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Speaker 3: This is Bloomberg Business Week inside from the reporters and
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Speaker 3: gloom O Business Finance and tech news the Bloomberg Business
Speaker 3: Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 4: You can absorb light.
Speaker 2: I can see it, and Kamala who's Kamala?
Speaker 3: She can turn light into physical matter, which I have
Speaker 3: never heard of.
Speaker 1: I can totally show you. The question that I have
Speaker 1: for you, Jennifer, is if you're going to go spend
Speaker 1: how much does it cost to go to a movie now?
Speaker 1: Eighteen bucks?
Speaker 5: Something like that?
Speaker 1: Are you gonna go smend eighteen bucks to see that movie?
Speaker 6: Not sure?
Speaker 7: Not sure? Okay?
Speaker 1: I think well that's the big question, right. That's an
Speaker 1: excerpt from the preview of the thirty third film in
Speaker 1: the Marvel Cinematic Universe aka MCU for those in the know,
Speaker 1: which is not me. It hits theaters today. It's aptly
Speaker 1: named The Marvels. I'm not in the Knowel. Joel Webber
Speaker 1: just Joel Webber just looked at me like I was,
Speaker 1: you know, a superhero.
Speaker 5: I thought, you know, you seem like you should know.
Speaker 1: I told Jennifer this story earlier, Joel, at the beginning
Speaker 1: of the pandemic, back in like March of twenty twenty,
Speaker 1: my wife and I were like, oh, let's watch all
Speaker 1: the Marvel movies.
Speaker 5: How far do you make it?
Speaker 1: We made it through two of them, just started waking.
Speaker 5: Thirty more to go.
Speaker 1: Yeah, so you still got time? Okay, So Thomas Buckley's
Speaker 1: got a great.
Speaker 5: Disney would appreciate your business.
Speaker 1: Well, it doesn't matter. I pay for Disney Plus regardless. Right,
Speaker 1: as long as there's Bluey there we're.
Speaker 7: Paying for it.
Speaker 5: So well, you got that, you got a whole bunch
Speaker 5: of other Marvel movies. And ever since Disney acquired Marvel
Speaker 5: more than a decade ago, they have just turned Marvel
Speaker 5: into a blockbuster powerhouse.
Speaker 1: That voice you're hearing, by the way, is none other
Speaker 1: than Joel Weber. He's editor of Bloomberg Business Week by day,
Speaker 1: but by night he's a superhero. Sure, DC or Marvel superhero,
Speaker 1: that's the question.
Speaker 5: It would be a Marvel one.
Speaker 1: Okay. We also have joining us Jim Ellis. He's assistant
Speaker 1: managing editor for Bloomberg Business He edited Thomas Buckley's story
Speaker 1: in the current issue of Bloomberg Business Week, available on
Speaker 1: newstands now online at the Bloomberg Terminal, and of course
Speaker 1: at Bloomberg dot com slash business Week. Joel, I'm sorry,
Speaker 1: now you can talk.
Speaker 5: Okay, So great acquisition. In two thousand and nine, Disney
Speaker 5: spent four billion dollars. The catalog. The MCU universe that
Speaker 5: has transpired from this Marvel acquisition generated close to thirty
Speaker 5: billion dollars at the box office. All those movies that
Speaker 5: you haven't watched are adored by Lee sustains on theaters Okay, well,
Speaker 5: it's starting to get to a point where these movies
Speaker 5: aren't having quite as big of a success, or any
Speaker 5: success that they've previously had, so more muted fans maybe
Speaker 5: getting a little tired of that superhero genre. And now
Speaker 5: we have yet another movie coming out this weekend. Jim
Speaker 5: elis the Marvels by Marvel by Disney. How's the Marvels
Speaker 5: going to do?
Speaker 1: We're working on getting now, Oh there's Jim Elis. Sorry, Jim, sorry,
Speaker 1: just go go start over one more time. We have
Speaker 1: trouble getting your How's the Marvel's gonna do?
Speaker 7: Jim?
Speaker 4: Most likely, the Marvels will probably do about half the
Speaker 4: week opening weekend business that the previous installment of this franchise.
Speaker 7: Did you know?
Speaker 4: That is a disappointment, obviously because this is an expensive
Speaker 4: movie to make. You know, this was probably but then
Speaker 4: one hundred and fifty to two hundred million dollar movie.
Speaker 4: And the big question for Marvel right now is, given
Speaker 4: the cost of all these films that they've made in
Speaker 4: the MCU, can they actually start keeping the profits running
Speaker 4: on these new installments even though fewer people are going
Speaker 4: to theaters. I mean, they've already had a disappointment earlier
Speaker 4: this year with the latest installment of the ant Man franchise.
Speaker 4: That movie did not make its production costs back. And
Speaker 4: so that's sort of a warning here. I mean, there's
Speaker 4: been a lot of content, a lot of MCU content
Speaker 4: out there. There's a lot of Disney content out but
Speaker 4: the MCU content is and.
Speaker 7: There's a lot of it. A lot of people say, well,
Speaker 7: you know, there are a lot of movies.
Speaker 4: I'll sit down and watch them like you Tom, Let's
Speaker 4: say like, oh, I'm going to get to that. The
Speaker 4: issue though, is that there's so much of it as
Speaker 4: you could sort of lost in it. We took a
Speaker 4: look at just how much MCU content was out there.
Speaker 7: We figured it out. We clocked it out by.
Speaker 4: The minutes that are available right now, and you can
Speaker 4: do thirty one days and fifty two minutes of non
Speaker 4: stop watching of MCU content. That includes the movies, the
Speaker 4: television shows that they've made, They've gone a bunch of specials,
Speaker 4: and they've got a lot of animated content that's been
Speaker 4: coming up since two thousand and nine. So it's an
Speaker 4: amazing amount of just stuff of Marvel stuff that's out there.
