1 00:00:02,960 --> 00:00:10,840 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,880 --> 00:00:15,040 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:15,080 --> 00:00:18,079 Speaker 1: Eastern on Apple Card playing Android Auto with the Bloomberg 4 00:00:18,120 --> 00:00:21,440 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,640 --> 00:00:24,040 Speaker 1: or watch us live on YouTube. 6 00:00:23,480 --> 00:00:27,640 Speaker 2: With consumer confidence number in ninety seven, the expectations coming 7 00:00:27,680 --> 00:00:30,160 Speaker 2: in sixty six point four, you got to wonder what's 8 00:00:30,160 --> 00:00:30,480 Speaker 2: behind that? 9 00:00:30,800 --> 00:00:33,479 Speaker 3: Yeah, that and that expectation sixty six point four is 10 00:00:33,520 --> 00:00:36,519 Speaker 3: down from last month's revised up seventy four, So a 11 00:00:36,520 --> 00:00:37,360 Speaker 3: big drop there. 12 00:00:37,479 --> 00:00:40,040 Speaker 2: Well, luckily we have Dana Peterson here, she's chief economists 13 00:00:40,040 --> 00:00:42,919 Speaker 2: over at the Conference Board. They do this data, so 14 00:00:42,960 --> 00:00:45,400 Speaker 2: it's great that we get her for that instant reaction. 15 00:00:45,760 --> 00:00:49,200 Speaker 2: So just to recap that Consumer Conference consumer confidence number 16 00:00:49,200 --> 00:00:52,440 Speaker 2: coming at ninety seven, Dana, what happened? What's behind that? 17 00:00:53,880 --> 00:00:56,160 Speaker 4: Sure, this is the third month that the index has 18 00:00:56,680 --> 00:01:00,000 Speaker 4: fallen off, and certainly in the month consumers were less 19 00:01:00,080 --> 00:01:05,320 Speaker 4: optimistic about current employment conditions, and certainly looking forward they 20 00:01:05,319 --> 00:01:09,440 Speaker 4: were less optimistic about employment, business and also income. But 21 00:01:09,480 --> 00:01:11,520 Speaker 4: I would say that if you look out of the 22 00:01:11,600 --> 00:01:15,039 Speaker 4: last two years, the headline measure has been moving back 23 00:01:15,080 --> 00:01:17,720 Speaker 4: and forth in a pretty narrow range, but still in 24 00:01:17,760 --> 00:01:20,319 Speaker 4: all three months down we really wonder what's going to 25 00:01:20,319 --> 00:01:21,440 Speaker 4: happen in that fourth month. 26 00:01:22,480 --> 00:01:25,280 Speaker 3: So how long does a trend here? I mean, it 27 00:01:25,720 --> 00:01:27,400 Speaker 3: feels like a trend to me, and I'm looking at 28 00:01:27,400 --> 00:01:30,840 Speaker 3: some of the revisions downward here, what is this data 29 00:01:31,080 --> 00:01:31,760 Speaker 3: really telling us? 30 00:01:31,760 --> 00:01:31,880 Speaker 2: Here? 31 00:01:31,920 --> 00:01:33,880 Speaker 3: Is there a problem for this US economy? 32 00:01:33,880 --> 00:01:34,080 Speaker 5: Here? 33 00:01:35,360 --> 00:01:37,800 Speaker 4: Well, I would split it out, so the headline, well, 34 00:01:37,840 --> 00:01:41,959 Speaker 4: the headline is made up of present conditions and also expectations. 35 00:01:42,040 --> 00:01:46,039 Speaker 4: So the present conditions index has actually stayed pretty much afloat, 36 00:01:46,080 --> 00:01:48,160 Speaker 4: even though it's moving back and forth a lot. But 37 00:01:48,280 --> 00:01:51,680 Speaker 4: expectations really came off about a year or so ago, 38 00:01:51,920 --> 00:01:55,280 Speaker 4: and they've just been flirting with that eighty threshold, and 39 00:01:55,360 --> 00:01:58,760 Speaker 4: below eighty usually signals or recession. So it suggests consumers 40 00:01:58,800 --> 00:02:02,840 Speaker 4: are a little worried about something. They're concerned about inflation still, 41 00:02:03,200 --> 00:02:05,520 Speaker 4: and they're getting a little bit worried about the labor market. 42 00:02:06,560 --> 00:02:08,639 Speaker 2: So to that point, this kind of goes to the 43 00:02:08,680 --> 00:02:12,320 Speaker 2: whole idea that people feel really bad even though the 44 00:02:12,400 --> 00:02:14,640 Speaker 2: overall data, like you could look at the employment cost 45 00:02:14,680 --> 00:02:16,880 Speaker 2: in next coming and higher than estimated, you know, GDP 46 00:02:17,040 --> 00:02:19,639 Speaker 2: I realized was a little cool, but still the data 47 00:02:19,720 --> 00:02:23,440 Speaker 2: actually comes in pretty pretty strong. How do we understand that? 48 00:02:24,840 --> 00:02:24,960 Speaker 6: So? 49 00:02:25,280 --> 00:02:27,680 Speaker 4: I think the key thing is, on the one hand, 50 00:02:27,720 --> 00:02:31,079 Speaker 4: consumers are working and so they feel good about that 51 00:02:31,520 --> 00:02:34,639 Speaker 4: and they have income coming in, but then that income 52 00:02:34,720 --> 00:02:38,359 Speaker 4: is eroded by inflation. Prices are still elevated. Even though 53 00:02:38,360 --> 00:02:41,359 Speaker 4: prices aren't rising as quickly as they were, the level 54 00:02:41,440 --> 00:02:43,919 Speaker 4: is high. People are saying eggs are eight bucks. I'm 55 00:02:43,960 --> 00:02:44,560 Speaker 4: not used to that. 56 00:02:44,680 --> 00:02:47,400 Speaker 3: I don't really like that, all right, Dana, thanks so 57 00:02:47,440 --> 00:02:49,760 Speaker 3: much for joining us. Dana Peterson, she's a chief economist 58 00:02:49,880 --> 00:02:52,200 Speaker 3: at the Conference Board. Kind of break down some of 59 00:02:52,240 --> 00:02:55,359 Speaker 3: these consumer confidence data coming in today, and again the 60 00:02:55,360 --> 00:02:59,320 Speaker 3: headline is Alex just reported Consumer Conference Board consumer confidence 61 00:02:59,360 --> 00:03:00,840 Speaker 3: came in and reading you have ninety seven. 62 00:03:00,960 --> 00:03:03,720 Speaker 7: Consensus was one zero four, one oh four. So a 63 00:03:03,760 --> 00:03:04,840 Speaker 7: pretty big miss there. 64 00:03:04,880 --> 00:03:07,480 Speaker 2: Straight up inflation, Like you're right, if you're gonna go 65 00:03:07,480 --> 00:03:09,400 Speaker 2: pay eight bucks for eggs, Like that's how you feel, 66 00:03:09,520 --> 00:03:11,440 Speaker 2: no matter what your paycheck necessarily is. 67 00:03:13,040 --> 00:03:16,919 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 68 00:03:17,000 --> 00:03:20,920 Speaker 1: weekdays at ten am Eastern on applecard Play and Android auto. 69 00:03:20,919 --> 00:03:23,720 Speaker 1: With the Bloomberg Business app. You can also listen live 70 00:03:23,800 --> 00:03:27,000 Speaker 1: on Amazon Alexa from our flagship New York station, Just 71 00:03:27,040 --> 00:03:29,559 Speaker 1: say Alexa, play Bloomberg eleven. 72 00:03:29,400 --> 00:03:34,480 Speaker 2: Thirty and Alex steelongside Paul Sweeney. This is Bloomberg Intelligence Radio, 73 00:03:34,560 --> 00:03:37,480 Speaker 2: recover all the top news with our amazing analysts worldwide. 74 00:03:37,480 --> 00:03:39,760 Speaker 2: They covered about two thousand companies and one hundred and 75 00:03:39,800 --> 00:03:42,200 Speaker 2: thirty industries. We also want to give you the perspective 76 00:03:42,200 --> 00:03:44,800 Speaker 2: of bigger market strategists, right, like, how do you look 77 00:03:44,840 --> 00:03:46,840 Speaker 2: at it if you're looking at the longer term perspective 78 00:03:46,840 --> 00:03:48,280 Speaker 2: when it comes to quity is and how the short 79 00:03:48,360 --> 00:03:50,560 Speaker 2: term is dictating how you're going to see the outcome. 80 00:03:50,640 --> 00:03:53,520 Speaker 2: Chris Watling is CEO and chief market strategist over at 81 00:03:53,520 --> 00:03:57,800 Speaker 2: Longview Economics. He joined us now from Toronto, Canada. So 82 00:03:57,840 --> 00:04:01,040 Speaker 2: I'm looking Chris at an SMP charter one month and 83 00:04:01,120 --> 00:04:04,680 Speaker 2: clearly we had a decline last week. Right, we've retraced 84 00:04:04,680 --> 00:04:06,680 Speaker 2: that we're up about three percent from the lows, but 85 00:04:06,680 --> 00:04:08,720 Speaker 2: we're still down by about two two and a half 86 00:04:08,760 --> 00:04:12,120 Speaker 2: percent from the peak that we saw back in early April. 87 00:04:12,560 --> 00:04:14,280 Speaker 2: What do we make of the market? 88 00:04:15,400 --> 00:04:16,720 Speaker 5: What do you make of the market? What a great 89 00:04:16,760 --> 00:04:20,960 Speaker 5: question and morning Alex and Paul. Great to be on. Yeah, 90 00:04:21,040 --> 00:04:23,800 Speaker 5: I mean it's it's I think it's it's time for 91 00:04:23,839 --> 00:04:25,240 Speaker 5: a bit of give back, and we think about it. 92 00:04:25,240 --> 00:04:28,000 Speaker 5: It's been extremely good run all the way from the 93 00:04:28,000 --> 00:04:30,360 Speaker 5: sort of loads in October last year through to where 94 00:04:30,400 --> 00:04:32,040 Speaker 5: we were at the beginning of April when we when 95 00:04:32,080 --> 00:04:33,560 Speaker 5: we sort of hit the highs on the S and P, 96 00:04:33,760 --> 00:04:35,719 Speaker 5: and and since then, I think we've had just a 97 00:04:35,720 --> 00:04:37,640 Speaker 5: bit of give back, a bit of a pause, what 98 00:04:37,720 --> 00:04:40,200 Speaker 5: I would call a healthy correction. And you know, part 99 00:04:40,240 --> 00:04:42,600 Speaker 5: of the reasons for that is I think the market's 100 00:04:42,640 --> 00:04:45,120 Speaker 5: time to think about the liquidity environment over the summer. 