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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. Tiens Nordvik

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Speaker 1: joins us right now an important moment with accente data.

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Speaker 1: Yen's perfect timing. Here we see the arch other pair

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Speaker 1: Euro yen breakout. Strong euro weekend weekend technically through one

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Speaker 1: forty eight is a huge deal against strong euro. Explain

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Speaker 1: to mere mortals what the significance of a euro yen

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Speaker 1: breakout means.

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Speaker 2: Yees.

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Speaker 3: So, we've had a situation here over the last month

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Speaker 3: or so right where we had significant banking tension. It

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Speaker 3: was not just in the US. We also saw pressure

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Speaker 3: and credit Swiss, Torture Bank and so forth, and we've

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Speaker 3: had a significant relief from that. So we've had euroen

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Speaker 3: essentially go up four to five percent from those lows.

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Speaker 3: So it's a very significant bounds as those banking tension

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Speaker 3: concerns and the Eurozone have really been pushed in the background.

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Speaker 3: In the US, it's a little bit more complicated, but

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Speaker 3: so we have a very significant movement. At the same time,

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Speaker 3: we continue to have this elevated speculation about whether the

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Speaker 3: Banquet Japan is going to do something right. We've had

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Speaker 3: incredible volatility around Bank oft Japan meetings. We have another

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Speaker 3: one this week, and now the new Banquet Japan leadership

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Speaker 3: is essentially signaling that they will still be patient. So

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Speaker 3: I wouldn't say it's still the same as Corona, right,

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Speaker 3: but they are sickling that they are not in a

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Speaker 3: rush to exit from the easy So those are the

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Speaker 3: things that's really pushing Uri in pretty significantly high.

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Speaker 1: He ends your book on the Euro ten to fifteen

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Speaker 1: years ago was definitive on what the euro needs to be.

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Speaker 1: Europe escaped eurosclerosis? Has Europe you know the experiment coming

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Speaker 1: out of the advent of the Euro. Have they escaped

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Speaker 1: that permanent unemployment? Have they found a more Anglo saxon prosperity.

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Speaker 3: We continue to see that when there's a crisis in Europe,

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Speaker 3: the leadership tends to come together and do more stuff

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Speaker 3: that they've been willing to do in the past, right,

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Speaker 3: So the Corona virus episode was another example of them

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Speaker 3: doing more and next generation EUO funds are still being

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Speaker 3: dispersed around the European Union to support countries that needed.

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Speaker 3: So we have essentially a degree of physcal union building, right,

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Speaker 3: So that was something that was missing and we're having

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Speaker 3: a degree of it and that certainly is certainly helping

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Speaker 3: on that front. There's a lot of talk about having

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Speaker 3: a banking union as well. Right when you have banking tension,

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Speaker 3: there's focused on supporting the banking system in various ways,

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Speaker 3: and we're having that discussion again, right So we're not

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Speaker 3: there yet. But I think the one thing that's really

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Speaker 3: important that is different from when I wrote that book

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Speaker 3: is we have those political tension that caused uncertainty about Okay,

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Speaker 3: do the different countries have the willingness to do what

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Speaker 3: it takes to stay in the Eurozone. We don't really

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Speaker 3: have those debates at the moment. There's no debate in

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Speaker 3: Italy about leaving the euro right now. There's no debate

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Speaker 3: in Spain or other countries. Right So, if you do

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Speaker 3: opinion polls, do people want to stick with the euro

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Speaker 3: there's actually rising support for the euro, So that's something

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Speaker 3: that cements the Euros status despite all the difficulties there

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Speaker 3: is with economic integration and so forth.

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Speaker 4: This was the reason why a lot of people earlier

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Speaker 4: this year said that European equities in particular were a

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Speaker 4: real place of brightness for the full year, given not

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Speaker 4: only all of this potential optimism, but also this idea

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Speaker 4: that they're not as tech heavy at a time when

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Speaker 4: there would be a rotation out of that, well it

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Speaker 4: hasn't really worked out that way, and you've seen actually

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Speaker 4: big tech continue to lead in the US. What is

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Speaker 4: that going to shift? Is Europe ever going to basically

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Speaker 4: create some other common plex like it to rival the

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Speaker 4: tech giants in the US.

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Speaker 3: Well, so the European stock trade, like for example, in

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Speaker 3: banking space, has worked out right. So BNP has recovered

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Speaker 3: twenty percent from the lows, is up significantly in the year.

