WEBVTT - Bloomberg Surveillance TV: September 3, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.920 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.080 Terminal and the Bloomberg Business app. So here's the latest. 0:00:37.080 --> 0:00:39.520 Investors are waiting a slew of jobs data this week 0:00:39.560 --> 0:00:42.120 that could determine the fence path forward. Neil Data of 0:00:42.159 --> 0:00:44.880 Renmeg has been saying the fedest late on cunning rates, 0:00:45.000 --> 0:00:48.440 and he's worried about the labor market. He joins us. Now, Neil, 0:00:48.479 --> 0:00:50.199 welcome to it. Back to the program, buddy. I want 0:00:50.200 --> 0:00:52.000 to start with Friday and ask a question I've already 0:00:52.000 --> 0:00:54.200 asked this morning, So I'll ask you twice. How bad 0:00:54.240 --> 0:00:56.160 does that number need to be on Friday to open 0:00:56.160 --> 0:00:57.880 the door for you to make it your base case. 0:00:58.120 --> 0:00:58.960 They're going fifty. 0:00:59.760 --> 0:01:02.640 Well the way the rest of the street is talking. 0:01:02.680 --> 0:01:05.800 It sounds like it needs to be pretty weak. But 0:01:06.160 --> 0:01:08.679 you know, I think that that's part of the problem, right, 0:01:08.800 --> 0:01:14.480 because you're almost talking yourself out of going fifty when 0:01:14.480 --> 0:01:18.400 the data up to this point are already consistent with fifty. 0:01:19.360 --> 0:01:21.880 So I think, you know, I thought the FED didn't 0:01:21.880 --> 0:01:24.920 want to be data point dependent, and that seems like 0:01:24.959 --> 0:01:26.039 what they're doing right here. 0:01:26.120 --> 0:01:28.600 So you know, I don't have a good sense. 0:01:28.680 --> 0:01:30.120 I mean, I think if you get another uptick in 0:01:30.120 --> 0:01:33.280 the unemployment rate, it's probably a lot. But you know, 0:01:33.319 --> 0:01:36.480 at the same time, you know, we tend to overweight 0:01:36.520 --> 0:01:37.800 the establishment. 0:01:37.280 --> 0:01:40.640 Survey to begin with anyway, so it's hard to know. 0:01:42.240 --> 0:01:43.520 You know, we'll see how it comes out. 0:01:44.200 --> 0:01:46.399 But I think even if the number does come in better, 0:01:46.480 --> 0:01:48.120 because you know, let's say there were some one off 0:01:48.160 --> 0:01:51.440 factors in the last month that kind of unwine, what's 0:01:51.480 --> 0:01:54.320 the overall slope of the data, we already know what 0:01:54.360 --> 0:01:56.720 that is. It's weaker, right, I mean, if you look 0:01:56.720 --> 0:01:59.880 at the Conference Boorts labor differential, which was released last week, 0:02:00.200 --> 0:02:04.440 consumer attitudes about the labor market are deteriorating full stop, 0:02:04.520 --> 0:02:08.200 and consumers tend to spot changes in their local economies 0:02:08.200 --> 0:02:10.360 before the data. They know when the pink slips are 0:02:10.360 --> 0:02:13.480 going out, they know when factories are hiring people, they 0:02:13.520 --> 0:02:15.760 know when they're help wanted signs in their neighborhoods. But 0:02:15.840 --> 0:02:18.079 the fact that consumers are telling you that the labor 0:02:18.120 --> 0:02:22.240 market situation is getting worse suggests that there's still probably 0:02:22.280 --> 0:02:25.120 a pipeline of weakness that's still in front of us 0:02:25.120 --> 0:02:26.760 with respect to the labor market. 0:02:26.919 --> 0:02:29.000 No, you mentioned the Establishment survey. I just wander this 0:02:29.040 --> 0:02:31.240 Friday for you and from the clients you speak to, 0:02:31.400 --> 0:02:33.040 are you more likely to put more weight on the 0:02:33.040 --> 0:02:35.640 household survey given the difficulties that we've been ha ac. 0:02:37.360 --> 0:02:39.080 Well, I think one of the benefits right now of 0:02:39.120 --> 0:02:42.840 the Household survey relative to the Establishment Survey is that 0:02:43.440 --> 0:02:47.840 you know it's about revisions. We just got a fairly 0:02:47.880 --> 0:02:51.280 significant down revision to the Establishment Survey up to March 0:02:51.320 --> 0:02:53.560 twenty twenty four. We sort of knew that was coming. 