1 00:00:01,440 --> 00:00:05,320 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 2 00:00:05,400 --> 00:00:08,719 Speaker 1: weekdays at ten am Eastern on applecar Playing androud Otto 3 00:00:08,840 --> 00:00:11,799 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 4 00:00:11,840 --> 00:00:15,520 Speaker 1: get your podcasts, or watch us live on YouTube. 5 00:00:16,600 --> 00:00:19,639 Speaker 2: Company news stories of the Day topical is Netflix. It 6 00:00:19,680 --> 00:00:23,240 Speaker 2: has acquired the exclusive rights to raw as well as 7 00:00:23,280 --> 00:00:27,080 Speaker 2: other programming from World Wrestling Entertainment Marketing. The streaming services 8 00:00:27,080 --> 00:00:30,200 Speaker 2: first big move into live events, the streaming giant big 9 00:00:30,200 --> 00:00:32,760 Speaker 2: Bucks Shares, agreed to pay five billion dollars over the 10 00:00:32,800 --> 00:00:35,640 Speaker 2: course of the ten year deal. Let's break this down 11 00:00:35,680 --> 00:00:38,080 Speaker 2: with Keitha Ranganath, and she covers all the media stuff 12 00:00:38,080 --> 00:00:40,960 Speaker 2: for Bloomberg Intelligence. She joins us via zoom from the 13 00:00:41,000 --> 00:00:46,120 Speaker 2: Bloomberg Intelligence headquarters in Lovely Princeton, New Jersey. Githa, this 14 00:00:46,159 --> 00:00:49,720 Speaker 2: is a big move for Netflix here because they've kind 15 00:00:49,720 --> 00:00:54,640 Speaker 2: of resisted getting into live events and sports and that 16 00:00:54,960 --> 00:00:56,840 Speaker 2: kind of stuff. So what gives here? 17 00:00:58,000 --> 00:01:00,959 Speaker 3: Yeah, what gives I think Paul is advertising. So they 18 00:01:01,000 --> 00:01:03,720 Speaker 3: resisted advertising to for the longest time till they were 19 00:01:03,800 --> 00:01:07,120 Speaker 3: kind of finally forced to bite the bullet and use 20 00:01:07,200 --> 00:01:10,959 Speaker 3: advertising to kind of reinvigorate subscriber growth. And so far, 21 00:01:11,480 --> 00:01:14,200 Speaker 3: I mean, it's worked, maybe not as much as they 22 00:01:14,200 --> 00:01:16,039 Speaker 3: had hoped it would, which is why they kind of 23 00:01:16,160 --> 00:01:19,400 Speaker 3: need to do. They need to invest in their business 24 00:01:19,440 --> 00:01:22,560 Speaker 3: in order to kind of really build that critical mass 25 00:01:22,600 --> 00:01:26,000 Speaker 3: of you know, ad supported users that you know, then 26 00:01:26,000 --> 00:01:27,920 Speaker 3: they can sell kind of advertising to. And so I 27 00:01:27,959 --> 00:01:31,640 Speaker 3: think this is really the real play here for Netflix 28 00:01:31,760 --> 00:01:35,399 Speaker 3: is to chase those advertising dollars. 29 00:01:35,760 --> 00:01:37,120 Speaker 4: How much could it actually help? 30 00:01:37,200 --> 00:01:39,039 Speaker 5: Like what kind numbers are we looking at, like X 31 00:01:39,040 --> 00:01:41,279 Speaker 5: amount of its revenue now that could be x amount 32 00:01:41,360 --> 00:01:42,640 Speaker 5: in five years. 33 00:01:43,640 --> 00:01:46,800 Speaker 3: Right now? The revenue is deminimus right. You know, they 34 00:01:46,920 --> 00:01:49,880 Speaker 3: launched the advertising tier in November of twenty twenty two, 35 00:01:50,000 --> 00:01:53,520 Speaker 3: kind of had a really really slow start, but the 36 00:01:53,520 --> 00:01:56,680 Speaker 3: most recent number that they reported was twenty three million 37 00:01:56,800 --> 00:02:00,440 Speaker 3: monthly active users. So we think that translates roughly to 38 00:02:00,480 --> 00:02:06,160 Speaker 3: about twelve million or thirteen million subscribers on the ad platform. Ultimately, 39 00:02:06,200 --> 00:02:08,960 Speaker 3: what we want to be able to see for scale. 40 00:02:09,639 --> 00:02:12,240 Speaker 3: You know, we know that Amazon Prime is actually launching 41 00:02:12,800 --> 00:02:14,320 Speaker 3: I think just in a few days they're kind of 42 00:02:14,360 --> 00:02:18,080 Speaker 3: launching video ads on on Prime Video, and the audience 43 00:02:18,200 --> 00:02:20,040 Speaker 3: right off the bat that they've kind of cited to 44 00:02:20,080 --> 00:02:23,200 Speaker 3: advertisers is one hundred and fifteen million. So what you 45 00:02:23,240 --> 00:02:25,440 Speaker 3: really kind of want to see is fifty million, one 46 00:02:25,480 --> 00:02:28,200 Speaker 3: hundred million. That is really kind of the captive audience, 47 00:02:28,240 --> 00:02:30,800 Speaker 3: the critical mass that we're looking for in terms of 48 00:02:30,840 --> 00:02:34,079 Speaker 3: how much can advertising potentially be. So right now, Netflix 49 00:02:34,120 --> 00:02:36,600 Speaker 3: is about a thirty five to forty billion dollar business. 50 00:02:36,919 --> 00:02:39,080 Speaker 3: I think if it takes off in a big way, 51 00:02:39,480 --> 00:02:42,800 Speaker 3: probably in the next two years, I wouldn't be surprised 52 00:02:42,800 --> 00:02:45,920 Speaker 3: if advertising made up about ten to fifteen percent of 53 00:02:45,960 --> 00:02:47,040 Speaker 3: Netflix's revenue. 54 00:02:47,360 --> 00:02:50,840 Speaker 2: Yeah, that's a lot, So Keitha, you know, is this 55 00:02:50,919 --> 00:02:53,919 Speaker 2: maybe the first step dipping the toe on the pool 56 00:02:53,960 --> 00:02:57,840 Speaker 2: of maybe becoming a bigger player in sports over all 57 00:02:57,960 --> 00:03:00,639 Speaker 2: that again, they've kind of resisted that, have been very 58 00:03:00,840 --> 00:03:03,079 Speaker 2: adamant about they don't have an interest in sports, maybe 59 00:03:03,080 --> 00:03:05,320 Speaker 2: because of the price tag, But is this maybe the 60 00:03:05,360 --> 00:03:07,239 Speaker 2: first opportunity here? 61 00:03:08,080 --> 00:03:11,320 Speaker 3: I definitely think so, you know, so, yes, they have 62 00:03:11,400 --> 00:03:13,520 Speaker 3: spoken about the price tag. Again, this is you know, 63 00:03:13,560 --> 00:03:16,840 Speaker 3: definitely a hefty price tag. It's five billion dollars over 64 00:03:16,919 --> 00:03:18,800 Speaker 3: a span of ten years, so they're spending five hundred 65 00:03:18,800 --> 00:03:21,600 Speaker 3: million a year. But again, they're not necessarily betting the farm, right, 66 00:03:21,639 --> 00:03:25,280 Speaker 3: because if we wanted to see Netflix do something transformative. 67 00:03:25,360 --> 00:03:27,160 Speaker 3: You know, it would have to be like maybe buying 68 00:03:27,160 --> 00:03:29,160 Speaker 3: a gaming studio, which would be upwards of you know, 69 00:03:29,240 --> 00:03:31,840 Speaker 3: fifteen twenty thirty billion dollars, or maybe just buying a 70 00:03:31,840 --> 00:03:34,640 Speaker 3: film studio again, which would be a huge price tag. 71 00:03:35,000 --> 00:03:37,840 Speaker 3: Of course, sports rights are also expensive. This kind of 72 00:03:37,880 --> 00:03:40,360 Speaker 3: I think allows them to dip their toes a little bit. 73 00:03:41,080 --> 00:03:43,360 Speaker 3: You know, it's still five hundred million. It's not some 74 00:03:43,440 --> 00:03:46,240 Speaker 3: crazy number like you know what what you know, some 75 00:03:46,280 --> 00:03:49,440 Speaker 3: of the other big media giants are paying for sports rights. 76 00:03:49,480 --> 00:03:51,320 Speaker 3: You know, you look at Disney, They're paying upwards of 77 00:03:51,360 --> 00:03:53,480 Speaker 3: ten billion dollars just for all of the sports rights 78 00:03:53,520 --> 00:03:55,720 Speaker 3: that they have. So I think relatively it's it's a 79 00:03:55,760 --> 00:03:58,000 Speaker 3: way for them to kind of experiment, test the water, 80 00:03:58,280 --> 00:04:00,360 Speaker 3: see how it plays out. And then remember we're on 81 00:04:00,400 --> 00:04:04,400 Speaker 3: that ten year deal with TKO. They do have an 82 00:04:04,440 --> 00:04:08,040 Speaker 3: option after five years to kind of walk away from 83 00:04:08,040 --> 00:04:10,480 Speaker 3: the deal if they're not happy with how it's playing 84 00:04:10,480 --> 00:04:10,960 Speaker 3: out for them. 85 00:04:11,480 --> 00:04:13,720 Speaker 5: But still, I mean for TKO, like it's kind of 86 00:04:13,720 --> 00:04:18,320 Speaker 5: double what they were getting with regular cable. So how 87 00:04:18,400 --> 00:04:22,200 Speaker 5: much is the content spend concern worth to the share 88 00:04:22,240 --> 00:04:23,120 Speaker 5: price of Netflix? 89 00:04:24,279 --> 00:04:26,800 Speaker 3: Oh, definitely, content spen I think is definitely going to 90 00:04:26,839 --> 00:04:29,839 Speaker 3: be one of those, you know, worrisome factors for Netflix. 91 00:04:29,839 --> 00:04:32,960 Speaker 3: But having said that, okay, so they are or they 92 00:04:32,960 --> 00:04:35,120 Speaker 3: have said that they're going to spend seventeen billion dollars 93 00:04:35,120 --> 00:04:37,120 Speaker 3: this year on content. Obviously it's probably going to go 94 00:04:37,200 --> 00:04:39,320 Speaker 3: up to about twenty billion dollars over the next couple 95 00:04:39,320 --> 00:04:39,800 Speaker 3: of years. 