Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day
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Speaker 1: joins us right now an important moment with accente data.
Speaker 1: Yen's perfect timing. Here we see the arch other pair
Speaker 1: Euro yen breakout. Strong euro weekend weekend technically through one
Speaker 1: forty eight is a huge deal against strong euro. Explain
Speaker 1: to mere mortals what the significance of a euro yen
Speaker 1: breakout means.
Speaker 2: Yees.
Speaker 3: So, we've had a situation here over the last month
Speaker 3: or so right where we had significant banking tension. It
Speaker 3: was not just in the US. We also saw pressure
Speaker 3: and credit Swiss, Torture Bank and so forth, and we've
Speaker 3: had a significant relief from that. So we've had euroen
Speaker 3: essentially go up four to five percent from those lows.
Speaker 3: So it's a very significant bounds as those banking tension
Speaker 3: concerns and the Eurozone have really been pushed in the background.
Speaker 3: In the US, it's a little bit more complicated, but
Speaker 3: so we have a very significant movement. At the same time,
Speaker 3: we continue to have this elevated speculation about whether the
Speaker 3: Banquet Japan is going to do something right. We've had
Speaker 3: incredible volatility around Bank oft Japan meetings. We have another
Speaker 3: one this week, and now the new Banquet Japan leadership
Speaker 3: is essentially signaling that they will still be patient. So
Speaker 3: I wouldn't say it's still the same as Corona, right,
Speaker 3: but they are sickling that they are not in a
Speaker 3: rush to exit from the easy So those are the
Speaker 3: things that's really pushing Uri in pretty significantly high.
Speaker 1: He ends your book on the Euro ten to fifteen
Speaker 1: years ago was definitive on what the euro needs to be.
Speaker 1: Europe escaped eurosclerosis? Has Europe you know the experiment coming
Speaker 1: out of the advent of the Euro. Have they escaped
Speaker 1: that permanent unemployment? Have they found a more Anglo saxon prosperity.
Speaker 3: We continue to see that when there's a crisis in Europe,
Speaker 3: the leadership tends to come together and do more stuff
Speaker 3: that they've been willing to do in the past, right,
Speaker 3: So the Corona virus episode was another example of them
Speaker 3: doing more and next generation EUO funds are still being
Speaker 3: dispersed around the European Union to support countries that needed.
Speaker 3: So we have essentially a degree of physcal union building, right,
Speaker 3: So that was something that was missing and we're having
Speaker 3: a degree of it and that certainly is certainly helping
Speaker 3: on that front. There's a lot of talk about having
Speaker 3: a banking union as well. Right when you have banking tension,
Speaker 3: there's focused on supporting the banking system in various ways,
Speaker 3: and we're having that discussion again, right So we're not
Speaker 3: there yet. But I think the one thing that's really
Speaker 3: important that is different from when I wrote that book
Speaker 3: is we have those political tension that caused uncertainty about Okay,
Speaker 3: do the different countries have the willingness to do what
Speaker 3: it takes to stay in the Eurozone. We don't really
Speaker 3: have those debates at the moment. There's no debate in
Speaker 3: Italy about leaving the euro right now. There's no debate
Speaker 3: in Spain or other countries. Right So, if you do
Speaker 3: opinion polls, do people want to stick with the euro
Speaker 3: there's actually rising support for the euro, So that's something
Speaker 3: that cements the Euros status despite all the difficulties there
Speaker 3: is with economic integration and so forth.
Speaker 4: This was the reason why a lot of people earlier
Speaker 4: this year said that European equities in particular were a
Speaker 4: real place of brightness for the full year, given not
Speaker 4: only all of this potential optimism, but also this idea
Speaker 4: that they're not as tech heavy at a time when
Speaker 4: there would be a rotation out of that, well it
Speaker 4: hasn't really worked out that way, and you've seen actually
Speaker 4: big tech continue to lead in the US. What is
Speaker 4: that going to shift? Is Europe ever going to basically
Speaker 4: create some other common plex like it to rival the
Speaker 4: tech giants in the US.
Speaker 3: Well, so the European stock trade, like for example, in
Speaker 3: banking space, has worked out right. So BNP has recovered
Speaker 3: twenty percent from the lows, is up significantly in the year.
Speaker 3: So the fact that interest rates arising is creating a
Speaker 3: different environment for equities and banks have done very well.
