WEBVTT - Yields, Markets, Tech, Oil, And Cars (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.120 at Bloomberg dot com slash podcast. Ira Jersey, chief US 0:00:23.200 --> 0:00:26.800 interest rate strategist for Bloomberg Intelligence. Uh, he joins us here, 0:00:26.840 --> 0:00:28.880 I I gotta be honest with you. Back just left 0:00:28.880 --> 0:00:30.840 the studio, he says, I got nothing to ask Ira. 0:00:31.120 --> 0:00:33.000 I'm all about earnings. I don't really care about the 0:00:33.000 --> 0:00:37.080 Federal Reserve right now. But so he's not even here. So, Um, 0:00:37.080 --> 0:00:40.560 but I'm looking at these two year tenure it's still 0:00:40.640 --> 0:00:43.880 inverted by you know, forty forty three points in terms 0:00:43.880 --> 0:00:46.960 of the yield curve, and you know types like you 0:00:47.040 --> 0:00:49.400 and Lisa Bramwins. You've teld me, I gotta pay attention 0:00:49.440 --> 0:00:52.040 to that stuff. It's important, isn't really, because it's been 0:00:52.040 --> 0:00:55.000 inverted for a while now and it's probably gonna continue 0:00:55.040 --> 0:00:57.840 to be inverted. Um. I think it matters in so 0:00:58.040 --> 0:01:02.080 far as um it is signaling that at some point 0:01:02.120 --> 0:01:06.080 we're going to have a much slower economic activity, UM 0:01:06.480 --> 0:01:09.760 in the future, and the Federal Reserve is going to 0:01:09.760 --> 0:01:12.319 continue to hike interest rates, so you know, at least 0:01:12.319 --> 0:01:15.640 well above four percent, and the market certainly price for 0:01:15.680 --> 0:01:19.080 that right now, and so so it does matter. Is 0:01:19.120 --> 0:01:21.920 it Is it going to affect economic growth in and 0:01:21.920 --> 0:01:24.440 of itself, No, it won't, but it is just a 0:01:24.480 --> 0:01:26.399 signal that the market thinks that we're going to have 0:01:26.480 --> 0:01:29.280 lower interest rates at some point in the future. Talk 0:01:29.319 --> 0:01:32.080 to us about some of these auctions, um, you tell 0:01:32.160 --> 0:01:34.000 us we need to really pay attention to these auctions, 0:01:34.120 --> 0:01:37.400 how they go, where's the demand, where's the demand coming from? 0:01:37.760 --> 0:01:42.080 What's been your observation over last week or two. Yeah, So, 0:01:42.080 --> 0:01:44.920 so the auctions really in both September and October have 0:01:45.000 --> 0:01:48.320 been pretty pretty weak. Actually, Um, you've seen demand slip 0:01:48.320 --> 0:01:51.600 a little bit. You've seen um, you've seen indirect bidder. 0:01:51.680 --> 0:01:54.680 So these are those are end users so UM, so 0:01:54.760 --> 0:01:58.760 you know mutual funds, central banks, UM, asset managers in general. UM, 0:01:58.800 --> 0:02:00.840 that's actually fallen a little bit. So that means that 0:02:00.880 --> 0:02:04.080 primary dealers have actually taken a larger share of these 0:02:04.120 --> 0:02:06.720 auctions and and I think that that's a signal that 0:02:06.760 --> 0:02:09.760 people are still not quite willing to go full bore 0:02:10.280 --> 0:02:13.000 into the market yet because these um, you know, these 0:02:13.000 --> 0:02:15.440 securities being auctioned right now are going to be out 0:02:15.480 --> 0:02:17.960 there for you know, ten years, thirty years, and and 0:02:18.160 --> 0:02:22.400 they've been reasonably uh reasonably weak, um you know that. 0:02:22.560 --> 0:02:25.600 That being said, I think it will be really interesting 0:02:25.600 --> 0:02:27.240 because in a couple of weeks we actually got the 0:02:27.240 --> 0:02:31.480 Treasury refunding announcements, So they're going to uh, the Treasury 0:02:31.480 --> 0:02:34.239 Department will determine how much it's going to issue over 0:02:34.280 --> 0:02:36.960 the next three months, and I suspect that they might 0:02:37.040 --> 0:02:39.360 actually reduce the amount that they're issuing just by a 0:02:39.400 --> 0:02:43.000 little bit. Um. But but interestingly, they've asked primary dealers 0:02:43.040 --> 0:02:44.799 and and we'll have some notes out on this in 0:02:45.120 --> 0:02:49.440 the recent in the recent future, UM about the h 0:02:50.480 --> 0:02:53.079 whether or not they're going to issue more debt at 0:02:53.120 --> 0:02:57.160 auction in order to buy back UH currently existing debts. 