0:02:53.760 --> 0:02:56.080 But what does that tell you about whatever the peril 0:02:56.160 --> 0:03:00.359 number prints at in the coming week. Whatever the number is, 0:03:00.560 --> 0:03:04.799 it's probably going to be weaker in reality, even irrespective 0:03:04.840 --> 0:03:08.040 of whatever is published. The good thing about the household 0:03:08.040 --> 0:03:12.880 surveys that the ratios in the job surveyed aren't really revised, right. 0:03:12.960 --> 0:03:16.640 I mean, maybe there are changes to population estimates, but 0:03:16.720 --> 0:03:20.400 ultimately it's those ratios, the unemployment rate, prime age employment. 0:03:20.080 --> 0:03:21.560 Those ratios don't really change. 0:03:21.560 --> 0:03:23.240 So I think there's a signal in the fact that 0:03:23.280 --> 0:03:25.760 the unemployment rate has been going up for five of 0:03:25.800 --> 0:03:27.960 the last six months. It tells you that there's a 0:03:28.120 --> 0:03:29.560 slackening in the labor market. 0:03:30.240 --> 0:03:30.400 Yeah. 0:03:30.480 --> 0:03:33.840 I got to say, there's this question about whether we've 0:03:33.919 --> 0:03:37.240 overly gotten confident about the soft landing, And I look 0:03:37.320 --> 0:03:40.240 back at history, and there are only three soft landings 0:03:40.400 --> 0:03:43.280 where the FED is orchestrated a rate cut coming down 0:03:43.280 --> 0:03:46.600 from high rates, where you haven't seen a recession. That 0:03:46.680 --> 0:03:48.000 was not the case in two thousand and eight, two 0:03:48.000 --> 0:03:50.080 thousand and one, nineteen eighty nine, nineteen eighty one, nineteen 0:03:50.080 --> 0:03:52.960 eighty nineteen seventy, nineteen sixty, nineteen fifty seven, even though 0:03:52.960 --> 0:03:54.800 it looked like it was going to be a soft landing. 0:03:55.440 --> 0:03:58.280 How confident are you that this time the soft landing 0:03:58.320 --> 0:03:59.280 thing isn't a headfake? 0:04:01.600 --> 0:04:02.520 Well, I still think. 0:04:02.680 --> 0:04:04.560 I mean, I think part of what's happened in markets 0:04:04.640 --> 0:04:07.080 is that we went from pricing in no risk of 0:04:07.680 --> 0:04:10.560 recession to some risk or recession, and it happened very quickly, 0:04:10.600 --> 0:04:12.200 which is why we got that sort of hig up 0:04:12.200 --> 0:04:14.000 in markets, you know, maybe a month. 0:04:13.880 --> 0:04:14.360 Or so ago. 0:04:15.400 --> 0:04:18.120 I think I still think soft landing is the overall 0:04:18.240 --> 0:04:19.200 sort of base. 0:04:19.000 --> 0:04:22.120 Case, but I do think that the FED has a 0:04:22.200 --> 0:04:22.880 role to play. 0:04:22.960 --> 0:04:25.680 I mean, you know, when when I hear people saying that, well, 0:04:25.680 --> 0:04:27.800 maybe they should string out a bunch of twenty five 0:04:27.839 --> 0:04:32.440 basis point moves between now and the summer, I think 0:04:32.440 --> 0:04:34.920 that's kind of ridiculous. I mean, the fact that core 0:04:34.960 --> 0:04:40.440 inflation is running below two percent. Frankly, if you look 0:04:40.480 --> 0:04:43.640 at it since last summer, we've been below two percent 0:04:43.800 --> 0:04:48.360 annualized on a monthly basis most of the time, believe 0:04:48.360 --> 0:04:48.680 it or not. 0:04:49.800 --> 0:04:52.440 To me, that suggests that they're already too tight. 0:04:52.960 --> 0:04:56.839 So going fifty on the first go is not a 0:04:56.880 --> 0:05:00.800 particularly big risk because we you know that they're way 0:05:00.800 --> 0:05:03.080 above neutral, and if you string out a bunch of 0:05:03.120 --> 0:05:07.560 twenty fives, getting back to neutral will take a long time, okay, 0:05:07.680 --> 0:05:10.400 And that puts the economy at risk in the process 0:05:10.440 --> 0:05:12.560 because it'd be mean it would mean that you'd be 0:05:12.640 --> 0:05:14.800 running a restrictive policy stance. 