96 00:04:40,120 --> 00:04:40,800 Speaker 6: But then look at. 97 00:04:40,680 --> 00:04:43,320 Speaker 3: Their free cash flow profile. They're throwing out six and 98 00:04:43,320 --> 00:04:45,520 Speaker 3: a half billion dollars in free cash flow in twenty 99 00:04:45,600 --> 00:04:48,880 Speaker 3: twenty three. That probably goes through about ten billion dollars 100 00:04:48,880 --> 00:04:51,479 Speaker 3: in the next few years. So they do have a 101 00:04:51,520 --> 00:04:53,600 Speaker 3: lot of cash at their disposal. They did say that 102 00:04:53,600 --> 00:04:55,400 Speaker 3: they're going to buy back shares, but we also want 103 00:04:55,440 --> 00:04:57,360 Speaker 3: to see them invest in their business, and so this 104 00:04:57,400 --> 00:05:00,000 Speaker 3: is a great way that they're investing in their business. Ultimately, 105 00:05:00,000 --> 00:05:02,200 Speaker 3: I think to build up their advertising business, it's not 106 00:05:02,240 --> 00:05:04,000 Speaker 3: just content, They're going to have to invest in their 107 00:05:04,000 --> 00:05:06,520 Speaker 3: tech stack, in their ad tech stack a little bit more, 108 00:05:07,160 --> 00:05:10,159 Speaker 3: you know, to kind of really get more traction and 109 00:05:10,200 --> 00:05:10,839 Speaker 3: more scale. 110 00:05:11,320 --> 00:05:13,120 Speaker 2: All Right, Githa, let's step back a little bit on 111 00:05:13,160 --> 00:05:15,880 Speaker 2: the streaming business here. You just you know, threw out 112 00:05:15,880 --> 00:05:18,920 Speaker 2: some big, big free cashual numbers which I remember the 113 00:05:19,000 --> 00:05:21,919 Speaker 2: days had negative free cash flow and they were just 114 00:05:22,040 --> 00:05:24,479 Speaker 2: trying to get some get the positive free cash flow. 115 00:05:24,880 --> 00:05:27,320 Speaker 2: How about the other competitors out there? What's the feeling 116 00:05:27,400 --> 00:05:29,720 Speaker 2: we're you know, two three, four years into this whole 117 00:05:30,160 --> 00:05:30,960 Speaker 2: streaming business? 118 00:05:31,000 --> 00:05:31,160 Speaker 7: Here? 119 00:05:31,880 --> 00:05:33,520 Speaker 2: Is there room for other players here? How do you 120 00:05:33,560 --> 00:05:34,520 Speaker 2: think this might shake out? 121 00:05:36,040 --> 00:05:38,080 Speaker 3: Yeah, Paul it, I think, you know, the streaming wars 122 00:05:38,120 --> 00:05:40,200 Speaker 3: are definitely over at this point, and we know the 123 00:05:40,200 --> 00:05:44,960 Speaker 3: winner is Netflix. You know, they've just completely decimated the competition, 124 00:05:45,000 --> 00:05:47,320 Speaker 3: if you will, whether it's in terms of subscriber growth, 125 00:05:47,320 --> 00:05:50,280 Speaker 3: but more importantly, you know, subscriber growth doesn't really it's 126 00:05:50,320 --> 00:05:52,320 Speaker 3: it's important, but it's not. It's not the be all 127 00:05:52,360 --> 00:05:54,560 Speaker 3: and the end all. What you know, the street is 128 00:05:54,600 --> 00:05:57,520 Speaker 3: really focused now on is the financial side of things, 129 00:05:57,560 --> 00:06:00,360 Speaker 3: is the profitability metrics, and Netflix is kind of ssolutely 130 00:06:00,360 --> 00:06:02,039 Speaker 3: blown it out of the park, and so as we 131 00:06:02,120 --> 00:06:04,240 Speaker 3: kind of look at you know, we're really what we're 132 00:06:04,360 --> 00:06:06,479 Speaker 3: kind of trying to see is the margin profile. So 133 00:06:06,720 --> 00:06:09,400 Speaker 3: right now, if you look at Netflix's streaming business, it's 134 00:06:09,400 --> 00:06:12,479 Speaker 3: a twenty percent operating margin, but they have committed to 135 00:06:12,560 --> 00:06:16,200 Speaker 3: about three hundred basis points of average annual increase so 136 00:06:16,320 --> 00:06:19,120 Speaker 3: just push that out another three four years. Very soon 137 00:06:19,160 --> 00:06:22,400 Speaker 3: we could be seeing upwards of thirty percent operating margins. 138 00:06:22,680 --> 00:06:25,240 Speaker 3: Can any of the other players, like a Disney, like 139 00:06:25,279 --> 00:06:29,120 Speaker 3: a Warner Brothers, Discovery replicate that they did they did 140 00:06:29,160 --> 00:06:33,120 Speaker 3: have those margins in their cable TV business. Unfortunately, in 141 00:06:33,160 --> 00:06:35,239 Speaker 3: the streaming business, it's going to be a really, really 142 00:06:35,279 --> 00:06:37,560 Speaker 3: long haul. We do think that they could potentially maybe 143 00:06:37,640 --> 00:06:40,000 Speaker 3: get to you know, ten percent, fifteen percent, but it's 144 00:06:40,000 --> 00:06:42,400 Speaker 3: going to take them a very very long time, and 145 00:06:42,440 --> 00:06:44,760 Speaker 3: who knows how the whole landscape is going to shift 146 00:06:44,920 --> 00:06:45,520 Speaker 3: by that time. 147 00:06:45,640 --> 00:06:47,200 Speaker 4: Paul, how do you watch stuff? 148 00:06:48,520 --> 00:06:50,560 Speaker 2: Kind of? You know, the only stuff I watch really 149 00:06:50,640 --> 00:06:55,160 Speaker 2: is sports, okay, and then I will stream some stuff, you. 150 00:06:55,120 --> 00:06:57,279 Speaker 5: Know, But but will you do you still have traditional 151 00:06:57,279 --> 00:06:58,320 Speaker 5: cablemen to watch the sport? 152 00:06:58,440 --> 00:07:00,640 Speaker 2: Yes, for the broadband and for the sport words. 153 00:07:00,440 --> 00:07:02,760 Speaker 5: Okay, But but if you can get sports on streaming, 154 00:07:02,920 --> 00:07:03,760 Speaker 5: would you cut the cord? 155 00:07:03,920 --> 00:07:06,240 Speaker 2: Well, I need broadband access, oh sure, yeah, but you 156 00:07:06,240 --> 00:07:08,800 Speaker 2: can get that just that. Yeah, that's right, And that's 157 00:07:08,880 --> 00:07:11,760 Speaker 2: basically what would be And Geitha, the cord cutting is 158 00:07:11,760 --> 00:07:14,720 Speaker 2: going to Alex's question, where are we there in terms 159 00:07:14,760 --> 00:07:16,679 Speaker 2: of cord cutting it's bad. 160 00:07:16,800 --> 00:07:17,640 Speaker 7: It's really bad. 161 00:07:17,760 --> 00:07:21,080 Speaker 4: All it palls and talking the words that feels bad. 162 00:07:22,400 --> 00:07:25,600 Speaker 3: It's it's close to an eight to nine percent erosion. 163 00:07:25,640 --> 00:07:27,360 Speaker 3: And just to kind of give you some context here, 164 00:07:27,400 --> 00:07:29,040 Speaker 3: you know, back in the day, Paul and when you 165 00:07:29,080 --> 00:07:31,240 Speaker 3: were kind of covering the space very actively, it was 166 00:07:31,280 --> 00:07:34,720 Speaker 3: one hundred and four million PATV households. Right now we're 167 00:07:34,720 --> 00:07:37,960 Speaker 3: down to about seventy million. And the the you know, 168 00:07:38,000 --> 00:07:39,640 Speaker 3: and kind of the outlook is we're probably going to 169 00:07:39,720 --> 00:07:41,800 Speaker 3: go to fifty million in the next couple of years 170 00:07:42,280 --> 00:07:44,520 Speaker 3: and then who knows, who knows where that's where we're 171 00:07:44,560 --> 00:07:45,280 Speaker 3: headed after that. 172 00:07:45,280 --> 00:07:47,080 Speaker 2: That's a tough business, all right, Keitha, thank you so 173 00:07:47,160 --> 00:07:49,200 Speaker 2: much for joining us. Always feel a little bit smarter 174 00:07:49,280 --> 00:07:51,120 Speaker 2: after checking in with you. Githa rang Andath and she 175 00:07:51,200 --> 00:07:54,560 Speaker 2: covers all the TMT space for Bloomberg Intelligencies based in 176 00:07:54,600 --> 00:07:57,720 Speaker 2: our headquarters in Prince, New Jersey, joining us via zoom 177 00:07:57,760 --> 00:08:00,800 Speaker 2: and that is a tough, tough erosion to what was 178 00:08:00,880 --> 00:08:04,240 Speaker 2: a phenomenal business model when every household was paying it's 179 00:08:04,280 --> 00:08:07,400 Speaker 2: eighty or ninety dollars a month. Everybody in Hollywood was 180 00:08:07,400 --> 00:08:08,040 Speaker 2: making money. 181 00:08:09,800 --> 00:08:13,720 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 182 00:08:13,800 --> 00:08:17,320 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 183 00:08:17,320 --> 00:08:20,119 Speaker 1: Auto with the Bloomberg Business app. You can also listen 184 00:08:20,240 --> 00:08:23,320 Speaker 1: live on Amazon Alexa from our flagship New York station 185 00:08:23,680 --> 00:08:27,440 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 186 00:08:28,240 --> 00:08:30,080 Speaker 2: Last year, thanks to the rally at the end of 187 00:08:30,080 --> 00:08:33,600 Speaker 2: the year, fixed income folks actually had some positive total returns. 188 00:08:33,640 --> 00:08:33,840 Speaker 5: There. 