1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,840 Speaker 1: for insight from the best and economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,640 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot com, 6 00:00:26,640 --> 00:00:30,760 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. They have 7 00:00:30,800 --> 00:00:33,640 Speaker 1: to be kept in separate offices in Washington. Claudia Sam 8 00:00:33,720 --> 00:00:37,320 Speaker 1: joins us right now. Former Feederiserve economists with a blistering 9 00:00:37,360 --> 00:00:42,400 Speaker 1: note yesterday on America's economic growth. You're channeling Michigan's Justin 10 00:00:42,440 --> 00:00:45,680 Speaker 1: Wolfers at Claudia yesterday, and it goes off a five 11 00:00:45,760 --> 00:00:50,839 Speaker 1: handle on GDP? Why is America so miserable? If we're 12 00:00:50,880 --> 00:00:54,840 Speaker 1: popping four and a half five percent real GDP? Throw 13 00:00:54,920 --> 00:00:58,639 Speaker 1: on the Claudia sim inflation. Why are we so miserable 14 00:00:58,720 --> 00:01:01,360 Speaker 1: with seven percent nominal GDP? 15 00:01:03,360 --> 00:01:04,880 Speaker 2: That's a tough one, right. 16 00:01:04,920 --> 00:01:07,959 Speaker 3: There can, and there have been in the past, disconnects 17 00:01:08,040 --> 00:01:10,039 Speaker 3: between the kind of numbers that we see about the 18 00:01:10,040 --> 00:01:14,000 Speaker 3: total economy and what families are telling us about how. 19 00:01:13,920 --> 00:01:16,040 Speaker 2: Things are going and where they think things are going. 20 00:01:16,319 --> 00:01:19,240 Speaker 3: Sometimes families are correct, right, we don't want to discount this. 21 00:01:19,560 --> 00:01:22,760 Speaker 3: And yet at this point we have gotten number, like 22 00:01:23,080 --> 00:01:26,120 Speaker 3: just all kinds of readings on what's going on right now, 23 00:01:26,280 --> 00:01:29,640 Speaker 3: and they look really good. So it's been a real 24 00:01:29,720 --> 00:01:33,400 Speaker 3: slog since the pandemic began. Inflation has been high, but 25 00:01:33,480 --> 00:01:35,840 Speaker 3: like things are good, especially the labor market. 26 00:01:36,080 --> 00:01:37,960 Speaker 1: Tourist and Slack writes a beef note to Day to 27 00:01:38,000 --> 00:01:41,399 Speaker 1: Apollo and it sums up the consensus of the FED. 28 00:01:41,520 --> 00:01:44,000 Speaker 1: We're returning to two percent. Le Guards said that in 29 00:01:44,080 --> 00:01:46,840 Speaker 1: Marrakesh we have to get back to two percent, I 30 00:01:46,920 --> 00:01:51,200 Speaker 1: believe to paraphrase. And the Richmond Fed has a model 31 00:01:51,240 --> 00:01:54,600 Speaker 1: which is a higher our start. Is this a Fed 32 00:01:54,680 --> 00:01:57,880 Speaker 1: that's going to have the facts change when they change 33 00:01:58,040 --> 00:02:01,520 Speaker 1: or they change when the facts change. 34 00:02:01,960 --> 00:02:06,480 Speaker 3: Yeah, what we've seen so far is inflation is coming down, right, 35 00:02:06,560 --> 00:02:09,400 Speaker 3: Like if we had seen it still sticking or going up, 36 00:02:09,440 --> 00:02:11,000 Speaker 3: then okay, fine, our star's hired. 37 00:02:11,040 --> 00:02:13,360 Speaker 2: They got to do more. Probably that is not what 38 00:02:13,400 --> 00:02:14,000 Speaker 2: we've seen. 39 00:02:14,200 --> 00:02:17,639 Speaker 3: All of these models are based on past historical relationships, 40 00:02:18,040 --> 00:02:20,480 Speaker 3: and we're writing the playbook here and the FED has 41 00:02:20,480 --> 00:02:23,600 Speaker 3: shown themselves capable of rewriting the playbook. They did that 42 00:02:23,639 --> 00:02:25,959 Speaker 3: after the Great Recession, so they're going to go where 43 00:02:26,000 --> 00:02:29,400 Speaker 3: the data takes them. But it's really tough when the 44 00:02:29,440 --> 00:02:32,520 Speaker 3: typical guideposts just aren't working the way they. 45 00:02:32,400 --> 00:02:33,960 Speaker 4: Have Chlouddie, what do you make of the fact that 46 00:02:34,000 --> 00:02:37,320 Speaker 4: the Beige Book and other anecdotal data really has pointed 47 00:02:37,360 --> 00:02:40,640 Speaker 4: to a real softening, a slow down pain I felt 48 00:02:40,720 --> 00:02:42,959 Speaker 4: among the consumers, and the heart TATA keeps coming out 49 00:02:43,320 --> 00:02:46,120 Speaker 4: surprisingly strong again and again and again. 50 00:02:47,880 --> 00:02:50,639 Speaker 3: Right, I don't look at the latest numbers that we've seen, 51 00:02:50,680 --> 00:02:53,400 Speaker 3: particularly that five percent GDP growth it appears we're headed 52 00:02:53,400 --> 00:02:56,119 Speaker 3: at and say, oh, things are accelerating, We're going back 53 00:02:56,200 --> 00:02:57,960 Speaker 3: up to where we are. I think this is a 54 00:02:58,080 --> 00:03:01,040 Speaker 3: sign that we're bumping around a pretty good place in 55 00:03:01,120 --> 00:03:04,520 Speaker 3: terms of a sustainable recovery. Obviously that's not going to 56 00:03:04,520 --> 00:03:07,400 Speaker 3: be felt by everyone. You can absolutely find people to 57 00:03:07,480 --> 00:03:10,680 Speaker 3: give very heartbreaking stories about what has happened to them. 58 00:03:11,200 --> 00:03:13,440 Speaker 3: And yet we do have to look at the totality 59 00:03:13,440 --> 00:03:17,440 Speaker 3: of data and it's like across the board looking really good, 60 00:03:17,480 --> 00:03:19,840 Speaker 3: like we could keep up a sustainable pace that looks 61 00:03:19,880 --> 00:03:21,919 Speaker 3: a lot like, if not a little better than where 62 00:03:21,960 --> 00:03:22,720 Speaker 3: we were before. 63 00:03:22,760 --> 00:03:23,440 Speaker 2: The pandemic. 64 00:03:23,919 --> 00:03:26,720 Speaker 4: So do you think that this is becoming problematic for 65 00:03:26,760 --> 00:03:27,680 Speaker 4: the inflation story? 66 00:03:27,760 --> 00:03:27,919 Speaker 5: Right? 67 00:03:27,960 --> 00:03:30,280 Speaker 4: I mean, in other words, is this growth incompatible with 68 00:03:30,320 --> 00:03:33,000 Speaker 4: inflation continuing to go down to two percent? Or are 69 00:03:33,040 --> 00:03:35,480 Speaker 4: you basically arguing but it doesn't matter if we get 70 00:03:35,520 --> 00:03:37,640 Speaker 4: back down to two percent and that that really needs 71 00:03:37,640 --> 00:03:39,440 Speaker 4: to be what perhaps fetcher J. 72 00:03:39,520 --> 00:03:40,800 Speaker 6: Powell talks about today. 73 00:03:41,720 --> 00:03:44,200 Speaker 3: We're going back to two percent like the Fed. The 74 00:03:44,240 --> 00:03:47,640 Speaker 3: Fed is absolutely capable of getting us there, and they 75 00:03:47,680 --> 00:03:49,840 Speaker 3: may get a little too antsy and we get there 76 00:03:49,920 --> 00:03:52,600 Speaker 3: with a lot of disruption and potentially a recession. I 77 00:03:52,640 --> 00:03:55,280 Speaker 3: don't question that target. It's as made up as three 78 00:03:55,320 --> 00:03:58,360 Speaker 3: percent would be. So you know, there's nothing magical here. 79 00:03:59,080 --> 00:04:02,320 Speaker 3: We haven't seen signs of this being difficult. Inflation is 80 00:04:02,360 --> 00:04:05,920 Speaker 3: still chipping away down. It's a different story if we 81 00:04:05,960 --> 00:04:08,960 Speaker 3: start getting stuck, and then you've got to think harder 82 00:04:08,960 --> 00:04:09,760 Speaker 3: about what's next. 83 00:04:09,800 --> 00:04:12,520 Speaker 1: What is so with all our good analysis of recession 84 00:04:12,560 --> 00:04:15,000 Speaker 1: and Michael McKee with us in Washington as well to 85 00:04:15,040 --> 00:04:17,360 Speaker 1: the two of you, I've got one question. Mike. Let 86 00:04:17,360 --> 00:04:20,800 Speaker 1: me start with you. Our audience on radio and television 87 00:04:21,040 --> 00:04:25,680 Speaker 1: is looking at a mortgage rate of eight percent. It's 88 00:04:25,760 --> 00:04:31,120 Speaker 1: either outright shock or how do we adjust to that? 89 00:04:31,400 --> 00:04:34,040 Speaker 1: Is citizens, how do we adjust to that within our 90 00:04:34,120 --> 00:04:37,120 Speaker 1: daily life? From where you sit, Mike, is the fedaware 91 00:04:37,680 --> 00:04:39,640 Speaker 1: that a thirty year mortgage is eight percent? 92 00:04:41,360 --> 00:04:43,760 Speaker 7: Oh? Of course they are, and I've talked to many 93 00:04:43,839 --> 00:04:46,080 Speaker 7: of them about that, and they do recognize it is 94 00:04:46,160 --> 00:04:48,719 Speaker 7: a bit of a problem in conundrum because they've raised 95 00:04:48,800 --> 00:04:51,720 Speaker 7: rates and sort of killed the housing market because they're 96 00:04:51,720 --> 00:04:55,080 Speaker 7: in a different situation than we have been since I 97 00:04:55,120 --> 00:04:59,440 Speaker 7: can remember, where their rate increases are so much higher 98 00:04:59,480 --> 00:05:01,760 Speaker 7: than what we but were able to take out mortgages 99 00:05:01,800 --> 00:05:06,000 Speaker 7: at that Nobody wants to sell their houses. The thought 100 00:05:06,320 --> 00:05:09,040 Speaker 7: seems to be that if they start coming back down, 101 00:05:09,120 --> 00:05:11,799 Speaker 7: they will get to a level, maybe in the threes, 102 00:05:12,720 --> 00:05:15,920 Speaker 7: where mortgage rates will come down to four or five percent, 103 00:05:15,960 --> 00:05:18,559 Speaker 7: and people might start buying again because that won't seem 104 00:05:18,600 --> 00:05:19,120 Speaker 7: too bad. 105 00:05:19,200 --> 00:05:20,320 Speaker 8: But yeah, that's going to take a. 106 00:05:20,320 --> 00:05:23,240 Speaker 1: While, obviously, Claudia, bring us over to academics as well. 107 00:05:23,240 --> 00:05:25,440 Speaker 1: You're writing the next paper at Jackson Hole here on 108 00:05:25,480 --> 00:05:28,320 Speaker 1: the American housing market. Are we at a point, Lisa 109 00:05:28,360 --> 00:05:30,279 Speaker 1: and I've talked about this. Are we at a point 110 00:05:30,400 --> 00:05:33,359 Speaker 1: where for elites like you, the housing market doesn't matter? 