>> welcome to bloomberg markets. there are two guest joining us in the next few minutes. first, goldman sachs cohead of m&a. and after that, live to the annual jp morgan health care conference in san francisco where we are going to hear from gsk's ceo. first, a quick check on markets. >> the s&p 500 is moving lower, and then of course the biggest selloff now happening across big tech. meanwhile, we do see that some hedge funds put into prime brokerage data are buying the dip in some of those tech stocks. 10-year treasury yield's are

moving slightly higher. we do see the 10 year is approaching this 5% level and finally crude. this is again a potentially inflationary pressure. oil is now trading around five months highs on concerns that supply will be really tight after u.s. treasury department issued more sanctions on russia. now let's talk about single stock movers. first, macy's. the stock is down after the company boosted -- posted disappointing outlook for sales for this current quarter. the stock is currently down by 7%. this is the lowest, the biggest drop since august. a big day for retailers overall. stocks like lululemon and shake shack as well. johnson & johnson, the stock is moving slightly higher after the pharmaceutical giant agreed to by a company that develops treatments for brain disorders, but the stock itself is up by

more than 35%. in the deal is expected to be closed later this year. sonali: certainly good news when you have investors liking deals that are being announced and you have the prior stock price also on the rise. some are expecting the pace of mergers and acquisitions to keep increasing. >> every company that has product from mexico, china, asia, which is almost every company in some sense, they are trying to figure out what is going to happen. phase could become prohibitively expensive, so people are looking at it and thinking maybe we've got to vertically integrate in the u.s., which questions what the trumpet ministration would like to have happen. sonali: and if you've been watching, m&a has already started to come back. for more on what it looks like this year we are joined by

global -- goldman sachs cohead of global m&a. believe that last year was the 10th time that goldman reached the over $1 trillion volume mark in just 30 years for m&a volume, so they set started to come back. so how much more can they come back this year, is it what investors are really expecting? >> first off, happy new year and thanks for having me on. there's definitely a lot of optimism out in the market. i think the way we are talking about it cautious optimism. certainly a lot of factors are driving us forward. new regulatory environment, the economy has been incredibly resilient and continues to be very strong. that being said, there is still geopolitical risk. it's not clear exactly what the regulatory landscape will look like and certainly interest rates which are looking higher for longer are certainly impacting private equity which i'm sure we will talk about. that being said, we are optimistic. i think we are very balanced and

cautious but the environment definitely feels better. sonali: one of the things investors are really concerned about right here is a lot of people are talking about the prospect of 5% on the tenure once again. what does that mean for financing, ideals going to be able to get done with interest rates this much higher still? >> deals will certainly still be able to get done. we think about things in decades, not any given year. certainly the lower half of or interest rates have been in any deal environment. it impacts different parts of the market differently. investment-grade corporate were using a lot of activity are less impacted by the interest rates. that being said, directly is certainly impacted, it impacts their ability to finance and pay prices that get deals done in as we talked about before, it does make it harder.

that being said, private equity activity, activity continues. is it one of the factors that is going to tempora 2025? certainly. that being said, it certainly is not prohibitive. sonali: what is the calibration looking like? if we ask this question may be a month or so ago we would be looking at a different answer because you saw equity markets at all-time highs, now they are hitting some choppiness. does that mean that still private equity needs to have some level of moderation in what they expect for getting money back on their deals? >> the pressure has continued to mount on private equity. they need to cycle capital, harvest investments. they can certainly do that in this environment and the challenge is private equity and even corporate's are making very

long cycle investments. near-term volatility is obviously not great, so predict ability instability even at a higher interest rate is as important as anything else. it's the volatility when banks need to underwrite something. that volatility makes it hard to price deals. a degree of stability even at a higher level is more important than it is with the absolute rate is of interest rates. sonali: just this morning it was announced that goldman formed a new capital solutions group. how much of that is acknowledgment that private equity is going to really matter going were, or the private markets in general? >> private equity has been a large part of the market for a very long time. it is not the private equity is all of a sudden important. we formed the capital solutions group to unify around our client franchise and focus to streamline and provide capital's and opportunities in a very