Speaker 4: And so we're hitting the point where a lot of
Speaker 4: people are saying, well, maybe I've had enough.
Speaker 5: Look at your life, look at your choice, Tim You
Speaker 5: could spend thirty one days and fifteen minutes NonStop.
Speaker 6: Let us know how that works out.
Speaker 1: Well, it might be there. I'll let you know in
Speaker 1: thirty three days.
Speaker 6: But you get looking back to where Disney stands in
Speaker 6: all of this. I mean, if one, we're writing the
Speaker 6: screenplay of let's buy a blockbuster franchise and produce a
Speaker 6: lot of movies out of it, we would be getting
Speaker 6: to the point where the profits are starting to fall off.
Speaker 6: And surely the audience saw this coming. I mean, what's
Speaker 6: Disney's plan here? Have they prepared for it? Is this
Speaker 6: something they're communicating to investors? Do you have any idea?
Speaker 8: Yeah?
Speaker 4: I mean what they're saying now is that they're going
Speaker 4: to reduce both the number of movies that Marvel produces
Speaker 4: and also they're going to actually cut down on the
Speaker 4: amount of money that's spent on a per film basis.
Speaker 4: Now Wall Street likes that, but the worrisome part of
Speaker 4: that is that is what's left in that intellectual property
Speaker 4: trow that is Marvel, the comic book company that they
Speaker 4: bought and basically have mined successfully for all this time.
Speaker 4: But what characters are left if you're not doing sequels
Speaker 4: because they're saying also they're not going to do as
Speaker 4: many sequels, then you know, are you going to have
Speaker 4: to move to the sort of third tier or fourth
Speaker 4: tier hero or are you really going to have to
Speaker 4: go and look for different types of people who know
Speaker 4: how to you know, sort of produce this type of
Speaker 4: film and our TV shows. I mean they're already saying
Speaker 4: now that they're going to go out and hire you know,
Speaker 4: showrunners who are used to producing you know, regular sort
Speaker 4: of network and streaming shows, not just in house at Disney.
Speaker 4: They're sort of recognizing that they need more juice to
Speaker 4: get consumers interested. I mean, they've gotten a lot of
Speaker 4: black this past year over things like you know, she
Speaker 4: Hulk Law, you know, Attorney at Law and shows like
Speaker 4: that that it sort of stretched the franchise in a
Speaker 4: way that you know a lot of people didn't connect to.
Speaker 4: So it's for every Loki that a lot of people
Speaker 4: have gotten excited about, there are an awful lot of
Speaker 4: she Hulks and other things that people say like, ah,
Speaker 4: you know, I don't really feel it even something like
Speaker 4: Secret Invasion that was a series that they had earlier
Speaker 4: this year that I personally liked a lot, But I
Speaker 4: seem to have been in the minority on that. I
Speaker 4: mean a lot of people are just saying, you know,
Speaker 4: these it's so much there's so much content, and there's
Speaker 4: so many characters, and there's so many interconnections, which was
Speaker 4: good at the beginning, but now it can be a
Speaker 4: little daunting, particularly if you want to start watching the MCU,
Speaker 4: because who's going to go back and say, I'll go
Speaker 4: back and look at the previous thirty two movies before
Speaker 4: I watched.
Speaker 1: This, Tim maybe that was maybe that was my problem, Jim.
Speaker 1: Maybe I shouldn't have done that. Jim.
Speaker 5: We'll get back to your It's like a weird order too,
Speaker 5: there you have to well we had to get the
Speaker 5: order weird or is actually just the order?
Speaker 3: Jim?
Speaker 8: Like that?
Speaker 5: There are rules to this.
Speaker 1: There were prequels and sequels. Yeah, that's what made it
Speaker 1: excit stories. Yeah, there were ones that came out more clearly.
Speaker 5: You haven't watched Star Wars also on Disney Plus. Okay,
Speaker 5: so Jim, we'll get back to your your personal taste
Speaker 5: in movies momentarily, but I do want to also just
Speaker 5: put out there, Jim, this is not just a test
Speaker 5: of Marvel, it's actually a test of the superhero genre.
Speaker 5: Because Marvel, which is you know, we've we've seen the
Speaker 5: treasure trove, that is, it's archive, it's minted, you know,
Speaker 5: billions for for Disney. D C has also an immense library,
Speaker 5: but we haven't seen as many of those movies on
Speaker 5: the big screen.
Speaker 1: And they're actively.
Speaker 5: Working on it.
Speaker 4: They're actively working on it, and they've hired some you know,
Speaker 4: sort of big talent to in the superhero world. But
Speaker 4: that way, they've hired the director who did a bunch
Speaker 4: of the X Men films. They've uh, you know, they
Speaker 4: they're looking to come up with their own universe of
Speaker 4: interconnected characters. However, you know, they have also been victims
Speaker 4: to this sort of cooling of enthusiasm for superheroes.
Speaker 7: I mean, this is past year.
Speaker 4: They had Shazam, Fury of the Gods, they had The Flash,
Speaker 4: they had the Blue Beetle.
Speaker 7: All of those are DC comic characters.
Speaker 4: All of those movies disappointed at the box office, and
Speaker 4: you know, it sort of goes into this theme that
Speaker 4: maybe we've had too much. Have we had too much?
Speaker 4: Are the stories just not that great? The test of that,
Speaker 4: at least for d C is going to come in
Speaker 4: December when Aquaman, which is also a sequel you know
Speaker 4: to their Aquaman movie that came out in twenty.
Speaker 5: Eight which was a huge success.
Speaker 4: That was a huge success, and that brought in a
Speaker 4: billion one, you know at the box office, and so
Speaker 4: now we're going to see if this sequel to that
Speaker 4: can do as well or sort of and factoring in
Speaker 4: that this is a very different environment now where people
Speaker 4: are still not back to normal going to theaters and
Speaker 4: the you know, the profits that you can make from
Speaker 4: streaming world on this aren't what you can do on
Speaker 4: a real big theatrical hit.