189 00:08:33,920 --> 00:08:36,600 Speaker 2: Good year because twenty twenty two is just ugly here. 190 00:08:36,600 --> 00:08:38,960 Speaker 2: So it's been tough space in fix income. Let's got 191 00:08:38,960 --> 00:08:41,280 Speaker 2: the latest outlook here. We can do that with Natalie Trevithick, 192 00:08:41,679 --> 00:08:46,239 Speaker 2: head of investment grade credit strategy at Payden and Regal. So, Natalie, 193 00:08:46,320 --> 00:08:48,439 Speaker 2: you guys rallied. I'm going to say you guys being 194 00:08:48,440 --> 00:08:51,120 Speaker 2: a fix income folks kind of rallied there in November December, 195 00:08:51,240 --> 00:08:55,200 Speaker 2: got some positive returns. How are you approaching twenty twenty four? 196 00:08:56,200 --> 00:08:58,079 Speaker 8: Yeah, that was a sharp rally and maybe it went 197 00:08:58,120 --> 00:09:01,400 Speaker 8: a little bit too far, bringing some of twenty twenty 198 00:09:01,400 --> 00:09:05,199 Speaker 8: four returns. But despite the modestly negative returns year to date, 199 00:09:05,600 --> 00:09:09,440 Speaker 8: investor appetite for corporate bonds is insatiable. We've already had 200 00:09:09,480 --> 00:09:12,760 Speaker 8: over one one hundred and fifty billion of supply this year, 201 00:09:13,040 --> 00:09:15,680 Speaker 8: and most deals are over five times subscribed. So there's 202 00:09:15,760 --> 00:09:18,640 Speaker 8: just so much investor money trying to get invested in 203 00:09:18,720 --> 00:09:22,160 Speaker 8: corporate bonds at these higher yields, despite the small. 204 00:09:21,920 --> 00:09:24,120 Speaker 7: Rise in interest rates since the beginning of the year. 205 00:09:24,400 --> 00:09:26,320 Speaker 4: So what happens with like cuts? 206 00:09:27,800 --> 00:09:30,120 Speaker 8: Yeah, if that that cuts, that's just even better news 207 00:09:30,160 --> 00:09:32,439 Speaker 8: for corporate bonds since we think, you know, there may 208 00:09:32,440 --> 00:09:35,240 Speaker 8: be some potential widening and spreads, but that'd be offset 209 00:09:35,240 --> 00:09:37,520 Speaker 8: by the move lower and interest rates. And even though 210 00:09:37,520 --> 00:09:39,480 Speaker 8: the market's still pricing in a number of cuts this 211 00:09:39,559 --> 00:09:41,480 Speaker 8: year five to six, we think they may come a 212 00:09:41,520 --> 00:09:44,480 Speaker 8: little bit later than anticipated, maybe in the second half, 213 00:09:44,640 --> 00:09:46,560 Speaker 8: because the economy is still looking strong. 214 00:09:47,559 --> 00:09:50,880 Speaker 2: So, I mean, what's the market like? Are you just 215 00:09:51,000 --> 00:09:53,040 Speaker 2: like when the phone Mortgane stale their gold and sexs 216 00:09:53,120 --> 00:09:55,080 Speaker 2: or whatever calls you guys to buy a new issue. 217 00:09:55,080 --> 00:09:57,240 Speaker 2: Do you just buy it? Are people just buying these 218 00:09:57,240 --> 00:09:59,400 Speaker 2: things or do they saying, oh, no, this is the 219 00:09:59,400 --> 00:10:02,600 Speaker 2: maturity one, this is the sector I want, or are 220 00:10:02,600 --> 00:10:04,120 Speaker 2: they just kind of clamoring to get anything. 221 00:10:04,920 --> 00:10:07,640 Speaker 8: They're clamoring to get most things. There's been a ton 222 00:10:07,679 --> 00:10:10,000 Speaker 8: of bank issue when saying, you know, people were afraid 223 00:10:10,000 --> 00:10:12,280 Speaker 8: to touch banks for a while. Last year they rally 224 00:10:12,360 --> 00:10:14,160 Speaker 8: sharply and people can't get enough of them. 225 00:10:14,320 --> 00:10:15,719 Speaker 7: We've had some of the big banks for. 226 00:10:15,760 --> 00:10:18,880 Speaker 8: Price five billion dollar deals and there's twenty billion of 227 00:10:18,920 --> 00:10:21,160 Speaker 8: demand for them, so people are going after that. 228 00:10:21,200 --> 00:10:23,160 Speaker 7: But they also want duration, so we. 229 00:10:23,160 --> 00:10:25,720 Speaker 8: Haven't seen a lot of thirty year issue and whenever 230 00:10:25,720 --> 00:10:28,000 Speaker 8: there's a thirty year deal, people just want to lock 231 00:10:28,040 --> 00:10:30,760 Speaker 8: in these higher yields for longer, whereas issuers, you know, 232 00:10:30,800 --> 00:10:33,320 Speaker 8: they rather borrow on the front end and not have 233 00:10:33,440 --> 00:10:35,319 Speaker 8: these long term high interest costs. 234 00:10:35,360 --> 00:10:37,320 Speaker 2: So if I'm a banker, I'm telling my issuers we 235 00:10:37,360 --> 00:10:40,240 Speaker 2: can go super covenant light covey light, as we used 236 00:10:40,280 --> 00:10:43,280 Speaker 2: to say back in the day. What is that are you? Guys? 237 00:10:43,320 --> 00:10:47,560 Speaker 2: So are the buyers just so aggressive that they will 238 00:10:47,600 --> 00:10:49,400 Speaker 2: maybe give on some covenants and things like that. 239 00:10:50,200 --> 00:10:52,079 Speaker 7: Yeah, it's getting to be that way in the high 240 00:10:52,120 --> 00:10:52,600 Speaker 7: yield market. 241 00:10:52,640 --> 00:10:55,560 Speaker 8: We're seeing less covenants generally in investment grade corporate bonds. 242 00:10:55,559 --> 00:10:58,520 Speaker 8: We don't have many to begin less, so we're used 243 00:10:58,520 --> 00:11:02,120 Speaker 8: to playing that game. They are pushing spreads, you know, 244 00:11:02,200 --> 00:11:02,800 Speaker 8: to the brink. 245 00:11:03,320 --> 00:11:05,800 Speaker 5: Well, I have to be honest, guys, I'm normally risk 246 00:11:05,800 --> 00:11:09,960 Speaker 5: averse anyway, but this makes me nervous. You have covenants 247 00:11:10,000 --> 00:11:13,640 Speaker 5: sort of going by the wayside, massive issuance, still massive 248 00:11:13,679 --> 00:11:16,160 Speaker 5: demand from what you're saying, seems a little bit indiscriminate. 249 00:11:17,200 --> 00:11:18,839 Speaker 4: What's the risk potential here then? 250 00:11:20,440 --> 00:11:22,320 Speaker 8: Yeah, the risk would really be if we had a 251 00:11:22,360 --> 00:11:26,040 Speaker 8: downturn in the economy, then banks would underperform. They're very 252 00:11:26,080 --> 00:11:28,800 Speaker 8: much a beta for the market. But we you know, 253 00:11:28,840 --> 00:11:31,120 Speaker 8: we do expects some volatility. We think spreads have come 254 00:11:31,160 --> 00:11:33,760 Speaker 8: a long way. They ended last year thirty basis points tighter, 255 00:11:33,840 --> 00:11:37,400 Speaker 8: and they're tighter even this year despite those negative yields. 256 00:11:37,720 --> 00:11:39,840 Speaker 8: So we think there could be some near term volatility 257 00:11:39,840 --> 00:11:42,880 Speaker 8: and you see those negative returns over the short term, 258 00:11:43,120 --> 00:11:45,040 Speaker 8: but with the five and a quarter percent, you know, 259 00:11:45,160 --> 00:11:48,480 Speaker 8: average coupon on a new investment grade credit, we think 260 00:11:48,520 --> 00:11:50,360 Speaker 8: over the longer term you're going to clip that nice 261 00:11:50,440 --> 00:11:53,040 Speaker 8: coupon and maybe get a little bonus of the FED cut. 262 00:11:53,080 --> 00:11:55,520 Speaker 8: So we're looking at mid to high single digit returns 263 00:11:55,720 --> 00:11:57,280 Speaker 8: in investment grade corporate this year. 264 00:11:57,720 --> 00:11:58,000 Speaker 3: Wow. 265 00:11:58,240 --> 00:12:02,040 Speaker 2: So are there secters that you guys prefer these days 266 00:12:02,120 --> 00:12:02,960 Speaker 2: in the credit space. 267 00:12:03,720 --> 00:12:06,600 Speaker 8: Yeah, we've actually started to like the sector now that 268 00:12:07,160 --> 00:12:08,920 Speaker 8: interest rates are off the high. We think that has 269 00:12:09,000 --> 00:12:11,840 Speaker 8: room to perform, and there's still a strong labor market. 270 00:12:12,160 --> 00:12:14,120 Speaker 8: You know, we like some of the residential ruts, maybe 271 00:12:14,160 --> 00:12:17,480 Speaker 8: staying away from some of the office rates. We continue 272 00:12:17,520 --> 00:12:20,480 Speaker 8: to be selective in the energy sector. There's been some 273 00:12:20,559 --> 00:12:23,840 Speaker 8: attractive deals coming in that market, particularly within high yield, 274 00:12:23,960 --> 00:12:25,560 Speaker 8: which we find compelling. 275 00:12:25,640 --> 00:12:27,599 Speaker 7: And in banks, were being pretty selective. 276 00:12:28,280 --> 00:12:30,240 Speaker 8: We're looking for some of the banks which are coming 277 00:12:30,679 --> 00:12:32,640 Speaker 8: a little bit of a concession, but those have been 278 00:12:32,760 --> 00:12:37,400 Speaker 8: printing pretty aggressively now, so it's really deal specific there. 279 00:12:38,520 --> 00:12:38,960 Speaker 4: Natalie. 280 00:12:39,320 --> 00:12:41,400 Speaker 5: I'm also wondering when you mentioned that, like if we 281 00:12:41,440 --> 00:12:45,000 Speaker 5: see a downturn that that would provide some rough volatility 282 00:12:45,080 --> 00:12:49,080 Speaker 5: for the sector. What kind of downturn like softness versus 283 00:12:49,080 --> 00:12:51,439 Speaker 5: like a deeper session, Like what happens if we just 284 00:12:51,559 --> 00:12:54,000 Speaker 5: kind of have middling growth for example. 285 00:12:54,920 --> 00:12:57,880 Speaker 8: Yeah, we're expecting that soft landing and maybe some middling growth. 286 00:12:57,880 --> 00:13:00,840 Speaker 8: And that's almost a Goldilock scenario for corporate bonds since 287 00:13:00,840 --> 00:13:03,760 Speaker 8: there's no real reason for them to widen, and you 288 00:13:03,760 --> 00:13:06,680 Speaker 8: still have investors looking for that extra hundred basis points 289 00:13:06,679 --> 00:13:09,760 Speaker 8: by going into corporate bonds over just treasuries. So you 290 00:13:09,880 --> 00:13:11,880 Speaker 8: kind of hang out there and you get that coupon 291 00:13:11,920 --> 00:13:15,040 Speaker 8: clipping year. You know, obviously, if it's a harder recession 292 00:13:15,080 --> 00:13:18,120 Speaker 8: and it's unexpected, you could see spreads, you know, blowout 293 00:13:18,160 --> 00:13:19,000 Speaker 8: materially wider. 