0:02:57.160 --> 0:02:59.320 So what we call off the run debt or or 0:02:59.720 --> 0:03:02.360 um you know, debt that was issued, say say two 0:03:02.440 --> 0:03:04.920 years ago, and a lot of that debt, remember, is 0:03:04.960 --> 0:03:07.240 trading at like eighty cents on the dollar, and eighty 0:03:07.280 --> 0:03:10.359 five cents on the dollar. So the Treasury Department can basically, 0:03:10.800 --> 0:03:13.280 you know, sell bonds now at par at a hundred 0:03:13.360 --> 0:03:15.920 and be able to buy back their uh you know, 0:03:16.000 --> 0:03:18.800 treasury securities at eighty five cents in the dollar, actually 0:03:18.880 --> 0:03:22.960 making the taxpayer you know, fifteen points effectively. And and um, 0:03:23.000 --> 0:03:25.360 you know, even though they'll be paying more interest cost 0:03:25.480 --> 0:03:28.440 on on the new debt compared to maybe the old debt, 0:03:29.280 --> 0:03:32.080 the fact that that old debt is not um is 0:03:32.080 --> 0:03:35.960 not trading at pars is an interesting um uh you know, 0:03:35.960 --> 0:03:37.960 it's really interesting. I think that that they might do 0:03:38.000 --> 0:03:41.600 this talk just about quantitative tightening. We don't I don't 0:03:41.600 --> 0:03:43.640 talk about it much. I don't hear about it much. 0:03:43.640 --> 0:03:47.080 Talk to us about is it happening? How is it happening? 0:03:47.360 --> 0:03:49.760 Do we need to pay attention to it? Yeah, well, 0:03:49.760 --> 0:03:51.880 it's it's it's kind of an autopilot. And I don't 0:03:51.880 --> 0:03:53.880 think that the Treasury at that the Federal Reserve will 0:03:53.960 --> 0:03:56.320 change the way that they do quantitative tightening at least 0:03:56.360 --> 0:04:00.880 until January February of next year. Um. And it's so 0:04:01.000 --> 0:04:04.880 basically for for the treasury market, um, the two big 0:04:05.000 --> 0:04:08.840 days that you have, uh, you have treasuries coming off 0:04:08.880 --> 0:04:10.720 the Fed's balance sheet, or the fifteenth of the month 0:04:10.800 --> 0:04:13.760 when you get settlements of of of three year notes, 0:04:13.800 --> 0:04:15.120 and then at the end of the month when you 0:04:15.120 --> 0:04:18.000 get settlements of of two year, five year, and seven 0:04:18.040 --> 0:04:20.800 year notes. When those bonds mature, they fall off the 0:04:20.839 --> 0:04:22.920 Fed's balance sheet, and that's when you see the Fed's 0:04:22.960 --> 0:04:25.760 balance eat shrink. And then of course mortgages roll off, 0:04:25.800 --> 0:04:27.680 and they roll off on the twenty fifth of the month, 0:04:27.760 --> 0:04:30.840 just the way that the um that that mortgages are 0:04:30.920 --> 0:04:34.400 retired when when people make principal payments um the Federal 0:04:34.400 --> 0:04:37.479 Reserves balance sheet falls from that. So so it does matter, 0:04:37.560 --> 0:04:41.120 and you've seen it. It's not it hasn't affected recently 0:04:41.200 --> 0:04:43.520 the treasury market. I think it affected the treasury market 0:04:43.520 --> 0:04:45.120 when it was being thought of and when it was 0:04:45.160 --> 0:04:49.080 announced earlier this year. So you really saw significant moves 0:04:49.160 --> 0:04:53.040 in the treasury market in February when not only because 0:04:53.360 --> 0:04:55.760 everyone was anticipating the FED raising interest rates, but also 0:04:55.800 --> 0:04:58.240 because of the quantitative tightening. I think where you've seen 0:04:58.279 --> 0:05:00.599 more of an of an effect is really in the 0:05:00.600 --> 0:05:03.640 mortgage market, where you see mortgage spreads. So the difference 0:05:03.680 --> 0:05:07.000 between mortgages and and the hedges that more that people 0:05:07.000 --> 0:05:10.440 who buy mortgages make have really widened out quite a lot. 0:05:10.480 --> 0:05:12.760 