0:05:16.320 --> 0:05:17.320 In the interim period. 0:05:17.480 --> 0:05:19.560 Just quickly here, Neil, does this mean that if the 0:05:19.560 --> 0:05:22.160 FED were to cut fifty basis points and every analyst 0:05:22.200 --> 0:05:24.920 that I've read says that probably risk assets would sell 0:05:24.960 --> 0:05:27.520 off immediately on the knee jerk reaction of a fifty 0:05:27.520 --> 0:05:30.400 basis point rate cut, You'd be saying this is the time. 0:05:30.240 --> 0:05:34.120 To go buy, absolutely, because it tells you the Fed's 0:05:34.120 --> 0:05:35.680 trying to get in front of the eight ball. I mean, 0:05:35.920 --> 0:05:38.400 there's nothing about the economy that the FED knows that 0:05:38.400 --> 0:05:39.200 the rest of us don't. 0:05:39.200 --> 0:05:42.120 They don't have an edge like that significantly. 0:05:42.560 --> 0:05:45.960 This is more about them coming to recognize that's something 0:05:46.000 --> 0:05:48.360 the rest of us already do, namely that the unemployment 0:05:48.440 --> 0:05:50.160 rate's gone up and that inflation slow. 0:05:52.000 --> 0:05:55.160 No dutsa making it easy, nod'sa of remmac Noil, It's 0:05:55.200 --> 0:05:57.719 never that easy. But we appreciate your take, Sat, Thank 0:05:57.760 --> 0:05:59.160 you very much. This is complex stuff. 0:05:59.200 --> 0:05:59.760 It's difficult. 0:06:09.760 --> 0:06:14.520 It is vital for our nation to maintain strong American 0:06:14.600 --> 0:06:18.160 steel companies, and I couldn't agree more with President Biden. 0:06:18.560 --> 0:06:26.240 US steel should remain American owned, an American operators, and 0:06:26.279 --> 0:06:29.880 I will always have the back of America steel workers. 0:06:30.600 --> 0:06:33.240 So here's the latest Kamala Harris alone with Joe Biden 0:06:33.320 --> 0:06:36.600 and her opponent Donald Trump in opposing the proposed takeover 0:06:36.640 --> 0:06:40.200 of US Steel by Japan's Nippon Steel. Harris catering to 0:06:40.240 --> 0:06:42.560 the union vote over Labor Day weekend, just one week 0:06:42.640 --> 0:06:45.840 shy of the first presidential debate set to air on ABC. 0:06:46.320 --> 0:06:49.040 Henrota Trees, a vader partner's writing, Harris is ahead and 0:06:49.080 --> 0:06:52.120 the polling nationally, but the electoral college remains extremely tight 0:06:52.200 --> 0:06:55.560 and continues to favor Trump and the Republican Party in 0:06:55.600 --> 0:06:59.120 our view, Henrotta joined us now for more. Henrietta, welcome back. 0:06:59.160 --> 0:07:00.760 We'll turn to the polling in just a moment. I 0:07:00.760 --> 0:07:02.680 want to start with the Steale issue. First of all, 0:07:02.720 --> 0:07:05.760 on this issue, is there any daylight whatsoever between the 0:07:05.800 --> 0:07:06.600 two candidates. 0:07:07.640 --> 0:07:10.360 There's no daylight between the two candidates, and frankly, there 0:07:10.360 --> 0:07:13.840 really can't be. I have some really fantastic clients who 0:07:13.880 --> 0:07:16.640 were asking this question a year ago, where the presidential 0:07:16.680 --> 0:07:19.440 good candidate is going to be on the yah X 0:07:19.520 --> 0:07:22.920 versus Nippon Steel deal, And the answer is, effectively, they're 0:07:22.960 --> 0:07:25.920 going to stay. They're against it for the duration of 0:07:25.920 --> 0:07:28.120 this election cycle. If anything, you should expect for none 0:07:28.160 --> 0:07:29.520 of this to be concluded. 0:07:29.160 --> 0:07:30.640 Until after the election. 