WEBVTT - Work From Home Has Created One-Woman Safety Nets 0:00:01.800 --> 0:00:04.440 This is Bloomberg business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:32.080 YouTube search Bloomberg Global News. This story, by the way, Katie, 0:00:32.320 --> 0:00:34.639 comes from Bloomberg business Week. It's found on the Bloomberg 0:00:34.640 --> 0:00:37.159 and Bloomberg dot com slash business Week. It's about how 0:00:37.200 --> 0:00:40.600 the work from home revolution. Initially we thought it would 0:00:40.600 --> 0:00:43.800 be a big step to women might finally finally be 0:00:43.880 --> 0:00:46.440 having it all. But as Bloomberg Business Week contributor and 0:00:46.680 --> 0:00:49.520 Peterson writes, it has also become a trap for women. 0:00:49.560 --> 0:00:51.840 So let's see what she has to say. She joins 0:00:51.880 --> 0:00:55.080 us from Loomie Island, Washington. Hey, and good to have 0:00:55.120 --> 0:00:58.720 you here with Katie and myself. So it was. I 0:00:59.080 --> 0:01:01.320 feel like this was like it to be the great 0:01:02.120 --> 0:01:06.200 um leveler, if you will um and it hasn't necessarily 0:01:06.280 --> 0:01:08.279 working from home played out like we thought for women. 0:01:10.120 --> 0:01:12.800 You know, it's hard because I think, like before the pandemic, 0:01:12.920 --> 0:01:17.480 if you would say to moms in particular and sexual families, 0:01:17.480 --> 0:01:19.399 if you would say, hey, what if you could do 0:01:19.440 --> 0:01:21.760 your job from home and you could be there for 0:01:21.840 --> 0:01:24.560 pickup and to facilitate a bunch of other stuff, and 0:01:24.600 --> 0:01:26.560 you could figure out where work would sit in your 0:01:26.560 --> 0:01:28.520 own life and you wouldn't have to commute and you 0:01:28.520 --> 0:01:31.520 wouldn't have to necessarily like but all the time putting 0:01:31.600 --> 0:01:35.240 on work clothes every day, Like would you choose that, right? 0:01:35.480 --> 0:01:38.160 And I think a lot of people said, yes, I 0:01:38.160 --> 0:01:40.760 would choose that it would make my life a lot easier. 0:01:41.440 --> 0:01:46.160 And what we've seen, which is not surprising given the 0:01:46.240 --> 0:01:49.880 state of different supports in the United States in particular 0:01:49.960 --> 0:01:53.600 right now, is that instead a lot of women who 0:01:53.720 --> 0:01:57.760 are have flexible work options have become a sort of 0:01:58.040 --> 0:02:02.400 one woman safety net. So they are providing the sort 0:02:02.440 --> 0:02:06.120 of support and care that maybe they split more equally 0:02:06.160 --> 0:02:09.160 with their husbands, maybe the school district provided a bit 0:02:09.160 --> 0:02:12.360 more of or maybe even just like child could care, 0:02:12.440 --> 0:02:16.400 infrastructure provided more of and so there's so many different 0:02:17.000 --> 0:02:21.400 sort of combinations that flexible work as a woman could take. 0:02:21.560 --> 0:02:23.840 And it's a beautifully reported piece. You say that you've 0:02:24.040 --> 0:02:27.960 conducted hundreds of interviews with women over the past two years. 0:02:28.040 --> 0:02:30.360 So I mean it's sort of walk us through the 0:02:30.360 --> 0:02:34.440 common denominator, because you can't paint a flexible work arrangement 0:02:34.520 --> 0:02:38.000 with the same brush. I mean, some people might have 0:02:38.120 --> 0:02:41.360 some children in different stages of life, maybe their spouse 0:02:41.880 --> 0:02:43.960 is in the office, maybe their spouses home. What was 0:02:44.000 --> 0:02:47.120 the sort of when you boiled all down the common 0:02:47.160 --> 0:02:51.520 element there, I would say that the people who are 0:02:51.560 --> 0:02:56.280 struggling the most would burnout right now are people who 0:02:57.360 --> 0:03:02.200 are working these flexible sorts of jobs where they have 0:03:02.360 --> 0:03:05.720 a much more control over how much time they're spending 0:03:05.720 --> 0:03:10.000 in their home and their partner, especially in heterosexual marriages, 0:03:10.360 --> 