Speaker 1: Where does CGI come into this and what did what
Speaker 1: did what did we learn in the story about c
Speaker 1: g I.
Speaker 4: Well, we learned that a lot of a lot of
Speaker 4: critics and a lot of the want of a better word,
Speaker 4: you know, mc u uh fanboys sort of think that
Speaker 4: the CGI has gotten a little either sloppy or it's
Speaker 4: just not of the quality that we saw.
Speaker 1: On some of the early documentary.
Speaker 4: A lot of a lot of complaints about you know,
Speaker 4: some of the c G I in some of the
Speaker 4: television shows like a she Hulk, and also that the
Speaker 4: last movie, Quantum Mania, which was earlier this year, a
Speaker 4: lot of people thought that that came across as sort
Speaker 4: of video gamish and not movie ish. And the thing
Speaker 4: is that, let's face it, a lot of these movies
Speaker 4: are filmed in front of Green Springs the same way
Speaker 4: that a video game would be, but they're not supposed
Speaker 4: to look that way. So that's, uh, I don't know
Speaker 4: if that's something that a lot of average moviegoers think about,
Speaker 4: but it seems to be quite a lot of people
Speaker 4: who are the sort of the influencers and also the
Speaker 4: people who write reviews, they care quite a lot about that.
Speaker 4: And so that's something that Disney is going to have
Speaker 4: to think more about, particularly when they've got a visual
Speaker 4: effects team that stretched across so many platforms. So it's
Speaker 4: not just theatrical movies, it's you know, having to do
Speaker 4: things for the Disney Plus streaming service as well as
Speaker 4: you know, they're putting things with you know, movies and
Speaker 4: specials inside their theme parks, so there's a lot of
Speaker 4: work going on there.
Speaker 7: But you know, with a limited number of people, all right.
Speaker 5: Let's bring it back to the Marvels, since that is
Speaker 5: the movie coming out now, Jennifer Ryan, The Marvels is coming.
Speaker 5: This is a sequel to Captain Marvel, which we're thrown
Speaker 5: around billion billions. It made a billion at the box
Speaker 5: office in twenty nineteen.
Speaker 1: Pre Larsen female lead. I think you going, No, not,
Speaker 1: she's not. I think I saw though, Tim, Yeah, he's going.
Speaker 7: I am going tomorrow.
Speaker 1: That was what I was waiting for.
Speaker 7: Jim already have my ticket. He's going, and I will
Speaker 7: be able to say whether it was better.
Speaker 4: One of the things that I'm surprised that as this
Speaker 4: this universe expands, I mean a lot of the things
Speaker 4: that you're seeing now in those movies, you know, like
Speaker 4: this one is much more of a it will be
Speaker 4: a female empowerment movie or obviously a female hero, but
Speaker 4: also in this case three female heroes in the movie, also.
Speaker 7: Mixed generation, very young teens plus some you know, sort
Speaker 7: of older actresses.
Speaker 4: And I mean these are things that were not even
Speaker 4: issues at the beginning with an Iron Man, which the
Speaker 4: stories were much more traditional comic book hero stories. And
Speaker 4: now we've gotten more and more into seeing the lives
Speaker 4: of people on screen, and I'm not certain that that
Speaker 4: works as well unless you're Spider Man.
Speaker 5: You know what works though, man eating kittens with tentacles
Speaker 5: for tongues.
Speaker 1: That's Marvels todight exactly.
Speaker 5: Okay, So Jim, we wait, wait a full report.
Speaker 1: Yeah, please do come back next week, Jim, and let
Speaker 1: us know how the how the movie was that Marvel
Speaker 1: fan you were listening to is? Jim ellis assistant managing
Speaker 1: editor for Bloomberg's Business Week, also with us Joel Webber.
Speaker 1: How many of the thirty three movies have you seen?
Speaker 7: Joel?
Speaker 5: Not all thirty three, but I would say a lot
Speaker 5: of them.
Speaker 1: Okay, all right, well, you still got time. You spend
Speaker 1: the week on doing it. Check out the days later.
Speaker 1: Check out the story. It's in the current issue. You
Speaker 1: have Bloomberg Business Week on newstands.
Speaker 3: Now you're listening to the Bloomberg Business Week podcast. Catch
Speaker 3: us live weekday afternoons from three to six Eastern Listen
Speaker 3: on Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 3: Business App, or watch us live on YouTube.
Speaker 1: Jennifer, hard to believe it, but Thanksgiving is less than
Speaker 1: two weeks Await? Are you gonna be here for Thanksgiving?
Speaker 6: I am, yeah, and I'm not doing any cooking.
Speaker 1: I was just gonna ask you knew you knew where
Speaker 1: I was going. We're gonna go visit our in laws
Speaker 1: in uh where am I? God, I'm going to Cincinnati.
Speaker 6: I'm going to Connecticut.
Speaker 1: Oh okay, well you get to drive.
Speaker 7: I have to fly.
Speaker 1: So yeah, I kind of envy that it's the worst
Speaker 1: time of year to fly. Okay, So these figures that
Speaker 1: I'm going to cite right now are dated because did
Speaker 1: you know that on Friday? Every Friday, the USDA comes
Speaker 1: out with a turkey National Retail Report. And when I
Speaker 1: did the research for this segment, the retail report I
Speaker 1: was looking at was from Friday, November three, and it
Speaker 1: showed no change in the price of a turkey between
Speaker 1: last year and this year. And then I pull it
Speaker 1: up again right now, and now I have the November
Speaker 1: tenth one up, and it shows that we actually are
Speaker 1: seeing turkeys a little bit more expensive this year than
Speaker 1: last year.