101 00:04:45,520 --> 00:04:46,400 Speaker 8: You know, the RRP. 102 00:04:46,640 --> 00:04:48,719 Speaker 5: This draining of the r RP has been a wheel 103 00:04:48,800 --> 00:04:52,360 Speaker 5: driver for stock markets, for riskats. It's over the last 104 00:04:52,360 --> 00:04:55,120 Speaker 5: seven eight months, as that's been drained and liquidity has 105 00:04:55,160 --> 00:04:57,760 Speaker 5: come into equities, that's been a will positive. And also 106 00:04:57,839 --> 00:05:00,440 Speaker 5: I think there's some issues about yields back up. This 107 00:05:00,680 --> 00:05:02,480 Speaker 5: is a bit of a sort of biting on the 108 00:05:02,560 --> 00:05:04,840 Speaker 5: valuation side of the equity market. And then on top 109 00:05:04,880 --> 00:05:06,960 Speaker 5: of that, personally, I think grow it's going to surprise 110 00:05:07,000 --> 00:05:09,080 Speaker 5: a little bit to the downside in the States this year. 111 00:05:09,160 --> 00:05:11,920 Speaker 5: So grappling with all of those, I would say and 112 00:05:12,360 --> 00:05:14,880 Speaker 5: as you said, the market bounced last week, it's sold 113 00:05:14,920 --> 00:05:17,080 Speaker 5: off the prior week. You know, markets don't go down 114 00:05:17,120 --> 00:05:18,960 Speaker 5: in straight lines, they don't go up in straight lines. 115 00:05:19,000 --> 00:05:22,360 Speaker 5: So I think we've begun early eight for a bit 116 00:05:22,360 --> 00:05:24,440 Speaker 5: of a gift back, a healthy correction, as I say, 117 00:05:24,680 --> 00:05:26,479 Speaker 5: And I think it's it's good for the market, so 118 00:05:26,640 --> 00:05:30,080 Speaker 5: it's important, and it often happens at the time when 119 00:05:30,080 --> 00:05:32,720 Speaker 5: you begin some rotation in sector leadership. 120 00:05:32,839 --> 00:05:34,760 Speaker 8: So that's kind of interesting as well. 121 00:05:35,000 --> 00:05:38,320 Speaker 3: Chris, were about halfway through earning season here. Anything jumping 122 00:05:38,360 --> 00:05:41,040 Speaker 3: out at you so far? I mean, I guess revenue 123 00:05:41,080 --> 00:05:43,040 Speaker 3: is surprising, maybe one or two percent on the upside, 124 00:05:43,040 --> 00:05:45,000 Speaker 3: earnings maybe eight or nine percent on the upside. 125 00:05:45,080 --> 00:05:47,680 Speaker 7: Anything surprising you, well, I. 126 00:05:47,600 --> 00:05:51,080 Speaker 5: Think, I mean the interesting thing I mean is somewhat surprising, 127 00:05:51,120 --> 00:05:54,520 Speaker 5: but some sensible. I suppose you've got that following when 128 00:05:54,560 --> 00:05:56,960 Speaker 5: when earnings have been a bit better. So, as you say, 129 00:05:57,720 --> 00:06:00,279 Speaker 5: the earnings are surprising to the upside, they aren't deliver 130 00:06:00,400 --> 00:06:03,480 Speaker 5: in growth. I think this de collective surprise is about 131 00:06:03,520 --> 00:06:05,440 Speaker 5: eight percent at the moment, and normally it's three or 132 00:06:05,520 --> 00:06:08,680 Speaker 5: four percent positive surprise, so that's coming in. I think 133 00:06:08,720 --> 00:06:11,680 Speaker 5: it's quite interesting how some of the big stocks have 134 00:06:11,760 --> 00:06:15,800 Speaker 5: been very mixed. We've seen over the last seven or 135 00:06:15,839 --> 00:06:17,920 Speaker 5: so days, you know, some of the big cap tech 136 00:06:18,200 --> 00:06:21,880 Speaker 5: having very different outcomes of very different performance as a result. 137 00:06:22,240 --> 00:06:23,960 Speaker 5: So there's a lot of volatility on the back of 138 00:06:24,000 --> 00:06:26,480 Speaker 5: that in some of those stocks, you know, ten percent 139 00:06:26,560 --> 00:06:29,719 Speaker 5: moves on the day on earnings announcements. So I'd say 140 00:06:29,720 --> 00:06:33,080 Speaker 5: those are probably so far the key features, lots to 141 00:06:33,120 --> 00:06:34,520 Speaker 5: go for, lots to come. 142 00:06:35,160 --> 00:06:38,560 Speaker 2: So Cameron christ writes a daily newsletter. He also contributes 143 00:06:38,760 --> 00:06:40,320 Speaker 2: to m Live and he had one of the best 144 00:06:40,320 --> 00:06:44,000 Speaker 2: sentences I've heard in a while on his daily article today. 145 00:06:44,040 --> 00:06:46,839 Speaker 2: Chris He said, one of the basic principles of successfully 146 00:06:46,920 --> 00:06:50,200 Speaker 2: navigating financial markets is that you should only date, not 147 00:06:50,360 --> 00:06:54,520 Speaker 2: marry your positions. Thanks the question what positions should you 148 00:06:54,600 --> 00:06:57,119 Speaker 2: date and what should you marry? Right now? 149 00:06:58,520 --> 00:07:02,760 Speaker 8: Well, I like to think not only rather than I. 150 00:07:02,720 --> 00:07:04,280 Speaker 2: Kind of like the dating marriage. But okay, I see 151 00:07:04,279 --> 00:07:05,440 Speaker 2: your point, n versus owning. 152 00:07:05,800 --> 00:07:08,560 Speaker 8: Yeah, it's all the same. What what should you date? 153 00:07:08,600 --> 00:07:11,040 Speaker 5: What? I think you should you should be dating. If 154 00:07:11,080 --> 00:07:13,080 Speaker 5: you're very short term trader, you should be short this 155 00:07:13,120 --> 00:07:15,800 Speaker 5: equity market for for for a bunch of weeks, a 156 00:07:15,800 --> 00:07:18,520 Speaker 5: couple of months. Uh, and you should be thinking about 157 00:07:18,560 --> 00:07:20,400 Speaker 5: marrying at the at the bottom in a in a 158 00:07:20,440 --> 00:07:23,840 Speaker 5: month or two time, because you know, the soft landing 159 00:07:23,840 --> 00:07:25,240 Speaker 5: that I think is going to come in the US, 160 00:07:25,400 --> 00:07:28,600 Speaker 5: coupled with some eventual rate cuts certainly in the out 161 00:07:28,600 --> 00:07:30,200 Speaker 5: of the fair but also of course out of the 162 00:07:30,200 --> 00:07:33,239 Speaker 5: European Central Bank and out of the UK, that's all coming. 163 00:07:33,280 --> 00:07:34,280 Speaker 8: That's all very positive. 164 00:07:34,440 --> 00:07:37,840 Speaker 5: So you know, you know, you want to you want 165 00:07:37,880 --> 00:07:39,880 Speaker 5: to date in the short term and rent in the 166 00:07:39,880 --> 00:07:43,720 Speaker 5: medium term. Gold we like, uh and gold gold you 167 00:07:43,720 --> 00:07:49,320 Speaker 5: could almost marry, you know, I mean girl, I mean 168 00:07:49,360 --> 00:07:53,679 Speaker 5: gold gold is gold is It's a terrific acid class 169 00:07:53,680 --> 00:07:56,000 Speaker 5: at the moment. It's had a great run already this year. 170 00:07:56,320 --> 00:07:58,600 Speaker 5: Of course it's given a bit of that back recently, 171 00:07:58,680 --> 00:08:00,520 Speaker 5: but it's got a lot going for it. 172 00:08:00,560 --> 00:08:01,680 Speaker 8: The Chinese are buying. 173 00:08:01,680 --> 00:08:04,440 Speaker 5: There's some stories, I think on the Bloomberg termal today 174 00:08:04,480 --> 00:08:07,760 Speaker 5: about Chinese buying, central bank buying. That's been a themal year. 175 00:08:08,000 --> 00:08:10,040 Speaker 5: And it's not just the central bank in China, it's 176 00:08:10,080 --> 00:08:13,200 Speaker 5: also the retailer. Is in China is time to buy, 177 00:08:13,240 --> 00:08:15,240 Speaker 5: and there's of course an awful lot of them and 178 00:08:15,560 --> 00:08:18,600 Speaker 5: a lot of liquidity around there. So we like gold, 179 00:08:18,640 --> 00:08:21,920 Speaker 5: and it'll be helped when the FED eventually starts cutting rights. 180 00:08:22,960 --> 00:08:25,400 Speaker 5: So I you know, as I say, could almost marry that. 181 00:08:27,160 --> 00:08:31,240 Speaker 5: I actually think European banks you should own and rent 182 00:08:31,360 --> 00:08:32,880 Speaker 5: and buy and everything. 183 00:08:34,240 --> 00:08:36,520 Speaker 8: And I think I. 184 00:08:36,480 --> 00:08:41,200 Speaker 5: Actually our left of field recommendation moments by Spanish mid caps, 185 00:08:41,559 --> 00:08:46,160 Speaker 5: which is really out there but Spanish. Yeah, I know, 186 00:08:46,280 --> 00:08:50,600 Speaker 5: I know it sounds a bit nuts, but actually has 187 00:08:50,600 --> 00:08:52,400 Speaker 5: a lot to be said for them. It's an economy 188 00:08:52,440 --> 00:08:54,839 Speaker 5: that's been neglected no one's really talked about for ten 189 00:08:54,840 --> 00:08:57,720 Speaker 5: to fifteen years since the euro crisis. Are because the 190 00:08:57,760 --> 00:09:01,640 Speaker 5: pigs crisis as it was known with with d sbing Spain, 191 00:09:02,840 --> 00:09:05,960 Speaker 5: and you know, the economy has really sorted itself out 192 00:09:06,000 --> 00:09:09,840 Speaker 5: over these last fifteen years. Healed a lot of structural imbalances. 193 00:09:10,120 --> 00:09:12,720 Speaker 5: It's well set and it's going to get rate cuts 194 00:09:12,720 --> 00:09:15,400 Speaker 5: when the ECB starts cutting, and it's going to benefit 195 00:09:15,480 --> 00:09:16,959 Speaker 5: from those. And I think we're going to see strong 196 00:09:17,000 --> 00:09:19,800 Speaker 5: growth out of Spain. And of course mid caps is 197 00:09:19,800 --> 00:09:22,679 Speaker 5: a great way to play a domestic economy. So that 198 00:09:22,840 --> 00:09:27,079 Speaker 5: is an own and a marry basically, not a rent 199 00:09:27,360 --> 00:09:28,640 Speaker 5: or whatever the other one was. 200 00:09:28,840 --> 00:09:29,120 Speaker 8: Dates. 201 00:09:29,280 --> 00:09:33,199 Speaker 5: Yeah, So yeah, so that there's there's so much going on, 202 00:09:33,240 --> 00:09:35,120 Speaker 5: there's so many opportunities out there. 