In short
Episode topic: U.S.-Iran escalation and its security/economic implications, plus a separate segment on AI-driven semiconductor spending and another on psychedelic drug M&A; later, a banking earnings roundup.
Guests
Nick Wadhams (Bloomberg News national security reporter, Washington, D.C. bureau). Ed Ludlow (Bloomberg Tech host, San Francisco bureau). Madison Muller (Bloomberg News healthcare reporter). David George (Baird senior research analyst, Franklin, Tennessee).
Key claims
- U.S. strikes intensify, including hitting an oil tanker near Iran’s main export terminal; Strait of Hormuz traffic slumps.
- Iran’s retaliation includes firing at U.S. bases in Kuwait and Jordan; assassination-plot concerns remain.
- Defense stockpiles and munitions production constraints may limit sustained operations; cruise/Patriot strain and slow artillery shell ramp-up.
- Escalation risks include targeting energy infrastructure and possible troop commitment; Israel’s independent actions complicate U.S. ceasefire goals.
- Nuclear strategy appears inconsistent: possible low-level enrichment acceptance vs insistence on no nuclear bomb; JCPOA-style roadmap not clearly detailed.
Notable examples
- Wall Street Journal reporting on potential expansion of operations and “Khark Island” seizure discussions.
- TSMC raising multi-year AI-related capex; U.S. fab investment plan boosted by $100B for four fabs.
- Eli Lilly buying Atai’s Tieback for up to $3.8B; FDA support and treatment-resistant depression market context.
- Big banks’ trading/investment banking strength (JPMorgan, Citi, Goldman, Bank of America, Morgan Stanley, Wells Fargo).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOEscalating Conflict: US-Iran Relations
0:00 to 1:24
Discussion on the US's recent military actions and their implications.
“So there's a lot of noise about AI, but time's too tight for more promises.”
Escalating Conflict: US-Iran Relations
2:32 to 4:25
Discussion on the US's recent military actions and their implications.
“intensifying strikes against Iran overnight, hitting an oil tanker near the country's main export terminal.”
Military Readiness and Economic Impact
4:25 to 8:08
Insights on US military stockpiles and economic repercussions of ongoing strikes.
“You know, one of the things that we have been talking about as a team, Nick, is military stockpiles.”
Internal Dynamics in Iran
8:08 to 14:00
Analysis of Iran's internal political factions and their impact on negotiations.
“they didn't tell that you guys feel like you're getting.”
Analyzing U.S. Military Strategy in Iran
14:00 to 16:32
Discussion on President's potential military choices regarding Iran.
“Markets sometimes don't look through it.”
Analyzing U.S. Military Strategy in Iran
16:36 to 17:50
Discussion on President's potential military choices regarding Iran.
“Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC.”
Analyzing Semiconductor Market Trends
17:54 to 22:50
Insights into the impact of semiconductor companies on the market.
“But without identity, you can't trust they'll serve your business instead of jeopardizing it.”
TSMC's Expansion in the U.S.
22:50 to 27:16
Exploration of TSMC's investment and operations in the U.S.
“You know, I mean, you know, we're talking about TSMC today, Ed, but it is not just a TSMC story as you guys were just talking about.”
TSMC's Expansion in the U.S.
27:20 to 27:38
Exploration of TSMC's investment and operations in the U.S.
“Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC.”
Eli Lilly's Acquisition of Atai
29:23 to 34:06
Discussion on Eli Lilly's acquisition of Atai and the growing interest in psychedelic medicine.
“And you're seeing colors and crazy things?”
Show all 18 chapters
The Market for Mental Health Treatments
34:06 to 39:55
Exploring the market dynamics surrounding mental health treatments, including psychedelics.
“Were you looking at me because of the Botox or the hair loss?”
Trends in Big Banking
40:05 to 41:13
Overview of the latest trends and profit reports from major banks this week.
“Advisory services by Public Advisors, LLC, SEC registered advisor.”
Trends in Big Banking
41:17 to 42:00
Overview of the latest trends and profit reports from major banks this week.
“But without identity, you can't trust they'll serve your business instead of jeopardizing it.”
Overview of Big Bank Earnings
42:00 to 43:06
Learn about the significant earnings reported by major banking institutions.
“We want to go to big banks because this week it was all about big banks.”
Discussion with David George
43:06 to 45:02
Insights from David George on the banks' performance and consumer health.
“David, settle this for us, and then we'll get to some of the numbers and some of the details.”
Financial Sector Insights and Risks
45:02 to 48:07
Analysis of current financial conditions and potential risks ahead.
“there was a lot of angst around private credit.”
Navigating Economic Shifts
48:07 to 50:26
Discussion on how banks adapt to shifting economic conditions and risks.
“David, one thing I wanted to ask you about, you know, these stocks, too, these names are increasingly levered to the AI bet.”
Market Outlook and Investor Sentiment
50:26 to 52:44
Exploration of market outlook and cautious investor sentiment in the current environment.
“Well, first of all, if you agree with that, which bank, in your view, is best handled to navigate that?”
Transcript
Automatic transcript. May contain errors.0:00So 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. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy.
0:38Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property, liability, or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one-time decision. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day-to-day operations.