111 00:05:35,520 --> 00:05:38,039 Speaker 3: Not just for me, right, there were a lot of 112 00:05:38,080 --> 00:05:41,320 Speaker 3: people that refinanced or purchase housing when we had a 113 00:05:41,480 --> 00:05:44,280 Speaker 3: very low interest rate. I mean, the housing market has 114 00:05:44,320 --> 00:05:47,599 Speaker 3: been very disrupted, both in a really good place and 115 00:05:47,600 --> 00:05:49,560 Speaker 3: now in a really bad place. This has been a 116 00:05:49,560 --> 00:05:51,840 Speaker 3: tough cycle. And those who timed it properly, and there 117 00:05:51,839 --> 00:05:55,880 Speaker 3: were millions of Americans who refinance their homes. They're in 118 00:05:55,920 --> 00:05:58,240 Speaker 3: a good place right now, and like you said, it 119 00:05:58,279 --> 00:05:59,000 Speaker 3: does make it treat. 120 00:05:59,040 --> 00:06:00,720 Speaker 2: They don't want to sell. They don't want to let 121 00:06:00,720 --> 00:06:01,080 Speaker 2: go of that. 122 00:06:01,440 --> 00:06:04,119 Speaker 1: Lisa, we're completely colored by this in New York City, 123 00:06:04,120 --> 00:06:08,760 Speaker 1: which is a completely wacko original housing market. To me, 124 00:06:08,920 --> 00:06:11,600 Speaker 1: this is the art we have to live in our houses. 125 00:06:12,279 --> 00:06:14,280 Speaker 1: I believe that. You know, like every month it's a 126 00:06:14,320 --> 00:06:18,120 Speaker 1: mortgage payment or a rent payment, And these numbers, to me, 127 00:06:18,279 --> 00:06:21,440 Speaker 1: have a greater effect than anything else. 128 00:06:21,520 --> 00:06:22,240 Speaker 8: We talk about. 129 00:06:22,480 --> 00:06:26,040 Speaker 1: Eight percent mortgage filters into everybody's pocketbook. 130 00:06:26,160 --> 00:06:28,880 Speaker 4: It affects our mobility and their willingness to move, especially 131 00:06:28,920 --> 00:06:31,680 Speaker 4: given the fact that it's going to be unaffordable for 132 00:06:31,680 --> 00:06:33,640 Speaker 4: the vast majority of people to do so. Claudia, I 133 00:06:33,640 --> 00:06:35,400 Speaker 4: just want to bring that together full circle with this 134 00:06:35,480 --> 00:06:38,720 Speaker 4: idea of the conundrum that a lot of investors have 135 00:06:38,839 --> 00:06:41,680 Speaker 4: right now. Are we seeing a world that can manage 136 00:06:41,720 --> 00:06:44,479 Speaker 4: with five percent rates and keep the growth profile that 137 00:06:44,560 --> 00:06:46,680 Speaker 4: you're talking about and that we're just seeing today with 138 00:06:46,760 --> 00:06:49,440 Speaker 4: claims coming in the lowest since January. Is that what 139 00:06:49,480 --> 00:06:50,279 Speaker 4: we are witnessing. 140 00:06:51,480 --> 00:06:54,279 Speaker 3: It's too soon to tell, but we are absolutely setting 141 00:06:54,360 --> 00:06:57,839 Speaker 3: up what could be. You know, the really important piece 142 00:06:57,839 --> 00:06:59,880 Speaker 3: of this would be productivity picks up. 143 00:07:00,440 --> 00:07:01,960 Speaker 2: That we're talking about growth. 144 00:07:01,720 --> 00:07:03,800 Speaker 3: Is not just quarter to quarter, but we can really 145 00:07:03,800 --> 00:07:06,320 Speaker 3: sustain it at a higher rate, then we can deal 146 00:07:06,360 --> 00:07:07,920 Speaker 3: with the higher interust rates. 147 00:07:07,920 --> 00:07:09,560 Speaker 2: There are some glimmers of hope. 148 00:07:10,400 --> 00:07:12,520 Speaker 3: I mean, that's all productivity looks like right now in 149 00:07:12,560 --> 00:07:13,280 Speaker 3: the data. 150 00:07:13,400 --> 00:07:14,600 Speaker 2: But that's the path. 151 00:07:14,640 --> 00:07:17,280 Speaker 3: And then we need Chair Powel to have a green 152 00:07:17,320 --> 00:07:21,000 Speaker 3: span moment and be like, you know, growth has picked up, 153 00:07:21,040 --> 00:07:22,120 Speaker 3: but we're not there yet. 154 00:07:22,120 --> 00:07:24,520 Speaker 2: He shouldn't do that today when he does the Q and. 155 00:07:24,560 --> 00:07:25,800 Speaker 8: A, when we're there. 156 00:07:25,840 --> 00:07:32,000 Speaker 6: This is great, Claudie s thank you so much, Marques 157 00:07:32,080 --> 00:07:34,320 Speaker 6: for one place to say, joined us around now, Secretary 158 00:07:34,400 --> 00:07:37,040 Speaker 6: esp fantastic to catch up with you, sir. As always, 159 00:07:37,080 --> 00:07:39,400 Speaker 6: I wanted to lean on your experience in the administration. 160 00:07:39,760 --> 00:07:42,960 Speaker 6: We've seen some landmark accords come out of the Trump administration, 161 00:07:43,040 --> 00:07:46,800 Speaker 6: the Abraham Accords, just establishing diplomatic relations between israelom places 162 00:07:46,840 --> 00:07:48,960 Speaker 6: we never thought we would. We were hopeful that was 163 00:07:49,000 --> 00:07:52,520 Speaker 6: going to take place with Saudi Arabia and Israel. It hasn't. 164 00:07:52,760 --> 00:07:54,800 Speaker 6: Mark Are wee learning that there is some forces in 165 00:07:54,840 --> 00:07:56,400 Speaker 6: the Middle East that just don't want peace? 166 00:07:58,160 --> 00:08:01,920 Speaker 9: Yes, of course we do, and that is Iran principally, 167 00:08:02,440 --> 00:08:05,560 Speaker 9: and then the proxy groups around the region that they 168 00:08:05,600 --> 00:08:10,040 Speaker 9: support Hamas, has Blah, the Hutis, the Shia militia. 169 00:08:09,640 --> 00:08:10,360 Speaker 10: Groups in Iraq. 170 00:08:10,400 --> 00:08:13,280 Speaker 9: Look, I think a big part of what motivated Hamas 171 00:08:13,320 --> 00:08:16,040 Speaker 9: to attack at this time and the way they did, 172 00:08:16,680 --> 00:08:19,920 Speaker 9: was the fact that the normalization accord between the Saudis 173 00:08:19,920 --> 00:08:23,040 Speaker 9: and Israelis was moving forward, albeit slowly, but moving forward. 174 00:08:23,480 --> 00:08:25,679 Speaker 9: And of course if it was concluded on the terms 175 00:08:25,680 --> 00:08:27,680 Speaker 9: that we knew that were leaking out, that would have 176 00:08:27,720 --> 00:08:30,720 Speaker 9: meant a tremendous shift of power back to the Palestinian authority, 177 00:08:30,840 --> 00:08:32,520 Speaker 9: which of course we know the Hamas is. 178 00:08:34,480 --> 00:08:35,040 Speaker 10: Opposed to. 179 00:08:35,120 --> 00:08:39,079 Speaker 9: Right, there's friction between Fatah and Hamas, and of course 180 00:08:39,160 --> 00:08:44,160 Speaker 9: the Hamas's benefactors Iran would also be hurt by normalization 181 00:08:44,200 --> 00:08:47,000 Speaker 9: because you'd finally see an alignment or an emerging alignment 182 00:08:47,040 --> 00:08:51,520 Speaker 9: between the Arab States and Israel against Persia against Iran. 183 00:08:51,600 --> 00:08:55,160 Speaker 9: So I think those are principal reasons why this attack happened. 184 00:08:55,160 --> 00:08:58,440 Speaker 1: At this time, the political battle will be engaged to 185 00:08:58,559 --> 00:09:04,040 Speaker 1: look back to twenty twenty. Hindsight Secretary, what I'm fascinated 186 00:09:04,120 --> 00:09:10,800 Speaker 1: by is how we prosecute a military affair with Israeli forces. Okay, fine, 187 00:09:11,440 --> 00:09:16,880 Speaker 1: against terrorist groups. We've never really done this, have we. 188 00:09:16,880 --> 00:09:19,520 Speaker 9: Well, I mean, you could argue that our response after 189 00:09:19,600 --> 00:09:22,040 Speaker 9: nine to eleven when we went into Afghanistan first to 190 00:09:22,120 --> 00:09:25,079 Speaker 9: displace the Taliban and then of course the pursuit of 191 00:09:27,920 --> 00:09:31,280 Speaker 9: al Qaeda and eventually ISIS et cetera, was part of that. 192 00:09:31,320 --> 00:09:33,360 Speaker 9: We of course, yes, we went after ISIS in Syria 193 00:09:33,400 --> 00:09:35,679 Speaker 9: as well, So but I get your point. Look, it's 194 00:09:35,800 --> 00:09:38,760 Speaker 9: very tough. You have an army built for big, heavy, 195 00:09:38,760 --> 00:09:44,040 Speaker 9: conventional fights, an extraordinary soft capability, going into a heavily populated, 196 00:09:44,840 --> 00:09:47,800 Speaker 9: dense area, trying to root out militants among the public, 197 00:09:47,840 --> 00:09:50,880 Speaker 9: and having to fight in multiple dimensions right on the ground, 198 00:09:50,960 --> 00:09:53,640 Speaker 9: above the ground and below the ground, and it's going 199 00:09:53,679 --> 00:09:55,280 Speaker 9: to be quite a bloody and messy affair. 200 00:09:56,040 --> 00:09:58,640 Speaker 1: What would do screaming eagles do I mean, you know, 201 00:09:58,679 --> 00:10:03,080 Speaker 1: you've got tangible experience here. Do they do a massive 202 00:10:03,160 --> 00:10:06,719 Speaker 1: bombardment I'll of World War two, say, and then go in? 203 00:10:07,160 --> 00:10:09,600 Speaker 1: Or do you expect them to prosecute something different? 