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- [00:01]
IBM Narrator
What if data didn't sit still? What if intelligence moved with us, not buried in reports but activated in real time? Where lives are being shaped, where decisions are being made. It all starts with a where is the potential? Totality turns data into clarity, intelligence into insight, insight into action. Because when intelligence moves, we all move forward. Intelligence beyond bounds so there's a lot
- [00:31]
IBM Representative
of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [01:00]
Public.com Advertiser
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- [02:01]
Bloomberg Radio Announcer
Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens Bloomberg Business Week Daily with Carol Massar and Tim Stenovec on Bloomberg Radio.
- [02:22]
Bloomberg Host
Hi everyone.
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Carol Massar
Welcome to the weekend edition of Bloomberg Business Week. This is this past week, the financial world marked the loss of Federal Reserve Chairman Alan Greenspan, who passed away at the age of 100, prompting a deep reflection on his immense economic legacy and decades of market influence.
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Tim Stenovec
His passing happened at the start of what turned out to be a volatile week for global markets. Meantime, geopolitical tension's still top of mind as fast moving, ever changing US Iran negotiations aimed at cementing a final peace deal to end the war take shape for all the important details on these developing stories head on over to bloomberg.com and always check out the Bloomberg terminal.
- [02:57]
Carol Massar
With that in mind this hour we bring a deep look at the macro market backdrop, AI monetary policy via the Fed and also the legacy of the late former Fed chair Alan Greenspan.
- [03:08]
Tim Stenovec
Plus the latest global phenomenon that's driving billions of dollars into unregulated markets from Silicon Valley and online fitness communities. The obsession with peptides has triggered a black market boon. More on that a little later.
- [03:21]
Carol Massar
It's a great BusinessWeek story. All of that to come. We do begin with a comprehensive market and macroeconomic check in. For that we leaned on Jim Caron, who is Chief Investment Officer of Portfolio Solutions at Morgan Stanley Investment Management.
- [03:34]
Tim Stenovec
We covered a lot with Jim, but of course, Carol, we had to start on the life and legacy of Alan Greenspan.
- [03:40]
Jim Caron
He was a legend. So I, you know, if we put this in perspective and I think it's very important to have context around this. He started his position as chair in 1987. He ended in 2006. That's a 19 year period. So for most people that's, that's a large chunk of their career. I started in the business in 91, 92. That's all I knew for 14 or 15 years of my, of the starting point of my career. He was somebody that was not going to be challenged easily by other members of the Fed. It's whatever he said went and that was it. So but he also did a bunch of different things. He changed things at the Fed in the sense that he made it a lot more transparent, if I could say those words. The so what the way the Fed operated and we take this for granted today that you find out on Wednesday at 2:00 what the Fed's decision was and we all go to work. Prior to Greenspan, it was Volcker. And what happened at about 4:15, 4:10 on a Thursday afternoon, you got money supply data. Based on what the money supply data was, that was the change in policy. You had to figure it out. Nobody told you if it was 25% or 50 basis points. You were guessing and you were trying to analyze and figure out what that was. So what Greenspan started to introduce through communications and things like that was what today we take for granted was absolutely monumental and groundbreaking. As far as saying, hey, by the way, we just hiked or cut 25 basis points and that's, and that's all it is.
- [05:14]
Carol Massar
Is it too much though? Like would some say it's gone too far.
- [05:17]
Jim Caron
So there's Been iterations. Like there's this pre Greenspan and then there's post Greenspan. Right. So what happened the 19 years subsequent from 2006, say to 2026. What we've had now is Bernanke, Yellen and Powell. They've all followed effectively the Greenspan mode, but they added onto it. Now, clearly Bernanke had a very special situation, the financial crisis. He had to do enhanced communications and things of that nature. I think that. Is it too much today in terms of communication? I'm going to say that it is a bit, because what the Fed is trying to do is they're trying to telegraph and televise too much, such that they're actually directing and dictating how the markets should think about things, as opposed to what Wash said, which is let the markets figure it out. I mean, so the way I think about being managed. Well, I mean, you know, the way I think about Kevin Warsh, if I'm going to put him in this, in this period of time from 1987 to 2026, I'm going to say that what Warsh is trying to do is bring us back to the period that was pre Ben Bernanke. So it was greenspan in the 1990s. So very similar economic setup, too. Big Capex cycle, big productivity boom that we're going through. And I think what Warsh is trying to do is bring us back to that period where he lets the markets assess what monetary policy ought to be as opposed to what Greenspan did. Greenspan was the guy that started to come in because like Volcker and everybody else just looked at money supply, M1, M2. They were, you know, very, very much that that's what they did. Greenspan was the one who started saying, you know, we should think about GDP growth and the labor market and inflation and let's talk about inflation anchoring and. And all of these various things, things that we think of today is very common, was very uncommon at the time. So I'd say let's give Kevin Warsh an opportunity. This is his moment in history. He wants to remake the Fed, but this isn't groundbreaking. What I think Warsh is trying to do, I think he's just getting back to a period that looks more like the 1990s.
