than than pay per view right but or are there are they already sort of serving those customers and it doesn't really move the needle.

So I'm really interested to see this this sort of entree into live events and where it goes for them. But I think in general, Netflix has been around for almost 22 years now. They keep innovating, they keep figuring it out. So they are certainly not down for the cow. And I think this is going to be an

interesting evolution. Well, it's certainly going to be a fun earnings call to listen to tonight. Sara, it's really great to catch up with you. That is Sara Kunst.

She is Cleo Capital, managing director. Now let's take a look at what's moving markets, what stocks that we should be paying attention to right now. Bloomberg's Emily Griffith was sitting right next to me. What's going on? Hi.

Well, let's start with Tokyo because like Sarah said, we're really going to have to watch and see what happens with this deal with Netflix. That stock is up 23% right now. That's the biggest jump in over two weeks. Now, like you guys said at the top of the hour, as part of this deal, Netflix is paying $5 billion over the course of the ten year deal. That's more than a 30% increase than what Tyco currently gets for the WWE Raw program.

Do you watch this program? Because I don't I've been learning a lot about wrestling this. I made a plan this morning. I'm going to watch all available 3 hours per week. That is my resolution. It's interesting, though, You have Tokyo

popping. Netflix originally started the day higher. Now it's coming back to Earth. Maybe as people think about that price tag a little bit. So Tyco, who else you got? Well, I'm also looking at Verizon kind of staying within the telecom realm because they reported mostly positive earnings and they added more retail customers in any quarter than they had since 2021. And they had actually been losing

customers for the last two years as AT&T and T-Mobile had been competing. But actually last year, Verizon added a new head of their consumer division who now has this goal to add a million new customers in the year. So right now they've added 318,000. So on track to that 1 million, if they

keep up this pace for this year. Yeah. And this is a stock that needs some good news. We're coming off of four consecutive years of losses. Emily, you've got 30 seconds. Who else is on your list? Three m triple down nearly 10%. Their earnings forecast missed estimates. The quarter was okay, but now they see a

cautious full year outlook. Sales and profit not looking as much as Wall Street wanted it to be. That stock down for its biggest drop now since 2019, the manufacturing sector has kind of suffered. They cited a slowdown in China growth as well as one area to watch. All right. Ending on a download.

I like it, emily. This was fun. Bloomberg's Emily Prevail. Thank you so much. Now coming up, blockbuster subscriber growth expected for Netflix, of course, as they kick off big tech earnings. We'll have the details next. This is Bloomberg. 2024 nominating contests are here and the candidates are making their cases to New Hampshire voters ahead of the primary. New Hampshire is going to speak very loudly.

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Well, Netflix will kick off big tech earnings after the bell today. And of course, the stock is up as analysts predict bumper subscriber growth for the streamer. For more. Let's bring in Bloomberg's Geeta Ranganathan. And I guess I actually want to start with the news of this morning. Netflix agreeing to pay $5 billion over the course of ten years for exclusive rights to raw as well as as well as other programming from WWE.

Now that seems like great news for WWE and specifically for Tokyo. What do you make of the price tag for Netflix? It's definitely a hefty price tag, there's no doubt about it. But if you just kind of look at what Netflix needs to do so they have these two new initiatives that they kind of rolled out over the past few months, which was the new advertising tier, as well as the password sharing crackdown that obviously has resulted in, you know, pretty good subscriber growth.

But I think investors are really going to be looking at, okay, so what's next for Netflix, Right? What's on the horizon? What is what is there to get excited about? And I think this really this deal kind of really speaks to that. So if they want to scale their advertising business and we know it kind of got off to a pretty slow start, they said they have about 23 million active users. But again, they really needed to get to scale. They needed to get to like 50 million, 100 million, 200 million. That's really the number that we kind of want and that's the number that they need to kind of sell to advertisers. And for that you need live content. You need sports content very similar to

what RAW will offer them. And it's content that travels pretty well globally and has, you know, this hardcore fan base as well. And so when we continue to gaze out over that horizon. Talk to us a little bit more about the promise of live events. This, of course, is Netflix's first big move into live events. Is that really the area that they should be pursuing here? I think so. I mean, so they've kind of really looked