204 00:10:10,559 --> 00:10:12,880 Speaker 9: Look, I think we've seen the bombardment so far. At 205 00:10:12,880 --> 00:10:14,360 Speaker 9: some point they're going to have to move in and 206 00:10:14,400 --> 00:10:17,080 Speaker 9: go street by street, block by block. I think part 207 00:10:17,080 --> 00:10:19,320 Speaker 9: of the reason why you see so many air strikes 208 00:10:19,360 --> 00:10:22,200 Speaker 9: is they're rubbling buildings. I will tell you know, you 209 00:10:22,240 --> 00:10:23,559 Speaker 9: refer back to my time with the one hundred and 210 00:10:23,600 --> 00:10:27,040 Speaker 9: first Airborne when we were in southern Iraq at the 211 00:10:27,040 --> 00:10:30,720 Speaker 9: Gulf four. We want to avoid cities because city fighting 212 00:10:30,800 --> 00:10:33,679 Speaker 9: is really tough. It consumes a lot of soldiers, not 213 00:10:33,760 --> 00:10:35,920 Speaker 9: just those you lose, but you have to leave people behind. 214 00:10:36,360 --> 00:10:38,560 Speaker 9: And again when you're fighting in multiple dimensions, this is 215 00:10:38,559 --> 00:10:40,520 Speaker 9: really tough. So I think they go block by block, 216 00:10:40,840 --> 00:10:43,760 Speaker 9: being very careful to avoid civil civilian casualties. 217 00:10:43,960 --> 00:10:45,079 Speaker 10: At some point they occupy. 218 00:10:45,160 --> 00:10:47,320 Speaker 9: But the really big question that we don't know yet 219 00:10:47,440 --> 00:10:49,560 Speaker 9: is what's the end state. What happens when they're done, 220 00:10:49,559 --> 00:10:51,600 Speaker 9: Because at some point they're going to pull out. They 221 00:10:51,600 --> 00:10:54,080 Speaker 9: want to pull out and do what vacuum do you create? 222 00:10:54,120 --> 00:10:57,160 Speaker 9: Do you somehow politically get the Palestinian authority to come in? 223 00:10:57,600 --> 00:11:00,959 Speaker 9: Is there some type of inter Arab peace peace keeping 224 00:11:01,000 --> 00:11:03,760 Speaker 9: group that comes in. Those are the big unanswered questions. 225 00:11:03,920 --> 00:11:05,160 Speaker 9: What does the end state look like? 226 00:11:05,640 --> 00:11:09,320 Speaker 4: Secretary, you were Defense secretary under the former President Trump. 227 00:11:09,520 --> 00:11:11,559 Speaker 4: How would have his response been different to what we're 228 00:11:11,559 --> 00:11:12,160 Speaker 4: seeing today. 229 00:11:13,880 --> 00:11:16,240 Speaker 10: I'm not sure that it would be different in this moment. 230 00:11:16,480 --> 00:11:18,160 Speaker 9: I would argue that it would be different with regard 231 00:11:18,200 --> 00:11:21,000 Speaker 9: to Ukraine and other countries, but with thee Israel, given 232 00:11:21,040 --> 00:11:24,840 Speaker 9: the close connections between our countries, our peoples, so much 233 00:11:24,840 --> 00:11:27,280 Speaker 9: to share between our two countries, I'm not sure it 234 00:11:27,280 --> 00:11:30,640 Speaker 9: would be that much different. Although I would say that 235 00:11:30,720 --> 00:11:33,520 Speaker 9: I think Trump would probably take a harder line and 236 00:11:33,760 --> 00:11:35,480 Speaker 9: a more public line against Iran. 237 00:11:35,960 --> 00:11:37,320 Speaker 10: I've argued for that in the past. 238 00:11:37,800 --> 00:11:40,480 Speaker 9: I know Secretary of State Pompeo has, and I would 239 00:11:40,480 --> 00:11:42,680 Speaker 9: like to see more from the Biden administration about connecting 240 00:11:42,720 --> 00:11:44,400 Speaker 9: the dots back to Iran, because I think at the 241 00:11:44,480 --> 00:11:46,880 Speaker 9: end of the day, while Israel can go in and 242 00:11:46,920 --> 00:11:50,120 Speaker 9: decapitate Jumas and try and suppress them, unless you deal 243 00:11:50,160 --> 00:11:53,000 Speaker 9: with the country Iran again, who's funding and training and 244 00:11:53,000 --> 00:11:56,160 Speaker 9: supporting them. Then I think Jimas just crops back up 245 00:11:56,200 --> 00:11:56,680 Speaker 9: over time. 246 00:11:57,000 --> 00:11:58,800 Speaker 4: How do you deal with Iran? I mean this has 247 00:11:58,840 --> 00:12:01,560 Speaker 4: been one of the big quagmi for a lot of nations, 248 00:12:01,640 --> 00:12:05,240 Speaker 4: especially given that people want to avoid World War three. 249 00:12:06,400 --> 00:12:06,600 Speaker 10: Yeah. 250 00:12:06,679 --> 00:12:09,199 Speaker 9: Look, I'm not arguing for strikes on Iran right now, 251 00:12:09,200 --> 00:12:10,880 Speaker 9: but I do think we should see a consensus some 252 00:12:10,920 --> 00:12:14,640 Speaker 9: more emerging first between the Western democracies United States, Europe 253 00:12:14,640 --> 00:12:17,000 Speaker 9: and elsewhere about really finally. 254 00:12:16,720 --> 00:12:19,280 Speaker 10: Tightening down economic sanctions on Iran. 255 00:12:19,440 --> 00:12:21,680 Speaker 9: You could go after their energy exports and I know 256 00:12:21,720 --> 00:12:23,920 Speaker 9: what that does to the energy markets, and then you 257 00:12:23,920 --> 00:12:26,600 Speaker 9: could talk about further isolation of them. I just don't 258 00:12:26,600 --> 00:12:30,160 Speaker 9: think we've seen a concerted effort over the past five, six, 259 00:12:30,200 --> 00:12:32,240 Speaker 9: seven years, and certainly over the past couple. In fact, 260 00:12:32,480 --> 00:12:36,160 Speaker 9: some would argue that the administration has been so eager 261 00:12:36,240 --> 00:12:38,600 Speaker 9: to find a nuclear deal with Iran that we've given 262 00:12:38,600 --> 00:12:39,200 Speaker 9: them too much. 263 00:12:39,240 --> 00:12:40,560 Speaker 10: And look, there's a good case to be. 264 00:12:40,559 --> 00:12:42,400 Speaker 9: Made for that, but I think we finally we need 265 00:12:42,440 --> 00:12:44,280 Speaker 9: to recognize that Iran is at the root of all 266 00:12:44,320 --> 00:12:44,880 Speaker 9: these problems. 267 00:12:45,040 --> 00:12:47,360 Speaker 6: As Secretary asker, if we can finish on drawing on 268 00:12:47,400 --> 00:12:49,400 Speaker 6: your experience, what do you suppose is happening right now? 269 00:12:49,440 --> 00:12:51,240 Speaker 6: What we're going to think from the outside looking in 270 00:12:51,640 --> 00:12:54,360 Speaker 6: is a period of intense deploymacy, a troop build up, 271 00:12:54,640 --> 00:12:56,680 Speaker 6: seemingly on the brink of a full ground invasion. What 272 00:12:56,720 --> 00:12:59,320 Speaker 6: do you suppose is happening right now on the ground 273 00:12:59,360 --> 00:13:00,960 Speaker 6: and what do you think going to see in a 274 00:13:00,960 --> 00:13:01,920 Speaker 6: coming weeks and months. 275 00:13:02,760 --> 00:13:05,360 Speaker 9: Look, I think from the Israeli side, they're gathering intelligence, 276 00:13:05,400 --> 00:13:08,199 Speaker 9: they're prepping their forces, they're talking about their battle plans, 277 00:13:08,760 --> 00:13:10,760 Speaker 9: doing some final training and making sure they know the 278 00:13:10,800 --> 00:13:12,199 Speaker 9: game plan to go in and how they're going to 279 00:13:12,240 --> 00:13:12,679 Speaker 9: deal with it. 280 00:13:13,120 --> 00:13:14,600 Speaker 10: I think that's happening at that level. 281 00:13:14,640 --> 00:13:18,080 Speaker 9: At the same time, they're reinforcing their northern front with 282 00:13:18,160 --> 00:13:20,320 Speaker 9: regard to Hesblo and southern Leblon, and they also have 283 00:13:20,360 --> 00:13:22,120 Speaker 9: to keep a presence in the West Bank in case 284 00:13:22,160 --> 00:13:25,160 Speaker 9: that rises up. I think President Binen's done make good 285 00:13:25,200 --> 00:13:27,520 Speaker 9: moves moving the carrier strike groups into the eastern med 286 00:13:27,520 --> 00:13:29,440 Speaker 9: The Marines will soon be following in there as well. 287 00:13:29,760 --> 00:13:32,080 Speaker 9: But one thing that has been talked about is this, Look, 288 00:13:32,120 --> 00:13:35,640 Speaker 9: if Hesbelah opens up a front in the north, we're 289 00:13:35,679 --> 00:13:37,800 Speaker 9: going to get involved. We have to at this point, 290 00:13:37,840 --> 00:13:41,520 Speaker 9: given what we've said about deterring Hesbla, Iran and others, 291 00:13:41,880 --> 00:13:43,880 Speaker 9: and so if Hesblah opens up a real front there, 292 00:13:43,920 --> 00:13:47,800 Speaker 9: i'd see American involvement happening with tomahawks, strikes, maybe airstrikes, 293 00:13:48,160 --> 00:13:49,880 Speaker 9: But we have to talk about that. And as you know, 294 00:13:49,960 --> 00:13:52,680 Speaker 9: there's the grander chessboard out there with regard to diplomacy. 295 00:13:53,400 --> 00:13:55,439 Speaker 10: Please to see Tony blinking going around the region. 296 00:13:55,440 --> 00:13:58,120 Speaker 9: I think it's important that we try and keep that 297 00:13:58,280 --> 00:14:02,600 Speaker 9: Saudi Israeli normalization deal on hold, make sure it's not dead. 298 00:14:02,640 --> 00:14:04,880 Speaker 9: At some point we're going to resurrect that because in 299 00:14:04,920 --> 00:14:08,199 Speaker 9: my view, if Jimas and Iran hates that deal, those 300 00:14:08,240 --> 00:14:10,480 Speaker 9: are two good reasons to pursue it, and I think 301 00:14:10,520 --> 00:14:12,600 Speaker 9: it would really change the dynamics of the region. 