294 00:13:19,320 --> 00:13:21,880 Speaker 7: But what we've seen is investors tend to step in. 295 00:13:21,920 --> 00:13:25,280 Speaker 8: When we got that volatility last year after the banking crisis, 296 00:13:25,360 --> 00:13:27,480 Speaker 8: when spreads got to one sixty five, there's a strong 297 00:13:27,480 --> 00:13:29,960 Speaker 8: buyer base came back in and pulled spreads back in 298 00:13:30,000 --> 00:13:30,840 Speaker 8: as we recovered. 299 00:13:31,600 --> 00:13:34,920 Speaker 2: So when you talk to issuers here, are they raising 300 00:13:34,960 --> 00:13:39,600 Speaker 2: money because they can, because they have to, because boy, 301 00:13:39,679 --> 00:13:41,360 Speaker 2: they could have raised money a lot cheaper a couple 302 00:13:41,400 --> 00:13:44,640 Speaker 2: of years ago. And why are companies coming to the 303 00:13:44,640 --> 00:13:47,240 Speaker 2: market here given that rates relative to the last several 304 00:13:47,320 --> 00:13:48,720 Speaker 2: years are in fact higher. 305 00:13:49,840 --> 00:13:53,600 Speaker 8: Yeah, So corporate bonds tend to these companies tend to issue, 306 00:13:53,720 --> 00:13:55,720 Speaker 8: you know, once a year, some of them multiple times 307 00:13:55,760 --> 00:13:58,080 Speaker 8: a year, like the banks almost come every quarter. So 308 00:13:58,120 --> 00:14:00,680 Speaker 8: it just refinancing their existing debt. Is a lot of 309 00:14:00,679 --> 00:14:03,960 Speaker 8: it general corporate purposes. Some of it's for share buybacks. 310 00:14:04,160 --> 00:14:05,679 Speaker 8: But you kind of hit the nail on the head 311 00:14:05,720 --> 00:14:07,400 Speaker 8: is that they refinanced a law of their debt a 312 00:14:07,400 --> 00:14:10,760 Speaker 8: few years ago, particularly in thirty year bonds, So they 313 00:14:10,800 --> 00:14:12,800 Speaker 8: have a lot of duration out there already that they 314 00:14:12,840 --> 00:14:15,880 Speaker 8: have at very low coupon payments, so now they're looking 315 00:14:15,920 --> 00:14:18,400 Speaker 8: more at the front end and just continuing their normal 316 00:14:18,480 --> 00:14:21,760 Speaker 8: boring schedule. It's actually interesting that the average coupon has 317 00:14:21,760 --> 00:14:24,200 Speaker 8: only gone up about fifty basis points from the lows 318 00:14:24,200 --> 00:14:27,960 Speaker 8: that hit last year, so it's only about four and 319 00:14:27,960 --> 00:14:30,360 Speaker 8: a quarter percent now, so it's not like they're refunding 320 00:14:30,400 --> 00:14:32,000 Speaker 8: their entire debt stock each year. 321 00:14:32,720 --> 00:14:35,360 Speaker 5: So any kind of like massive wall of maturity that 322 00:14:35,400 --> 00:14:38,000 Speaker 5: we've been worried about over the last two years, that 323 00:14:38,080 --> 00:14:40,600 Speaker 5: will come do, and rates aren't going to be from 324 00:14:40,640 --> 00:14:41,600 Speaker 5: the Fed at zero. 325 00:14:42,080 --> 00:14:42,840 Speaker 4: That's not a thing. 326 00:14:43,880 --> 00:14:46,080 Speaker 8: That's really not a thing in investment grade bonds because 327 00:14:46,120 --> 00:14:48,800 Speaker 8: as I mentioned, companies have termed out their debt issuing 328 00:14:48,800 --> 00:14:52,120 Speaker 8: twenty thirty forty year bond, so there's no looming wall there, 329 00:14:52,400 --> 00:14:55,200 Speaker 8: and high yield companies have had great access to the market. 330 00:14:55,280 --> 00:14:57,440 Speaker 8: Supply has been a little bit light there, and there's 331 00:14:57,480 --> 00:15:01,280 Speaker 8: a lot of private debt financing market, so we really 332 00:15:01,320 --> 00:15:03,360 Speaker 8: don't see a big maturity wall looming in the next 333 00:15:03,400 --> 00:15:04,200 Speaker 8: few years. 334 00:15:04,440 --> 00:15:05,960 Speaker 2: Natalie, do you guys have paid in regal do you 335 00:15:06,000 --> 00:15:09,200 Speaker 2: stay domestic us or you look at international issuers. 336 00:15:09,960 --> 00:15:12,520 Speaker 8: We'll look at international issuers as well. We have a 337 00:15:12,560 --> 00:15:14,520 Speaker 8: great emerging markets team here. 338 00:15:14,720 --> 00:15:17,960 Speaker 2: And so what's what's kind of the view from for 339 00:15:18,080 --> 00:15:20,920 Speaker 2: you guys for emerging markets and just you know, paper 340 00:15:20,920 --> 00:15:21,720 Speaker 2: outside the US. 341 00:15:22,720 --> 00:15:25,720 Speaker 8: Yeah, we think there's definitely opportunities in emerging markets. I'm 342 00:15:25,720 --> 00:15:28,360 Speaker 8: going to defer to their team to give you the countries, 343 00:15:28,680 --> 00:15:30,720 Speaker 8: but we think it could be a solid growth year 344 00:15:31,480 --> 00:15:33,280 Speaker 8: for em all. 345 00:15:33,240 --> 00:15:35,400 Speaker 2: Right, Natalie, thanks so much for joining us. Really appreciate it. 346 00:15:35,520 --> 00:15:40,040 Speaker 2: Natalie Trevithick, head of investment grade Credit Strategies, Paiden en Regal. 347 00:15:40,120 --> 00:15:45,520 Speaker 1: Here, you're listening to the Bloomberg Intelligence Podcast. Catch us 348 00:15:45,560 --> 00:15:48,520 Speaker 1: live weekdays at ten am Eastern on Affo card playing 349 00:15:48,520 --> 00:15:51,560 Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand 350 00:15:51,640 --> 00:15:56,000 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 351 00:15:57,120 --> 00:16:00,560 Speaker 2: When we have Bobby Goshen here, we talk geopolitics least 352 00:16:00,600 --> 00:16:03,480 Speaker 2: what's going on there. Now he's got a column out 353 00:16:03,520 --> 00:16:06,440 Speaker 2: on Awards shows, so I got to read it and 354 00:16:06,440 --> 00:16:08,680 Speaker 2: then I go see, oh, it's Bobby Ghosh's Bloomberg opinion 355 00:16:08,760 --> 00:16:13,120 Speaker 2: column is covering culture. Previously he covered foreign affairs. That's 356 00:16:13,160 --> 00:16:16,280 Speaker 2: a pivot who makes that pivot from foreign affairs to 357 00:16:16,480 --> 00:16:18,440 Speaker 2: like culture to Barbie. 358 00:16:18,600 --> 00:16:21,200 Speaker 9: How do you feel about that, Bobby about Barbie? Not 359 00:16:21,360 --> 00:16:21,760 Speaker 9: very much. 360 00:16:22,160 --> 00:16:24,240 Speaker 10: You know, everyone's going to be talking about Barbie being 361 00:16:24,760 --> 00:16:27,320 Speaker 10: for a couple of categories. I'm going to be the 362 00:16:27,320 --> 00:16:29,760 Speaker 10: odd ball who says I'm glad to hear it. I 363 00:16:29,800 --> 00:16:33,520 Speaker 10: hated the movie, absolutely hated the movie, and I'm glad Sarah. 364 00:16:33,520 --> 00:16:35,080 Speaker 2: I'm just gonna step back and let these. 365 00:16:34,920 --> 00:16:35,600 Speaker 9: Two go at it. 366 00:16:35,880 --> 00:16:37,960 Speaker 4: Okay, Well, first of all, I guess it's not made 367 00:16:37,960 --> 00:16:41,160 Speaker 4: for you. But do you know women of my age 368 00:16:41,280 --> 00:16:43,440 Speaker 4: group that didn't like it or did like it? 369 00:16:43,480 --> 00:16:45,960 Speaker 10: My wife loves it. I know plenty of people, women 370 00:16:46,040 --> 00:16:46,920 Speaker 10: and men who loved it. 371 00:16:47,200 --> 00:16:47,840 Speaker 9: I just didn't like it. 372 00:16:47,880 --> 00:16:49,720 Speaker 10: I thought it was too loud and too tacky and 373 00:16:50,000 --> 00:16:52,840 Speaker 10: too exploited, and basically, you know, it was a marketing 374 00:16:52,880 --> 00:16:53,840 Speaker 10: campaign for a doll. 375 00:16:54,160 --> 00:16:57,080 Speaker 9: Oh yeah, I'm too cynical. 376 00:16:57,720 --> 00:17:01,920 Speaker 10: When you cover foreign affairs, you become deeply, deeply cynical. 377 00:17:02,000 --> 00:17:04,399 Speaker 5: And I don't disagree that. In essence, it's still an 378 00:17:04,440 --> 00:17:07,000 Speaker 5: ad for Mattel Barbie one hundred percent. But to me, 379 00:17:07,119 --> 00:17:09,480 Speaker 5: that didn't take away from the brilliance of the script 380 00:17:09,560 --> 00:17:11,920 Speaker 5: and the message that comes across for it. 381 00:17:12,119 --> 00:17:13,480 Speaker 4: I weep every. 382 00:17:13,200 --> 00:17:17,840 Speaker 10: Single time in the same Niad nominations for a net Benning. 383 00:17:18,320 --> 00:17:20,520 Speaker 10: That was a terrific movie. You want, you want a 384 00:17:20,560 --> 00:17:23,840 Speaker 10: message about women empowerment. If that's what you're looking for, 385 00:17:23,880 --> 00:17:25,040 Speaker 10: that that's a fantastic movie. 386 00:17:25,400 --> 00:17:27,040 Speaker 5: But what I can also do is just watch Barbie 387 00:17:27,040 --> 00:17:28,480 Speaker 5: that I bought it, so I'm just gonna buy it. 388 00:17:28,600 --> 00:17:29,840 Speaker 4: I mean, I bought it and I'll just watch that. 389 00:17:29,920 --> 00:17:32,160 Speaker 4: But anyway, this is not what your calm is about. 