1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:32,360 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Let's 7 00:00:32,360 --> 00:00:35,920 Speaker 1: talk about another portfolio. Oil, The portfolio that exists in 8 00:00:36,040 --> 00:00:38,760 Speaker 1: Venezuela is hurting, and here to tell us more about 9 00:00:38,760 --> 00:00:41,760 Speaker 1: it is Liam Denning. He is our energy, mining and 10 00:00:41,920 --> 00:00:45,800 Speaker 1: commodities calumnist for Bloomberg Gadfly. Liam, thank you very much 11 00:00:45,840 --> 00:00:49,680 Speaker 1: for being here. Um, all right, we know Venezuela's economy 12 00:00:49,760 --> 00:00:52,839 Speaker 1: is a mess. We know the politics is a mess. Uh. 13 00:00:53,280 --> 00:00:57,200 Speaker 1: What is the likelihood that they will find a friendly nation, 14 00:00:57,440 --> 00:01:01,120 Speaker 1: whether it be Russia or China or somebody to loan 15 00:01:01,200 --> 00:01:05,959 Speaker 1: them more money, uh and perhaps help them stave off 16 00:01:06,040 --> 00:01:10,800 Speaker 1: that day of reckoning? Um? Well defined friendly? I mean 17 00:01:10,840 --> 00:01:14,400 Speaker 1: I think that non hostile, because I mean the United 18 00:01:14,440 --> 00:01:18,480 Speaker 1: States is even talking about more sanctions on Venezuela. Yeah, 19 00:01:18,560 --> 00:01:23,280 Speaker 1: I think so. The situation right now is they've got 20 00:01:23,400 --> 00:01:26,640 Speaker 1: declining all production Um. The economy is in a tailspin, 21 00:01:27,480 --> 00:01:30,319 Speaker 1: and they've got at least five billion dollars or so 22 00:01:30,680 --> 00:01:35,640 Speaker 1: of both sovereign debt and debt that resides at the 23 00:01:35,680 --> 00:01:37,920 Speaker 1: state or company coming due by the end of the year. 24 00:01:38,840 --> 00:01:44,400 Speaker 1: So one possible route for them is to get more 25 00:01:44,840 --> 00:01:49,000 Speaker 1: money from China and Russia. My senses, China may be 26 00:01:49,120 --> 00:01:52,840 Speaker 1: reluctant to put more into this, since it may be 27 00:01:52,960 --> 00:01:57,640 Speaker 1: just throwing, you know, good money after bad um. I 28 00:01:57,680 --> 00:02:00,920 Speaker 1: think with Russia it's it's more interesting because as there 29 00:02:00,960 --> 00:02:07,120 Speaker 1: are reports that the Russians are attempting to renegotiate some 30 00:02:07,120 --> 00:02:11,720 Speaker 1: some clauses around collateral with existing I mean, right, the 31 00:02:11,760 --> 00:02:18,320 Speaker 1: Russia isn't and they already have a stake in No, 32 00:02:18,639 --> 00:02:21,840 Speaker 1: they lent money to collateral I beg your pardon, and 33 00:02:21,880 --> 00:02:27,280 Speaker 1: it's collateralized with a roughly half steak in Sitgo, which 34 00:02:27,360 --> 00:02:32,359 Speaker 1: is the the Venezuelan refiner. Now, quite sensibly, they may 35 00:02:32,400 --> 00:02:35,839 Speaker 1: be the Russians maybe trying to renegotiate that because it's 36 00:02:35,840 --> 00:02:38,640 Speaker 1: it's unclear that if that ever came to pass, they 37 00:02:38,639 --> 00:02:41,600 Speaker 1: could actually take possession of those assets. So Leon, let's 38 00:02:41,639 --> 00:02:45,000 Speaker 1: zoom out a little bit, because Venezuela is a hotspot 39 00:02:45,080 --> 00:02:47,840 Speaker 1: right now of difficulties on a number of levels, and 40 00:02:47,960 --> 00:02:51,960 Speaker 1: it's sort of re introduces this idea of political risk 41 00:02:51,960 --> 00:02:54,760 Speaker 1: in the oil market that really has been sort of absent. 42 00:02:54,919 --> 00:02:59,799 Speaker 1: And I'm wondering, let's say Venezuela does become the for 43 00:03:00,040 --> 00:03:02,440 Speaker 1: us to big oil producer to withdraw from the market 44 00:03:02,520 --> 00:03:05,200 Speaker 1: due to political risk or to pull back. Would that 45 00:03:05,280 --> 00:03:08,399 Speaker 1: actually cause oil prices to rally? Would that be a 46 00:03:08,400 --> 00:03:12,080 Speaker 1: positive factor or would that possibly be a negative with 47 00:03:12,160 --> 00:03:18,200 Speaker 1: people wondering what will happen? Uh? I think, you know, 48 00:03:19,440 --> 00:03:21,680 Speaker 1: if if there is some sort of general generalized collapse 49 00:03:21,720 --> 00:03:24,799 Speaker 1: in Venezuela and it takes barrels off the market, that 50 00:03:24,960 --> 00:03:29,040 Speaker 1: is generally going to be seen as bullish for prices. 51 00:03:29,880 --> 00:03:32,920 Speaker 1: I think the thing to watch out for though, is, 52 00:03:33,680 --> 00:03:36,680 Speaker 1: you know, we have seen this happened before. I mean, 53 00:03:36,720 --> 00:03:39,120 Speaker 1: you look at a country like Libya, where the country 54 00:03:39,200 --> 00:03:44,240 Speaker 1: literally fell apart. It's being run by three different competing governments. 55 00:03:44,800 --> 00:03:48,920 Speaker 1: Their production has actually been coming back recently to the 56 00:03:48,960 --> 00:03:52,480 Speaker 1: extent that it's You've now got Opec and the countries 57 00:03:52,480 --> 00:03:54,840 Speaker 1: that are trying to limit supply actually trying to nudge 58 00:03:54,880 --> 00:03:59,640 Speaker 1: Libya towards limiting its output, which is kind of crazy 59 00:03:59,800 --> 00:04:04,040 Speaker 1: for a country that really needs the revenue. UM. I 60 00:04:04,080 --> 00:04:06,920 Speaker 1: think what I take away from Venezuela is if we 61 00:04:06,960 --> 00:04:09,000 Speaker 1: if we really step back and we look at what's 62 00:04:09,000 --> 00:04:12,200 Speaker 1: happened in the last few years, UM, what people have 63 00:04:12,240 --> 00:04:14,680 Speaker 1: been waiting for is some kind of big pullback in 64 00:04:14,840 --> 00:04:18,600 Speaker 1: US shale are either money runs out, companies go bankrupt, 65 00:04:18,680 --> 00:04:21,480 Speaker 1: people get laid off, production