302 00:14:12,600 --> 00:14:14,120 Speaker 6: You got about a minute left. If we could explore 303 00:14:14,120 --> 00:14:16,360 Speaker 6: the following, I think it would be beneficial. Is Turkey 304 00:14:16,400 --> 00:14:19,360 Speaker 6: the missing linkit? Where does Turkey stand in all of this? 305 00:14:20,920 --> 00:14:22,200 Speaker 10: Turkey stands in every place. 306 00:14:22,240 --> 00:14:26,240 Speaker 9: I mean, they straddle multiple fences right they're criticizing Israel 307 00:14:26,320 --> 00:14:28,960 Speaker 9: right now. They obviously have a large Muslim population, but 308 00:14:29,000 --> 00:14:33,400 Speaker 9: they're also active in southern Turkey, northern Iraq, going after 309 00:14:33,960 --> 00:14:36,680 Speaker 9: our friends and partners there. I mean, they play this 310 00:14:36,760 --> 00:14:39,360 Speaker 9: game multiple angles. You know, on one hand, they're with 311 00:14:39,440 --> 00:14:41,960 Speaker 9: us in NATO, but he's supporting PUT in another areas. 312 00:14:42,040 --> 00:14:44,040 Speaker 9: And of course what we're not talking about is there's 313 00:14:44,040 --> 00:14:47,560 Speaker 9: a conflict emerging between Armenia and Azerbaijan not too far away. 314 00:14:48,000 --> 00:14:50,240 Speaker 9: So you see the world fracturing here in these different 315 00:14:50,240 --> 00:14:54,000 Speaker 9: spots at this time, and they it all traces its 316 00:14:54,080 --> 00:14:55,080 Speaker 9: roots back decades. 317 00:14:55,680 --> 00:14:57,320 Speaker 6: In many cases, I'm with you, some of these key 318 00:14:57,400 --> 00:15:00,720 Speaker 6: issues just totally off the radar right now. Let's catch 319 00:15:00,800 --> 00:15:03,320 Speaker 6: up again soon. Marquesper There, the former US Defense Secretary 320 00:15:03,360 --> 00:15:16,640 Speaker 6: and author of a sacred oath can scarce them with 321 00:15:16,760 --> 00:15:20,080 Speaker 6: us CIO at the New h Wath Camerack go in morning. 322 00:15:20,120 --> 00:15:20,560 Speaker 2: Good morning. 323 00:15:20,640 --> 00:15:23,000 Speaker 6: Let's talk about a struggle for those airlines at the moment. 324 00:15:23,080 --> 00:15:24,880 Speaker 6: Is that just one sector? Does that tell you something 325 00:15:24,880 --> 00:15:28,000 Speaker 6: about consumer discretation respend in more broadly? What is it? 326 00:15:28,200 --> 00:15:29,880 Speaker 2: Yeah? Where's the ZEMPIC when you need it? 327 00:15:30,480 --> 00:15:33,280 Speaker 11: I think that what we're seeing here is this dynamic 328 00:15:33,640 --> 00:15:36,800 Speaker 11: that we are still very much in a late cycle economy, 329 00:15:36,880 --> 00:15:39,200 Speaker 11: that there are winners and there are losers. There are 330 00:15:39,240 --> 00:15:42,840 Speaker 11: those with pricing power and those without pricing power. You 331 00:15:42,880 --> 00:15:46,760 Speaker 11: see it this morning, Netflix pricing power, Tesla no pricing power. 332 00:15:46,880 --> 00:15:49,320 Speaker 11: That has something to do with small ticket item versus 333 00:15:49,400 --> 00:15:51,640 Speaker 11: large ticket item, but it also has to do with 334 00:15:51,840 --> 00:15:54,880 Speaker 11: interest rates and the cost of capital makes the operating 335 00:15:54,960 --> 00:15:58,560 Speaker 11: environment more difficult. So in late cycle you have to 336 00:15:58,560 --> 00:16:01,880 Speaker 11: be hyper selective when you're picking your equities because there 337 00:16:01,920 --> 00:16:05,640 Speaker 11: will be those that stumble, I love love love your note. 338 00:16:05,760 --> 00:16:07,800 Speaker 1: You go right to the top line. You look at 339 00:16:07,800 --> 00:16:12,080 Speaker 1: the nominal GDP inflation overlay. You've got the Magnificent seven 340 00:16:12,200 --> 00:16:15,800 Speaker 1: sales growth up something like thirty five percent year of 341 00:16:15,800 --> 00:16:18,160 Speaker 1: a year. Nobody's talking about the top line. 342 00:16:18,400 --> 00:16:21,000 Speaker 11: Yeah, it's extraordinary, and part of that top line is 343 00:16:21,080 --> 00:16:23,920 Speaker 11: because they have that great pricing power. Some of that 344 00:16:24,160 --> 00:16:27,040 Speaker 11: is skewed by Nvidia. It's pretty wild. And Video is 345 00:16:27,080 --> 00:16:30,320 Speaker 11: going to grow earnings by one thousand percent this quarter, 346 00:16:30,880 --> 00:16:33,280 Speaker 11: one thousand percent. But even if you remove in Video 347 00:16:33,360 --> 00:16:36,000 Speaker 11: that the Magnificent seven will still be growing earnings by 348 00:16:36,040 --> 00:16:39,440 Speaker 11: sixty percent. So if you take out the Magnificent seven 349 00:16:39,520 --> 00:16:42,920 Speaker 11: from this quarter's earnings, earnings would be down four percent 350 00:16:43,080 --> 00:16:46,160 Speaker 11: versus the down one percent to flat that's currently projected. 351 00:16:46,400 --> 00:16:48,080 Speaker 4: Is that priced aunority. 352 00:16:48,480 --> 00:16:50,520 Speaker 11: I think it is. I think it is to an 353 00:16:50,560 --> 00:16:54,160 Speaker 11: extent because you've seen so much multiple expansion. It doesn't 354 00:16:54,200 --> 00:16:56,240 Speaker 11: mean that these still aren't great companies, but if you 355 00:16:56,280 --> 00:17:00,080 Speaker 11: look at the direction of growth, it slows materially going 356 00:17:00,120 --> 00:17:03,000 Speaker 11: into next year. What you see is in video, for example, 357 00:17:03,120 --> 00:17:06,440 Speaker 11: one thousand percent goes to thirty three percent. You see 358 00:17:06,480 --> 00:17:10,920 Speaker 11: similar decelerations for other Magnificent seven names. The market cares 359 00:17:10,960 --> 00:17:13,200 Speaker 11: about second derivatives, so I think it'll be a really 360 00:17:13,280 --> 00:17:17,600 Speaker 11: interesting test for leadership next year as we see that deceleration. 361 00:17:18,240 --> 00:17:21,200 Speaker 4: John was asking about American airlines and whether some of 362 00:17:21,240 --> 00:17:23,879 Speaker 4: the disappointments that we've seen from America and from United 363 00:17:24,320 --> 00:17:27,040 Speaker 4: are specific to this sector or whether there's a broader 364 00:17:27,480 --> 00:17:30,280 Speaker 4: withdrawal from consumer spending that you're seeing on the ground. 365 00:17:30,359 --> 00:17:32,600 Speaker 4: Is there a dissonance between some of the official data 366 00:17:33,040 --> 00:17:35,159 Speaker 4: and the anecdotal data like what we got in the 367 00:17:35,200 --> 00:17:38,280 Speaker 4: Beige Book that points to a much more substantial slowing down. 368 00:17:38,640 --> 00:17:43,240 Speaker 11: Yeah, there is dissidents there. There's also within the credit 369 00:17:43,240 --> 00:17:45,960 Speaker 11: card data that was the big head scratcher. All the 370 00:17:46,000 --> 00:17:48,560 Speaker 11: credit card data seem to point to a slowing and 371 00:17:48,640 --> 00:17:50,920 Speaker 11: consumer of demand. We did not see that. Of course, 372 00:17:50,920 --> 00:17:53,800 Speaker 11: in retail sales. The best explanation I've heard of that 373 00:17:54,000 --> 00:17:58,280 Speaker 11: is because the measurement period was after the credit card 374 00:17:58,359 --> 00:18:01,000 Speaker 11: data was starting to roll over. So I think what 375 00:18:01,000 --> 00:18:03,800 Speaker 11: we're starting to see is at the margin, consumer spending 376 00:18:03,960 --> 00:18:07,000 Speaker 11: is starting to soften, but it's not broad enough yet 377 00:18:07,000 --> 00:18:08,760 Speaker 11: that it's falling off a cliff. And part of that 378 00:18:08,920 --> 00:18:11,240 Speaker 11: is just because the labor market still remains so tight 379 00:18:11,280 --> 00:18:13,359 Speaker 11: and wage growth still remains rather robust. 380 00:18:13,560 --> 00:18:17,040 Speaker 1: So what's your prescription except for load the boat on apple? 381 00:18:17,119 --> 00:18:20,119 Speaker 1: Julian Emmanuel writes a piercing note today with Edheimen at 382 00:18:20,119 --> 00:18:23,680 Speaker 1: Evercore Isi. They still are on recession twenty twenty four, 383 00:18:23,720 --> 00:18:26,800 Speaker 1: but he says a defensive tilt is essential. Do you 384 00:18:26,880 --> 00:18:29,560 Speaker 1: agree or can you be more optimistic and buy shares today? 385 00:18:30,040 --> 00:18:32,760 Speaker 11: I think the defensives are certainly washed out right now. 386 00:18:32,840 --> 00:18:35,960 Speaker 11: You look at big, huge put option buying within the staples, 387 00:18:35,960 --> 00:18:38,920 Speaker 11: for example. Utilities are very washed up, but there's still 388 00:18:39,040 --> 00:18:42,479 Speaker 11: very much in down trends. Our preferred way is to 389 00:18:42,520 --> 00:18:45,760 Speaker 11: say we're willing to own cyclical names as long as 390 00:18:45,800 --> 00:18:49,080 Speaker 11: they're high quality, meaning companies that have good balance sheets 391 00:18:49,080 --> 00:18:51,720 Speaker 11: have strong free cash flow, but the overlay on that 392 00:18:51,960 --> 00:18:55,040 Speaker 11: has to be valuation discipline, because the higher you go 393 00:18:55,119 --> 00:18:58,000 Speaker 11: in valuation, the more you have room to fall as 394 00:18:58,080 --> 00:19:00,919 Speaker 11: valuations come in, as growth X spectations come in. 395 00:19:01,400 --> 00:19:04,240 Speaker 6: Let's finish where you started a zenpic. You seen in 396 00:19:04,280 --> 00:19:08,240 Speaker 6: the performance of some of these packaged foodstocks. Yeah, brutal, 397 00:19:08,600 --> 00:19:11,720 Speaker 6: it's brutal Mondale's tom than something like twenty percent is 398 00:19:11,760 --> 00:19:14,520 Speaker 6: the peak earlier this year? How much is that stock 399 00:19:14,880 --> 00:19:17,000 Speaker 6: that company going to change this market? 