Speaker 3: Obviously Europe doesn't have a tech sector, so on that front,
Speaker 3: tech sectors speak of, So that front, the US is
Speaker 3: going to be leading. But I think overall we have
Speaker 3: a situation where European equity markets have outperformed the US
Speaker 3: equity market, so the first time in a long time, Right,
Speaker 3: you can argue whether it's europe outperforming of the US
Speaker 3: underperforming outside of tech, and that's something that's very interesting.
Speaker 3: Don't forget that we've had a situation where last year
Speaker 3: we had like a very very serious energy crisis in
Speaker 3: the Eurozone, right, and now energy prices have dropped very notably, right.
Speaker 3: So part of the reason why we have the eurostrong,
Speaker 3: European stocks also can can do relatively well this year
Speaker 3: is that that energy crisis has abated, consumer confidence has
Speaker 3: come back. You look at services PMI. Services pmis have
Speaker 3: just resent resen over the last couple of months, right,
Speaker 3: So we've really recovered from that energy shock in a
Speaker 3: way that the support of the European economy, and obviously
Speaker 3: the ECB is still facing inflation, right. So the combination
Speaker 3: of too high inflation and growth that's actually getting better
Speaker 3: means that it's very very hard for the ECB to relax.
Speaker 3: They have to continue going as we heard today as well.
Speaker 4: So Yen's basically it sounds like you are still very
Speaker 4: bullish in European banks and European equities more broadly as
Speaker 4: well as the euro.
Speaker 3: So I was certainly very I was treating very aggressively
Speaker 3: about it a month ago, and I actually did a
Speaker 3: summary tweet yesterday about it on my handle, like like
Speaker 3: there was no particular reason to think go to a
Speaker 3: bank was just about to go under, right, And we've
Speaker 3: recovered from that dramatic shock, and I think there's still
Speaker 3: some reasons to think that we're out of serial interest
Speaker 3: rate world. That's supported for the banking system overall, and
Speaker 3: for the euro. The ECP is going to continue to
Speaker 3: support it. So I think the big quest question here
Speaker 3: is what it's global growth is going to do. That's
Speaker 3: super important for the dollar, and we have some question
Speaker 3: marks in Asia now. So that's the new things that
Speaker 3: we're starting to really focus on in our research right now.
Speaker 1: Okay, let's go there on China. How does China fit
Speaker 1: into speculating or betting on a given currency pair, Which
Speaker 1: pair gives you the greatest efficacy to play your China guests.
Speaker 3: So typically when we've had you know, China stimulus, China
Speaker 3: growth recovery has been currencies like ARSI dollar that has
Speaker 3: benefited from Korean wan and we had a period in
Speaker 3: January and February where China linked assets all around the
Speaker 3: world from casino stocks to tourism stocks and so forth,
Speaker 3: all rallied hard. And now we've come to a point
Speaker 3: where it feels that some of those trades are very
Speaker 3: fully priced. And actually it's sort of the longer term
Speaker 3: growth concerns that are starting to feed into price action.
Speaker 3: We can see that in Chinese equities rolling all see
Speaker 3: it an iron ore rolling over. So it's kind of
Speaker 3: one of those things where perhaps we got it very
Speaker 3: fully embedded and we start to look at the more
Speaker 3: medium term past, it's just that short term shot.
Speaker 1: So are you saying au DKRW is the most efficient
Speaker 1: pair to play a China guess?
Speaker 3: So, I think when you have a growth bound in Europe,
Speaker 3: those are the assets that I'm moving. And I think
Speaker 3: right now, if we look at we have like very
Speaker 3: high frequency tracking of Chinese growth where we look at, okay,
Speaker 3: what is the momentum, and we can see at the
Speaker 3: end of March that's when we kind of had a
Speaker 3: peak in Chinese growth, and since then, over the last
Speaker 3: three four weeks, we've started to see the real momentum
Speaker 3: in the Chinese economy potentially peak out, and therefore you
Speaker 3: have to be a little bit more careful with those
Speaker 3: sort of China growth sensitive assets.
Speaker 5: Right now, Yen wander for to get your perspective on that.