goes down. Now, it did 66 00:04:21,520 --> 00:04:24,920 Speaker 1: go down, but then it rebounded quite quickly, and I 67 00:04:24,960 --> 00:04:29,080 Speaker 1: think if we're looking for barrels coming off the market, 68 00:04:29,160 --> 00:04:33,520 Speaker 1: it's not going to be the more flexible UM companies 69 00:04:33,520 --> 00:04:37,440 Speaker 1: that are operating in places like Texas, because you know, 70 00:04:37,520 --> 00:04:40,279 Speaker 1: even if those companies go bankrupt, someone else just takes 71 00:04:40,279 --> 00:04:42,560 Speaker 1: over the assets and starts running it. I think it's 72 00:04:42,640 --> 00:04:45,760 Speaker 1: much more likely that we see problems on the supply 73 00:04:45,880 --> 00:04:49,599 Speaker 1: side in these economies which are very beholden to the 74 00:04:49,600 --> 00:04:54,159 Speaker 1: old price, which haven't restructured, and where there's really very 75 00:04:54,240 --> 00:04:57,400 Speaker 1: little flexibility on both the economic and the political side 76 00:04:57,400 --> 00:04:59,680 Speaker 1: to deal with the pressure that they're under. Liam are 77 00:04:59,720 --> 00:05:02,240 Speaker 1: really interesting point and one that I hadn't really thought about. 78 00:05:02,240 --> 00:05:04,800 Speaker 1: Another word, stopped looking for shell producers to cut production. 79 00:05:05,080 --> 00:05:07,039 Speaker 1: It's really going to be some kind of crisis in 80 00:05:07,120 --> 00:05:09,920 Speaker 1: one of these other producers, like a venezuela that's going 81 00:05:09,960 --> 00:05:13,320 Speaker 1: to take barrels off the market. Liam Denning, Energy Mining 82 00:05:13,360 --> 00:05:17,360 Speaker 1: and commodities columnist for Bloomberg Gadfly. His work is tremendous. 83 00:05:17,520 --> 00:05:21,320 Speaker 1: Check it out bloomberg dot com, slash gadfly or on 84 00:05:21,520 --> 00:05:37,240 Speaker 1: Bloomberg and I gadfly. Plastic surgery is a huge business, Phim. 85 00:05:37,320 --> 00:05:41,359 Speaker 1: I didn't realize that Americans spent more than sixteen billion 86 00:05:41,440 --> 00:05:45,560 Speaker 1: dollars on cosmetic plastic surgeries minimally invasive procedures last year. 87 00:05:45,720 --> 00:05:47,599 Speaker 1: It's the most on record. And give us a sense 88 00:05:47,600 --> 00:05:50,600 Speaker 1: of how much uh this business is growing. I want 89 00:05:50,600 --> 00:05:53,719 Speaker 1: to bring in Dr Stafford brumand he's a plastic surgeon 90 00:05:53,760 --> 00:05:57,040 Speaker 1: at seven forty Park Plastic Surgery on the Upper East 91 00:05:57,080 --> 00:06:00,359 Speaker 1: Side of New York City. And Dr Bruman, thank you 92 00:06:00,400 --> 00:06:02,320 Speaker 1: so much for joining us. I'd love to get a 93 00:06:02,360 --> 00:06:05,159 Speaker 1: sense from you in the growth of the industry in 94 00:06:05,200 --> 00:06:08,680 Speaker 1: the past few years. What procedures have been the absolute 95 00:06:08,760 --> 00:06:12,240 Speaker 1: most popular? Well, there are a slew of procedures which 96 00:06:12,320 --> 00:06:17,880 Speaker 1: people come in for from non invasive injectables and surgery. 97 00:06:18,240 --> 00:06:22,800 Speaker 1: So in the injectables realm. It's grown a lot in 98 00:06:22,839 --> 00:06:26,560 Speaker 1: our practice. It's grown almost year over year and keeps growing. 99 00:06:27,200 --> 00:06:31,560 Speaker 1: Are you talking about fillers and botox? Fillers? Botox and fillers, 100 00:06:32,040 --> 00:06:34,760 Speaker 1: and then the other ones are noninvasive treatments like skin 101 00:06:34,839 --> 00:06:39,400 Speaker 1: tightening and fat freezing which is cool sculpt and all therapy. 102 00:06:39,760 --> 00:06:43,600 Speaker 1: So they can have treatments which are not surgical, uh, 103 00:06:43,880 --> 00:06:47,680 Speaker 1: either injectables or superficial treatments that make them look better, 104 00:06:47,880 --> 00:06:51,320 Speaker 1: and those have grown immensely. They're more popular. It delays 105 00:06:51,720 --> 00:06:56,400 Speaker 1: plastic surgery, h surgery itself, but doesn't eliminate the need 106 00:06:56,440 --> 00:06:59,520 Speaker 1: for surgery. Can you speak about some of the individual 107 00:06:59,600 --> 00:07:04,000 Speaker 1: company ease that have maybe pioneered or producing new types 108 00:07:04,080 --> 00:07:07,200 Speaker 1: of therapies or services that you didn't have let's say 109 00:07:07,200 --> 00:07:10,040 Speaker 1: five years ago. Well, Botox now is a brand name 110 00:07:10,080 --> 00:07:13,040 Speaker 1: and everyone knows Botox and is really not afraid of it, 111 00:07:13,360 --> 00:07:16,360 Speaker 1: and that's owned by Allergan, and Allergan I think was 112 00:07:16,440 --> 00:07:20,080 Speaker 1: recently bought by activists. So it's a whole range of companies. 113 00:07:20,080 --> 00:07:24,200 Speaker 1: But they have brought along Botox, which has many uses 114 00:07:24,680 --> 00:07:28,880 Speaker 1: as well as cosmetic uses. It's Botox cosmetica or cosmetic, 115 00:07:29,560 --> 00:07:31,960 Speaker 1: but they also have cool sculpt which was fat freezing, 116 00:07:31,960 --> 00:07:34,600 Speaker 1: which was a technology where you did not have to 117 00:07:34,640 --> 00:07:38,000 Speaker 1: have surgery, just had a cooling device sort of strapped 118 00:07:38,040 --> 00:07:40,040 Speaker 1: to you and that area lost the fat that it 119 00:07:40,120 --> 00:07:43,680 Speaker 1: was treating. It froze it basically, And they just recently 120 00:07:43,720 --> 00:07:46,400 Speaker 1: bought that as well. Uh So, and there are other 121 00:07:46,440 --> 00:07:50,920 Speaker 1: companies that still have other botox or botulism talks and products, 122 00:07:51,520 --> 00:07:55,000 Speaker 1: uh Like Valiant bought Medicis a while back, so there 123 00:07:55,000 --> 00:07:57,520 Speaker 1: are other companies that do that. There's another one traded