at, I think, different things. Right. So the one the one area that they were looking at was gaming. And we saw them kind of dabble a little bit, kind of go after a few, you know, indie studios. But I don't think that was necessarily a game changer. Right? When you think of video games, you don't necessarily think of Netflix as the destination for that. But Netflix is the destination for, you know, just kind of kicking back and looking for something to watch on television. And they know they have that built in

base of 250 million, you know, streaming subscribers across the world. And so now this really is about adding new content, making it, you know, appointment television, if you will, where they can promise advertisers or guarantee them a certain number of fixed, you know, audiences that will kind of come in and tune into a particular program. You know, for for RAW, for instance, we know there are about a 1.5 million to 2 million, you know, hardcore viewers. And so that is something that, you know, Netflix can really capitalize on as they look to kind of make more investments across the space. And not to get too dramatic here, but it

feels like live sports are kind of the last hope for traditional TV. How worrisome is this for cable networks? It definitely is worrisome. I mean, we've seen more and more, you know, tech giants kind of go after events for their streaming platforms. I mean, the most recent example was really Peacock kind of having one of those NFL wildcard games, which which are where they attracted over 23 million viewers, which I think is a pretty good number for a streaming event. You have Amazon, of course, playing with Thursday Night Football. You have YouTube with NFL Sunday ticket. So, I mean, it is going over the top,

There's no doubt about it. Having said that, though, I mean, we're still still seeing some pretty good ratings across the linear TV landscape for, you know, the NFL programming just for sports programming in general. But it is definitely a worrisome trend because there's more and more content kind of travels to streaming platforms. Obviously, the value of that TV bundle definitely gets diluted. All right, Geeta, always appreciate your instant analysis in this case. Geeta Ranganathan of Bloomberg Intelligence, thank you so much. Much more ahead.

This is Bloomberg and. And. All right. It's time now for social climbers. A look at the stocks making waves on social media this morning.

And first up, we have United Airlines, the carrier beating earnings and revenue expectations in the fourth quarter and also providing a stronger than expected outlook. Next up, 3 p.m., the manufacturing giant forecasting 2024 profits and sales growth below Wall Street estimates as it contends with sluggish consumer demand. And finally, we have D.R. Horton, the home builder, reporting weaker than expected quarterly orders. The company, however, meaning optimistic as the spring home selling season approaches, but super high mortgage rates. Of course, I would imagine are still a problem.

But in any case, you can follow all the latest company buzz on t r e and go on your Bloomberg terminal. But now let's get back to Netflix's deal to acquire exclusive rights to raw and other programming from World Wrestling Entertainment. We're joined now by Bloomberg Technology co-host Ed Ludlow. And Ed, this is a really interesting move for Netflix and a really good move, it seems like, for WWE and Tokyo, of course. Yeah, it seems like a good deal for Tokyo. You know, from the Netflix perspective, it's their first proper foray into regular long term live programming.

Sources are telling us that the deal 5 billion over ten years. So 500 million a year if it's structured that way. But it also gives. WWE, this distribution globally, it's very interesting. The exclusivity that Netflix has is on raw Live Raw being arguably the more popular of the two franchises or brands that X USA. In other words, internationally,

exclusivity on distribution for live content and pay per view, which that's a lot of eyeballs around the world. And I think Geeta just told you right there is a core loyal following for RAW and the other brand smackdown. But what about a new audience? Mm hmm.

Yeah. And it makes sense that Netflix may be trying to capture that add another avenue of growth there. I'm interested from the tech perspective, of course, why go with the streamer here? Is that basically a bet on where the future eyeballs will be? Yeah. When they did the smackdown deal with NBC Universal.

So there are two franchises of brands, right? Small, Raw and Smackdown, different rosters of talent, different times, slightly different audiences. But when that deal was done with NBC, Universal T Care shares kind of were a bit negative in the sense that they didn't get as much money for it as they thought. Raw is the more popular brand, and that's kind of the mainstay of this deal. And the question is, if you are you're

an existing Netflix user and you've never watched wrestling before or at least WWE wrestling, are you inclined to tune in? And that is the bet that TECO is making. But again, let's go back to the financial terms. Teco is getting a big chunk of change for it, so it seems like a bet or risk that may pay off, at least financially. I will say as someone who has Netflix but doesn't watch wrestling, I mean, maybe I'll do some anecdotal reporting there.