0:07:30.760 --> 0:07:33.280 There's no reason for a rush, and there's no other 0:07:33.360 --> 0:07:37.040 alternative for any presidential candidate. The alternative of saying yes, 0:07:37.080 --> 0:07:39.000 I think demand should come in and buy one of 0:07:39.000 --> 0:07:43.680 the most American brand companies in the Rust Belt before 0:07:43.720 --> 0:07:46.640 an election cycle is sort of unthinkable. So this should 0:07:46.640 --> 0:07:50.120 have been well understood and predicted many months ago, if 0:07:50.120 --> 0:07:50.720 not a year ago. 0:07:50.920 --> 0:07:54.440 Henrietta though this time next year or January twenty first, 0:07:54.480 --> 0:07:58.160 after the inauguration. If one of these individuals is becomes 0:07:58.160 --> 0:07:59.120 inaugurative and then. 0:07:59.120 --> 0:08:01.320 Bax tracks, how is that. 0:08:01.320 --> 0:08:02.560 Going to affect them in the future. 0:08:03.560 --> 0:08:05.040 Well, I think what you need to think about is 0:08:05.040 --> 0:08:07.440 that the regulatory agencies have the option to go in 0:08:07.480 --> 0:08:10.280 and study the issue, whether it's DJ or some of 0:08:10.320 --> 0:08:14.080 the other administration agencies, go in and say, look, what 0:08:14.120 --> 0:08:15.800 are the cost benefits here, and then either give it 0:08:15.800 --> 0:08:18.360 it's blessing or not. During that interim, they're going to 0:08:18.440 --> 0:08:20.360 have to go a long way towards given the unions 0:08:20.360 --> 0:08:22.400 what they need to the point where they get unions 0:08:22.440 --> 0:08:22.800 on board. 0:08:22.800 --> 0:08:24.320 That's the only way that this progresses. 0:08:24.360 --> 0:08:26.560 So that burden and the onus is really on the 0:08:26.560 --> 0:08:28.360 company on the pond Steel to make sure that the 0:08:28.480 --> 0:08:31.160 unions are behind them, and once that occurs, then you 0:08:31.280 --> 0:08:33.920 have a situation where the deal can go proceed. 0:08:34.080 --> 0:08:35.760 But it's never going to be you have my blessing. 0:08:35.760 --> 0:08:36.559 It's either going to be there. 0:08:36.559 --> 0:08:40.560 Haven't had enough issues to derail this or proceed in 0:08:40.840 --> 0:08:43.079 the free market society that we live in, Henriette. 0:08:43.120 --> 0:08:46.439 In Pennsylvania, Kamala Harris said, let's not pay too much 0:08:46.440 --> 0:08:49.679 attention to those polls. You were one individual that thinks 0:08:49.679 --> 0:08:51.720 Trump has the edge when it comes to the swing 0:08:51.800 --> 0:08:55.200 states in Pennsylvania specifically, Why do you think he has 0:08:55.240 --> 0:08:57.400 that edge even though she is doing the work there 0:08:57.400 --> 0:08:59.400 and going to places like Beaver County. 0:09:00.320 --> 0:09:03.920 Pennsylvania has slowly become more and more of Republican leaning, 0:09:04.000 --> 0:09:07.040 And a big part of my bias towards Biden in 0:09:07.200 --> 0:09:10.079 that state early in the year was mostly because he's 0:09:10.120 --> 0:09:10.840 scranted Joe. 0:09:10.880 --> 0:09:12.680 He was, you know, raised in the state, and I 0:09:12.679 --> 0:09:13.880 think that carries a lot of weight. 0:09:14.160 --> 0:09:16.840 Kama Harris is deploying Joe Biden in that area, and 0:09:16.880 --> 0:09:19.559 I think Tim Wallace goes a long way towards speaking 0:09:19.600 --> 0:09:20.520 to that demographic. 0:09:20.600 --> 0:09:21.559 But it's an. 0:09:21.480 --> 0:09:23.840 Issue where we see the unions play out with the 0:09:23.840 --> 0:09:26.800 top of the union structure, for example, has strong support 0:09:26.840 --> 0:09:29.640 for Kamala Harris as the Democratic candidate who has you know, 0:09:29.760 --> 0:09:32.840 minimum wage issues in mind and is fighting for unions. 