Speaker 6: Interestingly, I thought there was a glut.
Speaker 5: That's something I had heard.
Speaker 1: But I know someone now, I know someone who has
Speaker 1: been talking turkey for more than twenty years. We love
Speaker 1: having him join the show because it's kind of a
Speaker 1: Thanksgiving tradition to check in with him. The CEO of
Speaker 1: the turkey company Butterbult, Jay Jandrin, is with us right now.
Speaker 1: He joins us on Zoom from Butterball headquarters in Garner,
Speaker 1: North Carolina. So Jay, good to have you back with us.
Speaker 1: What are we getting wrong when it comes to the
Speaker 1: way we're looking at these turkey prices that come from
Speaker 1: the USDA here.
Speaker 9: Well, we really have to get through the entire holiday
Speaker 9: selling season to get a true picture of that. And
Speaker 9: the reason for that is you've got a lot of
Speaker 9: heavy discounting and feature activity from the retailers during the holiday.
Speaker 9: So it's really a matter of timing exactly when we
Speaker 9: pull the data and once you get through the entire
Speaker 9: holidays so you see exactly what's sold in at what
Speaker 9: prices to get a real accurate picture. But overall you
Speaker 9: seek pricing, it's going to be about the same as
Speaker 9: it was last year.
Speaker 1: How closely do you follow these reports from the USDA?
Speaker 9: We do pay attention to those, of course, those are
Speaker 9: things that we look at. We evaluate the holiday with
Speaker 9: the sale through is like with the consumers purchase. What
Speaker 9: our retailers are telling us as far as their overall sales.
Speaker 9: So it goes into kind of a bigger picture for
Speaker 9: us to really look at next year and how we're
Speaker 9: going to how we're going to approach next year's holiday season.
Speaker 6: I wondered if you could give us a little bit
Speaker 6: of insight in what retailers are telling you. I mean,
Speaker 6: we had our colleagues talking a little while ago, and
Speaker 6: one of them was mentioning that at one point he
Speaker 6: saw some free turkeys floating around some retailers, and I
Speaker 6: just didn't I couldn't get my head around that. But
Speaker 6: I mean, is that something that you're seeing at all?
Speaker 9: You know, each retailer has their own strategy on how
Speaker 9: they go about that. If some do giveaway turkeys with
Speaker 9: a certain amount of sale in the basket, uh, some
Speaker 9: heavily discounted.
Speaker 3: Uh.
Speaker 9: It's really all over the board. And they're all, you know,
Speaker 9: looking for ways to help get that shopper into the door.
Speaker 9: So they'll try things new each year to see what
Speaker 9: works for them and and uh or sometimes if this
Speaker 9: feel the strategy is working for them, whatever that strategy
Speaker 9: is for their for their stories, they'll stick with it.
Speaker 9: So it's really it's all over the board. You know,
Speaker 9: we don't even know really up until the time of
Speaker 9: the prices are released as well on what they're going
Speaker 9: to be. Uh so we're we're certainly paying attention to
Speaker 9: those prices and those retails as well.
Speaker 1: So how long cord is Thanksgiving to your your business?
Speaker 1: I mean, give us numbers here, just like how many
Speaker 1: you know, what percentage of sales do you do during
Speaker 1: the month of November versus year round?
Speaker 9: Well, it's certainly a big part of our business, but
Speaker 9: it's not it's not all of our business. We have
Speaker 9: over a billion dollars in sales, and this represents a
Speaker 9: good portion of that.
Speaker 1: But what you know, I'm sorry, over fifty percent.
Speaker 9: No, no, much less than fifty percent. But what we
Speaker 9: look at is particularly is how we sell versus other
Speaker 9: brands and other products in the case auring that period
Speaker 9: of time. And one of the important facts that we
Speaker 9: look at is or the measures we look at, is
Speaker 9: the butterballs. Every one of every three turkey sold in
Speaker 9: the retail outlets is a butter ball, so that that's
Speaker 9: the number. Week a real close attention to what that
Speaker 9: market share is every year, how it goes up or down,
Speaker 9: and how tost throughout each each Holday season, So looking
Speaker 9: away from.
Speaker 6: The holidays, I mean, just to help us get a
Speaker 6: better sense of how your business is out. Where's the
Speaker 6: big sources of demand for the rest of the year.
Speaker 9: Well, it really comes in our CpG products, our consumer
Speaker 9: packaged goods, maybe in our ground turkey products that we
Speaker 9: sell throughout the year. We also do a lot of
Speaker 9: business and food service as well, so that's a big
Speaker 9: portion of our business may go to restaurant change or
Speaker 9: to food service distributors who are selling to mom and
Speaker 9: pop restaurants, and then we have a portion of our
Speaker 9: business at international as well, so it's pretty well diversified.
Speaker 6: Well.
Speaker 1: One of the reasons we like having you on around
Speaker 1: this time of year is not just to prepare us
Speaker 1: for cooking Thanksgiving turkeys, but also because you guys do
Speaker 1: a survey each year when it comes to understanding consumers
Speaker 1: for the holidays. The surveys have been a little interesting
Speaker 1: over the last few years because of the pandemic, but
Speaker 1: it seems like a theme this year and the data
Speaker 1: that you found at Butterball, we're sort of seeing this
Speaker 1: return to pre pandemic activity. Talk to us a little
Speaker 1: bit about what you found.
Speaker 9: We are and that's great news. Everyone is finally kind
Speaker 9: of over the COVID stuff. Then celebrations are back to
Speaker 9: what they were pre COVID, which is great. You've got
Speaker 9: more people in households now celebrating together, an opportunity for
Speaker 9: friends and family to get together, which is which is fantastic. So,
Speaker 9: you know, we're really happy to see that those levels
Speaker 9: come back. And the good news for us is that
Speaker 9: Turkey will be at the center of the table as
Speaker 9: it has been year in and year out. Uh So,
Speaker 9: Turkey sales are expected to be very good this year.