But Ed, just in 45 seconds or so, I mean, is this the future for Netflix live events? They did their toe right. They dip their toe with comedy and they did their time with golf. And wrestling is not a universally loved sport globally. So it's a testing field. And, you know, executives have been, let's be honest, inconsistent about how they've talked about the future of live events on their platform. Think of WWE as entertainment more than sport. I think that is a conversation that we

should have with the companies going forward. Well, we are going to be looking forward to that conversation pretty soon. Stick with us. Ed Ludlow, of course, Bloomberg Technology co-host. You want to take a look at these shares right now, how they're trading on the heels of this news.

Of course, you take a look at Netflix, currently about half a percent higher. Totally different story. You take a look at Tokyo, currently up about 18% or so. Obviously, a bright future there. We welcome now our TV audience and our radio listeners for more on Netflix's deal to acquire exclusive rights to raw and other programming from WWE. I'm pleased to say we're joined now by WWE President Nick Khan. And still with us is Bloomberg Technology co-host Ed Ludlow.

Ed, take it away. Yeah. Nick, welcome to the program and thank you for your time. This is interesting. I don't think anyone saw this coming, really. Let's start with this cultural and audience question, right? Because the deal focuses on raw and the value of the deal. We're reporting 5 billion over ten

years. But there might be an audience out there that's like the most loyal Smackdown fan that says, Hey, I'd love to be watching WWE Smackdown on streaming platforms as well. Sure. Understood. Look, we're pleased with the deal and we love the fact that Netflix was willing to take a bet on us. As we know, they had said previously that they were not into sports rights. The good thing about WWE, it's sports entertainment, as you said before the quick break there.

So we're an entertainment property as much as we are a sports property, 52 weeks a year, live consistent programming, an audience that is actually quite global. If you look at India, India is not part of this deal. But if you look at India, where the second most popular sport in India, if you look at the United Kingdom, where the fourth most popular sport there, this deal will take effect in the U.K..

So in addition to the United States, it allows us to gain even a greater global footprint as we look to expand the business. Well, Nick, I want to talk a little bit more about the decision to go with Netflix, go with the streamer versus staying with a Comcast, for example. Did this purely come down to numbers where you were going to get the better deal, or is this in effect a bet on where the future eyeballs are going to be? Well, look, we continue to love NBCU.

We have Smackdown on USA premiering this October. There we have our premium live events formally our pay per views like WrestleMania on Peacock exclusively in the United States. They've been tremendous for us with Raw. It was yet another test of someone new

in the space, obviously an established streaming entity, the streaming entity, if you will. It was a good bet by us and we think a good bet by them. Nick There's kind of two sides to it, right from 2025. The regularity of a by appointment tuning in to RAW. And then there are the pay per view events and specials throughout the year. Historically, if you think about

Showtime, the distributor got 30% from a revenue split perspective. My understanding is that if you're a Netflix user, there's no additional cost for WrestleMania or those set piece events. Are you able to clarify that if you're not a Netflix subscriber, you do just pay a normal pay per view charge? And how will you and Netflix split those revenues globally? Because a lot of this is ex-U.S., right? It's an international deal, correct? You're 100% correct. There is no UPCHARGE for WrestleMania or the other premium live events anywhere in the globe where it's on Netflix.

No. UPCHARGE the 30% you talk about the traditional pay per view model. WWE was the first mover to get out of that space in 2014 when we started WWE Network, which brought WWE direct to consumer on our own OTT platform. From there two or three years ago, we

license that content to Peacock. That was when the streaming wars began. What we realized was a company of our size. As great as we'd like to believe we are, we're not going to compete technologically with the Amazons of the world, with the Netflix of the world, with the Nbcu's of the world. So it made sense to start it in 2014 to get rid of that excessive charge that in demand dish direct, we're charging for pay per views and to bring the costs down for our consumer. We think Netflix furthers that. Let's talk about ad pricing a little bit more here. Does this give you greater ad pricing

power, this deal? We think so. Look, you've seen what Amazon's been able to do on their ad supported tier. Netflix is going to have great success in that space.

