>> the fed is telling us that it

wants to start the easing process in the middle of the year and it is willing to do so, getting uncomfortably high inflation. >> restrictive policy. >> it's clear the fed is on the path to lowering rates. >> the risk i'm concerned about is sustained re-acceleration that the fed cannot live or some point on rate cuts. >> they need to be open to the possibility that inflation is sticky. >> this is "bloomberg surveillance." jonathan: let's get you to the long weekend. live from new york city this weekend, good morning, good morning. closing out q1, the month of march, with a stellar month and quarter of gains, reflecting on the speed for governor wallick -- governor waller.

yesterday evening he talked up the fact that maybe they should reduce the amount of cuts this year or push back the timing. they are in no rush. yield utter -- we heard from luke hickmore just 10 minutes ago, "waller is ignore and move on." lisa: seems that in the market there has not been a huge pickup on the potential for cut rates. there's a speech on the holiday, but the markets aren't open, so does he give credence to waller as the mainstream? jonathan: it's the right question to ask, unemployment is below 4%, looking sticky. we are on the path back to use his own question, so what's the rush to do anything? annmarie: economic data has been sparse, barely there with soft retail sales. now that this is public, which

he set behind the scenes, how difficult will it be for chair powell to heard those cats? -- herd those cats? jonathan: if you look at how the dots group around each other, they got pretty close, and you can see the direction of travel in the committee. lisa: this is the jonathan ferro scenario, where they sat around and negotiated, settling on june. there won't be another one for the rest of the year. jonathan: earlier and fewer might be the compromise. lisa: raising the question, are people really sincere in this narrative? it could be supportive of risk. is that true? ultimately, if you can't cut much, if it is a shallow cutting cycle with a higher neutral rate , you have to believe that it matters if it's 5% or 3% that we are talking about.

jonathan: i'm going to sound like a fed official, it will be highly data dependent. based on the current stance, they seem more biased on one part, the mandate, then the other. a weakening labor market, that will be ready to go. if that's where the combat -- consensus is, the doves win their argument and they went fast. lisa: that's the case, and i totally buy it, why are we not seem more concerned about higher inflation for longer? does the market agree that it will naturally disinflation and we will get that as the fed moves at a slower pace? this is the question that hasn't been resolved in a market that seems flush with cash and ready to go. jonathan: gold? lisa: yes, but why are treasury yields not? breakeven rates, it's a mystery to me. if you are going to play this, gold is inconsistent.

there are indirect ways it's not playing on the other side where people by the message that seems like what i heard. jonathan: equities turning positive on the s&p 500. the bond market yields look like this on the 10 year, 4.2180. market momentum is q1 comes to an end, that's coming up this hour. tiffany wilding on the fed inflation data. the merck ceo, robert davis, on the weight loss drug revolution. stocks are on track to win a quarter on the high. s&p 500 closing at another record for a fifth month of gains. looking back on this quarter, it was full risk on across asset classes, sticking to the bottom of fundamental approach, but be careful with that momentum is trends can turn quickly. matt joins us with more.

great to catch up with you. in person, as well. been a while. governor waller, do you agree with luke hickmore of aberdeen? matt: that made a lot of sense. during the fed meeting, he kept saying over time. it's like when i tell my children to clean the room, they are like yeah, over time we will clean the room. you have to think about this more with i already. inflation is starting to come back. data dependent. i love that. that's a great way for the fed to think about this. but if you are revising the forecast for cuts, that's not data-dependent. we have a communication issue right now and they will have a tough time navigating this. the markets are really dependent on them being dovish. if they push back, it's going to be tough. they should. they don't want to fight this battle all over again this year. jonathan: i always love your

storytelling, let's run with it. let's say you are convinced they are going to clean the room anytime soon. that's what lisa is asking. matt: some are in the position for higher interest rates, and because of that the longer end of the curve will see higher rates, if they let inflation run like this. in our view, yields are up on the yield curve. it's the longest inversion ever. the bond market is a mess just trying to interpret this. more inverted, that's the other side. we think they will take longer to cut, but it will be more than the markets expect, because something has to happen. got to be the adults, telling their kids to clean the room, but they are not right now. lisa: they are basically saying