400 00:19:18,200 --> 00:19:20,640 Speaker 11: Look, I think that as long as what you're seeing 401 00:19:20,760 --> 00:19:23,480 Speaker 11: is this shoot first, ask questions later, meaning that you're 402 00:19:23,520 --> 00:19:26,920 Speaker 11: pricing in an impact of something that probably is going 403 00:19:26,960 --> 00:19:29,679 Speaker 11: to take very many years to play out. And the 404 00:19:29,720 --> 00:19:32,000 Speaker 11: fact that Walmart was already calling it out as far 405 00:19:32,040 --> 00:19:34,919 Speaker 11: as weaker sales, that seems to be a really convenient 406 00:19:35,040 --> 00:19:38,080 Speaker 11: excuse as to what they're seeing. So I don't want 407 00:19:38,119 --> 00:19:39,760 Speaker 11: to I wouldn't want to praise all of that in 408 00:19:39,880 --> 00:19:42,200 Speaker 11: I think that's one of the reasons why Staples likely 409 00:19:42,240 --> 00:19:45,520 Speaker 11: are over sold at this point. It doesn't necessarily mean 410 00:19:45,520 --> 00:19:47,879 Speaker 11: that they're going to lead the market in an up trend, 411 00:19:47,960 --> 00:19:50,679 Speaker 11: but there's some of that kind of inverse of what 412 00:19:50,680 --> 00:19:53,200 Speaker 11: you're seeing in the optimism around the medical. 413 00:19:53,200 --> 00:19:56,680 Speaker 6: So excuse not a reason yeah, yeah, okay, excuse brama, 414 00:19:56,920 --> 00:19:57,840 Speaker 6: not a reason. 415 00:20:01,960 --> 00:20:04,879 Speaker 1: When we are thrilled to bring a Seemasha chief global strategist, 416 00:20:05,480 --> 00:20:08,800 Speaker 1: principal asset Management and seeing me and the zeitgeist this morning. 417 00:20:09,000 --> 00:20:12,520 Speaker 1: Is something changed yesterday? Maybe something changed over the last 418 00:20:12,520 --> 00:20:16,480 Speaker 1: forty eight hours? Is it nonlinear? Is it quadratic? Is 419 00:20:16,480 --> 00:20:19,920 Speaker 1: there convexity? Did something change in the last day. 420 00:20:22,119 --> 00:20:24,800 Speaker 5: It certainly feels like there is a different level of 421 00:20:24,880 --> 00:20:28,119 Speaker 5: momentum going on in the market at the moment. We 422 00:20:28,240 --> 00:20:30,960 Speaker 5: do think we're getting closer to a top certainly. You know, 423 00:20:31,440 --> 00:20:33,560 Speaker 5: we've had a long help view. We've discussed this many 424 00:20:33,600 --> 00:20:36,840 Speaker 5: times with you. We are expecting a slow down. It 425 00:20:36,960 --> 00:20:39,719 Speaker 5: is definitely not showing any signs of coming through at 426 00:20:39,720 --> 00:20:41,879 Speaker 5: this stage. I think that's what really bond yields are 427 00:20:41,920 --> 00:20:45,000 Speaker 5: responding to at this point. But of course, a further 428 00:20:45,080 --> 00:20:48,200 Speaker 5: that yields rise, the greater the chance out of slowdowns 429 00:20:48,240 --> 00:20:52,200 Speaker 5: can be even deeper. Now, momentum can take you pretty far, 430 00:20:52,280 --> 00:20:54,320 Speaker 5: and there's a number of other factors, as you know 431 00:20:54,440 --> 00:20:57,880 Speaker 5: you've discussed in the program many times over again, deficit 432 00:20:58,080 --> 00:21:01,520 Speaker 5: issue in Spanka Japan. Things that probably mean that the 433 00:21:01,680 --> 00:21:04,920 Speaker 5: flaw for bon DALs is higher. Bersinally, we do think 434 00:21:04,920 --> 00:21:06,920 Speaker 5: that as soon as you do get clear evidence of 435 00:21:06,960 --> 00:21:09,720 Speaker 5: economics slow down, and as as long as we get 436 00:21:09,880 --> 00:21:13,320 Speaker 5: a very clear signal from the Fed, whether it's Powell 437 00:21:13,320 --> 00:21:16,280 Speaker 5: today or later on, that should really mark the peak 438 00:21:16,400 --> 00:21:17,600 Speaker 5: for TENU bond yiles. 439 00:21:17,840 --> 00:21:19,520 Speaker 1: Okay, Well, what I'm going to do, folks is give 440 00:21:19,560 --> 00:21:21,280 Speaker 1: you the perspective, but not all at once. We're going 441 00:21:21,359 --> 00:21:24,040 Speaker 1: to drip these data points in to show the losses 442 00:21:24,080 --> 00:21:27,520 Speaker 1: that are being taken. Just since early April, the ten 443 00:21:27,640 --> 00:21:33,160 Speaker 1: year yield has down in price twelve shocking percent. So 444 00:21:33,200 --> 00:21:35,840 Speaker 1: see me your question if you were doing the interview 445 00:21:35,840 --> 00:21:39,800 Speaker 1: today and that David Weston, do you say to Chairman Powell, Sir, 446 00:21:39,920 --> 00:21:44,159 Speaker 1: are you even aware of the acceleration of higher yields? 447 00:21:46,480 --> 00:21:48,840 Speaker 5: Well, I think it's a it's a bit unfair because 448 00:21:48,880 --> 00:21:50,800 Speaker 5: actually for the Fed, just like the rest of us, 449 00:21:50,840 --> 00:21:53,840 Speaker 5: we're all trying to decipher what is driving this tenure 450 00:21:54,000 --> 00:21:57,120 Speaker 5: that this move up in bond yields. Is it ten premier, 451 00:21:57,359 --> 00:21:59,480 Speaker 5: is it the move up in neutral rates? And that 452 00:21:59,560 --> 00:22:01,600 Speaker 5: is going to be really important for how the Fed 453 00:22:01,760 --> 00:22:04,800 Speaker 5: moves on in its decision. Now it's very difficult to 454 00:22:04,960 --> 00:22:09,320 Speaker 5: figure out exactly what proportion is driven by which so equally, 455 00:22:09,359 --> 00:22:11,520 Speaker 5: I think the Federal Reserve themselves are trying to figure 456 00:22:11,560 --> 00:22:13,360 Speaker 5: it out. You hear it from a number of speakers 457 00:22:13,359 --> 00:22:15,399 Speaker 5: over the past couple of weeks, is that that is 458 00:22:15,400 --> 00:22:17,719 Speaker 5: what they're trying to figure out. And as long as 459 00:22:17,760 --> 00:22:20,800 Speaker 5: they don't have an answer to that, then probably does 460 00:22:20,920 --> 00:22:24,320 Speaker 5: make sense for the Fed to stone hold. But of course, 461 00:22:24,560 --> 00:22:26,720 Speaker 5: you know, there's so many risks on either side that 462 00:22:26,880 --> 00:22:30,480 Speaker 5: each moment that we don't know is somewhat damaging to 463 00:22:30,640 --> 00:22:33,040 Speaker 5: financial markets and potentially to the economy as well. 464 00:22:33,200 --> 00:22:35,480 Speaker 4: Sima, do you consider treasury is still to be a 465 00:22:35,520 --> 00:22:36,560 Speaker 4: haven asset. 466 00:22:38,400 --> 00:22:38,680 Speaker 10: Gouse? 467 00:22:38,680 --> 00:22:41,280 Speaker 5: You know, looking at the way that things are moving 468 00:22:41,280 --> 00:22:42,560 Speaker 5: in the last twenty four hours, I think you do 469 00:22:42,640 --> 00:22:45,959 Speaker 5: have to question that certainly, you know, given what's been 470 00:22:46,000 --> 00:22:48,119 Speaker 5: going on from a geopolitical front, and the fact that 471 00:22:48,200 --> 00:22:52,439 Speaker 5: treasury yields continue to rise, and the fact that actually 472 00:22:52,440 --> 00:22:55,359 Speaker 5: gold has rallied, you know, it does set that question. 473 00:22:55,400 --> 00:22:56,800 Speaker 5: But I think the thing is, at the moment, the 474 00:22:56,880 --> 00:23:01,439 Speaker 5: market is so specifically focused on the strength of the 475 00:23:01,440 --> 00:23:03,800 Speaker 5: economy what the Fed is going to do, that they're 476 00:23:03,800 --> 00:23:06,280 Speaker 5: almost thinking about the safe havens as other assets. Now, 477 00:23:06,680 --> 00:23:09,679 Speaker 5: let's get beyond this phase of uncertainty with regards to 478 00:23:09,720 --> 00:23:12,720 Speaker 5: the bond market, and yeah, I do think treasuries will 479 00:23:12,760 --> 00:23:15,639 Speaker 5: return as a safe haven's choice. But at this point 480 00:23:15,680 --> 00:23:18,240 Speaker 5: in time, there's so many different forces which are buffeting 481 00:23:18,560 --> 00:23:21,280 Speaker 5: the bond space that it's difficult to really say with 482 00:23:21,440 --> 00:23:25,119 Speaker 5: great conviction that today treasuries are your safe haven. 483 00:23:25,359 --> 00:23:27,560 Speaker 4: There's an irony baked into a lot of the conversations 484 00:23:27,600 --> 00:23:30,320 Speaker 4: that we've been having with certain investment managers who are 485 00:23:30,400 --> 00:23:33,560 Speaker 4: saying that risk assets are the new havens that essentially 486 00:23:33,640 --> 00:23:37,080 Speaker 4: corporate America and the corporations that have immunized their balance 487 00:23:37,119 --> 00:23:39,760 Speaker 4: sheets are essentially in better financial shape than the US 488 00:23:39,880 --> 00:23:42,400 Speaker 4: government than a lot of the sothern governments that used 489 00:23:42,440 --> 00:23:43,359 Speaker 4: to be the star warts. 490 00:23:43,800 --> 00:23:44,720 Speaker 6: Do you believe that? 491 00:23:44,800 --> 00:23:47,520 Speaker 4: Do you think the traditional risk assets, including some of 492 00:23:47,560 --> 00:23:50,560 Speaker 4: the stocks that have the highest flyers, are increasingly the 493 00:23:50,600 --> 00:23:52,000 Speaker 4: haven assets of the moment. 