0:09:33.080 --> 0:09:35.560 Joe Biden famously went on the picket line. Kamala Harris 0:09:35.600 --> 0:09:36.560 has been on the picket line. 0:09:36.600 --> 0:09:39.480 But then you have the members themselves of you know, 0:09:39.559 --> 0:09:42.320 the million persons strong Teamsters union, for example, who are 0:09:42.400 --> 0:09:45.480 very conflicted and they personally support Donald Trump and his 0:09:45.559 --> 0:09:49.280 brand of politics. So I think it's a harsh disparity 0:09:49.320 --> 0:09:51.760 between people at the top of the unions and then 0:09:51.760 --> 0:09:54.240 their rank and file members who may prefer about a 0:09:54.320 --> 0:09:57.520 different direction. And it's slowly been trending more and more red, 0:09:58.000 --> 0:10:01.640 getting closer to Ohio, which consistently has voted for Trump 0:10:01.760 --> 0:10:04.360 plus eight plus nine and is now plus twelve in 0:10:04.400 --> 0:10:05.959 that state, which is just right next. 0:10:05.760 --> 0:10:09.000 Door trending read especially in western Pennsylvania. But it has 0:10:09.040 --> 0:10:12.920 a very popular Democratic governor. Does that not favor Harris. 0:10:13.840 --> 0:10:16.040 It does have a very popular governor and that's great. 0:10:16.040 --> 0:10:18.920 And I think Shapiro has been an exemplary speaker on 0:10:18.960 --> 0:10:22.000 the trail. His speech at the DNC was notable in 0:10:22.040 --> 0:10:23.360 terms of getting support. 0:10:23.120 --> 0:10:25.160 But you really have to just keep that trajectory open. 0:10:25.160 --> 0:10:27.000 What the comp the Hiris campaign is trying to do 0:10:27.120 --> 0:10:29.920 right now is turnout youth voters. We saw a one 0:10:29.960 --> 0:10:33.920 hundred and seventy eight percent voter registration uptick amongst Black 0:10:33.960 --> 0:10:37.680 women in America in the last three weeks or five 0:10:37.720 --> 0:10:40.760 weeks since Kamala Harris has been the campaign front runner. 0:10:41.040 --> 0:10:43.320 We saw a one hundred and forty eight percent increase 0:10:43.320 --> 0:10:47.880 in Latino females registering to vote in. 0:10:47.480 --> 0:10:48.480 The United States. 0:10:48.600 --> 0:10:51.360 So it's all about voter turnout in these high urban 0:10:51.400 --> 0:10:54.240 density areas where Kamala Harris is going to try to 0:10:54.280 --> 0:10:55.720 run up the numbers and get it on par with 0:10:55.760 --> 0:10:58.880 two thousand and eight with Barack Obama, who won the 0:10:58.920 --> 0:11:02.439 state overwhelmingly. So that the trajectory that they're trying to pursue, 0:11:02.440 --> 0:11:04.480 and you're not going to see that translated to the polls. 0:11:04.480 --> 0:11:05.640 For reference, all. 0:11:05.520 --> 0:11:08.079 These new voter registrations, those are not going to be 0:11:08.120 --> 0:11:10.360 taken up in the polls because polsters are not reaching 0:11:10.360 --> 0:11:14.079 those new voters. So they also have a higher propensity 0:11:14.120 --> 0:11:15.400 to vote than somebody who's. 0:11:15.200 --> 0:11:18.000 Been on the roles for years or decades. 0:11:18.240 --> 0:11:21.400 So I think that there could be a sleeper voter 0:11:21.600 --> 0:11:25.160 in Pennsylvania and other states nationwide, which is these new registrants. 0:11:24.640 --> 0:11:26.400 That Kamala Harris has turned on in the last couple 0:11:26.440 --> 0:11:26.800 of weeks. 0:11:26.920 --> 0:11:29.240 When you look at the polls, Henriette, what's the main 0:11:29.280 --> 0:11:31.880 campaign issue of this campaign cycle. 0:11:33.040 --> 0:11:36.000 Right now? It's immigration and abortion. Those are the two 0:11:36.160 --> 0:11:36.800 top issues. 0:11:36.840 --> 0:11:38.600 When you look at voters and they say it's the 0:11:38.640 --> 0:11:42.200 economy or inflation, those are no longer reliable data sets 0:11:42.240 --> 0:11:44.760 because they skew partisan one way or the other. If 0:11:44.760 --> 0:11:46.720 you like Donald Trump, you think the economy is trash 0:11:46.720 --> 0:11:47.840 and we're going to a recession. 0:11:48.000 --> 0:11:50.160 If you like Joe Biden or Kamala Harris, you think 0:11:50.160 --> 0:11:51.280 the economy is improving. 