throw more things on the floor, we will get to it later. what gives you conviction that that is the path they are going to take if that's not the signal they are giving? if markets are running with that and not pushing back. matt: the stars in the sky, remember that analogy? if this is the neutral rate, why isn't inflation or the economy slowing? it's hard to say that they are being restricted with high yi spreads. they seem to be trying to turn off the faucet, but the shower is still running. liquidity is coming into the market and you have got to use -- maybe this is a bigger picture conversation, but i think the fed to be market and not academic based. jonathan: jumping in, matt, it doesn't matter, this is who they are. matt: historically speaking, this is usually a time in the

rate cycle with the fed is at what we think is the neutral rate and you have to be careful. it looks like you can get a late cycle pop in risk assets with the fed looks like they are not going to raise rates anymore, but then the tide goes out. warren buffett and quote, see who is swimming. make sure you don't have the risk. if it is commercial real estate, things can break and all of a sudden the fed has to turn. it seems like powell might have something up his sleeve. like there is a risk that isn't on the surface and i'm playing this a bit easier, and i wouldn't be surprised if there is something under the surface. lisa: how tough is it to play psychiatrist to jay powell in you think maybe he's playing games with us and that he knows something? this is where we are at. matt: they do this summary of for of guidance -- summary of

guidance that is supposed to help, where in -- back in the day said you are not doing much, just sitting there. now it's hurting. basically, that was the rate cut. i think about it like fight club, the movie. you don't talk about fight club, that's the first rule. don't talk about rate cuts until you need to talk about rate cuts . the market was a great, price it in. that creates the risk on inflation impulse and now we have to deal with it all over again. lisa: they upped their own inflation target and we had this conversation with a lot of people. to point something, something the fed is targeting, do you agree with that? jonathan: it's pop -- matt: it's possible. in the summary of economic projections, it doesn't take until 2026 that you see 2.0 overtime. clean up the room two years from now.

from then, it will be about the energy sector as well. oil prices are coming up. so, if you have the sox rallying without the inflation impulse, that's bad. i think about march madness, bracketology right now, energy stocks were the best performer in the corner. -- quarter. if that keeps going, there will be gas prices, disruption to supply chain going on. i think they have to change their tune as the year goes on. lisa: what are you buying? matt: overweight u.s. international, trying to find profitable businesses. we do not have some of the foam oai or the crypto. lisa: how hard has that then, though? matt: ai allies, nvidia has done pretty well -- ai-wise, nvidia

has done pretty well. we have been overweight back, but at a reasonable price. on the bond side, we had reasonable dragon. i -- dragging. i look at yield spreads, and that was a great tweet by the way -- we have got to watch this. the upside is 50 basis points lower. we could go 8% to 20% higher. that's another symptom of the market, how tight the spreads are. overweight higher-quality in the bond market with enough on the ball for the overweight u.s. equity caps, but frankly we are sitting here waiting. nothing is on sale, other than high quality bonds. it's a hard trade. jonathan: i love how many people have a bloomberg terminal and rely on glam out to get their tech updates. but the way you talk about them is as a reflection of complacency and not strength. why do you see it as a former

and not the latter? matt: it was 2007 to 2021. after those levels, yield was down on total return. 7%, negative in 2007. this is, again, going back to that warren buffett and quote, if the tide goes out, the risk on sentiment has to be stretched. i mean we always think about risk management, it is part of our dna. right now as everyone goes to the side of the boat, we are saying hey, there's stuff that's higher-quality in the defensive side of the market that we should be looking at. jonathan: that's sensible. when we hear stuff like this it's always from the other side and when i listen to you, the fed, to borrow from soros, they can't shake the events that they anticipate. if you can establish having a biased response on economic data

over economic data points, it probably makes weaker data less likely because conditions are so loose. credit spreads, tight as they are, the way i think about it is we are already worried about maturity and we have taken a massive chunk out of it in the first quarter of 24. high rates are less of a thing to worry about then they were at the start of the year. matt: you still have all of this communication, analysis, it's what powell is thinking, but we haven't done anything. we still have qt, 5.5, a huge maturity wall. there's 50, 60% of those companies that have to refinance. so if they don't do anything -- that's why i'd like to the wall or comments, it was refreshing. just don't do anything, let it go, sit on it, be patient. powell seems like he wants to cut. this looks like it will create