And liquidity in the mortgage market is as bet as 0:05:12.760 --> 0:05:15.600 liquidity is in the treasury market. Liquiditying the mortgage markets 0:05:15.640 --> 0:05:19.000 even worse. And and that's in part because um, there's 0:05:19.040 --> 0:05:20.719 just a lot more of them that have to be 0:05:21.200 --> 0:05:24.320 um uh they have to be absorbed by investors compared 0:05:24.360 --> 0:05:26.840 to the compared to treasuries, where like I mentioned, the 0:05:26.880 --> 0:05:29.640 Treasury Department has actually been shrinking the amount of bonds 0:05:29.640 --> 0:05:33.600 it's been issuing real quick seconds. If I want to 0:05:33.640 --> 0:05:35.600 unload a bunch of treasuries back in the day, I 0:05:35.680 --> 0:05:38.320 have a bunch of investment banks bidding me for those bonds. 0:05:38.360 --> 0:05:41.720 Is that still happen today? Uh? Yeah, well it does, 0:05:41.880 --> 0:05:44.240 and and primary dealers have to. But but there has 0:05:44.279 --> 0:05:48.720 been significantly less uh liquidity in the treasury market. So 0:05:48.760 --> 0:05:51.000 you've seen bid offers wide and you've seen you know, 0:05:51.120 --> 0:05:53.599 definitely challenge liquidity. Paul, I thought you were gonna ask 0:05:53.600 --> 0:05:55.360 me about where I am. I'm I'm in London today 0:05:55.360 --> 0:05:57.799 and I'm actually going to a to a soccer match tonight. 0:05:57.800 --> 0:06:01.159 I'm gonna go to Selhurst Park to see uh to 0:06:01.240 --> 0:06:06.520 see Crystal Palace play Wolverhampton Wanderers. So awesome. Alright, I 0:06:06.560 --> 0:06:08.440 have you know, have a point for me, you know, 0:06:08.440 --> 0:06:10.880 put a couple of shekels down on your favorite one there, 0:06:10.920 --> 0:06:14.200 but enjoy the soccer. Enjoy London. Um, that would be 0:06:14.240 --> 0:06:17.800 good fun. Our Jersey chief US interest rate strategist. So 0:06:17.839 --> 0:06:20.279 why is he in London if he's the chief US 0:06:20.440 --> 0:06:23.800 interest rate strategist? But anyway, shopping around his team may 0:06:23.839 --> 0:06:25.839 be shopping. He's just going over there to see some football, 0:06:25.880 --> 0:06:28.960 So good for him, Iro Jersey, good buddy of the show. 0:06:31.960 --> 0:06:33.600 Let's check in right now with our next guest. I'll 0:06:33.600 --> 0:06:38.039 hate Desponde, founder and chief investment officer of center Stone Investors. 0:06:39.360 --> 0:06:42.120 Am I buying this little rally here in the past 0:06:42.160 --> 0:06:43.760 couple of days? Hey, what do you make of it? Is? 0:06:43.760 --> 0:06:46.200 It's just kind of a technical bounce here? Is there 0:06:46.320 --> 0:06:50.120 something more there? Hey? Good morning? Yeah. I think basically 0:06:50.400 --> 0:06:52.840 there's that two D week moving average people have been 0:06:52.920 --> 0:06:57.080 fixating on has actually no relevance to the fundamentals. But 0:06:57.400 --> 0:07:00.240 you know, there's probably a lot of stop losses and 0:07:00.240 --> 0:07:02.520 and what not around there, So a couple of weeks 0:07:02.560 --> 0:07:05.000 of moving around that kind of makes sense to me, 0:07:05.279 --> 0:07:09.840 But the fundamentals are still uh, you know, deteriorating, not 0:07:09.920 --> 0:07:12.920 bad sell the rip is that? Is that what you're 0:07:12.960 --> 0:07:16.840 saying here? Um? At some point? Yeah, I don't know. 0:07:16.880 --> 0:07:19.000 I mean, I'm not a trader. You know, we're long term, 0:07:19.680 --> 0:07:22.840 but I'm not. I'm not you know, advocating one way 0:07:22.920 --> 0:07:24.880 or the other. I'm just saying that the you know, 0:07:24.920 --> 0:07:26.920 like this whole thing about capitulation and wall that you 0:07:26.960 --> 0:07:28.920 know you need you need some of that or bad 0:07:28.960 --> 0:07:31.920 news to confirm the capitulation. You don't have that yet, 0:07:31.960 --> 0:07:36.400 you just had fundamental deteriorating. I mean it takes uh, well, 0:07:36.800 --> 0:07:38.960 a lot of brains, a lot of guts, and a 0:07:39.040 --> 0:07:41.960 gigantic wallet