Speaker 5: Yen's Nordic then Efic Santa Data joining us now, Markey
Speaker 5: Ptel of Allspring Global Investments, Markey, wonderful to catch up
Speaker 5: with you. Tom mentioned this conversation at the very start
Speaker 5: of the program. Pushing forward to tech earnings later this week, Mark,
Speaker 5: you still hold a lot of tag. Can you walk
Speaker 5: us through where you're taking that equity exposure at the
Speaker 5: moment go and gets results later this week.
Speaker 2: Well, this is going to be a huge week for stocks.
Speaker 2: A huge number of companies are reporting. We still like
Speaker 2: the tech sector because certainly the understanding that there's a
Speaker 2: lot of inventory to be worked off, that we may
Speaker 2: have to wait for the second half of the year
Speaker 2: to see a turn in demand is well understood, and
Speaker 2: the stocks have anticipated that. Most have performed really well.
Speaker 2: So the question is can they have a decent results
Speaker 2: in the markets really go down because of that. We
Speaker 2: think we'd rather ride that out and say these companies
Speaker 2: have long term growth, they have good positions in the industry,
Speaker 2: strong balance sheets to withstand even if we do have
Speaker 2: a deep recession.
Speaker 1: Mark ya, look at tech and the rep here this
Speaker 1: how many people are afraid of. Is tech conservative? How
Speaker 1: do you determine a measured conservative cash flow from a
Speaker 1: high flyer that could be trouble.
Speaker 2: Well, I don't really know about the high flyers. I
Speaker 2: like to avoid the high flyers that might have trouble.
Speaker 2: But just looking at companies that have improved their market position,
Speaker 2: who are you know technological leaders that have a lot
Speaker 2: of cash on their balance sheet and also they pay
Speaker 2: a dividend. A lot of tech stocks pay. That's a
Speaker 2: good sign.
Speaker 1: You give us a name, Come on, no one's watching.
Speaker 2: Well, we think Broadcom is a is a good stock
Speaker 2: because it's diversified in a dividend.
Speaker 4: All right, Well, going forward, we talk about when to
Speaker 4: know when the cash out marquee. We have seen a
Speaker 4: huge run in some of the big tech names that
Speaker 4: are profitable. They've really been, frankly the backbone of any
Speaker 4: gains that they've gotten so far this year. When do
Speaker 4: you say that's enough?
Speaker 2: Well, I think that's true, But on a relative basis,
Speaker 2: we really don't know how deep of a economic correction
Speaker 2: we're going have, will be mild, will be more severe,
Speaker 2: and so tech prices may come down because it's pees
Speaker 2: have expanded. However, we don't know if other sectors will
Speaker 2: have very disappointing earnings if we have a big recession.
Speaker 2: So that's kind of the push and pool in the
Speaker 2: market of where you want to be positioned.
Speaker 4: Have you been surprised at the market's reaction to some
Speaker 4: of these earnings Marketie and I asked, because people if
Speaker 4: it's waiting for the earnings recession and in certain areas
Speaker 4: it's come and markets don't care. I mean, what do
Speaker 4: you make of that?
Speaker 2: Well, so far this earning season, which is really only
Speaker 2: about twenty percent or so, the results have been surprisingly good,
Speaker 2: and the market was really looking for signs that companies
Speaker 2: would tone down their earnings expectation the quarter would be disappointing,
Speaker 2: and it hasn't been. So we're still waiting for that
Speaker 2: correction we haven't seen.
Speaker 5: We have seen a correction though, in nen interest margins
Speaker 5: at the smaller banks. Lisa talks about this through most
Speaker 5: of the last week. Is we've got to drip feeded news
Speaker 5: from small and medium sized lenders in the United States market,
Speaker 5: just in terms of taking a step back and trying
Speaker 5: to understand the broader economy. What is the relationship between
Speaker 5: declining the interest margins and bank lending to the rest
Speaker 5: of the economy.
Speaker 2: Well, I think everything rolls back to the Fed, and
Speaker 2: they're super aggressive policy last year that really put the
Speaker 2: banks kind of in a box on the interest margin.
Speaker 2: So we think we have to see the yell curve
Speaker 2: get not so inverted as a big thing, and see
Speaker 2: a little more stability from the Fed. And we think
Speaker 2: we've already seen even before the distress we saw in
Speaker 2: the first quarter, bank lending standards were tightening up, so
Speaker 2: they have already been on the watch and I think
Speaker 2: are in pretty good shape as far as that.