Speaker 9: People don't break too much from tradition and they they're
Speaker 9: gonna they're going to celebrate like they did in the past.
Speaker 9: And uh and that means the Turkey will be will
Speaker 9: be on the table for sure.
Speaker 6: Yeah, that's one thing I wanted to ask you, is
Speaker 6: how stable is Turkey is a centerpiece of Thanksgiving?
Speaker 9: It is stable. It very very little year in the
Speaker 9: year out, and and uh, you know, we're we were
Speaker 9: really curious to see what happened during COVID as well,
Speaker 9: and what we found there is that sales were very
Speaker 9: very good. It was just a little bit different. We
Speaker 9: had less larger sized turkey sold and more smaller because
Speaker 9: the gatherings were smaller because people couldn't travel and get
Speaker 9: together like they would otherwise. This year, we're seeing more
Speaker 9: people at the table. Uh, So we're expecting you will
Speaker 9: probably see a few more sales of larger turkeys this year.
Speaker 1: How early do you have to plan for to anticipate demand?
Speaker 1: I mean it seems like you have to plan for
Speaker 1: this year ahead of time.
Speaker 9: Well, that's exactly right. As soon as this holiday is done,
Speaker 9: we're producing product for the next holiday season. So it
Speaker 9: is a year round production cycle for us, and it
Speaker 9: gets a little tricky, you know, to try to understand
Speaker 9: whatever retaillers are going to be looking forward to year.
Speaker 9: We spend a lot of time talking with our customers
Speaker 9: and sharing the information that we have from the holidays,
Speaker 9: so they have a good expectation what they think they
Speaker 9: need for the next year as well. So it really
Speaker 9: begins in earnest as soon as the Thanksgiving meal is over,
Speaker 9: we're producing more product and talking to our customers for
Speaker 9: next year's holiday already.
Speaker 1: Jay, we got twenty seconds. Are you answering any of
Speaker 1: the phones at the Turkey talk line this year?
Speaker 8: No?
Speaker 9: No, I want to only leave that to the experts.
Speaker 9: Those folks certainly know what they're doing, and I'm going
Speaker 9: to let them do that.
Speaker 1: But I did get a chance to visit with.
Speaker 9: Some of them last week at an event we had
Speaker 9: in New York City with partnership with Bumble for Friends
Speaker 9: that we did and we had some of our talk
Speaker 9: line hosts there and it was a great up indish
Speaker 9: for stas Jay.
Speaker 1: Always great to chat with you. Jajandran, Chief executive Officer,
Speaker 1: President of Butterball, joining us right here on a Bloomberg
Speaker 1: Business Week from Garner, North Carolina. Happy Thanksgiving Jay. If
Speaker 1: you're listening to Bloomberg.
Speaker 3: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 3: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 3: the Bloomberg Business app, and YouTube. You can also listen
Speaker 3: live on Amazon Alexa from our flagship New York station,
Speaker 3: Just say Alexa play Bloomberg eleven thirty.
Speaker 1: Well, bitcoin has just been on a tear. I'm actually
Speaker 1: pulling it up right now because you know, fortunately or unfortunately,
Speaker 1: it trades twenty four to seven. It's up for the
Speaker 1: last five days in a row. It's right now trading
Speaker 1: at thirty seven three hundred and eighty dollars. It's highest
Speaker 1: since May of twenty twenty two. And our next guest
Speaker 1: actually thinks that bitcoin still has more room to run,
Speaker 1: betting it'll increase fifty percent next year. John Wu is
Speaker 1: president at Avilabs. The company is developing the blockchain project Avalanche,
Speaker 1: which it calls the quote fastest smart contracts platform in
Speaker 1: the blockchain industry and touts it as quote fast, low cost,
Speaker 1: and equo friendly. John joins us now for our weekly
Speaker 1: look at crypto right here in the Interactive Broker's studio. So, John,
Speaker 1: before we get to the crypto market in your calls,
Speaker 1: I do want to touch on the Avid Labs news
Speaker 1: that we got this week, our own Bloomberg News team
Speaker 1: here reporting that aviad cut jobs by twelve percent this
Speaker 1: week in a restructuring. We should not it's just the
Speaker 1: latest layoffs to hit the cryptocurrency sector. What can you
Speaker 1: tell us about this restructuring.
Speaker 8: Well, that's right, Tim, and you know that day was
Speaker 8: probably the toughest day in my four years at Ava Labs.
Speaker 8: But in the last four plus years, we've gone from
Speaker 8: ten people to two seventy before this twelve percent and
Speaker 8: the world has changed. Like any fast growing business, you
Speaker 8: have to assess where the market is, what kind of
Speaker 8: products you're building, and analyze it and then make the
Speaker 8: necessary changes. So it was very tough. I call some
Speaker 8: of the those people my friends, but it was necessary
Speaker 8: and the team is leaner and I've got two hundred
Speaker 8: and almost forty people still that I have to think about.
Speaker 1: So is this it for cuts the next year?
Speaker 8: So it was a one time thing, that's it?
Speaker 1: Okay?
Speaker 8: Yeah?
Speaker 6: I guess one thing though, if you could just pull
Speaker 6: back and talk a little bit about the market for
Speaker 6: bigwoinings so far this year. I mean, there's just been
Speaker 6: this resurgence. What's the Is that going to continue? Are
Speaker 6: we going to see a bitcoin etf Oh?
Speaker 8: I mean that is obviously the rage. I mean, so
Speaker 8: first the surge in the bigcoon prices. Keiven, I'm an operator,
Speaker 8: but I used to be a fund manager, so I
Speaker 8: keep a lot of perspectives in mind. It was really
Speaker 8: two things. Recently, You've had the call it uninverting of
Speaker 8: the Yeld curve from a macro perspective. You had also
Speaker 8: announced that there will be less supply in treasury auction sales.
