WEBVTT - US Consumer Confidence Slumps , Paramount Earnings, Tech Preview 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple Card playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch us live on YouTube. 0:00:23.480 --> 0:00:27.640 With consumer confidence number in ninety seven, the expectations coming 0:00:27.680 --> 0:00:30.160 in sixty six point four, you got to wonder what's 0:00:30.160 --> 0:00:30.480 behind that? 0:00:30.800 --> 0:00:33.479 Yeah, that and that expectation sixty six point four is 0:00:33.520 --> 0:00:36.519 down from last month's revised up seventy four, So a 0:00:36.520 --> 0:00:37.360 big drop there. 0:00:37.479 --> 0:00:40.040 Well, luckily we have Dana Peterson here, she's chief economists 0:00:40.040 --> 0:00:42.919 over at the Conference Board. They do this data, so 0:00:42.960 --> 0:00:45.400 it's great that we get her for that instant reaction. 0:00:45.760 --> 0:00:49.200 So just to recap that Consumer Conference consumer confidence number 0:00:49.200 --> 0:00:52.440 coming at ninety seven, Dana, what happened? What's behind that? 0:00:53.880 --> 0:00:56.160 Sure, this is the third month that the index has 0:00:56.680 --> 0:01:00.000 fallen off, and certainly in the month consumers were less 0:01:00.080 --> 0:01:05.320 optimistic about current employment conditions, and certainly looking forward they 0:01:05.319 --> 0:01:09.440 were less optimistic about employment, business and also income. But 0:01:09.480 --> 0:01:11.520 I would say that if you look out of the 0:01:11.600 --> 0:01:15.039 last two years, the headline measure has been moving back 0:01:15.080 --> 0:01:17.720 and forth in a pretty narrow range, but still in 0:01:17.760 --> 0:01:20.319 all three months down we really wonder what's going to 0:01:20.319 --> 0:01:21.440 happen in that fourth month. 0:01:22.480 --> 0:01:25.280 So how long does a trend here? I mean, it 0:01:25.720 --> 0:01:27.400 feels like a trend to me, and I'm looking at 0:01:27.400 --> 0:01:30.840 some of the revisions downward here, what is this data 0:01:31.080 --> 0:01:31.760 really telling us? 0:01:31.760 --> 0:01:31.880 Here? 0:01:31.920 --> 0:01:33.880 Is there a problem for this US economy? 0:01:33.880 --> 0:01:34.080 Here? 0:01:35.360 --> 0:01:37.800 Well, I would split it out, so the headline, well, 0:01:37.840 --> 0:01:41.959 the headline is made up of present conditions and also expectations. 0:01:42.040 --> 0:01:46.039 So the present conditions index has actually stayed pretty much afloat, 0:01:46.080 --> 0:01:48.160 even though it's moving back and forth a lot. But 0:01:48.280 --> 0:01:51.680 expectations really came off about a year or so ago, 0:01:51.920 --> 0:01:55.280 and they've just been flirting with that eighty threshold, and 0:01:55.360 --> 0:01:58.760 below eighty usually signals or recession. So it suggests consumers 0:01:58.800 --> 0:02:02.840 are a little worried about something. They're concerned about inflation still, 0:02:03.200 --> 0:02:05.520 and they're getting a little bit worried about the labor market. 0:02:06.560 --> 0:02:08.639 So to that point, this kind of goes to the 0:02:08.680 --> 0:02:12.320 whole idea that people feel really bad even though the 0:02:12.400 --> 0:02:14.640 overall data, like you could look at the employment cost 0:02:14.680 --> 0:02:16.880 in next coming and higher than estimated, you know, GDP 0:02:17.040 --> 0:02:19.639 I realized was a little cool, but still the data 0:02:19.720 --> 0:02:23.440 actually comes in pretty pretty strong. How do we understand that? 0:02:24.840 --> 0:02:24.960 So? 0:02:25.280 --> 0:02:27.680 I think the key thing is, on the one hand, 0:02:27.720 --> 0:02:31.079 consumers are working and so they feel good about that 0:02:31.520 --> 0:02:34.639 and they have income coming in, but then that income 0:02:34.720 --> 0:02:38.359 