0:11:51.440 --> 0:11:54.320 You feel good about your own personal finances, you feel 0:11:54.320 --> 0:11:57.080 good about your state's personal finances, and you feel like 0:11:57.200 --> 0:11:58.880 the inflation issue is coming. 0:11:58.679 --> 0:12:00.680 Down, which it is at two point nine percent. 0:12:01.240 --> 0:12:03.480 I think that the Federal Reserve lowering interest rates in 0:12:03.520 --> 0:12:05.160 a couple of weeks is going to be really powerful 0:12:05.160 --> 0:12:07.360 for that message as well. But you keep having these 0:12:07.440 --> 0:12:11.239 upticks and fears about recession that keep being unproven and unnarrative, 0:12:11.800 --> 0:12:13.760 and that is something that needs to resonate with the 0:12:13.800 --> 0:12:17.280 American voter, but they don't receive that information due to 0:12:17.320 --> 0:12:20.120 partisan leanings. As a result, the most reliable data that 0:12:20.120 --> 0:12:22.480 you can look at as an investor watching the polling 0:12:22.520 --> 0:12:24.120 is where do you stand on immigration and where do 0:12:24.120 --> 0:12:26.960 you stand on abortion? And that's really what's driving the 0:12:28.240 --> 0:12:31.400 gender divide, which is outrageous and so big this year. 0:12:32.000 --> 0:12:34.680 It really is becoming men versus women in this election cycle. 0:12:34.920 --> 0:12:38.439 So let's put abortion aside for one second. With immigration, 0:12:39.160 --> 0:12:42.199 what is the daylight between people who are for much 0:12:42.240 --> 0:12:46.520 more stringent types of rules and those who would like 0:12:46.559 --> 0:12:49.559 to see a more measured approach. I mean, how much 0:12:49.760 --> 0:12:53.880 is this really dividing between Republicans and Democrats? And how 0:12:53.960 --> 0:12:56.199 much does it really room to negotiate. 0:12:57.160 --> 0:12:59.679 You know, it's interesting, there's not really that much of 0:12:59.720 --> 0:13:03.360 a Democrats have come very far to the right in 0:13:03.400 --> 0:13:06.600 their latest bill that was rejected by Republicans in the 0:13:06.600 --> 0:13:08.920 early part of this year at the request of Donald 0:13:08.960 --> 0:13:10.800 Trump to say, you know, let's keep this issue front 0:13:10.800 --> 0:13:11.200 of mine. 0:13:11.400 --> 0:13:12.520 But Joe Biden has. 0:13:13.240 --> 0:13:15.920 Introduced and signed on the most extreme executive orders that 0:13:15.960 --> 0:13:18.840 have more than had a legal immigration since the beginning 0:13:18.880 --> 0:13:21.360 of this year, and we're now down to twenty twenty 0:13:21.440 --> 0:13:24.319 levels when he took office. So I think that the 0:13:24.360 --> 0:13:28.040 Democratic Party has gone far to the right on this issue. 0:13:28.360 --> 0:13:32.079 It's really a question of whether voters are prioritizing immigration 0:13:32.360 --> 0:13:35.200 or not. Everybody is pretty much in favor of increasing 0:13:35.280 --> 0:13:38.360 drones at the southern border, boots on the ground, expanding 0:13:38.400 --> 0:13:42.520 you know, judges in the area, having a more streamlined 0:13:42.520 --> 0:13:46.439 asylum process so we can process illegal immigrants more quickly, 0:13:46.559 --> 0:13:51.440 and certainly compelling Mexico and southern border country nations to 0:13:51.760 --> 0:13:55.480 improve economic situations in their regions so that they do 0:13:55.559 --> 0:13:58.160 not have this surge of immigration at the US Mexico border. 0:13:58.240 --> 0:14:00.920 So I think it's really about who talks about it 0:14:00.960 --> 0:14:03.040 in what kind of a way as opposed to what 0:14:03.120 --> 0:14:04.920 functionally do we want to see. 0:14:04.679 --> 0:14:09.000 Two months ago, Henritta, thank you, Henritta Trece of Vader Partners. 