client-centric way because client to become a much broader. a client of a public markets business now branches into the private market -- market business. and by the way, they need a partner who can provide capital, which is what the asset and wealth management business is. it is backing on what we think is leading client coverage and client advisory, the ability to finance, hedge, provide derivatives, whatever it might be. we can advise, we can finance. if it is a public market solution we can do that. a private credit solution, we can do that. >> one thing i'm very curious

about outside of private equity, there is now a tremendous amount of strategic activity also going on this morning. a few days ago, goldman was one of the advisors on the cancellation deal as well. where do you think the hottest deal activity is going to be? >> is no question that tech might have short periods of less activity but will be pervasive. it might not be the largest companies but there's obviously a very long list. nearly half of the large-cap private equity portfolios sit inside the broader technology media telecom. industrials has remained very active. the national resources, there's been a lot of transactions which by the way, require commodity financing, hedging and potentially private credit activity. that is power as you just articulated, it is metals and mining, chemicals. >> health care had a relatively

quiet 2024. obviously it started the year with a relatively -- relatively significant jump in activities. geographically, europe last year was actually far more active than people expected it to be. i expect europe to continue. but we are really waiting to see is his cross-border activity going to come back? and we will see a lot about his geopolitical, obviously. >> and that obviously plays into the some of the geopolitical applications for natural resources. but one reason a lot of people are watching constellation is the ai story, is that deal with microsoft, the deal for three mile island, nuclear energy. when you think about the ramifications of ai and what it means for the industry, where is ai forcing people to do more deals to get ahead of the story? >> there's no question one of the biggest ai impacts is going to be where are the electronics going to come from?

and that has ramifications from just pure ai to data centers to real estate to power utilities to government relations, because obviously power is provided to utility customers as well. so ai is creating incredible demand for electronics. how is that a man going to be met, it is going to require a lot of capital investment. it might involve m&a but it has huge ramifications across all of those industries. putting all that together, ai will impact all of those. when will it lead to big m&a? we will see, but those forces are forcing companies to think about scale and how i'm going to deliver electronics. sonali: you mentioned europe a little earlier. i'm going to ask you to take a much more broad global scope. goldman was an advisor of course on the u.s. steel situation. i know you can't talk about that explicitly as a client but at the same time, you saw how city is behaved in this instance, and

i wonder if this means that ok, the indecision, if you will, pushes more and more power into the hands of the president. and how do you expect the president-elect to behave when large international companies look to buy u.s. assets, how as an advisor do you think about what that means? >> obviously i won't comment on any specific situation. geopolitical and sovereign interests are one of many important factors in any transaction. is it more acute in certain interests, certainly, but i could cross all sorts putting on a given administration and what is going on in a given time in the new cycle and how elections might be. not commenting on any specifics, it is one of several factors. the financing markets are an important factor. the governance, who is going to run the company. you just have to factor all of this in. but there are certainly transactions and industries much like we saw in the last four years where people decided now is not the right time.

we will see how that plays out. sonali: do you think that cross-border deals will be otherwise something easily facilitated? >> i don't know if i would use the word easily. sonali: this nationalist perspective is not just in the united states. >> sovereign interests, absolutely, all over the world. it is not about one administration or one geography. that being said, we can roll all the way back to when we spoke during covid. the forces driving the benefits of scale globally whether it is supply chains, scale of balance sheet, where am i going to find growth, are those factors that i talked about that are going to be driving, day which could in would be some cross-border, but they are the headwinds that you have to think about. that being said, the benefits of scale across the entire complex are undeniable. sonali: what about things that are in the united states as well? we thought about what you saw during the biden administration and you had the ftc and a doj that were tough on deals.