more issues for him and it is a circular feedback loop. jonathan: a chairman that wants to cut, that's the argument that will be settled later this year. thank you for joining us, matt. equity futures are unchanged. with an update on stories elsewhere, with your bloomberg brief, here is yahaira. yahaira: home depot says that purchasing srs distribution in an $18 billion deal. the world's largest home improvement detailer saying the acquisition will beef up their current business as they make a push to win over contractors, roofers, and other building professionals. home depot says they plan to fund the deal with a mix of cash and that by the end of fiscal 2024. the walgreens alliance narrowed its guidance as it eat second quarter profit revenue expectations. the drugstore chain cited a challenging retail environment with lower earnings due to

selling your -- nearly $1 billion in shares in february and they have been looking for ways to increase cash flow, including tim wentworth's strategic relief next month. the company will evaluate its assets, including retail locations, primary care providers, and more. the treasury secretary, janet yellen, slamming the chinese use of subsidies to boost industry. speaking at an event in georgia yesterday, saying that u.s. manufacturing is facing pressure from imports flooding the markets. comments ranging from green energy products to electric vehicles, saying that this will be a key issue in her next trip to china, which is expected in the coming weeks. that is your bloomberg brief, john. jonathan: matt made me sound raging, but that was not my intention. next, the crypto world, moving on. >> we suffered a lot of damage

to trust in the end of 21, 22. getting that behind us is a good thing. jonathan: that conversation, up next. ♪

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jonathan: live from new york city, equity futures are totally unchanged on the s&p 500 as we close out q1. yields are higher by three basis points. moving there on the u.s. 10 year, and under surveillance the crypto world is moving on. >> we suffered a lot of damage to trust in the end of 2021 and 2022. getting that behind us is a good thing. i wish spf well. he's going to serve time and

deserves to. i think it is good for the industry to move beyond that. i think we have. the face of the industry in a weird way went from a little kid in commuter shorts to larry fink. jonathan: the former ftx ceo sam bankman-fried, facing sentencing over his role in the collapse of ftx. prosecutors pushing for a prison sentence of 40 to 50 years in what has been called the largest fraud in the loss -- last decade. friends and family are urging leniency, saying investors have largely recovered on. you are about to find out what we do with you hi-res at bloomberg. we side -- we send them into the rain outside courthouses. david, fantastic to catch up. can you tell us what to expect later this morning? david: we saw the parents of sam bankman-fried. both law professors, they came here and found their way to the door. the hearing is scheduled to

start at 9:30 this morning on the 26th floor of the building behind me. no phones allowed, no buildings, facing everything we get, it's on the notes that people are feeding out to us. they will have a hearing where they kind of go over this comprehensive report on what happened, the fraud committed by spf -- sbf. then the critical thing, the size and magnitude of this fraud , the fundamental disagreement. defense saying no harm, no foul, essentially. we heard from bankruptcy that a lot of the money lost is likely to be recovered and the victims are not as likely to be in dire straits as they could be. the prosecution saying that's not the way this works. fraud committed, this needs to be punished. the job for the judge is to look at the pantheon of fraudsters throughout american history. bernie made off was sentenced to 150 years in prison.

defense is saying that that is not the perfect analog here. a better one would be michael milken, saying this is where the judge comes out with this, it could last for a few minutes or a few hours. folks are expecting it to be about one hour, two hours long. lisa: it's been ironic, david, and welcome back. it's a rally that has been so rapid, it's recovered a lot of the losses. how many proponents of sam bankman-fried are there still in the area coming in who are bitcoin enthusiasts, watching enthusiasts, versus the animosity and distancing that we saw a couple of months ago? david: i mean, you heard there a moment ago about their eagerness to move on and it is so astonishing how the crypto industry, if you can call it that, is not moving on today. the sense is that they have already moved on and after the verdict was entered, four or five months ago, the attorney

for the southern district wanted the case to send a message incredibly fast. sam bankman-fried was arrested less than a year before the verdict was entered. it's unclear how forceful that is. i suppose the sentence will determine that. as you see, we can have going here touching record highs with a lot of easy as him and this attitude that this case and others, there are other prominent figures in crypto facing legal issues of their own. they are ready to clean house and move on. it's a funny moment in that sense. prosecution closing this chapter, it's a crypto story continuing. lisa: continuing on that, what kind of domino effect could we see in the ruling today? as well as the others wrapped up in the scheme that he had?