390 00:17:32,560 --> 00:17:35,719 Speaker 5: Your Colm says award shows like the Oscars are doomed. 391 00:17:35,920 --> 00:17:37,440 Speaker 4: I feel like I've heard this one before. 392 00:17:37,960 --> 00:17:41,000 Speaker 10: Yeah, so you know, all the award shows, Oscars, Emmy's 393 00:17:41,520 --> 00:17:46,760 Speaker 10: Golden Globes. The audiences have been dropping precipitously over the 394 00:17:46,800 --> 00:17:49,320 Speaker 10: past decade. It used to be that an Oscar night 395 00:17:49,359 --> 00:17:53,040 Speaker 10: would be forty billion viewers, and then it became about thirties. 396 00:17:53,080 --> 00:17:55,600 Speaker 10: Now it's down to you know, if they get ten twelve, 397 00:17:55,680 --> 00:17:57,919 Speaker 10: then they're lucky. Last year there was a little bit 398 00:17:57,920 --> 00:18:00,400 Speaker 10: of an uptick. I think a lot of people sort 399 00:18:00,400 --> 00:18:02,040 Speaker 10: of basically dialed in to see if there'd be a 400 00:18:02,040 --> 00:18:05,800 Speaker 10: repeater Will Smith's slap on Chris Rock. There wasn't a 401 00:18:05,840 --> 00:18:10,080 Speaker 10: slap this year. Ironically, the nominations are going to get 402 00:18:10,119 --> 00:18:11,920 Speaker 10: a lot of buzz for the reasons we've just been 403 00:18:11,960 --> 00:18:16,160 Speaker 10: talking about. Because Margot Robbie gets snubbed, because Greta Govi 404 00:18:16,320 --> 00:18:16,879 Speaker 10: gets snobbed. 405 00:18:16,880 --> 00:18:17,560 Speaker 9: There will be a lot of. 406 00:18:17,520 --> 00:18:20,960 Speaker 10: Buzz around the nominations, but for those exact same reasons. 407 00:18:21,359 --> 00:18:24,440 Speaker 10: I suspect few people will watch the actual oscars. It's 408 00:18:24,480 --> 00:18:29,920 Speaker 10: too long, it's you know, they're just too much sort 409 00:18:29,920 --> 00:18:33,240 Speaker 10: of pop and circumstances, very little actual content, and most 410 00:18:33,240 --> 00:18:37,080 Speaker 10: people will will consume the highlights on YouTube and on 411 00:18:37,359 --> 00:18:38,439 Speaker 10: TikTok on on. 412 00:18:38,800 --> 00:18:41,680 Speaker 2: That's not what the ABC Television network wants. They hear that, 413 00:18:41,720 --> 00:18:45,000 Speaker 2: I mean, because they I mean, that's historically these events, 414 00:18:45,000 --> 00:18:48,679 Speaker 2: which the CEO of former CEO of CBS would call 415 00:18:48,840 --> 00:18:53,240 Speaker 2: oh wow events, that's what brings in huge advertising dollars. 416 00:18:53,280 --> 00:18:57,000 Speaker 2: So well, that's just another emblematic of the overall issue 417 00:18:57,000 --> 00:18:58,600 Speaker 2: of TV cord cutting. 418 00:18:58,600 --> 00:19:01,040 Speaker 10: And so yeah, they'll sell out the ads. They sold 419 00:19:01,040 --> 00:19:02,880 Speaker 10: out the ads the last time as well last year 420 00:19:02,920 --> 00:19:05,480 Speaker 10: as well, but at a lower rate. So that's something 421 00:19:05,520 --> 00:19:08,040 Speaker 10: that they need to worry about. If they'll you know, 422 00:19:08,400 --> 00:19:11,800 Speaker 10: sufficient numbers of people will tune in that advertisers will 423 00:19:11,840 --> 00:19:16,560 Speaker 10: still remain interested in the event, but for progressively or 424 00:19:16,760 --> 00:19:18,320 Speaker 10: you know, smaller and smaller amounts of But. 425 00:19:18,440 --> 00:19:20,840 Speaker 2: Here goes this. This is the sales pitch that broadcast 426 00:19:20,880 --> 00:19:23,239 Speaker 2: and cable television have been making the Madison Avenue for 427 00:19:23,280 --> 00:19:25,960 Speaker 2: thirty years. Yeah, okay, here's the pitch. I'm gonna give 428 00:19:25,960 --> 00:19:28,239 Speaker 2: you no inferior product to what I gave you last year. 429 00:19:28,280 --> 00:19:29,280 Speaker 2: I'm gonna charge you more. 430 00:19:29,880 --> 00:19:31,120 Speaker 4: That's not going this way. 431 00:19:31,040 --> 00:19:32,800 Speaker 2: And it works every single year. 432 00:19:33,080 --> 00:19:35,480 Speaker 4: So they're charging more for the space right now. 433 00:19:35,280 --> 00:19:37,200 Speaker 2: Every year up until the last couple of years when 434 00:19:37,200 --> 00:19:40,080 Speaker 2: court cutting became so bad. But broadcasting cable television, which 435 00:19:40,080 --> 00:19:41,960 Speaker 2: is yeah, I know, my ratings are down because there's 436 00:19:41,960 --> 00:19:44,200 Speaker 2: five hundred more more channels, but still I have the 437 00:19:44,200 --> 00:19:46,959 Speaker 2: biggest audience at CBS. Yes, it's half of what it 438 00:19:47,000 --> 00:19:48,800 Speaker 2: was ten years ago, but it's still bigger than anything 439 00:19:48,800 --> 00:19:50,320 Speaker 2: else out there. Oh, by the way, for that, I'm 440 00:19:50,359 --> 00:19:53,560 Speaker 2: gonna charge another five six seventy percent. And that worked forever. 441 00:19:54,119 --> 00:19:55,080 Speaker 2: Now the issue is. 442 00:19:55,160 --> 00:19:56,919 Speaker 9: I don't think that can be sustainedful very well. 443 00:19:57,480 --> 00:19:59,600 Speaker 2: I don't know. Yeah, I think again, you know, unless 444 00:19:59,600 --> 00:20:01,240 Speaker 2: you're the ser if, you're the super Bowl you. 445 00:20:01,200 --> 00:20:03,399 Speaker 9: Can go is a different category. 446 00:20:04,640 --> 00:20:08,160 Speaker 10: But you know, sports, if you're a fan, you don't 447 00:20:08,160 --> 00:20:09,960 Speaker 10: want to just watch the highlights. You want to watch 448 00:20:10,000 --> 00:20:13,920 Speaker 10: the live performance. But with Oscars, with any award show, 449 00:20:14,280 --> 00:20:16,080 Speaker 10: more and more people are quite happy just to see 450 00:20:16,080 --> 00:20:18,439 Speaker 10: the highlights immediately after the award is announced. 451 00:20:18,440 --> 00:20:21,720 Speaker 9: They don't want to watch the whole awkward moments, the 452 00:20:21,760 --> 00:20:25,199 Speaker 9: awkward moments, the songs, the skits. You know, it seems 453 00:20:25,240 --> 00:20:25,960 Speaker 9: like too much. 454 00:20:25,760 --> 00:20:27,720 Speaker 2: Of them used to be that used to be must 455 00:20:27,880 --> 00:20:30,800 Speaker 2: watch it really, I know, John Tucker's The Whole World's 456 00:20:30,800 --> 00:20:31,399 Speaker 2: Coming to an End. 457 00:20:31,520 --> 00:20:33,800 Speaker 5: I would have oscar parties. Literally, we'd like do both 458 00:20:33,880 --> 00:20:35,879 Speaker 5: to put in money. We'd like people walk home with 459 00:20:35,920 --> 00:20:36,800 Speaker 5: a couple hundred bucks. 460 00:20:36,800 --> 00:20:38,960 Speaker 4: Like it was. It was like, I guess you can 461 00:20:39,200 --> 00:20:40,920 Speaker 4: like people in my home. 462 00:20:41,080 --> 00:20:43,480 Speaker 5: Sure, I mean, oh, like in the reality of the 463 00:20:43,720 --> 00:20:47,520 Speaker 5: maybe maybe. But but what I also wonder too is 464 00:20:47,960 --> 00:20:49,880 Speaker 5: do you think that these kind of live events will 465 00:20:49,920 --> 00:20:53,560 Speaker 5: go the way of sports in different ways of viewing 466 00:20:53,600 --> 00:20:56,720 Speaker 5: it like we saw ww and Netflix for example, Like 467 00:20:57,119 --> 00:20:59,680 Speaker 5: would Paramount be like, hey, let's just er it streaming 468 00:21:00,080 --> 00:21:01,720 Speaker 5: and save something like that thing? 469 00:21:02,119 --> 00:21:05,000 Speaker 10: Well, I think you probably if the audience continues to shrink. 470 00:21:05,000 --> 00:21:07,640 Speaker 10: They'll have to find new ways of making it relevant. 471 00:21:07,840 --> 00:21:11,919 Speaker 10: You know, in time, I think you'll see the duration 472 00:21:12,080 --> 00:21:13,720 Speaker 10: of its shrink. I don't think a three and a 473 00:21:13,760 --> 00:21:17,280 Speaker 10: half hour program, which invariably goes closer to four hours, 474 00:21:17,400 --> 00:21:19,080 Speaker 10: I don't think that's sustainable anymore. 475 00:21:19,440 --> 00:21:20,920 Speaker 9: This year, they're bringing it forward. 476 00:21:20,920 --> 00:21:23,919 Speaker 10: They're starting broadcast an hour early because they're conscious that 477 00:21:24,200 --> 00:21:27,720 Speaker 10: in that last hour past bedtime in the East Coast, 478 00:21:27,760 --> 00:21:29,280 Speaker 10: a lot of people the next day is a school day, 479 00:21:29,320 --> 00:21:31,280 Speaker 10: lots of people just switch off, and that's a real 480 00:21:31,320 --> 00:21:33,359 Speaker 10: problem for them. So they're bringing it forward to try 481 00:21:33,400 --> 00:21:35,600 Speaker 10: and see if they can sort of juice the audience 482 00:21:35,640 --> 00:21:38,760 Speaker 10: that way. I think you'll probably see certain amount of 483 00:21:38,760 --> 00:21:42,720 Speaker 10: stunt casting in the in the people who are hosts 484 00:21:42,720 --> 00:21:45,720 Speaker 10: to presenters. We've seen that happen in the in the Olympics, 485 00:21:45,720 --> 00:21:48,840 Speaker 10: for instance. You know, Olympic audiences have been down. NBC 486 00:21:48,920 --> 00:21:52,359 Speaker 10: has been bringing in people like Snoop Dogg Right to 487 00:21:52,440 --> 00:21:56,399 Speaker 10: try and get audiences interested. I say, okay, let's have 488 00:21:56,480 --> 00:21:59,960 Speaker 10: a let's have a switch and get some Olympic perfore 489 00:22:00,000 --> 00:22:01,240 Speaker 10: almost to present the oscars. 