494 00:23:53,680 --> 00:23:54,560 Speaker 6: Well, I think that's. 495 00:23:54,359 --> 00:23:56,199 Speaker 5: True to some extent, and you definitely do hear that 496 00:23:56,359 --> 00:23:58,960 Speaker 5: from clients in the way that they're talking about it. 497 00:23:58,960 --> 00:24:01,840 Speaker 5: It's ignol think by any means. It's very very specific. 498 00:24:01,880 --> 00:24:04,520 Speaker 5: You know, people want the big balance you. They want 499 00:24:04,520 --> 00:24:07,080 Speaker 5: something which they know is going to provide stability, and 500 00:24:07,200 --> 00:24:10,359 Speaker 5: something specifically that they know is you know, they have 501 00:24:10,440 --> 00:24:12,760 Speaker 5: some understanding over a longer term, so you know they 502 00:24:12,760 --> 00:24:14,840 Speaker 5: look at the short term the ticket this is very difficult, 503 00:24:14,960 --> 00:24:16,679 Speaker 5: but at least for a longer term period there are 504 00:24:16,680 --> 00:24:19,880 Speaker 5: secular trends that we can put our trust in. So yes, 505 00:24:19,920 --> 00:24:22,680 Speaker 5: from that perspective, maybe there are a few corporates who 506 00:24:22,800 --> 00:24:26,760 Speaker 5: have that strength and most importantly we'll be able to 507 00:24:26,800 --> 00:24:30,600 Speaker 5: withstand any further opper pressure from treasuries. But it is 508 00:24:30,640 --> 00:24:33,879 Speaker 5: a very difficult environment for investors, I think today, and 509 00:24:33,960 --> 00:24:36,199 Speaker 5: actually it just makes more sense in that case to 510 00:24:36,400 --> 00:24:38,560 Speaker 5: try and look beyond as difficult as it is, to 511 00:24:38,600 --> 00:24:41,360 Speaker 5: try and look beyond near the next month, two three 512 00:24:41,400 --> 00:24:43,200 Speaker 5: months and try and have a bit of a six 513 00:24:43,280 --> 00:24:45,840 Speaker 5: month one year outfit that is very important today. 514 00:24:45,920 --> 00:24:48,200 Speaker 1: Yes, I mean you had a tour duty of Treasury 515 00:24:48,440 --> 00:24:51,560 Speaker 1: and you were very aware obviously with principal global of 516 00:24:51,600 --> 00:24:55,919 Speaker 1: the United Kingdom bond dibaccle, debt, tobaccle, pension, tobaccle of 517 00:24:56,000 --> 00:24:59,000 Speaker 1: a number of corners ago. Do you feel we're at 518 00:24:59,000 --> 00:25:02,600 Speaker 1: a point of instant insitutional risk where the degrees of 519 00:25:02,680 --> 00:25:07,280 Speaker 1: freedom of buy managers with actual assumptions can't get it 520 00:25:07,440 --> 00:25:13,200 Speaker 1: done and we become unstable within our conservative institutional money. 521 00:25:14,960 --> 00:25:16,840 Speaker 5: Utterly. That is a question I've been getting a lot 522 00:25:16,880 --> 00:25:19,040 Speaker 5: of within the last twenty four hours as you're getting 523 00:25:19,040 --> 00:25:21,760 Speaker 5: close to that five percent point. That is the main question. 524 00:25:22,400 --> 00:25:24,600 Speaker 5: But I have to said, we are not detecting any 525 00:25:24,720 --> 00:25:29,520 Speaker 5: clear signs of financial stress. These numbers are certainly I 526 00:25:29,560 --> 00:25:33,440 Speaker 5: guess concerning We actually think that the system can withstand 527 00:25:33,600 --> 00:25:35,560 Speaker 5: rates getting to five and a half percent. The most 528 00:25:35,600 --> 00:25:38,720 Speaker 5: important point, of course, is how quickly are That's important Seman. 529 00:25:38,800 --> 00:25:42,680 Speaker 1: You're saying that financial system can we stand and move 530 00:25:42,800 --> 00:25:46,840 Speaker 1: to a ten year US five point five zero percent. 531 00:25:47,880 --> 00:25:50,800 Speaker 5: As long as it is backed up by strong economic growth. 532 00:25:50,960 --> 00:25:54,000 Speaker 5: So again it comes back to what is driving yields higher. 533 00:25:54,400 --> 00:25:56,399 Speaker 5: If it's because the strength of the years economy is 534 00:25:56,440 --> 00:25:58,840 Speaker 5: that resilient, our inflation is maybe a little bit content, 535 00:25:59,320 --> 00:26:03,119 Speaker 5: then yeah, I think that the system can can stand it. 536 00:26:03,880 --> 00:26:04,720 Speaker 10: But I also have. 537 00:26:04,680 --> 00:26:07,240 Speaker 5: To clarify here as well that look, with financial risks, 538 00:26:07,280 --> 00:26:09,360 Speaker 5: it's typically not in the area that you're looking at. 539 00:26:09,640 --> 00:26:11,480 Speaker 5: So it's probably not going to be from the pension system. 540 00:26:11,840 --> 00:26:13,960 Speaker 5: It probably won't even from the banking system, because it 541 00:26:14,000 --> 00:26:16,960 Speaker 5: has been ring fenced from by the effect. So you know, 542 00:26:17,000 --> 00:26:20,240 Speaker 5: typically financial risks, as they arise, when they arise, it's 543 00:26:20,240 --> 00:26:22,840 Speaker 5: in the place that you're not looking. So we have 544 00:26:22,920 --> 00:26:24,800 Speaker 5: to be a little bit humble about this, and investors 545 00:26:24,800 --> 00:26:27,360 Speaker 5: everywhere have to be saying, you know, maybe we can't 546 00:26:27,359 --> 00:26:29,840 Speaker 5: see any risks today, but there has to be some 547 00:26:29,920 --> 00:26:34,760 Speaker 5: kind of defense within your portfolios potentially to kind of 548 00:26:34,800 --> 00:26:38,080 Speaker 5: withstand anything that could arise as obs get closer and 549 00:26:38,119 --> 00:26:40,440 Speaker 5: closer to that point where where their frictions. 550 00:26:40,000 --> 00:26:42,040 Speaker 6: Start to come up, saying we've got to leave it 551 00:26:42,080 --> 00:26:56,800 Speaker 6: there of principles management. Netflix shares gaining in the pre 552 00:26:56,920 --> 00:27:00,200 Speaker 6: market after reporting its best subscriber growth in years is. 553 00:27:00,240 --> 00:27:03,280 Speaker 6: The company also announcing it's raising prices for customers in 554 00:27:03,280 --> 00:27:05,960 Speaker 6: the US, UK and France. Brian Weezer and Madison and 555 00:27:05,960 --> 00:27:09,960 Speaker 6: Wall running this. Although a fifteen percent price increase is significant, 556 00:27:10,359 --> 00:27:12,520 Speaker 6: I know that it's likely the case that many, if 557 00:27:12,560 --> 00:27:16,000 Speaker 6: not most, of Netflix Is subscribers consume enough content to 558 00:27:16,200 --> 00:27:19,320 Speaker 6: justify this cost, given the high volume of time spent 559 00:27:20,000 --> 00:27:20,920 Speaker 6: Tom with the platform. 560 00:27:21,000 --> 00:27:23,479 Speaker 1: Yeah, we're brain over this weekend, and he looked up 561 00:27:23,480 --> 00:27:25,520 Speaker 1: at the keynose. You know, we just had the CFO 562 00:27:25,640 --> 00:27:26,959 Speaker 1: there styling from Netflix. 563 00:27:27,040 --> 00:27:27,920 Speaker 8: John, am I losing it? 564 00:27:28,000 --> 00:27:29,760 Speaker 1: Ere do I need to get out of the suit 565 00:27:29,760 --> 00:27:32,200 Speaker 1: and bowt tie and get into full Patagonia. 566 00:27:32,920 --> 00:27:36,760 Speaker 6: It's like that's the Midtown uniform and I'm against it. 567 00:27:37,440 --> 00:27:41,200 Speaker 6: I hate it. I saw two chaps walk across Park 568 00:27:41,240 --> 00:27:44,560 Speaker 6: Avenue yesterday in their Midtown uniform, the Patagonia vests. 569 00:27:45,440 --> 00:27:45,600 Speaker 7: No. 570 00:27:45,880 --> 00:27:49,960 Speaker 4: My favorite part of this entire show is when you start, 571 00:27:50,200 --> 00:27:52,040 Speaker 4: you know, going through an issue, and all of a sudden, 572 00:27:52,040 --> 00:27:52,879 Speaker 4: Tom just is like. 573 00:27:56,160 --> 00:27:59,840 Speaker 9: Going to the list, flowing through. 574 00:28:00,119 --> 00:28:01,640 Speaker 1: Guy for Netflix is going. 575 00:28:01,480 --> 00:28:03,920 Speaker 6: Full mid doown for mid time uniform. 576 00:28:04,240 --> 00:28:04,840 Speaker 8: That's all there is. 577 00:28:04,960 --> 00:28:06,600 Speaker 6: If your stocks out, you can get away with it. 578 00:28:06,720 --> 00:28:09,120 Speaker 6: Get whatever you want, okay, if the stalks down, put 579 00:28:09,119 --> 00:28:10,080 Speaker 6: on a suit, okay. 580 00:28:10,080 --> 00:28:13,440 Speaker 1: Right, We're gonna help you with your house. The streaming 581 00:28:13,640 --> 00:28:16,000 Speaker 1: John Farrell trying to cut down his cable TV bill 582 00:28:16,080 --> 00:28:18,600 Speaker 1: by I don't know, thirty percent or something like that. 583 00:28:18,640 --> 00:28:21,560 Speaker 1: Brian Weezer has been brilliant on this principal senior media 584 00:28:21,600 --> 00:28:24,680 Speaker 1: analyst Madison and Wall and he's really at an arch 585 00:28:24,760 --> 00:28:27,800 Speaker 1: theme for a decade, which is don't give up on TV? 586 00:28:27,960 --> 00:28:29,359 Speaker 8: Do you still hold that theme? 587 00:28:29,600 --> 00:28:32,480 Speaker 1: No? You know TV? It's it's like finally done. 588 00:28:32,560 --> 00:28:33,160 Speaker 8: Yeah, we're over. 589 00:28:33,600 --> 00:28:37,120 Speaker 12: I mean I wrote something yesterday earlier this week where 590 00:28:37,160 --> 00:28:39,280 Speaker 12: I calculated that the total amount of TV AD inventory 591 00:28:39,320 --> 00:28:41,160 Speaker 12: is going to fall by about twenty four percent at 592 00:28:41,240 --> 00:28:42,400 Speaker 12: least under curtainservatives. 