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Speaker 3: So the fact that interest rates arising is creating a

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Speaker 3: different environment for equities and banks have done very well.

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Speaker 3: Obviously Europe doesn't have a tech sector, so on that front,

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Speaker 3: tech sectors speak of, So that front, the US is

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Speaker 3: going to be leading. But I think overall we have

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Speaker 3: a situation where European equity markets have outperformed the US

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Speaker 3: equity market, so the first time in a long time, Right,

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Speaker 3: you can argue whether it's europe outperforming of the US

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Speaker 3: underperforming outside of tech, and that's something that's very interesting.

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Speaker 3: Don't forget that we've had a situation where last year

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Speaker 3: we had like a very very serious energy crisis in

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Speaker 3: the Eurozone, right, and now energy prices have dropped very notably, right.

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Speaker 3: So part of the reason why we have the eurostrong,

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Speaker 3: European stocks also can can do relatively well this year

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Speaker 3: is that that energy crisis has abated, consumer confidence has

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Speaker 3: come back. You look at services PMI. Services pmis have

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Speaker 3: just resent resen over the last couple of months, right,

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Speaker 3: So we've really recovered from that energy shock in a

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Speaker 3: way that the support of the European economy, and obviously

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Speaker 3: the ECB is still facing inflation, right. So the combination

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Speaker 3: of too high inflation and growth that's actually getting better

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Speaker 3: means that it's very very hard for the ECB to relax.

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Speaker 3: They have to continue going as we heard today as well.

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Speaker 4: So Yen's basically it sounds like you are still very

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Speaker 4: bullish in European banks and European equities more broadly as

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Speaker 4: well as the euro.

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Speaker 3: So I was certainly very I was treating very aggressively

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Speaker 3: about it a month ago, and I actually did a

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Speaker 3: summary tweet yesterday about it on my handle, like like

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Speaker 3: there was no particular reason to think go to a

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Speaker 3: bank was just about to go under, right, And we've

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Speaker 3: recovered from that dramatic shock, and I think there's still

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Speaker 3: some reasons to think that we're out of serial interest

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Speaker 3: rate world. That's supported for the banking system overall, and

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Speaker 3: for the euro. The ECP is going to continue to

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Speaker 3: support it. So I think the big quest question here

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Speaker 3: is what it's global growth is going to do. That's

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Speaker 3: super important for the dollar, and we have some question

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Speaker 3: marks in Asia now. So that's the new things that

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Speaker 3: we're starting to really focus on in our research right now.

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Speaker 1: Okay, let's go there on China. How does China fit

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Speaker 1: into speculating or betting on a given currency pair, Which

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Speaker 1: pair gives you the greatest efficacy to play your China guests.

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Speaker 3: So typically when we've had you know, China stimulus, China

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Speaker 3: growth recovery has been currencies like ARSI dollar that has

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Speaker 3: benefited from Korean wan and we had a period in

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Speaker 3: January and February where China linked assets all around the

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Speaker 3: world from casino stocks to tourism stocks and so forth,

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Speaker 3: all rallied hard. And now we've come to a point

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Speaker 3: where it feels that some of those trades are very

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Speaker 3: fully priced. And actually it's sort of the longer term

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Speaker 3: growth concerns that are starting to feed into price action.

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Speaker 3: We can see that in Chinese equities rolling all see

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Speaker 3: it an iron ore rolling over. So it's kind of

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Speaker 3: one of those things where perhaps we got it very

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Speaker 3: fully embedded and we start to look at the more

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Speaker 3: medium term past, it's just that short term shot.

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Speaker 1: So are you saying au DKRW is the most efficient

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Speaker 1: pair to play a China guess?

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Speaker 3: So, I think when you have a growth bound in Europe,

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Speaker 3: those are the assets that I'm moving. And I think

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Speaker 3: right now, if we look at we have like very

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Speaker 3: high frequency tracking of Chinese growth where we look at, okay,

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Speaker 3: what is the momentum, and we can see at the

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Speaker 3: end of March that's when we kind of had a

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Speaker 3: peak in Chinese growth, and since then, over the last

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Speaker 3: three four weeks, we've started to see the real momentum

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Speaker 3: in the Chinese economy potentially peak out, and therefore you

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Speaker 3: have to be a little bit more careful with those

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Speaker 3: sort of China growth sensitive assets.

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Speaker 5: Right now, Yen wander for to get your perspective on that.