Revance, 124 00:07:57,560 --> 00:08:00,600 Speaker 1: which is a small company which has another uh Bauchlism 125 00:08:00,840 --> 00:08:04,200 Speaker 1: talks and product. Is this like all the effect of 126 00:08:05,120 --> 00:08:09,480 Speaker 1: Instagram and selfies where people an increasing number of people 127 00:08:09,680 --> 00:08:14,280 Speaker 1: are obsessed with the way that they look, or is 128 00:08:14,320 --> 00:08:18,520 Speaker 1: this uh simply the normalizing of an ongoing trend where 129 00:08:18,520 --> 00:08:20,160 Speaker 1: people just want to look their best and if they 130 00:08:20,160 --> 00:08:22,640 Speaker 1: can find a procedure to help them do that, they'll 131 00:08:22,680 --> 00:08:25,200 Speaker 1: do that. I mean, how much excessive surgery did see? 132 00:08:25,400 --> 00:08:28,480 Speaker 1: It's really a matter of function of both. I think 133 00:08:28,560 --> 00:08:32,000 Speaker 1: that uh, social media has propelled this to a new level. 134 00:08:32,360 --> 00:08:35,480 Speaker 1: And I also think that people really are working harder 135 00:08:35,520 --> 00:08:38,200 Speaker 1: and longer and want to be relevant and they have 136 00:08:38,320 --> 00:08:41,240 Speaker 1: to look the part. So they come in seeing how 137 00:08:41,240 --> 00:08:44,560 Speaker 1: they can still be relevant in the workforce. Uh, and 138 00:08:44,640 --> 00:08:47,880 Speaker 1: so it's a matter, it really is. Bifurcates that way. 139 00:08:47,920 --> 00:08:50,240 Speaker 1: It's the young person coming in knowing that they've seen 140 00:08:50,280 --> 00:08:53,719 Speaker 1: selfies and they are on social media and Facebook, and 141 00:08:54,120 --> 00:08:58,040 Speaker 1: more middle aged or older group wanting to have plastic 142 00:08:58,080 --> 00:09:01,400 Speaker 1: surgery to stay in the workforce. That's that's fascinating point. 143 00:09:01,440 --> 00:09:04,040 Speaker 1: In other words, people who are older knowing that they 144 00:09:04,120 --> 00:09:08,760 Speaker 1: might be replaced more quickly if they don't look young well, 145 00:09:08,840 --> 00:09:10,160 Speaker 1: or they'll come in they say, you know what, I 146 00:09:10,200 --> 00:09:12,679 Speaker 1: work with all these young people. I can't look like 147 00:09:12,760 --> 00:09:17,280 Speaker 1: someone's uncle or grandmother. I've got to look younger. So 148 00:09:17,360 --> 00:09:20,440 Speaker 1: they want to do something that will transform them but 149 00:09:20,520 --> 00:09:22,880 Speaker 1: not change them, so that they can be still relevant 150 00:09:22,880 --> 00:09:25,160 Speaker 1: in the workforce. You notice he keeps looking at me 151 00:09:25,160 --> 00:09:32,679 Speaker 1: whenever he says those yeah, I saw those eyes. Dr Broman, 152 00:09:32,800 --> 00:09:37,320 Speaker 1: I'm when I ask you about the practice that you 153 00:09:37,360 --> 00:09:39,240 Speaker 1: know you happen to be a plastic surgeon, but I 154 00:09:39,280 --> 00:09:41,679 Speaker 1: mean you're a medical doctor, so you've got to practice. 155 00:09:42,120 --> 00:09:46,640 Speaker 1: The software that you use, the management systems that you use. Uh. 156 00:09:46,720 --> 00:09:49,520 Speaker 1: That is big business. Athena Health, for example, one of 157 00:09:49,520 --> 00:09:54,000 Speaker 1: the big software practice providers. Can you give us some 158 00:09:54,080 --> 00:09:56,720 Speaker 1: insight into what has changed there? And this whole idea 159 00:09:56,760 --> 00:10:00,200 Speaker 1: of trying to digitize people's medical records so it it 160 00:10:00,240 --> 00:10:04,240 Speaker 1: becomes a more efficient service, because not all places are 161 00:10:04,280 --> 00:10:07,440 Speaker 1: as efficient. To some the trend is to go to 162 00:10:07,600 --> 00:10:12,839 Speaker 1: electronic medical records. In plastic surgery practices, you don't necessarily 163 00:10:12,840 --> 00:10:15,040 Speaker 1: have to do that because it's a smaller practice, but 164 00:10:15,040 --> 00:10:17,679 Speaker 1: when you're affiliated with a hospital as we are at 165 00:10:17,679 --> 00:10:21,080 Speaker 1: seven forty part plastic surgery, you can get the software 166 00:10:21,559 --> 00:10:24,760 Speaker 1: UH and the electronic records through the hospital system, which 167 00:10:24,800 --> 00:10:28,360 Speaker 1: is Mount Sinai Hospital, or you can get your own system, 168 00:10:28,360 --> 00:10:30,520 Speaker 1: which is what we have. And they're smaller players in 169 00:10:30,559 --> 00:10:33,520 Speaker 1: that field. So it's not only in plastic surgeries at 170 00:10:33,520 --> 00:10:39,400 Speaker 1: botox and fillers, but it's UH medical records, it's information technology, UH, 171 00:10:39,520 --> 00:10:42,800 Speaker 1: it's devices. So there's a whole different slew of things 172 00:10:42,840 --> 00:10:46,000 Speaker 1: to to look at in the medical space. But they're 173 00:10:46,040 --> 00:10:49,200 Speaker 1: smaller players. Ours as next Tech, which is a privately 174 00:10:49,200 --> 00:10:53,080 Speaker 1: held company which is really on the forefront of dermatology 175 00:10:53,120 --> 00:10:56,439 Speaker 1: and plastic surgery and ophthalmology, and that's the system we 176 00:10:56,520 --> 00:10:59,000 Speaker 1: use and it's specialized, right I mean, that's what's so 177 00:10:59,080 --> 00:11:01,120 Speaker 1: interesting is that the the market in a sense is 178 00:11:01,160 --> 00:11:05,080 Speaker 1: fragmented because the software has been built for specific types 179 00:11:05,160 --> 00:11:09,240 Speaker 1: of practice. A specialties every specially has its own needs, 180 00:11:09,320 --> 00:11:11,520 Speaker 1: and we have our needs where we need to show 181 00:11:11,559 --> 00:11:16,680 Speaker 1: photographs and file photographs and uh interact with the hospital 182 00:11:16,960 --> 00:11:19,320 Speaker 1: and keep our own records sort of