0:03:13.560 um doesn't have as much flex or is not taking 0:03:13.600 --> 0:03:16.600 as much flex and so what they're doing is they're 0:03:16.639 --> 0:03:22.320 essentially working this full time job for pay that they've 0:03:22.360 --> 0:03:24.200 been working for a long time, but then they're also 0:03:24.240 --> 0:03:27.040 taking on even more of that unpaid labor in the 0:03:27.080 --> 0:03:29.839 home and a lot of that includes what's often called 0:03:29.960 --> 0:03:32.680 like the mental load, right, so like keeping the list 0:03:32.720 --> 0:03:34.440 in their head of all of the different things that 0:03:34.480 --> 0:03:37.400 have to be happening right now, and so they are 0:03:37.400 --> 0:03:39.440 working all the time on their salary job and then 0:03:39.520 --> 0:03:43.200 also taking up a lot more of that other unpaid labor. 0:03:43.680 --> 0:03:46.520 And that includes even things like, oh, they don't have 0:03:46.600 --> 0:03:50.200 enough bus drivers for the school district, so I guess 0:03:50.240 --> 0:03:52.080 that I will pick up my kid every day after 0:03:52.120 --> 0:03:55.600 school instead of them taking the bus home, or something 0:03:55.640 --> 0:03:58.960 like oh, my kids sick and has to stay home. 0:03:59.520 --> 0:04:01.600 Used to be my husband and I would rotate who 0:04:01.600 --> 0:04:04.160 would stay home with him, But since I'm already in 0:04:04.160 --> 0:04:06.360 the home, I guess I'll just stay here and my 0:04:06.440 --> 0:04:08.280 work will be affected and then I'll need to stay 0:04:08.280 --> 0:04:10.400 it wait to put in that work then I missed. 0:04:10.440 --> 0:04:13.240 So basically it's like what's going on in relationships? So 0:04:13.280 --> 0:04:15.720 here we are. We've gone through the pandemic working from home. 0:04:16.120 --> 0:04:18.719 Women are like, wow, this could be really cool. Great, 0:04:18.760 --> 0:04:21.160 give me some flexibility, but still pursue my career and 0:04:21.200 --> 0:04:25.520 continue to move ahead. What's happening is what's happening internally 0:04:25.560 --> 0:04:29.119 within relationships or the husband are the partner, I guess 0:04:29.120 --> 0:04:33.000 has gone the male partner predominantly maybe in some cases, 0:04:33.240 --> 0:04:35.440 has gone back to work, and so when stuff happens 0:04:35.480 --> 0:04:38.080 at home, the woman is continue to work from home, 0:04:38.120 --> 0:04:40.600 but also adding on everything else. I love there's a 0:04:40.640 --> 0:04:43.839 picture in the story I'm looking at that I looked 0:04:43.839 --> 0:04:47.480 at at the terminal of like the nineteen fifties wife 0:04:47.760 --> 0:04:50.960 sending our kids off to school, you know, and she's 0:04:51.000 --> 0:04:55.000 kind of getting stuck. Yep. Well, I would say that 0:04:55.120 --> 0:04:57.039 this is also true. And I heard a lot of 0:04:57.080 --> 0:05:01.080 feedback after the piece was published. Even if you the 0:05:01.440 --> 0:05:05.400 woman in these heterosexual relationships, if they are making more money, right, 0:05:05.400 --> 0:05:09.040 if their job is ostensibly within the paradigm of the relationship, 0:05:09.480 --> 0:05:13.000 the more important one, if they have flex they are 0:05:13.000 --> 0:05:15.400 still the one who's taking up all of this extra labor. 0:05:16.520 --> 0:05:19.279 And I think it's really frustrating, right because like what 0:05:19.480 --> 0:05:22.839 is the solution? And something I asked some people like, 0:05:23.000 --> 0:05:26.440 is there anything that your company could do to make 0:05:26.480 --> 0:05:29.960 a better policy for you? And you know, everyone has 0:05:30.279 --> 0:05:35.400 small complaints about how their companies have orchestrated flexible work policies, 0:05:35.400 --> 0:05:37.400 like there are things that absolutely need to get better. 