- [07:27]
Tim Stenovec
So it's fair to say you see a hint or more of Alan Greenspan in Kevin Warsh today?
- [07:35]
Jim Caron
Yeah, I do. Now, whenever you compare somebody to somebody who was a legend and somebody just starting out, that's always a very, very difficult. We'll see How Warsh does. Right. It's going to be a long journey and long road ahead. But I think on paper, conceptually, what Kevin Warsh is trying to do is get the Fed back to a much more narrow focus. Not as narrow as the Volcker Fed, which was just money supply, but something that's a little more growth, inflation outlook, jobs market. But let's ease up on the communications. I think he's really just going back to a 1990s Greenspan model right now. And that's my perspective. And a lot of people weren't even around in the 90s in this business practicing. Right. So they don't really have a good perspective on this. It wasn't chaos. It was fine. You know, you just have to get used to the new. There's a new sheriff in town.
- [08:26]
Carol Massar
What's the downside of kind of where we are and what we expect from today's Fed?
- [08:32]
Jim Caron
I think the downside is that there's a lot of mission creep with the Fed. Right. So now we have to, we have to put this in context as well. Prior to the financial crisis, we had this much more narrow remit. This is what Greenspan kind of created. I mean, he opened it up, more transparency. Then Bernanke kicked the door wide open. He had to. We had a financial crisis. We had interest policy, we had qe, we had policy rates at zero. So he had to find a way to communicate policy to the markets. I totally get it, but what happens is, is that once the Fed starts to have this mission creep and they start to be asked to do more and more, even from a regulatory standpoint or even, you know, the Fed was being asked, what's your policy on climate? You know, you know, things like that. This is not what the Fed's job is. So the Fed, and according to Kevin Warsh, should color in a very, very narrow set of lines and stick to what their job is. Under Volcker, it was money supply.
- [09:26]
Carol Massar
But what if the economy has gotten more complicated? Climate change is an issue. Companies have to think about it, you know, because it is ultimately going to impact their bottom line.
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Tim Stenovec
But does it affect a dual mandate? I guess some might say, well, it
- [09:39]
Carol Massar
might because it can't work.
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Jim Caron
Yeah, you can extrapolate. Right. So what Warsh is basically saying is, don't ask me that question. That is an elected official's job. To do my job as Kevin Warsh, if you're Kevin Warsh, if you're the chair of the Fed, is to is price stability and full employment and to really focus on the price stability component.
- [10:01]
Carol Massar
But don't you sometimes need. Okay, I'm going to get into trouble by needing a figure that's not political. But we understand that politics has certainly crept its way, Jim, into the US Central bank. But I think, I think there are times we look at the Fed chair, even if there is a political backdrop, as being kind of a voice of reason on all of these major issues that will impact economic growth globally, will impact corporate bottom lines. Like, is it not important to have that voice of reason?
- [10:31]
Jim Caron
It is absolutely important to have a voice of reason. But in a position like that, in the way that I believe that Warsh interprets it, is that it's a very narrow remit. And one of the things that he said is that the Fed should have absolute independence on a narrow set of items. Everything else, this is not. This is what the Fed is. This is not what the Fed does. And I think keeping that very, very clear and setting these boundaries. Right. You know, we all have to set boundaries. Right. You know, this is a very important aspect of things is like, look, don't ask me these questions. I mean, these aren't questions that are for Kevin Warsh. Right. You know, so that's what he's basically saying. And what he's, what he says ultimately is that the Fed can do its job better if it's just doing the job that it was tasked to do, but is not being asked to solve all these other problems.
- [11:17]
Tim Stenovec
In the words of Jay Powell, we'll stick to our knitting is what he said over and over.
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Jim Caron
Exactly.
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Bloomberg Radio Announcer
Right.
- [11:22]
Tim Stenovec
So it just reminds me of that sort of go to for him. So, so what does all this mean for. For rates under a wash regime?
- [11:29]
Jim Caron
So it was pretty clear. Yeah.
- [11:32]
Tim Stenovec
Was in the market reacted in a very clear way.
- [11:35]
Jim Caron
Well, yeah, so. So I have a, I have a very out of consens this. Okay. So I actually think Warsh was more dovish than what the markets thought. Okay. So I know what he said in a traditional interpretation.
- [11:49]
Tim Stenovec
So markets got it wrong.
- [11:50]
Jim Caron
I think so.
- [11:51]
Tim Stenovec
Okay.