Speaker 5: Is, expecting that to continue. Potentially we get some more
Speaker 5: data on that early next month. Markie, thank you for that.
Speaker 5: As always, Marcobada of All Spring Globe and Investments, we.
Speaker 1: Feel that we need to pursue any good conversation with
Speaker 1: Dana Peterson, chief economists at the conference. Border really joins
Speaker 1: us now in the state of America, Dana, where's your
Speaker 1: GDP statistic that we're going to see this week? We
Speaker 1: sort of come down. We're all at three point two
Speaker 1: ish and we've come down. Give me the conference board
Speaker 1: statistic that you're working with right now.
Speaker 6: Well, we're probably looking at anything between one and a
Speaker 6: half to two percent growth in the month. Certainly, we
Speaker 6: had a very strong January in terms of consumer spending,
Speaker 6: but then February and March we're pretty pathetic. And also
Speaker 6: we think business investment continued to shrink, as well as
Speaker 6: residential investment. Of course, the wildcards are trade and inventories,
Speaker 6: which have been exactly wild well.
Speaker 1: Wor's domestic final sales. If you take out inventories and
Speaker 1: trade dynamics, you get into a domestic view of Y.
Speaker 1: We'll see plus I plus G plus NX And Dana,
Speaker 1: are we in domestic final sales recession now?
Speaker 6: Probably not in the first quarter, but we do think
Speaker 6: that the second quarter we definitely will see some negative readings.
Speaker 6: Certainly that'll be negative consumpt consumer spending, also business investment,
Speaker 6: and of course residential investment.
Speaker 4: Dana, have you been surprised to consumer confidence hanging in
Speaker 4: there at the fact that the economic data has not
Speaker 4: turned around more than it already has.
Speaker 6: Well, our overall measure of consumer confidence continues to just
Speaker 6: kind of move back and forth. It's definitely down from
Speaker 6: where it was at the peak last year or even
Speaker 6: the year before, but still not When you look at expectations,
Speaker 6: consumers still expect a recession at some point, and they've
Speaker 6: been signaling that for the last twelve out of thirteen months,
Speaker 6: and so something is about to happen. And certainly when
Speaker 6: we ask CEOs, they continue to believe that there is
Speaker 6: going to be a recession. It won't be long and
Speaker 6: it won't be deep, but it's going to happen.
Speaker 4: How much is this consistent throughout industries versus specific industries
Speaker 4: giving this signal very strongly, whereas others are a little
Speaker 4: bit more iffy on just the prospect.
Speaker 6: Well, when I look at the labor market and by industry,
Speaker 6: it's kind of split into three pieces. You have those
Speaker 6: former pandemic darlings that are not doing so well, like
Speaker 6: technology and retail and transportation, ware housing and finance. But
Speaker 6: then you have the ones in the middle that are
Speaker 6: just kind of hoarding labor and not doing anything. And
Speaker 6: then you definitely have those industries that are still adding workers,
Speaker 6: and that includes healthcare and hotels and restaurants all those
Speaker 6: experiential types of services.
Speaker 1: With inflation coming down, do we get an inflation adjusted wage,
Speaker 1: however you want to define it, that's level or increases,
Speaker 1: or do we still have negative real wage growth?
Speaker 6: Well, real wages are actually slightly positive right now, and
Speaker 6: that's because headline inflation has come off, but still underlying
Speaker 6: inflation less food, energy is still pretty sticky, and again
Speaker 6: wages are just slightly positive. So we think that with that,
Speaker 6: consumers are saying to themselves, well, you know, at least energy,
Speaker 6: at least gasoline is not as expensive as it was
Speaker 6: and so not eating some of my budget as much
Speaker 6: as it was. But certainly food and other services are
Speaker 6: still pretty expensive.
Speaker 1: I looked in a at the back and forth here
Speaker 1: of all the economic data coming out. I believe we
Speaker 1: have to get to a FED meeting May third. What
Speaker 1: matters for Chairman Powell and the rest of the voters
Speaker 1: at the FED towards May third? Which part of the
Speaker 1: new economic data will matter.