1:14And when losses do happen, the Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. As industries evolve faster than ever, companies need an environment that accelerates strategic growth and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem,
1:43Carol Massar:diverse communities that attract top talent and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business 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. The Bloomberg Businessweek Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
2:31Carol Massar:We also continue to keep an eye on what's going on in the Middle East. The war between the U.S. and Iran continuing. The U.S. intensifying strikes against Iran overnight, hitting an oil tanker near the country's main export terminal. A shipping traffic slumped through the critical Strait of Hormuz. Iran responded by firing at American bases in Kuwait and Jordan, and Tehran seems in no mood to back down in the face of President Trump's warning that he will escalate strikes. We head to the Bloomberg News Washington, D.C. Bureau and to our national security reporter, Nick Wadams, who joins us from there.
3:03Nick, we as a nation, the question I think a lot of people have, I don't know, Carol was asking this question earlier. Are we less secure or are we more secure the longer this war between the U.S. and Iran goes on?
3:19Are we less secure? You know, I think the big question that you have to look at this from a few angles. One is obviously U.S. bases in the region and U.S. allies. So their willingness to sort of partner with the United States in the long term. Big question there. They are obviously getting a lot more anxious, given that Iran's way of responding has been to attack U.S. allies as well as U.S. bases. So service members in the region, certainly less secure. I would say that hasn't really bled over into the United States itself, though obviously there are assassination plots against the president where they've accused Iran of trying to do that.
3:56So that is a big concern. Economically, I think on this very much an open question and a much more difficult one, oil going back up. The president had said when he had signed that ceasefire, listen, we wanted to avoid economic catastrophe. Well, here we are again. They're looking to potentially ramp up strikes again. And you can bet that that will have real aftershocks for the economy and it will hit people's pocketbooks back home.
4:22Carol Massar:Well, speaking of such, the U.S. forces began conducting a new wave of strikes on Iran. So it continues and it goes on and on. You know, one of the things that we have been talking about as a team, Nick, is military stockpiles. Where are we? You know, you've got the Ukraine war with Russia, whatever assist the U.S. has been providing there. Obviously, its efforts, its actions with the war with Iran. Where are we? Just yesterday, President Trump was talking about, you know, calling military contractors to speed up production. A lot of them were at this event in Pennsylvania with him. Right. Well, there are so many issues there, but certainly the information we have here, I mean, the administration is not disclosing the extent of its stockpiles for some of its more advanced weapons systems.
5:07But certainly when you fire a lot of cruise missiles and bombs at Iran, that means you can't use those weapons or stockpile those weapons if conflict should arise elsewhere. We've seen that strain, especially on the ballistic missiles, on Patriot missiles and things like that, which cost millions of dollars and take years to produce. And then we've also seen on the flip side, the U.S. has really struggled to ramp up production of certain other munitions, such as 155 millimeter shells for artillery that were so desperately needed in Ukraine. Obviously, that's not as much of an issue for President Trump because he's not supplying those weapons as much as Joe Biden was.
5:50But you do see this issue across the defense sector, which is why it's so important to the president. And defense companies are not able to ramp up as quickly as he wants. And that's also pushed a real question for other countries that want to buy those things from the United States. The wait list there sometimes goes for years. Nick, we covered this late yesterday, and I want to get your take on this. The Wall Street Journal with reporting yesterday that said that the president is leaning toward expanding U.S. military operations in Iran, hosting a situation room meeting on Tuesday to discuss the seizure of Khark Island.
6:25Questions about the actual presence of troops in the area as well. What's your reporting telling you about the way that this could escalate? Well, I mean, certainly the big question, what you saw from the overnight strikes, was itself an escalation. If they're hitting an oil tanker, that does suggest that the administration is willing to get a little closer to that line of really going after civilian and energy infrastructure rather than just military infrastructure. That's something the president has not really been willing to do in an extensive way. And if they start doing that, you know, that could open a lot up a lot of thorny legal questions.
7:03But then obviously there's the bigger risk. If he decides to commit troops to the ground, I mean, that extends the time horizon much more for the conflict. Obviously, it puts U.S. troops in much greater danger. The blowback could be much more severe. I mean, there's a reason why presidents have wanted to rely on air power for so long, because though it's expensive, it's considered a much less dangerous way to do the conflict. Of course, as Iran is showing, they've been able to hold out against that. So the president really wants this thing to end, but he doesn't seem to be able to achieve his strategic ends through bombing alone.
7:39So that then raises that question of a more serious commitment, either going after infrastructure or providing troops. But, you know, a huge political issue for the president, as well as, you know, the livelihood, you know, lives of his troops, because this is something he campaigned against, you know, no new wars. And this one's been going on for several months, and indications suggest he may be thinking of deepening the U.S. involvement just before the midterms. That's going to have blowback.
8:07Carol Massar:Nick, Iran's lead negotiator, I'm curious they didn't tell that you guys feel like you're getting. Iran's lead negotiator defending diplomatic efforts to end the war, pushing back against hardliners, urging him to abandon a tentative peace deal and avenge the country's slain supreme leader. What do we know? We keep thinking about what's going on inside Iran. What do we know about the internal tensions and battles within Iran and how that complicates bringing this war to an end? Right. I mean, so those remarks that you cite clearly show that there are deep factional divisions within Iran, just like there are, you know, anywhere else, including in the United States, where you have members of Congress or members of the administration within the administration, members of the opposition, all of which have a voice and can slow down or speed up that process.