593 00:28:42,520 --> 00:28:44,240 Speaker 8: Where's it go It goes away. 594 00:28:44,480 --> 00:28:47,520 Speaker 12: People don't get as many ads going forward, because even 595 00:28:47,560 --> 00:28:50,040 Speaker 12: if people subscribe to an AD tier, they're not going 596 00:28:50,040 --> 00:28:51,360 Speaker 12: to get the same AD loads. But not that many 597 00:28:51,360 --> 00:28:52,880 Speaker 12: people are going to subscribe to ads tiers in the 598 00:28:52,880 --> 00:28:55,320 Speaker 12: first place. They're going to take the increases and prices. 599 00:28:55,360 --> 00:28:57,640 Speaker 12: They're going to cut their pay TV subscriptions to fund it. 600 00:28:58,680 --> 00:29:01,960 Speaker 1: When you look at this in a broad sense, Michael 601 00:29:02,040 --> 00:29:07,160 Speaker 1: Mabusian seventeen eighteen years ago on the concentration of digital product, 602 00:29:07,520 --> 00:29:09,400 Speaker 1: Are we just going to concentrate down to two or 603 00:29:09,440 --> 00:29:10,240 Speaker 1: three survivors? 604 00:29:10,680 --> 00:29:13,200 Speaker 12: I think that that's possible. I think there are going 605 00:29:13,280 --> 00:29:14,920 Speaker 12: to be four or five. More likely just a lot 606 00:29:14,920 --> 00:29:17,239 Speaker 12: of very low profit players. But here's the big thing. 607 00:29:17,280 --> 00:29:19,080 Speaker 12: A lot of people are thinking about that. Most of 608 00:29:19,120 --> 00:29:21,479 Speaker 12: them can be global if they bother to invest in it. 609 00:29:21,520 --> 00:29:25,160 Speaker 12: Netflix will, Disney will, We're not sure what Warner Discovery 610 00:29:25,200 --> 00:29:28,040 Speaker 12: is doing. We're not sure how much comcasts will they are, 611 00:29:28,520 --> 00:29:30,040 Speaker 12: but I think that's the big thing that they can 612 00:29:30,080 --> 00:29:32,480 Speaker 12: play at a global level. So low profit but double 613 00:29:32,520 --> 00:29:34,440 Speaker 12: or triple the revenue, that's still a good business. 614 00:29:34,480 --> 00:29:35,680 Speaker 6: Do you remember the death of the PC? 615 00:29:35,960 --> 00:29:36,080 Speaker 7: Oh? 616 00:29:36,160 --> 00:29:38,000 Speaker 6: Yeah, it used to be that line that every person 617 00:29:38,040 --> 00:29:40,600 Speaker 6: who wrote that headline wrote it on a PC. Slightly, 618 00:29:40,640 --> 00:29:42,160 Speaker 6: I'd run it. We're talking about the death of TV 619 00:29:42,640 --> 00:29:45,000 Speaker 6: on TV, Yeah, what lives on? 620 00:29:45,120 --> 00:29:45,239 Speaker 1: Well? 621 00:29:45,280 --> 00:29:46,560 Speaker 6: To be clear, sports. 622 00:29:46,480 --> 00:29:50,360 Speaker 8: Paid TV keeps growing. Okay, people will pay for it. 623 00:29:50,360 --> 00:29:55,760 Speaker 12: It's advertising on television that is going to continue to decline, decline, decline, decline, 624 00:29:55,960 --> 00:29:57,280 Speaker 12: but consumers will pay for it. 625 00:29:57,520 --> 00:30:00,440 Speaker 6: So let's go to the Walt Disney company. Leave them 626 00:30:00,480 --> 00:30:01,120 Speaker 6: and what do they do? 627 00:30:01,640 --> 00:30:05,840 Speaker 12: That's such a mess. I mean, here's the thing. Separating 628 00:30:05,920 --> 00:30:09,480 Speaker 12: the network and the stations is kind of ridiculous. Septaring 629 00:30:09,480 --> 00:30:12,240 Speaker 12: the stations makes sense. You don't need that legacy infrastructure. 630 00:30:12,320 --> 00:30:14,000 Speaker 12: Think about how you're going to position this company to 631 00:30:14,040 --> 00:30:16,600 Speaker 12: merge with someone else. Having a regulated business like the 632 00:30:16,640 --> 00:30:19,240 Speaker 12: broadcast stations combined with the network makes no sense. 633 00:30:19,440 --> 00:30:21,600 Speaker 8: Firstly, I don't know where they're going to go. 634 00:30:21,960 --> 00:30:24,320 Speaker 12: They don't seem to have a very clear true north 635 00:30:24,360 --> 00:30:25,520 Speaker 12: like they used to in twenty eighteen. 636 00:30:25,720 --> 00:30:27,040 Speaker 6: What do you think I like you was doing then, 637 00:30:27,560 --> 00:30:29,680 Speaker 6: just saying come to me with some ideas. 638 00:30:29,720 --> 00:30:31,720 Speaker 12: I think so I wonder I have a theory that 639 00:30:31,800 --> 00:30:33,640 Speaker 12: he was getting really good advice from a team he 640 00:30:33,720 --> 00:30:36,080 Speaker 12: built up over the course of fifteen years prior to 641 00:30:36,120 --> 00:30:39,320 Speaker 12: twenty eighteen. You could tell they had clarity in what 642 00:30:39,360 --> 00:30:42,040 Speaker 12: they were doing, and if they stuck to it, maybe 643 00:30:42,040 --> 00:30:43,320 Speaker 12: it would have been worth less than it was in 644 00:30:43,360 --> 00:30:45,080 Speaker 12: twenty eighteen, but it would have been a great fifty 645 00:30:45,120 --> 00:30:48,479 Speaker 12: year business. Now it's strategically all over the place. Are 646 00:30:48,520 --> 00:30:49,760 Speaker 12: they going to split ESPN? 647 00:30:49,920 --> 00:30:51,960 Speaker 8: What about A and E? I mean, there's. 648 00:30:51,800 --> 00:30:54,960 Speaker 12: All these businesses that they just don't have clarity around. 649 00:30:55,040 --> 00:30:57,320 Speaker 1: Lisa helped me at your house. In my house, nobody 650 00:30:57,320 --> 00:30:59,600 Speaker 1: watches Disney. Plus they're glued to Netflix. 651 00:31:00,680 --> 00:31:01,360 Speaker 2: Yeah, but how old? 652 00:31:01,400 --> 00:31:03,640 Speaker 4: Okay, right, I mean how much this is a demographic issue. 653 00:31:03,720 --> 00:31:05,720 Speaker 1: Disney survive on the kids. 654 00:31:05,400 --> 00:31:05,600 Speaker 7: You know. 655 00:31:06,040 --> 00:31:08,840 Speaker 12: Well, To be clear, there is a very direct relationship 656 00:31:08,840 --> 00:31:12,040 Speaker 12: between shaff spend on content and share of viewing. Sounds 657 00:31:12,120 --> 00:31:13,960 Speaker 12: kind of obvious, but if you increase the amount you 658 00:31:13,960 --> 00:31:17,320 Speaker 12: spend on content, you'll get more viewing, right, And so 659 00:31:17,480 --> 00:31:19,920 Speaker 12: if that follows, if Disney doubles the spend that they 660 00:31:19,920 --> 00:31:23,440 Speaker 12: have on actual programming, they will get more viewership. 661 00:31:23,040 --> 00:31:26,640 Speaker 4: Once the pushback point when you do have consumers that 662 00:31:26,760 --> 00:31:29,160 Speaker 4: say I'm not going to pay for that, is there have. 663 00:31:29,200 --> 00:31:31,600 Speaker 2: We seen anyone breach that? Or is this basically the 664 00:31:31,600 --> 00:31:32,120 Speaker 2: sky's the. 665 00:31:32,040 --> 00:31:33,840 Speaker 4: Limit we're going to be paying, you know, one thousand 666 00:31:33,880 --> 00:31:35,600 Speaker 4: dollars a month for our our entertainment. 667 00:31:35,680 --> 00:31:36,600 Speaker 8: You're hitting on some things. 668 00:31:36,640 --> 00:31:38,360 Speaker 12: I thought we're kind of obvious in twenty eighteen when 669 00:31:38,360 --> 00:31:40,680 Speaker 12: I had to sell on Disney back then. But the 670 00:31:40,720 --> 00:31:43,360 Speaker 12: point I was making was the cost for these services 671 00:31:43,400 --> 00:31:45,760 Speaker 12: will be so much higher because you're going to churn. 672 00:31:46,080 --> 00:31:48,720 Speaker 12: So Netflix can raise their prices fifteen percent, but churn 673 00:31:48,800 --> 00:31:50,960 Speaker 12: is going to go up too. Marketing is going to 674 00:31:51,000 --> 00:31:53,440 Speaker 12: go up. The content delivery, of course, we're always going 675 00:31:53,520 --> 00:31:54,080 Speaker 12: to be higher. 676 00:31:54,480 --> 00:31:55,400 Speaker 10: When you talk about churn. 677 00:31:55,440 --> 00:31:58,040 Speaker 4: This basically means that people are going to leg in 678 00:31:58,120 --> 00:31:59,840 Speaker 4: when they see content that they like, and they're going 679 00:31:59,880 --> 00:32:00,640 Speaker 4: to like showing the. 680 00:32:00,680 --> 00:32:02,480 Speaker 8: Backing series and get out you're done. 681 00:32:02,480 --> 00:32:05,360 Speaker 4: And suits repeatedly like Tom and John do every night. 682 00:32:05,400 --> 00:32:08,800 Speaker 4: But I'm curious religiously about whether we also learn something 683 00:32:08,800 --> 00:32:11,600 Speaker 4: from password sharing and that crackdowns on that do not 684 00:32:11,800 --> 00:32:13,920 Speaker 4: lead to a drop off in revenues. In fact, you 685 00:32:14,000 --> 00:32:16,520 Speaker 4: just capture more. Is this going to lead to a 686 00:32:16,560 --> 00:32:19,000 Speaker 4: broad policing of all the people out there who are 687 00:32:19,040 --> 00:32:21,480 Speaker 4: still using their parents subscriptions when they're thirty three? 688 00:32:21,680 --> 00:32:22,080 Speaker 8: I think so. 689 00:32:22,400 --> 00:32:25,000 Speaker 12: And the more aggressive that Netflix or any streaming service 690 00:32:25,120 --> 00:32:27,360 Speaker 12: is in doing that. Again, it's going to lead to 691 00:32:27,440 --> 00:32:30,160 Speaker 12: higher prices paid by consumers. But again there's this pool 692 00:32:30,240 --> 00:32:32,560 Speaker 12: right now of one hundred billion dollars being spent on 693 00:32:32,720 --> 00:32:36,560 Speaker 12: legacy PayTV services, it's only thirty billion being spent on streaming. 694 00:32:37,400 --> 00:32:39,160 Speaker 12: That's a lot of money to shift. 