in shape so 183 00:11:19,360 --> 00:11:23,000 Speaker 1: that our office can work more efficiently. You know, before 184 00:11:23,040 --> 00:11:26,000 Speaker 1: the segment, we were talking about how in your view, 185 00:11:26,120 --> 00:11:29,800 Speaker 1: sometimes your role is as much a physician and a 186 00:11:29,880 --> 00:11:33,560 Speaker 1: surgeon as it is a psychiatrist or a psychologist and 187 00:11:33,679 --> 00:11:36,360 Speaker 1: a therapist, and that when people come to you, it's 188 00:11:37,120 --> 00:11:40,079 Speaker 1: really part of your job to let them know if 189 00:11:40,120 --> 00:11:42,960 Speaker 1: you think that perhaps they ought to go a different route, 190 00:11:43,040 --> 00:11:46,120 Speaker 1: if perhaps it's not a responsible surgery. Can you talk 191 00:11:46,240 --> 00:11:49,880 Speaker 1: a little bit about that. A plastic surgery is a 192 00:11:49,920 --> 00:11:52,000 Speaker 1: two way street. So we have to listen to our 193 00:11:52,040 --> 00:11:55,800 Speaker 1: patients to see what brings them in and what concerns 194 00:11:55,840 --> 00:11:57,760 Speaker 1: them and what we can do to help them. But 195 00:11:57,840 --> 00:12:01,720 Speaker 1: then we have to project and help them figure out 196 00:12:01,760 --> 00:12:05,400 Speaker 1: what works and what we can do legitimately and rightly. 197 00:12:05,480 --> 00:12:07,960 Speaker 1: So we've got to sort of figure out where they're 198 00:12:08,000 --> 00:12:11,480 Speaker 1: coming from, whether it's the right indications, whether it's the 199 00:12:11,600 --> 00:12:15,560 Speaker 1: right requirements, whether they're medically in the right place to 200 00:12:15,600 --> 00:12:17,599 Speaker 1: have this sort of surgery, and then we have to 201 00:12:17,640 --> 00:12:21,480 Speaker 1: discuss with them the options. What's a bad reason to 202 00:12:21,600 --> 00:12:24,880 Speaker 1: want to get There are many bad reasons and so 203 00:12:25,000 --> 00:12:28,800 Speaker 1: each person has their own take on it. But whether 204 00:12:28,960 --> 00:12:34,000 Speaker 1: it's a relationship issue, whether it is trying to look 205 00:12:34,040 --> 00:12:37,560 Speaker 1: like someone that they shouldn't be trying to look like. Uh, 206 00:12:37,600 --> 00:12:40,160 Speaker 1: there are a lot of reasons for it, or peer pressure. 207 00:12:40,640 --> 00:12:43,800 Speaker 1: So there are some reasons not to do surgery. And 208 00:12:44,200 --> 00:12:47,320 Speaker 1: we as a as a body, as plastic surgeons, are 209 00:12:47,400 --> 00:12:50,480 Speaker 1: offering our services to help them. We're here to help people. 210 00:12:50,520 --> 00:12:53,560 Speaker 1: We want people happy. We're and then make people happy business. 211 00:12:54,080 --> 00:12:57,320 Speaker 1: So if we can't do that and we think that 212 00:12:57,400 --> 00:13:01,559 Speaker 1: their objectives are not legitimate it, then we'll tell them 213 00:13:01,559 --> 00:13:03,400 Speaker 1: we talked to them. I want to thank you for 214 00:13:03,480 --> 00:13:07,000 Speaker 1: talking with us. Dr Stafford Boumant is a plastic surgeon 215 00:13:07,040 --> 00:13:12,600 Speaker 1: with seven forty park plastic surgery and very interesting, very 216 00:13:12,640 --> 00:13:28,520 Speaker 1: interesting conversation about the nature of plastic surgery. Well, we'll 217 00:13:28,520 --> 00:13:31,080 Speaker 1: be looking forward to earnings from the Walt Disney Company 218 00:13:31,080 --> 00:13:34,080 Speaker 1: plus Alphabet the parent company of Google, and here to 219 00:13:34,080 --> 00:13:36,480 Speaker 1: help us understand what to look for is Paul Sweeney, 220 00:13:36,559 --> 00:13:39,720 Speaker 1: US Director of Research and Senior Media Internet Analyst for 221 00:13:39,840 --> 00:13:46,000 Speaker 1: Bloomberg Intelligence. He can be followed on Twitter at pt Sweeney. Alright, 222 00:13:46,000 --> 00:13:50,320 Speaker 1: pt Sweeney, this report today. I want to focus on 223 00:13:50,640 --> 00:13:55,640 Speaker 1: the combination perhaps of Alphabet and Walt Disney because when 224 00:13:55,640 --> 00:13:59,280 Speaker 1: I look at the dashboard, which I compliment you one 225 00:13:59,320 --> 00:14:01,679 Speaker 1: on Bloomberg and Intelligence because it gives you every piece 226 00:14:01,679 --> 00:14:04,079 Speaker 1: of data. As if I didn't know that Don Kirk 227 00:14:04,240 --> 00:14:07,959 Speaker 1: was the big movie of the weekend, Uh, I find 228 00:14:07,960 --> 00:14:12,199 Speaker 1: that it's Facebook and Alphabet those are the ones that 229 00:14:12,240 --> 00:14:16,000 Speaker 1: are really competing for the ad dollars for companies such 230 00:14:16,080 --> 00:14:19,640 Speaker 1: as the Walt Disney Company and ESPN. Is there an overlap? 231 00:14:19,680 --> 00:14:21,720 Speaker 1: Is there? Because it seems as though there's a bleed 232 00:14:22,160 --> 00:14:24,880 Speaker 1: between one kind of company and another. Content is a 233 00:14:24,960 --> 00:14:27,800 Speaker 1: very fuzzy thing. Now, yes, I think you know, we've 234 00:14:27,800 --> 00:14:29,960 Speaker 1: seen something that we've been talking about in the t 235 00:14:30,160 --> 00:14:33,320 Speaker 1: MT technology, media and telecom space for the last twenty years. 