0:05:38.000 --> 0:05:41.520 But to the person, every single person told me that like, No, 0:05:41.920 --> 0:05:44.240 this is a societal thing and it's also a relationship 0:05:44.320 --> 0:05:47.400 thing and it's really hard to fix. Well, that's sort 0:05:47.440 --> 0:05:49.920 of getting to what I want to touch on, which 0:05:49.960 --> 0:05:52.719 is where does this go from here? Too? Because back 0:05:52.720 --> 0:05:54.480 to the question you posted at the beginning, you know, 0:05:54.760 --> 0:05:56.520 if I could tell you you wouldn't have to go 0:05:56.520 --> 0:05:58.320 into the office put on word clothes, you could be 0:05:58.400 --> 0:06:03.040 at home in these flexible work arrangements. I my gut 0:06:03.120 --> 0:06:05.720 feeling is that a lot of people, even with this, 0:06:06.040 --> 0:06:09.120 spurnout this uh sort of one woman safety that that 0:06:09.160 --> 0:06:11.919 you described. It doesn't feel like going into the office 0:06:12.360 --> 0:06:16.360 would fix that. No, Well, I think in some ways 0:06:16.360 --> 0:06:20.080 it would, because it would force you to find backup care, right, 0:06:20.680 --> 0:06:22.919 it would force you to figure out what, like what 0:06:22.960 --> 0:06:27.120 were people doing before? Right there there we had emergency 0:06:27.160 --> 0:06:29.760 plans for like oh, if the kid gets sick, we 0:06:29.880 --> 0:06:33.640 rotate turns off because we both conceive of our jobs 0:06:33.800 --> 0:06:36.800 as equal, right that we would one person goes and 0:06:36.800 --> 0:06:40.080 get that person, or like school districts has more buster 0:06:40.320 --> 0:06:44.040 first and really made that a priority. And so I 0:06:44.120 --> 0:06:47.520 think that there are different ways that you can solve 0:06:47.600 --> 0:06:52.040 this problem. But we're just like instead where people I 0:06:52.080 --> 0:06:55.279 think are it's been normalized that women are taking on 0:06:55.360 --> 0:06:57.360 more and more of this work. And if you look 0:06:57.360 --> 0:06:59.640 at things like the Deloitte Study of Women in Work 0:06:59.680 --> 0:07:02.360 that the numbers of burnout amongst women and mothers in 0:07:02.440 --> 0:07:06.599 particular in in office jobs is just guy rocketing and 0:07:06.720 --> 0:07:08.640 something has to give. And a lot of cases, I 0:07:08.720 --> 0:07:10.800 think you have women who are like, I can't do 0:07:10.840 --> 0:07:13.200 it anymore. The only way to make our family work 0:07:13.240 --> 0:07:16.040 now is for me not to work at all, for 0:07:16.080 --> 0:07:18.160 me to drop out of the workforce. And that's a 0:07:18.200 --> 0:07:21.560 different problem. Well, and it's interesting, right, Katie, in terms 0:07:21.560 --> 0:07:24.720 of we've got this very tight labor market. We talk about, 0:07:24.800 --> 0:07:26.680 you know, people who are just not coming back to 0:07:26.680 --> 0:07:28.920 the workforce, and you wonder how many although we've seen 0:07:28.960 --> 0:07:31.920 some stronger numbers in terms of women. UM, but you 0:07:31.960 --> 0:07:35.400 do wonder, you do wonder how this impacts it going forward. UM. 0:07:35.480 --> 0:07:40.200 And really, as Katie said, well and beautifully reported story. 0:07:40.320 --> 0:07:42.440 Really appreciate getting some time to talk with you and 0:07:42.560 --> 0:07:45.800 Peterson contributor at Bloomberg Business Week on the phone from 0:07:46.080 --> 0:07:49.040 Loomie Island, Washington. And this story you can find on 0:07:49.040 --> 0:07:51.600 the Bloomberg terminal at Bloomberg dot com. Slash Business Week. 0:07:51.920 --> 0:07:54.040 It's just all these things from the pandemic maybe not 0:07:54.080 --> 0:07:56.560 playing out as we anticipated in I know, I know, 0:07:56.760 --> 0:07:59.720 at least in this point, this UH piece points out 0:08:00.000 --> 0:08:02.520 at least kids are back in school for the large part, 0:08:02.600 --> 0:08:05.120 not doing virtual school anymore. So maybe one thing that 0:08:05.160 --> 0:08:09.200 they can cross off there. Yeah, um, be sure to 0:08:09.280 --> 0:08:12.200 check it out in more all from Bloomberg Business Week. 0:08:12.560 --> 0:08:14.920 You can find that on the terminal. You're listening to 0:08:15.040 --> 0:08:19.040 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:08:19.120 --> 0:08:22.920 Tim Stinovic on Bloomberg Radio. Well, as we mentioned, we 0:08:22.920 --> 0:08:24.760 did want to get to the Bloomberg Big Take. It's 0:08:24.880 --> 0:08:27.440 also among the most read on the Bloomberg Take. Bloomberg 0:08:27.440 --> 0:08:30.200 Big Take, by the way, is our editorial team saying, folks, 0:08:30.280 --> 0:08:33.079 you gotta read this story and it's a Bloomberg exclusive, 0:08:33.360 --> 0:08:35.520 and it is about the big bank, probably the most 0:08:35.559 --> 0:08:39.160 associated Katie with the US mortgage industry big time. Of course, 0:08:39.160 --> 0:08:43.480 we're talking about Wells Fargo. Great scoop from our handle 0:08:43.559 --> 0:08:47.480 lot that Wells Fargo plans to shrink the biggest US 0:08:47.520 --> 0:08:52.120 mortgage empire. Of course, after waves of scandal scandals, Hannah, 0:08:52.160 --> 0:08:54.600 you join us on the phone now basically walk us 0:08:54.640 --> 0:08:57.640 through the premise of this big take and how we 0:08:57.679 --> 0:09:00.720 got here. Hey ya, thank you so much for having 0:09:00.760 --> 0:09:03.200 me so as you mentioned, like when you when you 0:09:03.240 --> 0:09:06.560 thank Wells Fargo, you think the biggest US homelander, like 0:09:06.600 --> 0:09:09.040 that was their whole thing for a number of years. 0:09:09.160 --> 0:09:12.000 Right coming out of the financial crisis um in two 0:09:12.000 --> 0:09:14.120 thousand and eight, a lot of the big banks who 0:09:14.120 --> 0:09:17.920 had dominated the space prior to the crisis pulled back 0:09:17.960 --> 0:09:19.599 in a big way, and well S Fargo took the 0:09:19.600 --> 0:09:21.680 opposite approach and said, no, we're going to really dig in. 0:09:21.720 --> 0:09:24.560 You know, at one point they were turning out one 0:09:24.600 --> 0:09:26.960 in every three home loans in the US and they 0:09:26.960 --> 0:09:29.920 were aiming for higher than outer raiming for market share. 0:09:30.200 --> 0:09:34.000 So that was um. That was then, and then you know, 0:09:34.160 --> 0:09:36.760 since then, we've seen the rise of non make mortgage 0:09:36.800 --> 0:09:38.360 lenders like Quicken and stuff like that, and not so 0:09:38.440 --> 0:09:41.320 well Fargo has had um a lot of issues, some 0:09:41.400 --> 0:09:44.240 of which have been in its mortgage empire. And so 0:09:44.320 --> 0:09:47.400 now under Charlie Sharp, who has been the CEO for 0:09:47.440 --> 0:09:51.240 almost three years, they are making plans to shrink and mortgage. 0:09:51.600 --> 0:09:54.040 How important is the mortgage business though, to Wells Fargo's 0:09:54.080 --> 0:09:57.000 top and bottom line. Um. You know, that's a great 0:09:57.040 --> 0:09:59.920 question because it's less important today than it used to be. 0:10:00.160 --> 0:10:03.640 So the history of going back before even the crisis, 0:10:03.760 --> 0:10:08.520 was that they liked mortgage as a way to counterbalance um, 0:10:08.559 --> 0:10:11.960 you know, lower net interest income from lower interest rates, 0:10:12.000 --> 0:10:14.160 and so they would get seeds from lower rates when 0:10:14.200 --> 0:10:18.400 people wanted to rEFInd refinance the mortgage and stuff and such, um, 0:10:18.520 --> 0:10:22.520 And so it would be a counterway to that. But um, 0:10:22.559 --> 0:10:25.200 the company has gotten a lot bigger, so it has 0:10:25.200 --> 0:10:28.280 become less relevant. And also it's a more competitive landscape 0:10:28.320 --> 0:10:31.760 today than it was, you know, when Wells of doing 0:10:31.800 --> 0:10:34.120 one in every three homelands. Yeah, well, that's what I 0:10:34.160 --> 0:10:37.040 wanted to ask, because that's such a crazy stat one 0:10:37.240 --> 0:10:40.160 of every three home loans in the US. With Wells 0:10:40.200 --> 0:10:43.439 Fargo kind of planning to step away here, where does 0:10:43.480 --> 0:10:47.160 that leave the US mortgage market? Yeah. Well, and so 0:10:47.200 --> 0:10:50.480 they certainly aren't doing one in three today. Um, and 0:10:50.520 --> 0:10:52.320 it'll be really interesting to