0:14:09.040 --> 0:14:21.680 The comdown to the US election continues. Let's take the 0:14:21.680 --> 0:14:23.920 opportunity to get you some morning calls. First up, ever, 0:14:24.000 --> 0:14:27.440 Core Issi of Granning Southwest to outperform with a thirty 0:14:27.440 --> 0:14:30.920 five dollars price target the amlyss citing new revenue initiatives 0:14:31.280 --> 0:14:33.840 said to be outline of the company's investor day of 0:14:33.960 --> 0:14:37.640 September twenty six. Your second call from Morgan Stanley, lowering 0:14:37.680 --> 0:14:40.240 his price target on Alphabet to one ninety from two 0:14:40.280 --> 0:14:43.840 to five, keeping an overweight rating the alyst weighing potential 0:14:43.880 --> 0:14:47.120 fallout after a judge rule of the company illegally monopolized 0:14:47.160 --> 0:14:49.920 the search market. We're down there by zero point six percent. 0:14:50.240 --> 0:14:53.200 And finally Wells Fargo down, grounding Boeing to underweight with 0:14:53.280 --> 0:14:55.760 a street low price target of one nineteen. The ambless 0:14:55.760 --> 0:14:58.520 seeing the company's free cash flow peaking by twenty twenty 0:14:58.600 --> 0:15:03.280 seven as aircraft development costs offset production growth. That's stark. 0:15:03.640 --> 0:15:06.520 That name is down by almost three point eight percent 0:15:07.160 --> 0:15:09.440 in early training. That's one to watch at the opening 0:15:09.520 --> 0:15:13.920 bout Turning to streaming DirecTV customers losing access to ABC 0:15:14.200 --> 0:15:17.960 and ESPN after the pay TV service and Disney failed 0:15:18.000 --> 0:15:20.960 to come to terms on a new contract. Matt Delgan 0:15:21.040 --> 0:15:23.720 of morning Star, who maintains a by rating on Disney, 0:15:23.720 --> 0:15:26.800 expecting the blackout to be resolved by the weekend, writing, 0:15:26.840 --> 0:15:29.440 Disney is in the stronger position as it can more 0:15:29.480 --> 0:15:33.440 easily withstand the loss of DirecTV than DirecTV could withstand. 0:15:33.480 --> 0:15:37.200 The family of Disney Networks. Matt joins us now for more. 0:15:37.360 --> 0:15:37.560 Matt. 0:15:37.640 --> 0:15:39.480 Not the first time we've seen this, and what we 0:15:39.520 --> 0:15:42.160 do see this is typically around this time of the year. 0:15:42.320 --> 0:15:46.480 What's different about it this time around, Well. 0:15:46.440 --> 0:15:49.040 There's not too much different in this one. As you said, 0:15:49.080 --> 0:15:52.520 we see this pretty frequently. It seems to follow the 0:15:52.520 --> 0:15:56.960 same playbook, and eventually these things get resolved. The thing 0:15:57.000 --> 0:16:02.440 that is becoming different is that with the cable bundle 0:16:02.520 --> 0:16:04.640 is going to change. So although this one might not 0:16:04.680 --> 0:16:06.560 look different than the past ones, and we expect it 0:16:06.600 --> 0:16:09.640 to get resolved in the same way, we think coming 0:16:09.720 --> 0:16:12.400 up pretty soon there is going to be a bigger 0:16:12.480 --> 0:16:16.080 change to the pay TV packages that these distributors, the 0:16:16.080 --> 0:16:19.200 cable companies, the directvs of the world get and are 0:16:19.240 --> 0:16:21.840 allowed to put out there. So although this might not 0:16:21.960 --> 0:16:24.080 be the one where we see the big change, we 0:16:24.120 --> 0:16:24.920 do think that's coming. 0:16:25.120 --> 0:16:27.120 So let's talk about that a little bit more. What 0:16:27.120 --> 0:16:29.320 would that change as we look like in practice in 0:16:29.480 --> 0:16:29.960 us to come. 0:16:31.480 --> 0:16:34.480 Well, right now, what direct TV is looking for is 0:16:34.520 --> 0:16:37.760 the ability to offer a skinnier bundle, basically not having 0:16:37.800 --> 0:16:40.680 to put in in this case, all of the Disney 0:16:40.960 --> 0:16:44.520 family of channels into their stream packages. So they can 0:16:44.560 --> 0:16:48.000 offer their customers and packages for a lower price. 