490 00:22:01,280 --> 00:22:03,119 Speaker 9: I'll watch them on BIOst. 491 00:22:03,920 --> 00:22:05,840 Speaker 2: ABC doesn't have the rights of the Olympics. 492 00:22:05,800 --> 00:22:08,280 Speaker 9: That's true. But you can bring an athlete in exactly well, 493 00:22:08,320 --> 00:22:08,720 Speaker 9: that's the good thing. 494 00:22:08,760 --> 00:22:12,479 Speaker 2: I mean bringing in athletes to just some stunt hosting. 495 00:22:12,920 --> 00:22:15,760 Speaker 10: Yeah, I think you see progressively more and more desperate 496 00:22:15,760 --> 00:22:17,800 Speaker 10: attempts to try and hold on to that audience. 497 00:22:17,800 --> 00:22:19,320 Speaker 9: But I think that ship is se. 498 00:22:20,320 --> 00:22:22,639 Speaker 4: What else you're working on right now? What else catches 499 00:22:22,640 --> 00:22:23,000 Speaker 4: your eye? 500 00:22:23,080 --> 00:22:27,359 Speaker 10: Well, culture is a very very sort of large beat, 501 00:22:27,440 --> 00:22:28,919 Speaker 10: and there's a big tent, and there are lots of 502 00:22:28,920 --> 00:22:31,600 Speaker 10: different aspects of it. I'm sort of taking a nibble 503 00:22:31,640 --> 00:22:36,480 Speaker 10: of the food some food stuff, no pun intended, you know, 504 00:22:36,520 --> 00:22:41,359 Speaker 10: I'm trying to wrap my head around the the evolution 505 00:22:41,600 --> 00:22:45,840 Speaker 10: of the entertainment business. Just this fact that it's it's 506 00:22:45,920 --> 00:22:51,440 Speaker 10: becoming more and more sort of desegregated, and you can't 507 00:22:51,480 --> 00:22:55,320 Speaker 10: rely on the old tent pole events and the old 508 00:22:55,359 --> 00:22:59,000 Speaker 10: ways of watching and consuming entertainment. People are watching entire 509 00:22:59,080 --> 00:23:03,439 Speaker 10: movies in segments on TikTok. That just, you know, my 510 00:23:03,480 --> 00:23:05,960 Speaker 10: head exploded the thought of that. Can you watch an 511 00:23:06,119 --> 00:23:08,840 Speaker 10: entire movie two minutes at a time? But people are 512 00:23:09,000 --> 00:23:10,840 Speaker 10: doing that. I've written by that in the past, and 513 00:23:10,840 --> 00:23:14,480 Speaker 10: that's very interesting to me, you know, just to sort 514 00:23:14,520 --> 00:23:17,639 Speaker 10: of come back to the oscars, that slap that we 515 00:23:17,640 --> 00:23:21,080 Speaker 10: were talking about. Yeah, within twenty four hours of that slap, 516 00:23:21,480 --> 00:23:24,800 Speaker 10: fifty million people had watched it on YouTube. It broke 517 00:23:25,160 --> 00:23:28,960 Speaker 10: the existing YouTube record fifteen million people. How many people 518 00:23:29,000 --> 00:23:31,840 Speaker 10: watch it on ABC twelve yep, million people. 519 00:23:32,200 --> 00:23:34,200 Speaker 11: So we've become a less cultured. 520 00:23:35,040 --> 00:23:36,960 Speaker 9: I don't think we're less culture, but certainly I want to. 521 00:23:37,560 --> 00:23:39,320 Speaker 11: I want you to come up with an index like 522 00:23:39,359 --> 00:23:40,959 Speaker 11: the DOW or the S and P five and the 523 00:23:40,960 --> 00:23:43,919 Speaker 11: Culture Index. Okay, I don't know what components will go 524 00:23:43,960 --> 00:23:46,800 Speaker 11: into it telling us, you know, are we less or 525 00:23:46,840 --> 00:23:47,440 Speaker 11: more culture? 526 00:23:47,520 --> 00:23:51,160 Speaker 10: I think our attention span has certainly been greatly reduced 527 00:23:51,200 --> 00:23:54,280 Speaker 10: because in part because there's just so much competing for 528 00:23:54,359 --> 00:24:01,720 Speaker 10: our attention, and Hollywood and the the theaters have been 529 00:24:01,760 --> 00:24:04,120 Speaker 10: taking for granted for years that we will go in 530 00:24:04,200 --> 00:24:08,440 Speaker 10: and watch a movie, you know, two and a half 531 00:24:08,440 --> 00:24:10,320 Speaker 10: hours at a stretch in the case of someone this 532 00:24:10,400 --> 00:24:12,919 Speaker 10: year's Big Three, three and a half hours at a stretch. 533 00:24:13,080 --> 00:24:15,360 Speaker 9: But I think fewer and fewer people going to do that. 534 00:24:15,359 --> 00:24:16,200 Speaker 9: That's just too. 535 00:24:16,119 --> 00:24:19,080 Speaker 2: Long, it is, I mean, it's it's That's what I 536 00:24:19,080 --> 00:24:20,480 Speaker 2: think the big issue is. And you talk to the 537 00:24:20,520 --> 00:24:24,119 Speaker 2: filmmakers in Hollywood, and they're frustrated like crazy because you know, 538 00:24:24,160 --> 00:24:28,119 Speaker 2: they feel like the art form of cinema is dying 539 00:24:29,119 --> 00:24:31,520 Speaker 2: and so, but then you get Martin Scorsese, I think 540 00:24:31,560 --> 00:24:34,080 Speaker 2: goes to the other extreme with his film. 541 00:24:34,320 --> 00:24:36,160 Speaker 9: That's because he's Martin school, that's right. 542 00:24:36,200 --> 00:24:39,200 Speaker 2: And I walked down to the theater saying, yeah, Martin 543 00:24:39,200 --> 00:24:42,119 Speaker 2: Scorsese took me for granted. He made a three and 544 00:24:41,880 --> 00:24:44,199 Speaker 2: a half hour movie when A Farewell could have been 545 00:24:44,240 --> 00:24:46,160 Speaker 2: a two hour movie. I loved the movie, I love 546 00:24:46,200 --> 00:24:48,359 Speaker 2: the actors, but I did not have a good experience. 547 00:24:48,400 --> 00:24:49,560 Speaker 2: If I saw him on a street right then. 548 00:24:49,520 --> 00:24:51,760 Speaker 5: I said, so did Christopher Nolan. Open Hummer was like 549 00:24:51,840 --> 00:24:53,760 Speaker 5: seventeen hours, I know, didn't have to. 550 00:24:53,760 --> 00:24:54,400 Speaker 9: Be really the thing. 551 00:24:54,440 --> 00:24:57,640 Speaker 10: Interesting thing though, here's here's the weird thing. We're We're 552 00:24:57,640 --> 00:25:00,480 Speaker 10: perfectly happy to spend an entire day binge watching the 553 00:25:00,560 --> 00:25:03,720 Speaker 10: TV series Y so you know, eight hours, nine hours 554 00:25:03,880 --> 00:25:07,040 Speaker 10: at a stretch, just breaking for lunch and bathroom breaks. 555 00:25:07,359 --> 00:25:08,680 Speaker 10: But we don't want to watch three and a half 556 00:25:08,720 --> 00:25:11,920 Speaker 10: hours in the cinema. So you know, Hollywood has to 557 00:25:11,920 --> 00:25:12,400 Speaker 10: wrap its. 558 00:25:12,320 --> 00:25:12,879 Speaker 9: Head around that. 559 00:25:12,920 --> 00:25:14,480 Speaker 4: So so, so why is that? Is that? What John 560 00:25:14,520 --> 00:25:16,040 Speaker 4: Tucker saying that we're all just getting dumber. 561 00:25:16,280 --> 00:25:17,840 Speaker 9: I think no, I don't think we're getting dumber. 562 00:25:18,000 --> 00:25:20,880 Speaker 10: I think some stories are better told in the long format. 563 00:25:21,119 --> 00:25:24,280 Speaker 10: This long this idea of binge watching is relatively new. 564 00:25:24,760 --> 00:25:28,520 Speaker 10: Is the opportunity didn't exist before, and I think a 565 00:25:28,560 --> 00:25:31,640 Speaker 10: lot of really intelligent directors are taking to that, recognizing 566 00:25:31,680 --> 00:25:34,239 Speaker 10: that that's how that's where we live now, that's why 567 00:25:34,320 --> 00:25:36,879 Speaker 10: there is appetite now. And if that means that we 568 00:25:36,920 --> 00:25:41,639 Speaker 10: make fewer movies and more interesting long running television shows, 569 00:25:41,640 --> 00:25:42,320 Speaker 10: then so be it. 570 00:25:42,720 --> 00:25:46,000 Speaker 2: I just think people can get on Instagram reels. You 571 00:25:46,040 --> 00:25:48,560 Speaker 2: look down, you look up, it's three hours later. 572 00:25:49,000 --> 00:25:49,240 Speaker 9: Yeah. 573 00:25:49,320 --> 00:25:54,120 Speaker 2: Well, I mean for somebody who I'm sensitive that stuff, 574 00:25:54,119 --> 00:25:56,240 Speaker 2: I don't want to get anywhere near that it happens. 575 00:25:56,280 --> 00:25:59,080 Speaker 2: And so imagine if you're sitting in Hollywood and you're like, 576 00:25:59,160 --> 00:26:01,359 Speaker 2: wait a minute, this is not had just got entertained 577 00:26:01,440 --> 00:26:05,439 Speaker 2: rapidly for three hours on user generated content and just garbage. 578 00:26:05,800 --> 00:26:07,879 Speaker 2: What happened to the two hundred million dollar movie I 579 00:26:07,960 --> 00:26:08,439 Speaker 2: just made? 580 00:26:08,680 --> 00:26:08,840 Speaker 1: You know? 581 00:26:09,040 --> 00:26:11,000 Speaker 2: That's kind of the big issue. Bobby Gosh, We're talking 582 00:26:11,040 --> 00:26:13,520 Speaker 2: more about about this with Bobby. 