see. You know, they're still 0:10:52.320 --> 0:10:55.480 in the process of making plans of where they're gonna 0:10:55.679 --> 0:10:59.160 pull back. You know, I've wrote about other correspondent lending, 0:10:59.200 --> 0:11:02.560 which is when they've on uh mortgages that are made 0:11:02.600 --> 0:11:05.960 by other firms and then servicing to like billion collections 0:11:05.960 --> 0:11:10.840 for mortgages UM as as places where they're looking at um. 0:11:10.880 --> 0:11:13.120 But you know, a lot of that is building sketched out. 0:11:13.160 --> 0:11:15.240 But it will be really interesting to see, you know, 0:11:15.280 --> 0:11:18.240 when all is said and done, where Well Spargo fits 0:11:18.320 --> 0:11:21.439 into the greater mortgage picture. Hey, how much of this 0:11:21.520 --> 0:11:25.920 is just well Spargo saying I am tired of being criticized, 0:11:26.559 --> 0:11:31.400 um for you know, rejecting refinances for black homeowners, for 0:11:31.880 --> 0:11:34.520 doing other things and being fine, I'm just tired of this. 0:11:34.679 --> 0:11:36.320 And if I get rid of this business, I'm no 0:11:36.400 --> 0:11:42.120 longer on regulators radar. Yeah, that's also a super interesting 0:11:42.200 --> 0:11:46.240 question because a lot of the big bank, like you know, 0:11:46.360 --> 0:11:49.600 Bank of America did um, I want to say, over 0:11:49.640 --> 0:11:53.480 a hundred billion of originations in a single quarter during 0:11:53.480 --> 0:11:56.080 the right after the crisis, and they were down to 0:11:56.160 --> 0:11:59.360 less than a tenth of that by so a lot 0:11:59.360 --> 0:12:02.240 of these banks already kind of concluded that, Remember, there 0:12:02.240 --> 0:12:04.480 were like tens of billions of dollars and signs. I 0:12:04.480 --> 0:12:06.480 think it actually that have gone over a hundred billion 0:12:06.520 --> 0:12:10.200 total UM for the bank's behavior leading up to the 0:12:10.240 --> 0:12:14.120 crisis causing the crisis in some ways, um, so wells 0:12:14.160 --> 0:12:16.280 here is kind of you know, in some sense it's 0:12:16.320 --> 0:12:19.240 the last big bank to come to this conclusion. But 0:12:19.360 --> 0:12:22.400 also in recent years, you know, they have been very 0:12:22.400 --> 0:12:25.480 scandal written. That's why Charlie Sharp took over three years ago, 0:12:26.040 --> 0:12:30.120 and the mortgage business has been a key you know, 0:12:30.400 --> 0:12:33.360 trouble spots in them. And Hannah, we have about forty 0:12:33.400 --> 0:12:35.880 seconds left. But you write the shrinking even in a 0:12:35.960 --> 0:12:41.000 downturn will be complicated. Tell us about some of those hurdles. Yeah, 0:12:41.000 --> 0:12:44.400 So when the economy is worth, the value of the 0:12:44.440 --> 0:12:47.160 loans that they hold will go down. So that just 0:12:47.200 --> 0:12:50.679 makes it harder to um, you know, for them to 0:12:51.760 --> 0:12:54.679 potentially sell this off or do whatever they're gonna do. Um, 0:12:54.720 --> 0:12:56.760 you know, versus when it's when it's a great market 0:12:56.800 --> 0:12:59.600 and everyone is climbing to get those fascets and things 0:12:59.640 --> 0:13:02.160 like that. It is a great story. Does also make 0:13:02.200 --> 0:13:04.600 me think about, you know, all she talked about. Hannah 0:13:04.600 --> 0:13:06.839 talked about more competition today in the mortgage business, and 0:13:06.880 --> 0:13:09.880 all these up starts right then have given homeowners or 0:13:09.920 --> 0:13:13.880 prospective homeowners so many different options when it comes when 0:13:13.920 --> 0:13:17.160 it comes to either mortgages or home equity. Um. It 0:13:17.240 --> 0:13:19.240 is the Bloomberg Big Take. It's among the most read 0:13:19.280 --> 0:13:22.280 on the Bloomberg today, and it's all about Wells Fargo 0:13:22.520 --> 0:13:26.240 shrinking the biggest US mortgage empire after a bunch of 0:13:26.280 --> 0:13:28.920 scandals over the last few years. Hannah Levet, she is financial. 