8:56And we have seen Iran, you know, you have the political leadership, you have the IRGC, you have the supreme leader, all of whom have deep interests in the outcome of this thing. But what we do see is sort of a fascinating element, which is despite this war, there are two very powerful and clear factions in the U.S. and in Iran that do want to see this thing end and are looking for an off-ramp. The question, of course, is whether they have the power to, you know, push that policy through amid all the voices that don't want that. And then, obviously, the issue of how the U.S. and Iran either read or misread each other's intentions or actions.
9:39So it's a whole sort of swelter of competing interests and power centers on both sides, not even looking at the dynamic when the U.S. and Iran actually get in the room with each other. Yeah, and I'm glad you mentioned the politics of this too. I want to home in specifically on the nuclear issue and the many months that it took over a decade ago for the CPOA to be negotiated. What is the U.S. strategy around the nuclear enrichment program in Iran right now? Because it seems like sometimes we hear from the president about actually physically going and getting what he calls the dust versus bombing facilities that intelligence, in some cases reporting, says where they could be working on this stuff.
10:28What is the strategy with that part of this mission? I mean, this is a great question. You know, the administration may have a strategy. They have been inconsistent, I would say, in communicating that strategy. I mean, the president, when he announced the ceasefire a few weeks ago, said, hey, maybe Iran should have the right to enrich. You know, other countries are allowed to enrich or they have nuclear, civilian nuclear programs. And so wouldn't be fair for Iran not to get that. Of course, that goes against sort of his own programming that he'd been saying for years, you know, and that a lot of his advisors had been saying Iran should not have the right to enrich uranium at all.
11:08So, you know, the issue with the JCPOA, I mean, that took years to negotiate. And the administration, the Obama administration gave very detailed explanations of what it was seeking to achieve. So allowing Iran to enrich at a low level for a set period of time, and then they would address it again once the terms of the deal ran out. This administration has not given us nearly so detailed a roadmap, but what they do seem to toggle between is an acknowledgement that, you know, listen, we are probably going to have to give them the right to enrich at least at a low level, similar to what the JCPOA did, and then we can figure out the rest later while insisting that they not have a nuclear bomb.
11:51Carol Massar:Where's Israel in all of this? Is that also a complicating factor? You know, we give you all the easy situations, as you know, to make sense of. We know Netanyahu, Benjamin Netanyahu, is going to be in town and spending some time with the president. But I'm just curious where they fit into all of this still. Well, it's a great question because, you know, you're talking about the political centers in the United States and the various factions here and in Iran. And then you have the whole issue of Israel, which with Prime Minister Netanyahu essentially willing to act independently. And in some ways, though, he's an ally of the president, acting as a spoiler for the president's plans.
12:34So continuing the war in Lebanon and then maintaining its own covert campaign that they have been doing for years to eliminate Iranian nuclear scientists and essentially conduct their own campaign against Iran. And that has been enormously complicating for President Trump because we've seen repeatedly that even when the U.S. commits to a ceasefire with Iran, it's not able to stop Israel from attacking Lebanon in particular, though Iran considers stopping Lebanon, the fighting there to be part of the ceasefire. So it's very complicated and very difficult for the president to control Prime Minister Netanyahu.
13:16Netanyahu wants the Iranian regime, essentially, you know, their nuclear program completely eliminated and is working sometimes at counter purposes to President Trump.
13:26Carol Massar:And my apologies. Prime Minister Benjamin Netanyahu actually is not coming to the U.S. next week. He was supposed to. Right. But this is as Lindsey Graham's funeral service has been pushed off and post-owned a little bit. I don't know. You know, Nick, I am shocked. I think a lot of folks are shocked that here we are still talking about this. I think the assumption was that this would be done early. I think anybody who understood Iran in the Middle East would have said differently when this happened. And where do we go from here? How do you guys, I mean, markets sometimes look through it. Markets sometimes don't look through it.
14:01Carol Massar:And so I guess we're just going to have to wait and see. I don't know. Is there a time, some point, do you expect the president to talk about it in his speech tonight? We are hearing it's going to be maybe about elections, but I'm just curious. Right. I mean, I think it seems likely that he would address it in some way. But the president really faces a big choice here because what Iran has shown is that with relatively few resources and despite the intense U.S. bombing campaign, it can really lock up the Strait of Hormuz and keep ships from going through it. So it doesn't need a lot of resources to do that because it's shippers that are going to make the decision about whether they want to risk that.
14:41And right now they're showing they don't want to risk it. That is not something the president has a lot of control over. So in a way, he's really sort of stuck in a bind here. He wants this thing to end. But if he the only way it seems to get it to end would be to really, in a way, counterintuitively ramp up the military campaign to a degree that he just does not want to do. So it's a real bind. I mean, I don't see how we how this thing ends anytime soon, especially given the complete lack of trust between the two sides. So it feels a little bit like we're going to be in this cycle where the president promises a ceasefire.