Speaker 8: So that created a backdrop from a macro perspective that
Speaker 8: was very positive for risk assets and crypto included in that.
Speaker 8: But on the micro perspective, you had I think you
Speaker 8: called it on your own show exuberance for these ETF potentials.
Speaker 8: I think we're getting closer to the reality of one
Speaker 8: of those, and reality is I think a lot of
Speaker 8: these institutional managers are trying to get ahead in anticipation
Speaker 8: of that.
Speaker 1: How are they doing that just by buying bitcoin? Or
Speaker 1: I mean, how do you get ahead of that?
Speaker 8: Yeah, I mean I think they are buying Well, if
Speaker 8: you look at the volumes where they're coming from, if
Speaker 8: you are doing it on central egs exchanges like a coinbase,
Speaker 8: or are you doing in a decentral exchange which is
Speaker 8: on chain. Typically the crossover investors, the institutional hedge fund types,
Speaker 8: they do it on chain. So you can do it
Speaker 8: either through coinbase or you can do it through proxies.
Speaker 8: Those are basically the gray scales product. Then you also
Speaker 8: have other proxy products out there, trust like that, and
Speaker 8: you have certain stocks that you can buy it. So
Speaker 8: if you look at that, you would say that it
Speaker 8: was more crossover traditional people getting ahead of the ETF announced.
Speaker 1: How much do you think Grayscale is spending on marketing
Speaker 1: because you cannot go into an airport in the New
Speaker 1: York City area or the Washington DC area and not
Speaker 1: see an ad for GBTC.
Speaker 8: Listen, when you have thirty billion in assets and you
Speaker 8: charge or what they charge, you have decent you know,
Speaker 8: marketing budget.
Speaker 1: And do you think they're also doing marketing to get
Speaker 1: ahead of it, to gin up interest ahead of a
Speaker 1: spot bit QUINNYTF.
Speaker 8: They have been very consistent in their marketing even before this.
Speaker 8: You know, part of their job is also to proselytize
Speaker 8: asset managers, and they've been very good at it. I
Speaker 8: know those guys well, they've been doing it for more
Speaker 8: than five six years.
Speaker 6: One thing, just to go back to the you know,
Speaker 6: the outlook here, I mean you mentioned this link between
Speaker 6: a risk on appetite and demand. What's the chance that
Speaker 6: that risk on appetite is going to continue into next year?
Speaker 6: I mean we've certainly got a lot of macro feedback
Speaker 6: that that's not good, that that's not going to.
Speaker 5: Be the case.
Speaker 8: Yeah, I mean that is everything is likely, and it's
Speaker 8: a it's a volatile asset class. So anything can happen
Speaker 8: the short term, but if you look at it over
Speaker 8: the course of the year, bitcoin is actually a lot
Speaker 8: better than most TEX stocks. It's up something like two
Speaker 8: to three hundred somewhere between two and three hundred percent.
Speaker 8: Literally two or three hundred percent. You can't even tell
Speaker 8: you exactly unless you're really studying a day to day.
Speaker 8: So actually, over the longer period of time, it's still
Speaker 8: doing relatively well. Can it go backwards, sure, and I
Speaker 8: wouldn't even be surprised. People have bought in anticipation in
Speaker 8: the news and then sell it on the news, so
Speaker 8: to speak of an ETF release. But just think about it.
Speaker 8: Blackrock has ten trillion in assets, so you know, if
Speaker 8: one percent of their distribution picks up on this, that's
Speaker 8: you know, one hundred billion, one hundred billion, you know,
Speaker 8: the bitcoin ETF A Bitcoin MARKAB I think is about
Speaker 8: seven hundred ish, so it's like fourteen percent increased demand,
Speaker 8: and that's only one percent of just black Rock, ye Fidelity,
Speaker 8: of all the big players involved. So over time it'll
Speaker 8: still continue to have positive inflows.
Speaker 6: You know, and then just continue on with the sort
Speaker 6: of sentiment around the market. At this point. Can you
Speaker 6: explain a little bit about how the implosion of FTX
Speaker 6: is landing in terms of getting new customers in people
Speaker 6: sticking with the asset class.
Speaker 8: Well, obviously, when it happened the FTX scenario, it was
Speaker 8: litterally about a year ago. Everything changed, the market structure
Speaker 8: of the asset class really deteriorated, a lot of players
Speaker 8: left the system. I think what's good right now, a
Speaker 8: year later after the trial, is that people are saying, Okay,
Speaker 8: it's almost there where we can put this chapter behind
Speaker 8: us and move forward. So I think the fact that
Speaker 8: we can put this chapter, or closer to putting this
Speaker 8: chapter behind us, we removed a lot of bad actors
Speaker 8: is all viewed positive going forward.
Speaker 1: I saw last week I believe it was last week
Speaker 1: or the week before. Jennifer correct me if I'm wrong,
Speaker 1: if you know this, that we saw another person accused
Speaker 1: of being a bad actor in the crypto space by
Speaker 1: the Southern District of New York, Like this was an actual,
Speaker 1: you know complaint. Where are we in weeding everybody out?
Speaker 8: I think we're farther along than people realize. There are
Speaker 8: bad actors. I mean this places. I've been in this
Speaker 8: space for a while, the space has been a peachy
Speaker 8: dish of genius experimentation and frauds and scams. Unfortunately, you know,
Speaker 8: regulatory rules are different in every part of the world
Speaker 8: and they're frankly uncertain, so it allows the bad actors
Speaker 8: to come in and try to take advantage of things.