0:13:28.960 --> 0:13:31.040 Put her at Bloomberg News, check her out on Twitter 0:13:31.160 --> 0:13:33.560 at Hannah Levitt, and she of course joining us on 0:13:33.600 --> 0:13:36.760 the phone from New York City. This is Bloomberg Business 0:13:36.840 --> 0:13:40.640 Week with Carol Masser and Bloomberg Quick Takes. Tim Stenovic 0:13:41.120 --> 0:13:44.680 on Bloomberg Radio. All Right, so, dear Bob, I like 0:13:44.760 --> 0:13:47.439 your company, think though we could make a few changes. 0:13:47.440 --> 0:13:50.400 Sincerely yours Dan Lobe. Okay, that's not exactly what he wrote, 0:13:51.120 --> 0:13:54.320 Pretty close though, you think so, yeah, right at the 0:13:54.360 --> 0:13:57.040 main points, Well, Dan Lobe did write a letter to 0:13:57.080 --> 0:14:00.160 Disney CEO Bob Chpeck after taking a signal if you 0:14:00.200 --> 0:14:02.600 can stake at the company, and suggesting some changes at 0:14:02.600 --> 0:14:07.720 the Magic Kingdom. Indeed, again, this news breaking this morning 0:14:08.080 --> 0:14:10.600 definitely took a lot of people by surprise, just judging 0:14:10.640 --> 0:14:13.440 at the readership numbers on the Bloomberg terminal. For more, 0:14:13.520 --> 0:14:16.320 let's bring in geta rank and Nathan, she of course 0:14:16.520 --> 0:14:21.800 is a Bloomberg Intelligence analysts and geta This calling for 0:14:21.840 --> 0:14:25.600 a spinoff of the ESPN Sports Network have to assume 0:14:25.680 --> 0:14:32.239 that cha Pec and Go haven't done this for a reason. Yeah, yeah, 0:14:32.280 --> 0:14:35.280 So this is something that has come up so many times, 0:14:35.680 --> 0:14:39.480 Katie and Carol over the past few years, I mean, 0:14:39.520 --> 0:14:43.400 constant questions about whether it makes sense for ESPN to 0:14:43.520 --> 0:14:45.920 be spun off, just kind of given the secular challenges 0:14:45.960 --> 0:14:48.960 in the linear TV business model. The reason they're not 0:14:49.040 --> 0:14:52.000 doing it, and that reason is cash flow, tons and 0:14:52.080 --> 0:14:55.160 tons of cash flow from ESPN almost four and a 0:14:55.200 --> 0:14:58.800 half billion dollars every year. And remember this is almost 0:14:58.800 --> 0:15:02.880 thirty percent of uh, you know, Disney's profits. So it 0:15:03.000 --> 0:15:05.840 is a crucial part of their business and one that 0:15:05.880 --> 0:15:07.560 they're not going to be willing to let go off 0:15:07.640 --> 0:15:12.200 very easily. Quito, would this be like an activist investors saying, hey, Apple, 0:15:12.280 --> 0:15:14.440 we'd really love it if you'd spin off the iPhone 0:15:14.800 --> 0:15:16.920 in terms of seal, I mean, this is just so 0:15:16.960 --> 0:15:21.160 important to Disney, as you said, absolutely, it is a 0:15:21.160 --> 0:15:25.120 critical part of the business. Yes, agreed, there are lots 0:15:25.120 --> 0:15:28.280 of challenges in the business model, especially given that court 0:15:28.320 --> 0:15:32.800 cutting is accelerating, But the whole streaming part of the business, yes, 0:15:32.880 --> 0:15:36.560 they are having pretty good growth there. For streaming, they 0:15:36.640 --> 0:15:39.960 reported some fantastic numbers just a few days ago. They 0:15:39.960 --> 0:15:42.040 have more than if you just look at their streaming 0:15:42.040 --> 0:15:45.360 portfoolio now, they actually have more subscribers and netflix as. 0:15:45.480 --> 0:15:48.840 But remember, streaming is not generating any profits for this 0:15:48.920 --> 0:15:52.160 company just yet. So getting that cash flow, getting those 0:15:52.200 --> 0:15:54.400 four and a half million dollars from ESPN ear in 0:15:54.440 --> 0:15:57.280 and ear out, is so important to fund all of 0:15:57.320 --> 0:16:01.520 that content investments in the streaming platform, all the technological improvements. 0:16:01.520 --> 0:16:04.280 So absolutely, I have a core part of the business. 