203 00:09:36,240 --> 00:09:39,240 Speaker 8: But yeah, you've got to distinguish between trading and investing. 204 00:09:38,840 --> 00:09:41,320 Speaker 7: Which let's go, let's go hyper local. 205 00:09:41,559 --> 00:09:44,240 Speaker 3: How's the economy in Clapham, which is a neighborhood south 206 00:09:44,280 --> 00:09:45,080 Speaker 3: of London. 207 00:09:45,480 --> 00:09:46,360 Speaker 8: Clapham, how's it? 208 00:09:48,400 --> 00:09:51,520 Speaker 5: That's a great question. I do actually live very close 209 00:09:51,559 --> 00:09:55,360 Speaker 5: to Clapham. I'm obviously in Canada at the moment, but Plapham, 210 00:09:55,640 --> 00:09:58,080 Speaker 5: Clapham in South London is buzzing because it's full of 211 00:09:58,120 --> 00:10:00,760 Speaker 5: twenty and thirty year olds basically who who love to 212 00:10:00,760 --> 00:10:03,120 Speaker 5: get out and the sunshine started to come out and 213 00:10:03,160 --> 00:10:04,120 Speaker 5: it's that time of year. 214 00:10:04,240 --> 00:10:06,520 Speaker 8: So but but the British. 215 00:10:06,120 --> 00:10:09,840 Speaker 5: Economy is not good now, which is perhaps more to 216 00:10:09,880 --> 00:10:13,360 Speaker 5: your question. The British economy is flat. It's had no 217 00:10:13,480 --> 00:10:15,760 Speaker 5: growth in two years. It's flat as a parent caake 218 00:10:17,080 --> 00:10:20,080 Speaker 5: and it desperately needs weight cuts and we're going to 219 00:10:20,080 --> 00:10:21,240 Speaker 5: be getting those pretty soon. 220 00:10:21,360 --> 00:10:23,680 Speaker 3: Yes, So is that the expectation of the Bank Bank 221 00:10:23,679 --> 00:10:25,680 Speaker 3: of England is not waiting on the Fed that the 222 00:10:25,679 --> 00:10:28,080 Speaker 3: Bank of England is confident to cut rage sooner? 223 00:10:29,320 --> 00:10:29,880 Speaker 8: Absolutely. 224 00:10:29,880 --> 00:10:32,040 Speaker 5: I think that the Bank of England is just like 225 00:10:32,120 --> 00:10:34,520 Speaker 5: the UCB and you would have seen Christine Lagarde a 226 00:10:34,520 --> 00:10:37,280 Speaker 5: couple of weeks ago say, you know that the UCB 227 00:10:37,400 --> 00:10:40,720 Speaker 5: is not is data dependent, not Fed dependent, trying to 228 00:10:40,760 --> 00:10:45,680 Speaker 5: make that distinguish distinction between the FED and the European 229 00:10:45,800 --> 00:10:49,280 Speaker 5: central banks. So same in the UK, different inflation dynamics, 230 00:10:49,360 --> 00:10:52,760 Speaker 5: different growth dynamics, and therefore and need to get on 231 00:10:52,840 --> 00:10:53,280 Speaker 5: with cuts. 232 00:10:53,360 --> 00:10:55,439 Speaker 2: I wonder what the currencies are going to say about 233 00:10:55,480 --> 00:10:57,679 Speaker 2: that and the very differentials. But okay, let's play it 234 00:10:57,679 --> 00:11:01,400 Speaker 2: out a little bit. How strong does a dollar actually get. 235 00:11:02,240 --> 00:11:04,800 Speaker 2: I mean, it is definitely breaking things. 236 00:11:05,720 --> 00:11:08,040 Speaker 5: It is breaking things, and you're quite right, and it's 237 00:11:08,040 --> 00:11:09,680 Speaker 5: probably got I think it's got one more flurry in 238 00:11:09,720 --> 00:11:12,120 Speaker 5: it in this sort of risk of phase that we're 239 00:11:12,160 --> 00:11:14,560 Speaker 5: thinking about in the near term, and of course the 240 00:11:14,600 --> 00:11:18,400 Speaker 5: dollars are classic recipient of liquidity when. 241 00:11:18,040 --> 00:11:18,840 Speaker 8: It's a risk off. 242 00:11:19,280 --> 00:11:21,400 Speaker 5: But beyond that, I think we're going to get into 243 00:11:21,400 --> 00:11:23,520 Speaker 5: a dollar bear market. You know, we've had a dollar 244 00:11:23,559 --> 00:11:26,440 Speaker 5: bull market now for a long time, sort of ten 245 00:11:26,440 --> 00:11:29,679 Speaker 5: plus years depending on your starting point, but a long 246 00:11:29,760 --> 00:11:32,440 Speaker 5: old dollar bull market, and I think we're due a 247 00:11:32,640 --> 00:11:36,200 Speaker 5: change in that sort of secular status of the currency. 248 00:11:36,360 --> 00:11:39,960 Speaker 5: So yeah, I've given a few more weeks of strength 249 00:11:40,000 --> 00:11:43,240 Speaker 5: in the dollars, we've complete this risk of phase, then 250 00:11:43,280 --> 00:11:46,280 Speaker 5: as we get closer to fedweight cuts, because I mean, 251 00:11:46,320 --> 00:11:47,959 Speaker 5: I think really in this risk of phase that you 252 00:11:48,000 --> 00:11:50,120 Speaker 5: know the market wants to bully the FED for cuts. 253 00:11:50,679 --> 00:11:51,839 Speaker 8: You know, we're still doing QT. 254 00:11:52,120 --> 00:11:55,200 Speaker 5: I mean, this is an extraordinary thing, you know, And 255 00:11:55,240 --> 00:11:57,200 Speaker 5: I think this will be tough for the stock market 256 00:11:58,400 --> 00:12:02,720 Speaker 5: to to with with with QT ongoing. So yeah, so 257 00:12:02,760 --> 00:12:04,880 Speaker 5: I think got one more, one more, one more florry 258 00:12:04,880 --> 00:12:05,640 Speaker 5: in the dollar. 259 00:12:05,920 --> 00:12:08,160 Speaker 3: One more floy and real quick, Chris, I mean, are 260 00:12:08,160 --> 00:12:09,560 Speaker 3: we going to get a rate cut in the US 261 00:12:09,640 --> 00:12:10,280 Speaker 3: here this year? 262 00:12:11,760 --> 00:12:12,560 Speaker 8: I think so? Yeah? 263 00:12:12,559 --> 00:12:15,280 Speaker 5: Okay, I mean I know the data is so mixed, 264 00:12:15,320 --> 00:12:18,240 Speaker 5: isn't it. I mean, e CI not so good today. 265 00:12:18,360 --> 00:12:22,079 Speaker 5: Consumer confidence is bad. It's it's a two speed economy, 266 00:12:22,120 --> 00:12:24,079 Speaker 5: and I think that's why the data is so confusing. 267 00:12:25,080 --> 00:12:28,240 Speaker 5: But I do think the reality is money is much 268 00:12:28,280 --> 00:12:30,920 Speaker 5: tight and it has been. Fiscal stimulus is not as 269 00:12:31,080 --> 00:12:33,680 Speaker 5: good as it was last year, in fact, quite the reverse, 270 00:12:34,120 --> 00:12:36,240 Speaker 5: And so I think inflation will dissipate and you'll get 271 00:12:36,280 --> 00:12:39,880 Speaker 5: a cut and maybe two, but certainly one. 272 00:12:40,080 --> 00:12:44,080 Speaker 2: Hey, Chris really appreciated Chris Watling joining US from Longview Economics. 273 00:12:44,120 --> 00:12:45,960 Speaker 2: Just so I know Paul Chris knows this, but you 274 00:12:46,040 --> 00:12:48,160 Speaker 2: don't know. He is my mom's favorite. 275 00:12:48,360 --> 00:12:48,680 Speaker 1: He is. 276 00:12:48,760 --> 00:12:49,480 Speaker 3: He is nice. 277 00:12:49,679 --> 00:12:50,520 Speaker 7: That's just for he. 278 00:12:50,520 --> 00:12:51,920 Speaker 2: Doesn't know what to say to that. I just feel 279 00:12:51,920 --> 00:12:53,200 Speaker 2: like he used to be on with me in the 280 00:12:53,200 --> 00:12:55,079 Speaker 2: morning show. He used to jam for like an hour 281 00:12:55,200 --> 00:12:58,439 Speaker 2: or two. And okay, she's Carol Steel's favorite out there. 282 00:12:58,520 --> 00:12:59,079 Speaker 7: It's a big deal. 283 00:12:59,120 --> 00:13:01,480 Speaker 2: It's a big deal means And speaking of the FED, 284 00:13:01,760 --> 00:13:04,880 Speaker 2: Bloomberg Radio has full coverage for you starting at one 285 00:13:04,960 --> 00:13:08,800 Speaker 2: thirty eastern tomorrow, very much. All looking forward to. 286 00:13:08,800 --> 00:13:11,400 Speaker 7: That, Tom Lisa and John Farrell. How good is that? 287 00:13:11,679 --> 00:13:12,080 Speaker 6: So good? 288 00:13:12,160 --> 00:13:12,960 Speaker 2: Can't get any better? 289 00:13:13,040 --> 00:13:13,880 Speaker 7: Talking about the FED? 290 00:13:14,760 --> 00:13:17,640 Speaker 3: And then and Michael McKee, we're sending him on the 291 00:13:17,720 --> 00:13:20,439 Speaker 3: sella train this say afternoon. He'll be down there ready 292 00:13:20,480 --> 00:13:23,000 Speaker 3: to go and ask his question or two of the 293 00:13:23,000 --> 00:13:25,880 Speaker 3: FED chairman during the press conference tomorrow afternoon, which starts 294 00:13:25,920 --> 00:13:28,440 Speaker 3: at two thirty pm Wall Street time. 295 00:13:30,880 --> 00:13:34,760 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 296 00:13:34,840 --> 00:13:37,480 Speaker 1: weekdays at ten am Eastern on AFO, car Playing and 297 00:13:37,640 --> 00:13:40,560 Speaker 1: broyd Outo with the Bloomberg Business app. Listen on demand 298 00:13:40,600 --> 00:13:44,920 Speaker 1: wherever you get your podcasts or watch us live on YouTube. 299 00:13:45,840 --> 00:13:46,400 Speaker 7: Paramount. 300 00:13:46,679 --> 00:13:51,040 Speaker 3: Paramount is the old CBS television networking stations. It's the Viacom, 301 00:13:51,440 --> 00:13:53,520 Speaker 3: which is MTV and all that kind of good stuff, 302 00:13:53,520 --> 00:13:56,840 Speaker 3: the Powermount movie and TV studio, all that's wrapped up 303 00:13:56,880 --> 00:13:58,479 Speaker 3: into this company renamed Paramount. 304 00:13:59,240 --> 00:14:00,880 Speaker 7: A lot going on there, let's put it. 305 00:14:00,920 --> 00:14:04,400 Speaker 3: I mean they got reported earnings last night mixed, They 306 00:14:04,520 --> 00:14:07,760 Speaker 3: replaced their CEO. That's not good with an office of CEO. 307 00:14:08,120 --> 00:14:11,199 Speaker 3: And oh yeah, they're actually in discussions to be sold 308 00:14:11,480 --> 00:14:12,920 Speaker 3: to one or more parties. 