- [11:52]
Jim Caron
So effectively under Bernanke, a Yellen and a Powell, if that's your mindset and say, look, traditionally if I think about what War said and I use that framework, Bernanke, Yellen and Powell, then yes, he was absolutely very hawkish. Right. There's no question. But I think if you read between the lines and listen to what he's really saying. What he's saying is that like is he's going to create these task forces in terms of like, so how do we Think about the data. So if you were to ask me a week ago, two weeks ago, what is the Fed's most favored measure of inflation? I'd say core pce. That's the Fed's favored measure of inflation today. I don't know what it is. I don't know what the task force is going to say that it is. Is it year over year PCE or is it month over month or is it three month over? This is what the task force is going to figure out. So the market I think for the next six months until this task for force gets us all done is going to be very confused as to what the inputs are to the Fed's large scale policy model, which is their, what they call the Ferbus model, Federal Reserve bank of the US Model. And what Warsh is doing is he's not saying I'm going to change the model. What he's saying is I want to look at different inputs, I want to look at labor data in a different way. I want to think about productivity differently. Kevin Warsh is a supply side economist. He's going to start to create a lot of supply side indicators to inform him as opposed to the more traditional demand side components of the economy and those indicators. This is in my career and I've been doing this since, you know, 91, 92, so about 34 years is the most monumental shift that I've seen take place. I inherited Greenspan when I started. Greenspan was there. That's all I knew. This is a major shift and I think that people are underestimating how monumental of a shift this is and where are they going to get it wrong and is by applying what they've learned over the last 25, 30 years under a Greenspan to then say, oh well this is what it's, this is how I would interpret this. I think the rules are the ground is shifting, not the rules of change, but the ground is shifting.
- [13:54]
Carol Massar
So good that it's shifting good that we kind of take a look at a system that we've been kind of moving along for a long time.
- [14:01]
Jim Caron
Well, I mean, you know, changes happen, right. So Greenspan changed it right when he came in because he felt, and you, and you mentioned yourself the economy is just changed. Right. So when we look at labor data and labor statistics, I think the data is, has been challenged for the last five years. The nonfarm payroll data for me used to be the sun rose and set on the non farm payroll data for me for most of my career last five years not very informative weekly. Jobless claims were a bit better, so I think there's a lot of challenge to the data.
- [14:30]
Tim Stenovec
That was Jim Caron, chief investment officer of portfolio solutions at Morgan Stanley Investment Management.
- [14:35]
Carol Massar
Coming up, we continue with Jim Carrey and we zero in on the Fed's inflation battle and whether that elusive 2% target is still realistic.
- [14:43]
Tim Stenovec
You're listening to Bloomberg Businessweek. This is Bloomberg.
- [14:49]
IBM Narrator
What if data didn't sit still? What if intelligence moved with us, not buried in reports but activated in real time, where lives are being shaped, where decisions are being made? It all starts with the question where is the potential Catality turns data into clarity, intelligence into insight, insight into action. Because when intelligence moves, we all move forward. Intelligence beyond bounds.
- [15:19]
IBM Representative
So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [15:48]
Public.com Advertiser
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- [17:00]
Bloomberg Radio Announcer
Bloomberg Business Week Daily with Carol Massar and Tim Stanweck on Bloomberg Radio.
- [17:07]
Carol Massar
Welcome back to the weekend edition of Bloomberg businessweek. We continue our conversation with Jim Carrey and he's Chief Investment Officer of Portfolio Solutions over at Morgan Stanley Investment Management.
- [17:17]
Tim Stenovec
We kicked off this part of our discussion by zeroing in on the central banks and inflation mandate, specifically whether that elusive 2% inflation target is still achievable in this economic climate or if the Fed is chasing a moving target. Here's Jim Carreran.
- [17:31]
Jim Caron
In the 90s, we didn't really get to 2% as a target either. We didn't even really have the target of 2% at that time, which is another thing. So maybe as I'm saying, as Kevin Warsh is kind of going back to the 90s, maybe we should think about the target. Is it more of a range or is it a specific point target? And the other thing that I think is going to be very, very different is that the way that the traditional way over the last 25 years or so that we thought about controlling inflation was to adjust the jobs market. Right. So if inflation's running too hot, this is the irrational exuberance. How do you, how do you control inflation? You kill the jobs market, you create a recession, you get the unemployment rate up, you get prices back down and you tamp down inflation. What Warsh is saying is that if you're in this period of higher productivity, then lower, lower levels of unemployment. So an unemployment rate that say, falls from 4.3 to 3.8 or something like that doesn't necessarily mean that it's going to be inflationary. If it's because you're getting higher productive growth. That's a very supply side view of the world and basically saying that if industry is creating more efficiencies, that doesn't necessarily create a higher inflation rate. So a lot is changing and you know, it's. A lot of people should really just, you know, when they speak to say, look, I'm not really sure but what I think is, as opposed to being so definitive, so I'm keeping a very open mind about all of this.
- [19:01]
Tim Stenovec
Does AI completely change everything that we're talking about?
