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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. Steves with us around

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Speaker 2: the table. Steve, good Morning's here, Good morning. I'm going

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Speaker 2: to ask you then, first question, who wins?

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Speaker 3: So caveat first. Okay, I'm not speaking for Newburger Berman.

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Speaker 3: I'm speaking just for myself. I don't want to get

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Speaker 3: into trouble. And what I'm about to say is just

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Speaker 3: pure political analysis. And the analogy I'll draw is to

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Speaker 3: the financial crisis. You know, in August of two thousand

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Speaker 3: and seven, the subprime paper market collapse, and at that point,

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Speaker 3: when you look back on it, the financial crisis was baked.

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Speaker 3: Everything else was completely inevitable. So I think that it

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Speaker 3: is completely inevitable at this point that Donald Trump will

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Speaker 3: win every single swing state and we'll get elected. And

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Speaker 3: the reason I think this way we'll unfold is part

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Speaker 3: one of the story is that the protesters and all

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Speaker 3: the universities are becoming the face of the Democratic Party.

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Speaker 3: But that's not one hundred percent at this point. But

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Speaker 3: what's going to solidify it is in August at the

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Speaker 3: Democratic Convention, which is in Chicago. Ironically, you'll see all

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Speaker 3: these protesters again, and a lot of them will be

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Speaker 3: screaming in yelling things like not just at the Israel,

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Speaker 3: but death to America because they can't help themselves, and

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Speaker 3: the country will be a polled and that'll be it.

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Speaker 4: It'll be over.

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Speaker 2: Let's say, you right, Crystal Bull dead on. Next question

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Speaker 2: is what do I do with that information? And when

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Speaker 2: do I put the trades on? And what are the trades?

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Speaker 2: How do you sort of I.

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Speaker 3: Would say, you do largely nothing, because I don't think

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Speaker 3: that whether Trump wins or Biden wins has any real

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Speaker 3: impact on the economy at all. You know, there'll be

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Speaker 3: things that people will will want to trade, which I'm

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Speaker 3: not going to talk about because I haven't put on.

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Speaker 4: Those straights yet.

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Speaker 3: Because it's because it's too early. But there'll be things

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Speaker 3: to do, but that'll just be short term trade.

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Speaker 2: Some investing. Can I jump in? That's what I'm interested in.

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Speaker 2: You said it's too early, when it's the right time

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Speaker 2: to really think about expressing these as trades.

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Speaker 3: Oh, I think when in August, when at the convention,

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Speaker 3: when this one when I said happens happens, everybody will

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Speaker 3: realize that that's the case.

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Speaker 1: So you said that it doesn't really matter who gets elected. Yes,

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Speaker 1: that's fascinating to me because some people are saying that

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Speaker 1: Donald Trump would put on pretty significant tariffs, particularly to China,

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Speaker 1: and that this would increase inflation sort of de facto

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Speaker 1: in the United States. I see you rolling your eyes.

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Speaker 1: You can respond in a second. And then at the

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Speaker 1: same time you're going to have, you know, the tax cuts, reinstadts.

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Speaker 3: And dogs will be lying together and it will be

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Speaker 3: end of the world and doom, gloom and whatever lunging together.

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Speaker 1: I don't know, it could usum gloom depending on your view.

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Speaker 2: But what do you make of this?

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Speaker 1: Why do you discount this?

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Speaker 3: I mean, do I think that Donald Trump would increase

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Speaker 3: tarifts to China?

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Speaker 5: Sure?

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Speaker 3: Do I think that would have a massive inflationary impact

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Speaker 3: in the United States.

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Speaker 4: I think that's ridiculous.

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Speaker 3: So you know, on the margin, would it impact you know,

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Speaker 3: for example, I'll give you a company, First Solar, So

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Speaker 3: First Solar sells solar panels to utilities. Now, they're already

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Speaker 3: massive tarists that are helping them. Now, could Trump increase

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Speaker 3: the tariffs or make them longer so that stock would

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Speaker 3: do better? Could be But you know the price of

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Speaker 3: T shirts going to go up, as a price of

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Speaker 3: food going to go up. No, I mean you have

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Speaker 3: to remember that the United States is of all the

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Speaker 3: developed world, the United States is the most insular economy

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Speaker 3: of any.

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Speaker 4: Of any developed world.

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Speaker 3: So the fact that tariffs will go on in China,

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Speaker 3: big deal.

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Speaker 6: But one thing you recently spoke about was infrastructure spending,

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Speaker 6: and how do you like all of those trains? What

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Speaker 6: happens to all of that if Trump becomes elected because

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Speaker 6: all that is attached to the Biden administration.

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Speaker 3: Well true, but a don't forget that the solar tariffs

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Speaker 3: were put on by Trump Originally, most more than fifty

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Speaker 3: percent of all the government spending is actually going to

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Speaker 3: Red States. So I don't think he's going to want

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Speaker 3: to mess with his own voters. Could there be tinkering

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Speaker 3: at the edges?

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Speaker 5: Sure?

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Speaker 3: Are there enough votes in the United States Senate to

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Speaker 3: repeal the IIJ Act and the IRA Act not even close?

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Speaker 4: So you know, rhetoric, You'll hear lots of rhetoric.

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Speaker 3: About repealing the IRA or changing the IRA, and you

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Speaker 3: know stocks will move on that. But at the end

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Speaker 3: of the day, nothing will happen.

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Speaker 1: So spending will continue, Yes, tax cuts will get extended,

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Speaker 1: Tariffs on the margin will be there. This to me

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Speaker 1: raises questions that a lot of people have talked about,

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Speaker 1: which is a deficit not going away at the time

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Speaker 1: where you're going to have to see some of the

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Speaker 1: issue ins numbers really start to pick up. You seem

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Speaker 1: to discount that too.

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Speaker 5: You don't think.

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Speaker 4: That's one hundred percent not an issue?

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Speaker 1: Oka, You don't think the deficit issues.

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Speaker 4: Not inn is shot.

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Speaker 5: So can I tell you why?

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Speaker 3: Look, I'm not an economist. I can only say this

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Speaker 3: that the people who have been complaining about the deficit,

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Speaker 3: and I like to call them the OI, the deficit people, Okay.

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Speaker 2: Because that's what it sounds, that's what they sound like.

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Speaker 3: I literally have been literally been saying O the deficit

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Speaker 3: for forty years. Okay, forty years now. Look, in my business,

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Speaker 3: being too early is the equivalent of being wrong. But

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Speaker 3: in my business, when you're too early, you're a year

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Speaker 3: too early. You're two years too early, You're not forty

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Speaker 3: years too early. When you're forty years too early, you

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Speaker 3: probably should just shut up and keep your mouth shut.

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Speaker 4: But I would say this that the sign that.

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Speaker 5: The OI the deficit group.

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Speaker 3: Will be right is when rates actually go up a lot.

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Speaker 4: Until then, everybody should just keep quiet.

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Speaker 1: But how do you know when that's going to happen.

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Speaker 3: It will be on the show and you'll say, wow,

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Speaker 3: long term rates went up fifty basis points in one day,

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Speaker 3: and then it will sound so.

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Speaker 4: Natural right after forty fifty years. Until then it's not relevant.

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Speaker 1: Well, but this, to me is a real question because

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Speaker 1: people increasingly are focused on this in the market. People

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Speaker 1: who actually can determine what those rates are can send

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Speaker 1: those rates to up fifty.

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Speaker 4: Bases treasuries, Well, there are rates going up.

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Speaker 1: There was a time when you're talking, so they're doing

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Speaker 1: so you think, are you basically saying that you are

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Speaker 1: long long term rates? Because you think that all of

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Speaker 1: this discussion about OI the deficit is still way too early,

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Speaker 1: and all these people are.