WWE, again, 3 hours a week on RAW every week allows Netflix to monetize this deal in the advertising space in a way that has not been seen before in Net Raw has this kind of super loyal and sizable audience. But there must be a part of this deal where you're like, okay, we need to think about the future and growing a new audience. And I wondered if there's any terms in the deal where Netflix goes away and produces a behind the scenes kind of documentary exclusive to Netflix that introduces WWE to that new audience. Think about like, what am I thinking of? Drive to survive in Formula One and the success that they've had bringing a sport to a new audience. It would be a mistake by us at WWE to

not do that with Netflix. So assume that what you said is exactly what we're all thinking. We being Netflix and WWE, you saw where Drive to Survive did for Formula One. As you just mentioned, we think the WWE

audience are already big on a global level, only gets bigger with a show like that. So potentially a lot to look forward to. So it sounds like the WWE and Netflix are going to work on things outside of Raw here, that it's not just about this one program. Keep in mind that WWE, we have a whole treasure trove of intellectual property that is largely untouched. So if you look at what Disney has done, certainly that was through acquisition with Marvel, with Lucasfilm.

If you look what Warner Brothers Discovery did when they acquired DC a long time ago, you now have this treasure trove at Netflix that's available to produce. So things like The Undertaker characters that have been created over time. We're looking forward to getting to all of that with Netflix as well. Nick A really fantastic question that our producer Joe Chaffey has is about tech and infrastructure.

This deal doesn't kick in until June 2025. Is that because Netflix needs time to know they can support a live stream of that scale weekly? No, no, not at all. It just timed out budget wise to start in January.

But I'll tell you this. WWE with the WWE Network that I referenced from 2014, we're turnkey programming. So, number one, Netflix knows how to distribute it and make sure that it goes around the world live. It's not going to be any issue. We also know how to do it. So the partnership, even on that level,

we think it's going to be a great thing. Nick, 10 seconds. How many new eyeballs we get in 2025 that you don't have already through this deal? We'll look against the College Football Playoff, the two semifinals game on a monday night a couple of weeks ago. You're talking about Michigan, Alabama. In the game, we did a 4.6 in the demo with millions in the overall rating, again, against stiff competition. So we think with the Netflix reach, it's

millions and millions around the globe. We're excited about the whole thing. All right. Our big thanks to Nick Conn, WWE president and, of course, Bloomberg Technology co-host Ed Ludlow. Now, let's switch gears here because, of course, metals, they remain under pressure. That is despite production cuts from

companies in the space. And for more on insight into the challenges in the metal market and the outlook for 2024, I'm pleased to say that we're joined now by Robert Friedland. He is Ivanhoe Mines, founder and executive co-chairman.

Great to have you in person. Let's talk about copper, because you take a look at the price of copper were around $83,000 or so. We know that we've seen plenty of supply shocks in this market and it feels like the price has barely budged. Does this come down to a demand story? Goldman Sachs is just published today calling for over $9,000 a tonne copper this year. We think copper is making a bottom. I'd be willing to wager on 9500 a tonne before you go down to 7500 a tonne.

The the physical market is very, very tight and now in deficit and with the Fed likely to cut rates, the dollar denominated price of copper is likely to go up a lot this year by the middle of the year. Well, let's let's talk about China, because I don't need to tell you that a lot of the bearish cases for copper, they really come back to sluggish Chinese demand. How does that factor into your pretty bullish view here? It's not true. China consume more copper last year than any year before.

So Chinese demand is still very strong. Everybody knows about the weak real estate market in China, which is probably 20 to 25% of their economy. Military demand, national security demand. Demand for militarisation is very high and so physical offtake is very strong and inventories are extremely low. So really, this is like a powder keg ready to explode as soon as the Fed cuts rates in the second half. So a red herring on the Chinese demand. Forget about the Chinese demand.

There's India is growing. Europe is growing. The rest of the world is growing. And the demand for ESG and the greening of the world economy remains very strong.