695 00:32:39,320 --> 00:32:41,400 Speaker 6: And TOELM and I talk about the bundo, the return 696 00:32:41,400 --> 00:32:43,720 Speaker 6: of the bundo. What does the future look like? Is 697 00:32:43,720 --> 00:32:44,280 Speaker 6: it the past? 698 00:32:44,720 --> 00:32:46,320 Speaker 12: I think it will look a lot like the past. 699 00:32:46,360 --> 00:32:50,200 Speaker 12: I've called it John McCain's dream, right, remember explain that? Okay, 700 00:32:50,360 --> 00:32:52,080 Speaker 12: two thousand and three, right, who was chairman of the 701 00:32:52,080 --> 00:32:54,200 Speaker 12: House or the House Energy Committee. 702 00:32:54,200 --> 00:32:56,080 Speaker 8: They were trying to create an a la carte world. 703 00:32:56,560 --> 00:32:57,160 Speaker 8: Do you remember this. 704 00:32:57,760 --> 00:32:59,400 Speaker 12: Basically, they were trying to make it possible so you 705 00:32:59,400 --> 00:33:01,400 Speaker 12: could sign up, sign off for a given network. 706 00:33:01,440 --> 00:33:02,880 Speaker 8: That was a big deal in the cable industry. 707 00:33:03,040 --> 00:33:04,640 Speaker 12: People like me. I was a cable outside deutsch Bank. 708 00:33:04,680 --> 00:33:06,520 Speaker 12: At the time, we were saying this is crazy. It's 709 00:33:06,520 --> 00:33:08,640 Speaker 12: going to actually cause a worse business going to make 710 00:33:09,200 --> 00:33:11,760 Speaker 12: consumers are going to pay more, less marketing, less diversity 711 00:33:11,800 --> 00:33:14,280 Speaker 12: of content, blah blah blah. Well, here we are twenty 712 00:33:14,320 --> 00:33:16,480 Speaker 12: years later and we got it. It's just at a 713 00:33:16,520 --> 00:33:19,280 Speaker 12: slightly more aggregated level. But it's not positive for the 714 00:33:19,320 --> 00:33:21,680 Speaker 12: economics of the business. Consumers might feel better about it, 715 00:33:21,680 --> 00:33:23,440 Speaker 12: but they're going to pay more for the privilege. 716 00:33:23,640 --> 00:33:26,840 Speaker 1: What does sports do? I mean, sports is still megabox. 717 00:33:26,880 --> 00:33:28,960 Speaker 1: It seems to me that's all people watch sports in 718 00:33:29,000 --> 00:33:32,840 Speaker 1: the weather and I'm Bloomberg surveillance, But what does sports do? 719 00:33:33,160 --> 00:33:35,600 Speaker 12: Sports is in a real worry right now because if 720 00:33:35,960 --> 00:33:38,000 Speaker 12: basically the only people who are going to access sports 721 00:33:38,040 --> 00:33:40,440 Speaker 12: are going to be those who keep with the PayTV bundle, 722 00:33:40,880 --> 00:33:42,920 Speaker 12: you've got to really like your sports because you're going 723 00:33:42,960 --> 00:33:44,520 Speaker 12: to be paying one hundred and fifty or two hundred 724 00:33:44,560 --> 00:33:46,880 Speaker 12: dollars a month exactly exactly, and I don't know it. 725 00:33:46,840 --> 00:33:49,160 Speaker 1: Suns up at five hundred a month for English football. 726 00:33:49,760 --> 00:33:53,000 Speaker 12: Disney put out ak last night with breaking out ESPN 727 00:33:53,040 --> 00:33:55,160 Speaker 12: for the first time. Fun reading just to see just 728 00:33:55,240 --> 00:33:58,080 Speaker 12: exactly how big. It is not a shocker on the sizing, 729 00:33:58,440 --> 00:34:00,880 Speaker 12: but you know, their positioning to do something with. 730 00:34:00,840 --> 00:34:04,280 Speaker 8: That outset, which they probably should. Sports is the problem. 731 00:34:04,320 --> 00:34:07,360 Speaker 12: Is sports risks going the way of boxing, right, not 732 00:34:07,480 --> 00:34:09,160 Speaker 12: that bad, but in the way that boxing used to 733 00:34:09,200 --> 00:34:12,280 Speaker 12: be this broad reaching thing that everyone access and consumed, 734 00:34:12,719 --> 00:34:15,400 Speaker 12: and then it became pay per view and then stopped 735 00:34:15,520 --> 00:34:16,440 Speaker 12: having casual fans. 736 00:34:16,560 --> 00:34:19,080 Speaker 1: Some of us had pro wrestling and Gorgeous. You know, 737 00:34:19,160 --> 00:34:20,560 Speaker 1: you get to get to the weekend just so you 738 00:34:20,600 --> 00:34:22,319 Speaker 1: could watch thirty minutes in black and I. 739 00:34:22,320 --> 00:34:24,799 Speaker 6: Wish you could see from space, as he's discussed in 740 00:34:24,840 --> 00:34:26,040 Speaker 6: from Wrestling Gorgeous. 741 00:34:26,120 --> 00:34:30,759 Speaker 10: You do not watch serious religion and then the shit 742 00:34:30,880 --> 00:34:31,200 Speaker 10: came on. 743 00:34:31,480 --> 00:34:34,520 Speaker 6: There's a very interesting negotiation taking place in Italy with 744 00:34:34,600 --> 00:34:37,279 Speaker 6: Italian football. There is a push by some of these 745 00:34:37,360 --> 00:34:39,919 Speaker 6: leagues to go direct to the consumer, not to sound 746 00:34:39,920 --> 00:34:42,040 Speaker 6: the rights, but go direct to the consumer. And I 747 00:34:42,080 --> 00:34:43,880 Speaker 6: think you alluded to that slightly with boxing. 748 00:34:44,120 --> 00:34:44,359 Speaker 8: Yeah. 749 00:34:44,520 --> 00:34:46,320 Speaker 6: Is that the future for American sports? 750 00:34:46,400 --> 00:34:48,000 Speaker 8: Yeah? I think many of them are going to end 751 00:34:48,080 --> 00:34:48,960 Speaker 8: up doing something like that. 752 00:34:49,080 --> 00:34:50,800 Speaker 6: So the NFL is going to have its own network, 753 00:34:50,800 --> 00:34:53,279 Speaker 6: its own TV network and just pushes the game straight 754 00:34:53,280 --> 00:34:53,879 Speaker 6: at it to be. 755 00:34:53,840 --> 00:34:55,800 Speaker 12: Clear, they may, they will still prefer to sell to 756 00:34:55,880 --> 00:34:58,839 Speaker 12: multiple rights holders, and those multiple rights holders will end 757 00:34:58,920 --> 00:35:01,960 Speaker 12: up praising it very, very high. Right, But the point is, 758 00:35:01,960 --> 00:35:04,400 Speaker 12: if right now fifty sixty percent of the population might 759 00:35:04,440 --> 00:35:06,640 Speaker 12: consume a little bit of sports, half of those people 760 00:35:06,680 --> 00:35:09,280 Speaker 12: are passionate about the sports, half are kind of indifferent 761 00:35:09,719 --> 00:35:10,960 Speaker 12: that in different group won't pay. 762 00:35:11,040 --> 00:35:12,680 Speaker 4: There's a bigger question at our putting that, which is 763 00:35:12,680 --> 00:35:14,920 Speaker 4: how much of the money goes to the content creators? 764 00:35:15,080 --> 00:35:19,640 Speaker 4: Right the sports members, the athletes versus the writers versus 765 00:35:19,800 --> 00:35:22,520 Speaker 4: artificial intelligence. Is there a sense that a greater proportion 766 00:35:22,560 --> 00:35:24,400 Speaker 4: of the money will go to the creators? 767 00:35:24,560 --> 00:35:25,600 Speaker 8: Isn't this the perplexing thing? 768 00:35:25,600 --> 00:35:27,560 Speaker 12: With the strikes going on, the amount of spending on 769 00:35:27,640 --> 00:35:30,040 Speaker 12: content has only gone up now. I think it's actually 770 00:35:30,120 --> 00:35:34,160 Speaker 12: the showrunners who have been benefiting disproportionally. Jerry Bruckheimer's is 771 00:35:34,160 --> 00:35:36,879 Speaker 12: Shonda Rhimes, et cetera. That I think is where a lot. 772 00:35:36,800 --> 00:35:38,960 Speaker 8: Of the mine is going. And the distribution of talent 773 00:35:39,000 --> 00:35:39,680 Speaker 8: around the world. 774 00:35:39,719 --> 00:35:41,879 Speaker 12: I mean, think of how many people in England are 775 00:35:41,880 --> 00:35:45,040 Speaker 12: now acting in a series running in the US right 776 00:35:45,080 --> 00:35:47,960 Speaker 12: as an example, or all over the world, the talent 777 00:35:48,000 --> 00:35:50,520 Speaker 12: has been distributed, and so the spending on content has 778 00:35:50,520 --> 00:35:52,279 Speaker 12: been spread. It's like a lot of other industries where 779 00:35:52,280 --> 00:35:55,239 Speaker 12: we see offshoring in agencies or in other industries. It's 780 00:35:55,280 --> 00:35:57,239 Speaker 12: the same thing for Hollywood. It's just the people in 781 00:35:57,280 --> 00:35:59,120 Speaker 12: Los Angeles aren't necessarily the beneficiaries. 782 00:35:59,320 --> 00:36:01,520 Speaker 6: So you've put in an an Englishman acting in a 783 00:36:01,560 --> 00:36:04,239 Speaker 6: series exactly in the US is just acting this kind 784 00:36:04,239 --> 00:36:04,680 Speaker 6: of this. 785 00:36:04,600 --> 00:36:05,640 Speaker 2: Is the Bloomberg series. 786 00:36:05,840 --> 00:36:06,359 Speaker 8: What it is? 787 00:36:06,920 --> 00:36:11,600 Speaker 6: I'm warming a brama? You meccan moncol No? Please, Madison's 788 00:36:11,640 --> 00:36:14,400 Speaker 6: that an offensive thing to sign? Okay, all right, interesting, 789 00:36:14,480 --> 00:36:18,120 Speaker 6: let's look at those phones from Get to see it. 790 00:36:18,400 --> 00:36:22,200 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 791 00:36:22,360 --> 00:36:26,520 Speaker 1: anywhere else you get your podcasts. Listen live every weekday 792 00:36:26,840 --> 00:36:30,279 Speaker 1: starting at seven am Eastern on Bloomberg dot Com, the 793 00:36:30,480 --> 00:36:34,920 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 794 00:36:35,040 --> 00:36:39,080 Speaker 1: can watch us live on Bloomberg Television and always. I'm 795 00:36:39,080 --> 00:36:43,040 Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and 796 00:36:43,200 --> 00:36:44,719 Speaker 1: this is Bloomberg