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Speaker 5: Yen's Nordic then Efic Santa Data joining us now, Markey

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Speaker 5: Ptel of Allspring Global Investments, Markey, wonderful to catch up

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Speaker 5: with you. Tom mentioned this conversation at the very start

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Speaker 5: of the program. Pushing forward to tech earnings later this week, Mark,

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Speaker 5: you still hold a lot of tag. Can you walk

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Speaker 5: us through where you're taking that equity exposure at the

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Speaker 5: moment go and gets results later this week.

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Speaker 2: Well, this is going to be a huge week for stocks.

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Speaker 2: A huge number of companies are reporting. We still like

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Speaker 2: the tech sector because certainly the understanding that there's a

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Speaker 2: lot of inventory to be worked off, that we may

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Speaker 2: have to wait for the second half of the year

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Speaker 2: to see a turn in demand is well understood, and

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Speaker 2: the stocks have anticipated that. Most have performed really well.

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Speaker 2: So the question is can they have a decent results

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Speaker 2: in the markets really go down because of that. We

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Speaker 2: think we'd rather ride that out and say these companies

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Speaker 2: have long term growth, they have good positions in the industry,

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Speaker 2: strong balance sheets to withstand even if we do have

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Speaker 2: a deep recession.

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Speaker 1: Mark ya, look at tech and the rep here this

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Speaker 1: how many people are afraid of. Is tech conservative? How

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Speaker 1: do you determine a measured conservative cash flow from a

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Speaker 1: high flyer that could be trouble.

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Speaker 2: Well, I don't really know about the high flyers. I

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Speaker 2: like to avoid the high flyers that might have trouble.

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Speaker 2: But just looking at companies that have improved their market position,

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Speaker 2: who are you know technological leaders that have a lot

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Speaker 2: of cash on their balance sheet and also they pay

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Speaker 2: a dividend. A lot of tech stocks pay. That's a

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Speaker 2: good sign.

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Speaker 1: You give us a name, Come on, no one's watching.

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Speaker 2: Well, we think Broadcom is a is a good stock

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Speaker 2: because it's diversified in a dividend.

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Speaker 4: All right, Well, going forward, we talk about when to

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Speaker 4: know when the cash out marquee. We have seen a

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Speaker 4: huge run in some of the big tech names that

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Speaker 4: are profitable. They've really been, frankly the backbone of any

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Speaker 4: gains that they've gotten so far this year. When do

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Speaker 4: you say that's enough?

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Speaker 2: Well, I think that's true, But on a relative basis,

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Speaker 2: we really don't know how deep of a economic correction

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Speaker 2: we're going have, will be mild, will be more severe,

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Speaker 2: and so tech prices may come down because it's pees

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Speaker 2: have expanded. However, we don't know if other sectors will

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Speaker 2: have very disappointing earnings if we have a big recession.

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Speaker 2: So that's kind of the push and pool in the

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Speaker 2: market of where you want to be positioned.

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Speaker 4: Have you been surprised at the market's reaction to some

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Speaker 4: of these earnings Marketie and I asked, because people if

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Speaker 4: it's waiting for the earnings recession and in certain areas

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Speaker 4: it's come and markets don't care. I mean, what do

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Speaker 4: you make of that?

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Speaker 2: Well, so far this earning season, which is really only

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Speaker 2: about twenty percent or so, the results have been surprisingly good,

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Speaker 2: and the market was really looking for signs that companies

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Speaker 2: would tone down their earnings expectation the quarter would be disappointing,

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Speaker 2: and it hasn't been. So we're still waiting for that

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Speaker 2: correction we haven't seen.

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Speaker 5: We have seen a correction though, in nen interest margins

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Speaker 5: at the smaller banks. Lisa talks about this through most

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Speaker 5: of the last week. Is we've got to drip feeded news

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Speaker 5: from small and medium sized lenders in the United States market,

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Speaker 5: just in terms of taking a step back and trying

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Speaker 5: to understand the broader economy. What is the relationship between

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Speaker 5: declining the interest margins and bank lending to the rest

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Speaker 5: of the economy.

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Speaker 2: Well, I think everything rolls back to the Fed, and

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Speaker 2: they're super aggressive policy last year that really put the

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Speaker 2: banks kind of in a box on the interest margin.

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Speaker 2: So we think we have to see the yell curve

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Speaker 2: get not so inverted as a big thing, and see

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Speaker 2: a little more stability from the Fed. And we think

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Speaker 2: we've already seen even before the distress we saw in

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Speaker 2: the first quarter, bank lending standards were tightening up, so

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Speaker 2: they have already been on the watch and I think

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Speaker 2: are in pretty good shape as far as that.