All right. I'm going to forget about it for at least a couple of minutes. Let's talk about 5,000 because you joined BTV last month. You made waves by saying that we need a copper price of 5,000 a tonne to really stimulate and sustain new investment in copper mines. Of course, copper is at almost half of

that price today. What is the road to 15,000 look like? What do we need to happen? We've seen molybdenum go from a dollar a pound to $30 a pound. We see metals go crazy. When do you need them? If somebody is pointing a gun at you. You need that copper to shoot back. You don't do an MPV model. So we see massive military demand. Europe is rearming. Japan is rearming. Taiwan wants to turn into a big

porcupine. The United States military is worried about a shortage of 155 millimeter Howitzer shells. What do you think the world's army is made out of as all this shooting goes on? And meantime, we have a huge amount of humanity that wants to see the world economy building electric cars, windmills. So everything you touch requires copper metal in the modern economy, including this wonderful studio, very city, smiling at each other. Well, Robert, I have to say, I hope I

never need copper that badly. But let's assume that we stay around these levels, $83,000 or so. What would that mean for the legacy mines that are in business right now? The legacy mines are in the process of slowly dying. They're very low grade. They're generating more and more global warming gas per unit of production. It's really, really difficult to bring a copper mine into production.

It usually takes 20 years or so for a Tier one mine to be discovered, built and constructed. And we've had such a long period of time when all the money in the world went into your previous guest, like Netflix or broadband or wireless or really sexy disruptive technology. We didn't put money into mining, into basic raw materials.

And so this is the revenge of the old economy. And suddenly we have a shortage of these metals. And so it's inevitable that the price will rise. It's only a question of when. Well, let's talk a little bit more about those legacy mines, in your words, in the process of slowly dying, what sort of timeline does that play out over Codelco, which has been the largest historical producer in Chile, has watched production go down, down, down ten years in a row? Mm hmm. So the Chilean mines at a high elevation take large amounts of electrical energy.

Their grid is powered by coal. There's a huge amount of global warming, gas period of copper. What's the point of trying to mine copper to green the world economy if we have to destroy the environment to find that copper? So the problem is there aren't very many places where you can build a green new copper mine to put into your Tesla or your microwave oven or your washing machine. Well, the thinking is that, of course, as we think about that backdrop, that mines are going to increasingly need to be developed in really tough jurisdictions. Of course, you do have a successful track record there. You think about Mongolia, the Democratic

Republic of Congo. How does that differ? Building a mine that. Versus Australia or the United States, for example, Australia. The United States are very difficult jurisdictions. There's no easy mining project anywhere in the world. You take the Pebble Project in the United States, it's been legislated out of existence by the US government.

The resolution project in Arizona has been delayed for 30 years in a permanent dispute with the San Juan Apache Nation. So even in developed societies, it's very difficult to build a mine. From our point of view, we go anywhere on the planet where we see the best store and the opportunity to produce metal in the greenest possible way. 99% of electricity in the Democratic

Republic of the Congo is hydroelectricity, which enables us to produce the metal with the lowest amount of global warming gas per unit of copper produced. And soon we'll have differential pricing in metals. The green of the production of the metal, the more the premium and the dirty of the production of the metal, the greater level of discount airbags. Technologies is now starting such a

market in Singapore. Given your differential pricing on the ESG characteristics of the metal produced, well, let's talk a little bit more about your project in Congo, because that produced almost 400,000 tonnes of copper in 2023. You're also still expanding the mind as well. How could could it get how big could it get? Rather, We're scheduled to be the third largest copper complex in the world in 2025 and we have our sights set for sure on number two with new discoveries. And God willing, it's possible to be

number one. There's an enormous endowment of copper metal. The Congo was the world's largest historical producer of copper until the low grade copper mines of Chile were invented in the 1960s. And the Congo is now the second largest

producer after Chile. This is something new. And so we think the Congo has the potential in mineral production to be number one, especially since the United States government has sponsored the Low Vito quarter to connect the copper fields of the Congo directly with the ocean through Angola. That little veto quarter, which the Biden administration has backed with the G7 nations, is really going to improve the ability to produce copper cheaply and in a green way in the Democratic Republic of the Congo. Well, Robert, I really hope to check in with you soon. Great to see you on set. That is Robert Freeland of Ivanhoe

Mines. Now let's turn back to the equity markets and get a check with Abigail Doolittle. Well, Katie, we're seeing something that we haven't seen in a few days, and that is the possibility that the S&P 500 will not be climbing. Coming into today, we've had a solid rally for the S&P 500 up three days in a row. Right now we have that index fluctuating nonetheless, that fluctuation. You can see that we're still pretty green relative to that overall time period.