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Speaker 4: Become a meme. Now I hope. So I just literally

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Speaker 4: just made it out. It's really good. So answer the

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Speaker 4: question I lost the train of Okay, Well.

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Speaker 7: I'm just saying, you know, if you you know, at

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Speaker 7: what point do you say, Okay, if we think that

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Speaker 7: the discussion of OI the deficit is overblown, go into

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Speaker 7: long treasuries, buy them.

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Speaker 1: Because all the people who are worried about that are

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Speaker 1: going to be proven wrong.

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Speaker 3: I mean, look, I'm not really a bond person. I'm

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Speaker 3: more of a stock jockey. So what caused the market

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Speaker 3: to go down? In twenty twenty two? The FED raised

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Speaker 3: rates five hundred basis points. I don't think the Fed's

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Speaker 3: going to be raising rates. Do I think the Fed's

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Speaker 3: going to cut rates? Maybe? I actually do think it

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Speaker 3: doesn't really matter because if they cut, their only cutting

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Speaker 3: a little bit. They're not certainly not cutting five hundred

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Speaker 3: basis points. You know, people like to talk about it

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Speaker 3: on Fed Day as if you know, Moses came down

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Speaker 3: from Sinai with the tablets and let let's examine whether

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Speaker 3: the ten commandments are on there, because we'll look at

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Speaker 3: whether there was Oh, there was a comma removed.

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Speaker 4: That's so significant.

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Speaker 5: Let's buy the.

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Speaker 4: S and P.

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Speaker 2: You know miss that.

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Speaker 4: He said, bah, wow, what does that mean? So then

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Speaker 4: you say, oh, you know what, it's not relevant.

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Speaker 1: Okay, So you don't necessarily see the potential rate cutting

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Speaker 1: cycle is particularly relevant to your stock picking.

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Speaker 3: At the same time, there is no aggressive rate cycle

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Speaker 3: coming of cutting that would matter. If the FED is

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Speaker 3: going to cut rates once twice to tinker at the edges.

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Speaker 2: We can live five percent, it's the message.

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Speaker 3: We seem to be living just fine with it right now.

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Speaker 3: The economy is fine, which is I think is a

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Speaker 3: surprise to everybody.

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Speaker 2: It rais an important question. I was listening to the

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Speaker 2: podcast you did with Tracy and Joe. It's fantastic, by

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Speaker 2: the way, and if you haven't listened to it at home,

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Speaker 2: you should do odd lots. And you talked about good

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Speaker 2: times is for storytelling bad times, it's for the focus

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Speaker 2: on a bandance sheet. Is this a good time?

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Speaker 3: Or it's definitely a good time? And I'll just repeat

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Speaker 3: what I said on that show because I like it.

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Speaker 3: Is it There are three great themes of our time.

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Speaker 3: There's ai, there's everything having to do with infrastructure, and

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Speaker 3: there's crypto, and I believe in the first two and

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Speaker 3: I don't believe in the third.

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Speaker 2: Why not the third?

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Speaker 3: Look, the crypto is there's two questions with respect to crypto.

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Speaker 3: Is is it a currency? And if it's a currency,

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Speaker 3: should you own it? So let's skip the first part.

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Speaker 3: But that's like that's like, you know, is it a

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Speaker 3: currency is like having an dis question about how many

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Speaker 3: angels dance on the head of a pin.

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Speaker 4: You know, there's no structure to it.

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Speaker 3: So okay, So if it's a currency, why should you

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Speaker 3: own it? So let's ask the people who own crypto

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Speaker 3: why do they own it? They all say the same thing.

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Speaker 3: They say, fear currency all the deficit people's definitely gonna

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Speaker 3: be a memere my first meme. Yeah, and it's so

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Speaker 3: it's a hedge against the demise of fear currency. You know,

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Speaker 3: cats and dogs one day will lie together, you'll be

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Speaker 3: in a kay, but at least you'll have your crypto.

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Speaker 3: It's like digital gold. That's that's the thesis. So okay,

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Speaker 3: let's let's take them at their word. So if that's

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Speaker 3: the thesis, then on days where everybody's worried about inflation,

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Speaker 3: they're worried about the deficit, and NASDAK is down.

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Speaker 4: Three hundred points and interest.

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Speaker 5: Rates are up. Crypto should be up.

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Speaker 3: And on days where everybody's feeling great and video is

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Speaker 3: up and NASDAK is up and rates are down and

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Speaker 3: nobody cares about inflation, Crypto should be down.

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Speaker 4: And does it act that way?

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Speaker 5: It does not.

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Speaker 3: It acts exactly the opposite of its own these It's

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Speaker 3: correlation to NAASAC is like seventy five percent. So to me,

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Speaker 3: it's just another way for people to speculate on speculating.

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Speaker 3: So what do I do that there's no data point

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Speaker 3: of research that says that it's right or that it's wrong.

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Speaker 1: So at this point you don't like crypto debt whatever.

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Speaker 4: I never have, but I'm not short. I don't short

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Speaker 4: it because there's something to short.

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Speaker 1: How do you get an edge at a time where

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Speaker 1: everyone loves ai and where everyone's scouring for the place.

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Speaker 3: One example of a stock that I think eventually will

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Speaker 3: become a great AI play, which I mean the whole

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Speaker 3: thing about getting an edge I think is overrated. Because

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Speaker 3: most people have all the facts. It's a question of

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Speaker 3: how you interpret the facts. I mean, people think that

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Speaker 3: I had some sort of unbelievable edge about the subprime

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Speaker 3: mortgage sector. I had the same facts that everybody else had,

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Speaker 3: I just looked at them differently. So you know, right now,

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Speaker 3: everybody's focused on Nvidia and a MD and data centers.

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Speaker 3: But one day, and that day is not too far

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Speaker 3: from now, there will be a lot of AI apps

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Speaker 3: that you and I will use, and we're not going

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Speaker 3: to use them at a data center in the cloud.

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Speaker 3: We're going to want to use them on our phone

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Speaker 3: because that we wanted at the head end right here.

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Speaker 3: So at that point there's going to be I think

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Speaker 3: an entire new sales cycle of phones laptops that are

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Speaker 3: going to need to be upgraded to be able to

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Speaker 3: do all this stuff that eventually we will want to do.

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Speaker 4: That's Apple.

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Speaker 1: So you're buying Apple aggressively.

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Speaker 3: Well, we've owned it for a long time and we

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Speaker 3: continue to own it now. But it's not it's not

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Speaker 3: actionable at this second because that hasn't been an app.

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Speaker 3: What app I don't know. When it shows up, I'll

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Speaker 3: let you know, but until then, but at that point,

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Speaker 3: the phone I have, the new phone, that phone is

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Speaker 3: not going to be probably it's probably not going to

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Speaker 3: be capable to do some of the apps that you're

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Speaker 3: going to want to do.

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Speaker 2: It appears, and that's the direction of travel. I know

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Speaker 2: you've talked about this in the past. I'd love to

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Speaker 2: hear it again. The electricity grid. Yes, the demand on

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Speaker 2: electricity in this country, given where policy is, EVS, where

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Speaker 2: AI is going, how great is it going to be?

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Speaker 2: We in a position to supply it.

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Speaker 3: So the utility budget CAPEX budgets go up every single

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Speaker 3: year they update them. They do like a three year

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Speaker 3: forward look and the that comes out you know January

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Speaker 3: when they report, and the utility budgets three year budgets

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Speaker 3: are up twenty percent. That's an enormous, enormous sum. They're

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Speaker 3: going to go up even more because the U n

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Speaker 3: VIDA MD chips are use a lot more electricity than

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Speaker 3: the CPUs do, so there's even more pressure on the grid.