- [19:04]
Jim Caron
Possibly, possibly. You know, I mean, I think the issues with AI that, that I have in economic forecasting is that it's kind of just going to look at the survey data. It's going to look at the available data sets that are out there. Unless you train it to look at.
- [19:21]
Tim Stenovec
I just mean that from productivity. Oh yeah, that's what I mean.
- [19:24]
Jim Caron
100%. Yeah, yeah, I see what you're saying.
- [19:25]
Tim Stenovec
Yeah. Not on the data analysis, but just on productivity and what it does to this economy.
- [19:30]
Jim Caron
So in my view it does. Right. So I think the productivity, I think you're going to get A lot. I think you get higher levels of growth and lower levels of unemployment. But if it's more productive, because AI is becoming more efficient is going to be a, it's going to be a positive. So when we think about AI, people think about it in terms of profit margins. Right. And today the way they think about it is it reduces costs. So more AI, less junior analysts, higher unemployment rate. And that's kind of the negative view of AI. Yeah, I don't think it's going to work that way. I think what we're going to see is you're going to have more AI, it's going to create more demand. It's the Javons paradox. Right. Whereas when something becomes cheaper, you demand more of it. Which is, which is what I think AI is going to do. You'd have more people asking critical questions of this tool called AI, and we're going to be judging the results of these things. And ultimately if you get better, more efficient decisions and higher productivity, these are the companies that, you know that actually use this. These are the winners. There's a lot of creative destruction here. There are going to be winners and losers.
- [20:37]
Carol Massar
Yeah, I agree. Do you think that that means that some of the companies we talk about non stop could be a possible loser down the road?
- [20:44]
Jim Caron
Absolutely. Right. So it's all about adapting and it's looking at companies that can actually use this tool very efficiently. So right now there's a big productivity gap between the way that we evaluate this. Right. We're just in the infancy of all this stuff. Right. So if you ask any individual person, hey, do you use AI? Yes, I do. Are you more productive because you use it? Yes, I am. Okay, now go ask the CEO of that company if your employee's 30% more productive. Are your profits 30% higher? And they're gonna say, I don't think so, not yet. Over time that gap, that productivity gap is gonna narrow relative to the individual being more productive and the company becoming more productive. Companies right now don't quite know how to use this tool efficiently or effectively.
- [21:34]
Tim Stenovec
But I think the concern that a lot of people have is that, well, maybe when an employee leaves, that employee doesn't need to be replaced by headcount. And, and it's the margins that where you'll see and fewer people producing the same amount of work, great for shareholders, not so great for those folks with jobs.
- [21:57]
Jim Caron
Yeah, it could be. Right. So my take on it is that the real power of a powerful user of AI is somebody who can ask really good creative insightful questions. So the work that, whether it's software programmers, engineers that create a lot of the software, a lot of that work is going to get displaced, I think. But the people asking the questions, the more creative questions that come in that try to solve problems, I think that doesn't go away. And then you have to judge it, you have to interpret it, and then you have to apply it. And I think that's where the job growth is actually going to be.
- [22:38]
Carol Massar
So maybe that liberal arts education makes it 100%.
- [22:42]
Tim Stenovec
Talking to a Bowdoin guy here and a Colby guy here. So we're getting along right now,
- [22:49]
Carol Massar
but I think about that a little bit like learning how to ask the right question. And we keep talking about this, too. It's not these basic, simple questions. It's really complicated, smart, thoughtful questions.
- [23:02]
Tim Stenovec
The critical thinking that you develop when you're writing those papers late at night that now AI is writing for you, unfortunately. So the kids aren't learning how to do that.
- [23:09]
Jim Caron
Well, think about it. I mean, you may not be able to code, but you can ask a lot of really good questions. So there you go. And if you could ask really good questions, well, don't worry about it. The machine's going to code for you.
- [23:19]
Tim Stenovec
Exactly. If you have a vision for something, because you have an analytical mind, right. You have an idea for creating something, you no longer need to find that person to code for you. You can get Claude Code or Codex from OpenAI to do it for you.
- [23:30]
Jim Caron
So Albert Einstein said that the true measure of intelligence is imagination. It's not all these hard technicals is if you're very imaginative, that's actual intelligence. I'll go with Albert Einstein on this one.
- [23:42]
Carol Massar
Yeah. It makes us think there are people who've been writing things about. You have to give your mind, your brain kind of a moment to think, some space to think, rather than kind of nonstop, either on a computer or on your phone and thinking things through. When it comes to the spend that we see nonstop, and we've been talking a lot about Space X now, tapping the debt market, I don't know, how do you work that into the investment narrative? Is it smart? Do we get nervous?