Speaker 6: Well, certainly this week's GDP report for the first quarter,
Speaker 6: but also the PCEE deflator inflation, whether or not we
Speaker 6: still continue to see stickiness in the core, or if
Speaker 6: it's just a function of what we saw in CPI
Speaker 6: and also daily lending data from banks to businesses and
Speaker 6: consumers and seeing how much that dips, because if it
Speaker 6: dips considerably, then that tells the Fed that, well, maybe
Speaker 6: this is the last hike that they'll need to implement,
Speaker 6: but certainly if inflation continues to be a problem, we
Speaker 6: might be looking at two more hikes.
Speaker 4: We're speaking with Dana Peterson of the Conference Board at
Speaker 4: a time of great uncertainty of exactly where we are
Speaker 4: in this economic cycle and data. There was a lot
Speaker 4: of discussion earlier in this year about whether we'd be
Speaker 4: going back to the low flation, low growth kind of
Speaker 4: environment that we had for so many years, and with
Speaker 4: the race, could go back to that in the next
Speaker 4: few years, do you see that as a likelihood akin
Speaker 4: to what IMF was saying last in the past couple
Speaker 4: of weeks.
Speaker 6: Well, we certainly do think that growth over the well
Speaker 6: beyond this year is going to pick up, but still
Speaker 6: be materially below what we're used to seeing, probably closer
Speaker 6: to potential between one and a half and one point
Speaker 6: eight percent growth, and that's not certainly not to two
Speaker 6: and a half to three percent growth that we saw
Speaker 6: before the pandemic, but inflation will be tough to keep
Speaker 6: down because they're going to be these structural drivers of
Speaker 6: higher inflation. So that means the FED will have to
Speaker 6: keep interest rates higher for longer in order to get
Speaker 6: inflation back to the two percent target and maintain it there.
Speaker 4: What does it say, Dana that so many people before
Speaker 4: this period of time said that this economy could not
Speaker 4: handle higher interest rates, and that suddenly we are seeing
Speaker 4: ongoing growth in the face of interest rates that that
Speaker 4: are the highest they've been going back to the nineteen eighties,
Speaker 4: and that people believe that the FED will eventually have
Speaker 4: to cut But you're saying not really that much, given
Speaker 4: how much inflation is going to pick up. What does
Speaker 4: that mean about what the right rate is.
Speaker 6: Well, when I look at the economy, different aspects of
Speaker 6: it are behaving differently, so I use different a lot.
Speaker 6: So if you look at the housing market, residential investment
Speaker 6: that's really come off, and that really moves first when
Speaker 6: interest rates rise, and then business investment has come off
Speaker 6: a little bit, and consumers have pulled back on spending
Speaker 6: on durable goods, which are things that they need to finance.
Speaker 6: The last shoot to drop really is services, And I
Speaker 6: think it's going to take some weakness in the labor
Speaker 6: market or even belief that people consumers believing that they
Speaker 6: might get let go even though they may not, and
Speaker 6: that's really going to bring things back into balance.
Speaker 1: Dan, I one final question. We've got to go to
Speaker 1: some breaking news here, but Dana Peterson, it's too important
Speaker 1: you open this conversation by talking about sub too percent growth.
Speaker 1: Can I assume that with sub two percent growth x
Speaker 1: percent of America's in recession, how big is that part
Speaker 1: of America that feels recession even if the GDP statistic
Speaker 1: is positive.
Speaker 6: Well, I think definitely people with lower incomes because much
Speaker 6: of their paychecks get eaten up by inflation. But also
Speaker 6: we're seeing worries among people who have higher incomes, especially
Speaker 6: the middle class, because they're the ones who pay the
Speaker 6: most taxes, they also pay a lot of in terms
Speaker 6: of inflation. They're still very much affected, and so I
Speaker 6: think it's those groups that are definitely feeling the pinch
Speaker 6: right now.
Speaker 1: Dana, Thank you so much, Dana Peterson, with a conference board.
Speaker 1: This guy leads the way. Rich Greenfield had to wear
Speaker 1: a flat coat, flat jacket and helmet here years ago
Speaker 1: media as a cell side analyst who was one of
Speaker 1: the courageous guys out there in a really vicious time
Speaker 1: for IPOs and secondary offerings in that he's aged nicely
Speaker 1: like Shud Partners and joins us this morning, Rich, I
Speaker 1: got to cut to the chase. I've never seen more
Speaker 1: capital deployed and misallocated in fourteen different ways. How bad
Speaker 1: will the rationalizations of labor be across all of the
Speaker 1: rich greenfield space.