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Speaker 3: So the cycle of you know, improving the grid, building

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Speaker 3: you know, green type of utility struck is whether it's

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Speaker 3: wind and solar or just upgrading what you have, is

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Speaker 3: going to go on for a very very long time.

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Speaker 3: I've just mentioned one stock that I've talked about before,

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Speaker 3: you know, I mean what.

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Speaker 5: Do utilities do.

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Speaker 3: They send you electricity and they send you a bill,

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Speaker 3: but when they actually have to do something, they hire

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Speaker 3: somebody to do it. So when you hear that utility

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Speaker 3: A is in creeping, it's increasing its CAPEX budget, and

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Speaker 3: it is building a solar whatever or a gas whatever,

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Speaker 3: nine times out of ten they hire a company called Quanta,

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Speaker 3: which is the largest utility related engineering company in the country.

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Speaker 3: We've owted for a long time. But what I would say,

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Speaker 3: the amusing thing is I'm on the quarterly call.

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Speaker 4: Every quarter, and every quarter the CEO looks happier, and

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Speaker 4: you think I couldn't look happier.

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Speaker 3: Because he was so happy last quarter, but even happier

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Speaker 3: today because he has so much business he can't do

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Speaker 3: it all.

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Speaker 2: That's the winner. Is there a loser? Is there a

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Speaker 2: short for you an active show?

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Speaker 3: I'm not talking about shorts, No. I mean I do

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Speaker 3: a little shorting for myself, but that's it.

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Speaker 2: Could you think of a theme that associated with that

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Speaker 2: where there could be a group of companies that would

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Speaker 2: lose in that world?

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Speaker 3: Well, I would say just as an uber theme about

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Speaker 3: companies that I probably would not invest in.

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Speaker 4: Okay, are you know the stock set did really well.

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Speaker 3: Call it twenty eighteen nineteen twenty twenty one. Were the

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Speaker 3: very high revenue growth, negative earnings companies, kind of like

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Speaker 3: venture public venture capital companies. Those got destroyed in twenty

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Speaker 3: twenty two, down literally seventy five to ninety percent. You

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Speaker 3: know they've come back, but you know, when you're down

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Speaker 3: seventy five to ninety percent and then you go up

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Speaker 3: fifty percent, it doesn't look so good on a chart.

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Speaker 3: I would just avoid those companies until it becomes very

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Speaker 3: clear that they actually have real business models where they

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Speaker 3: can actually make money.

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Speaker 2: In just a moment, we'll catch up with our alyst

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Speaker 2: of Bloomberg Intelligence on the World Disney company. That stock

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Speaker 2: is down by about five percent this morning. Can we

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Speaker 2: squeeze in a question on Marvel? Yes we can, which

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Speaker 2: you have some expertise? I do this co say she

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Speaker 2: could go a whole lot longer than maybe it.

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Speaker 4: Could go for hours? What do you a background? I'm

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Speaker 4: going to brag a little bit.

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Speaker 3: I own one of the largest digital comic book collections

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Speaker 3: on planet Earth. It's eleven thousand comics on my iPad

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Speaker 3: and I've read all eleven thousand, So I could write

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Speaker 3: a dissertation on doctor Strange that would go for two

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Speaker 3: hundred pages.

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Speaker 4: Read it, Yes, you probably would be very interesting.

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Speaker 2: Maybe they should make it into So the problem.

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Speaker 4: With Marvel movies to me is that.

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Speaker 3: They had a great story and it ended and Iron

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Speaker 3: Man is dead, Captain America is ninety and Thor is

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Speaker 3: and this.

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Speaker 4: Really upsets me. And I really am serious about this.

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Speaker 3: They made Thor into a comedic comedic buffoon, and it

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Speaker 3: was always one of my favorite comics. So Thor being

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Speaker 3: a comedic buffoon I find extremely upsetting. This is Hamsworth, yes,

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Speaker 3: and there's no story anymore.

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Speaker 4: They they don't.

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Speaker 3: They had a story where they had all these different

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Speaker 3: different tangents, but it all wove down into one eventual

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Speaker 3: story and then it was over and they had been

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Speaker 3: unable to find a new story. And the problem is

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Speaker 3: that their three gate characters are gone. So even if

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Speaker 3: they had a story, we would want to go watch.

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Speaker 3: I would just say with final say this as an example,

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Speaker 3: the last Guardians of the Galaxy movie was unwatchable.

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Speaker 2: Steve Weisman with This World Disney Review. Steve Weisman of

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Speaker 2: Newberger Berment, Stay this is great, It's going to see it.

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Speaker 2: I'm pleased to say that. Joining us with his view

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Speaker 2: on things is Mark Sandy of Moody's Analytics. Mark, it's

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Speaker 2: been too long, sir, Thanks very much for catching up

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Speaker 2: with this this morning. Why is the concern in your words,

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Speaker 2: around inflation being above target? Why is that concern misplaced?

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Speaker 8: Well, I think inflation's at target appropriately measured at least

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Speaker 8: underlying inflation.

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Speaker 9: You know, I think if.

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Speaker 8: It's very problematic measuring the cost of housing services, particularly

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Speaker 8: owner's equivalent rent, and if you look at harmonized inflation

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Speaker 8: exclude OEER, we're there, and we've been there for quite

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Speaker 8: some time, so, you know, I think the FED should

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Speaker 8: be focused on the underlying rate of inflation, trying to

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Speaker 8: abstract from the vagaries of the data, the ups and

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Speaker 8: downs and all around. That's why they look at core

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Speaker 8: excluding food and energy. But at this point in time,

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Speaker 8: i'd also exclude OEER, and if you do that, we're there,

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Speaker 8: and we've been again.

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Speaker 9: We've been there for you know, six nine months.

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Speaker 8: So to me, it feels like the FED has achieved

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Speaker 8: its goal. It's mandated. We're at full employments of four

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Speaker 8: percent unemployment, and we're at we're at target on inflation

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Speaker 8: and inflation expectations are nailed down to that two percent target.

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Speaker 8: So I think, to me, all the everything's pointing brain

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Speaker 8: for FED, for the FED to start cutting rates here.

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Speaker 2: Why do you think they don't talk about it in

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Speaker 2: the same way.

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Speaker 8: I think it's a matter of credibility. I think they said, look,

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Speaker 8: we're getting this is this is our number. We're looking

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Speaker 8: at core consumer expenditure to flatter. That's our target. That's

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Speaker 8: the benchmark we're using for underlying inflation. We said we're

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Speaker 8: going to get to two percent, and we're going to

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Speaker 8: get there because they want to ensure that they are.

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Speaker 9: Credible going forward. I get it.

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Speaker 8: I understand that, and that's why I don't think they're

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Speaker 8: going to move until later in the year, probably around September.

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Speaker 8: That seems like the most logical point where they'd start

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Speaker 8: cutting rates. But you know they are running a risk

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Speaker 8: by doing so.

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Speaker 9: I mean, it keeps.

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Speaker 8: I do think the federal funds rate target at five

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Speaker 8: and a half percent is high, and it's putting a

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Speaker 8: lot of pressure on the banking system, financial system in

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Speaker 8: broader economy, and they run the risk of breaking something.

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Speaker 9: So they're taking a chance here. But I think at

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Speaker 9: the end of the day.

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Speaker 8: They want to make sure that they you know, they

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Speaker 8: did what they're saying, they said they're going to do.

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Speaker 8: They're going to hit two percent on the core PCEE

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Speaker 8: to flatter Mark.

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Speaker 1: If Tom Mark herey, he would say, let's rip up

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Speaker 1: the script because I'm getting a lot of hate mail

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Speaker 1: from people who might fall into the OI the deficit camp.