Speaker 8: But what is happening with this ETF potential? As well
Speaker 8: as again I'm an operator, Alva Labs is actually a
Speaker 8: software services company helping people build on Avalanche. The partnerships
Speaker 8: and the business development relationships we're building with professionals tells
Speaker 8: me professionals are coming into the space, there's new leadership
Speaker 8: coming and it's frankly nice to see a blend of
Speaker 8: great technologists working with domain experts, whether that be traditional
Speaker 8: finance or the stuff we're working on in Asia with
Speaker 8: gaming companies or loyalty rewards programs.
Speaker 6: Yeah, I mean, that's my next question for you, isn't it.
Speaker 6: It's the industry developing and more professionals coming in. What
Speaker 6: sort of the vision in terms of pursuing that with
Speaker 6: corporate partnerships?
Speaker 8: So the vision for Ava Labs again software service, just
Speaker 8: like RedHat was for Linux, is to help people deploy
Speaker 8: things on top of Avalanche create real business use cases
Speaker 8: for traditional companies as well as crypto native companies, so
Speaker 8: giving them product market fit, getting them business use cases.
Speaker 8: Stable coins was a perfect example. I think that is
Speaker 8: the real first thing in blockchain or web three if
Speaker 8: you will, that has established product market fit. Brevin Howard's
Speaker 8: research said there was over eleven trillion on chain settlement
Speaker 8: in stable coins in last year. That's the same volume,
Speaker 8: almost the same volume as Visa over the course of
Speaker 8: the year. Soiction you know for next year twenty twenty
Speaker 8: four is you're going to have uh, the same volume
Speaker 8: as both Visa and MasterCard in terms of stable coint settlements.
Speaker 1: You guys are profitable over at a lab.
Speaker 8: Yet Ava Labs is a profitable company.
Speaker 1: Yes, uh going public? What's the plan.
Speaker 8: We're a little bit away from going public, but we
Speaker 8: are profitable for it depends because the accounting rules a
Speaker 8: little bit tricker to be fair. But we are cash
Speaker 8: full of positive.
Speaker 1: How about that cash flow positive? Okay, so not profitable
Speaker 1: but cash floposit. Okay, all right, Really appreciate you joining us.
Speaker 1: John Will, President of Ava Labs, the company developing the
Speaker 1: blockchain project Avalanche.
Speaker 3: Marc A.
Speaker 5: Journal.
Speaker 8: How about you let me drive?
Speaker 5: Oh no, no, no, no, honey, please, I'll douse.
Speaker 3: I want to drive.
Speaker 2: It's a good question.
Speaker 3: This is good drive to the clothes pong comer peck
Speaker 3: Wellga Don on Bloomberg Radio.
Speaker 1: All right, I'm certainly flying on this Friday afternoon. We
Speaker 1: got about eighteen minutes until the close of US equity
Speaker 1: market trading here in New York. You just heard the
Speaker 1: numbers from Charlie and Bill, but they are worth repeating.
Speaker 1: The Dow up more than one percent to reach thirty
Speaker 1: four seventy eight, the SB five hundred higher by more
Speaker 1: than one point five percent, in the nasdak hired by
Speaker 1: a full two percentage points. Really eager what our drive
Speaker 1: to the closed? Guest has to think about all this.
Speaker 1: Rob Hayworth is senior investment strategy at US Bank Asset
Speaker 1: Management Group. Good to have you with us this afternoon, Rob,
Speaker 1: What do you make of this rally? The S and
Speaker 1: P five hundred up eight of the last nine days,
Speaker 1: Vecho Jpwell, not really successfully throwing water on it yesterday.
Speaker 10: No, not quite yet. But I think some of the
Speaker 10: signs here, especially the strength and the Nasdaq, tells us
Speaker 10: that the market and investors are still worried about higher
Speaker 10: interest rates for longer. Right, they may be taking jpe
Speaker 10: out a little bit at his word, as they're looking
Speaker 10: for companies that are not going to be reliant on
Speaker 10: debt market funding for their future growth and probably looking
Speaker 10: to companies that have more natural growth embedded within them.
Speaker 10: We're seeing more of a general rally today, but the
Speaker 10: leadership certainly speaks to that worry for us.
Speaker 6: One thing I'm wondering is, you know, looking at some
Speaker 6: of the stocks that are struggling today, like Diagio, you're
Speaker 6: seeing some price sensitivity start to emerge among US consumers.
Speaker 6: I mean, what does that sort of tell you for
Speaker 6: the outlook for you know, these consumer facing names to
Speaker 6: continue to plow ahead strongly.
Speaker 10: Yeah, we're very much looking ahead to retail sales next week.
Speaker 10: I think the consumer remains a major question in all
Speaker 10: our outlooks, especially after we got consumer credit and the
Speaker 10: Senior Loan Officer Opinion survey this week, which pointed out that,
Speaker 10: you know, lending is down, and there's certainly some question
Speaker 10: as to what is the resilience left in the consumer
Speaker 10: after such strong data in Q three, Right, can they
Speaker 10: maintain it as they have to start paying back student
Speaker 10: loans and other things that I think, you know, as
Speaker 10: we look ahead into some of the big box retailers
Speaker 10: in coming weeks, that's something we're going to be paying
Speaker 10: close attention to because the consumer is front and center
Speaker 10: for what's going to drive the economy in twenty twenty four.
Speaker 6: I find that it can be just quite difficult to
Speaker 6: unpack consumer sentiment because if you add to the student
Speaker 6: loan costs, you've also got massive childcare bills that are
Speaker 6: going to be landing on people's doorsteps now that federal
Speaker 6: funding is dried up there, so there's so much pressure
Speaker 6: on consumer's wallets. But at the same time, the job
Speaker 6: market is incredibly healthy, so it's hard to know do
Speaker 6: consumers feel rich or do they feel poor?
Speaker 7: Right?