is eroded by inflation. Prices are still elevated. Even though 0:02:38.360 --> 0:02:41.359 prices aren't rising as quickly as they were, the level 0:02:41.440 --> 0:02:43.919 is high. People are saying eggs are eight bucks. I'm 0:02:43.960 --> 0:02:44.560 not used to that. 0:02:44.680 --> 0:02:47.400 I don't really like that, all right, Dana, thanks so 0:02:47.440 --> 0:02:49.760 much for joining us. Dana Peterson, she's a chief economist 0:02:49.880 --> 0:02:52.200 at the Conference Board. Kind of break down some of 0:02:52.240 --> 0:02:55.359 these consumer confidence data coming in today, and again the 0:02:55.360 --> 0:02:59.320 headline is Alex just reported Consumer Conference Board consumer confidence 0:02:59.360 --> 0:03:00.840 came in and reading you have ninety seven. 0:03:00.960 --> 0:03:03.720 Consensus was one zero four, one oh four. So a 0:03:03.760 --> 0:03:04.840 pretty big miss there. 0:03:04.880 --> 0:03:07.480 Straight up inflation, Like you're right, if you're gonna go 0:03:07.480 --> 0:03:09.400 pay eight bucks for eggs, Like that's how you feel, 0:03:09.520 --> 0:03:11.440 no matter what your paycheck necessarily is. 0:03:13.040 --> 0:03:16.919 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:03:17.000 --> 0:03:20.920 weekdays at ten am Eastern on applecard Play and Android auto. 0:03:20.919 --> 0:03:23.720 With the Bloomberg Business app. You can also listen live 0:03:23.800 --> 0:03:27.000 on Amazon Alexa from our flagship New York station, Just 0:03:27.040 --> 0:03:29.559 say Alexa, play Bloomberg eleven. 0:03:29.400 --> 0:03:34.480 Thirty and Alex steelongside Paul Sweeney. This is Bloomberg Intelligence Radio, 0:03:34.560 --> 0:03:37.480 recover all the top news with our amazing analysts worldwide. 0:03:37.480 --> 0:03:39.760 They covered about two thousand companies and one hundred and 0:03:39.800 --> 0:03:42.200 thirty industries. We also want to give you the perspective 0:03:42.200 --> 0:03:44.800 of bigger market strategists, right, like, how do you look 0:03:44.840 --> 0:03:46.840 at it if you're looking at the longer term perspective 0:03:46.840 --> 0:03:48.280 when it comes to quity is and how the short 0:03:48.360 --> 0:03:50.560 term is dictating how you're going to see the outcome. 0:03:50.640 --> 0:03:53.520 Chris Watling is CEO and chief market strategist over at 0:03:53.520 --> 0:03:57.800 Longview Economics. He joined us now from Toronto, Canada. So 0:03:57.840 --> 0:04:01.040 I'm looking Chris at an SMP charter one month and 0:04:01.120 --> 0:04:04.680 clearly we had a decline last week. Right, we've retraced 0:04:04.680 --> 0:04:06.680 that we're up about three percent from the lows, but 0:04:06.680 --> 0:04:08.720 we're still down by about two two and a half 0:04:08.760 --> 0:04:12.120 percent from the peak that we saw back in early April. 0:04:12.560 --> 0:04:14.280 What do we make of the market? 0:04:15.400 --> 0:04:16.720 What do you make of the market? What a great 0:04:16.760 --> 0:04:20.960 question and morning Alex and Paul. Great to be on. Yeah, 0:04:21.040 --> 0:04:23.800 I mean it's it's I think it's it's time for 0:04:23.839 --> 0:04:25.240 a bit of give back, and we think about it. 0:04:25.240 --> 0:04:28.000 It's been extremely good run all the way from the 0:04:28.000 --> 0:04:30.360 sort of loads in October last year through to where 0:04:30.400 --> 0:04:32.040 we were at the beginning of April when we when 0:04:32.080 --> 0:04:33.560 we sort of hit the highs on the S and P, 0:04:33.760 --> 0:04:35.719 and and since then, I think we've had just a 0:04:35.720 --> 0:04:37.640 bit of give back, a bit of a pause, what 0:04:37.720 --> 0:04:40.200 I would call a healthy correction. And you know, part 0:04:40.240 --> 0:04:42.600 of the reasons for that is I think the market's 0:04:42.640 --> 0:04:45.120 time to think about the liquidity environment over the summer. 