Speaker 7: I mean, look, you know, I mean, look, the reality
Speaker 7: is is, you know, we saw a lot of what
Speaker 7: I would call over hiring during sort of the pandemic,
Speaker 7: where I think there was just this sort of you know,
Speaker 7: incredible surge of activity around a lot of these companies.
Speaker 7: I mean, obviously they were first depressed for like a
Speaker 7: nanosecond and then we just saw this massive explosion in
Speaker 7: a lot of these digital businesses. And you're seeing a
Speaker 7: right sizing now. I mean, you know, look look at
Speaker 7: what's happening to companies like Meta and Google, you know,
Speaker 7: Alphabet et cetera, but even Netflix and others. I mean,
Speaker 7: you've seen sort of across the board head count reductions,
Speaker 7: not because business is collapsing, but I think more than
Speaker 7: anything else, Tom, is just that they got a little
Speaker 7: ahead of themselves in terms of hiring and just brought
Speaker 7: on too many people relative to your overall revenue growth.
Speaker 1: Rich, you and your team have been leaders in trying
Speaker 1: to monitor the consolidation of what we call entertainment. I
Speaker 1: think I saw a photo this weekend, folks of people
Speaker 1: buying Taylor Swift's merch and it was like four miles
Speaker 1: long to buy you know, Taylor Swift t shirts and
Speaker 1: coffee mugs and that Rich, I want to talk about
Speaker 1: monopsony or the consolidation here under monopoly and where price
Speaker 1: is set. Are we just going to have one or
Speaker 1: two or three entertainment vendors at the end of the day.
Speaker 7: I mean, right now, things are pretty amazing for the consumer, Tom,
Speaker 7: I mean, yes, you have the legacy multi channel bundle
Speaker 7: that you and I have been sort of watching melt
Speaker 7: down over the course of the last ten to fifteen years.
Speaker 7: You know what people like to call cord cutting. But
Speaker 7: we're really in this era and now of where the
Speaker 7: consumers in the driver's seat. I mean, think about what
Speaker 7: used to happen in the cable and satellite world. I
Speaker 7: mean having to wait you know, call up to change
Speaker 7: your service. Someone had to come out swap out a box.
Speaker 7: Like canceling was a pain in the neck. Nobody did
Speaker 7: it now with things, whether it's Netflix or Disney Plus
Speaker 7: or Paramount Plus or Peacock, all of these things, click
Speaker 7: of a button sign up. If you're not happy with
Speaker 7: your Peacock service, or you're tired of it, orf you
Speaker 7: watch enough content, you literally click cancel, click of a button.
Speaker 7: There's no waiting for someone to come to your house.
Speaker 7: I mean, I don't think we've ever been in a
Speaker 7: better time in entertainment for the consumer than we are
Speaker 7: right now. More content, and you're in control of what
Speaker 7: you pay for for the first time.
Speaker 4: It goes to this kind of frictionless ability that we've
Speaker 4: been talking about with banking but also with respect to entertainment.
Speaker 4: Given those options, does it make sense to you that
Speaker 4: simply cutting workers like what we're seeing at Meta, like
Speaker 4: what we're seeing at Disney, is enough to engender a
Speaker 4: new era of growth. I'm just wondering, basically, to put
Speaker 4: it more bluntly, does Meta's cutting of staff justify a
Speaker 4: seventy seven percent gain so far this year?
Speaker 7: Absolutely? I mean, when you think about what's happened at
Speaker 7: Meta They've sort of gone back to what they're good at,
Speaker 7: which is selling ads. I mean, they're one of the
Speaker 7: best companies in the world for helping small businesses around
Speaker 7: the world move products off shelves like that is what
Speaker 7: Meta does. They are incredible at direct response advertising. Nobody
Speaker 7: does it better than what Meta does. There was a
Speaker 7: lot of distraction, a lot of focus on the metaverse
Speaker 7: and virtual reality in the future, and I think Mark
Speaker 7: very much correctly realized he needed the street support, he
Speaker 7: needed investors to believe in this story. He can still
Speaker 7: build his long term metaverse vision, but he has to
Speaker 7: do it in line with.
Speaker 1: The growth of the company.
Speaker 7: But I think that's what got disjointed is refocused, reallocated
Speaker 7: capital more appropriately, and I think the team has never
Speaker 7: been more focused on selling the core product, and that's
Speaker 7: you know, AI driven content and AI driven advertising. That's
Speaker 7: what's making MetaStock work right now.