really to be able to trade a day 0:07:41.960 --> 0:07:44.200 on a day to day basis. And even with all 0:07:44.200 --> 0:07:47.200 of those threings, you're three things, you're probably losing money 0:07:47.240 --> 0:07:49.560 in the long run for most people in terms of 0:07:49.600 --> 0:07:52.960 long term investments. Um, what would you do right now 0:07:53.000 --> 0:07:55.360 if you had cash to put to work? And apparently 0:07:55.960 --> 0:07:58.120 you know a lot of people do. Um. The b 0:07:58.240 --> 0:08:01.720 of A survey showed ASH at six point three percent, 0:08:01.840 --> 0:08:06.880 the highest level since April of two thousand and one. Yeah, 0:08:06.920 --> 0:08:08.960 you know, it's a tough one because if you have 0:08:09.080 --> 0:08:13.440 cash already, you are not used to seeing it earn anything. 0:08:14.480 --> 0:08:17.840 And now you're getting you're getting three well, just sitting 0:08:17.840 --> 0:08:19.360 in a bank account of money market you are getting 0:08:19.360 --> 0:08:22.160 almost three percent. UM. You're soon to get to four 0:08:22.200 --> 0:08:25.160 percent at least that's what the toilet or the one 0:08:25.240 --> 0:08:28.520 year notes are telegraphing. So it doesn't seem like a 0:08:28.560 --> 0:08:32.440 bad place to sit and wait, right without the uncertainty 0:08:32.679 --> 0:08:35.480 um the treasury. You know, there's going to be a 0:08:35.520 --> 0:08:39.520 point at which treasury bonds will become attractive. I'm I 0:08:39.559 --> 0:08:43.040 don't know exactly, but my initial work suggests that somewhere 0:08:43.040 --> 0:08:45.880 between four and five percent seems to be a resting 0:08:46.040 --> 0:08:49.720 place for treasure yields. UM. So you know, at some 0:08:49.720 --> 0:08:53.920 point that will be attractive. But um probably even more 0:08:53.960 --> 0:08:57.360 interesting is what you're starting to unearth overseas in some 0:08:57.440 --> 0:09:00.679 of these international markets where you can by, you know, 0:09:00.760 --> 0:09:04.440 very high quality franchises for twelve thirteen times earnings with 0:09:04.440 --> 0:09:08.200 four dividend yields. So we've kind of gotten you know, 0:09:08.320 --> 0:09:10.560 we're investors. You know, I'm not a money market fund, right, 0:09:10.640 --> 0:09:14.040 so for the most part we've been allocating more and 0:09:14.040 --> 0:09:18.400 more overseas to higher quality franchise type companies. Uh, you 0:09:18.440 --> 0:09:21.880 know within our value framework, um, that that seems to 0:09:21.920 --> 0:09:25.600 be from a three to five year perspective, very interesting 0:09:25.640 --> 0:09:27.120 place to be. And of course in the United States, 0:09:27.120 --> 0:09:29.880 we've also found plenty of interesting things to either buyer, 0:09:30.080 --> 0:09:33.960 buy moreover or even hold. So but you know, in 0:09:34.960 --> 0:09:37.760 two it's really unique year when you know, the whole 0:09:37.800 --> 0:09:42.120 sixty forty portfolio scenario really did not work. I mean, 0:09:42.240 --> 0:09:44.600 you know, you've got stocks down the mid twenties, you've 0:09:44.640 --> 0:09:48.880 got bonds down load of mid teens in total return. Man, 0:09:49.400 --> 0:09:56.000 what's an investor supposed to do here? Well, don't sell now, right, Yeah, 0:09:56.040 --> 0:09:58.439 because you've had that. As you mentioned, it's been the worst. 0:09:59.120 --> 0:10:00.960 I saw a Bank of America of studies that this 0:10:01.040 --> 0:10:05.000 is the worst year for household wealth destruction ever, right, 0:10:05.440 --> 0:10:11.880 going back back anyway, So at this point, um, you know, 0:10:11.920 --> 0:10:15.160 you're well more than halfway through this. Even I don't 0:10:15.200 --> 0:10:16.920 think that there's gonna be a banking crisis. I don't 0:10:16.920 --> 0:10:20.960 think there's gonna be some systemic issue that's anything unusual 0:10:21.040 --> 0:10:25.200 for a like a recessionary environment, which means that you know, 0:10:25.240 --> 0:10:27.040 you're kind of like two thirds of the way three 