15:17Then maybe we get a ceasefire. Then we return to conflict. That that's going to happen in many more cycles or repeats of that cycle to come.
15:25Carol Massar:Yeah, it absolutely does feel that way. Nick, as always, you know, we appreciate everything that you do. Nick Wadhams. My pleasure. He is Bloomberg News National Security Reporter there in our Washington, D.C. Bureau. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
15:44Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like if the VIX hits 25, buy a put option on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.
16:23An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.
16:54Carol Massar:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.
17:32Carol Massar:Technology designed to help doctors spend less less time on busy work, and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust.
18:12So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.
18:24Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Once again, semiconductor stocks, as we mentioned at the top, a drag on the overall U.S. equity trade. Charlie also putting that into context. All names in the stocks are down on this Thursday. The index is off about 5%. Now, this is coming as U.S.-listed shares of Taiwan Semiconductor Manufacturing are down and a drag. The chipmaker reported its second quarter results and gave an outlook.
19:00Carol Massar:However, the company is also spending more to meet AI-related demands. So you've got that kind of push-pull going on there. With what you need to know, we've got the host of Bloomberg Tech, Ed Ludlow. He's in our Bloomberg News San Francisco bureau. Ed, analyst broadly positive on the report. I mean, you've got to spend to meet this demand. What's not to love in this report? That's probably exactly the right way to frame it. The world's biggest chip manufacturer, contract chip manufacturer, beat across the board, raised its sales outlook. Everything is very AI demand specific. But you're right that the market right now is recalculating the spending environment overall.
19:40So it's kind of like a chain effect. If TSMC is saying, OK, we are going to boost CapEx. And what they said was not just this year, but boost CapEx multiple times over multiple years. I think they said up to three years. What's the next step of that? That means that they see the hyperscalers also boost in CapEx, the recipients of capital expenditures needing to up their own game. And so the market's recalculating this relative to valuations. One thing I just want to ask you, it feels like
20:10Carol Massar:everybody is working on this timeframe of like looking to until 2030. Why is it? Why is it that three-year thing that everybody seems to land on? Super good question. In simple terms, the bit that TSMC is confronting on the demand side is capacity demand for leading-edge chips for AI, both logic and memory. Those chips go into data centers. The data centers take time to get built. So there is like this backlog that goes all the way through to the end of the decade, which is projects that are underway, projects that have been planned but not yet started, And it factors in future demand on inference, basically, what they think the compute demand will be for running AI workloads, such as the information that they have now.
20:56And so the way you guys have framed this is completely fair. The market is also just taking a breather. I loved what did Tim say was so good. The socks giveth and the socks taketh away. That has been true every day for about a month. It's so normal to see a swing of 5 % to the upside or the downside. Yeah, the reason I said that is because every day it seems like the Sox is either the leader of Carroll's gainers or the leader of my decliners. I mean, it is and it is 5%. And look, so far this year, it's still up, you know, two thirds, still up 66%. Exactly. But and look, and I think this is something we talk about with Ian King all the time.
21:34Chip makers are the ones that move drastically when it comes to cycles such as these. I mean, you've been in Silicon Valley for quite a few years at this point. What are folks telling you who lived through the dot-com boom and the dot-com bust and other times where chip makers have been the bell of the ball? Well, the difference is the health from a balance sheet perspective of these companies, the scale that they have now. You know, in the dot-com bubble, you know, these are financial metrics, but from a cash flow perspective or literally cash on the balance sheet perspective, the the world's biggest technology companies now they they weren't of that size then they didn't have the financial clout that they do now and equity markets you know those that were using equity markets weren't weren't being used in the same way that that they're being tapped now so like that's the principal difference you know on the socks you're exactly right to put it in relative performance year to date and also zoom out right nvidia is the easiest case study of like look at its performance from a stock perspective over multiple years on days like this i often like do my bow tie, do my gruffest Tom Keen voice.
22:40And I hit HRH on the Bloomberg terminal. And so like a move of 5 % on the socks is well within two standard deviations. That's what he would say. I won't do the voice. It's like normal. You know, I mean, you know, we're talking about
22:55Carol Massar:TSMC today, Ed, but it is not just a TSMC story as you guys were just talking about. I mean, the four biggest USAI operators, Meta, Alphabet, expected to spend upwards of$725 billion this year alone. This is all of them. What's going on right now, this market churn, is about whether or not you believe the AI spend and build is all real and impactful and will pay off, or do you kind of don't believe that story, at least not at these constantly growing spend levels? I mean, that's kind of where we are. So the way that I've read all the sales side notes I can. I've talked to as many market participants as I can.
Read the full transcript
23:34The conclusion today is that, yes, everyone is even more bullish on AI, but bullish on the idea that we have confirmation spending gets bigger. We don't have any confirmation that the payoff on the other side is there. You know, the literal revenue growth that derives from AI workloads when you strip all of the hardware story out. One point is that TSMC is a chip manufacturer. It makes chips for other companies. The most analogous story this week is ASML, which is a chip equipment maker. TSMC is the biggest buyer of ASML equipment. But ASML did exactly the same thing, raised their sales outlook for this year, boosted what they call capacity, but the number of chip making machines they plan to build this year and said that this is a multi-year horizon.