236 00:14:33,360 --> 00:14:37,520 Speaker 1: Is this convergence of technology and media and content and uh, 237 00:14:37,840 --> 00:14:40,360 Speaker 1: and we're really really are seeing it really over the 238 00:14:40,400 --> 00:14:43,160 Speaker 1: last five to six seven years really accelerate and so 239 00:14:43,240 --> 00:14:46,800 Speaker 1: examples would be a traditional technology companies such as Google 240 00:14:47,000 --> 00:14:49,680 Speaker 1: as actually, through their ownership of YouTube, one of the 241 00:14:49,680 --> 00:14:53,560 Speaker 1: biggest television platforms in the business on a global basis, uh, 242 00:14:53,600 --> 00:14:56,040 Speaker 1: and part of their you know, they're probably generating you know, 243 00:14:56,160 --> 00:15:00,520 Speaker 1: several billion dollars of advertising revenue on YouTube. So there's 244 00:15:00,640 --> 00:15:02,960 Speaker 1: a classic example. And then another would be you know, 245 00:15:03,320 --> 00:15:06,720 Speaker 1: a T and T, the largest telecommunications companies spending eighty 246 00:15:06,760 --> 00:15:09,520 Speaker 1: five billion dollars to buy Time Warner to get those 247 00:15:09,560 --> 00:15:13,520 Speaker 1: assets to put that content over their wireless network here. 248 00:15:13,520 --> 00:15:16,440 Speaker 1: So we really are seeing the convergence here as consumers 249 00:15:16,440 --> 00:15:19,320 Speaker 1: spend more and more of their time online, if you will, 250 00:15:19,320 --> 00:15:23,280 Speaker 1: on outside of the traditional media ecosystem. Yeah, Paul, you 251 00:15:23,320 --> 00:15:28,040 Speaker 1: were saying before the segment that seventy percent of display ads. 252 00:15:28,040 --> 00:15:30,120 Speaker 1: I just I can't believe the seventy percent of display 253 00:15:30,160 --> 00:15:34,080 Speaker 1: ads are going to Google and Facebook, and that proportion 254 00:15:34,200 --> 00:15:36,840 Speaker 1: has been going up, and that's been taking away from 255 00:15:37,120 --> 00:15:42,320 Speaker 1: platforms such as Disneys and other more traditional media companies. 256 00:15:42,400 --> 00:15:45,840 Speaker 1: I'm trying to understand how effective some of these ads are. 257 00:15:45,880 --> 00:15:48,320 Speaker 1: I mean, I think about, for example, the Google search 258 00:15:48,440 --> 00:15:50,960 Speaker 1: ads and how often do people really click on them? 259 00:15:51,000 --> 00:15:54,760 Speaker 1: How valuable is that to retailers and others that are 260 00:15:54,760 --> 00:15:57,480 Speaker 1: doing the advertising. Well, what's interesting when you when if 261 00:15:57,480 --> 00:15:59,880 Speaker 1: you went to the television up from presentations and may 262 00:16:00,000 --> 00:16:02,040 Speaker 1: all the big broadcast networks, they would tell you that 263 00:16:02,080 --> 00:16:05,840 Speaker 1: digital advertising is not nearly as effective as some people believe. 264 00:16:06,280 --> 00:16:08,560 Speaker 1: There is a lot of audience fraud. You can't even 265 00:16:08,600 --> 00:16:11,320 Speaker 1: really measure accurately the audience that is seen your ad 266 00:16:11,440 --> 00:16:14,000 Speaker 1: number one, number two, You don't know where your ad 267 00:16:14,080 --> 00:16:17,440 Speaker 1: is actually being placed in many instances on the internet. Uh, 268 00:16:17,480 --> 00:16:21,120 Speaker 1: and they're obviously those famous examples where an advertiser would 269 00:16:21,120 --> 00:16:23,120 Speaker 1: have its message you know, next to some type of 270 00:16:23,120 --> 00:16:26,520 Speaker 1: isis you know, video or certainly content that you don't 271 00:16:26,520 --> 00:16:28,800 Speaker 1: want to be associated with. Whereas on a broadcasting cable 272 00:16:28,840 --> 00:16:30,880 Speaker 1: networks you know exactly where your ad will be. It 273 00:16:30,960 --> 00:16:34,840 Speaker 1: is a advertiser safe environment. That being said, the dollars 274 00:16:34,880 --> 00:16:37,880 Speaker 1: the numbers tell a different story. TV ad spending this 275 00:16:37,960 --> 00:16:41,880 Speaker 1: year will be up probably low single digits, whereas digital 276 00:16:41,920 --> 00:16:44,880 Speaker 1: advertising across the Internet will probably be up fifteen to 277 00:16:45,040 --> 00:16:48,880 Speaker 1: seventeen percent. So advertisers continue to allocate more and more 278 00:16:48,920 --> 00:16:53,160 Speaker 1: of their budgets to digital advertising platforms, and as you mentioned, um, 279 00:16:53,240 --> 00:16:56,160 Speaker 1: it really is a d wopply for big brand advertisers. 280 00:16:56,160 --> 00:16:58,840 Speaker 1: If they want to allocate their dollars onto the Internet 281 00:16:58,880 --> 00:17:01,760 Speaker 1: broadly defined, they really only have to two choices, and 282 00:17:01,800 --> 00:17:06,280 Speaker 1: that is Facebook, UH and Google. So UM and everybody 283 00:17:06,280 --> 00:17:08,200 Speaker 1: else is kind of fighting for the scraps, which are 284 00:17:08,280 --> 00:17:11,159 Speaker 1: big scraps and they're growing, but Google and Facebook are 285 00:17:11,160 --> 00:17:14,000 Speaker 1: really the dominant players here. UM, and I think a 286 00:17:14,040 --> 00:17:17,240 Speaker 1: lot of advertisers are saying, yes, we have issues about measurement, 287 00:17:17,320 --> 00:17:20,600 Speaker 1: Yes we have issues about accountability and context, but at 288 00:17:20,600 --> 00:17:23,280 Speaker 1: the end of the day, we know that our consumers 289 00:17:23,280 --> 00:17:26,440 Speaker 1: are audiences are spending more line and more time online 290 00:17:26,440 --> 00:17:28,760 Speaker 1: and therefore we need to be there as well talking 291 00:17:28,760 --> 00:17:31,840 Speaker 1: about spending spending more money for live sports and when 292 00:17:31,960 --> 00:17:35,160 Speaker 1: if you could talk to the issue of ESPN some 293 00:17:35,440 --> 00:17:38,480 Speaker 1: comparisons to a year ago, so that we understand what's 294 00:17:38,480 --> 00:17:40,680 Speaker 1: going to happen this afternoon when they tell us about 295 00:17:40,720 --> 00:17:43,399 Speaker 1: the operations of ESPN and so on. Yes, so the 296 00:17:43,520 --> 00:17:46,440 Speaker 1: challenge UH for ESPN. In the space of probably two 297 00:17:46,520 --> 00:17:49,159 Speaker 1: years to maybe three years, ESPN has gone from the 298 00:17:49,160 --> 00:17:52,320 Speaker 1: crown jewel of the Walt Disney investment story UH to 299 00:17:52,440 --> 00:17:55,800 Speaker 1: being really the big question mark. And that is because