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Speaker 5: Is, expecting that to continue. Potentially we get some more

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Speaker 5: data on that early next month. Markie, thank you for that.

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Speaker 5: As always, Marcobada of All Spring Globe and Investments, we.

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Speaker 1: Feel that we need to pursue any good conversation with

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Speaker 1: Dana Peterson, chief economists at the conference. Border really joins

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Speaker 1: us now in the state of America, Dana, where's your

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Speaker 1: GDP statistic that we're going to see this week? We

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Speaker 1: sort of come down. We're all at three point two

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Speaker 1: ish and we've come down. Give me the conference board

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Speaker 1: statistic that you're working with right now.

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Speaker 6: Well, we're probably looking at anything between one and a

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Speaker 6: half to two percent growth in the month. Certainly, we

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Speaker 6: had a very strong January in terms of consumer spending,

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Speaker 6: but then February and March we're pretty pathetic. And also

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Speaker 6: we think business investment continued to shrink, as well as

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Speaker 6: residential investment. Of course, the wildcards are trade and inventories,

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Speaker 6: which have been exactly wild well.

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Speaker 1: Wor's domestic final sales. If you take out inventories and

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Speaker 1: trade dynamics, you get into a domestic view of Y.

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Speaker 1: We'll see plus I plus G plus NX And Dana,

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Speaker 1: are we in domestic final sales recession now?

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Speaker 6: Probably not in the first quarter, but we do think

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Speaker 6: that the second quarter we definitely will see some negative readings.

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Speaker 6: Certainly that'll be negative consumpt consumer spending, also business investment,

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Speaker 6: and of course residential investment.

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Speaker 4: Dana, have you been surprised to consumer confidence hanging in

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Speaker 4: there at the fact that the economic data has not

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Speaker 4: turned around more than it already has.

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Speaker 6: Well, our overall measure of consumer confidence continues to just

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Speaker 6: kind of move back and forth. It's definitely down from

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Speaker 6: where it was at the peak last year or even

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Speaker 6: the year before, but still not When you look at expectations,

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Speaker 6: consumers still expect a recession at some point, and they've

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Speaker 6: been signaling that for the last twelve out of thirteen months,

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Speaker 6: and so something is about to happen. And certainly when

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Speaker 6: we ask CEOs, they continue to believe that there is

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Speaker 6: going to be a recession. It won't be long and

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Speaker 6: it won't be deep, but it's going to happen.

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Speaker 4: How much is this consistent throughout industries versus specific industries

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Speaker 4: giving this signal very strongly, whereas others are a little

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Speaker 4: bit more iffy on just the prospect.

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Speaker 6: Well, when I look at the labor market and by industry,

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Speaker 6: it's kind of split into three pieces. You have those

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Speaker 6: former pandemic darlings that are not doing so well, like

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Speaker 6: technology and retail and transportation, ware housing and finance. But

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Speaker 6: then you have the ones in the middle that are

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Speaker 6: just kind of hoarding labor and not doing anything. And

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Speaker 6: then you definitely have those industries that are still adding workers,

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Speaker 6: and that includes healthcare and hotels and restaurants all those

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Speaker 6: experiential types of services.

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Speaker 1: With inflation coming down, do we get an inflation adjusted wage,

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Speaker 1: however you want to define it, that's level or increases,

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Speaker 1: or do we still have negative real wage growth?

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Speaker 6: Well, real wages are actually slightly positive right now, and

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Speaker 6: that's because headline inflation has come off, but still underlying

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Speaker 6: inflation less food, energy is still pretty sticky, and again

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Speaker 6: wages are just slightly positive. So we think that with that,

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Speaker 6: consumers are saying to themselves, well, you know, at least energy,

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Speaker 6: at least gasoline is not as expensive as it was

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Speaker 6: and so not eating some of my budget as much

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Speaker 6: as it was. But certainly food and other services are

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Speaker 6: still pretty expensive.

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Speaker 1: I looked in a at the back and forth here

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Speaker 1: of all the economic data coming out. I believe we

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Speaker 1: have to get to a FED meeting May third. What

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Speaker 1: matters for Chairman Powell and the rest of the voters

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Speaker 1: at the FED towards May third? Which part of the

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Speaker 1: new economic data will matter.