0:04:45.520 --> 0:04:46.400 You know, the RRP. 0:04:46.640 --> 0:04:48.719 This draining of the r RP has been a wheel 0:04:48.800 --> 0:04:52.360 driver for stock markets, for riskats. It's over the last 0:04:52.360 --> 0:04:55.120 seven eight months, as that's been drained and liquidity has 0:04:55.160 --> 0:04:57.760 come into equities, that's been a will positive. And also 0:04:57.839 --> 0:05:00.440 I think there's some issues about yields back up. This 0:05:00.680 --> 0:05:02.480 is a bit of a sort of biting on the 0:05:02.560 --> 0:05:04.840 valuation side of the equity market. And then on top 0:05:04.880 --> 0:05:06.960 of that, personally, I think grow it's going to surprise 0:05:07.000 --> 0:05:09.080 a little bit to the downside in the States this year. 0:05:09.160 --> 0:05:11.920 So grappling with all of those, I would say and 0:05:12.360 --> 0:05:14.880 as you said, the market bounced last week, it's sold 0:05:14.920 --> 0:05:17.080 off the prior week. You know, markets don't go down 0:05:17.120 --> 0:05:18.960 in straight lines, they don't go up in straight lines. 0:05:19.000 --> 0:05:22.360 So I think we've begun early eight for a bit 0:05:22.360 --> 0:05:24.440 of a gift back, a healthy correction, as I say, 0:05:24.680 --> 0:05:26.479 And I think it's it's good for the market, so 0:05:26.640 --> 0:05:30.080 it's important, and it often happens at the time when 0:05:30.080 --> 0:05:32.720 you begin some rotation in sector leadership. 0:05:32.839 --> 0:05:34.760 So that's kind of interesting as well. 0:05:35.000 --> 0:05:38.320 Chris, were about halfway through earning season here. Anything jumping 0:05:38.360 --> 0:05:41.040 out at you so far? I mean, I guess revenue 0:05:41.080 --> 0:05:43.040 is surprising, maybe one or two percent on the upside, 0:05:43.040 --> 0:05:45.000 earnings maybe eight or nine percent on the upside. 0:05:45.080 --> 0:05:47.680 Anything surprising you, well, I. 0:05:47.600 --> 0:05:51.080 Think, I mean the interesting thing I mean is somewhat surprising, 0:05:51.120 --> 0:05:54.520 but some sensible. I suppose you've got that following when 0:05:54.560 --> 0:05:56.960 when earnings have been a bit better. So, as you say, 0:05:57.720 --> 0:06:00.279 the earnings are surprising to the upside, they aren't deliver 0:06:00.400 --> 0:06:03.480 in growth. I think this de collective surprise is about 0:06:03.520 --> 0:06:05.440 eight percent at the moment, and normally it's three or 0:06:05.520 --> 0:06:08.680 four percent positive surprise, so that's coming in. I think 0:06:08.720 --> 0:06:11.680 it's quite interesting how some of the big stocks have 0:06:11.760 --> 0:06:15.800 been very mixed. We've seen over the last seven or 0:06:15.839 --> 0:06:17.920 so days, you know, some of the big cap tech 0:06:18.200 --> 0:06:21.880 having very different outcomes of very different performance as a result. 0:06:22.240 --> 0:06:23.960 So there's a lot of volatility on the back of 0:06:24.000 --> 0:06:26.480 that in some of those stocks, you know, ten percent 0:06:26.560 --> 0:06:29.719 moves on the day on earnings announcements. So I'd say 0:06:29.720 --> 0:06:33.080 those are probably so far the key features, lots to 0:06:33.120 --> 0:06:34.520 go for, lots to come. 0:06:35.160 --> 0:06:38.560 So Cameron christ writes a daily newsletter. He also contributes 0:06:38.760 --> 0:06:40.320 to m Live and he had one of the best 0:06:40.320 --> 0:06:44.000 sentences I've heard in a while on his daily article today. 0:06:44.040 --> 0:06:46.839 Chris He said, one of the basic principles of successfully 0:06:46.920 --> 0:06:50.200 navigating financial markets is that you should only date, not 0:06:50.360 --> 0:06:54.520 marry your positions. Thanks the question what positions should you 0:06:54.600 --> 0:06:57.119 date and what should you marry? Right now? 0:06:58.520 --> 0:07:02.760 Well, I like to think not only rather than I. 0:07:02.720 --> 0:07:04.280 Kind of like the dating marriage. But okay, I see 0:07:04.279 --> 0:07:05.440 your point, n versus owning. 