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Speaker 1: And we did just have Steve iispin on and he

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Speaker 1: basically said, all the concern, the gloom and doom about

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Speaker 1: the US deficit is what we've heard for the past

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Speaker 1: thirty or forty years of OI the deficit at everyone's

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Speaker 1: kitchen table, and it won't really matter, doesn't matter for

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Speaker 1: now economically.

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Speaker 2: Do you agree or do.

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Speaker 1: You think that the deficit is actually an economic concern

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Speaker 1: going forward for this government at a time where we

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Speaker 1: could be heading into potentially a less positive growth scenario

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Speaker 1: than what we've had.

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Speaker 8: Yeah, I think it matters. The deficits in debt matter.

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Speaker 8: I mean when the reason what happened in the past,

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Speaker 8: we said OI because all the you know, if you

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Speaker 8: if we didn't change something, then we would have a problem.

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Speaker 9: But we change something.

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Speaker 8: You know, if you go back and look at previous

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Speaker 8: historical points where the deficit that we're becoming a realisue

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Speaker 8: like the early mid nineteen nineties would be good, good,

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Speaker 8: good case study. We responded collectively, we came together, and

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Speaker 8: we did what was necessary in terms of taxes and

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Speaker 8: in terms of spending to rein it in and put

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Speaker 8: things on a more sustainable path. Here we are today.

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Speaker 8: You know, right now, I don't think deficits in debt matter.

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Speaker 8: But look look at the forecast, and I think the

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Speaker 8: forecasts are you know, pretty reasonable. Take the Congressional Budget

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Speaker 8: Office forecast, the by person the non person group that

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Speaker 8: does the budgeting, and if we don't change something, that

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Speaker 8: that to GDP goes from one hundred percent. And by

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Speaker 8: the way, that's a lot higher than it was twenty

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Speaker 8: twenty five years ago.

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Speaker 9: Twenty twenty five years ago was about half that.

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Speaker 8: So we're a one hundred percent to GDP and all

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Speaker 8: the trend lines look pretty bad. So we should say, OI,

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Speaker 8: we got to change this, and hopefully we come together

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Speaker 8: and change it. But of course, you know, in the

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Speaker 8: fracture of politics, local environment that we live in, it

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Speaker 8: just feels like that's going to be a pretty heavy lift, which.

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Speaker 1: Raises a question, at what point it becomes reality. People

440
00:20:33,400 --> 00:20:35,520
Speaker 1: have worried about it for a long time, but it's

441
00:20:35,520 --> 00:20:38,720
Speaker 1: not going to be reality until yields actually materially shift

442
00:20:38,800 --> 00:20:41,440
Speaker 1: higher in a way that's putted for the US government,

443
00:20:41,640 --> 00:20:43,960
Speaker 1: And that speaks to some of these concerns. Do you

444
00:20:44,000 --> 00:20:45,639
Speaker 1: see that on the horizon. Do you have a sense

445
00:20:45,720 --> 00:20:48,400
Speaker 1: of what that rate would be where it becomes unduly

446
00:20:48,440 --> 00:20:51,359
Speaker 1: punitive to the US government in terms of interest expenses,

447
00:20:51,560 --> 00:20:53,000
Speaker 1: and where that takes money away.

448
00:20:52,760 --> 00:20:55,959
Speaker 9: From Yeah, we're already it's getting a lot uncomfortable, right.

449
00:20:55,960 --> 00:20:57,560
Speaker 8: I mean, if you look at interest payments, the federal

450
00:20:57,560 --> 00:21:00,520
Speaker 8: government's interest payments, it's I think that we're truly dollars

451
00:21:00,560 --> 00:21:03,919
Speaker 8: now anally, and that's I think we just passed the

452
00:21:03,920 --> 00:21:06,680
Speaker 8: amount we spend on defense, and that's the first time

453
00:21:06,720 --> 00:21:09,679
Speaker 8: I think that's ever happened, right, I mean, that feels weird.

454
00:21:09,800 --> 00:21:12,040
Speaker 8: I mean, we're spending more on interest payments on our

455
00:21:12,080 --> 00:21:14,840
Speaker 8: debt than our own national defense. So I think, you know,

456
00:21:14,920 --> 00:21:16,960
Speaker 8: pressure is starting rice. But you know, here's the thing.

457
00:21:17,080 --> 00:21:20,800
Speaker 8: I don't think the deficits and debt are a clip event.

458
00:21:20,840 --> 00:21:22,359
Speaker 8: It's not like you come up to a clip and

459
00:21:22,400 --> 00:21:25,080
Speaker 8: you go over. It's a corrosive on the economy, and

460
00:21:25,640 --> 00:21:29,399
Speaker 8: as debt levels continue to rise, interest rates will continue

461
00:21:29,440 --> 00:21:32,840
Speaker 8: to rise. A lot of empirical work trying to understand

462
00:21:32,840 --> 00:21:34,920
Speaker 8: what the relationship is. But here's a good rule of thumb.

463
00:21:35,000 --> 00:21:38,040
Speaker 8: For every percentage point increasing the debt to GDP ratio,

464
00:21:38,280 --> 00:21:40,119
Speaker 8: so you go from one hundred percent that to GDP

465
00:21:40,240 --> 00:21:43,000
Speaker 8: to say one hundred and ten percent, that adds a

466
00:21:43,040 --> 00:21:45,120
Speaker 8: basis point. So you go one hundred one hundred ten percent,

467
00:21:45,160 --> 00:21:47,720
Speaker 8: that adds ten basis points to that ten year treasury yield.

468
00:21:48,040 --> 00:21:51,120
Speaker 9: You know, it's not perfectly right, but that's roughly right.

469
00:21:51,160 --> 00:21:52,240
Speaker 9: And the other thing I'd say is.

470
00:21:53,960 --> 00:21:57,399
Speaker 8: Jargony is nonlinear, meaning going from you know, one hundred

471
00:21:57,400 --> 00:21:59,520
Speaker 8: percent that to gb to one ten is one thing.

472
00:21:59,600 --> 00:22:02,600
Speaker 8: Going from one fifty to one sixty that's a totally

473
00:22:02,600 --> 00:22:04,920
Speaker 8: different thing. So you know, I don't think, at least

474
00:22:04,920 --> 00:22:07,159
Speaker 8: for the foreseeable future, we've got to clip ahead of us.

475
00:22:07,160 --> 00:22:09,320
Speaker 9: But you know, this is a corrosive on our economy's

476
00:22:09,320 --> 00:22:10,000
Speaker 9: ability to grow.

477
00:22:10,520 --> 00:22:12,200
Speaker 6: Mark, I want to ask you about the labor market

478
00:22:12,200 --> 00:22:14,600
Speaker 6: because you mentioned how we are running a tight labor market.

479
00:22:14,640 --> 00:22:18,280
Speaker 6: The Conference Board recently came out and consumers were less

480
00:22:18,280 --> 00:22:20,720
Speaker 6: concerned actually about inflation. They were concerned about cracks in

481
00:22:20,720 --> 00:22:23,119
Speaker 6: the labor market. Is it concerning to you when you

482
00:22:23,160 --> 00:22:25,159
Speaker 6: look through this data? I mean the last survey, the

483
00:22:25,200 --> 00:22:28,560
Speaker 6: response rate was fifty four point nine percent, lowess since

484
00:22:28,600 --> 00:22:29,360
Speaker 6: two thousand and two.

485
00:22:30,680 --> 00:22:33,400
Speaker 9: You mean the survey rate survey you're asking about.

486
00:22:33,720 --> 00:22:36,399
Speaker 6: Yeah, do we have no correct read on this data?

487
00:22:37,080 --> 00:22:37,320
Speaker 5: Yeah?