0:16:04.320 --> 0:16:06.640 I had trouble with the timing on this case, like, wait, 0:16:06.720 --> 0:16:09.560 Disney did really well, what's up with this? Yeah, yeah 0:16:09.600 --> 0:16:12.160 it again. I guess that they had really wolfed it 0:16:12.240 --> 0:16:14.520 in earnings. This would make a little bit more sense, 0:16:14.560 --> 0:16:17.360 but it does feel a bit unintuitive. Let's talk about 0:16:17.400 --> 0:16:19.760 some of the other suggestions here. We have Third Point 0:16:19.840 --> 0:16:23.640 also urging Disney to integrate Hulu directly into the Disney 0:16:23.680 --> 0:16:27.160 Plus platform. Of course, that's the company's flagship streaming operation. 0:16:27.880 --> 0:16:30.600 The logic there on the Third Point side is that 0:16:30.640 --> 0:16:34.800 this would save money reignite growth and domestic streaming. Does 0:16:34.840 --> 0:16:38.480 that logic hold water with you? I think it does 0:16:38.520 --> 0:16:40.480 to a certain extent. And again this has again been 0:16:40.560 --> 0:16:44.120 one of those constant conundrums for Disney. Remember Disney has 0:16:44.120 --> 0:16:47.080 a sixty six percent stake in Hulu. This is jointly 0:16:47.120 --> 0:16:50.840 owned with Comcast, and they the two companies actually have 0:16:51.120 --> 0:16:55.440 an agreement between them which allows for you know, Disney 0:16:55.480 --> 0:16:59.520 to buy back the thirty three percent in January. The 0:16:59.560 --> 0:17:02.960 problem really here is valuation. So they have agreed to 0:17:02.960 --> 0:17:05.640 a minimum valuation of about twenty seven billion dollars, which 0:17:05.640 --> 0:17:08.560 means Disney has to show out at least nine billion dollars. 0:17:08.560 --> 0:17:12.240 But Comcast is going to want much much more, and 0:17:12.280 --> 0:17:15.760 the two parties have been in arbitration. But again this 0:17:15.920 --> 0:17:17.920 price is going to be a major sticking point, which 0:17:18.000 --> 0:17:20.639 is why Disney does not want to rush into it. 0:17:20.880 --> 0:17:22.720 Is what I'm thinking, do you think on the cost 0:17:22.720 --> 0:17:24.560 cutting side of things, you look at all the metrics 0:17:24.560 --> 0:17:27.639 when it comes to the Walt Disney Company, geta when 0:17:28.240 --> 0:17:30.720 you know Lobe d and Lobe says cost cutting Disney 0:17:30.760 --> 0:17:34.080 costs among the highst in industry. We believe Disney significantlyland 0:17:34.119 --> 0:17:36.600 Er earns relative to its potential. We urge the company 0:17:36.600 --> 0:17:39.320 to embark on a cost cutting program that addresses both 0:17:39.359 --> 0:17:43.520 margins and the disposal of excess underperforming assets. Is he 0:17:43.640 --> 0:17:45.800 right in that regard? And I am reading from his letter, 0:17:47.320 --> 0:17:50.159 so he is right when he says that they have 0:17:50.280 --> 0:17:52.560 the highest costs in the industry. To remember, this year, 0:17:52.600 --> 0:17:55.399 Disney is going to pay out thirty billion dollars in 0:17:55.480 --> 0:17:59.760 terms of content costs across platforms. Now that that is 0:17:59.800 --> 0:18:01.520 the ii is by the way in the industry. But 0:18:01.960 --> 0:18:05.199 that's that's the reason it's paying that much is because 0:18:05.280 --> 0:18:08.320 of majority of it is really because of sports rights. 0:18:08.400 --> 0:18:10.600 So you know, they're paying about eight to nine billion 0:18:10.640 --> 0:18:13.480 dollars in sports rights, and that's why ESPN is the 0:18:13.560 --> 0:18:16.480 number one cable network when it comes to earning affiliate 0:18:16.520 --> 0:18:18.240 fees in the industry. That's what drives the four and 0:18:18.240 --> 0:18:20.720 a half billion dollars in eep IT down. Also, remember 0:18:20.800 --> 0:18:24.080 this is the biggest movie studio in the world. They 0:18:24.119 --> 0:18:27.360 are half of the global box office. So in order 0:18:27.400 --> 0:18:30.879 to generate you know, eleven ten or ten eleven billion 0:18:30.880 --> 0:18:33.880 dollars in global box office, they have to make significant investments. Again, 0:18:33.920 --> 0:18:36.760 a major part of the cost there. You know my 0:18:36.760 --> 0:18:40.480 my only contention with the cost argument is you want 0:18:40.480 --> 0:18:43.879 to build a streaming platform that is, you know, the