Uh, 300 00:17:55,880 --> 00:17:58,720 Speaker 1: I'm very similar to what we're seeing across the entire 301 00:17:58,800 --> 00:18:03,080 Speaker 1: television ecosystem. Even the mighty ESPN is losing subscribers to 302 00:18:03,320 --> 00:18:07,280 Speaker 1: chord cutting and chord shaving as people try to pair back. Uh, 303 00:18:07,359 --> 00:18:10,560 Speaker 1: they're spending on the traditional pay TV packages. Even ESPN 304 00:18:10,640 --> 00:18:12,920 Speaker 1: is filling it. So they have lost you know, several 305 00:18:13,080 --> 00:18:15,880 Speaker 1: probably four to five million subscribers over the last four 306 00:18:15,960 --> 00:18:18,920 Speaker 1: or five years um. And that is impacting their ability 307 00:18:19,000 --> 00:18:22,080 Speaker 1: to charge for advertising and as well as it impacts 308 00:18:22,080 --> 00:18:25,280 Speaker 1: their affiliate fees that they can charge to their distributors. 309 00:18:25,280 --> 00:18:28,879 Speaker 1: So they have revenue challenges at ESPN. And that's a 310 00:18:28,920 --> 00:18:32,399 Speaker 1: problem because their costs, their costs are primarily programming, and 311 00:18:32,440 --> 00:18:36,280 Speaker 1: those programming rights fees to the NFL into Major League Baseball, 312 00:18:36,280 --> 00:18:40,199 Speaker 1: into the NBA, those are very big numbers. And that's right, 313 00:18:40,320 --> 00:18:43,160 Speaker 1: isn't that right for the For the NBA. Uh, yeah, 314 00:18:43,240 --> 00:18:46,400 Speaker 1: it was actually an additional for dollars above their last contracts, 315 00:18:46,440 --> 00:18:49,480 Speaker 1: So they have billions of dollars of rights fees that 316 00:18:49,520 --> 00:18:53,080 Speaker 1: are long term, multi year contracts that are fixed at 317 00:18:53,080 --> 00:18:55,240 Speaker 1: a time when their revenue is being pressured. That's the 318 00:18:55,800 --> 00:18:59,280 Speaker 1: challenge for ESPN. Well, and it's not just ESPN for Disney, right, 319 00:18:59,320 --> 00:19:02,560 Speaker 1: because we also have gotten news that thirty eight thou 320 00:19:02,760 --> 00:19:07,080 Speaker 1: Florida union workers are looking for higher wages and are 321 00:19:07,119 --> 00:19:10,359 Speaker 1: prepared to be pretty aggressive with that. How realistic is 322 00:19:10,359 --> 00:19:13,200 Speaker 1: it that their wages could be increased enough to make 323 00:19:13,200 --> 00:19:17,200 Speaker 1: a material dent in disneys earnings and potentially hurt them. Yeah, 324 00:19:17,240 --> 00:19:19,040 Speaker 1: that's it's gonna be an interesting question to see how 325 00:19:19,040 --> 00:19:21,080 Speaker 1: they talk about it on the call coming up on 326 00:19:21,119 --> 00:19:24,159 Speaker 1: their earnings. UM. That is the parks and resorts business 327 00:19:24,160 --> 00:19:26,600 Speaker 1: has actually been a great story for the Walt Disney 328 00:19:26,600 --> 00:19:28,320 Speaker 1: Company over the last four or five years. This is 329 00:19:28,520 --> 00:19:31,600 Speaker 1: a business that, um, you know, is a minta high 330 00:19:31,600 --> 00:19:34,600 Speaker 1: single digit revenue growth business, a low double digit profit 331 00:19:34,680 --> 00:19:37,640 Speaker 1: growth business. So this is a business that they need 332 00:19:37,720 --> 00:19:41,040 Speaker 1: to really manage their costs well. Um So that and 333 00:19:41,080 --> 00:19:43,680 Speaker 1: they're one of the largest costs obviously is their personnel costs. 334 00:19:43,680 --> 00:19:45,600 Speaker 1: And to the extent that they have a material impact 335 00:19:46,080 --> 00:19:48,840 Speaker 1: uh to the cost in Florida, which is their biggest 336 00:19:48,880 --> 00:19:52,440 Speaker 1: market globally, that will have an impact marginally, I think 337 00:19:52,480 --> 00:19:54,760 Speaker 1: on the profitability of that business. But I think investors 338 00:19:55,119 --> 00:19:57,600 Speaker 1: still view that business is a very good business as 339 00:19:57,640 --> 00:20:00,680 Speaker 1: a business that is worthy of more investment. And in fact, 340 00:20:00,960 --> 00:20:03,640 Speaker 1: we see the Walt Disney Company investing, you know, every 341 00:20:03,720 --> 00:20:05,840 Speaker 1: year more and more in their parks and resorts businesses 342 00:20:05,880 --> 00:20:09,440 Speaker 1: around the world, from Shanghai to Orlando to California, to 343 00:20:09,640 --> 00:20:12,560 Speaker 1: additional cruise ships. Uh. So that's a business they like. 344 00:20:12,760 --> 00:20:17,000 Speaker 1: That's a business. Actually, the Comcast, through its acquisition of Universal, uh, 345 00:20:17,160 --> 00:20:19,280 Speaker 1: got all the parks and resorts from Universal. That's a 346 00:20:19,320 --> 00:20:22,840 Speaker 1: business Comcast like. So the theme park business globally is 347 00:20:22,880 --> 00:20:24,919 Speaker 1: a very good business. And of course the Disney as 348 00:20:24,920 --> 00:20:27,320 Speaker 1: a world leader, aren't they just about to celebrate something 349 00:20:27,359 --> 00:20:32,840 Speaker 1: like their ten million visitor Torobabling park in China and uh, well, China, China. 