0:10:27.120 --> 0:10:29.840 quarters of the way down as far as stock price, 0:10:30.200 --> 0:10:34.920 UH moves at least um and and as I mentioned, 0:10:34.920 --> 0:10:37.880 if I think that UH inflation already peaked, which I do, 0:10:38.600 --> 0:10:41.600 and you know, bond rates at four or you're not 0:10:41.640 --> 0:10:43.600 that far from it, you know, just suggest holding and 0:10:43.880 --> 0:10:47.280 you know, just just waiting. I can do that, all right, 0:10:47.360 --> 0:10:50.120 I can do that. Thank you so much. We appreciate 0:10:50.400 --> 0:10:52.920 always checking in with you. Founder and ce IO at 0:10:53.000 --> 0:11:01.000 center Stone Investors, Mark Douglas is the CEO of Mountain. 0:11:01.120 --> 0:11:08.959 He's in our studio, which guarantee I guarantee to see 0:11:09.000 --> 0:11:11.400 the Yankees? Am I wrong? Now I look at him. 0:11:11.400 --> 0:11:14.360 I think I might be wrong. Wrong. I'll squeeze in 0:11:14.400 --> 0:11:18.080 some Yankees. I'll try my best. But it's New York. 0:11:18.400 --> 0:11:21.840 Are we skipping fall? It's like yesterday man had the 0:11:21.840 --> 0:11:24.280 wine shirt on him. So it was kind of, you know, 0:11:24.600 --> 0:11:27.440 last vestiges of summer. Now we're all in fall. Yeah, 0:11:27.480 --> 0:11:29.720 well like now I'm in the full flannel? Yes, are 0:11:29.760 --> 0:11:33.000 you in full Flanney? So we went from sorry, talk 0:11:33.080 --> 0:11:36.040 to me about the Yankees? Are they gonna win? Are 0:11:36.040 --> 0:11:38.560 they playing this afternoon? Four oh seven? First pitch and 0:11:38.600 --> 0:11:41.400 so what's the deal is it. It's a it's the 0:11:41.480 --> 0:11:44.559 game five, it's the winn or go home. So we 0:11:44.679 --> 0:11:47.280 got Nasty Nestor on the mound, one of our favorite 0:11:47.280 --> 0:11:49.880 pictures for the year. Feeling good about it all right 0:11:50.080 --> 0:11:51.760 that I just summarized that, and I think you got 0:11:51.840 --> 0:11:54.040 it right. But if and if they lose, it's gonna 0:11:54.040 --> 0:11:59.040 be bad, bad, mark Um. Netflix is a name that 0:11:59.080 --> 0:12:01.600 we love to talk about around here, and we love 0:12:01.640 --> 0:12:04.079 talking media with you, and we love talking media with you. 0:12:04.800 --> 0:12:08.440 But now Netflix is going to introduce an advertising tier. 0:12:08.559 --> 0:12:11.320 I thought that they the whole Netflix gig was we 0:12:11.320 --> 0:12:13.720 don't do advertising. You just pay us a subscription and 0:12:13.720 --> 0:12:16.920 it's a much better user experience. Well, I mean a 0:12:17.000 --> 0:12:21.360 lot of their customers obviously like Netflix content without the ads, 0:12:21.400 --> 0:12:24.040 but a lot of people want to pay less and 0:12:24.440 --> 0:12:27.280 advertising brings in the dollars to pay for all the 0:12:27.440 --> 0:12:31.599 content for those users. So this new tiers launching in November. 0:12:32.040 --> 0:12:36.240 UM it's been very well received. The price point and 0:12:36.400 --> 0:12:38.199 the number of minutes. It's not going to be a 0:12:38.240 --> 0:12:41.000 lot of minutes of advertising. So people like four minutes 0:12:41.120 --> 0:12:43.760 versus maybe five, fourteen or fifteen, Yeah, like four to 0:12:43.880 --> 0:12:47.000 five minutes of ads per hour of content, So that's 0:12:46.559 --> 0:12:50.880 pretty low at I think roughly half the price. So 0:12:51.040 --> 0:12:53.400 you know, it's a nice trade off, especially in these times. 