- [24:14]
Jim Caron
Well, I mean, things are going to go in cycles. There's no question about this. So there is a large spend right now and everybody's going to ask a question, is the juice worth the squeeze? Right. We're spending a lot of money. Are we going to get the profits or is this going to happen? I think it will. It's going to happen. Over time. But it has to be an enterprise solution, meaning that companies, Corporate America is who's going to build data centers in space, for example. Right. It's going to be the need from business that says, hey, I've got a whole team of people that I just hired, and they're using this AI engine, this AI tool, creating agents nonstop. And their productivity's off the charts. We need to do more of this. It's an enterprise solution that's going to actually create the profitability. And I don't think we're close to it yet, because right now you're asking CEOs like, oh, so is this profitable? Yeah, I think it is. I mean, they're not quite sure how to measure it.
- [25:10]
Tim Stenovec
Well, the flip side of that is some CFOs pulling back on. On those tokens because they're not necessarily seeing the roi. Uber, for example.
- [25:18]
Jim Caron
Expensive. Yeah, yeah, yeah. It's a cost. It's cost component. But like anything else, you know, tokenization is. Is going to get commoditized. It's going to become cheaper. Do you remember, like, oh, don't print in color. Right. You can't print in color because of ink was born. Nobody really says that anymore. Right. You know, so I think it's one of these things that it's like, you know, I think it's gonna get cheaper.
- [25:41]
Tim Stenovec
What did I tell you, Carol? When I started working here six years ago, I was like, I like working here. Cause they don't count how many pages you print in color.
- [25:47]
Jim Caron
Yeah.
- [25:48]
Tim Stenovec
As opposed to where I used to work. And they're like, do not print in
- [25:50]
Carol Massar
color or do not print at all.
- [25:52]
Tim Stenovec
Yeah, exactly.
- [25:53]
Carol Massar
Just read off of it. You know, it's funny when we talk and I feel like, I mean, we don't know what the timeframe is here, do we? Nope, we really don't. We're taking it day by day, week by week, month by month, in terms of just kind of watching how this, you know, evolves. But what I do find interesting, and we mentioned roi, like, our conversations have evolved a lot more to talk about that. When we're talking about artificial intelligence. We weren't doing that necessarily a year and a half ago.
- [26:19]
Jim Caron
Yeah. So. So I think if you look at any business cycle, right. You've got the early adopters, you've got the late adopters. Right. It's never a straight line. It's never like you're early, then all of a sudden you kind of get there. It's always exponential. So you start off there are going to be some early adopters. The way that the market's going to identify that is these are the companies who are going to get rewarded.
- [26:41]
Carol Massar
So, Jim, just early adopters.
- [26:42]
Jim Caron
Early adopters.
- [26:43]
Tim Stenovec
Well, I think it's fair to say some of those are getting rewarded right now.
- [26:47]
Jim Caron
Exactly.
- [26:48]
Tim Stenovec
But apart from those companies, the developers of the frontier models, the hyperscalers, who else could be winners? Where else could you find winners?
- [26:57]
Jim Caron
I think you're going to find it all across the spectrum. It's not a question of so specific industries. It's really a question of which companies in which sectors are adopting these tools and unlocking operating leverage. That's going to happen in health care, that's going to happen in industry, that's going to happen in software and technology. It's going to happen.
- [27:16]
Carol Massar
All financial sector.
- [27:18]
Jim Caron
Financial sector financials are pretty efficient, but I would say. But even still financials, these are all managed care networks which are very cost intensive, very heavy, you know, workforce intensive. And the companies that do this, right, they're going to unlock a lot of operating leverage. And those are cash flows I want to buy. So I don't think there's any one sector, one company is the president. Right.
- [27:42]
Carol Massar
Though if that war had continued, would there be an economic catastrophe for the United States?
- [27:48]
Jim Caron
Yeah, I think there would have been a significant slowdown. I mean, ultimately the inventories and the oil supply shortage would have caught up. And everybody's pretty well versed on the numbers.
- [27:59]
Tim Stenovec
But is the challenge now that he said that out loud, Iran knows they have that leverage?
- [28:06]
Jim Caron
I don't think it's news to them. I mean, I think they're following the same flow of information that the rest of us are and calculating the amount of barrels of oil that the world needs and things like that. And it was creating some real shortages in and some pressures. And I also think, though, that what Iran also knew is that the world, and, you know, China is a big consumer of oil, for example, would have some patience up to a certain point and then they would start to. Iran would start to feel a lot of different pressure from their partners because then it would really become, you know, a much bigger issue. But like, I mean, you know, ultimately, I do think, though, we're at a stage where the, the point of this conflict, as far as it matters to the markets with oil prices, I think, is largely behind us. I mean, where oil is today in the mid-70s, whether you're looking at WTI or Brent, which is around 77 at the moment, this is way below what I thought it was going to be. I would have said mid-80s. I wouldn't have guessed in the 70s. So I think there's a lot to this.