Speaker 10: Yeah, no, And the sentiment surveys have made that difficult. Certainly,
Speaker 10: if we just looked at today's University of Michigan consumer
Speaker 10: sentiment survey, you'd have to worry about that. But you know,
Speaker 10: they may be focused on things other than just what's
Speaker 10: going on in pocketbooks, because as you dig into the
Speaker 10: survey personal finances, where something consumers felt okay about it
Speaker 10: was more about the impact of higher cost of sorry,
Speaker 10: of higher borrowing costs, and of that inflation could worry
Speaker 10: them in the future. So I think this is a
Speaker 10: little bit of a unique environment that we haven't seen
Speaker 10: in the last two decades in the economy. Where we're
Speaker 10: getting fairly robust wage growth numbers, we're not seeing a
Speaker 10: lot of layoffs. I mean, weekly jobless claims remained quite
Speaker 10: low at set two hundred and seventeen thousand this last week,
Speaker 10: so that labor market isn't quite as strong as it was,
Speaker 10: but it remains fairly strong. And that's giving the consumers
Speaker 10: some resilience, even if they're not quite happy with where
Speaker 10: prices have been added.
Speaker 1: But doesn't rob that also make the Fed's job that much.
Speaker 10: Harder, Absolutely right, And I think that's why we're seeing
Speaker 10: and we saw a chair palll really emphasize holding rates
Speaker 10: higher for longer and looking harder and longer at the data.
Speaker 10: I think, you know, as we're seeing it. I mean
Speaker 10: that they could be on hold well into the middle
Speaker 10: of next year, depending upon how the economic data unwinds,
Speaker 10: and there's and there's room to see that. Right, We're
Speaker 10: still working through the adjustment to borrowing costs. I mean
Speaker 10: one of the things we look at is what is
Speaker 10: the average mortgage rate for existing mortgages? Right, we know
Speaker 10: it's seven and a half eight percent for new mortgages.
Speaker 1: I'm sorry, is it sub four?
Speaker 9: Yeah?
Speaker 7: Right?
Speaker 10: Existing costs are sub four percent, So that gives current
Speaker 10: homeowners a lot of a lot of room to still
Speaker 10: manage their budget because their housing costs aren't going up
Speaker 10: quite as quickly as what it costs for new buyers.
Speaker 10: So so I think that means that there's a as
Speaker 10: as is always want to be said, monetary policy works
Speaker 10: with long and variable legs, and I think we're seeing
Speaker 10: that the variance is longer this time.
Speaker 1: Well, I mean fed CHERP. Powell talked about this yesterday, Jennifer.
Speaker 1: He's talked about this id been over the last few months.
Speaker 1: A lot of the people who live in homes where
Speaker 1: they have thirty year mortgages that are sub four percent,
Speaker 1: they're not experiencing higher rates the same way that those
Speaker 1: first time home buyers are. So, like you said yesterday,
Speaker 1: those people are sort of exempt from that higher rate environment,
Speaker 1: at least when it comes to housing.
Speaker 6: When it comes to housing, indeed, but then think about
Speaker 6: their car loans, think about their credit card loans and
Speaker 6: loans for any other kind of activity, and like you know,
Speaker 6: like we've already been talking about their student loans, so
Speaker 6: they are definitely feeling a pinch, but it's just not
Speaker 6: in the thing that's got the roof over their heads.
Speaker 7: Yeah, what do you think about it as quick? Right? Yeah?
Speaker 1: Sorry, go ahead.
Speaker 10: No, No, we're seeing that in the corporate market as well,
Speaker 10: right where companies that have borrowed money and their average
Speaker 10: maturities are out ten years aren't having to come back
Speaker 10: to market quite as quickly as maybe some smaller companies
Speaker 10: where the term on their loan is three to five years,
Speaker 10: so they're having to bear those new costs a little quicker.
Speaker 10: And I think we're seeing that play out in the
Speaker 10: differentials within the equity market as well.
Speaker 6: One thing I wanted to do if I could switch
Speaker 6: gears a little bit in our chat about the equity market,
Speaker 6: is to talk about your thoughts on the big rallies
Speaker 6: that we're seeing in some techniques like Microsoft. I mean,
Speaker 6: do you think that this is you know, the look
Speaker 6: like some crowded trades perhaps, and do you think that
Speaker 6: this is something that can continue or is it still
Speaker 6: you know, we were talking earlier in the show about
Speaker 6: the shift to greed and the marketers, there's still some
Speaker 6: legs there.
Speaker 10: Yeah, I mean, having lived through a couple of market cycles,
Speaker 10: I'd say that we're not seeing valuations quite as stretched
Speaker 10: as we may have historically. And I think the constructive
Speaker 10: thing is this being this is being underpinned by earnings
Speaker 10: and actual growth in sales and revenue when we think
Speaker 10: about the push to cloud services, the push for artificial intelligence,
Speaker 10: the push for software as a service to increase and
Speaker 10: enhance productivity. So I think the constructive thing is even
Speaker 10: though we've seen a tremendous rebound in twenty twenty three
Speaker 10: after a horrendous twenty twenty two, there's still long term
Speaker 10: room and long term growth in these markets because our
Speaker 10: economy and the innovation in our economy is being driven
Speaker 10: by technology and the distribution of technology throughout the all
Speaker 10: sectors in the economy.
Speaker 1: Yeah, it's just going to be interesting to see moving forward,
Speaker 1: which of those companies are the ones that get that
Speaker 1: lion's share, Especially Jennifer, this year we've seen you know,
Speaker 1: the quote unquote Magnificent seven really lead the way when
Speaker 1: it comes to rally on y s and p five
Speaker 1: hundred in the Nasdaq as well. Rob Hayworth, Senior Investment
Speaker 1: Strategy director at us Bank Asset Management, joining us on
Speaker 1: Zoom from Seattle. The Big Thank You.
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