309 00:14:12,960 --> 00:14:14,240 Speaker 7: I'm not sure what's going on. There are a lot 310 00:14:14,240 --> 00:14:15,000 Speaker 7: of moving pieces. 311 00:14:15,240 --> 00:14:17,520 Speaker 3: Luckily we have Getha Rong Anathon joining us. She's a 312 00:14:17,640 --> 00:14:20,720 Speaker 3: media analyst, the media analyst for Bloomberg Intelligence. 313 00:14:20,760 --> 00:14:22,240 Speaker 7: She's based in Princeton, New Jersey. 314 00:14:22,480 --> 00:14:26,000 Speaker 3: So, Githa, let's start with the potential ownership change here. 315 00:14:26,000 --> 00:14:30,840 Speaker 3: There's lots of parties looking at Paramount. I guess the 316 00:14:30,920 --> 00:14:35,040 Speaker 3: sky Dance, which is the media company owned by mister Ellison, 317 00:14:35,280 --> 00:14:36,680 Speaker 3: the son of Larry Ellison. 318 00:14:36,400 --> 00:14:39,320 Speaker 7: Of what is that? Where is he from? 319 00:14:40,400 --> 00:14:42,720 Speaker 3: Well, yeah, Oracle, thank you? So where are we with 320 00:14:42,760 --> 00:14:44,520 Speaker 3: those negotiations, Githa. 321 00:14:45,800 --> 00:14:49,080 Speaker 6: Yeah, good morning, Paul and Alex so we're in the 322 00:14:49,120 --> 00:14:52,760 Speaker 6: take of those negotiations. There there is an exclusive negotiating 323 00:14:53,200 --> 00:14:57,360 Speaker 6: window that Paramount agreed to with sky Dance that one 324 00:14:57,480 --> 00:15:02,240 Speaker 6: actually expires this Friday. So obviously the ouster of Bob 325 00:15:02,320 --> 00:15:05,920 Speaker 6: Bakish as CEO, who was vehemently opposed to the deal, 326 00:15:06,600 --> 00:15:08,800 Speaker 6: seems to suggest to us that they really have something 327 00:15:08,880 --> 00:15:11,440 Speaker 6: lined up and something's kind of going to go through 328 00:15:11,480 --> 00:15:12,080 Speaker 6: pretty quickly. 329 00:15:12,880 --> 00:15:14,800 Speaker 2: What do we make of the actual earnings? I mean, 330 00:15:15,240 --> 00:15:17,360 Speaker 2: I was on air breaking the numbers yesterday, and like, 331 00:15:17,400 --> 00:15:19,320 Speaker 2: we didn't even talk about the numbers. We just talked 332 00:15:19,320 --> 00:15:22,840 Speaker 2: about the CEO replacement and the weird three CEO thing 333 00:15:22,880 --> 00:15:25,840 Speaker 2: they got going on. What did we learn within the numbers? 334 00:15:27,000 --> 00:15:31,240 Speaker 6: So the actual earnings by itself, Alex was not bad 335 00:15:31,280 --> 00:15:34,200 Speaker 6: at all. I mean, there were definitely some encouraging elements. 336 00:15:34,480 --> 00:15:37,760 Speaker 6: We saw advertising hold up really well, but again one 337 00:15:37,760 --> 00:15:41,400 Speaker 6: could argue that core advertising is still challenged. The reason 338 00:15:41,440 --> 00:15:44,840 Speaker 6: that they reported the seventeen percent increase in advertising revenue 339 00:15:44,840 --> 00:15:47,080 Speaker 6: in the first quarter was really all driven by the 340 00:15:47,080 --> 00:15:50,080 Speaker 6: Super Bowl telecast that said, I mean, you know, if 341 00:15:50,120 --> 00:15:52,560 Speaker 6: you kind of looked at their streaming business, we did 342 00:15:52,600 --> 00:15:55,880 Speaker 6: see a pretty good momentum there in terms of subscriber numbers. 343 00:15:56,240 --> 00:15:59,320 Speaker 6: You know, we did see some progress on a profitability, 344 00:15:59,320 --> 00:16:01,920 Speaker 6: which is not not to say that it's actually profitable, 345 00:16:02,040 --> 00:16:04,720 Speaker 6: just that the losses were a little bit better than 346 00:16:04,720 --> 00:16:08,320 Speaker 6: what we were expecting. But overall, I mean, this is 347 00:16:08,880 --> 00:16:11,040 Speaker 6: right now, as Paul kind of pointed out, this is 348 00:16:11,200 --> 00:16:13,880 Speaker 6: peak uncertainty at paramount. Right now. We don't know what's 349 00:16:13,920 --> 00:16:15,680 Speaker 6: going on with ownership. We don't know what's going on 350 00:16:15,720 --> 00:16:18,520 Speaker 6: with leadership, we don't know what's going on with strategic direction. 351 00:16:19,120 --> 00:16:20,600 Speaker 6: So it's all up in the air. 352 00:16:20,960 --> 00:16:23,240 Speaker 3: So, Gita, I guess one of the big big questions 353 00:16:23,280 --> 00:16:26,800 Speaker 3: on any change of ownership is what are they going 354 00:16:26,840 --> 00:16:29,160 Speaker 3: to pay for share of the buyer? And are they 355 00:16:29,200 --> 00:16:32,480 Speaker 3: going to pay the same price for Sherry Redstone's controlling shares, 356 00:16:33,080 --> 00:16:35,040 Speaker 3: the super voting shares. Are they going to pay the 357 00:16:35,120 --> 00:16:37,520 Speaker 3: same for those shares as they will for the plain 358 00:16:37,560 --> 00:16:39,400 Speaker 3: old shareholders shares? 359 00:16:39,440 --> 00:16:40,240 Speaker 7: So how's that work? 360 00:16:41,120 --> 00:16:43,440 Speaker 6: Yeah, they're not, Paul, And that's kind of been the 361 00:16:43,480 --> 00:16:46,200 Speaker 6: whole bone of contention. Right, So, the whole sky Dance 362 00:16:46,240 --> 00:16:49,440 Speaker 6: proposal is kind of this very convoluted offer. It's this 363 00:16:49,880 --> 00:16:53,880 Speaker 6: two step proposal where they basically pay out Sherry her 364 00:16:54,240 --> 00:16:56,760 Speaker 6: interest in Paramount is worth something like about eight hundred, 365 00:16:56,760 --> 00:16:58,320 Speaker 6: eight hundred and fifty million. They're going to pay her 366 00:16:58,400 --> 00:17:02,240 Speaker 6: upwards of about two billion dollars, so she's getting a 367 00:17:02,320 --> 00:17:06,320 Speaker 6: nice pocket of change there, but it's basically diluting everybody else, 368 00:17:06,359 --> 00:17:09,000 Speaker 6: and that's why you have all of this shareholder consternation. 369 00:17:09,480 --> 00:17:11,720 Speaker 6: Of course, Guy Dance is kind of addressing that. Now 370 00:17:12,280 --> 00:17:14,119 Speaker 6: you know, they have sweetened the bid a little bit. 371 00:17:14,119 --> 00:17:17,439 Speaker 6: They've thrown in about a three billion dollar cash infusion 372 00:17:17,520 --> 00:17:20,480 Speaker 6: to pay down debt to buy back stock, but I'm 373 00:17:20,480 --> 00:17:21,720 Speaker 6: not sure if that's going to be enough. 374 00:17:21,800 --> 00:17:23,520 Speaker 2: Do you feel like this is the best and final 375 00:17:23,560 --> 00:17:26,600 Speaker 2: offer from Skydance as we get to that Friday deadline? 376 00:17:27,280 --> 00:17:28,440 Speaker 6: That's what they have said. 377 00:17:28,640 --> 00:17:32,439 Speaker 2: Yes, did we learn anything from the numbers yesterday that 378 00:17:32,640 --> 00:17:35,960 Speaker 2: shows what a buyer should be paying for shares? 379 00:17:37,280 --> 00:17:39,919 Speaker 6: So we do have another concrete offer on the table, 380 00:17:39,960 --> 00:17:44,120 Speaker 6: one that Sherry Redstone rejected. This was the offer from Apollo, 381 00:17:44,160 --> 00:17:47,600 Speaker 6: which basically offered, you know, twelve billion dollars for the 382 00:17:47,600 --> 00:17:49,879 Speaker 6: equity of the company versus what it's currently trading at, 383 00:17:49,920 --> 00:17:52,920 Speaker 6: which is about eight billion, so you know, roughly about 384 00:17:53,680 --> 00:17:57,280 Speaker 6: ninety to twenty dollars a share. So that's kind of 385 00:17:57,320 --> 00:18:00,560 Speaker 6: where you know, the the Apollo deal stand. Of course, 386 00:18:00,560 --> 00:18:03,159 Speaker 6: now there have been rumors that's they're partnering with Sony 387 00:18:03,200 --> 00:18:06,000 Speaker 6: to again take that bid up a little bit. But 388 00:18:06,040 --> 00:18:07,560 Speaker 6: you know, when we kind of did some of the 389 00:18:07,560 --> 00:18:12,399 Speaker 6: parts analysis, you know, we think that this company is 390 00:18:12,440 --> 00:18:15,640 Speaker 6: easily worth you know, upwards of twenty dollars a share. 391 00:18:16,200 --> 00:18:17,879 Speaker 7: Yep, I've seen folks. 392 00:18:17,880 --> 00:18:20,399 Speaker 3: If you want to check out that research analysis, you 393 00:18:20,440 --> 00:18:22,960 Speaker 3: can go to Bigo in the terminal and search for 394 00:18:23,000 --> 00:18:25,920 Speaker 3: Geetha's work. They did a lot of evaluation work on paramount. 395 00:18:25,920 --> 00:18:28,400 Speaker 3: A lot of investors are looking at that work as well. 396 00:18:28,680 --> 00:18:32,560 Speaker 3: So getha Friday is I guess one kind of date 397 00:18:32,600 --> 00:18:34,919 Speaker 3: to keep in mind. But it just seems like with 398 00:18:35,040 --> 00:18:39,760 Speaker 3: this dual class of stock and maybe different prices being 399 00:18:39,760 --> 00:18:41,879 Speaker 3: paid for different classes of stock, this thing's gonna end 400 00:18:41,960 --> 00:18:45,200 Speaker 3: up in court. It just feels like, what are most 401 00:18:45,200 --> 00:18:46,080 Speaker 3: people thinking about this? 402 00:18:47,200 --> 00:18:49,200 Speaker 6: I think it definitely that there is a very very 403 00:18:49,280 --> 00:18:52,600 Speaker 6: high property of litigation. I mean it's not probably, it's 404 00:18:52,640 --> 00:18:55,280 Speaker 6: almost a certainty. At this point. Everybody has said all 405 00:18:55,320 --> 00:18:59,360 Speaker 6: all the big shareholders, including Mario Gabelli, has said that 406 00:18:59,600 --> 00:19:02,560 Speaker 6: they will definitely litigate if Sherry Redstone actually goes through 407 00:19:02,560 --> 00:19:05,200 Speaker 6: with this deal, a deal which does not treat all 408 00:19:05,280 --> 00:19:10,320 Speaker 6: shareholders equally. And this isn't something new, Paul with paramount. 