488
00:22:37,400 --> 00:22:40,640
Speaker 9: No, it bothers me. Yeah, and it's getting worse and worse.

489
00:22:40,680 --> 00:22:41,840
Speaker 8: And you know, if you go look at the other

490
00:22:42,119 --> 00:22:44,600
Speaker 8: I think the Jolt survey, the Job Opening Labor Turner survey,

491
00:22:44,680 --> 00:22:46,879
Speaker 8: we're down to like a third of respondents, you know,

492
00:22:46,920 --> 00:22:49,960
Speaker 8: getting back. So absolutely, and this goes to it's a

493
00:22:50,000 --> 00:22:52,640
Speaker 8: broader point. You know, all the surveys that we look

494
00:22:52,640 --> 00:22:55,080
Speaker 8: at and all the polls that we're looking at, they're

495
00:22:55,119 --> 00:22:57,600
Speaker 8: increasingly less reliable. So yeah, I think this is a

496
00:22:57,680 --> 00:23:01,359
Speaker 8: this is a big problem and why al data in

497
00:23:01,480 --> 00:23:05,240
Speaker 8: third party data sources are becoming more important because you know,

498
00:23:05,280 --> 00:23:07,639
Speaker 8: we can't rely on the surveys. They're just much more

499
00:23:07,880 --> 00:23:11,000
Speaker 8: particularly month to month. And this gets to the you know,

500
00:23:11,040 --> 00:23:14,520
Speaker 8: the inflation persistence in the first quarter. You know that

501
00:23:14,760 --> 00:23:18,359
Speaker 8: that's just a bunch of in my view, technical factors

502
00:23:18,440 --> 00:23:23,399
Speaker 8: or usual effects and perhaps survey issues, seasonal adjustment issues.

503
00:23:23,440 --> 00:23:26,640
Speaker 8: So it just you know, complicates using data the way

504
00:23:26,680 --> 00:23:28,840
Speaker 8: we have been using data month to month to set

505
00:23:28,920 --> 00:23:30,240
Speaker 8: for example, monetary policy.

506
00:23:30,400 --> 00:23:33,000
Speaker 2: Mark, we'd love you for you on an immigration as well,

507
00:23:33,080 --> 00:23:35,280
Speaker 2: this has been a big theme over the last few

508
00:23:35,320 --> 00:23:37,520
Speaker 2: months and some people, in fact, quite a few guests

509
00:23:37,520 --> 00:23:41,520
Speaker 2: on this program basically saying ways have stayed low even

510
00:23:41,520 --> 00:23:46,400
Speaker 2: with these really decent, tremendous payrolls figures because of immigration. Mark,

511
00:23:46,440 --> 00:23:48,200
Speaker 2: do you see it in quite the same way?

512
00:23:48,880 --> 00:23:49,200
Speaker 4: I do?

513
00:23:49,440 --> 00:23:49,720
Speaker 5: I do.

514
00:23:49,800 --> 00:23:52,359
Speaker 8: I mean, there's obviously the immigration and what's going on

515
00:23:52,400 --> 00:23:54,119
Speaker 8: into southern border is a real challenge for a lot

516
00:23:54,119 --> 00:23:56,960
Speaker 8: of communities across the country. But the one clear benefit,

517
00:23:57,640 --> 00:23:59,440
Speaker 8: particularly in this point in time when the liver market

518
00:23:59,480 --> 00:24:01,760
Speaker 8: it's very tight, business been struggling to find and.

519
00:24:01,720 --> 00:24:04,720
Speaker 9: Retain workers is the surge and immigration.

520
00:24:05,040 --> 00:24:09,600
Speaker 8: And you know, there's a real clear link between immigration

521
00:24:09,800 --> 00:24:12,520
Speaker 8: where those immigrants are going if you look across industries

522
00:24:12,560 --> 00:24:15,919
Speaker 8: like leisure and hospitality or retailing and wage growth in

523
00:24:15,960 --> 00:24:18,520
Speaker 8: those industries. So I think we can connect those dots

524
00:24:18,560 --> 00:24:19,960
Speaker 8: and I think this has been very important. So it

525
00:24:19,960 --> 00:24:23,520
Speaker 8: allows this immigration allows the economy to grow more quickly

526
00:24:24,800 --> 00:24:27,400
Speaker 8: and at the same time take pressure off of inflation.

527
00:24:27,440 --> 00:24:30,439
Speaker 9: So I think the particularly fortuitous and really important.

528
00:24:30,480 --> 00:24:33,239
Speaker 8: And you know, if there's one thing we can do

529
00:24:33,240 --> 00:24:35,640
Speaker 8: to address our long term fiscal problems, and it would

530
00:24:35,640 --> 00:24:39,000
Speaker 8: be to have a rational immigration policy, because if we

531
00:24:39,000 --> 00:24:41,720
Speaker 8: can have more immigrants and you know, the right kind

532
00:24:41,760 --> 00:24:45,160
Speaker 8: of immigrants, it's like a really power economic growth, then

533
00:24:45,320 --> 00:24:47,159
Speaker 8: that's going to solve a lot of problems, including our

534
00:24:47,240 --> 00:24:49,399
Speaker 8: long term fiscal problems. And we won't say oi, we

535
00:24:49,440 --> 00:24:51,760
Speaker 8: won't have to say oi, we've got to cut spending

536
00:24:51,800 --> 00:24:54,199
Speaker 8: and raised taxes. We got a stronger economy, it's generating

537
00:24:54,200 --> 00:24:56,680
Speaker 8: those tax revenues. Then we need to finance our government.

538
00:24:56,720 --> 00:24:58,719
Speaker 2: I like how that's catching on. Macat. You just want

539
00:24:58,760 --> 00:25:01,320
Speaker 2: to finish on this question. It's an utum one if

540
00:25:01,320 --> 00:25:04,280
Speaker 2: it is important for what's happened in wages in very

541
00:25:04,320 --> 00:25:09,119
Speaker 2: specific sectors and industries. What happens if bordering counters dropped,

542
00:25:09,160 --> 00:25:12,000
Speaker 2: which they have based on the information we got yesterday,

543
00:25:12,000 --> 00:25:15,760
Speaker 2: they've dropped by quite a bit. What happens next.

544
00:25:15,760 --> 00:25:18,800
Speaker 8: Well, the lever mark is going to tighten up and

545
00:25:18,840 --> 00:25:22,840
Speaker 8: it's put pressure on wages unless we see continued moderation

546
00:25:23,040 --> 00:25:25,679
Speaker 8: and demand, and then I think we will. You know,

547
00:25:25,680 --> 00:25:28,560
Speaker 8: I think that will happen here because interest rates are high.

548
00:25:28,600 --> 00:25:30,560
Speaker 8: At five and a half percent fund rate target, I

549
00:25:30,640 --> 00:25:33,520
Speaker 8: do believe is restrictive, and it becomes more restrictive over time.

550
00:25:33,560 --> 00:25:35,720
Speaker 8: I mean, one reason why it hasn't bit really hard

551
00:25:35,760 --> 00:25:38,800
Speaker 8: so far is that households and businesses did a really

552
00:25:38,800 --> 00:25:41,359
Speaker 8: good job locking in the previously record low interest rates.

553
00:25:41,440 --> 00:25:43,480
Speaker 8: But that only works for you know period of time

554
00:25:43,640 --> 00:25:47,040
Speaker 8: is more households and businesses face higher interest rates, you know,

555
00:25:47,080 --> 00:25:48,640
Speaker 8: they're going to start to pull back. So I think

556
00:25:48,640 --> 00:25:53,000
Speaker 8: the economy will slow and you know, even with less immigration,

557
00:25:54,800 --> 00:25:56,040
Speaker 8: I think the FED will be in a position to

558
00:25:56,040 --> 00:25:56,640
Speaker 8: cut interest rates.