david: that's a great question. he pled guilty and faces federal prison time. alice mission ski going on trial -- alex mission ski is going on trial in the building behind me. prominent individuals on trial in the coming months. but what does it mean for the broader conversation about regulation and how crypto is regarded? it's fascinating to me that it didn't serve as the catalyst many thought that it would. with sam bankman-fried arrested, some thought it would collapse and it wasn't the case. others thought it would expedite regulation to change regulatory structures in washington. that hasn't happened either. a lot is at play and happening as a result. it's not leading to the changes

some thought. jonathan: david, old friend, fantastic to see you back on our screens. providing coverage of this story throughout the day on bloomberg tv and radio. odd situation. typically when you think of fraud you think of failure and a lot of people losing a lot of money. a lot of people have been made whole because of what's happened in this universe over the last 12 months or so. lisa: with the assets behind it, it's the enthusiasm for crypto outliving sam bankman-fried's work for it. does that have a material effect on the sentencing? does it the reduced -- does it reduce the argument of harm caused? jonathan: should it? annmarie: the sentencing should be on the harm done, not whether people lost money or not. when it looked at the harm done, it does not look like it will be lenient sentencing like his friends and family are asking for. lisa: if your friend has a ponzi scheme of peanut butter and

jelly sandwiches, it's not the same sentencing as one with billions of dollars. this is the same issue. jonathan: if you took my money out of my bank account and put in a triple levered etf, i'd be annoyed that you took money out of my bank account. just because you were going to give it back to me, i'd be more interested in the stealing in the first place. lisa: what if i give you back to pull -- quadruple? would you still be mad? jonathan: for us, as friends question mark maybe not. but i'm not sure that should apply to the leniency of this case. [laughter] the court will decide. lisa: i wish you had done that. annmarie: if you took money and put it in nvidia? jonathan: triple levered anything. lisa: if you had done it for me, i would say thank you. lisa: gluten stocks, -- jonathan: gluten stocks, leveraged first. no doubt. [laughter]

jonathan: economic data just moments away with an update on jobless claims in a moment. just a touch negative going into the spring. scores on the bond market look like this on a two-year yield, anticipating economic data up on the front end, up three on the 10-year. on the 10 year, 4.22. economic data around the table. here's mike mckee.

mike: jobless claims come in first, surprise, 210,000. that was last week's initial number. we will see with the revision is. 119 thousand, revised basis, up to 12,000 from last week. essentially noise in the greater context of things. the other numbers out this morning, the gdp numbers. this is the third estimate for gdp. it isn't particularly meaningful. 3.4% is significantly higher in the initially reported. now it's 3.4%. personal consumption, 3.3%, up from 3.0. from the fourth quarter, the core 2% are little changed from the initial reporting. the one number i want to look up, and i know you want to get those market numbers,

fourth-quarter profit numbers that we get. let me check that and will be back. i will give you a quick -- jonathan: i will give you a quick sneak peek, equity futures are just about positive. no big price action here whatsoever. the two-year yield was higher before the number and higher ring out of the other side. the 10 year was up three or four basis points. the dollar has been stronger since mom -- for most of the morning. euro-dollar down and near session lows. jobless claims, what can you say? claims are at 210. it's hard to sit here and scream the labor market is falling apart if jobless claims keep coming through 200,000 every single week. lisa: i'm old enough to remember that people said it mattered and the fed would be paying attention to it and we needed to hold rates higher for longer. now we are in a zone where no one cares.

it's not a data-dependent market unless it affects stock markets. good data has no negative consequence for the potential of fed holding rates higher because they told us they want to cut and that's what we are seeing in this market. jonathan: very true. mike, what have you got? mike: basically, increases in consumer spending, exports of state and local government spending pushing the number up significantly. residential fixed investment is also up, that's housing sales, which has been so low that really they barely contributed anything. personal income increased by $219.5 billion. making you a little bit more money. personal savings, 809.2 billion. i haven't run across the profits number, yet. i'm still looking for that, but we will get that for you. lisa: help me for something. first revision, second revision, third revision, why are these