583 00:26:13,240 --> 00:26:15,000 Speaker 4: Gosh's Majeh on Tucker Cry I. 584 00:26:14,960 --> 00:26:17,399 Speaker 2: Know it's just but he's got he feels, he feels 585 00:26:17,440 --> 00:26:20,680 Speaker 2: passionately about this whole dumbing down of America, and there's 586 00:26:20,720 --> 00:26:22,919 Speaker 2: a lot of data to support it, quite frankly. So, 587 00:26:23,080 --> 00:26:25,360 Speaker 2: Bobby Ghest, thanks so much for joining us here. 588 00:26:26,960 --> 00:26:30,840 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 589 00:26:30,920 --> 00:26:34,440 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 590 00:26:34,480 --> 00:26:37,240 Speaker 1: Otto with the Bloomberg Business App. You can also listen 591 00:26:37,359 --> 00:26:40,440 Speaker 1: live on Amazon Alexa from our flagship New York station 592 00:26:40,840 --> 00:26:43,560 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 593 00:26:45,000 --> 00:26:48,080 Speaker 2: Let's chicken with brook suttle Wine. Oh she's very nice. 594 00:26:48,119 --> 00:26:50,320 Speaker 2: We like talking to loved and she's super duper smart 595 00:26:50,359 --> 00:26:53,239 Speaker 2: and she really covers all of these industrial companies well. 596 00:26:53,240 --> 00:26:54,600 Speaker 2: And there's a lot of stuff to talk about here. 597 00:26:54,640 --> 00:26:57,840 Speaker 2: So brook Sutherland, she writes for Bloomberg Opinion. She's based 598 00:26:57,960 --> 00:27:00,960 Speaker 2: up in Boston. April. I don't know where you want 599 00:27:00,960 --> 00:27:03,840 Speaker 2: to go here. We've got the you know, the three 600 00:27:04,000 --> 00:27:06,440 Speaker 2: M issue, we got the geed earnings. Let's start with 601 00:27:06,480 --> 00:27:09,600 Speaker 2: those companies, which are you know, right in your Ballywick 602 00:27:09,640 --> 00:27:12,160 Speaker 2: in terms of industrial America. What do we take away here? 603 00:27:13,160 --> 00:27:16,400 Speaker 6: Sure? I mean, I think there are two different stories here, 604 00:27:16,440 --> 00:27:20,000 Speaker 6: So I mean GE sits primarily the crown jewel is 605 00:27:20,000 --> 00:27:23,040 Speaker 6: the aerospace business, which will stand alone come April once 606 00:27:23,080 --> 00:27:25,560 Speaker 6: it feeds complete, sort of that final piece of its 607 00:27:25,600 --> 00:27:29,439 Speaker 6: slow moving break up. This is a very strong corner 608 00:27:29,480 --> 00:27:32,480 Speaker 6: of the industrial market, particularly for companies like GE that 609 00:27:32,560 --> 00:27:37,639 Speaker 6: provide maintenance services repairs. That business has been booming because 610 00:27:37,640 --> 00:27:40,800 Speaker 6: we've had so many issues with Boeing and Airbus in 611 00:27:40,880 --> 00:27:43,920 Speaker 6: terms of being able to deliver jets. That's kept airlines 612 00:27:43,960 --> 00:27:48,040 Speaker 6: flying older planes for longer. Older planes need more shop visits, 613 00:27:48,080 --> 00:27:50,840 Speaker 6: they need more repairs, and so companies like GE have 614 00:27:51,000 --> 00:27:53,680 Speaker 6: just been really growing like crazy there and that looks 615 00:27:53,720 --> 00:27:56,920 Speaker 6: set to continue given Boeing's continued challenges, and then also 616 00:27:57,040 --> 00:28:00,080 Speaker 6: the recall of the geared turbofan Jet Engines, which is 617 00:28:00,119 --> 00:28:03,639 Speaker 6: impacting a big portion of the Airbus A three twenty fleet. 618 00:28:04,480 --> 00:28:06,760 Speaker 6: And so that business is really doing quite well, and 619 00:28:06,800 --> 00:28:08,840 Speaker 6: I think GE is just kind of chuggling along here. 620 00:28:08,840 --> 00:28:11,960 Speaker 6: I think the stock reaction that you're seeing reflects the 621 00:28:11,960 --> 00:28:14,520 Speaker 6: fact that this company, the shrifes, have really just taken 622 00:28:14,560 --> 00:28:16,879 Speaker 6: off like a rocket ship over the past twelve months 623 00:28:17,359 --> 00:28:20,640 Speaker 6: on enthusiasm about this breakup. And maybe you know, investors 624 00:28:20,680 --> 00:28:22,760 Speaker 6: got a little bit ahead of themselves in terms of 625 00:28:22,800 --> 00:28:24,760 Speaker 6: the forecast. But this is also a company that has 626 00:28:24,800 --> 00:28:27,960 Speaker 6: a history of setting the bar at a beatable level 627 00:28:28,040 --> 00:28:31,760 Speaker 6: under Larry Colp at three M it's a completely different story. 628 00:28:31,800 --> 00:28:34,919 Speaker 6: They play more in sort of the shorter cycle industrial markets, 629 00:28:34,960 --> 00:28:37,720 Speaker 6: places with quick serales turnarounds, and so they've really been 630 00:28:38,160 --> 00:28:43,280 Speaker 6: hit hard by slowdowns in electronics and in China as well. 631 00:28:44,160 --> 00:28:47,240 Speaker 6: And you know that sort of general inventory de stocking 632 00:28:47,240 --> 00:28:50,480 Speaker 6: phenomenon that's haunted much of the industrial sector over the 633 00:28:50,520 --> 00:28:52,440 Speaker 6: course of the back half of twenty twenty three. And 634 00:28:52,480 --> 00:28:54,600 Speaker 6: I think you know, as you look at the forecast 635 00:28:54,680 --> 00:28:57,880 Speaker 6: that they gave for this year, there's nothing heroic here. 636 00:28:58,160 --> 00:29:02,240 Speaker 6: We're talking about a pretty pedestrian sales growth going forward. 637 00:29:02,280 --> 00:29:04,800 Speaker 6: And I think you know, there was some hope that 638 00:29:04,840 --> 00:29:07,080 Speaker 6: maybe we might start to see some green shoots, that 639 00:29:07,160 --> 00:29:09,480 Speaker 6: you know, this corner of the industrial world might start 640 00:29:09,480 --> 00:29:12,120 Speaker 6: to turn around. If for no other reason, then you know, 641 00:29:12,160 --> 00:29:15,920 Speaker 6: the ism has been a contraction terrorky for fourteen months now, 642 00:29:15,920 --> 00:29:18,640 Speaker 6: which is the longest streak since the dot com bubble burst, 643 00:29:19,040 --> 00:29:21,080 Speaker 6: and at some point that has to end. But it 644 00:29:21,080 --> 00:29:24,640 Speaker 6: doesn't appear that we've reached that point just yet. 645 00:29:24,680 --> 00:29:26,960 Speaker 5: Talking about three AM before and it's talking about, hey, 646 00:29:27,120 --> 00:29:29,000 Speaker 5: was this a whole point of a conglomerate that like, 647 00:29:29,040 --> 00:29:32,600 Speaker 5: you have all these different parts, you have industrial demand, 648 00:29:32,600 --> 00:29:34,560 Speaker 5: you have retail demand, you have China demand, you have 649 00:29:34,600 --> 00:29:36,880 Speaker 5: electronics demand, and then that's going to spare you all 650 00:29:36,880 --> 00:29:39,560 Speaker 5: the pain. But it seems like everything is not doing well. 651 00:29:40,400 --> 00:29:43,040 Speaker 6: It I mean it. Threem always makes the argument that 652 00:29:43,040 --> 00:29:46,480 Speaker 6: their businesses stick together because of material science. When you 653 00:29:46,480 --> 00:29:49,600 Speaker 6: think about they sell automotive adhesives and then also post its. 654 00:29:49,600 --> 00:29:51,240 Speaker 6: But at the end of the day, it's still still 655 00:29:51,240 --> 00:29:54,680 Speaker 6: inadhesive and there's a lot of overlaps there. But where 656 00:29:54,720 --> 00:29:57,200 Speaker 6: that is really make breaking down is that they were 657 00:29:57,200 --> 00:30:00,280 Speaker 6: supposed to have this you know, superhuman R and D 658 00:30:00,480 --> 00:30:03,080 Speaker 6: engine that would just keep churning out better and better 659 00:30:03,120 --> 00:30:05,800 Speaker 6: products and help push the growth of the company along, 660 00:30:05,880 --> 00:30:08,200 Speaker 6: and we're just not seeing that and the results. And 661 00:30:08,240 --> 00:30:11,920 Speaker 6: the company has been in restructuring mode for years now, 662 00:30:12,040 --> 00:30:14,080 Speaker 6: quite frankly, and then also dealing with you know, the 663 00:30:14,440 --> 00:30:19,520 Speaker 6: very serious legal liabilities related to pfast and military earplugs, 664 00:30:19,520 --> 00:30:22,160 Speaker 6: and so it's a company that is trying really hard 665 00:30:22,240 --> 00:30:25,320 Speaker 6: to reinvent itself and get back to focusing on actually 666 00:30:25,320 --> 00:30:29,120 Speaker 6: making industrial products. But that's just not the story right now. 667 00:30:29,760 --> 00:30:32,920 Speaker 2: So I mean, are we is he taking a victory 668 00:30:33,000 --> 00:30:36,080 Speaker 2: lap here because he's really done a good job. It 669 00:30:36,080 --> 00:30:37,560 Speaker 2: seems like just looking at this dog. 670 00:30:38,240 --> 00:30:41,160 Speaker 6: Yeah, I mean he should be. This was a certainly 671 00:30:41,520 --> 00:30:44,719 Speaker 6: not an easy task that he inherited. It was some 672 00:30:44,760 --> 00:30:47,600 Speaker 6: pretty dark days when he took over a CEO of GE, 673 00:30:48,160 --> 00:30:50,760 Speaker 6: and I think there are a lot of lessons here 674 00:30:51,280 --> 00:30:54,000 Speaker 6: from what he's been able to do as we think 675 00:30:54,040 --> 00:30:56,760 Speaker 6: about what Boeing needs to do to write the ship 676 00:30:56,840 --> 00:31:00,560 Speaker 6: over there. There was a lot of shared exails executives 677 00:31:00,560 --> 00:31:03,840 Speaker 6: between those two companies, and I think some similarities between 678 00:31:03,840 --> 00:31:06,400 Speaker 6: their two cultures. And GE has done sort of a 679 00:31:06,440 --> 00:31:10,200 Speaker 6: really top to bottom overhaul of the way that it 680 00:31:10,280 --> 00:31:13,520 Speaker 6: operates and that extends, you know, not just to the boardroom, 681 00:31:13,520 --> 00:31:15,640 Speaker 6: but to the factory floor. And Larry Colpe's been very 682 00:31:15,680 --> 00:31:19,520 Speaker 6: hands on and he's a big believer in lean manufacturing 683 00:31:19,560 --> 00:31:22,040 Speaker 6: and that is a philosophy that is rooted first and 684 00:31:22,080 --> 00:31:26,840 Speaker 6: foremost in safety and quality and on time deliveries, which 685 00:31:26,840 --> 00:31:30,080 Speaker 6: are things that you know, Boeing really could use some 686 00:31:30,240 --> 00:31:30,720 Speaker 6: lessons on. 687 00:31:31,040 --> 00:31:34,120 Speaker 5: Yeah, said so nicely, because it's so I'm looking through 688 00:31:34,200 --> 00:31:34,959 Speaker 5: the different areas. 