559
00:25:56,640 --> 00:25:58,960
Speaker 2: Your verse and Mank, this is interesting, always good to

560
00:25:58,960 --> 00:26:01,800
Speaker 2: hear from you, MANK, Sandy, that of Moody's analytics always

561
00:26:01,840 --> 00:26:03,280
Speaker 2: catching on, you know, it's that good.

562
00:26:03,640 --> 00:26:03,880
Speaker 5: Oi.

563
00:26:04,200 --> 00:26:08,040
Speaker 1: Yeah, we don't have to say oi anymore, according to him, ours, Andy.

564
00:26:17,760 --> 00:26:19,600
Speaker 2: Do you wonder for to catch up with you once again?

565
00:26:20,000 --> 00:26:22,199
Speaker 2: I want to begin, if we may, talking about the

566
00:26:22,200 --> 00:26:25,240
Speaker 2: theme part business and the consumer price tolerance that you see.

567
00:26:25,280 --> 00:26:27,680
Speaker 2: Do you still have that pricing power at a time

568
00:26:27,720 --> 00:26:30,359
Speaker 2: where many companies are reporting that yes, there is upper

569
00:26:30,400 --> 00:26:34,000
Speaker 2: rent stability, but maybe some low rent fragility around the consumer.

570
00:26:34,680 --> 00:26:37,040
Speaker 10: Yeah, good morning, great to be with you all. Yeah,

571
00:26:37,280 --> 00:26:39,520
Speaker 10: I actually believe we do. If we sort of zoom

572
00:26:39,520 --> 00:26:41,440
Speaker 10: out a little bit. The quarter was really a strong

573
00:26:41,480 --> 00:26:44,200
Speaker 10: one for US, seventeen percent of I growth, thirty percent

574
00:26:44,240 --> 00:26:45,159
Speaker 10: EPs growth.

575
00:26:45,480 --> 00:26:47,560
Speaker 5: That's what led us to raise guidance.

576
00:26:47,200 --> 00:26:49,800
Speaker 10: To twenty five percent EPs growth for the full year,

577
00:26:49,800 --> 00:26:51,240
Speaker 10: which is obviously quite strong.

578
00:26:52,200 --> 00:26:55,040
Speaker 5: Two big stories I think here. Number one, you were just.

579
00:26:55,040 --> 00:26:59,159
Speaker 10: Talking about our experiences business was up ten percent on

580
00:26:59,200 --> 00:27:02,840
Speaker 10: a revenue basis, twelve percent on an AY basis, and

581
00:27:02,880 --> 00:27:06,600
Speaker 10: the parks business was actually up thirteen percent on OI,

582
00:27:06,640 --> 00:27:08,000
Speaker 10: So we do feel.

583
00:27:07,800 --> 00:27:08,520
Speaker 5: Good about that.

584
00:27:09,040 --> 00:27:11,639
Speaker 10: Obviously, I watch other stocks report and have seen that

585
00:27:11,800 --> 00:27:14,880
Speaker 10: the value consumer is really struggling a bit and making

586
00:27:15,000 --> 00:27:16,040
Speaker 10: choices right now.

587
00:27:16,320 --> 00:27:17,680
Speaker 5: We're not really seeing as.

588
00:27:17,640 --> 00:27:21,560
Speaker 10: Much of that in our portfolio of products. The other

589
00:27:21,600 --> 00:27:25,440
Speaker 10: positive for US is obviously the streaming service. Last year,

590
00:27:25,480 --> 00:27:28,240
Speaker 10: we lost about six hundred million dollars. This year we're

591
00:27:28,280 --> 00:27:31,200
Speaker 10: about break even and we saw twelve percent revenue growth,

592
00:27:31,240 --> 00:27:33,800
Speaker 10: So we're encouraged by the progress we've made in that

593
00:27:33,920 --> 00:27:36,280
Speaker 10: business in a relatively short period of time.

594
00:27:36,520 --> 00:27:38,439
Speaker 1: Here, you said that you're not seeing that kind of

595
00:27:38,440 --> 00:27:41,520
Speaker 1: price sensitivity, how much could you increase prices in from here?

596
00:27:42,640 --> 00:27:43,600
Speaker 5: It's a great question.

597
00:27:43,920 --> 00:27:47,280
Speaker 10: We took prices up a little bit in the beginning

598
00:27:47,280 --> 00:27:49,919
Speaker 10: of this year and didn't want to see much of

599
00:27:49,920 --> 00:27:53,159
Speaker 10: an impact. So as to what the future brings, We're

600
00:27:53,200 --> 00:27:55,639
Speaker 10: obviously very judicious with the way that we price. We

601
00:27:55,720 --> 00:27:59,040
Speaker 10: want to provide access to as many guests as we

602
00:27:59,160 --> 00:28:02,919
Speaker 10: possibly can, but we do believe that the great experiences

603
00:28:02,960 --> 00:28:05,480
Speaker 10: we provide people are willing to pay for it.

604
00:28:05,640 --> 00:28:07,920
Speaker 2: Here, let's talk about the streaming business just a little

605
00:28:07,960 --> 00:28:10,480
Speaker 2: bit more and more specifically, if we can Hulu. I

606
00:28:10,480 --> 00:28:13,200
Speaker 2: want to get into Hulu and the future of that business.

607
00:28:13,240 --> 00:28:15,840
Speaker 2: Can we just start with something like the likes of

608
00:28:15,880 --> 00:28:21,000
Speaker 2: Taranaga and Showgun on Hulu. How impressive that content actually was.

609
00:28:21,080 --> 00:28:23,680
Speaker 2: When you have something like that a big hit, How

610
00:28:23,680 --> 00:28:26,480
Speaker 2: does it translate in some gains for the company? How

611
00:28:26,520 --> 00:28:28,280
Speaker 2: does it fall to the bottom line?

612
00:28:28,600 --> 00:28:31,320
Speaker 5: Yeah, it really does create two things.

613
00:28:31,400 --> 00:28:34,800
Speaker 10: Number One, it brings new subscribers in right, we call

614
00:28:34,840 --> 00:28:38,479
Speaker 10: them for subscribers. Those types of jows do pull people

615
00:28:38,520 --> 00:28:42,200
Speaker 10: into the service, and then once they're into the service,

616
00:28:42,240 --> 00:28:45,560
Speaker 10: they realize just the great amount of content that's out there,

617
00:28:45,600 --> 00:28:49,160
Speaker 10: so that those shows also tend to increase stickiness over time.

618
00:28:49,280 --> 00:28:53,560
Speaker 10: So from both perspectives, they're truly additive. And the other

619
00:28:53,560 --> 00:28:56,880
Speaker 10: piece of it that's terrific I think is it really

620
00:28:56,880 --> 00:29:00,240
Speaker 10: does integrate well with the linear business as well. We

621
00:29:00,360 --> 00:29:03,000
Speaker 10: use these different windows to choose when to show things,

622
00:29:03,400 --> 00:29:05,920
Speaker 10: whether it's on FX or whether it's on ABC, and

623
00:29:05,960 --> 00:29:08,680
Speaker 10: then into the streaming service. So we were actually getting

624
00:29:08,760 --> 00:29:12,080
Speaker 10: quite good at reaching different audiences, streaming being a bit

625
00:29:12,120 --> 00:29:15,320
Speaker 10: of a younger audience, the linear business being a bit of.

626
00:29:15,240 --> 00:29:16,880
Speaker 5: A more mature audience.