revisions continually going upward? why do they keep getting better and better as we look back at what has happened over the past couple of months? jonathan: it's more source data. when they -- mike: it's more source data. when we get all the numbers they don't have them all in and then we get the inventory numbers, so those get added into the first revision and we get advanced numbers on those now, but they have to be massage and you get more information about all of these categories as the months go on. by the third revision, they have it pretty close. there is a fourth revision coming next year when they benchmark these things. it's funny, when you look back at the turning points for the fed, the data that the fed had in front of it at the time can be completely different from what it looks like one year later or so. that is one of the problems with being on the fed that you don't have on twitter or x, you can

comment on stuff like -- of course they should have done this, but that was not the number they were dealing with at the time. jonathan: in 24 hours we will have been sitting on the inflation data for 24 minutes. we have a lot of information on what that would look like tomorrow. what is your view? mike: i'm going with jay powell. jonathan: easy to go with. [laughter] mike: he said would -- we would get a .3% rise and i have no doubt in their analysis. this is of course on a year-over-year basis, which is what the fed is following. chris waller said the same thing last night and as he pointed out, the october to december average was about .03 percent, rather than 3/10 percent. so, it's 10 times higher in january and it would be the same this month. that suggests some progress has

halted, if not gone the other way. jonathan: there are 54 estimates on the terminal and only five of them say anything other than 0.3%. i wonder why? and you just basically guess pc from ppi? mike: you can. inflation numbers are some of the best from economists. there might be a surprise in one or the other that push it 1/10 of one way or the other, but if you notice, there are only a certain number that say anything other than 3/10, but it is not a wide dispersion. jonathan: true. tiffany joins us now with more. let's start with the data tomorrow and then we can backfill to talk about jobless claims. what are you in the team looking for tomorrow and in the current trend, coming into tomorrow, and what things could look like in a couple of months time? tiffany: the bigger issue in our minds is that after we did two quarters

of 2% pce elation, we got obvious small revision to that this morning and we think that the first quarter inflation accelerated up to over three. so, that's obviously going in the wrong direction for fed officials and christopher waller talked about that and his speech last night. powell seemed much more sanguine, but we think it will result in a lot of focus being on the second quarter core pce inflation number, which has to come down, we think, from three, in order for them to get the confidence to cut here. jonathan: the governor put forward the argument that they should go later or do fewer. is that were you and the team are, currently? tiffany: we certainly think that the balance of risks are skewed that way and the biggest argument we would make is that growth has been quite strong and we would argue that yes there is supply side improvement

happening, but nevertheless growth is above levels that we would think would be consistent with potential. when you have above potential growth, that usually tightens the labor market, not eases it. that will ultimately put upward pressure on inflation. i do think that the balance of risk here is on hold. holding at high levels for longer than they are currently projecting. one has to move for the medium to move to two cuts this year. that is certainly the way we think things are headed. lisa: tiffany, do you think that powell is data dependent or does this fed have it in its mind that they want to cut rates once ahead of the fall to get ahead of that to make sure they are not being overly restrictive? tiffany: i certainly think that we listen to powell, not only at the press conference, but at his semiannual testimony to congress , it appeared to us that he almost pre-committed to getting

an easing cycle started in the meat -- middle of this year. if you look at various taylor type rules, it would suggest the fed is already late to cut and they have the cover to cut. we have been arguing that as long as inflation is in this zone, it gives him the cover to go ahead and do it. getting ahead of the election, you know, might be something that they want to do in order to appear apolitical, but nevertheless, getting a cut in before the election, you know, maybe they do fewer in the back half of the year. lisa: a lot of risk assets have rallied on the heels of cuts in the future, even just one, people say it makes them feel good and they want to buy risk. how does that make the -- expected inflation higher, give it a little bit of a boost around the inflationary pressure that people are seeing around the edges in goods and elsewhere as well?

tiffany: yeah, i think that there is a wealth of fact here that has been important since the pandemic. you had a lot of fiscal transfers. i think the wealth effect continues to be important. near term, it should be boosting demand and on the margin should be inflationary. overall, continuing to manage financial conditions is something they are going to need to do. i think that maybe when they start to cut interest rates to try to convince the markets that this is going to be slow and that we could even stop for a time, you know we have been talking about the potential for this to be a midcycle adjustment. i don't think they will ever say that, but that kind of language to try to keep financial conditions tight is what they will likely continue to try to do to manage inflation risks. jonathan: picking up on that, remember the language from a number of years ago where he talked about extending the cycle? is that what this feels like to you?