0:07:05.800 --> 0:07:08.560 Yeah, it's all the same. What what should you date? 0:07:08.600 --> 0:07:11.040 What? I think you should you should be dating. If 0:07:11.080 --> 0:07:13.080 you're very short term trader, you should be short this 0:07:13.120 --> 0:07:15.800 equity market for for for a bunch of weeks, a 0:07:15.800 --> 0:07:18.520 couple of months. Uh, and you should be thinking about 0:07:18.560 --> 0:07:20.400 marrying at the at the bottom in a in a 0:07:20.440 --> 0:07:23.840 month or two time, because you know, the soft landing 0:07:23.840 --> 0:07:25.240 that I think is going to come in the US, 0:07:25.400 --> 0:07:28.600 coupled with some eventual rate cuts certainly in the out 0:07:28.600 --> 0:07:30.200 of the fair but also of course out of the 0:07:30.200 --> 0:07:33.239 European Central Bank and out of the UK, that's all coming. 0:07:33.280 --> 0:07:34.280 That's all very positive. 0:07:34.440 --> 0:07:37.840 So you know, you know, you want to you want 0:07:37.880 --> 0:07:39.880 to date in the short term and rent in the 0:07:39.880 --> 0:07:43.720 medium term. Gold we like, uh and gold gold you 0:07:43.720 --> 0:07:49.320 could almost marry, you know, I mean girl, I mean 0:07:49.360 --> 0:07:53.679 gold gold is gold is It's a terrific acid class 0:07:53.680 --> 0:07:56.000 at the moment. It's had a great run already this year. 0:07:56.320 --> 0:07:58.600 Of course it's given a bit of that back recently, 0:07:58.680 --> 0:08:00.520 but it's got a lot going for it. 0:08:00.560 --> 0:08:01.680 The Chinese are buying. 0:08:01.680 --> 0:08:04.440 There's some stories, I think on the Bloomberg termal today 0:08:04.480 --> 0:08:07.760 about Chinese buying, central bank buying. That's been a themal year. 0:08:08.000 --> 0:08:10.040 And it's not just the central bank in China, it's 0:08:10.080 --> 0:08:13.200 also the retailer. Is in China is time to buy, 0:08:13.240 --> 0:08:15.240 and there's of course an awful lot of them and 0:08:15.560 --> 0:08:18.600 a lot of liquidity around there. So we like gold, 0:08:18.640 --> 0:08:21.920 and it'll be helped when the FED eventually starts cutting rights. 0:08:22.960 --> 0:08:25.400 So I you know, as I say, could almost marry that. 0:08:27.160 --> 0:08:31.240 I actually think European banks you should own and rent 0:08:31.360 --> 0:08:32.880 and buy and everything. 0:08:34.240 --> 0:08:36.520 And I think I. 0:08:36.480 --> 0:08:41.200 Actually our left of field recommendation moments by Spanish mid caps, 0:08:41.559 --> 0:08:46.160 which is really out there but Spanish. Yeah, I know, 0:08:46.280 --> 0:08:50.600 I know it sounds a bit nuts, but actually has 0:08:50.600 --> 0:08:52.400 a lot to be said for them. It's an economy 0:08:52.440 --> 0:08:54.839 that's been neglected no one's really talked about for ten 0:08:54.840 --> 0:08:57.720 to fifteen years since the euro crisis. Are because the 0:08:57.760 --> 0:09:01.640 pigs crisis as it was known with with d sbing Spain, 0:09:02.840 --> 0:09:05.960 and you know, the economy has really sorted itself out 0:09:06.000 --> 0:09:09.840 over these last fifteen years. Healed a lot of structural imbalances. 0:09:10.120 --> 0:09:12.720 It's well set and it's going to get rate cuts 0:09:12.720 --> 0:09:15.400 when the ECB starts cutting, and it's going to benefit 0:09:15.480 --> 0:09:16.959 from those. And I think we're going to see strong 0:09:17.000 --> 0:09:19.800 growth out of Spain. And of course mid caps is 0:09:19.800 --> 0:09:22.679 a great way to play a domestic economy. So that 0:09:22.840 --> 0:09:27.079 is an own and a marry basically, not a rent 0:09:27.360 --> 0:09:28.640 or whatever the other one was. 0:09:28.840 --> 0:09:29.120 Dates. 