24:20They have a backlog for multiple years. It's all linked in a chain of chronological order. TSMC buys the machines from ASML. TSMC churns out the chips, the chips go into server racks, those go into data centers. The thing that's missing is how are the software companies showing us that they too are seeing the same boom? Ed, I don't remember, have you been to the TSMC facility in Arizona, just north of Phoenix? I have not. I have not. I wish, yeah. So what is happening? I mean, we don't have time to get a complete answer here, but this is supposed to be an ability for the US to get some of what TSMC does in Taiwan happening in the United States.
25:05It started during the Biden administration. It's now continued during the Trump administration. What is the status of what TSMC can do here versus in Taiwan? Well, the news is that they've boosted their commitment by$100 billion, right? So$250-ish billion overall in their planned investments for America. But what jumped off me at the page was, what does$100 billion extra get you? It gets you four fabs. And again, like goes to Carol's question, like, why are we talking about 2030? Fabs cost tens of billions of dollars a piece, and they take a really long time to build. At the root of your question is also a technology question, right?
25:42So America wants to re-insure chip manufacturing, wants to bring chip leadership back to this country. But from a technology process standpoint, is TSMC a Taiwanese company, or Samsung, a Korean company, going to put their absolute latest, greatest process into an American fab, or are they going to do that domestically? And that's the bit that lots of people question.
26:03Carol Massar:I mean, gosh, it's a fair question. I mean, I have thoughts on that, but if you want to play it safe, you keep it in your home front, right? Or I don't know. Ed Ludlow, thank you so much. He is the host of Bloomberg Tech. Catch it on Bloomberg Television at 11 a.m. Monday through Friday on Bloomberg Television. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
26:50on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC.
27:30Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.
27:38Carol Massar:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.
28:16Carol Massar:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. These days, it seems like AI agents are just about everywhere you turn. every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust.
28:56So whether an AI agent supports a single user or your entire enterprise with Okta, you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI.
29:08Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. I'm looking at the AdvisorShare Psychedelics ETF. And you're seeing colors and crazy things? No, I'm just kidding. I like that. It's actually up less than I thought. It's up 2.5%. The biggest mover hire in that ETF is a tie back up more than 32 % right now. This is after, our Bloomberg News team reported this late yesterday, that Eli Lilly was going to buy the company. And then this morning, I wake up to the news that yes, now Eli Lilly making it official, agreeing to buy a tie back for as much as$3.8 billion.
29:56It underscores growing interest from large drug makers in the once fringe area of psychedelic medicine.
30:00Carol Massar:Fringe no more. Madison Muller is with us. Bloomberg News healthcare reporter. She joins us here in our Bloomberg Interactive Brokers studio. It isn't just on the fringe anymore. It's like, so what does it mean when an Eli Lilly buys a company like this? Yeah. I mean, I think it just is really proof that this is an area of medicine that is legitimate, that people are interested in, that we're really seeing evidence and promising results in clinical trials that show that these kinds of medicines can be pretty life-changing for people with treatment-resistant depression and other mental health conditions.
30:31Is the FDA saying that too?
30:33Carol Massar:They are. So that has also been a shift. The Trump administration is supportive of psychedelic medicines and has made some recent moves, taken some steps recently to open the door a little bit more to take back some of the restrictions that were placed around research on some of these compounds. What is treatment resistant depression? Because I've noticed this in advertising for not necessarily for psychedelics that I've seen on TV, but especially actually during watching the World Cup, I'm seeing ads for or medications that are targeting what at least they're referring to as treatment-resistant depression.
31:07Is that different than other types of depression?
31:09Carol Massar:It is. You might have seen ads for Spravato, which is a Johnson & Johnson drug. It's not a psychedelic, but they call it like a psychedelic adjacent. It's a little bit similar. Patients kind of feel high when they're on the medicine. And there's a psychoactive period that requires them to be monitored after taking the drug. But treatment resistant depression is people who have tried and failed other antidepressive drugs like SSRIs, things like that, and have continued to struggle, haven't really had success with those other medications. So you have to have tried and failed other drugs and had it for a long time.
31:43Carol Massar:And that's usually, and a lot of people in the US have it. Well, that's what I was going to ask you. How many people? Like what, do we have any idea? Like how big? Like tens of thousands. Yeah. Yeah. I mean, it's a pretty big market and it's obviously pretty devastating as well. when people have something that you just, no matter what, it feels like nothing's really working. So psychedelics wouldn't necessarily be the first line of defense. If somebody is speaking to a therapist and is talking about depression, they wouldn't immediately go to a drug from a company like a Tybeckley? Exactly. Yeah.
32:13Carol Massar:Right now, these drugs are usually reserved for people that are more sick, have struggled for longer, have tried other medications. although some of the companies are studying them in major depressive disorder, which is more of like a first-line type treatment for depression. Madison, is this as much an Eli Lilly story as it is a story about these companies that make these psychedelic drugs, a little bit of both? Because, I mean, Eli Lilly has done a lot, as you report, in the world of neuroscience. Exactly. I mean, Lilly, three decades ago, brought Prozac to the market, and that was like a watershed moment for depression in general.