409 00:19:10,320 --> 00:19:13,320 Speaker 6: I mean, we've seen this litigation stuff happen over and 410 00:19:13,359 --> 00:19:16,679 Speaker 6: over again. But it definitely is a huge risk and 411 00:19:16,720 --> 00:19:18,760 Speaker 6: it's going to be interesting to see what Sony and 412 00:19:18,800 --> 00:19:21,280 Speaker 6: Apollo kind of come up with. In the meantime, before I. 413 00:19:21,320 --> 00:19:25,480 Speaker 2: Let you go, Warner Brothers Discovery is down like eight percent. 414 00:19:25,920 --> 00:19:31,920 Speaker 6: Why Why because no NBA. So their NBA rights are 415 00:19:31,960 --> 00:19:35,440 Speaker 6: actually being negotiated right now. They're currently paying about one 416 00:19:35,480 --> 00:19:39,280 Speaker 6: point two billion. Rumor is that NBC, which is owned 417 00:19:39,320 --> 00:19:42,200 Speaker 6: by Comcast, is kind of swooping in ready to pay 418 00:19:42,200 --> 00:19:44,800 Speaker 6: about two and a half billion dollars to the NBA 419 00:19:45,320 --> 00:19:48,080 Speaker 6: and snatching away the rights from from TNT. That's where 420 00:19:48,160 --> 00:19:51,000 Speaker 6: you know, Warner Brothers owns TNT. That's where they show 421 00:19:51,000 --> 00:19:54,119 Speaker 6: the NBA games. And remember NBA, TNT is kind of 422 00:19:54,119 --> 00:19:57,600 Speaker 6: the anchor to the Warner Brothers TV portfolio, and the 423 00:19:57,720 --> 00:20:00,560 Speaker 6: NBA is the anchor to the TN to the TNT network. 424 00:20:00,760 --> 00:20:02,439 Speaker 6: So not having that is really going to hurt them. 425 00:20:02,480 --> 00:20:04,360 Speaker 6: It's hurting them as you can see in the stock price. 426 00:20:04,119 --> 00:20:11,040 Speaker 3: Today, turnover, speak of turnover and CEOs. How about David 427 00:20:11,080 --> 00:20:13,680 Speaker 3: Zaslov the yea of Warner Brothers Discovery here? I mean 428 00:20:13,680 --> 00:20:16,280 Speaker 3: the stocks down thirty four percent this year, down almost 429 00:20:16,320 --> 00:20:19,760 Speaker 3: fifty percent over the last year. Holy can John alone 430 00:20:19,800 --> 00:20:22,119 Speaker 3: cannot be happy with what's going on here? What's the 431 00:20:22,800 --> 00:20:24,880 Speaker 3: thinking about Warner Brothers Discovery here? 432 00:20:26,960 --> 00:20:29,400 Speaker 6: Hard to say, Paul. I mean, the whole story here 433 00:20:29,560 --> 00:20:31,680 Speaker 6: was supposed to be synergies, which I think they've done 434 00:20:31,680 --> 00:20:33,679 Speaker 6: a pretty good job on. But what's really kind of 435 00:20:33,720 --> 00:20:36,520 Speaker 6: been out of their control has been the TV ad market, 436 00:20:37,480 --> 00:20:42,240 Speaker 6: which has really you know, it's it's of course secularly challenged, 437 00:20:42,240 --> 00:20:44,400 Speaker 6: and I think what made it even far, far worse 438 00:20:44,520 --> 00:20:47,280 Speaker 6: was the Hollywood strikes, which just kind of resulted in 439 00:20:47,359 --> 00:20:49,800 Speaker 6: no good content right now, and so they're kind of 440 00:20:49,800 --> 00:20:52,000 Speaker 6: trying to work through all that. But you know, we've 441 00:20:52,080 --> 00:20:54,440 Speaker 6: chatted before about this. The Ibadah number that they kind 442 00:20:54,480 --> 00:20:56,840 Speaker 6: of showed everybody was fourteen billion. This year, they're going 443 00:20:56,880 --> 00:20:59,480 Speaker 6: to go below ten billion. Add to that, you know, 444 00:20:59,480 --> 00:21:02,800 Speaker 6: about forty billion dollars in debt, and it's really just 445 00:21:02,880 --> 00:21:03,960 Speaker 6: a train wreck right now. 446 00:21:04,200 --> 00:21:06,359 Speaker 2: I Mean, I feel like that is well said you know, 447 00:21:06,800 --> 00:21:10,960 Speaker 2: I said hot mess yesterday about Paramount, train wreck about 448 00:21:11,000 --> 00:21:13,199 Speaker 2: Warner Brothers Discovery. It fit of sums it up. 449 00:21:13,240 --> 00:21:15,360 Speaker 3: I think the life of a media analyso and media 450 00:21:15,400 --> 00:21:16,280 Speaker 3: investor these days. 451 00:21:16,520 --> 00:21:19,520 Speaker 2: Yeah, it's so crazy to be. It is a place 452 00:21:19,560 --> 00:21:21,199 Speaker 2: to be. And you know, you make we can make 453 00:21:21,240 --> 00:21:23,920 Speaker 2: hey about Paramount what I think it's seventy one million subscribers, 454 00:21:24,440 --> 00:21:27,640 Speaker 2: but then compare that to Netflix, right, forget it. Githa, 455 00:21:27,680 --> 00:21:30,040 Speaker 2: thanks a lot. We appreciate you. You are the best. 456 00:21:30,119 --> 00:21:32,800 Speaker 2: Keithan wrongana than she joins us. She is head of 457 00:21:33,040 --> 00:21:39,000 Speaker 2: US media coverage for Bloomberg Intelligence. What's interesting too, I think, Paul, 458 00:21:39,240 --> 00:21:41,080 Speaker 2: is that when you get to these companies, like the 459 00:21:41,160 --> 00:21:44,600 Speaker 2: numbers in some ways then matter less. It's more about 460 00:21:44,600 --> 00:21:46,840 Speaker 2: what the strategy is going to wind up being and 461 00:21:46,880 --> 00:21:48,760 Speaker 2: who's going to be able to turn it around. Same 462 00:21:48,760 --> 00:21:51,480 Speaker 2: thing for Warner Brothers Discovery and same thing for Paramount. 463 00:21:51,600 --> 00:21:51,919 Speaker 7: Yeah. 464 00:21:52,040 --> 00:21:54,879 Speaker 3: Absolutely, And it's been a very big challenge for the 465 00:21:54,920 --> 00:22:00,000 Speaker 3: industry overall, you know, navigating that transition from the traditional 466 00:22:00,280 --> 00:22:01,760 Speaker 3: distribution through cable to all. 467 00:22:01,640 --> 00:22:02,680 Speaker 7: This streaming stuff. 468 00:22:02,760 --> 00:22:04,200 Speaker 3: So I wan have to see how that plays out 469 00:22:04,200 --> 00:22:05,160 Speaker 3: for both of these companies. 470 00:22:06,600 --> 00:22:10,480 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 471 00:22:10,560 --> 00:22:13,600 Speaker 1: weekdays at ten am Eastern on Apple car Play and 472 00:22:13,600 --> 00:22:16,520 Speaker 1: Android Auto with the Bloomberg Business app. You can also 473 00:22:16,600 --> 00:22:20,080 Speaker 1: listen live on Amazon Alexa from our flagship New York station. 474 00:22:20,480 --> 00:22:24,960 Speaker 1: Just say Alexa, Play Bloomberg eleven thirty. 475 00:22:24,640 --> 00:22:27,640 Speaker 3: Smack dab in the middle of earnings and right now 476 00:22:27,640 --> 00:22:29,840 Speaker 3: we're getting through the tech earnings and is a big 477 00:22:29,880 --> 00:22:32,680 Speaker 3: week here next couple of days. Today after the close, 478 00:22:32,840 --> 00:22:36,240 Speaker 3: Amazon sets report, and then Thursday, after the close, we'll 479 00:22:36,240 --> 00:22:39,240 Speaker 3: hear from our good friends at Apple walk us through 480 00:22:39,280 --> 00:22:41,240 Speaker 3: what are some of the key issues that we need 481 00:22:41,280 --> 00:22:43,400 Speaker 3: to focus on that the market needs to focus on? 482 00:22:43,920 --> 00:22:44,520 Speaker 7: Is Gene Monster. 483 00:22:44,560 --> 00:22:46,480 Speaker 3: Gen Munster is the managing partner co founder of deep 484 00:22:46,520 --> 00:22:49,720 Speaker 3: Water Asset Manager. He's been covering Silicon Valley for decades. 485 00:22:50,080 --> 00:22:52,080 Speaker 3: He is absolutely a go to voice and we appreciate 486 00:22:52,119 --> 00:22:54,720 Speaker 3: getting a few minutes of his time. Hey, Geene, let's 487 00:22:54,720 --> 00:22:58,800 Speaker 3: start with Amazon. I guess it's all about the cloud, 488 00:22:58,880 --> 00:22:59,199 Speaker 3: isn't it. 489 00:23:01,080 --> 00:23:06,320 Speaker 9: Indeed, Paul, the cloud AWS is expected to continue to accelerate, 490 00:23:06,440 --> 00:23:10,360 Speaker 9: So just taking a couple steps back, AWS growth over 491 00:23:10,359 --> 00:23:13,280 Speaker 9: the past year and a half has been declining from 492 00:23:13,400 --> 00:23:17,280 Speaker 9: high twenty percent and then at bottomed at twelve percent 493 00:23:17,560 --> 00:23:22,400 Speaker 9: in the September quarter, bumped up to thirteen percent year 494 00:23:22,440 --> 00:23:26,440 Speaker 9: of year growth in December, and expectations in print are 495 00:23:26,520 --> 00:23:30,119 Speaker 9: for fifteen percent year ofver year growth in March. I 496 00:23:30,280 --> 00:23:33,760 Speaker 9: mentioned and emphasize the word print there because the whisper 497 00:23:33,880 --> 00:23:38,800 Speaker 9: numbers have been stoked after Amazon, after Azure and Google 498 00:23:38,840 --> 00:23:42,320 Speaker 9: Cloud reported last week, and of course they had upside 499 00:23:42,320 --> 00:23:45,280 Speaker 9: to their cloud numbers. I suspect that the whisper number 500 00:23:45,320 --> 00:23:49,000 Speaker 9: is sixteen percent plus. In other words, if they print 501 00:23:49,000 --> 00:23:52,480 Speaker 9: to sixteen percent growth up from thirteen in December, that 502 00:23:52,600 --> 00:23:56,520 Speaker 9: may be viewed as a slight disappointment. A couple other 503 00:23:56,640 --> 00:24:00,440 Speaker 9: just quick, really important parts related to the whole AWS conation. 