leader, 0:18:44.000 --> 0:18:46.360 and you have to be careful because you know content 0:18:46.520 --> 0:18:49.280 is the key differentiator. Yeah right, we say content is 0:18:49.359 --> 0:18:51.840 king when you've got somebody like sore Love and thunder 0:18:51.960 --> 0:18:53.520 like I'm in. I'm just gonna tell you, I'm all 0:18:53.520 --> 0:18:59.000 in our Avengers watch look always great as guitar rank 0:18:59.000 --> 0:19:01.840 and outhan. She's Bloomberg in religience technology media analyst joining 0:19:01.880 --> 0:19:03.800 us on the phone in New Jersey. Guita, thank you. 0:19:05.920 --> 0:19:13.359 I'm Roly macro a journal But you let me drive? No, no, 0:19:13.520 --> 0:19:22.240 who's going home? Please? Gravels? I want to drive? Which? 0:19:22.320 --> 0:19:31.680 Good question? Good drive is the drive to the clobe 0:19:31.920 --> 0:19:35.520 on Bluebird Radio. Al Right, everybody, just about ten and 0:19:35.520 --> 0:19:39.160 a half minutes left in today's trading session, and as 0:19:39.160 --> 0:19:41.480 you know we've been talking, we've got another rally Underwear 0:19:41.520 --> 0:19:44.639 Slate rally up about nineteen on the SUP, as Charlie mentioned, 0:19:44.680 --> 0:19:47.960 up about half a percent on the Dow, and the 0:19:48.080 --> 0:19:50.920 NASDAK up by about two thirds of one percent. So 0:19:51.000 --> 0:19:53.240 let's get to it as we drive to the clothes 0:19:53.240 --> 0:19:55.159 on this Monday hick Smith is back with us, his 0:19:55.240 --> 0:19:58.040 chief investment officer, having for Trust, which as you know, 0:19:58.320 --> 0:20:01.479 is based in Radnor, Pennsylvania. Yeah, nice to have you 0:20:01.520 --> 0:20:04.600 here with Katie Greifeld and myself. You have repeatedly come 0:20:04.600 --> 0:20:07.159 on with us this year said a recession in a 0:20:07.160 --> 0:20:10.160 bear market are not likely? Is that still the case 0:20:10.240 --> 0:20:15.040 in your view? Well? Look, if one aspect, we do 0:20:15.119 --> 0:20:18.879 have a technical recession defined by two consecutive quarters with 0:20:19.040 --> 0:20:22.960 negative real GDP growth. But if we're in our recession, 0:20:23.000 --> 0:20:27.480 it's the most unusual recession in modern history, given uh, 0:20:27.600 --> 0:20:30.719 the strength of the labor market, the health of the consumer, 0:20:31.400 --> 0:20:37.800 corporate profits, corporate balance sheets, the banking system is well capitalized, UH, 0:20:37.840 --> 0:20:41.520 and there doesn't seem to beat any problems there. So, 0:20:42.400 --> 0:20:46.560 on the one hand, a lot looks good about the economy. UH. 0:20:46.840 --> 0:20:50.000 The big part thou is inflation. A lot looks good 0:20:50.040 --> 0:20:53.600 in the economy, inflation being its own special animal. What 0:20:53.680 --> 0:20:56.080 does the stock market look like? Though, because if we 0:20:56.119 --> 0:20:59.360 think about the past two months since June's lows, it's 0:20:59.359 --> 0:21:02.520 been a pretty robust rally. The question it feels like 0:21:02.560 --> 0:21:06.160 everyone is asking is whether that June loow was actually 0:21:06.520 --> 0:21:10.240 the bottom. What's your view. Well, Look, the stock market 0:21:10.400 --> 0:21:16.200 is an anticipatory vehicle. Uh. It anticipated peak inflation, which 0:21:16.280 --> 0:21:19.359 is really kind of junish uh with a very weak 0:21:19.480 --> 0:21:22.760 first half, and now I think it's anticipating that we 0:21:22.840 --> 0:21:28.159 are beyond peak inflation um and that a lot of factors, 0:21:28.440 --> 0:21:33.679 including the federal reserves policy, is starting to unlind inflation 0:21:34.280 --> 0:21:39.119 and and perhaps perhaps uh, the Fed might get lucky 0:21:39.160 --> 0:21:42.480 and engineer a somewhat soft landing. And so I think 0:21:42.520 --> 0:21:48.359 that's what the market is really focusing on. I don't 0:21:48.359 --> 0:21:51.400 think they're focusing on a FED pitot, because I think 0:21:51.440 --> 0:21:54.920 we're going to see Fed fund rate increases through two 0:21:54.960 --> 0:21:58.159