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Speaker 6: Well, certainly this week's GDP report for the first quarter,

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Speaker 6: but also the PCEE deflator inflation, whether or not we

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Speaker 6: still continue to see stickiness in the core, or if

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Speaker 6: it's just a function of what we saw in CPI

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Speaker 6: and also daily lending data from banks to businesses and

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Speaker 6: consumers and seeing how much that dips, because if it

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Speaker 6: dips considerably, then that tells the Fed that, well, maybe

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Speaker 6: this is the last hike that they'll need to implement,

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Speaker 6: but certainly if inflation continues to be a problem, we

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Speaker 6: might be looking at two more hikes.

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Speaker 4: We're speaking with Dana Peterson of the Conference Board at

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Speaker 4: a time of great uncertainty of exactly where we are

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Speaker 4: in this economic cycle and data. There was a lot

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Speaker 4: of discussion earlier in this year about whether we'd be

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Speaker 4: going back to the low flation, low growth kind of

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Speaker 4: environment that we had for so many years, and with

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Speaker 4: the race, could go back to that in the next

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Speaker 4: few years, do you see that as a likelihood akin

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Speaker 4: to what IMF was saying last in the past couple

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Speaker 4: of weeks.

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Speaker 6: Well, we certainly do think that growth over the well

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Speaker 6: beyond this year is going to pick up, but still

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Speaker 6: be materially below what we're used to seeing, probably closer

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Speaker 6: to potential between one and a half and one point

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Speaker 6: eight percent growth, and that's not certainly not to two

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Speaker 6: and a half to three percent growth that we saw

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Speaker 6: before the pandemic, but inflation will be tough to keep

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Speaker 6: down because they're going to be these structural drivers of

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Speaker 6: higher inflation. So that means the FED will have to

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Speaker 6: keep interest rates higher for longer in order to get

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Speaker 6: inflation back to the two percent target and maintain it there.

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Speaker 4: What does it say, Dana that so many people before

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Speaker 4: this period of time said that this economy could not

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Speaker 4: handle higher interest rates, and that suddenly we are seeing

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Speaker 4: ongoing growth in the face of interest rates that that

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Speaker 4: are the highest they've been going back to the nineteen eighties,

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Speaker 4: and that people believe that the FED will eventually have

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Speaker 4: to cut But you're saying not really that much, given

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Speaker 4: how much inflation is going to pick up. What does

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Speaker 4: that mean about what the right rate is.

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Speaker 6: Well, when I look at the economy, different aspects of

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Speaker 6: it are behaving differently, so I use different a lot.

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Speaker 6: So if you look at the housing market, residential investment

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Speaker 6: that's really come off, and that really moves first when

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Speaker 6: interest rates rise, and then business investment has come off

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Speaker 6: a little bit, and consumers have pulled back on spending

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Speaker 6: on durable goods, which are things that they need to finance.

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Speaker 6: The last shoot to drop really is services, And I

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Speaker 6: think it's going to take some weakness in the labor

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Speaker 6: market or even belief that people consumers believing that they

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Speaker 6: might get let go even though they may not, and

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Speaker 6: that's really going to bring things back into balance.

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Speaker 1: Dan, I one final question. We've got to go to

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Speaker 1: some breaking news here, but Dana Peterson, it's too important

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Speaker 1: you open this conversation by talking about sub too percent growth.

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Speaker 1: Can I assume that with sub two percent growth x

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Speaker 1: percent of America's in recession, how big is that part

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Speaker 1: of America that feels recession even if the GDP statistic

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Speaker 1: is positive.

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Speaker 6: Well, I think definitely people with lower incomes because much

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Speaker 6: of their paychecks get eaten up by inflation. But also

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Speaker 6: we're seeing worries among people who have higher incomes, especially

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Speaker 6: the middle class, because they're the ones who pay the

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Speaker 6: most taxes, they also pay a lot of in terms

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Speaker 6: of inflation. They're still very much affected, and so I

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Speaker 6: think it's those groups that are definitely feeling the pinch

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Speaker 6: right now.

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Speaker 1: Dana, Thank you so much, Dana Peterson, with a conference board.

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Speaker 1: This guy leads the way. Rich Greenfield had to wear

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Speaker 1: a flat coat, flat jacket and helmet here years ago

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Speaker 1: media as a cell side analyst who was one of

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Speaker 1: the courageous guys out there in a really vicious time

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Speaker 1: for IPOs and secondary offerings in that he's aged nicely

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Speaker 1: like Shud Partners and joins us this morning, Rich, I

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Speaker 1: got to cut to the chase. I've never seen more

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Speaker 1: capital deployed and misallocated in fourteen different ways. How bad

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Speaker 1: will the rationalizations of labor be across all of the

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Speaker 1: rich greenfield space.