- [29:10]
Tim Stenovec
Our thanks to Jim Carreyn, Chief Investment Officer of Portfolio Solutions at Morgan Stanley Investment Manager.
- [29:15]
Carol Massar
Be sure to check out our podcast feed, more of our conversation with Jim Carrey and we got into positioning when it comes to global equities. Still ahead on Bloomberg Businessweek. From anti aging to muscle growth to improving anxiety and accelerating recovery from injuries. Also getting a tan. There's probably a peptide for that, or
- [29:34]
Tim Stenovec
at least a peptide that says it's for that.
- [29:36]
Carol Massar
Yeah, that's true.
- [29:37]
Tim Stenovec
The explosive demand for physical optimization has minted a new underground economy. We go inside the billion dollar peptide gold rush next. This is Bloomberg.
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- [32:19]
Carol Massar
This is Bloomberg Business Week Daily with Carol Massar and Tim Stenovec on Bloomberg Radio.
- [32:26]
Tim Stenovec
This is about the million dollar peptide gold rush. And as I was reading it, I thought about a friend of mine who recently shared that he is the father of teenage boy or two. He found some peptides in the refrigerator in the basement.
- [32:42]
Amanda Mull
Well, safe storage at least.
- [32:44]
Tim Stenovec
Safe storage, but not necessarily safe injection.
- [32:48]
Amanda Mull
Yes.
- [32:49]
Tim Stenovec
Or safe part of the world or place that these came from. And that's really at the heart of the story, Tim.
- [32:58]
Carol Massar
That story was written by Amanda Mull. She is Bloomberg Businessweek senior reporter. And Madison Mueller, she is Bloomberg News U.S. healthcare reporter. And you can of course check it out in its entirety. Find it on the Bloomberg terminal and@Bloomberg.com
- [33:10]
Tim Stenovec
first of all, if people aren't familiar with peptides, Madison, start us out. What are they?
- [33:15]
Madison Mueller
Oh, that's a good question. One of the things is that most people actually don't know what they are, don't know how to explain them, even if they think that they do. And a lot of people are injecting these things, really know what they are. But peptides are essentially, I mean, if you think about it, Insulin's a peptide, GLP1s are a peptide. There are a lot of legal drugs out there that are peptides, common drugs. But when we're talking about peptides, so putting it in this sort of context, we're talking about black market peptides, the ones that are not approved drugs that don't really have the rigorous safety.
- [33:49]
Tim Stenovec
These were the ones in the fridge of the teenage boy.
- [33:51]
Madison Mueller
Yeah.
- [33:52]
Carol Massar
Okay, this doesn't sound good. What exactly are black market peptides? Amanda?
- [33:57]
Amanda Mull
Well, they are, well, they start off as like little vial, little glass vials of powder that are imported from overseas, usually from Chinese manufacturers, which, it should be noted, also produce a lot of the active pharmaceutical ingredients in perfectly legal, perfectly safe drugs. They're imported from overseas, little glass vials of powder. They're reconstituted with a special type of sterile liquid so that they can then be drawn up into a syringe and injected. And so once they're reconstituted, they have to be kept cold in order to be kept safe. So that's why they're in the fridge.
- [34:33]
Carol Massar
Why do people want them?
- [34:35]
Amanda Mull
A whole host of reasons for everything.
- [34:38]
Carol Massar
Basically, to sleep, to tan.
- [34:41]
Tim Stenovec
One thing that may inform the question is Carol's not on Instagram. Maybe she doesn't see the same things I do.
- [34:47]
Carol Massar
Well, tell us about like what is going on?
- [34:50]
Amanda Mull
Well, people are looking for a magic pill. Like as always, as from the beginning of humanity, people have been looking for substances that can solve various problems. And people are hopeful because GLP1 drugs are so effective at helping people lose weight and work. They work, they work, they're safe, they're effective. They've been used in large patient populations. So once those got popular, people started looking for other peptides to do other things in their bodies.
- [35:21]
Tim Stenovec
Well, Madison, you cover the regulated, mostly the regulated pharmaceutical industry. As a healthcare reporter, do the black market peptides work? Does the stuff that is sold as part of, I don't know, a filler treatment at a med spa in Brooklyn or the stuff that a celebrity takes, talks about as a secret, seems to
- [35:41]
Carol Massar
know a lot about this.
- [35:42]
Tim Stenovec
It's all in the.
- [35:43]
Carol Massar
I know, I know.
- [35:43]
IBM Representative
Just kidding.
- [35:46]
Tim Stenovec
Do they, do they work? Like, is there the evidence to back it up?