0:16:48.480 --> 0:16:50.320 The network providers. 0:16:49.840 --> 0:16:53.680 Like Disney have been resistant to that because the business 0:16:53.680 --> 0:16:58.160 model for these companies has been get people forced essentially 0:16:58.160 --> 0:17:01.640 to subscribe to all of your networks, and that's their 0:17:01.640 --> 0:17:04.800 best way forward. The thing that's going to be different, however, 0:17:05.359 --> 0:17:10.719 is that with streaming, there are becoming other ways to 0:17:10.760 --> 0:17:14.600 see this content content other than through a PATV package, 0:17:14.720 --> 0:17:18.560 and that's going to actually next year become even more 0:17:18.600 --> 0:17:23.159 and probably the greatest extent once ESPN, the linear the 0:17:23.160 --> 0:17:26.080 flagship service the people watch on only TV right now 0:17:26.320 --> 0:17:30.280 becomes offered to consumers also, So that's the biggest thing 0:17:30.280 --> 0:17:31.920 again right now it's going out with DirecTV. 0:17:32.320 --> 0:17:33.960 The other thing that we think. 0:17:35.040 --> 0:17:37.000 Is a good way forward is what we've seen Charter 0:17:37.200 --> 0:17:38.960 do the cable company. 0:17:39.000 --> 0:17:41.320 They did it with Disney last year. They subsequently did 0:17:41.320 --> 0:17:41.640 it with. 0:17:41.520 --> 0:17:45.600 Paramount, where they're offering a similar type of bundle, but 0:17:46.160 --> 0:17:47.800 their subscribers get the stream. 0:17:47.560 --> 0:17:51.119 Packages of these companies along. 0:17:50.800 --> 0:17:54.560 With their cable subscriptions or their PATV subscriptions. So those 0:17:54.600 --> 0:17:56.760 are the couple of ways we think the changes will 0:17:56.760 --> 0:18:00.280 come and we expect them to happen, even if again 0:18:00.320 --> 0:18:03.159 not necessarily in this deal and not quickly. 0:18:03.760 --> 0:18:05.359 Can you zoom out and give us a sense of 0:18:05.400 --> 0:18:07.520 where this dispute, which is a couple of years running, 0:18:07.560 --> 0:18:11.439 now sits in this overall shift away from cable to 0:18:11.600 --> 0:18:14.879 what purportedly should be the new future, which is, we 0:18:14.960 --> 0:18:17.119 don't know what, maybe another bundle. It just looks a 0:18:17.160 --> 0:18:19.720 little bit different, but something that excludes the cable companies. 0:18:20.880 --> 0:18:23.119 Yeah, and that's the thing is, we do think that 0:18:23.200 --> 0:18:24.439 another bundle is the way to go. 0:18:24.640 --> 0:18:27.160 The question is who is it that offers it. 0:18:27.240 --> 0:18:32.160 Is it these traditional PATV providers or do the streaming 0:18:32.200 --> 0:18:35.440 companies do it themselves? As I mentioned with the Charter deal, 0:18:35.520 --> 0:18:38.800 we think that the cable companies and the PayTV distributors 0:18:38.800 --> 0:18:41.920 are the ones's best position to do it. But as 0:18:42.000 --> 0:18:45.639 far as why it's happening, that is the point is 0:18:46.080 --> 0:18:49.320 the companies that rely on PayTV, so the cable companies, 0:18:49.320 --> 0:18:55.800 the directvs, their businesses are shrinking drastically as we see 0:18:55.800 --> 0:18:57.840 more cord cutting and they need to be able to 0:18:57.880 --> 0:19:00.879 do something different. One of the reasons we think DirecTV 0:19:01.119 --> 0:19:04.119 isn't necessarily the company that's going to be able to 0:19:04.200 --> 0:19:08.120 cause the biggest change is because it has less leverage, 0:19:08.200 --> 0:19:10.960 in part because it relies on PayTV a lot more, 0:19:11.280 --> 0:19:13.400 and so it's in a bad position. Like the rest, 0:19:13.520 --> 0:19:16.640 It's subscriber base is coming down very much, and there's 0:19:16.680 --> 0:19:19.919 really nothing these companies can do about it because consumers 0:19:20.280 --> 0:19:22.840