350 00:20:32,880 --> 00:20:35,520 Speaker 1: The first year they had I guess, I guess it 351 00:20:35,560 --> 00:20:37,879 Speaker 1: was about ten million, and that was kind of their goal. 352 00:20:37,960 --> 00:20:39,680 Speaker 1: And then now that now they're in year two. So 353 00:20:39,920 --> 00:20:42,600 Speaker 1: Shanghai has generally been very successful for them, and in fact, 354 00:20:42,600 --> 00:20:47,719 Speaker 1: they've announced additional expansion of Shanghai uh to fuel what 355 00:20:47,760 --> 00:20:50,000 Speaker 1: they believe will be future growths there. So I think 356 00:20:50,040 --> 00:20:51,960 Speaker 1: that was a I think most investors view that is 357 00:20:51,960 --> 00:20:54,560 Speaker 1: a very good investment. Thank you so much for joining us. 358 00:20:54,560 --> 00:20:58,040 Speaker 1: Paul Sweeney, US Director of Research and senior Media and 359 00:20:58,160 --> 00:21:01,879 Speaker 1: Internet analyst for Bloomberg Intelligence. He is now off to 360 00:21:02,160 --> 00:21:05,560 Speaker 1: a trip to Disney World with his family while he 361 00:21:05,640 --> 00:21:19,720 Speaker 1: checks out Disney earnings. We want to turn now to 362 00:21:19,760 --> 00:21:23,480 Speaker 1: Ira Jersey, are interest rate strategist for Bloomberg Intelligence, to 363 00:21:23,480 --> 00:21:25,080 Speaker 1: give us a little bit of a preview of this 364 00:21:25,119 --> 00:21:28,520 Speaker 1: week's f O m C meeting. Ira, what can we 365 00:21:28,560 --> 00:21:32,399 Speaker 1: expect to learn? Hey, pim, UM, So the Federal Reserve 366 00:21:32,480 --> 00:21:33,919 Speaker 1: is not going to hike this week. You know, the 367 00:21:33,920 --> 00:21:36,280 Speaker 1: markets pricing for a zero percent chance of a hike 368 00:21:36,359 --> 00:21:38,440 Speaker 1: this week, So that would certainly be the biggest shock 369 00:21:38,560 --> 00:21:40,480 Speaker 1: to the market, and I think you'd wind up seeing 370 00:21:40,800 --> 00:21:43,800 Speaker 1: to your notes sell off quite significantly if if they 371 00:21:43,800 --> 00:21:47,280 Speaker 1: were to do that. UM. But there is the possibility 372 00:21:47,280 --> 00:21:49,960 Speaker 1: that they can announce runoff this week, which UM I 373 00:21:50,000 --> 00:21:54,400 Speaker 1: think has caused some confusion and consternation around different market 374 00:21:54,480 --> 00:21:56,720 Speaker 1: segments about you know, exactly what does that mean? What 375 00:21:56,760 --> 00:21:58,920 Speaker 1: does it mean when the Federal Reserve starts to run 376 00:21:58,920 --> 00:22:03,359 Speaker 1: off um it's treasury and mortgage portfolio. So so they're 377 00:22:03,359 --> 00:22:08,520 Speaker 1: expected to start allowing some of their treasury mortgage backed 378 00:22:08,560 --> 00:22:12,520 Speaker 1: securities holdings to pay down starting as soon as what 379 00:22:12,680 --> 00:22:17,480 Speaker 1: October or September even UM, and the biggest question, according 380 00:22:17,520 --> 00:22:21,240 Speaker 1: to your latest research note is around mortgage backed securities, right, 381 00:22:21,280 --> 00:22:24,600 Speaker 1: that's where people are sort of girding for the most 382 00:22:24,680 --> 00:22:28,040 Speaker 1: potential volatility. Am I writing that? Yeah? I think that 383 00:22:28,040 --> 00:22:31,399 Speaker 1: that's that's where the biggest risk comes is really what 384 00:22:31,400 --> 00:22:33,600 Speaker 1: what what comes from that? And the reason is because 385 00:22:33,880 --> 00:22:37,760 Speaker 1: that can't be managed by the UM, by any bureaucracy. 386 00:22:37,880 --> 00:22:40,959 Speaker 1: So when the treasury portfolio runs off, even though some 387 00:22:41,000 --> 00:22:43,720 Speaker 1: months are going to run off significantly more treasuries than 388 00:22:44,040 --> 00:22:47,760 Speaker 1: than mortgage backed securities UM, the Treasury Department can determine 389 00:22:47,880 --> 00:22:50,000 Speaker 1: how that's going to come into the market. Is that 390 00:22:50,040 --> 00:22:52,360 Speaker 1: going to come into the market with them issuing more 391 00:22:52,400 --> 00:22:54,879 Speaker 1: ten year notes or thirty year thirty year bonds? The 392 00:22:54,880 --> 00:22:57,640 Speaker 1: answer is probably not. They'll end up issuing a lot 393 00:22:57,680 --> 00:22:59,960 Speaker 1: more TEA bills and two year and three year Now 394 00:23:00,040 --> 00:23:03,400 Speaker 1: it's a very short maturity, short duration, not a lot 395 00:23:03,440 --> 00:23:07,280 Speaker 1: of market risk instruments, whereas mortgages that it will have 396 00:23:07,359 --> 00:23:10,040 Speaker 1: to just be absorbed by the market based on how 397 00:23:10,160 --> 00:23:15,199 Speaker 1: much UM, how much people actually refinance our houses and 398 00:23:15,200 --> 00:23:18,320 Speaker 1: how much mortgage activity there is. So so so that's 399 00:23:18,359 --> 00:23:20,680 Speaker 1: something that's that can't be controlled as well. So that's 400 00:23:20,760 --> 00:23:24,160 Speaker 1: one of the reasons why we think that there could 401 00:23:24,160 --> 00:23:26,720 Speaker 1: be much more volatility and mortgage backed securities and say 402 00:23:26,720 --> 00:23:29,960 Speaker 1: treasury treasury securities because of this. So, just to be 403 00:23:30,080 --> 00:23:33,919 Speaker 1: clear of these mortgage backed securities are agency backed securities. 404 00:23:33,920 --> 00:23:36,640 Speaker 1: These are mortgages that are ensured by Fannie and Freddie 405 00:23:36,680 --> 00:23:41,840 Speaker 1: and Emayn May I'm wondering, how much do you expect 406 00:23:42,160 --> 00:23:46,480 Speaker 1: that mortgage rates could potentially increase if there is a 407 00:23:46,600 --> 00:23:50,280 Speaker 1: lack of clarity around the runoff program, specifically with respect 408 00:23:50,320 --> 00:23:53,399 Speaker 1: to mortag back securities. Well, so, I think the Fed's 409 00:23:53,440 --> 00:23:55,920 Speaker 1: done a good job in preparing the market for how 410 00:23:56,040 --> 00:23:58,960 Speaker 1: runoff the pace of runoff. But but one of the 411 00:23:59,000 --> 00:24:03,760 Speaker 1: interesting things is for mortgages, there's um the FED set 412 00:24:03,800 --> 00:24:06,040 Speaker 1: that they're going to allow up to twenty billion dollars 413 00:24:06,040 --> 00:24:08,960 Speaker 1: a month of their mortgage securities roll off. Now what's 414 00:24:09,000 --> 00:24:12,320 Speaker 1: interesting about that is that barely twenty billion dollars a 415 00:24:12,359 --> 00:24:14,800 Speaker 1: months is running off today, So there'll be many months 416 00:24:14,880 --> 00:24:18,000 Speaker 1: when um they run off everything out of their portfolio, 417 00:24:18,080 --> 00:24:20,520 Speaker 1: and all of that winds up going back in to 418 00:24:20,640 --> 00:24:23,640 Speaker 1: mortgage pools, so you wind up with with more mortgage 419 00:24:23,680 --> 00:24:27,280 Speaker 1: backed security issuance it winds up affecting UM what rates 420 00:24:27,280 --> 00:24:29,320 Speaker 1: are going to go out in the future. Now you 421 00:24:29,320 --> 00:24:32,640 Speaker 1: know how much that that's that's going to increase mortgage rates. 