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Speaker 7: I mean, look, you know, I mean, look, the reality

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Speaker 7: is is, you know, we saw a lot of what

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Speaker 7: I would call over hiring during sort of the pandemic,

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Speaker 7: where I think there was just this sort of you know,

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Speaker 7: incredible surge of activity around a lot of these companies.

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Speaker 7: I mean, obviously they were first depressed for like a

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Speaker 7: nanosecond and then we just saw this massive explosion in

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Speaker 7: a lot of these digital businesses. And you're seeing a

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Speaker 7: right sizing now. I mean, you know, look look at

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Speaker 7: what's happening to companies like Meta and Google, you know,

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Speaker 7: Alphabet et cetera, but even Netflix and others. I mean,

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Speaker 7: you've seen sort of across the board head count reductions,

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Speaker 7: not because business is collapsing, but I think more than

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Speaker 7: anything else, Tom, is just that they got a little

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Speaker 7: ahead of themselves in terms of hiring and just brought

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Speaker 7: on too many people relative to your overall revenue growth.

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Speaker 1: Rich, you and your team have been leaders in trying

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Speaker 1: to monitor the consolidation of what we call entertainment. I

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Speaker 1: think I saw a photo this weekend, folks of people

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Speaker 1: buying Taylor Swift's merch and it was like four miles

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Speaker 1: long to buy you know, Taylor Swift t shirts and

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Speaker 1: coffee mugs and that Rich, I want to talk about

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Speaker 1: monopsony or the consolidation here under monopoly and where price

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Speaker 1: is set. Are we just going to have one or

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Speaker 1: two or three entertainment vendors at the end of the day.

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Speaker 7: I mean, right now, things are pretty amazing for the consumer, Tom,

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Speaker 7: I mean, yes, you have the legacy multi channel bundle

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Speaker 7: that you and I have been sort of watching melt

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Speaker 7: down over the course of the last ten to fifteen years.

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Speaker 7: You know what people like to call cord cutting. But

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Speaker 7: we're really in this era and now of where the

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Speaker 7: consumers in the driver's seat. I mean, think about what

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Speaker 7: used to happen in the cable and satellite world. I

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Speaker 7: mean having to wait you know, call up to change

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Speaker 7: your service. Someone had to come out swap out a box.

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Speaker 7: Like canceling was a pain in the neck. Nobody did

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Speaker 7: it now with things, whether it's Netflix or Disney Plus

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Speaker 7: or Paramount Plus or Peacock, all of these things, click

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Speaker 7: of a button sign up. If you're not happy with

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Speaker 7: your Peacock service, or you're tired of it, orf you

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Speaker 7: watch enough content, you literally click cancel, click of a button.

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Speaker 7: There's no waiting for someone to come to your house.

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Speaker 7: I mean, I don't think we've ever been in a

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Speaker 7: better time in entertainment for the consumer than we are

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Speaker 7: right now. More content, and you're in control of what

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Speaker 7: you pay for for the first time.

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Speaker 4: It goes to this kind of frictionless ability that we've

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Speaker 4: been talking about with banking but also with respect to entertainment.

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Speaker 4: Given those options, does it make sense to you that

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Speaker 4: simply cutting workers like what we're seeing at Meta, like

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Speaker 4: what we're seeing at Disney, is enough to engender a

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Speaker 4: new era of growth. I'm just wondering, basically, to put

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Speaker 4: it more bluntly, does Meta's cutting of staff justify a

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Speaker 4: seventy seven percent gain so far this year?

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Speaker 7: Absolutely? I mean, when you think about what's happened at

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Speaker 7: Meta They've sort of gone back to what they're good at,

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Speaker 7: which is selling ads. I mean, they're one of the

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Speaker 7: best companies in the world for helping small businesses around

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Speaker 7: the world move products off shelves like that is what

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Speaker 7: Meta does. They are incredible at direct response advertising. Nobody

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Speaker 7: does it better than what Meta does. There was a

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Speaker 7: lot of distraction, a lot of focus on the metaverse

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Speaker 7: and virtual reality in the future, and I think Mark

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Speaker 7: very much correctly realized he needed the street support, he

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Speaker 7: needed investors to believe in this story. He can still

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Speaker 7: build his long term metaverse vision, but he has to

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Speaker 7: do it in line with.

438
00:22:59,080 --> 00:23:00,000
Speaker 1: The growth of the company.