504 00:24:01,160 --> 00:24:04,480 Speaker 9: As a reminder, this is seventeen percent of Amazon's revenue 505 00:24:04,920 --> 00:24:08,280 Speaker 9: and about sixty seven percent this is for calendar twenty 506 00:24:08,320 --> 00:24:11,800 Speaker 9: three of their earnings. So it punches above its weight 507 00:24:11,840 --> 00:24:14,679 Speaker 9: when it comes to profitability, and that's why investors are 508 00:24:14,680 --> 00:24:18,000 Speaker 9: so hyper focused. And when you put all this together, Paul, 509 00:24:18,119 --> 00:24:21,679 Speaker 9: what you have is a picture where AWS with leading 510 00:24:21,720 --> 00:24:25,560 Speaker 9: market share continues to lose market share. I mentioned that 511 00:24:25,920 --> 00:24:29,360 Speaker 9: sixteen percent whisper number if they deliver on that they're 512 00:24:29,400 --> 00:24:32,480 Speaker 9: growing at half the rate that Azure and Google Cloud 513 00:24:32,560 --> 00:24:37,600 Speaker 9: are growing. So this dynamic is it will post an 514 00:24:37,640 --> 00:24:42,080 Speaker 9: improvement undoubtedly in AWS growth, but still the broader picture 515 00:24:42,240 --> 00:24:45,159 Speaker 9: around the future of AWS, not the future, but the 516 00:24:45,200 --> 00:24:49,760 Speaker 9: future market share is still in question as Google and 517 00:24:49,920 --> 00:24:53,400 Speaker 9: Microsoft are really benefiting from how much they've been invested 518 00:24:53,400 --> 00:24:56,680 Speaker 9: in AI and that has been powering their cloud business 519 00:24:56,760 --> 00:24:58,040 Speaker 9: faster than Amazon. 520 00:24:58,359 --> 00:25:01,159 Speaker 7: Folks, I've seen this time and time again. Gene Mounster speaks. 521 00:25:01,200 --> 00:25:02,200 Speaker 7: People take notes. 522 00:25:02,320 --> 00:25:07,080 Speaker 3: Alex Steel has been writing furiously over here listening to Gene. 523 00:25:07,480 --> 00:25:09,160 Speaker 2: It's so true. I'm like, oh, I got to break 524 00:25:09,200 --> 00:25:11,360 Speaker 2: Amazon after the bell, So let me really pay attention here. 525 00:25:11,920 --> 00:25:16,160 Speaker 2: So if you go back to the AWS growth, why 526 00:25:16,359 --> 00:25:19,640 Speaker 2: why did we see that decline in growth and how 527 00:25:20,040 --> 00:25:21,760 Speaker 2: do we expect them at some point to get back 528 00:25:21,840 --> 00:25:24,080 Speaker 2: up to twenty and then grow from there or is 529 00:25:24,119 --> 00:25:25,840 Speaker 2: it now going to be in some kind of range. 530 00:25:27,520 --> 00:25:30,280 Speaker 9: So during that period of call it high twenties to 531 00:25:30,359 --> 00:25:37,080 Speaker 9: that twelve percent, Azure showed some also deceleration from mid 532 00:25:37,160 --> 00:25:41,159 Speaker 9: thirties down to high twenties, Google Cloud from around thirty 533 00:25:41,240 --> 00:25:44,080 Speaker 9: down to low twenties, and so it was just a 534 00:25:44,160 --> 00:25:47,760 Speaker 9: kind of a broader corporate pullback in cloud spending I 535 00:25:47,760 --> 00:25:50,320 Speaker 9: think had part of it, but I think the other 536 00:25:50,400 --> 00:25:54,159 Speaker 9: part was this piece around what's going on on the 537 00:25:54,200 --> 00:25:58,159 Speaker 9: model front, and specifically of course with Azure they've got 538 00:25:58,200 --> 00:26:02,320 Speaker 9: the integration with open AI models, with Google their own 539 00:26:02,359 --> 00:26:05,439 Speaker 9: deep Mind and what they've done with Gemini and building 540 00:26:05,480 --> 00:26:08,280 Speaker 9: those models into their cloud offerings. And when it comes 541 00:26:08,320 --> 00:26:11,200 Speaker 9: to Amazon, they do have an offering. It is related 542 00:26:11,200 --> 00:26:14,800 Speaker 9: to anthropic. They also host a lot of the kind 543 00:26:14,840 --> 00:26:17,800 Speaker 9: of open source models like Lama, But I think that 544 00:26:17,800 --> 00:26:21,080 Speaker 9: that has played into it. So Alex, to put it 545 00:26:21,080 --> 00:26:23,560 Speaker 9: in a perspective, I think that half of the decline 546 00:26:23,560 --> 00:26:26,399 Speaker 9: has been that we saw earlier was because of the 547 00:26:26,400 --> 00:26:30,439 Speaker 9: broader market corporate spending, and I think half is because 548 00:26:30,880 --> 00:26:34,280 Speaker 9: I think that there are AI strategy well, it is 549 00:26:34,960 --> 00:26:38,560 Speaker 9: forward thinking, still lacks some of the punch that Azure 550 00:26:38,680 --> 00:26:41,119 Speaker 9: and Google Cloud is integrating. 551 00:26:41,200 --> 00:26:45,280 Speaker 3: So ging this company has certainly evolved over the years 552 00:26:45,280 --> 00:26:47,880 Speaker 3: that at least you and I have covered it. How 553 00:26:47,880 --> 00:26:50,960 Speaker 3: do investors view this company right now? Like how do 554 00:26:51,040 --> 00:26:53,720 Speaker 3: they think about the retail business? And they just kind 555 00:26:53,720 --> 00:26:56,439 Speaker 3: of put us a relatively low multiple on it and 556 00:26:56,600 --> 00:26:57,720 Speaker 3: kind of really just focus. 557 00:26:57,520 --> 00:26:58,360 Speaker 8: On the cloud. 558 00:26:59,600 --> 00:27:01,680 Speaker 9: Tonight, it is all about the cloud. I think that 559 00:27:02,800 --> 00:27:05,679 Speaker 9: is that the central takeaway. I think that beyond this, 560 00:27:06,359 --> 00:27:09,000 Speaker 9: we are seeing an improvement in some of the metrics 561 00:27:09,040 --> 00:27:11,080 Speaker 9: around the retail business. And this, of course is the 562 00:27:11,160 --> 00:27:15,080 Speaker 9: vast majority of their sales and the profitability is starting 563 00:27:15,119 --> 00:27:17,159 Speaker 9: to move in the right direction, and part of that 564 00:27:17,359 --> 00:27:20,080 Speaker 9: is because of how they've improved the logistics. Some of 565 00:27:20,119 --> 00:27:22,760 Speaker 9: those have been more recently related to AI in terms 566 00:27:22,760 --> 00:27:25,080 Speaker 9: of the planning. Some of it's just been good old 567 00:27:25,080 --> 00:27:28,720 Speaker 9: fashioned algorithms that make their delivery more efficient. But the 568 00:27:28,760 --> 00:27:31,760 Speaker 9: retail opportunity I see as kind of a changing of 569 00:27:31,800 --> 00:27:33,800 Speaker 9: the guard and the Amazon story. Over the next couple 570 00:27:33,840 --> 00:27:37,199 Speaker 9: of years, I think investors will progressively focus more on 571 00:27:37,240 --> 00:27:40,879 Speaker 9: that business. I mentioned today almost seventy percent of Amazon's 572 00:27:40,920 --> 00:27:43,840 Speaker 9: earnings come from AWS, and I think that number is 573 00:27:43,880 --> 00:27:46,080 Speaker 9: going to continue to decline going forward because I think 574 00:27:46,080 --> 00:27:49,640 Speaker 9: the retail business is going to improve, and the substance 575 00:27:49,680 --> 00:27:53,439 Speaker 9: of the improvement is better efficiency at logistics. Of course, 576 00:27:53,720 --> 00:27:55,680 Speaker 9: is a real this is real AI, it's not hype, 577 00:27:55,720 --> 00:27:59,240 Speaker 9: it's real. And second is related to robotics. It's something 578 00:27:59,280 --> 00:28:01,760 Speaker 9: that they've done this Kiva acquisition a long time ago. 579 00:28:02,160 --> 00:28:04,600 Speaker 9: That's the start to it. But they have a profound 580 00:28:04,640 --> 00:28:08,520 Speaker 9: opportunity in terms of integrating robotics over the next decade 581 00:28:08,560 --> 00:28:12,040 Speaker 9: into logistics, which would have a positive impact on earning. 582 00:28:12,080 --> 00:28:13,840 Speaker 9: So I do think that we will see the baton 583 00:28:13,880 --> 00:28:16,200 Speaker 9: switch over the next couple of years in terms of 584 00:28:16,240 --> 00:28:18,800 Speaker 9: the pressure point. We will be talking about AWS, but 585 00:28:18,840 --> 00:28:21,600 Speaker 9: it won't be the center focus all right, So I. 586 00:28:21,560 --> 00:28:25,640 Speaker 2: Feel like I'm relatively prepped now to break those earnings. 587 00:28:25,840 --> 00:28:30,240 Speaker 2: So can you prep us for Apple on Thursday? For sure? 588 00:28:30,280 --> 00:28:34,119 Speaker 9: I think Apple is going to be much more exciting 589 00:28:34,280 --> 00:28:37,879 Speaker 9: in terms of kind of what the investor reaction is 590 00:28:37,880 --> 00:28:40,400 Speaker 9: going to be because the setup we have is pretty 591 00:28:40,400 --> 00:28:45,200 Speaker 9: well known that the businesses has been slow. The expectations. 592 00:28:45,240 --> 00:28:47,440 Speaker 9: Their guidance was for revenue to be down five percent 593 00:28:47,520 --> 00:28:50,240 Speaker 9: year every year, and that's generally where analysts are at 594 00:28:50,560 --> 00:28:53,400 Speaker 9: the iPhone segment. Analysts are expecting it to be down 595 00:28:53,480 --> 00:28:55,760 Speaker 9: ten percent, and if you take a step back over 596 00:28:55,760 --> 00:28:58,520 Speaker 9: the last few years, it's continued to be flat to 597 00:28:58,560 --> 00:29:01,480 Speaker 9: downsh the iPhone and regular China is a weakness. I 598 00:29:01,560 --> 00:29:03,560 Speaker 9: just want to call out that's one of the key 599 00:29:03,600 --> 00:29:06,440 Speaker 9: metrics that investors are going to be focusing on. In September. 600 00:29:06,520 --> 00:29:09,240 Speaker 9: The China business was down three percent, in December down 601 00:29:09,360 --> 00:29:12,080 Speaker 9: ten percent, and I believe that it's going to be 602 00:29:12,080 --> 00:29:15,400 Speaker 9: down caught around thirteen to fifteen percent in the March quarter. 