- [35:50]
Madison Mueller
That is the key question. Because the thing is like if you ask someone and we ask many people in the course of reporting this story, several of whom are in the story, they do work, they're life changing. But the evidence and the safety data and the effectiveness data is not there to back it up. So it's hard to know and it's hard to tease out. I mean, one of the people that we talk to in the story is on tirzepatide, which is the active ingredient in Lilly's drugs. They're also on multiple other things. And so it's hard to know whether the effects that they're experiencing, the anti inflammatory effects, the weight loss, all of the things are because of Lilly's drug, which we know does work, or the other things that they're on. And you know, sometimes when people start taking these peptides, they might also start working out more or start eating healthier or doing other things. And it's just a bit hard to know what's actually happening.
- [36:42]
Carol Massar
So the FDA is all over this, right?
- [36:45]
Madison Mueller
Well, all over it is a little degenerate.
- [36:48]
Carol Massar
There was a little sarcasm there, yeah.
- [36:50]
Amanda Mull
I mean they're all over it in certain ways.
- [36:53]
Carol Massar
Well, tell us, where are they on this? Because it's obviously people are interested. People are consuming them.
- [36:57]
IBM Narrator
Right.
- [36:58]
Carol Massar
And so where are they?
- [36:59]
Amanda Mull
Yeah, well, I think perhaps we haven't said this yet, but these drugs are like, illegal to sell, illegal to prescribe. They are black market substances. They are not approved for legal sale in the United States. And the ones that are approved for legal sale, if you're getting them in vials of powder, you're getting an illegal version of them that's being sold outside of patent.
- [37:18]
Carol Massar
So it won't be the first time that somebody consumes an illegal substance. Right?
- [37:22]
Jim Caron
Yeah.
- [37:22]
Amanda Mull
Illegal drugs are something you have a long and storied history in this country.
- [37:26]
Carol Massar
Okay, but. But what's worrisome though, right? And where is the government on this?
- [37:30]
Amanda Mull
Right. So RFK Jr. Has said he's a peptide fan first and foremost and has said that because there is this overwhelming. Yeah, hold on.
- [37:38]
Tim Stenovec
But that's such a.
- [37:38]
Public.com Advertiser
Hold on, hold on.
- [37:39]
Tim Stenovec
I just wanna stop you there, because that's contradictory in some way because a lot of his supporters. Madison, you've been on our program talking about this. A lot of the Make America Healthy Again people are sort of anti GLP.1, which you helpfully shared with us at the beginning, is a peptide. So is there some sort of contradiction there?
- [37:55]
Amanda Mull
They're being sort of caught in a bit of a corner that they've backed themselves into, I would say, because there is. You know, the way I would think about it is that, like, it's not an incoherent position toward science or scientific proof or towards these drugs, but it's a coherent position in regards to, like, an attitude toward authority. So getting these things outside of normal medical guidelines, outside of normal chains of expertise, outside of a doctor's office in most cases, is like, really an effective pitch for the Maha crowd for a lot of different things, because it enables a person to feel like they are taking control of their health and not listening to what the government or big Pharma says. So the existence of these peptide supply chains outside of regulatory control is very enticing to the whole Maha mindset, I would say. So RFK Jr. Has said that he is a fan of peptides and he has instructed the FDA's regulatory committee on Compounded Pharmaceuticals to look into allowing some of these drugs to be made by compounding pharmacies, which wouldn't approve them for regular pharmacy sale in your local cvs, but it would make them available through sterile facilities.
- [39:13]
Carol Massar
Well, isn't that gonna tick off Peter Magic
- [39:17]
Madison Mueller
or it will do more business.
- [39:20]
Carol Massar
Yeah, tell us about him. Because that's kind of the character that kicks off your story.
- [39:23]
Madison Mueller
Do you want to go into it?
- [39:24]
Jim Caron
Sure.
- [39:26]
Tim Stenovec
He drives a fast car.
- [39:27]
Bloomberg Host
Yes.
- [39:27]
Madison Mueller
That's all you need to know.
- [39:29]
Amanda Mull
Peter Magic is a chemist with a lab outside of Prague.
- [39:31]
Carol Massar
Is Magic his real name?
- [39:33]
Amanda Mull
Yes, as far as we can tell. As far as we can tell.
- [39:35]
Carol Massar
Keep going.
- [39:37]
Amanda Mull
He owns a testing lab outside of Prague. That his sort of become like a central node in the trade of black market peptides across the world. Because he started his business to test black market anabolic steroids and peptides first gained sort of a foothold through some of the same users, like fitness hobbyists, biohackers, people who are interested in perfecting their own form. So he realized there was an opportunity to purity and sterility test these substances because, like, users of anabolic steroids, people want them, and they want them outside of legal means, but they still don't want to, like, die because they injected
- [40:15]
Carol Massar
something, you know, to self.
- [40:17]
IBM Narrator
Right.
- [40:17]
Tim Stenovec
So, Madison, does that mean they're safe still?