0:09:29.280 --> 0:09:33.199 Yeah, So yeah, so that there's there's so much going on, 0:09:33.240 --> 0:09:35.120 there's so many opportunities out there. 0:09:36.240 --> 0:09:39.240 But yeah, you've got to distinguish between trading and investing. 0:09:38.840 --> 0:09:41.320 Which let's go, let's go hyper local. 0:09:41.559 --> 0:09:44.240 How's the economy in Clapham, which is a neighborhood south 0:09:44.280 --> 0:09:45.080 of London. 0:09:45.480 --> 0:09:46.360 Clapham, how's it? 0:09:48.400 --> 0:09:51.520 That's a great question. I do actually live very close 0:09:51.559 --> 0:09:55.360 to Clapham. I'm obviously in Canada at the moment, but Plapham, 0:09:55.640 --> 0:09:58.080 Clapham in South London is buzzing because it's full of 0:09:58.120 --> 0:10:00.760 twenty and thirty year olds basically who who love to 0:10:00.760 --> 0:10:03.120 get out and the sunshine started to come out and 0:10:03.160 --> 0:10:04.120 it's that time of year. 0:10:04.240 --> 0:10:06.520 So but but the British. 0:10:06.120 --> 0:10:09.840 Economy is not good now, which is perhaps more to 0:10:09.880 --> 0:10:13.360 your question. The British economy is flat. It's had no 0:10:13.480 --> 0:10:15.760 growth in two years. It's flat as a parent caake 0:10:17.080 --> 0:10:20.080 and it desperately needs weight cuts and we're going to 0:10:20.080 --> 0:10:21.240 be getting those pretty soon. 0:10:21.360 --> 0:10:23.680 Yes, So is that the expectation of the Bank Bank 0:10:23.679 --> 0:10:25.680 of England is not waiting on the Fed that the 0:10:25.679 --> 0:10:28.080 Bank of England is confident to cut rage sooner? 0:10:29.320 --> 0:10:29.880 Absolutely. 0:10:29.880 --> 0:10:32.040 I think that the Bank of England is just like 0:10:32.120 --> 0:10:34.520 the UCB and you would have seen Christine Lagarde a 0:10:34.520 --> 0:10:37.280 couple of weeks ago say, you know that the UCB 0:10:37.400 --> 0:10:40.720 is not is data dependent, not Fed dependent, trying to 0:10:40.760 --> 0:10:45.680 make that distinguish distinction between the FED and the European 0:10:45.800 --> 0:10:49.280 central banks. So same in the UK, different inflation dynamics, 0:10:49.360 --> 0:10:52.760 different growth dynamics, and therefore and need to get on 0:10:52.840 --> 0:10:53.280 with cuts. 0:10:53.360 --> 0:10:55.439 I wonder what the currencies are going to say about 0:10:55.480 --> 0:10:57.679 that and the very differentials. But okay, let's play it 0:10:57.679 --> 0:11:01.400 out a little bit. How strong does a dollar actually get. 0:11:02.240 --> 0:11:04.800 I mean, it is definitely breaking things. 0:11:05.720 --> 0:11:08.040 It is breaking things, and you're quite right, and it's 0:11:08.040 --> 0:11:09.680 probably got I think it's got one more flurry in 0:11:09.720 --> 0:11:12.120 it in this sort of risk of phase that we're 0:11:12.160 --> 0:11:14.560 thinking about in the near term, and of course the 0:11:14.600 --> 0:11:18.400 dollars are classic recipient of liquidity when. 0:11:18.040 --> 0:11:18.840 It's a risk off. 0:11:19.280 --> 0:11:21.400 But beyond that, I think we're going to get into 0:11:21.400 --> 0:11:23.520 a dollar bear market. You know, we've had a dollar 0:11:23.559 --> 0:11:26.440 bull market now for a long time, sort of ten 0:11:26.440 --> 0:11:29.679 plus years depending on your starting point, but a long 0:11:29.760 --> 0:11:32.440 old dollar bull market, and I think we're due a 0:11:32.640 --> 0:11:36.200 change in that sort of secular status of the currency. 