627
00:29:17,480 --> 00:29:19,400
Speaker 10: It gives us the ability to reach the most people,

628
00:29:19,400 --> 00:29:22,880
Speaker 10: which is obviously terrific from an advertising and a subscriber process.

629
00:29:22,920 --> 00:29:26,520
Speaker 2: That sets up brilliant the conversation about the future of Hulu, Hugh,

630
00:29:26,600 --> 00:29:29,360
Speaker 2: So let's talk about it. A report yesterday from Reuter's

631
00:29:29,360 --> 00:29:32,080
Speaker 2: that JP Morgan has valued the company for you close

632
00:29:32,080 --> 00:29:35,000
Speaker 2: to twenty seven point five billion Morgan Stanley value when

633
00:29:35,000 --> 00:29:38,000
Speaker 2: wholy for Comcast at more than forty billion? Is that

634
00:29:38,040 --> 00:29:40,760
Speaker 2: an accurate assessment of where things are? They also reported

635
00:29:40,760 --> 00:29:43,560
Speaker 2: that we're looking for an independent valuation now to try

636
00:29:43,560 --> 00:29:45,320
Speaker 2: and close the gap. Could you just update us and

637
00:29:45,360 --> 00:29:47,880
Speaker 2: tell us if that's an accurate representation of the current

638
00:29:47,880 --> 00:29:48,760
Speaker 2: state of affairs.

639
00:29:49,120 --> 00:29:52,640
Speaker 10: Yeah, so we have a well defined process in terms

640
00:29:52,680 --> 00:29:54,880
Speaker 10: of how this is going to play its way out.

641
00:29:55,800 --> 00:29:58,400
Speaker 10: Beyond that, I'm not going to comment on that right now.

642
00:29:58,840 --> 00:30:01,480
Speaker 10: One of the sciplines I have, as I talk about

643
00:30:01,600 --> 00:30:03,400
Speaker 10: M and A, when it's done, not before it's done.

644
00:30:03,520 --> 00:30:06,160
Speaker 2: Too early to talk about a timeline, Hugh, A little

645
00:30:06,160 --> 00:30:08,880
Speaker 2: bit too early. So here, let's talk about going forward

646
00:30:08,880 --> 00:30:11,560
Speaker 2: from here where the big opportunities are for the streaming business.

647
00:30:12,960 --> 00:30:13,080
Speaker 4: OK.

648
00:30:13,440 --> 00:30:16,520
Speaker 10: I think there are a multitude of opportunities. Number one

649
00:30:17,240 --> 00:30:20,160
Speaker 10: great programming, and that's an advantage that we have in

650
00:30:20,160 --> 00:30:22,600
Speaker 10: our Disney portfolio because we create so much of our

651
00:30:22,640 --> 00:30:26,520
Speaker 10: own IP. Number two is driving engagement, and bundling clearly

652
00:30:26,560 --> 00:30:29,520
Speaker 10: does that, whether it's with sports, whether it's down in

653
00:30:29,600 --> 00:30:32,840
Speaker 10: Latin America, we're actually putting sports, General Entertainment and Disney

654
00:30:32,840 --> 00:30:36,680
Speaker 10: Plus together, or the tile that we added to the

655
00:30:36,720 --> 00:30:39,720
Speaker 10: Hulu tile on Disney Plus. So that bundling is clearly

656
00:30:39,720 --> 00:30:44,400
Speaker 10: an opportunity. Third is password sharing. That's an opportunity for us.

657
00:30:44,480 --> 00:30:46,800
Speaker 10: We think it's pretty substantial and it's going to drive growth.

658
00:30:47,560 --> 00:30:50,680
Speaker 10: Fourth is distribution cost. We do think by going direct

659
00:30:50,720 --> 00:30:55,040
Speaker 10: to consumer, we can actually both build a stronger relationship

660
00:30:55,040 --> 00:30:58,160
Speaker 10: with the consumer and also reduce our costs. And then

661
00:30:58,200 --> 00:31:02,520
Speaker 10: fifth is technology clearly an opportunity in terms of recommendation engines.

662
00:31:02,960 --> 00:31:05,880
Speaker 10: As we put all of that together, we're pretty well

663
00:31:05,880 --> 00:31:07,600
Speaker 10: convinced that this is going to be a great growth

664
00:31:07,640 --> 00:31:09,680
Speaker 10: business for the Disney Company for a.

665
00:31:09,640 --> 00:31:10,320
Speaker 5: Long long time.

666
00:31:10,480 --> 00:31:13,400
Speaker 6: Here you mentioned a number of things there, including password sharing.

667
00:31:13,440 --> 00:31:15,600
Speaker 6: How much do you expect all of those initiatives you

668
00:31:15,720 --> 00:31:18,800
Speaker 6: just mentioned to save money? What's the cost benefit of

669
00:31:18,880 --> 00:31:19,240
Speaker 6: all of that?

670
00:31:19,840 --> 00:31:23,800
Speaker 10: Yeah, I mean things like password sharing obviously drive additional

671
00:31:23,880 --> 00:31:28,040
Speaker 10: revenue growth. Things like distribution costs do save money for you.

672
00:31:28,320 --> 00:31:31,440
Speaker 10: In addition to that, things like recommendation engines and direct

673
00:31:31,480 --> 00:31:34,320
Speaker 10: to consumer marketing tends to reduce churn, which allows you

674
00:31:34,360 --> 00:31:37,480
Speaker 10: to reduce marketing costs. So there really is some synergy

675
00:31:37,560 --> 00:31:39,960
Speaker 10: between the revenue benefits and the cost benefits.

676
00:31:40,240 --> 00:31:42,160
Speaker 5: But overall, we're looking.

677
00:31:41,880 --> 00:31:44,000
Speaker 10: To make this into a great business, not just a

678
00:31:44,000 --> 00:31:46,080
Speaker 10: growth business, but a great margin business for.

679
00:31:46,080 --> 00:31:47,240
Speaker 5: The company as well, Hugh.

680
00:31:47,320 --> 00:31:49,360
Speaker 1: Over the past six months, we've been talking about the

681
00:31:49,400 --> 00:31:53,120
Speaker 1: cost cutting operations in Disney. Have we finished some of

682
00:31:53,160 --> 00:31:55,720
Speaker 1: the shrinking, have we finished the pairing back and are

683
00:31:55,720 --> 00:31:57,800
Speaker 1: you back on some sort of growth trajectory.

684
00:31:58,600 --> 00:32:02,560
Speaker 10: We are definitely back of growth trajectory. That said, we're

685
00:32:02,600 --> 00:32:05,080
Speaker 10: always going to be looking hard at our cost structure,

686
00:32:05,240 --> 00:32:08,720
Speaker 10: in particular looking to reduce costs where perhaps they add

687
00:32:08,760 --> 00:32:11,360
Speaker 10: less value than they used to and redeploy some of

688
00:32:11,360 --> 00:32:13,680
Speaker 10: that money back into the business so that we can

689
00:32:13,720 --> 00:32:16,280
Speaker 10: actually grow the balance of the business. So I think

690
00:32:16,280 --> 00:32:19,040
Speaker 10: that's a never ending exercise of looking for ways to

691
00:32:19,080 --> 00:32:21,120
Speaker 10: be more efficient as a company so that you can

692
00:32:21,160 --> 00:32:22,160
Speaker 10: invest in your future.

693
00:32:22,280 --> 00:32:24,959
Speaker 1: When you talk about growing, where is that growth focused on?

694
00:32:25,000 --> 00:32:25,760
Speaker 5: Geographically?

695
00:32:25,840 --> 00:32:27,400
Speaker 1: We know that in the US you've got a very

696
00:32:27,400 --> 00:32:31,600
Speaker 1: strong parks business. In Europe there also is a parks presence.