Let's see how we close out the day. As for what's happening beneath the surface, we have a lot of big winners to take a look at relative to earnings. RTX up 7.5%, its best day since November of 2020. They beat estimates that fiscal year cash flow outlook solidly above what the street was looking for. United airlines off of its highs, but still a solid gain of nearly 5%. They beat profits by about 20%. The midpoint of the 2020 for profit view is better than expected.

Investors cheering that, especially after Delta a couple of weeks ago shaved their profit view in a way that investors did not like. Verizon up 5.9%, the best day of the year, modest beats, but they added the most mobile customers in two years plus strong cash flow. Estee Lauder I'm not exactly sure why this one is up.

Katy. It's the fourth best stock for the S&P 500 from a percentage basis. They report in two weeks. One thing that could be happening, 32% or so of their revenue comes from China.

And of course, there was a Bloomberg exclusive recently. The idea that China may be considering putting in stimulus as a result. The Nasdaq gold and Dragon index today right now having its best days since July of 2023, up more than 5%. And that rescue package, Katie, if it happens, could be as much as $278 billion. China's tech stock investors cheering that for sure.

Yeah, we'll see if that actually comes to fruition. Bloomberg's Abigail Doolittle. Thank you so much. Now coming up, Johnson Johnson's fourth quarter sales and earnings beat analysts estimates. We'll speak with Joe Wolfe, Johnson and Johnson, CFO on Wall Street Week with David Westin.

That's next. This is Bloomberg and. And. All right. It's time now for our daily Wall Street Week segment with Wall Street Week. David Westin. We're taking a look at JNJ shares. They're falling after the company said

pharma sales will be lower in the second half of the year. Thank you so much, Katy. Great to be with you. We're joined now by the chief financial officer of Johnson Johnson.

He's Joe Walsh. Joe, thank you so much for joining us. So you did do a bit better than what most people expected you would do going backwards. There's some guidance going forward. Give us your sense as the CFO of Johnson and Johnson, what do these numbers tell us about where Johnson Johnson is and where it's headed? Sure. Good morning, David. Great to be with you today. You know, Johnson and Johnson had a tremendous year in 2023, and I think it was really capped off by a very strong fourth quarter. Whether you're looking at our innovative

medicine, what our pharmaceutical group is called now, or medtech, with 9% growth in each of those segments in the fourth quarter really capped off a really prolific year and where we solidified our foundation. You know, as I look forward to 2024, that positions us very well. We had the opportunity to deploy capital not only with an acquisition of Abiomed, a heart pump manufacturer 13 months ago for 7 billion. Throughout the course of 2023, we deployed or announced capital commitments for another $3 billion, more than $3 billion for more than 50 licensing deals or smaller acquisitions. Now, those typically aren't headlines when we sign them, but they often become headlines for patients when we launch products through them. So we fortified our pipeline.

We we surpassed all expectations. We had this time last year for 2023, and we feel very comfortable with the guidance that we've provided for 2024. I know in the tie up there was a little bit of information of that. Sales in for pharma in the second half of this year might be a little bit softer. That is not a surprise to us. That is a loss of exclusivity, unchanged

largest product ever, STELARA. But we are so well positioned with our pipeline of products across oncology, immunology and neuroscience to be to position not only to just digest it, but to actually grow through the loss of that largest product. You took me straight to Celera was going to be my question is that comes off of patent.