439
00:23:00,040 --> 00:23:05,159
Speaker 7: But I think that's what got disjointed is refocused, reallocated

440
00:23:05,200 --> 00:23:08,440
Speaker 7: capital more appropriately, and I think the team has never

441
00:23:08,480 --> 00:23:12,080
Speaker 7: been more focused on selling the core product, and that's

442
00:23:12,320 --> 00:23:17,520
Speaker 7: you know, AI driven content and AI driven advertising. That's

443
00:23:17,600 --> 00:23:19,800
Speaker 7: what's making MetaStock work right now.

444
00:23:19,840 --> 00:23:22,880
Speaker 4: Does the same kind of thesis hold true for Disney,

445
00:23:22,960 --> 00:23:25,680
Speaker 4: which is I believe cutting about fifteen percent of their

446
00:23:25,720 --> 00:23:29,040
Speaker 4: staff in the entertainment division. Does it also give the

447
00:23:29,080 --> 00:23:30,280
Speaker 4: same sort of optimism.

448
00:23:31,640 --> 00:23:33,800
Speaker 7: I mean, you don't have the underlying growth at Disney

449
00:23:33,800 --> 00:23:35,840
Speaker 7: that you do. It's something like meta, right, I mean,

450
00:23:36,840 --> 00:23:39,840
Speaker 7: the meta story. While it's had an amazing growth over

451
00:23:39,880 --> 00:23:42,199
Speaker 7: the last decade, there's a lot to come, you know,

452
00:23:42,240 --> 00:23:44,439
Speaker 7: with Disney, the challenge is really threefold.

453
00:23:44,520 --> 00:23:44,680
Speaker 1: Right.

454
00:23:45,200 --> 00:23:47,439
Speaker 7: We're trying to figure out what do you do with Hulu.

455
00:23:47,440 --> 00:23:50,600
Speaker 7: They've got this sort of extra streaming service. Don't know

456
00:23:50,640 --> 00:23:53,200
Speaker 7: whether the you know, sort of NBCU news over the

457
00:23:53,200 --> 00:23:57,920
Speaker 7: weekend changes that process at all, But you've got Hulu situation.

458
00:23:58,440 --> 00:24:00,479
Speaker 7: Then you've got what do you do with the ESPN?

459
00:24:00,560 --> 00:24:03,600
Speaker 7: As Tom pointed out, the cable network business is not

460
00:24:03,720 --> 00:24:06,640
Speaker 7: exactly a growth business anymore, and sports costs keep going up,

461
00:24:06,680 --> 00:24:09,160
Speaker 7: So what do you do with the ESPN? And then

462
00:24:09,160 --> 00:24:11,679
Speaker 7: the big problem, honestly that the two of you, you know,

463
00:24:11,680 --> 00:24:14,879
Speaker 7: should think about, is the Disney content. That engine of

464
00:24:14,960 --> 00:24:17,639
Speaker 7: growth that you know, really that is the lifeblood of

465
00:24:17,640 --> 00:24:21,000
Speaker 7: Disney really hasn't been working over the last couple of years.

466
00:24:21,040 --> 00:24:23,240
Speaker 7: Marvel and Lucasfilm don't look as strong, they look a

467
00:24:23,280 --> 00:24:26,199
Speaker 7: little tired. And the animation crown, I mean, we're all

468
00:24:26,200 --> 00:24:28,880
Speaker 7: talking about Super Mario Brothers. What was the last time

469
00:24:28,880 --> 00:24:33,080
Speaker 7: you were talking about a blockbuster Disney animated title Raiger's

470
00:24:33,080 --> 00:24:34,800
Speaker 7: got a lot of work. He's got a lot of

471
00:24:34,840 --> 00:24:39,240
Speaker 7: work to do across Disney's businesses. He's obviously incredibly talented,

472
00:24:39,240 --> 00:24:41,320
Speaker 7: but he's got to figure out all three of those

473
00:24:41,359 --> 00:24:44,080
Speaker 7: big issues as well as fine as successor in the

474
00:24:44,080 --> 00:24:45,000
Speaker 7: next eighteen months.