and now there is an expectation that in the trump administration, this will be a lot leaner. is there a reasonable expectation that perhaps investors are also maybe going too far here, that there will still be a clampdown in some areas given that there is still concern out there about some of the large giants across many industries? >> i guess the way i would characterize the regulatory prospect is it is going to be a reversion to the rule of law which is what we saw for decades, and in those contexts, there were still investigations and acquisitions, several remedies, and in some deals their work. so what we expect is a reversion to what we saw in prior administrations. it's not going to be wide open doors, it's going to be a review based on precedent and based on the rule of law and if there are transactions that have implications they will be a dialogue and potentially remedies that lead to resolution. sonali: 30 seconds left, biggest prediction from 2025. >> biggest prediction is a more

active m&a market, not unbelievable, irrational exuberance in terms of a rampant m&a market. we've seen 12% in 2024. i'm thinking about the same with some upside based on all the positive factor that we talked about. sonali: so great to have you to start the year with us. and this time now for the stock of the hour. we are looking at gs k announcing it u.s. biotech idrx for up number of deals announced at the j.p. morgan health conference. we are going to head to san francisco now or we find katie sitting down wit thank you. it's great to see you in person. >> thanks for having me on. let's talk about your news of the day. a deal worth up to $1.15

billion, tell me a bit about your emendation strategy. there is so much excitement about this industry and what activity we could see. should we expect more to come from you? >> always expect more to come. the most important thing we do is to develop a pipeline and it was fantastic to kick off the year with this announcement. it is a time of great momentum in the performance of the company. last year we upgraded short, medium and long-term outlooks but also at a time of real progress in the pipeline, i think off the back of 13 positive phase 3 last year we are going to be looking forward to launching five new products in 2025, but we always want to keep adding to that. one of the big drivers of our growth has been our biggest product area, which is specialty , a real strategic shift for us. and a core part of that has been our return to oncology. we doubled that business so far in our results published for

last year. really looking forward to launching a new myeloma drug in 2025, one with fantastic overall survival data and now to announce another new addition to our oncology portfolio with the idr x asset. hopefully it best in class solution for particularly tough g.i. cancer which tends to mutate for i think 90% of the patients who go through first-line treatment with the genetic cause of this. they get a mutation, but this drug has a broader level of coverage, and we hope it could be best in class. planning on getting into phase 3 of that later this year and really adding to our portfolio momentum. >> that is where i wanted to go, this drug hoping to move to phase 3. when might this launch and what could it mean in terms of sales potentials? >> we always want to bet on things that are going to have a

material contribution to our growth, but most of all, to the patient so we want this to be best in class. it is a cancer that affects up to 120,000 people worldwide, at least 6000 here in the u.s. we hope to be able to launch, we have interface three by the end of this year. we will then be able to add, we hope, first-line once we've got the deal closed, and the contributing to our sales later on in the decade. but nearer term, i'm really excited about us having a current portfolio of cancer drugs. let's face it, that is a tough diagnosis, one in five of us have to face it personally and i'm sure everyone on your set knows and loves someone who is dealing with cancer. and this record, new multiple myeloma -- myeloma solution will have new fantastic data and i'm

looking forward to getting approval on that hopefully later this year here in the u.s. and around the world. it looks like the overall survival in a head-to-head study is adding nearly three years, so that is a big deal for patients and very exciting. sonali: as you know the cancer space is incredibly competitive, and a lot of enormous players in that space. how do you think about which spots you pick and choose about where you are really going to focus? >> the important thing to remember is we do have a broad portfolio. more than 10 drugs and vaccines of over one billion pounds in sales. and in our specialty business, the biggest business, we have double-digit growth not only in oncology but also in immunology and hiv, so this is part of a broad portfolio. specifically in cancer where we are seeing this great growth, we started off in women's and

hematology, and we are now adding to that with a portfolio of solid tumor work, whether that is in colorectal cancer, some very interesting early results without drug there. we have more data coming through on some antibody drug conjugates. the exciting early dated we will see more of later this year. we are very thoughtful about how we allocate our current goals. >> i do want to go back to a dealmaking strategy. you and i were talking about not just the quantity, but what type of deals you might pursue and sizes for example. >> one of the most important changes we've made for gsk over the last few years, and