603 00:29:15,440 --> 00:29:19,080 Speaker 9: So continued softness in China that's about twenty percent of 604 00:29:19,120 --> 00:29:21,680 Speaker 9: Apple's overall redness. That's going to be one of the themes. 605 00:29:22,080 --> 00:29:24,720 Speaker 9: The second theme, of course, is going to be related 606 00:29:24,760 --> 00:29:28,440 Speaker 9: to when the bottom of the cycle happens, and I 607 00:29:28,440 --> 00:29:31,640 Speaker 9: think they will give softish guidance for the June quarter, 608 00:29:31,720 --> 00:29:34,560 Speaker 9: but the stock may actually react positive to that because 609 00:29:34,560 --> 00:29:37,520 Speaker 9: once they've got that negative guidance in then investors can 610 00:29:37,520 --> 00:29:39,200 Speaker 9: start to look to the back half of the year. Of course, 611 00:29:39,240 --> 00:29:41,240 Speaker 9: the new iPhone cycle comes, that will probably have some 612 00:29:41,360 --> 00:29:44,160 Speaker 9: AI branding around it, and that we should start to 613 00:29:44,160 --> 00:29:48,160 Speaker 9: see some reacceleration. So the irony of this print is 614 00:29:48,600 --> 00:29:53,080 Speaker 9: the weak March quarter, punky guidance for June might actually 615 00:29:53,160 --> 00:29:55,760 Speaker 9: kind of mark the bottom. One last piece, of course, 616 00:29:55,800 --> 00:29:58,600 Speaker 9: I buried the lead related to AI. This we're going 617 00:29:58,640 --> 00:30:00,440 Speaker 9: to hear a lot more in the beginning June at 618 00:30:00,440 --> 00:30:03,640 Speaker 9: their developer conference, and I think that there is a 619 00:30:03,720 --> 00:30:06,320 Speaker 9: piece around this on Capex, of course, that was a 620 00:30:06,360 --> 00:30:09,720 Speaker 9: hot topic last week. Apple has yet to talk about CAPEX, 621 00:30:10,000 --> 00:30:14,200 Speaker 9: any big uptake in Capex. They stand alone amongst big tech, 622 00:30:14,240 --> 00:30:16,360 Speaker 9: and I think this is going to be a quarter 623 00:30:16,400 --> 00:30:19,760 Speaker 9: where investors get some medicine when it comes to Apple 624 00:30:19,800 --> 00:30:22,160 Speaker 9: and how they are going to be spending in CAPEX. 625 00:30:22,640 --> 00:30:25,400 Speaker 9: If in fact, Apple wants to participate in AI, which 626 00:30:25,560 --> 00:30:28,040 Speaker 9: sounds like they want to, it's going to require a 627 00:30:28,080 --> 00:30:31,840 Speaker 9: significant uptake in Capex, and that potentially could be at 628 00:30:32,240 --> 00:30:34,600 Speaker 9: the cost of margins, a couple percent in margins. So 629 00:30:35,360 --> 00:30:37,760 Speaker 9: that's the piece I'm bracing for is what their commentary 630 00:30:37,800 --> 00:30:39,640 Speaker 9: on CAPEX is related to jenit of ai. 631 00:30:39,840 --> 00:30:41,680 Speaker 3: Are you surprised, Gene that we haven't seen a more 632 00:30:41,680 --> 00:30:44,080 Speaker 3: aggressive move on AI from Apple? 633 00:30:45,880 --> 00:30:50,040 Speaker 9: Absolutely, I mean it's I mean there's silence today, it's 634 00:30:50,200 --> 00:30:53,520 Speaker 9: more recently it's they've said more, but has been definiting 635 00:30:53,520 --> 00:30:56,080 Speaker 9: at least in twenty twenty three. And I think that 636 00:30:56,400 --> 00:30:58,840 Speaker 9: they've got a golden opportunity here. They have a brand 637 00:30:58,840 --> 00:31:02,520 Speaker 9: around privacy. The current stage of AI that we're operating 638 00:31:02,520 --> 00:31:04,920 Speaker 9: in is jenn of ai, where we prompt a model, 639 00:31:05,000 --> 00:31:07,600 Speaker 9: it gets back, we can have a conversation. The next 640 00:31:07,600 --> 00:31:10,960 Speaker 9: phase and this is it won't be products today with Apple, 641 00:31:10,960 --> 00:31:13,040 Speaker 9: but I think ultimately where they're going to go is 642 00:31:13,080 --> 00:31:16,120 Speaker 9: what's referred to as a gentic or agent or personalized day. 643 00:31:16,240 --> 00:31:18,959 Speaker 9: You'll hear those terms interchanged, but this is the idea 644 00:31:18,960 --> 00:31:22,160 Speaker 9: of AI actually completing a task for you instead of 645 00:31:22,240 --> 00:31:25,920 Speaker 9: just responding in part to a conversation. And again, because 646 00:31:25,920 --> 00:31:27,960 Speaker 9: I think what Apple does around privacy, I think they're 647 00:31:27,960 --> 00:31:30,840 Speaker 9: going to have an invitation for consumers really to build 648 00:31:31,120 --> 00:31:34,440 Speaker 9: some unique products around agentic AI down the road. 649 00:31:34,600 --> 00:31:36,720 Speaker 7: All right, Gene, thanks so much for your time. Really appreciated. 650 00:31:37,320 --> 00:31:40,200 Speaker 3: Gene, Monster, managing partner, co founder of Deepwater Asset Management. 651 00:31:40,200 --> 00:31:42,960 Speaker 3: Give us a preview here for Amazon tonight after close 652 00:31:43,000 --> 00:31:44,720 Speaker 3: and Apple reporting the results Thursday. 653 00:31:44,720 --> 00:31:45,440 Speaker 7: After the close. 654 00:31:48,000 --> 00:31:51,880 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 655 00:31:51,960 --> 00:31:55,000 Speaker 1: weekdays at ten am Eastern on Apple car Play and 656 00:31:55,000 --> 00:31:57,920 Speaker 1: Android Auto with the Bloomberg Business app. You can also 657 00:31:58,000 --> 00:32:01,480 Speaker 1: listen live on Amazon. Alexa'm our flagship New York station. 658 00:32:01,840 --> 00:32:04,880 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 659 00:32:06,200 --> 00:32:08,720 Speaker 2: To Alex Steele, I hear alongside Paul Sweeney. We are 660 00:32:08,760 --> 00:32:12,000 Speaker 2: live Interactive Brokers Studio right here in Midtown Manhattan. This 661 00:32:12,080 --> 00:32:15,120 Speaker 2: is Bloomberg Intelligence Radio. We cover all the news for you, 662 00:32:15,320 --> 00:32:18,400 Speaker 2: all the top news for you with our amazing analysts worldwide. 663 00:32:18,400 --> 00:32:20,800 Speaker 2: They cover about two thousand companies and one hundred and 664 00:32:20,960 --> 00:32:23,120 Speaker 2: thirty industries. So let's get to one of them right now. 665 00:32:23,200 --> 00:32:25,960 Speaker 2: Look at mcdonald' stock doing a whole lot of nothing. 666 00:32:26,720 --> 00:32:29,320 Speaker 2: It was down earlier today it has slight miss on 667 00:32:29,400 --> 00:32:33,960 Speaker 2: earnings per share and their comp sales, particularly international missed estimates. 668 00:32:33,960 --> 00:32:36,360 Speaker 2: But the big news everyone seems so excited about is 669 00:32:36,400 --> 00:32:38,880 Speaker 2: his biggest burger thing. We're going to test it to 670 00:32:38,920 --> 00:32:41,920 Speaker 2: try and spark some traffic growth right here, let's bring it, 671 00:32:42,000 --> 00:32:44,960 Speaker 2: I mean, okay, just by two of them. Anyway, let's 672 00:32:45,000 --> 00:32:47,120 Speaker 2: get more details on this with Michael Halen. He is 673 00:32:47,120 --> 00:32:50,160 Speaker 2: a Bloomberg Intelligence senior restaurant and food service analyst, and 674 00:32:50,200 --> 00:32:53,240 Speaker 2: he joins us. Now, okay, let's just kiss off the 675 00:32:53,280 --> 00:32:55,520 Speaker 2: earnings before we get to this big burger thing. What 676 00:32:55,560 --> 00:32:57,760 Speaker 2: was your biggest takeaway? 677 00:32:59,200 --> 00:33:01,920 Speaker 10: I'd say the biggest takeaway was, you know the fact 678 00:33:01,960 --> 00:33:05,760 Speaker 10: that April's flat so far in the United States, that's 679 00:33:05,960 --> 00:33:09,920 Speaker 10: trailing the industry level. You know the industry data that 680 00:33:09,960 --> 00:33:14,160 Speaker 10: we get so and also you know, restaurant brands reported 681 00:33:14,160 --> 00:33:19,000 Speaker 10: this morning, and Burger King showed an acceleration in the 682 00:33:19,080 --> 00:33:20,880 Speaker 10: US and their US numbers. 683 00:33:20,520 --> 00:33:22,600 Speaker 11: So I would say that was the biggest surprise. 684 00:33:22,760 --> 00:33:23,000 Speaker 1: You know. 685 00:33:23,400 --> 00:33:27,520 Speaker 10: McDonald's still on a five year trend, is vastly outperforming 686 00:33:27,520 --> 00:33:31,040 Speaker 10: Burger King almost the other quick service names, but there seems. 687 00:33:30,720 --> 00:33:31,720 Speaker 11: To be some slowing. 688 00:33:31,800 --> 00:33:34,719 Speaker 10: If I was to guess, some of that bad press 689 00:33:34,800 --> 00:33:37,760 Speaker 10: around the eighteen dollars big mac meal in some markets, 690 00:33:37,800 --> 00:33:39,960 Speaker 10: you know, could be hurting because we are seeing US 691 00:33:40,040 --> 00:33:43,680 Speaker 10: consumers really push back against price increases right now, and 692 00:33:43,960 --> 00:33:47,000 Speaker 10: they're they're being more picky about where they spend their money. 693 00:33:47,160 --> 00:33:49,480 Speaker 7: Mike, I see. Just in the Bloomberg reporting here. 694 00:33:49,520 --> 00:33:52,960 Speaker 3: Executives have also said that low income consumers in the US, 695 00:33:53,000 --> 00:33:54,960 Speaker 3: which is an important part of the company's customer base, 696 00:33:55,240 --> 00:33:57,280 Speaker 3: are pulling back. Is that Does that mean we're going 697 00:33:57,360 --> 00:34:00,360 Speaker 3: to see more promotions which might be put freshl on 698 00:34:00,360 --> 00:34:00,800 Speaker 3: the margins. 