422 00:24:32,640 --> 00:24:35,800 Speaker 1: Well back inn when the Fed allowed their mortgage backed 423 00:24:35,800 --> 00:24:38,679 Speaker 1: security portfolio to run off, you saw a significant volatility. 424 00:24:38,720 --> 00:24:42,479 Speaker 1: You saw swings of basis points within a few weeks 425 00:24:42,880 --> 00:24:46,160 Speaker 1: UH in UH in the market. So you know, it's 426 00:24:46,160 --> 00:24:49,159 Speaker 1: hard to judge exactly what the impact could be the 427 00:24:49,280 --> 00:24:53,120 Speaker 1: basis point per per dollar of runoff, but I think 428 00:24:53,119 --> 00:24:55,679 Speaker 1: you could wind up seeing significant volatility and you know, 429 00:24:55,800 --> 00:24:59,600 Speaker 1: twenty five basis point, thirty basis point increase in UM 430 00:24:59,640 --> 00:25:02,240 Speaker 1: in more could spreads compared to treasuries could uh could 431 00:25:02,240 --> 00:25:05,560 Speaker 1: potentially happen and that would obviously have an impact on 432 00:25:05,600 --> 00:25:08,960 Speaker 1: the broader broader economy um irish. Should we rename it 433 00:25:09,040 --> 00:25:11,120 Speaker 1: the debt ceiling? Should it just be like the debt 434 00:25:11,119 --> 00:25:14,080 Speaker 1: window because they always open it at the very last minute? 435 00:25:14,480 --> 00:25:16,480 Speaker 1: You know that that's you know, yeah, that's the one 436 00:25:16,520 --> 00:25:19,040 Speaker 1: thing that could probably uh, you know, stop the Federal 437 00:25:19,080 --> 00:25:23,440 Speaker 1: Reserve from actually uh starting to run off of their portfolio. 438 00:25:23,760 --> 00:25:26,040 Speaker 1: That they always wait till the last minute to raise 439 00:25:26,080 --> 00:25:28,359 Speaker 1: the death ceiling. It's actually from a for a lot 440 00:25:28,440 --> 00:25:30,399 Speaker 1: of strategists. It gives us something to right about. But 441 00:25:30,440 --> 00:25:33,479 Speaker 1: it's really quite um, it's really quite annoying because it's 442 00:25:33,480 --> 00:25:35,880 Speaker 1: a man made problem, right. It's it's not something that 443 00:25:36,400 --> 00:25:40,320 Speaker 1: is is societal. It's really Congress just not being willing 444 00:25:40,359 --> 00:25:44,160 Speaker 1: to change the rules. So they so they only they 445 00:25:44,160 --> 00:25:47,879 Speaker 1: can fund um. They can fund the government based on 446 00:25:47,920 --> 00:25:52,360 Speaker 1: the budget that they've already passed. So so it's right now. 447 00:25:52,480 --> 00:25:56,000 Speaker 1: Our expectation is early October is the time when they 448 00:25:56,000 --> 00:25:59,200 Speaker 1: actually run out of money to uh uh both cash 449 00:25:59,280 --> 00:26:02,840 Speaker 1: and uh debt limit. Um. Soon after that they'll wind 450 00:26:02,920 --> 00:26:05,000 Speaker 1: up running out of money in order to to actually 451 00:26:05,000 --> 00:26:09,560 Speaker 1: refinance debt. So there are some there are some suggestions 452 00:26:09,600 --> 00:26:11,560 Speaker 1: that some people in Congress want to do, like change 453 00:26:11,560 --> 00:26:13,960 Speaker 1: the debt deailing and say hey, you're allowed to refinance stuff, 454 00:26:13,960 --> 00:26:15,920 Speaker 1: you're just not allowed to issue new debt once you 455 00:26:16,000 --> 00:26:18,399 Speaker 1: reach the limit. Something like that would certainly give the 456 00:26:18,400 --> 00:26:21,199 Speaker 1: market some comfort. Um. You're starting to see actually the 457 00:26:21,200 --> 00:26:23,840 Speaker 1: market move a little bit. Um October te bills are 458 00:26:23,920 --> 00:26:26,520 Speaker 1: trading cheap to other T bills because people are worried 459 00:26:26,560 --> 00:26:29,520 Speaker 1: about you know, the missing a payment, even if it's 460 00:26:29,520 --> 00:26:32,080 Speaker 1: for a day, it's just really annoying um to have 461 00:26:32,160 --> 00:26:35,040 Speaker 1: to deal with that operational challenge. Hira, thank you so 462 00:26:35,119 --> 00:26:37,119 Speaker 1: much for joining us ire A Jersey as interest rate 463 00:26:37,160 --> 00:26:41,080 Speaker 1: strategist for Bloomberg Intelligence. Uh and I'm sure we'll be 464 00:26:41,080 --> 00:26:43,800 Speaker 1: speaking with you in the upcoming days and weeks. I 465 00:26:43,840 --> 00:26:46,600 Speaker 1: am very interested to see whether the Federal Reserve does 466 00:26:46,760 --> 00:26:50,040 Speaker 1: mention anything about this runoff program. If they don't, I 467 00:26:50,080 --> 00:26:53,359 Speaker 1: am sure there will be questions about how serious they 468 00:26:53,400 --> 00:26:57,480 Speaker 1: are about starting this runoff later this year, certainly in 469 00:26:57,480 --> 00:27:03,639 Speaker 1: the earlier part September or October should be interesting. Thanks 470 00:27:03,640 --> 00:27:06,280 Speaker 1: for listening to the Bloomberg P and L podcast. You 471 00:27:06,320 --> 00:27:10,080 Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 472 00:27:10,200 --> 00:27:13,680 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 473 00:27:13,720 --> 00:27:17,720 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 474 00:27:17,840 --> 00:27:20,439 Speaker 1: It's one before the podcast. You can always catch us 475 00:27:20,480 --> 00:27:22,040 Speaker 1: worldwide on Bloomberg Radio.