tiffany: you know, ultimately the fed is projecting that they will sort of slowly march back towards where they think neutral is. you know, of course, neutral is very difficult to understand and to estimate at any given point in time, right? we don't know where neutral is until seven -- several years after the fact and even then the models are wide in terms of their bands. it's certainly possible they start to cut and the economy just re-accelerates a little bit. that then stops them from kind of continuing to march back towards neutral. i think that over the longer term, you know, we think demographics with lower productivity trends make the neutral policy rate on a real level zero p1 -- 0-1, but there is a lot of policy sloshing around in the economy where the interest rate passes to the consumers because of long rate duration mortgages that have been relatively slow in those

things can kind of the u.s. economy going relative to our peers who have been weaker. lisa: just this morning we have had people coming on saying that we are early cycle late cycle and now you reference midcycle. how confusing is it to understand what cycle we are in, where we are in it, and how that is relevant to what's going to happen? [laughter] tiffany: yeah, i definitely think the pandemic has created a unique set of factors that have, you know, really made difficult forecasting not only for the economics community but for market are to sip and says well. i think that the key issue here is one honestly of supply. how long can you get the kind of supply-side gains that we saw last year to continue in the u.s. economy? that will depend on productivity. we obviously saw a lot of immigration last year as well. there is reason to believe over

the longer term that productivity could be great. ai, you know, is obviously something that can be very transformative for economies. that is, you know, economists are worse at forecasting productivity than recessions, and we know how difficult it has been. jonathan: tiffany, appreciate that update. michael mckee, want to give you a final word there. the data point you were looking for? tiffany: corp. -- mike: corporate profits include private companies, all of that in the united states in the fourth order, profits were up after 3.4% in the third quarter of 2023. so, there was progress made in the fourth order and interestingly, almost all of it was nonfinancial. financial corporations were up only one point 3%. all the prophets were domestically generated. from the rest of the world, down

1.7%. jonathan: look out for mike mckee, tomorrow, bloomberg radio, breaking down pce. the short straw, how did that work out? tune in again. thank you, mike. here is your bloomberg brief. yahaira: a salvage firm is heading to the port of baltimore to recover the container ship dolly and the perhaps -- collapsed francis scott key bridge. regulators telling lawmakers that will costs $2 billion to replace the bridge, including cleanup, with no timeline on when normal port operations will resume as insurers face $3 billion in claims with lloyd's of london being the most exposed. the bud light comeback hopes are about to get dashed. major grocery chains are set to reshuffle alcohol sections, giving more space to top sellers. bud light took a sales hit last

year after a conservative lead backlash over collaboration with a transgender influencer. anheuser-busch is expected to lose as much as 15% of shelf space to molson coors and constellation brands. talents across america preparing for a potential economic windfall with a solar eclipse crossing the country on april 8. the last one was lucrative for some state, but the south carolina tourism department estimates the 200 62 $9 million economic impact to be around 1.6 million people traveling to see the eclipse. rochester, new york is one city on the pathway this year, with officials anticipating as many as half of a million people visiting. that is your bloomberg brief. john? jonathan: competition is coming up next for pharmaceuticals. >> for the most part it's been focused, but diversified across sectors and science is really hard.

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jonathan: we are counting you down to the opening bell, 32 minutes away. equity futures are software, down by zero point 1%. jobless claims came out 17 minutes ago, 210,000. that's a strong labor market based on that economic market number. you can lift the lid and find pockets of week this, but 210,000 is exceptionally low. higher on the basis points of 421 80, dollars stronger all of the morning. break of 108 on the euro, the currency pair is negative. under surveillance this morning, coppin -- competition in

pharmaceuticals. >> the trend has been in focus, most of those companies have focus down over the recent years and i think it will be the current trend. to be diversified across sectors and in science is really hard. jonathan: pharmaceuticals are up more than 10% in 2024, keeping pace with the s&p 500. merck has been one of the top performers. the company winning fda of for a new drug that treats a role -- rare form of high blood pressure. drug clearance coming at a critical time for them as they prepare to lose market exclusivity for their cancer drug, keep truth. rob joins us for more. good morning. how much of a rake through is this? rob: this is really, we think, something special. the disease we hopefully think we will be able to make a difference is is pulmonary hypertension. it's a rare disease, not