475
00:24:45,080 --> 00:24:48,080
Speaker 1: Rich green it's not easy, you comment Rich Greenfield on

476
00:24:48,119 --> 00:24:51,320
Speaker 1: what I saw twice over the weekend was his fondest

477
00:24:51,359 --> 00:24:54,400
Speaker 1: desire of Tim Cook to the rescue. And it can

478
00:24:54,440 --> 00:24:58,959
Speaker 1: be Apple, Disney, Apple, this, Apple, that whatever. But in

479
00:24:59,000 --> 00:25:02,080
Speaker 1: your world, there's seems to be the savior transaction for

480
00:25:02,200 --> 00:25:06,000
Speaker 1: troubled companies that Apple would buy you. Why would Apple

481
00:25:06,040 --> 00:25:07,280
Speaker 1: buy any of this stuff?

482
00:25:09,119 --> 00:25:12,280
Speaker 7: Tom, I don't know. I mean, why would you want

483
00:25:12,320 --> 00:25:16,199
Speaker 7: to own cable networks that are disappearing? Why would you

484
00:25:16,240 --> 00:25:19,760
Speaker 7: want to own all of these assets? When Apple has

485
00:25:19,880 --> 00:25:24,439
Speaker 7: enough capital, they can make movies, they can make TV shows,

486
00:25:24,440 --> 00:25:27,320
Speaker 7: they can hire the best talent. They essentially if they

487
00:25:27,359 --> 00:25:30,960
Speaker 7: want to become HBO over the next decade plus, they

488
00:25:30,960 --> 00:25:34,200
Speaker 7: can spend and get there. I think it'd be very

489
00:25:34,240 --> 00:25:38,360
Speaker 7: hard to imagine them buying a big media company. Sure

490
00:25:38,440 --> 00:25:40,679
Speaker 7: would they love to potentially own a studio if you

491
00:25:40,680 --> 00:25:43,960
Speaker 7: could just buy a studio, But every one of these

492
00:25:43,960 --> 00:25:47,040
Speaker 7: companies comes with so many other assets. I mean, they

493
00:25:47,040 --> 00:25:50,000
Speaker 7: have MLS now on Apple TV Plus. Do you need

494
00:25:50,040 --> 00:25:53,760
Speaker 7: to buy ESPN and have people subscribers to get I mean,

495
00:25:53,960 --> 00:25:56,720
Speaker 7: just buy the good stuff, you know, buy the actual content,

496
00:25:57,119 --> 00:25:59,439
Speaker 7: or invest in it, build it. I don't think you

497
00:25:59,440 --> 00:26:01,000
Speaker 7: have to go out and buy one of these companies.

498
00:26:01,040 --> 00:26:03,600
Speaker 7: And I think your point is well taken tom way

499
00:26:03,640 --> 00:26:05,640
Speaker 7: Too often in the space it's like, oh, I can't

500
00:26:05,640 --> 00:26:08,520
Speaker 7: figure out a growth strategy. Maybe we'll just get bought

501
00:26:08,520 --> 00:26:11,280
Speaker 7: by Apple or Amazon because they have so much capitalism.

502
00:26:11,359 --> 00:26:14,440
Speaker 1: Exactly, Rich twenty seconds your single best buy right now

503
00:26:14,440 --> 00:26:15,640
Speaker 1: at light Shed Partners.

504
00:26:16,000 --> 00:26:17,879
Speaker 7: I mean I think, look, it's when you think about

505
00:26:17,880 --> 00:26:21,080
Speaker 7: recovery stocks right now, the two that stand out that

506
00:26:21,119 --> 00:26:23,960
Speaker 7: are sort of rebounding off of their lows. I think

507
00:26:24,000 --> 00:26:26,800
Speaker 7: you would probably put both Spotify and Snapchat right now.

508
00:26:27,000 --> 00:26:29,440
Speaker 1: Very good, Rich Greenfield, Thank you so much on entertainment.

509
00:26:29,520 --> 00:26:32,840
Speaker 1: Just a great snapshot there as well. Subscribe to the

510
00:26:32,840 --> 00:26:37,159
Speaker 1: Bloomberg Surveillance podcast on Apple, Spotify, and anywhere else you

511
00:26:37,200 --> 00:26:41,400
Speaker 1: get your podcasts. Listen live every weekday starting at seven

512
00:26:41,440 --> 00:26:46,119
Speaker 1: am Eastern on Bloomberg dot Com, the iHeartRadio app tune

513
00:26:46,160 --> 00:26:49,680
Speaker 1: in and the Bloomberg Business App. You can watch us

514
00:26:49,760 --> 00:26:53,800
Speaker 1: live on Bloomberg Television and always on the Bloomberg Terminal.

515
00:26:54,200 --> 00:26:58,440
Speaker 1: Thanks for listening. I'm Tom Keane, and this is Bloomberg