0:12:53.440 --> 0:12:55.280 And I hear the CPM they're going to charge. The 0:12:55.360 --> 0:12:59.079 cost per thousand is like almost super Bowl Like there's 0:12:59.120 --> 0:13:01.800 a lot of the bait about that right now. Yeah, 0:13:02.000 --> 0:13:04.520 I think it's a little higher than the Super Bowl. 0:13:04.720 --> 0:13:08.560 I think, Um, I think that. I think maybe we'll 0:13:08.559 --> 0:13:13.720 see a couple of months of that and then I'm 0:13:13.760 --> 0:13:15.800 telling you, everyone I talked to they've rolled their eyes 0:13:15.800 --> 0:13:17.559 when I hear the CPM, but they were we'll see 0:13:17.600 --> 0:13:20.520 how it goes. Is that just because I know what 0:13:20.600 --> 0:13:23.320 the audience is, I know who they are, and as 0:13:23.360 --> 0:13:27.199 an advertiser, I'll pay up for that. Well, you know, 0:13:27.240 --> 0:13:29.520 I was watching Netflix the other day and I thought 0:13:29.760 --> 0:13:32.559 I was watching something that seemed like an ad. It wasn't. 0:13:32.880 --> 0:13:34.760 It was just part of content. It made me look 0:13:34.800 --> 0:13:37.000 at this, I was like, is that an ad? On Netflix? 0:13:37.040 --> 0:13:40.040 So they're counting on people paying attention to the ads 0:13:40.040 --> 0:13:44.280 and they can charge that premium CPM. My big question is, um, 0:13:44.360 --> 0:13:48.120 who does the seven dollar package? I mean, is it 0:13:48.200 --> 0:13:53.080 somebody paying fifteen dollars already that goes down to seven 0:13:53.200 --> 0:13:55.640 or is it for new customers that started seven? I mean, 0:13:55.679 --> 0:13:57.920 I think it's people who are not the binge watching 0:13:58.320 --> 0:14:01.480 watches on the show bad or maybe watching a little 0:14:01.480 --> 0:14:04.160 more casually and like, hey, I can say, you know, 0:14:04.280 --> 0:14:08.840 seven bucks, but doesn't cannibalize the subscription subscriber base they 0:14:08.880 --> 0:14:11.640 already had. That's the big questions. So their predictions that 0:14:11.720 --> 0:14:14.240 this is going to bring back rejoiners that think is 0:14:14.280 --> 0:14:17.439 the word, is going to bring back um former subscribers, 0:14:17.480 --> 0:14:20.840 maybe expand the subscriber base, but yeah, there's a lot 0:14:20.840 --> 0:14:23.040 of people who are gonna immediately want to go that 0:14:23.200 --> 0:14:26.480 lower price here and the Yeah, can they bring the 0:14:26.480 --> 0:14:28.920 ad revenue up as fast as they're gonna lose the 0:14:29.000 --> 0:14:32.160 revenue and subscriptions. I think that's the big question. I 0:14:32.200 --> 0:14:34.600 think the market is kind of immune to it right now. 0:14:34.800 --> 0:14:38.040 I mean, Netflix is dealing with problems that other streaming 0:14:38.040 --> 0:14:40.920 services wish they were dealing with. Yeah, I heard so, 0:14:41.200 --> 0:14:43.520 By the way, fifteen is what I pay. I hear 0:14:43.520 --> 0:14:47.120 there's a nine dollar subscription, which is what you can 0:14:47.240 --> 0:14:49.080 like the least you can pay, and you can only 0:14:49.160 --> 0:14:51.480 use it on one device, and they I guess they watch. 0:14:51.920 --> 0:14:54.080 By the way, that was the price for this new 0:14:54.120 --> 0:14:57.920 subscription is what Netflix was charging a few years right, 0:14:58.040 --> 0:15:01.920 But now they're gonna be making I here about six 0:15:01.960 --> 0:15:06.560 dollars six fifty on the ads per subscribers. So the 0:15:06.640 --> 0:15:12.280 seven plus that yields doing the quick math is from 0:15:12.320 --> 0:15:15.520 the Ohio state exactly. And so they're gonna be at 0:15:15.600 --> 0:15:18.200 least making more than the nine dollars that the cheaper 0:15:18.240 --> 0:15:21.480 subscribers would be paying, and almost as much as the 0:15:21.520 --> 0:15:26.200 fifteen that um that the financially irresponsible people like me. 0:15:26.240 --> 0:15:28.520 And and this is in the US. In the nationally, 0:15:28.600 --> 0:15:31.160 I think there's a lot of potential there to to 0:15:31.200 --> 0:15:35.120 offer them different priced tiers. So there you know. Again, 0:15:35.160 --> 0:15:39.160 these problems are huge opportunities and Netflix is moving very 0:15:39.240 --> 0:15:42.080 very quickly to capitalize on them. What else you're working on? 0:15:42.240 --> 0:15:44.360 What else is interesting out there that you guys are 0:15:44.360 --> 0:15:47.320 looking at? Well, I think the whole ads in terms 0:15:47.320 --> 0:15:51.200 of media, I think we're seeing every major service. Disney 0:15:51.200 --> 0:15:54.760 Plus is announced ads um. Amazon I think it is 