0:11:36.360 --> 0:11:39.960 So yeah, I've given a few more weeks of strength 0:11:40.000 --> 0:11:43.240 in the dollars, we've complete this risk of phase, then 0:11:43.280 --> 0:11:46.280 as we get closer to fedweight cuts, because I mean, 0:11:46.320 --> 0:11:47.959 I think really in this risk of phase that you 0:11:48.000 --> 0:11:50.120 know the market wants to bully the FED for cuts. 0:11:50.679 --> 0:11:51.839 You know, we're still doing QT. 0:11:52.120 --> 0:11:55.200 I mean, this is an extraordinary thing, you know, And 0:11:55.240 --> 0:11:57.200 I think this will be tough for the stock market 0:11:58.400 --> 0:12:02.720 to to with with with QT ongoing. So yeah, so 0:12:02.760 --> 0:12:04.880 I think got one more, one more, one more florry 0:12:04.880 --> 0:12:05.640 in the dollar. 0:12:05.920 --> 0:12:08.160 One more floy and real quick, Chris, I mean, are 0:12:08.160 --> 0:12:09.560 we going to get a rate cut in the US 0:12:09.640 --> 0:12:10.280 here this year? 0:12:11.760 --> 0:12:12.560 I think so? Yeah? 0:12:12.559 --> 0:12:15.280 Okay, I mean I know the data is so mixed, 0:12:15.320 --> 0:12:18.240 isn't it. I mean, e CI not so good today. 0:12:18.360 --> 0:12:22.079 Consumer confidence is bad. It's it's a two speed economy, 0:12:22.120 --> 0:12:24.079 and I think that's why the data is so confusing. 0:12:25.080 --> 0:12:28.240 But I do think the reality is money is much 0:12:28.280 --> 0:12:30.920 tight and it has been. Fiscal stimulus is not as 0:12:31.080 --> 0:12:33.680 good as it was last year, in fact, quite the reverse, 0:12:34.120 --> 0:12:36.240 And so I think inflation will dissipate and you'll get 0:12:36.280 --> 0:12:39.880 a cut and maybe two, but certainly one. 0:12:40.080 --> 0:12:44.080 Hey, Chris really appreciated Chris Watling joining US from Longview Economics. 0:12:44.120 --> 0:12:45.960 Just so I know Paul Chris knows this, but you 0:12:46.040 --> 0:12:48.160 don't know. He is my mom's favorite. 0:12:48.360 --> 0:12:48.680 He is. 0:12:48.760 --> 0:12:49.480 He is nice. 0:12:49.679 --> 0:12:50.520 That's just for he. 0:12:50.520 --> 0:12:51.920 Doesn't know what to say to that. I just feel 0:12:51.920 --> 0:12:53.200 like he used to be on with me in the 0:12:53.200 --> 0:12:55.079 morning show. He used to jam for like an hour 0:12:55.200 --> 0:12:58.439 or two. And okay, she's Carol Steel's favorite out there. 0:12:58.520 --> 0:12:59.079 It's a big deal. 0:12:59.120 --> 0:13:01.480 It's a big deal means And speaking of the FED, 0:13:01.760 --> 0:13:04.880 Bloomberg Radio has full coverage for you starting at one 0:13:04.960 --> 0:13:08.800 thirty eastern tomorrow, very much. All looking forward to. 0:13:08.800 --> 0:13:11.400 That, Tom Lisa and John Farrell. How good is that? 0:13:11.679 --> 0:13:12.080 So good? 0:13:12.160 --> 0:13:12.960 Can't get any better? 0:13:13.040 --> 0:13:13.880 Talking about the FED? 0:13:14.760 --> 0:13:17.640 And then and Michael McKee, we're sending him on the 0:13:17.720 --> 0:13:20.439 sella train this say afternoon. He'll be down there ready 0:13:20.480 --> 0:13:23.000 to go and ask his question or two of the 0:13:23.000 --> 0:13:25.880 FED chairman during the press conference tomorrow afternoon, which starts 0:13:25.920 --> 0:13:28.440 at two thirty pm Wall Street time. 0:13:30.880 --> 0:13:34.760 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:34.840 --> 0:13:37.480 weekdays at ten am Eastern on AFO, car Playing and 0:13:37.640 --> 0:13:40.560 broyd Outo with the Bloomberg Business app. Listen on demand 0:13:40.600 --> 0:13:44.920 wherever you get your podcasts or watch us live on YouTube. 0:13:45.840 --> 0:13:46.400 Paramount. 0:13:46.679 --> 0:13:51.040 Paramount is the old CBS television networking stations. It's the Viacom, 0:13:51.440 --> 0:13:53.520 which is MTV and all that kind of good stuff, 0:13:53.520 --> 0:13:56.840 the Powermount movie and TV studio, all that's wrapped up 0:13:56.880 --> 0:13:58.479 into this company renamed Paramount. 