well-known but devastating. it's a disease that primarily affects women in the prime of life, age 30 to 60. mortality rates of 43% in five years. you can imagine impact not only to the patient, but to the family of people who otherwise are in the prime of life, really tragic. thankfully and hopefully this will make a difference. this drug, we are now bringing it forward, it's a biologic and first in class medicine. a new mechanism of action with an active signaling inhibitor that potentially remodels the blood vessels, the arterial vessels, allowing them to open up. ph causes your blood vessels in your lungs to thicken and narrow, ultimately leading to heart disease. jonathan: how often do you take it? rob: every three week, subcutaneous injection that can be done by the caregiver. this would be something that you

would administer at home. most people do. lisa: i wish we could come up -- go into a segment with how you come up with these names. but that's another time. you came into this through an acquisition. what is the importance of looking beyond the mainstays, like cancer? the diversity we were hearing about. rob: obviously, we are a science led to, science driven company, and this came about we were already starting to look into this space. our cardiovascular teams were doing work here and when they saw the data from a company called excel around that had this asset, they came to me and said that they were excited that this could be a difference maker and that that is why they moved on it. now it really is a foundational element in their broader cardiovascular metabolic portfolio. it's one where we see the value of diversification. we are obviously a leader in

oncology and vaccines, increasingly moving into immunology. this move is significant for us. lisa: a lot of people invest increasingly in health care at all they want to hear about is your solution for weight loss, the reason so many people have gone into health stocks and the industry. you are working on a glp-1 type of drug that is not for weight loss but is for fatty liver. why are you approaching this differently and not directed at the weight loss itself and more on the illness that potentially some of it can cause? rob: the mechanism you are talking about, we have one that brings weight loss benefits similar to what you would see with ozempic, the primary focus is fatty liver disease, which really is an untreated area, today. the argument in this space is that obesity is important, but increasingly it's the comorbidities around it.

it's heart disease, its diabetes, it's liver disease. so, if we can affect those and bring outcomes to benefit patients there, they get the weight and if it, but as you think about reimbursement and value, that is where the value comes to society. we are making people more healthy than just losing weight. lisa: is this mostly a coverage play? essentially easier for this to get reimbursed and insured? that being one of the reasons why if you gear it as an illness, you don't have to get into the debate percolating elsewhere? rob: from a merck perspective, it starts with the patient at the center. we see this as a disease that needs to be dealt with, but yes i think the benefit of this is if you can show outcome and that there is something beyond weight loss, your ability to be reimbursed and show value to society is different, will be different. annmarie: to your point, if

obesity leads to some any health issues, will insurance or government be able to put this in their plans? rob: we would expect so, and that is starting to shift with driven outcome approaches driving that. jonathan: let's go to the costs. the costs could be about $242,000 per year. i have always struggled with this, why is it so much more expensive in america compared to say the prices i see for the u.k. or abroad? rob: it's hard to do apples to apples. if you look at what drugs are as a percentage of total health care spend in the united states, its 14% to 15%. across europe, it's about the same. the reality is that health care as a total area, not just drugs, in the united states, is more expensive. the percentage of the costs of

drugs in the united states is equal to what it is outside the united states. it's hard to take one element and say focus on that without understanding the broader questions. if you are in the united states, you benefit from the fact -- fastest most access to the most innovative medicine driven by an industry that is based here in the united states and exports to the world. you know? so, we need to look at the totality of what we see as three things. access, affordability, and making sure you are acting the innovation ecosystem that we value. jonathan: we appreciate that breakthrough, rob. thank you very much for being with us. robert davis there, the merck ceo. flagging programming on monday, laura cap sena, peter scheer, and the former fed rice year -- vice chair. you will be catching up with me and annmarie. you won't see lisa, she will be

on a ski slope somewhere in the united states of america. lisa: and listening. and parsing through all our data. jonathan: headphones, going down the slope, going down the pce. you doing the live feed of chairman powell as well? lisa: going down the slope? i will verbalize it. jonathan: we wish everyone a very happy long weekend. from new york city, this was "bloomberg surveillance." ♪ >> finalists remain unbeaten

against garcia in four meetings, making her first appearance in the semi's since 2018. collins is looking for her first title since lifting the trophy in pao.

her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

manus: good morning. these equity markets seem to lean into the old data. a warning to rate. we will debate. countdown to the open kicks in now. >> everything you need to get start -- get ready for the start of trading. this is bloomberg's the open with jonathan ferro.