699 00:34:02,720 --> 00:34:05,160 Speaker 11: Yeah, we see. Yeah. 700 00:34:05,240 --> 00:34:07,520 Speaker 10: McDonald's has come out and said they're going to focus 701 00:34:07,520 --> 00:34:10,279 Speaker 10: more on their value menu. They're going to continue to 702 00:34:10,320 --> 00:34:11,960 Speaker 10: offer promotions, a lot of them. 703 00:34:11,840 --> 00:34:16,040 Speaker 11: Through the apps. So it looks like a full on 704 00:34:16,160 --> 00:34:17,160 Speaker 11: value war is here. 705 00:34:17,280 --> 00:34:19,719 Speaker 10: I mean, Burger King said they're going to be a 706 00:34:19,760 --> 00:34:22,600 Speaker 10: little bit more careful than they've been in the past 707 00:34:22,800 --> 00:34:25,960 Speaker 10: with their price increases because you know, they've had some 708 00:34:26,080 --> 00:34:26,920 Speaker 10: increases over. 709 00:34:26,760 --> 00:34:27,799 Speaker 11: The last five years or so. 710 00:34:30,760 --> 00:34:32,640 Speaker 10: I'm sorry, so Burger things to be a little bit 711 00:34:32,719 --> 00:34:36,399 Speaker 10: more careful with their discounting because in the last five 712 00:34:36,480 --> 00:34:40,200 Speaker 10: years or so they've gotten too aggressive and hurt franchising margins. 713 00:34:40,200 --> 00:34:43,160 Speaker 11: So they kind of hoopooed that a little bit. 714 00:34:43,160 --> 00:34:45,759 Speaker 10: But we think a full blown value war is here 715 00:34:45,840 --> 00:34:47,560 Speaker 10: and it's on the table for twenty twenty four. 716 00:34:47,680 --> 00:34:50,280 Speaker 2: So does the value war take into account a Bigger Burger? 717 00:34:50,520 --> 00:34:51,120 Speaker 2: Is that the deal? 718 00:34:52,880 --> 00:34:53,680 Speaker 11: Well? Value? 719 00:34:53,960 --> 00:34:56,040 Speaker 10: You know, it's measured in a couple of ways. It's 720 00:34:56,080 --> 00:34:58,279 Speaker 10: not just the price, but it's what you get for 721 00:34:58,320 --> 00:35:03,120 Speaker 10: the price, right, And so you know, I'm sure McDonald's 722 00:35:02,880 --> 00:35:07,320 Speaker 10: has done their legwork and they have some customer feedback 723 00:35:07,400 --> 00:35:10,680 Speaker 10: that says that they want some Bigger Burgers on their menu, 724 00:35:10,800 --> 00:35:13,239 Speaker 10: and so that's going to be interesting. They said they're 725 00:35:13,280 --> 00:35:15,160 Speaker 10: going to start testing it in the second half of 726 00:35:15,200 --> 00:35:18,440 Speaker 10: this year, so it may not hit the United States 727 00:35:18,200 --> 00:35:19,399 Speaker 10: for quite some time. 728 00:35:20,600 --> 00:35:22,960 Speaker 11: But yeah, there's a couple of ways to measure value. 729 00:35:23,280 --> 00:35:26,080 Speaker 3: Hey, Mike, what are the McDonald's of the world, and 730 00:35:26,120 --> 00:35:27,840 Speaker 3: you know, the other restaurant companies you talked to, what 731 00:35:27,840 --> 00:35:31,520 Speaker 3: are they saying about these GLP one drugs? Are they 732 00:35:31,719 --> 00:35:34,520 Speaker 3: really going to impact their business? 733 00:35:36,360 --> 00:35:38,960 Speaker 10: You know, I don't think there's too much worry about 734 00:35:38,960 --> 00:35:41,320 Speaker 10: that anymore. I know that was a big thing last 735 00:35:41,320 --> 00:35:44,560 Speaker 10: summer and into the fall, and it really impacted the 736 00:35:44,600 --> 00:35:47,120 Speaker 10: prices of some of these quick service restaurant chain stocks, 737 00:35:47,200 --> 00:35:50,840 Speaker 10: especially McDonald's. But you know, I've seen a lot of 738 00:35:50,840 --> 00:35:53,960 Speaker 10: different reports out there, and you know, the amount of 739 00:35:54,000 --> 00:35:57,719 Speaker 10: people on these drugs ranges from you know, seven to 740 00:35:57,840 --> 00:36:01,520 Speaker 10: twelve or maybe fifteen percent bit best case if once 741 00:36:01,560 --> 00:36:03,719 Speaker 10: they get to like maybe a pill form instead of 742 00:36:03,719 --> 00:36:08,080 Speaker 10: a shot, you know, and we don't know about long 743 00:36:08,160 --> 00:36:11,359 Speaker 10: term side effects from some of these drugs, so I 744 00:36:11,360 --> 00:36:15,880 Speaker 10: think initially there was some concern, but over time, McDonald's 745 00:36:15,880 --> 00:36:17,759 Speaker 10: and these other chains, they're going to figure out how 746 00:36:17,800 --> 00:36:21,440 Speaker 10: to make a seven to twelve percent smaller cheeseburger. Right 747 00:36:21,480 --> 00:36:24,759 Speaker 10: They're getting smaller anyway, because beef prices are going they're 748 00:36:24,800 --> 00:36:29,200 Speaker 10: going up, and you know, there's a historical situation in 749 00:36:29,239 --> 00:36:31,719 Speaker 10: the cattle market right now, and so beef prices are 750 00:36:31,800 --> 00:36:34,000 Speaker 10: going to continue to stay elevated in here for a 751 00:36:34,040 --> 00:36:37,040 Speaker 10: couple of years, and so chains are already starting to 752 00:36:37,160 --> 00:36:40,759 Speaker 10: try to, you know, solve for some of these problems, 753 00:36:42,400 --> 00:36:44,400 Speaker 10: you know, ahead of broader adoption. 754 00:36:44,760 --> 00:36:46,480 Speaker 2: Yeah, I mean you have to think that translation is 755 00:36:46,480 --> 00:36:48,520 Speaker 2: going to hit in many different ways. But before we 756 00:36:48,600 --> 00:36:50,840 Speaker 2: let you go, we have about a minute left. So 757 00:36:51,120 --> 00:36:53,279 Speaker 2: who wins the value war right now? Based on what 758 00:36:53,280 --> 00:36:53,960 Speaker 2: you've seen. 759 00:36:55,960 --> 00:37:00,279 Speaker 10: Well, it's interesting because you know McDonald's historically has and 760 00:37:00,360 --> 00:37:03,640 Speaker 10: so that's what's most interesting about them underperforming in April. 761 00:37:04,680 --> 00:37:09,080 Speaker 10: Burger King is is an interesting one because you know, 762 00:37:09,120 --> 00:37:12,239 Speaker 10: they have easier comps. They struggled coming out of the 763 00:37:13,120 --> 00:37:15,239 Speaker 10: pandemic for a few years, right, and so they have 764 00:37:15,440 --> 00:37:18,640 Speaker 10: easier comparisons to lap lower average unit volumes at the 765 00:37:18,640 --> 00:37:21,680 Speaker 10: store level, and so there's room for some upside there. 766 00:37:22,719 --> 00:37:26,760 Speaker 10: Chipotle absolutely continues to knock the cover off the ball, 767 00:37:28,080 --> 00:37:31,120 Speaker 10: and you know McDonald's has scale, right, and so when 768 00:37:31,120 --> 00:37:34,600 Speaker 10: they really start pushing on value, everyone else is going 769 00:37:34,680 --> 00:37:37,399 Speaker 10: to feel it. So so you know, I'm confident that 770 00:37:37,400 --> 00:37:41,680 Speaker 10: that McDonald's can kind of can kind of turn the 771 00:37:41,680 --> 00:37:43,760 Speaker 10: tide here a little bit because they can just offer 772 00:37:43,760 --> 00:37:47,120 Speaker 10: burgers and other items at prices their computers just can't match. 773 00:37:46,920 --> 00:37:49,000 Speaker 7: All right, Michael, great stuff has always Mike Calin. 774 00:37:49,040 --> 00:37:51,960 Speaker 3: He's a senior restaurant and food service analyst Bloomberg Intelligence. 775 00:37:52,520 --> 00:37:55,080 Speaker 3: McDonald's putting out some numbers a little bit disappointing. The 776 00:37:55,120 --> 00:37:59,640 Speaker 3: stock kind of flat here today, maybe you know, talking 777 00:37:59,640 --> 00:38:01,719 Speaker 3: about is kind of where the demand is, where some 778 00:38:01,760 --> 00:38:05,480 Speaker 3: of their customers are facing some pressure. So how promotional 779 00:38:05,520 --> 00:38:08,120 Speaker 3: do you need to be and how innovative do you 780 00:38:08,200 --> 00:38:08,760 Speaker 3: be in products? 781 00:38:08,840 --> 00:38:09,839 Speaker 7: You know you. 782 00:38:09,840 --> 00:38:11,520 Speaker 2: Just already said, right, I mean, he likes you. 783 00:38:12,000 --> 00:38:13,520 Speaker 3: I get the same thing today that I got when 784 00:38:13,560 --> 00:38:16,640 Speaker 3: I was like fifteen, which is a number two with 785 00:38:16,680 --> 00:38:16,920 Speaker 3: a coke. 786 00:38:17,000 --> 00:38:19,560 Speaker 7: It's like a quarter pound or something with cheese. 787 00:38:19,560 --> 00:38:22,719 Speaker 2: Okay, And can you offer the price for that, Like 788 00:38:23,160 --> 00:38:23,600 Speaker 2: I don't know. 789 00:38:24,000 --> 00:38:25,759 Speaker 3: I don't even know now, but I'm sure the price 790 00:38:25,800 --> 00:38:28,320 Speaker 3: is going to do it dramatically, so but we have 791 00:38:28,360 --> 00:38:28,600 Speaker 3: to see. 792 00:38:28,640 --> 00:38:30,080 Speaker 7: But it still works. But I think do it once 793 00:38:30,120 --> 00:38:31,120 Speaker 7: or twice a year, so who cares. 794 00:38:31,400 --> 00:38:35,880 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 795 00:38:36,080 --> 00:38:39,000 Speaker 1: and anywhere else you will get your podcasts. Listen live 796 00:38:39,080 --> 00:38:42,279 Speaker 1: each weekday, ten am to noon Eastern on Bloomberg dot 797 00:38:42,280 --> 00:38:45,520 Speaker 1: com The iHeart Radio app tune In, and the Bloomberg 798 00:38:45,560 --> 00:38:48,680 Speaker 1: Business App. You can also watch us live every weekday 799 00:38:48,719 --> 00:38:51,400 Speaker 1: on YouTube and always on the Bloomberg terminal