0:13:59.240 --> 0:14:00.880 A lot going on there, let's put it. 0:14:00.920 --> 0:14:04.400 I mean they got reported earnings last night mixed, They 0:14:04.520 --> 0:14:07.760 replaced their CEO. That's not good with an office of CEO. 0:14:08.120 --> 0:14:11.199 And oh yeah, they're actually in discussions to be sold 0:14:11.480 --> 0:14:12.920 to one or more parties. 0:14:12.960 --> 0:14:14.240 I'm not sure what's going on. There are a lot 0:14:14.240 --> 0:14:15.000 of moving pieces. 0:14:15.240 --> 0:14:17.520 Luckily we have Getha Rong Anathon joining us. She's a 0:14:17.640 --> 0:14:20.720 media analyst, the media analyst for Bloomberg Intelligence. 0:14:20.760 --> 0:14:22.240 She's based in Princeton, New Jersey. 0:14:22.480 --> 0:14:26.000 So, Githa, let's start with the potential ownership change here. 0:14:26.000 --> 0:14:30.840 There's lots of parties looking at Paramount. I guess the 0:14:30.920 --> 0:14:35.040 sky Dance, which is the media company owned by mister Ellison, 0:14:35.280 --> 0:14:36.680 the son of Larry Ellison. 0:14:36.400 --> 0:14:39.320 Of what is that? Where is he from? 0:14:40.400 --> 0:14:42.720 Well, yeah, Oracle, thank you? So where are we with 0:14:42.760 --> 0:14:44.520 those negotiations, Githa. 0:14:45.800 --> 0:14:49.080 Yeah, good morning, Paul and Alex so we're in the 0:14:49.120 --> 0:14:52.760 take of those negotiations. There there is an exclusive negotiating 0:14:53.200 --> 0:14:57.360 window that Paramount agreed to with sky Dance that one 0:14:57.480 --> 0:15:02.240 actually expires this Friday. So obviously the ouster of Bob 0:15:02.320 --> 0:15:05.920 Bakish as CEO, who was vehemently opposed to the deal, 0:15:06.600 --> 0:15:08.800 seems to suggest to us that they really have something 0:15:08.880 --> 0:15:11.440 lined up and something's kind of going to go through 0:15:11.480 --> 0:15:12.080 pretty quickly. 0:15:12.880 --> 0:15:14.800 What do we make of the actual earnings? I mean, 0:15:15.240 --> 0:15:17.360 I was on air breaking the numbers yesterday, and like, 0:15:17.400 --> 0:15:19.320 we didn't even talk about the numbers. We just talked 0:15:19.320 --> 0:15:22.840 about the CEO replacement and the weird three CEO thing 0:15:22.880 --> 0:15:25.840 they got going on. What did we learn within the numbers? 0:15:27.000 --> 0:15:31.240 So the actual earnings by itself, Alex was not bad 0:15:31.280 --> 0:15:34.200 at all. I mean, there were definitely some encouraging elements. 0:15:34.480 --> 0:15:37.760 We saw advertising hold up really well, but again one 0:15:37.760 --> 0:15:41.400 could argue that core advertising is still challenged. The reason 0:15:41.440 --> 0:15:44.840 that they reported the seventeen percent increase in advertising revenue 0:15:44.840 --> 0:15:47.080 in the first quarter was really all driven by the 0:15:47.080 --> 0:15:50.080 Super Bowl telecast that said, I mean, you know, if 0:15:50.120 --> 0:15:52.560 you kind of looked at their streaming business, we did 0:15:52.600 --> 0:15:55.880 see a pretty good momentum there in terms of subscriber numbers. 0:15:56.240 --> 0:15:59.320 You know, we did see some progress on a profitability, 0:15:59.320 --> 0:16:01.920 which is not not to say that it's actually profitable, 0:16:02.040 --> 0:16:04.720 just that the losses were a little bit better than 0:16:04.720 --> 0:16:08.320 what we were expecting. But overall, I mean, this is 0:16:08.880 --> 0:16:11.040 right now, as Paul kind of pointed out, this is 0:16:11.200 --> 0:16:13.880 peak uncertainty at paramount. Right now. We don't know what's 0:16:13.920 --> 0:16:15.680 going on with ownership. We don't know what's going on 0:16:15.720 --> 0:16:18.520 with leadership, we don't know what's going on with strategic direction. 