697
00:32:31,640 --> 00:32:34,640
Speaker 1: But in Asia, in particular in China, that has been

698
00:32:34,720 --> 00:32:37,320
Speaker 1: a growth area. Is it still How much can that

699
00:32:37,360 --> 00:32:40,240
Speaker 1: be a bright spot at a time of increasing geopolitical tensions?

700
00:32:40,680 --> 00:32:43,160
Speaker 10: Yeah, I do think not just China, but all of

701
00:32:43,240 --> 00:32:47,160
Speaker 10: Asia represent growth opportunities for us, both in terms of

702
00:32:47,200 --> 00:32:50,040
Speaker 10: the streaming service and select markets as well as in

703
00:32:50,120 --> 00:32:53,040
Speaker 10: terms of the parks and cruises business. So we do

704
00:32:53,080 --> 00:32:56,800
Speaker 10: see good growth opportunities there. Europe and Latin America continue

705
00:32:56,800 --> 00:32:59,960
Speaker 10: to be good growth opportunities and make no mistake North America.

706
00:33:00,000 --> 00:33:01,000
Speaker 5: We're not done growing yet.

707
00:33:01,000 --> 00:33:03,520
Speaker 10: We still think there are terrific opportunities here for us

708
00:33:03,560 --> 00:33:04,040
Speaker 10: right at home.

709
00:33:04,120 --> 00:33:06,800
Speaker 6: When it comes to Asia Pacific, is it domestic demand

710
00:33:06,800 --> 00:33:10,200
Speaker 6: within those countries, specifically China, or is it tourists in

711
00:33:10,240 --> 00:33:10,719
Speaker 6: the region.

712
00:33:11,360 --> 00:33:14,200
Speaker 10: Combination of both. I wouldn't tie it to one or

713
00:33:14,200 --> 00:33:15,720
Speaker 10: the other. I think it's a combination of both.

714
00:33:16,200 --> 00:33:18,760
Speaker 6: And when you look at China, to Lisa's point, you know,

715
00:33:18,800 --> 00:33:24,200
Speaker 6: we're going into a very heated political election coming up

716
00:33:24,240 --> 00:33:28,400
Speaker 6: in November, very hot rhetoric regarding China. Is it becoming

717
00:33:28,480 --> 00:33:33,360
Speaker 6: more challenging to deal with authorities in Beijing and business

718
00:33:33,360 --> 00:33:36,720
Speaker 6: on the ground given the increased geopolitical tensions.

719
00:33:37,360 --> 00:33:38,720
Speaker 5: It has not been for us.

720
00:33:38,760 --> 00:33:41,239
Speaker 10: You know, one of the benefits of what we do

721
00:33:41,320 --> 00:33:43,960
Speaker 10: for a living is, you know, we make people smile.

722
00:33:44,040 --> 00:33:46,560
Speaker 10: We bring them happiness, right, we bring them the most

723
00:33:46,560 --> 00:33:50,560
Speaker 10: magical place on earth. Candidly, the government's investing in infrastructure

724
00:33:50,600 --> 00:33:52,479
Speaker 10: to make it easier for guests to get to and

725
00:33:52,520 --> 00:33:55,880
Speaker 10: from the park. We're continuing to invest in that park

726
00:33:55,920 --> 00:33:57,360
Speaker 10: in order to drive growth.

727
00:33:57,600 --> 00:33:59,200
Speaker 5: It's doing better now than it ever has.

728
00:33:59,280 --> 00:34:03,560
Speaker 10: So we're the fortunate beneficiaries of bringing people joy in

729
00:34:03,560 --> 00:34:04,400
Speaker 10: a world that needs it.

730
00:34:04,520 --> 00:34:06,600
Speaker 2: Here, we've got to talk about the NBA deal as well.

731
00:34:06,800 --> 00:34:08,680
Speaker 2: Can you talk to us about that? And it is

732
00:34:08,719 --> 00:34:10,279
Speaker 2: going to be much high up. How do you make

733
00:34:10,360 --> 00:34:12,640
Speaker 2: money from something like that? I just want to understand

734
00:34:12,800 --> 00:34:14,200
Speaker 2: the numbers business of all of this.

735
00:34:14,920 --> 00:34:17,840
Speaker 10: Yeah, So the NBA, we're in the middle of discussions

736
00:34:17,920 --> 00:34:20,880
Speaker 10: right now. So again I don't comment on specific deals

737
00:34:20,960 --> 00:34:21,920
Speaker 10: until they're done.

738
00:34:22,280 --> 00:34:23,879
Speaker 5: What I would tell you is two things.

739
00:34:23,960 --> 00:34:27,160
Speaker 10: Number One, we've had a long, long, productive relationship with

740
00:34:27,239 --> 00:34:29,960
Speaker 10: the NBA. We've been infitted from it, and clear the

741
00:34:30,040 --> 00:34:31,600
Speaker 10: NBA has benefited as well.

742
00:34:32,120 --> 00:34:34,080
Speaker 5: I expect that that'll continue.

743
00:34:34,600 --> 00:34:36,880
Speaker 10: Number Two, We'll always continue to look at the balance

744
00:34:36,920 --> 00:34:40,200
Speaker 10: of our rights portfolio, and as things come up, we'll

745
00:34:40,239 --> 00:34:42,560
Speaker 10: decide whether we want to continue with them in the

746
00:34:42,600 --> 00:34:46,400
Speaker 10: current form, reduce them, or even in some cases, perhaps

747
00:34:46,440 --> 00:34:49,520
Speaker 10: not continue to carry them anymore. So I think we'll

748
00:34:49,560 --> 00:34:52,279
Speaker 10: balance the portfolio rights and we'll get the things that

749
00:34:52,320 --> 00:34:55,400
Speaker 10: we need as the thirty five percent market shareholder in

750
00:34:55,440 --> 00:34:58,799
Speaker 10: the sports business to continue to make ESPN the true

751
00:34:58,880 --> 00:34:59,760
Speaker 10: leader in sports.

752
00:35:00,080 --> 00:35:02,000
Speaker 2: You said you won't comment on deals until they're done,

753
00:35:02,040 --> 00:35:04,120
Speaker 2: but maybe you'll comment on other people's deals. Can we

754
00:35:04,160 --> 00:35:07,680
Speaker 2: do that Sony paramount? How would that impact Hollywood? Is

755
00:35:07,760 --> 00:35:08,680
Speaker 2: that something you'd depose?

756
00:35:09,920 --> 00:35:11,920
Speaker 5: You know, it's funny. I don't have a real comment

757
00:35:12,040 --> 00:35:12,600
Speaker 5: on that one.

758
00:35:13,600 --> 00:35:16,000
Speaker 2: I didn't expect you to, but we have to ask you.

759
00:35:16,000 --> 00:35:17,600
Speaker 2: You've got to leave it there. It's going to catch up,

760
00:35:17,640 --> 00:35:20,960
Speaker 2: Sir Hugh Johnson. There the Disney CFO. This is the

761
00:35:21,000 --> 00:35:25,239
Speaker 2: Bloomberg Surveillance Podcast, bringing you the best in markets, economics,

762
00:35:25,239 --> 00:35:28,200
Speaker 2: angio politics. You can watch the show live on Bloomberg

763
00:35:28,239 --> 00:35:31,400
Speaker 2: TV weekday mornings from six am to nine am Eastern.

764
00:35:31,680 --> 00:35:35,040
Speaker 2: Subscribe to the podcast on Apple, Spotify, or anywhere else

765
00:35:35,080 --> 00:35:37,719
Speaker 2: you listen, and as always, on the Bloomberg Terminal and

766
00:35:37,800 --> 00:35:39,000
Speaker 2: the Bloomberg Business app