689 00:31:34,960 --> 00:31:36,560 Speaker 4: We talk a lot about aerospace, for ge. 690 00:31:36,640 --> 00:31:38,560 Speaker 5: You know, I'm going to be interested in the energy part, 691 00:31:38,600 --> 00:31:40,280 Speaker 5: and that's what really the spin off is going to be. 692 00:31:40,600 --> 00:31:43,880 Speaker 5: I have to say, though, like not terrible. Like the 693 00:31:43,960 --> 00:31:47,560 Speaker 5: renewable energy revenue up twenty three percent, power revenue of 694 00:31:47,600 --> 00:31:50,720 Speaker 5: fifteen percent. There was still an operating loss though in 695 00:31:50,760 --> 00:31:53,560 Speaker 5: renewable energy. What where's the weakest link there? 696 00:31:54,440 --> 00:31:57,360 Speaker 6: Yeah, No, it's definitely not terrible. And this business has 697 00:31:57,360 --> 00:32:00,360 Speaker 6: come a really long way, and you know, I think 698 00:32:00,400 --> 00:32:02,560 Speaker 6: it's gotten to the point where it is at least 699 00:32:02,560 --> 00:32:06,440 Speaker 6: stable and that it's realistic to have a conversation about 700 00:32:06,480 --> 00:32:08,760 Speaker 6: what this looks like on its own, which was certainly 701 00:32:08,800 --> 00:32:13,160 Speaker 6: not the case for a very long time. There's still 702 00:32:13,320 --> 00:32:15,840 Speaker 6: is struggling a bit in offshore, but they you know, 703 00:32:15,960 --> 00:32:18,920 Speaker 6: have been able to eke out some profits in onshore 704 00:32:19,000 --> 00:32:21,320 Speaker 6: and in grit which is really you know, helping to 705 00:32:22,280 --> 00:32:24,280 Speaker 6: put this business in a much stronger place. So they're 706 00:32:24,280 --> 00:32:27,200 Speaker 6: not out of the woods completely just yet, but they've 707 00:32:27,200 --> 00:32:29,320 Speaker 6: really come a long way. And to be talking about 708 00:32:29,400 --> 00:32:32,920 Speaker 6: positive free cash flow, I mean that blows my mind 709 00:32:32,920 --> 00:32:35,160 Speaker 6: a little bit as I remember the dark old days 710 00:32:35,200 --> 00:32:37,680 Speaker 6: when we were coming out of the you know, disastrous 711 00:32:37,680 --> 00:32:40,840 Speaker 6: Alstom acquisition, and this business was just on the gas 712 00:32:40,840 --> 00:32:44,200 Speaker 6: turbine side, was just bleeding money. And so you know this, 713 00:32:44,200 --> 00:32:46,600 Speaker 6: this has really been a stark turnaround and the business 714 00:32:46,680 --> 00:32:48,520 Speaker 6: is in a much better position, especially when you think 715 00:32:48,520 --> 00:32:51,840 Speaker 6: about Siemen's Energy, which is probably the closest pier and 716 00:32:51,960 --> 00:32:54,680 Speaker 6: just all of the issues that they have had, which 717 00:32:54,720 --> 00:32:57,000 Speaker 6: also stems from quality control, and I just I do 718 00:32:57,080 --> 00:33:00,440 Speaker 6: not think it is a coincidence that ge Underry Cope, 719 00:33:00,480 --> 00:33:02,960 Speaker 6: with all of his focus on lean manufacturing, has avoided 720 00:33:03,360 --> 00:33:06,840 Speaker 6: the major quality control lapses that we've seen at Seamen's Energy, 721 00:33:06,880 --> 00:33:10,120 Speaker 6: at RTX, at Boeing. I think the company is just 722 00:33:10,160 --> 00:33:11,560 Speaker 6: a lot more on top of it, and that's a 723 00:33:11,560 --> 00:33:12,720 Speaker 6: reflection of his approach. 724 00:33:12,880 --> 00:33:14,760 Speaker 5: So it's wind, so it's all the energy. It's the 725 00:33:14,760 --> 00:33:17,920 Speaker 5: big wind turbineses. Yeah, often so somewhere off. 726 00:33:17,760 --> 00:33:19,440 Speaker 4: Of New Jersey. I think they were supposed to be 727 00:33:19,840 --> 00:33:21,120 Speaker 4: then and then Orista didn't like that. 728 00:33:21,360 --> 00:33:24,680 Speaker 11: John, that's the proposal. I believe it's gone through. They're 729 00:33:24,680 --> 00:33:28,000 Speaker 11: still doing I think environmental impacts, no. 730 00:33:27,960 --> 00:33:29,000 Speaker 4: But the companies. 731 00:33:29,360 --> 00:33:31,760 Speaker 5: They want more money because prices have gone up so 732 00:33:31,840 --> 00:33:34,040 Speaker 5: much and the contract isn't giving them the money, and 733 00:33:34,080 --> 00:33:36,080 Speaker 5: so they're kind of pulling out and writing down their stuff. 734 00:33:36,200 --> 00:33:38,680 Speaker 11: Seeing those big turbines of my deck. 735 00:33:39,320 --> 00:33:42,280 Speaker 2: We got bigger issues in New Jersey. Hey, Brooke, let's 736 00:33:42,280 --> 00:33:44,040 Speaker 2: switch carees a little bit about Boeing. I'm seeing that 737 00:33:44,120 --> 00:33:48,120 Speaker 2: the recently, the United Airlines chief executive Scott Kirby criticized 738 00:33:48,160 --> 00:33:51,000 Speaker 2: Boeing on Tuesday, saying he was disappointed with what he 739 00:33:51,080 --> 00:33:53,880 Speaker 2: called the planemaker sluggish response to the grounding of Max 740 00:33:53,880 --> 00:33:57,400 Speaker 2: and nine aircraft. What's the latest from our good friends 741 00:33:57,600 --> 00:33:58,040 Speaker 2: at Boeing. 742 00:33:59,720 --> 00:34:02,880 Speaker 6: I mean, the latest is that that Max nine variant 743 00:34:02,880 --> 00:34:05,760 Speaker 6: that was involved in the Alaska Airlines incident remains on 744 00:34:05,800 --> 00:34:09,040 Speaker 6: the ground, and the FA is being very thorough. They 745 00:34:09,080 --> 00:34:11,560 Speaker 6: did complete sort of the first round of inspections on 746 00:34:11,600 --> 00:34:14,759 Speaker 6: those forty initial jets, and we're downloading that data to 747 00:34:14,800 --> 00:34:17,719 Speaker 6: see if that process was what it needed to be 748 00:34:17,800 --> 00:34:19,560 Speaker 6: to get those jets back up into the air. But 749 00:34:19,960 --> 00:34:25,040 Speaker 6: I mean, I think the frustration among Boeing customers is palpable, 750 00:34:25,120 --> 00:34:27,479 Speaker 6: not just from United, but we've also heard comments from 751 00:34:27,840 --> 00:34:30,400 Speaker 6: Ryan Air and a couple other customers, because this is 752 00:34:30,480 --> 00:34:34,719 Speaker 6: just not the first time that we've had manufacturing issues 753 00:34:34,760 --> 00:34:36,600 Speaker 6: out of Boeing, nor is it the first time that 754 00:34:36,680 --> 00:34:39,440 Speaker 6: deliveries have been delayed or you know, a plane that 755 00:34:39,480 --> 00:34:42,760 Speaker 6: Boeing had promised on a certain timeline gets significantly delayed. 756 00:34:42,800 --> 00:34:46,000 Speaker 6: And I think if you're an airline customer, you just 757 00:34:46,040 --> 00:34:49,000 Speaker 6: have to be you have to be frustrated. And I 758 00:34:49,000 --> 00:34:50,560 Speaker 6: think that's just what we're seeing right now. 759 00:34:51,000 --> 00:34:53,520 Speaker 2: Yeah, it really is amazing. Then the question is where 760 00:34:53,520 --> 00:34:55,680 Speaker 2: do you go and to dlopoli here, So I'm not 761 00:34:55,680 --> 00:34:57,960 Speaker 2: sure where you go exactly. So all right, brook thanks 762 00:34:57,960 --> 00:34:59,480 Speaker 2: so much for joining us. Brook Sutherland and she's a 763 00:34:59,480 --> 00:35:03,480 Speaker 2: Bloomberget Indian commis. She covers all the industrial parts of 764 00:35:03,520 --> 00:35:05,160 Speaker 2: this economy. So it's great to check out with the 765 00:35:05,160 --> 00:35:07,360 Speaker 2: Brookly on the day when you've got three M reporting, 766 00:35:07,400 --> 00:35:10,000 Speaker 2: you've got ge reporting. United actually had some good numbers, 767 00:35:10,040 --> 00:35:13,840 Speaker 2: that stock is higher. There's still some issues ongoing with Boeing, 768 00:35:13,840 --> 00:35:16,719 Speaker 2: and I read a piece recently, opinion piece where it 769 00:35:16,840 --> 00:35:19,040 Speaker 2: just kind of said Boeing, you know, they made a 770 00:35:19,080 --> 00:35:22,200 Speaker 2: decision maybe a good decade plus to focus a little 771 00:35:22,200 --> 00:35:26,240 Speaker 2: bit more on profitability, total returns. Maybe at the expense, 772 00:35:26,320 --> 00:35:29,239 Speaker 2: maybe at the expense of some of their engineering investments.