0:16:19.120 --> 0:16:20.600 So it's all up in the air. 0:16:20.960 --> 0:16:23.240 So, Gita, I guess one of the big big questions 0:16:23.280 --> 0:16:26.800 on any change of ownership is what are they going 0:16:26.840 --> 0:16:29.160 to pay for share of the buyer? And are they 0:16:29.200 --> 0:16:32.480 going to pay the same price for Sherry Redstone's controlling shares, 0:16:33.080 --> 0:16:35.040 the super voting shares. Are they going to pay the 0:16:35.120 --> 0:16:37.520 same for those shares as they will for the plain 0:16:37.560 --> 0:16:39.400 old shareholders shares? 0:16:39.440 --> 0:16:40.240 So how's that work? 0:16:41.120 --> 0:16:43.440 Yeah, they're not, Paul, And that's kind of been the 0:16:43.480 --> 0:16:46.200 whole bone of contention. Right, So, the whole sky Dance 0:16:46.240 --> 0:16:49.440 proposal is kind of this very convoluted offer. It's this 0:16:49.880 --> 0:16:53.880 two step proposal where they basically pay out Sherry her 0:16:54.240 --> 0:16:56.760 interest in Paramount is worth something like about eight hundred, 0:16:56.760 --> 0:16:58.320 eight hundred and fifty million. They're going to pay her 0:16:58.400 --> 0:17:02.240 upwards of about two billion dollars, so she's getting a 0:17:02.320 --> 0:17:06.320 nice pocket of change there, but it's basically diluting everybody else, 0:17:06.359 --> 0:17:09.000 and that's why you have all of this shareholder consternation. 0:17:09.480 --> 0:17:11.720 Of course, Guy Dance is kind of addressing that. Now 0:17:12.280 --> 0:17:14.119 you know, they have sweetened the bid a little bit. 0:17:14.119 --> 0:17:17.439 They've thrown in about a three billion dollar cash infusion 0:17:17.520 --> 0:17:20.480 to pay down debt to buy back stock, but I'm 0:17:20.480 --> 0:17:21.720 not sure if that's going to be enough. 0:17:21.800 --> 0:17:23.520 Do you feel like this is the best and final 0:17:23.560 --> 0:17:26.600 offer from Skydance as we get to that Friday deadline? 0:17:27.280 --> 0:17:28.440 That's what they have said. 0:17:28.640 --> 0:17:32.439 Yes, did we learn anything from the numbers yesterday that 0:17:32.640 --> 0:17:35.960 shows what a buyer should be paying for shares? 0:17:37.280 --> 0:17:39.919 So we do have another concrete offer on the table, 0:17:39.960 --> 0:17:44.120 one that Sherry Redstone rejected. This was the offer from Apollo, 0:17:44.160 --> 0:17:47.600 which basically offered, you know, twelve billion dollars for the 0:17:47.600 --> 0:17:49.879 equity of the company versus what it's currently trading at, 0:17:49.920 --> 0:17:52.920 which is about eight billion, so you know, roughly about 0:17:53.680 --> 0:17:57.280 ninety to twenty dollars a share. So that's kind of 0:17:57.320 --> 0:18:00.560 where you know, the the Apollo deal stand. Of course, 0:18:00.560 --> 0:18:03.159 now there have been rumors that's they're partnering with Sony 0:18:03.200 --> 0:18:06.000 to again take that bid up a little bit. But 0:18:06.040 --> 0:18:07.560 you know, when we kind of did some of the 0:18:07.560 --> 0:18:12.399 parts analysis, you know, we think that this company is 0:18:12.440 --> 0:18:15.640 easily worth you know, upwards of twenty dollars a share. 0:18:16.200 --> 0:18:17.879 Yep, I've seen folks. 0:18:17.880 --> 0:18:20.399 If you want to check out that research analysis, you 0:18:20.440 --> 0:18:22.960 can go to Bigo in the terminal and search for 0:18:23.000 --> 0:18:25.920 Geetha's work. They did a lot of evaluation work on paramount. 0:18:25.920 --> 0:18:28.400 A lot of investors are looking at that work as well. 0:18:28.680 --> 0:18:32.560 So getha Friday is I guess one kind of date 0:18:32.600 --> 0:18:34.919 to keep in mind. But it just seems like with 0:18:35.040 --> 0:18:39.760 this dual class of stock and maybe different prices being 0:18:39.760 --> 0:18:41.879 paid for different classes of stock, this thing's gonna end 0:18:41.960 --> 0:18:45.200 up in court. It just feels like, what are most 0:18:45.200 --> 0:18:46.080