0:15:54.800 --> 0:15:57.040 likely expand their ads here. So it's a little bit 0:15:57.080 --> 0:15:59.520 back to the future in the television industry. Looks like 0:16:00.000 --> 0:16:05.080 I'm glad you brought up because it feels like again five, seven, 0:16:05.200 --> 0:16:09.400 ten years ago, packages stuff up. Oh, that's what Comcast does, 0:16:09.520 --> 0:16:12.400 that's what Charter does. I mean, we're getting back to 0:16:12.440 --> 0:16:15.360 the same gig. You know. I had a dinner about 0:16:15.440 --> 0:16:18.160 two weeks ago, actually less than two weeks ago. I 0:16:18.240 --> 0:16:21.040 was at a table with someone who runs a major 0:16:21.080 --> 0:16:25.160 cable company, and he's the CEO, and he was complaining 0:16:25.160 --> 0:16:29.000 about the price the cable and he runs the company, 0:16:29.200 --> 0:16:31.600 and he explained, look, you know, we have to in 0:16:31.720 --> 0:16:34.120 order to offer choice as a cable provider, we have 0:16:34.200 --> 0:16:37.720 to have every channel on streaming. You don't have you 0:16:37.800 --> 0:16:39.560 just have to have the content. You don't have to 0:16:39.680 --> 0:16:43.600 doll out dollars to all of these individual TV networks. 0:16:43.600 --> 0:16:47.040 And so the price point and cable became very high streaming. 0:16:47.080 --> 0:16:48.920 If you want all this choice, you're gonna have to 0:16:48.920 --> 0:16:51.000 pay all these dollars exactly. I mean that that the 0:16:51.120 --> 0:16:54.960 value proposition from streaming. I don't think it's relevant anymore 0:16:55.240 --> 0:16:57.760 because I just I think, and maybe it's just from neglect. 0:16:57.960 --> 0:17:00.520 People are just paying four or five, six, seven streamers 0:17:00.520 --> 0:17:01.880 and you add it all up and it's the same 0:17:01.880 --> 0:17:04.399 as I was paying the eighty bucks per month for 0:17:04.560 --> 0:17:06.960 my cable for Comcast, which which is by the way, 0:17:07.200 --> 0:17:11.680 John Farroh asked this um question of I think, um, 0:17:11.760 --> 0:17:16.160 Michael Nathanson today, smart dude, which is is are some 0:17:16.160 --> 0:17:18.399 people trying to put together the cable box, you know 0:17:18.480 --> 0:17:21.000 as Disney with Hulu, trying to put together kind of 0:17:21.000 --> 0:17:24.080 an ESPN a cable experience. Yeah, I mean, we're gonna, 0:17:24.320 --> 0:17:26.240 we're gonna come back. You're gonna stick with us. But 0:17:26.320 --> 0:17:28.560 Matt has an interview coming up with Guy Johnson. They're 0:17:28.560 --> 0:17:33.440 gonna be interviewing the CEO of Rolls Royce, uh, which 0:17:33.520 --> 0:17:36.520 is owned by BMW. So that's gonna be very cool. 0:17:36.520 --> 0:17:37.960 That's coming up in just one which we're gonna bring 0:17:38.000 --> 0:17:40.439 that to you. Uh. And they're gonna talk about the 0:17:40.440 --> 0:17:43.960 car business, which Matt, as we know, loves to talk about. 0:17:43.960 --> 0:17:46.679 The carbiss Matt Miller, Guy Johnson with the CEO of 0:17:46.760 --> 0:17:50.879 Rose Royce, let's listen in. So Rolls Royce, talking of 0:17:50.920 --> 0:17:54.879 the car sector, is debuting its first fully electric vehicle. 0:17:55.000 --> 0:17:57.399 It's called the Specter. UH. This marks, of course, a 0:17:57.440 --> 0:18:01.000 new era for the also maker. We welcome now our 0:18:01.040 --> 0:18:04.720 TV and radio audience worldwide for an interview with Rolls Royce. 0:18:04.760 --> 0:18:08.640 Motor Cars CEO tostenst and of course we bring into 0:18:08.640 --> 0:18:12.480 this conversation as ever Bloomberg's Matt Miller Tosten thank you 0:18:12.560 --> 0:18:15.080 very much indeed for taking the time. So you've made 0:18:15.119 --> 0:18:18.480 the jump to the electric vehicle. What does demand look 0:18:18.600 --> 0:18:24.640 like for this first car? Very pleasing. First of all, 0:18:24.680 --> 0:18:28.120 good morning, Matt, really good. I mean we call it 0:18:28.119 --> 0:18:32.280 it's a prophecy fulfilled. Our founding father, Charles Rowles said 0:18:32.359 --> 0:18:36.640 in that