particularly with the separation of the consumer business this to really create new capacity in our balance sheet to do more deals. i think we are up to nearly 20 or so over the last few years, and looking at last year, these deals were we can get to a best in class asset, whether that be fibrosis in cancer which has seen great results through this year, we also did a deal for the spiritually. -- risk spirit tory. always assessing the sort of risk profile for high returns, but also the total portfolio. so you should expect more from us, about half of the pipeline in the industry comes externally and i'm really pleased we've created that capacity to invest more. sonali: great to get that context.

of course a lot of this optimism over the dealmaking landscape comes from the incoming second trump administration and speaking of the second trump administration, i do want to get your thoughts on rfk jr. of course jfk is known for its vaccines and rfk jr. is a noted vaccine skeptic. so have you had conversations with the trump administration and how are you thinking about navigating that relationship? >> the first thing to say is this country, the u.s. is extremely important for gsk. it is our number one priority without doubt. more than half the business globally, it is the single best market in the world for innovation, that's why we are bringing these five new lunches this year which we are really excited about. we had a very successful partnering and working with the previous trump administration and i would say we are optimistic and ambitious as we look into 2025. we have a very powerful and strong vaccines portfolio.

it is not our biggest business, but we do believe in the purpose of our company, getting ahead of disease. that means prevention is important. there's no better thing we can do for health care than to keep people out of the hospital, and we have a great portfolio there. obviously there's a lot of commentary on what the administration's approach the vaccination will be. i think we should wait and see what the facts are when they come through, but any conversation about the advocacy of vaccines, the quality of vaccines, these are things like company is deeply committed to and we want to engage with transparency. there is no better intervention for public health than stopping disease before it starts. start out of latency, there's a lot of wait and see commentary when it comes to potential tariffs. you talk about the u.s. being such an important market for you. how do you even begin to plan around the potential there? >> first of all, in general

historically you haven't seen tariffs being brought to bear on health care because what really matters, we are in israel where there is a match of life and death, the security of supply and global supply chains is really important. that said, we prioritize the u.s., we are heavily invested here. i just invested another 800 million dollars in manufacturing in pennsylvania. i was visiting last week. we have 15,000 people here, five factories, we invest heavily in r&d. the deal be announced this morning was for a boston-based company. we are very focused on what we do america, for america, but there is no question we are a global company and our priority is to make sure we get our products to the people that need them. >> freight to get some time with you, really appreciate it. back to you. sonali: looking forward to the

rest of your interviews from jp morgan health care. i know you have a huge day tomorrow as well. stick with us. more coverage of markets of next. this is bloomberg.

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♪ >> i wanted to check in on these market as we close out the hour because yes, we are still lower on the s&p 500 and the nasdaq 100 but we are off of session highs. down 3/10, 4/10 of 1%. the nasdaq 100 about a 10th of 1% lower. the 10 year yield has been just below 4.8% all day long, but elevated out 4.77, so not far off. that does it for bloomberg markets today. this is berg. ♪

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>> from the world of politics to the world of business, this is "balance of power." ♪ live from washington, d.c. salty republicans spend the weekend at mar-a-lago and find a new wrinkle. welcome to the fastest show

impolitic as lawmakers return from florida with new hopes of lifting the salt cap. i'm joe mathieu alongside kailey leinz. this is the monday edition of "balance of power." glad you are with us on tv and radio. donald trump is asking lawmakers to consensus on this. based on what we are hearing from our first guest this hour, it may involve incentives to some states that actually lower their property taxes. getting interesting. >> we know this is going to be difficult as you have to get the 218 vote in the house and those two aren't from high tax states like new york and california and they may not like the idea of lifting the salt cap as those were from those blue states especially. the question is going to be how long does that take and ultimately what is the form of that consensus, what kind of bill, how large of a package? will it be split off into something else and leave energy and immigration issues to be dealt with separately?

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