- [40:20]
Madison Mueller
Not necessarily. I mean, the thing that, you know, he can. He can test these substances. He can say that they are what they purport to be. But a lot of these people like the practices of injecting yourself with the medication. Like, some people aren't changing the syringe, or they're not, you know, cleaning properly. And, like, there can still be things in these drugs that are not necessarily safe. And like, the practice of how people are actually taking and consuming these medicines, like, there's just no oversight. So any number of things can happen. And that's sort of the problem. I mean, there can be medication interactions. You can be. One of the things is, with some of these peptides, you need to take blood tests, you need to cycle on and off of them. So you're not essentially, like, poisoning yourself. And not everyone knows that. So it's like all of these things that in, you know, with normal drugs and in a normal setting would have some type of doctor involved or some type of oversight are just not happening.
- [41:16]
Carol Massar
What does the medical community say? What do doctors say?
- [41:18]
Madison Mueller
Well, we. There are some doctors who are also fans of them. And like, we talked to some of them in this story, and those doctors are more comfortable, I would say, with the risks or aware of the risks, but they think that some of the benefits might outweigh the risks. And so it's definitely challenging.
- [41:37]
Tim Stenovec
Amanda, do we get to a point where in a couple of years this is just gonna look so quaint? Because these have made their way through a formal approval process, and we'll be able to buy legitimate peptides at CVS?
- [41:50]
Amanda Mull
Probably not. The FDA's process for approving drugs like this for regular commercial sale is pretty specific in the kinds of proof that it requires. And in order to. This is the same reason why it's been until, you know, last week it was years and years since we had gotten a new sunscreen filter approved, even though there's lots of effective ones being used in Europe and Asia for decades. The FDA requires like somebody to invest in a lot of very expensive, lengthy clinical trials in order to create the sort of safety and efficacy data that it requires in order for these drugs to be sold commercially. So because these drugs exist outside of like the normal patent process, that would normally allow a single company to profit off of them exclusively for a period of time after their approval. No single company is really incentivized to go through the effort of getting these drugs tested and approved in the way that they normally would be, because once they're approved, then all of their competitors can make them and sell them as well. So the fda, at least under rfk, seems intent on sort of making an end run around that type of legalization, or at least that's the issue that they're going to take up in a few weeks.
- [43:08]
Carol Massar
We only have about 50 seconds left here. I'm just reporting this out because there are people, as you say, it's all over social and people are looking, looking at this and thinking, should I take this? What's a quick like thought to them, Madison or what's your what? What did you learn in kind of doing this?
- [43:23]
Madison Mueller
I mean, I think that it will be really important for people to tune into this FDA meeting that's happening in July where they will literally be reviewing the evidence and the data around these things. There are independent experts on this committee that will be talking about that.
- [43:37]
Carol Massar
Yeah.
- [43:38]
Madison Mueller
And most of the people that we talk to say there really isn't any evidence or human data on this. So I think like, hopefully that will make people aware of the situation.
- [43:47]
Carol Massar
More 15 seconds for you, Amanda.
- [43:49]
Amanda Mull
Well, I think so many of their proponents agree that there's not any data, but they think that they should be able to give it a shot if they want to.
- [43:55]
Tim Stenovec
Our thanks to Amanda Mole, Bloomberg Businessweek senior reporter, and Madison Mueller, Bloomberg News, U.S. healthcare reporter. Check out their story in Bloomberg Businessweek.
- [44:04]
Carol Massar
It's a great read. Check it out. It's also online. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us.
- [44:11]
Tim Stenovec
Be sure to tune in to Bloomberg Business Week daily Monday through Friday starting at 2pm Wall street time on Bloomberg Radio, Bloomberg TV and on Sirius XM channel 121. Also, just a shout out to Sebastian Escobar.
- [44:22]
Carol Massar
Yeah.
- [44:23]
Tim Stenovec
For hooking us up each and every week with this weekend programming.
- [44:26]
Carol Massar
Aw, that's really kind.
- [44:28]
Tim Stenovec
I mean, he does a lot.
- [44:29]
Carol Massar
I know he does kind of everything. Travels on the road with us.
- [44:31]
Tim Stenovec
Well, he puts up with us.
- [44:33]
Carol Massar
That's a big part of it. Hey, you can also watch our daily broadcast on Just Search Bloomberg Podcast for simulcast on Bloomberg originals, available on bloomberg.com originals and streaming platforms including Roku, Amazon Fire TV, Samsung TV plus and more.
- [44:48]
Tim Stenovec
Find our Bloomberg Businessweek podcast at bloomberg.com, apple or wherever you get your podcasts and the latest edition of the magazine. It's available on newsstands now@bloomberg.com and always on the Bloomberg Terminal. I'm Tim Stanbeck.
- [44:59]
Carol Massar
And I'm Carol Massar. Have a good and safe weekend everyone. Stay with us. Today's top stories and global business headlines are coming up right now.
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Jim Caron
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Madison Mueller
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