32:48Carol Massar:They really did a lot of work to destigmatize depression. And so they're kind of like it's kind of coming full circle for them, coming back to this area, which neuroscience has continued to be a focus for them. But they've more recently focused efforts on things like Alzheimer's disease. And so coming back into mental health is something that's sort of a long time coming for them and something that they've always been really interested in. Eli Lilly is a more than one trillion dollar company, a four billion dollar acquisition. Like it's a lot of money. It's a trillion dollar company. Yeah, it's a trillion dollar company.
33:19I kind of lost that.
33:20Carol Massar:It came under the radar. This seems like not that big of a purchase, like not that big of an acquisition. Yeah, no, it's not. And I mean, for Lilly, they've been on like a record spending spree this year, been doing a ton of M &A. I think the last that I checked, it was like over 20 billion. I think we're probably a bit higher than that now. But they've been making plays in neuroscience, in cancer, in various other areas. I mean, we've heard and reported that they're also interested in more and same with Novo Nordisk, more like cosmetic or aesthetic type treatments as well. And so it's sort of like they have all of this.
33:56Botox type of thing or what?
33:57Carol Massar:I mean, more like I mean, it could be. But like skin care, hair loss, that's getting more interest from big drug makers right now. I think partly because of GLP. Were you looking at me because of the Botox or the hair loss? I just want to know, Tim Stenevec. Carol gives me such a hard time because I'm always like, let's talk about mental hair loss. We did a call, a planning call, a show call. And Tim just went on a tirade about hair loss. And it was like all three women. And we were like, talk to us about the things that we're not getting R &D on. Here's why I said that, though. And I think I've shared this before on the program.
34:27Because Paul Sweeney references it on the show. I think an analyst said the next big opportunity for these companies after GLP One is figuring out something for hair loss. Because that market is huge.
34:37Carol Massar:Exactly. And they've seen that people are willing to invest so much money in their aesthetics. Like, people want to feel better, look better. I mean, with GLP-1s, it was like a pretty immediate effect that people were seeing where they just dropped a ton of weight. And now these drug makers are like, okay, this is a legit market, looking better, feeling better. What else can we do here? And there are a few different biotech companies that are developing, like, better hair loss treatments. And some that are developing better acne treatments, skin care treatments. So it's a pretty promising area that along with psychedelics has been getting more interest from large.
35:13Carol Massar:How quickly are we going to get the new hair loss stuff? I'm just asking for a friend. Wait, so is something like that then covered? It's a good question. I mean, not historically, right? Okay. Who knows? I mean, we've gotten GLP ones covered at this point. It's a little bit different. But it's challenging to cover GLP ones. I was talking to somebody about it. I want you to keep your hair. I want you to have all the hair you want. But I'm just saying. But people are willing to pay for it. I know. And you see people willing to pay out of pocket for GLP-1s. It's like there is a legitimate cash pay market for all of these things.
35:41Carol Massar:How many years are we now in on GLP-1 drugs? Is it two, three? Three? Three, I think. Yeah. A pretty relentless news flow, just interesting things happening nearly every week around them. And it's not falling off or anything, right? In terms of the demand and the usage? No. I mean, the U.S. government just opened Medicare coverage for weight loss drugs. So that's expected to give it another boost that, you know, opens the door to millions more patients. And then we have the oral drugs that recently got approval. And then there's so many other companies that are still trying to develop their own versions of weight loss drugs.
36:16Can we go back to psychedelics for a minute?
36:18Carol Massar:Wherever you want to go. OK, Compass Pathways is down about 6.7 percent. We've spoken to Kabir Nath before, the company's CEO. Is this a sign of legitimacy for the entire market here? It is. Yeah, I think that it is. I think, I mean, Compass is further ahead. I mean, they are expected to be the first company in this space to get approval. I mean, obviously, it's still up to the FDA what they decide when they end up reviewing this. But Compass is expected to potentially get approval at the end of the year. Why not buy Compass instead of Atai? Atai is probably a little bit cheaper. I mean, they're still in mid-stage trials.
36:52Compass is later moving toward, you know, potential approval and commercialization at this point.
36:58Carol Massar:Their drugs also work a little bit differently. uh compass's drug has a longer duration like psychoactive duration so patients have to be monitored potentially for up to eight hours and that can be a lot both for patients and for the doctors that are overseeing their care so with this new newish class of drugs do patients have to be on it for forever or is there a permanent altering of their brain chemistry that will lead them away from a um not major depressive disorder treatment yeah and that's one of the things that for a couple of these treatments is still sort of an unknown. Like with J &J's Bravado, patients are supposed to continue taking it weekly.
37:37Carol Massar:Some of the other companies, I think including Compass, have said that they've seen effects kick in within a couple of weeks or months and that maybe patients don't have to be on it forever. But again, that's sort of still an unknown thing because we don't have these longer term trials to see what happens when patients stay on. Cause I guess I always thought that it was going to be, you're guided through some of the treatment, right? You're overseen as you're taking it right to be careful. And that somehow it kind of jumpstarts almost like an electric shock to the brain to some like, exactly. It puts it on a different path, literally.