he foresees the great future for electric cars 0:18:36.800 --> 0:18:40.480 once charging is fixed and is available. And I think 0:18:40.600 --> 0:18:45.080 now we are here fulfilling his prophecy, and we are 0:18:45.200 --> 0:18:48.280 very excited and our clients are. I mean, it's the 0:18:48.400 --> 0:18:51.840 very first time that you can acquire in the super 0:18:51.920 --> 0:18:57.359 luxury segment an electric car. So it's the very first, 0:18:58.000 --> 0:19:00.800 and for that reason we are also in pensively proud 0:19:00.840 --> 0:19:03.880 that we are the first. Obviously it's a true Rose 0:19:03.960 --> 0:19:07.760 Royce and an electric Ross Royce second, and that was 0:19:07.880 --> 0:19:10.959 very important for our clients. So what Towardsen. First of all, 0:19:11.000 --> 0:19:13.280 good morning to you and thanks so much for joining us. 0:19:13.520 --> 0:19:16.320 Um the car looks spectacular. I don't think anyone would 0:19:16.359 --> 0:19:20.960 have expected anything else. What about the performance the magic 0:19:21.040 --> 0:19:23.560 carpet ride that Rolls Royce is so famous for. And 0:19:24.200 --> 0:19:27.040 until now, Um, we've come to rely on the V 0:19:27.160 --> 0:19:28.959 twelve six and Athlete of V twelve for that. Now 0:19:28.960 --> 0:19:34.360 we're gonna rely on a big pound battery. I mean, 0:19:34.520 --> 0:19:36.840 first of all, Matt, it is a true Ros Royce 0:19:36.880 --> 0:19:39.640 that is promised, and we would never bring anything into 0:19:39.680 --> 0:19:44.320 the market that doesn't carry magic carpet right, whaf stability. 0:19:44.359 --> 0:19:48.199 Everything you know from Rose Royce is embedded also inspector, 0:19:48.359 --> 0:19:52.280 that's for sure. And it is even a remarkable way 0:19:52.359 --> 0:19:56.520 to drive it because it's even more silent, no slide 0:19:56.640 --> 0:20:01.120 raw from the twelve cylinder. It's a very silent propulsion 0:20:01.240 --> 0:20:05.040 fits perfect to the mark and for that reason, I 0:20:05.080 --> 0:20:09.440 think a brilliant Rose Royce rest issued and all the 0:20:09.560 --> 0:20:13.879 qualities you're used from Rose Royce embedded into it. So 0:20:14.000 --> 0:20:17.080 and it's a it's a huge car. It's built on 0:20:17.119 --> 0:20:21.479 a phantom like chassis, um and even heavier than a 0:20:21.480 --> 0:20:24.760 colony in is I think Sunds right. The colony is 0:20:24.760 --> 0:20:27.600 about six thousand, Um. Are you gonna put batteries in 0:20:27.640 --> 0:20:30.000 the colony next? What's next for Rolls Royce in terms 0:20:30.000 --> 0:20:36.400 of electrification mhm yeah. I mean I can't talk today 0:20:36.400 --> 0:20:39.240 about let's say, obviously all the next steps, but one 0:20:39.359 --> 0:20:43.680 just by end of twenties thirty met we will be 0:20:43.880 --> 0:20:47.760 fully electrified. So every future Rose Royce we're gonna bring 0:20:47.800 --> 0:20:52.200 into the market, every new one, is fully electrified Rose Royce. 0:20:52.600 --> 0:20:57.760 So we are seizing building combustion engine cars end or 0:20:57.800 --> 0:21:02.600 the beginning of twenty thirty m Tolsten. Let's talk about 0:21:02.640 --> 0:21:07.080 the profitability that is going to be um with you 0:21:07.160 --> 0:21:10.639 when when you make this this full move to electrification, 0:21:11.800 --> 0:21:15.639 you make a lot of money of building traditional ice 0:21:15.760 --> 0:21:19.920 engine cars. Your margins are being phenomenal. Are you going 0:21:19.960 --> 0:21:22.679 to be able to match those margins when you go 0:21:22.720 --> 0:21:29.480 all electric? Matt Yes, definitely, because that was always on 0:21:29.600 --> 0:21:32.880 my mind when we have the plan to go electric. 0:21:32.960 --> 0:21:35.880 That is not a plan that was born a year 0:21:35.920 --> 0:21:39.840 ago or whatever. We basically came into it when we 0:21:39.960 --> 0:21:42.840 experimented for the very first time over ten years ago 0:21:43.040 --> 0:21:46.480 with a prototype of an electric Phantom, and the client 0:21:46.520 --> 0:21:50.200