Speaker 4: Does the same kind of thesis hold true for Disney,
Speaker 4: which is I believe cutting about fifteen percent of their
Speaker 4: staff in the entertainment division. Does it also give the
Speaker 4: same sort of optimism.
Speaker 7: I mean, you don't have the underlying growth at Disney
Speaker 7: that you do. It's something like meta, right, I mean,
Speaker 7: the meta story. While it's had an amazing growth over
Speaker 7: the last decade, there's a lot to come, you know,
Speaker 7: with Disney, the challenge is really threefold.
Speaker 1: Right.
Speaker 7: We're trying to figure out what do you do with Hulu.
Speaker 7: They've got this sort of extra streaming service. Don't know
Speaker 7: whether the you know, sort of NBCU news over the
Speaker 7: weekend changes that process at all, But you've got Hulu situation.
Speaker 7: Then you've got what do you do with the ESPN?
Speaker 7: As Tom pointed out, the cable network business is not
Speaker 7: exactly a growth business anymore, and sports costs keep going up,
Speaker 7: So what do you do with the ESPN? And then
Speaker 7: the big problem, honestly that the two of you, you know,
Speaker 7: should think about, is the Disney content. That engine of
Speaker 7: growth that you know, really that is the lifeblood of
Speaker 7: Disney really hasn't been working over the last couple of years.
Speaker 7: Marvel and Lucasfilm don't look as strong, they look a
Speaker 7: little tired. And the animation crown, I mean, we're all
Speaker 7: talking about Super Mario Brothers. What was the last time
Speaker 7: you were talking about a blockbuster Disney animated title Raiger's
Speaker 7: got a lot of work. He's got a lot of
Speaker 7: work to do across Disney's businesses. He's obviously incredibly talented,
Speaker 7: but he's got to figure out all three of those
Speaker 7: big issues as well as fine as successor in the
Speaker 7: next eighteen months.
Speaker 1: Rich green it's not easy, you comment Rich Greenfield on
Speaker 1: what I saw twice over the weekend was his fondest
Speaker 1: desire of Tim Cook to the rescue. And it can
Speaker 1: be Apple, Disney, Apple, this, Apple, that whatever. But in
Speaker 1: your world, there's seems to be the savior transaction for
Speaker 1: troubled companies that Apple would buy you. Why would Apple
Speaker 1: buy any of this stuff?
Speaker 7: Tom, I don't know. I mean, why would you want
Speaker 7: to own cable networks that are disappearing? Why would you
Speaker 7: want to own all of these assets? When Apple has
Speaker 7: enough capital, they can make movies, they can make TV shows,
Speaker 7: they can hire the best talent. They essentially if they
Speaker 7: want to become HBO over the next decade plus, they
Speaker 7: can spend and get there. I think it'd be very
Speaker 7: hard to imagine them buying a big media company. Sure
Speaker 7: would they love to potentially own a studio if you
Speaker 7: could just buy a studio, But every one of these
Speaker 7: companies comes with so many other assets. I mean, they
Speaker 7: have MLS now on Apple TV Plus. Do you need
Speaker 7: to buy ESPN and have people subscribers to get I mean,
Speaker 7: just buy the good stuff, you know, buy the actual content,
Speaker 7: or invest in it, build it. I don't think you
Speaker 7: have to go out and buy one of these companies.
Speaker 7: And I think your point is well taken tom way
Speaker 7: Too often in the space it's like, oh, I can't
Speaker 7: figure out a growth strategy. Maybe we'll just get bought
Speaker 7: by Apple or Amazon because they have so much capitalism.
Speaker 1: Exactly, Rich twenty seconds your single best buy right now
Speaker 1: at light Shed Partners.
Speaker 7: I mean I think, look, it's when you think about
Speaker 7: recovery stocks right now, the two that stand out that
Speaker 7: are sort of rebounding off of their lows. I think
Speaker 7: you would probably put both Spotify and Snapchat right now.
Speaker 1: Very good, Rich Greenfield, Thank you so much on entertainment.
Speaker 1: Just a great snapshot there as well. Subscribe to the
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Speaker 1: Thanks for listening. I'm Tom Keane, and this is Bloomberg