38:10Carol Massar:Yeah. I think that's the hope. It's just, I don't know that the studies exist yet to show what happens in terms of like relapse or over a long period of time. You know, really like the only drug that we've had in lots of people, lots of patients is bravado over the last couple of years. And as for what we can see right now, patients sort of continue taking that, but it's really interesting. So are we going to get fixed men's hair loss before we actually really focus on women's health and R &D? What's going to come first? It's a good question. Probably Madsen. Sorry, sorry. Madison, too long. So glad you could stop by.
38:50Carol Massar:Madison Muller, she's Bloomberg News Healthcare reporter right here in our Bloomberg Interactive Broker Studio. Certainly watching because Eli Lilly and Atai both on the move today. This is Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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40:17Carol Massar:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.
40:55Carol Massar:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust.
41:36So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.
41:47Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. We want to go to big banks because this week it was all about big banks. You just have to walk outside the door here and then you'll get to a big bank very quickly. If you really want to go to a big bank, you just go to that corner or that corner. This one right in the building actually has a cafe in it. Do you know what's so interesting? Like we have lost a lot of retail space right around Bloomberg headquarters.
42:21Carol Massar:Empty, sat empty. Two big banks have taken over a lot of space. So maybe it's because they're making a lot of money. And we certainly did see that this week. Let's get to it. JP Morgan bagging its highest quarterly profit ever on a$6 billion stock trading haul. Citi's CEO, though, warning it may speed up job cuts. Maybe that means higher severance costs. CFO also asking for patience. Goldman Sachs, Tim Trounce, its own Wall Street stock trading records as well. Okay, Bank of America stock traders notching a record in the second quarter. Morgan Stanley joined its Wall Street rivals in its stock trading boon.
42:56Wells Fargo beat estimates on wealth and investment banking. It's a lot. It's a lot. Fortunately, David George keeps track of it all. He's senior research analyst at Baird. He joins us from Franklin, Tennessee. David, settle this for us, and then we'll get to some of the numbers and some of the details. We have typically looked at these banks as canaries in the coal mine or barometers on the health of the U.S. consumer, specifically banks like Wells Fargo, Bank of America, and JPMorgan Chase because of Chase. Todd Gillespie and Trinata Rajan from our Bloomberg News team were in here earlier this week and they made the point not necessarily a great barometer of how the general consumer is doing because everyone's focusing on the higher end consumer.
43:37I pushed back a little bit and I said, well, you know, they still have tens of millions of customers combined doing retail and business banking. Are these still a good barometer of the economy and how the consumer is doing? Hey, Tim, good afternoon. You know, I think so. And one of the great things that we get specifically from Bank of America, they give us debit card spend data every month. And Bank of America, I think, does business with one of every two households in the U.S. And whether you're at one part of the K or the other, most Americans that I know have a checking account. And more than likely, it's probably one in three have them with one of these big institutions.
44:21So I'm I'm respectful of the fact that on the credit card side, most of these big banks are focusing on the super prime and prime consumer. But I do think that there's some instructiveness around the data that these guys give us as it relates to the consumer overall.
44:40Carol Massar:All right. So helpful. But what really moves the needle on the balance sheet? Is it the high net worth individuals, the stock trading, the M &A? What really matters when you look at these balance sheets? Yeah. Yeah. Yeah. And a word. Yes. Everything matters. We're in a period right now. And, you know, I don't know if I was with you nine months ago or so, but in the fall of last year, there was a lot of angst around private credit. There were a couple of frauds that went bad and a couple of banks in the in the third quarter of 2025. But the story right now unequivocally has to be capital markets.
45:19I've been doing this a long time. And I was talking with one of the companies that I covered earlier today. And I think I've been doing this 28 years. And this is probably one of the best quarters that I've ever seen. And it's very rare that you have a combination of fees at a record, net or just income at a record, and credit costs at a cyclical low. So it's very common to see one of those three cylinders firing, but the other ones are not. But this is a unique period of time that really all pieces of these stories are really executing flawlessly at the moment. And the environment has never been better, which is great today, but obviously gives us a little bit of pause in terms of what gets better from here.
46:10Carol Massar:You know, David, we have a chart up. I don't know if we can bring that up again, folks, that we're showing three-month charts and the run-ups that we've seen in some of these names. For those who are listening on radio, B of A is up 15 % in the last three months. Goldman Sachs up almost 22%. Morgan Stanley up almost 16%. It was interesting what you just said. So you're kind of saying Goldilocks for these firms right now. And so investors enjoy it. And what might make it more difficult for them? Is it the higher cost of credit? What changes their backdrop, in your view, in maybe the coming months or coming years?
46:51Yeah, you know, Carol, today it's hard to see any potential landmines in front of us. But unfortunately, as you know, these companies are levered to everything. So when something goes wrong, somebody's got some exposure to it. But financials are, they're not acting like it at the moment, but financials are cyclical companies. In other words, their revenues and earnings will kind of oscillate depending upon the macro environment, whether that's capital markets, interest rates, loan demand. But credit is really kind of the main volatility component in a lot of these income statements in addition to capital markets.