You're going to have to replace that in the pipeline as you're prepared to the pipeline. Can you do that without buying some other company? Oh, we certainly can, David. Again, we had the chance to speak with investors in December at the New York Stock Exchange with our Analyst Day. And what we highlighted to them was ten assets within our portfolio that have the opportunity and really the potential to be more than $5 billion in peak year sales. So that doesn't only bode well for the short term here of 2024 and 2025 as we digest the law. It really bodes well for the second half of this decade and into the next decade. We also should not overlook the fact

that our medtech performance has, quite frankly been stellar. We had 9% growth in the fourth quarter. We've been on a, I'll say, a cadence of annual improvement in terms of the growth out of that segment.

And we are now playing in the upper echelon of our peer set there. So we feel very confident about not just what lies ahead in the near term, but also the long term. Joe, help those of us who are not scientists understand what your clinical trials are doing right now as you're developing new drugs to try to replace the wounds you're losing, Which of the ones that you think hold the greatest promise? And I guess what I mean by that, both probability of success and also magnitude. Yeah. So the ones we identified cover a number of areas such as bladder cancer.

That has a very nice feature in that it's not only a therapeutic, but it also is a pretzel like device that sits on the tumor itself, which really minimizes, I would say, side effects that are typically come with cancer treatment. We're also in lung cancer, our multiple myeloma portfolio. It's a very heterogeneous disease. You need therapeutics for all levels of the disease.

We have a strong player in Darzalex. We also have Cavo Talbot and Teck Valley. So we are very well positioned on that front. I would say we have some about five readouts this year of phase three data. Some of that will be in IBD, the immunology space for ulcerative colitis and Crohn's disease.

We've got psoriasis with an oral targeted oral peptide which holds the promise should it be successful of biological efficacy, but in the convenience of a pill. So there's a number of elements that we're we're in right now, David, that I think positioned us very well. And usually when we speak about Amgen J we feel very confident about the science. You can never be 100% sure, but we're we're very bullish on all of these assets. Joe I can't talk to anybody in unison talking about weight loss or you can call it diabetes if you like.

You can take your pick there. But do you have a dog in that hunt? Do you have a prospect of really surely cashing in on what some of your competitors really have done extraordinarily well with? Yeah, no. And it really that's a testament. To the industry itself, how we continue to come up with innovative medicines to address serious unmet medical need. Johnson Johnson currently does not have a GLP one or applying obesity. We tend to focus and do really well in areas like oncology, neuroscience, immunology, those areas where we have deep scientific expertise. Clinical insights is proven to be best for us. I would never say never, but right now

that's not one of our focus areas. But the good news is there's probably upwards of 8 to 10 companies currently in that space. So we can probably expect to see improvements there.

One last quick one, Joe. I generally, as all the talk, is that going to help you in medtech? Yeah. You know, David, it's kind of funny. We have about 2 to 3000 data scientists within our employee workforce today.

It is helping MedTech as our very distinguished Chief Technology officer, Jim Swanson says it's more of a productivity play for us right now. So we're getting better predictive analytics. It is helping with surgeries as you can have prototypes as to what a patient may how they may interact with certain surgical procedures.

I would say there's promise, however, with insights about clinical data and how can we develop outcomes that are much more insightful than what maybe even a human can grasp? So potentially going through reams of data, millions of algorithms to find a biomarker or certain string of assays through the genetic code, that may work specifically well. All right. Our thanks to Joe Walsh, Johnson and Johnson, CFO, and, of course, Bloomberg Wall Street Week host David Westin. And tune in to Wall Street Week on Friday.

Former U.S. Treasury Secretary Bob Rubin joins David to talk about the country's fiscal future. This is Bloomberg. Let's take a look at some of the stocks hitting highs and lows. On the high side, We have AbbVie, the pharmaceutical company hitting a 52 week high. Barclays maintaining its overweight and raising its price target to 75. Economy technology seen a 52 week high

as well after Citi raising its price target on the company. And I'll say well it was there by the insurance giant also higher a little bit treading water Bloomberg intelligence out today saying that the company's low cost tag trophy losses could fuel a strong ROIC. That's the good news. On the bad news side, as you swatch

hitting a 52 week low after it failed to hit the sales record predicted by its CEO. So those are your highs and lows. And let's take a look at what's coming up, because the we family office, the CEO coming up next, joining Bloomberg Technology with Ed Ludlow. This is Bloomberg.

2024-01-31 15:47

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