47:32So from from my perspective, being mindful of the fact that things are really good today, I'm a little worried that we're flirting with a peak in ROEs for the financial sector. And if we if we kind of take a step back and think about all the things that are going well, what gets better from here? And as you both know, stocks are forward looking instruments. And, you know, from my perspective, we're starting to get up there. I wouldn't say frothy, but the opportunities in these stocks are not nearly as meaningful as they were nine months ago.
48:07Carol Massar:David, one thing I wanted to ask you about, you know, these stocks, too, these names are increasingly levered to the AI bet. And I think about B of A and how we talked with our own team here, how it was unusual. Brian Moynihan, kind of very cautious, careful, risk free. but opening up a more than half a billion dollar credit line to open AI ahead of its expected IPO. And so I just wonder if you think that that is something that possibly could come back to bite some of these firms in the future. Or do you see it as a really good thing to keep the momentum going? Yeah, it's a good question. Anytime we get late in an economic cycle, and it's just part of its human nature, when you're not losing, when you're not really suffering any credit costs, you tend to maybe push out on the risk curve.
49:00I think in this situation, Carol, I think it's a it's a ploy or a tactic to try and win an investment banking mandate more than likely. And keep in mind, there are several billion dollars of investors that are junior to Bank of America in a line of credit scenarios such as this. So from a risk perspective, this isn't something that I would be particularly concerned about as a risk. And this I would I kind of think about this, Carol, as a bridge loan until this IPO gets done. And they're collabed. They would be in a senior collateral position, presumably and presumably ahead of all these other investors that continue to put money into some of these companies.
49:46So we also like to look at these companies, David, as giving us information about what the macroeconomic conditions look like. and specifically jamie diamond in the past he's you know given a weather report about the economy uh this time he according to our max abelson and hannah levitt they wrote that he swaps the weather report for tectonic plates to explain risk he said quote several risks are shifting below the surface like tectonic plates including geopolitical tensions and wars sticky inflation large global fiscal deficits and elevated asset prices they may remain manageable but they could also cause meaningful disruptions when they shift or collide.
50:26Which bank, in your view, is best? Well, first of all, if you agree with that, which bank, in your view, is best handled to navigate that? Well, I think the comments, and obviously you report this consistently when Jamie speaks, everyone listens. And I don't want to say that those comments are self-serving because I do think J.P. Morgan's probably the best position to benefit from almost any environment. But in a down market, in a market that is gripped with fear, as you both know, J.P. Morgan becomes the counterparty of choice. And if you're in the capital markets, you've got to do business with J.P.
51:11Morgan. So they are best in class in almost everything that they do. And I think what he's trying to say is to just remind, and he's one of the only ones that's saying it and giving credit for doing it. He has also said that kind of what we're saying this afternoon is that they're over-earning. And that's okay. In a cyclical business, that happens. Banks will under-earn when times aren't as good, and they'll over-earn when times are a little bit better. And in their case, they're over-earning a bit on capital markets and maybe a little bit on their margin. And they're taking they continue to invest very aggressively in growth initiatives, which despite a company of this size, it's over a two trillion dollar balance sheet.
51:57But yet they consistently show an ability to grow better than their peers and still maintain an ROE in the 20s with significant excess capital relative to their peers. So I think it's just important. I think he's just trying to ground market participants for the possibility that the good times may not last forever. And they typically don't.
52:20Carol Massar:Well, having said that, Morgan Stanley, CEO Ted Pick, too, said on his earnings call with analysts, things could feel like they're getting frothy. So we keep a very close eye on that. Do they have to say that? Or does that mean they maybe see something just got about 30 seconds left? I think it's the former, Carol. I think it pays to be cautious. When times are overly good, it kind of makes sense to maybe tap the brakes and prepare investors for the likelihood that this may not continue beyond the next couple of quarters. Well, hopefully David joins us the next couple of quarters. Yeah. Let's not wait nine months.
53:01Carol Massar:Thank you. Thank you. Thank you. Have a good rest of the week and a good weekend. We're almost there. David George, he's senior research analyst at Bayer joining us from Franklin, Tennessee. This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.
53:41Carol Massar:Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? cheaper prescriptions that are easier to get, and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. These days, it seems like AI agents are just about everywhere you turn, every field and every function.
54:16But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.
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The people, companies and trends shaping the global economy. Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The US launched fresh strikes against Iran on Thursday, the fifth straight day of attacks as shipping traffic slumped in the critical Strait of Hormuz.The attacks began at 2 p.m. ET, according to US Central Command, with US forces aiming to “further degrade Iranian military capabilities.”Iran responded to earlier strikes by firing at American bases in Kuwait and Jordan, with the Kuwaiti Armed Forces warning of explosions as a result of air-defense systems intercepting hostile targets.
On this episode, Carol Massar and Tim Stenovec speak with:
- Nick Wadhams, Bloomberg News National Security Reporter
- Ed Ludlow, Bloomberg Tech Host on TSMC, renewed/continuing AI trade worries
- Madison Muller, Bloomberg News Healthcare Reporter on Lilly Strikes $3.8B Deal for Psychedelic Drugmaker and Merck’s $3,800-a-Year Cholesterol-Cutting Pill Gets FDA Nod
- David George, Senior Research Analyst at Baird
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