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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: We're going to get the latest on what's happening in Israel.

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Speaker 1: Hillary Kalisman, professor at the University.

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Speaker 3: Of Colorado, Boulder. Oh, she may have been to, could

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Speaker 3: have been where?

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Speaker 2: Let's ask her before we get into the Middle East situation, Joe,

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Speaker 2: because I don't want to, you know, because it's such

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Speaker 2: a tragic and horrible situation that we don't want to

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Speaker 2: be at all lighthearted.

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Speaker 3: But before we get there, have you been to Casa

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Speaker 3: I have not.

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Speaker 4: I've driven past it many times though, and I would

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Speaker 4: like to go, but I think it's hard to get there.

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Speaker 4: Right now, I have another.

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Speaker 3: Good recommendation for you.

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Speaker 1: I just went this weekend my son and graduated from

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Speaker 1: INERSH at Colorado. He picked I think the most expensive

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Speaker 1: restaurant in Denver, Fruition. So I recommend fruition if you

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Speaker 1: haven't been there. All right, let's get to Israel here,

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Speaker 1: very very difficult situation here. Do you have a sense

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Speaker 1: of how this might play out? I mean, it's just

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Speaker 1: been on and on and on, and now with the

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Speaker 1: horrific attack from you know, now ten days ago, it's

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Speaker 1: taken a whole new level here. Do you have any

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Speaker 1: sense of how this might develop over the coming weeks

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Speaker 1: and months.

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Speaker 4: It's a difficult question, and I would say I would

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Speaker 4: see I don't. I don't necessarily see any kind of

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Speaker 4: long term easing of the conflict either. It's something where

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Speaker 4: you have an Israeli government reeling from intelligence failures, trying

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Speaker 4: to figure out what is the best option while trying

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Speaker 4: to kind of please like trying to reassure their constituents

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Speaker 4: that they can in fact tech their citizens. On the

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Speaker 4: other hand, their tactics so far have been it seems

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Speaker 4: quite ineffective and causing a lot of civilian deaths within Gaza.

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Speaker 4: So I do think a ground invasion is imminent. I

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Speaker 4: think the part that I worry about in particular is

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Speaker 4: what is the endgame for any of the involved parties here.

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Speaker 1: So, if you're the Palestinians, can you give us just

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Speaker 1: educase a little bit here to what extent do the

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Speaker 1: Palestinian people in that region support Hamas.

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Speaker 4: Well? So Hamas was elected in two thousand and six

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Speaker 4: over you know, sort of about fifty percent of the

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Speaker 4: population in Gaza would not have been old enough to

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Speaker 4: elect them. And I would say I don't I haven't

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Speaker 4: heard sort of very many support people supporting Hamas's current

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Speaker 4: actions and also their fallout. Right. It's something though where Hamas,

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Speaker 4: you know, sort of, so it's been a long time

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Speaker 4: since two thousand and six, right, and you've had Palestinians

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Speaker 4: in Gaza, in particular also in the West Bank protesting

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Speaker 4: sort of demanding that their self determination not continue to

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Speaker 4: be put on the back burner, that their material conditions improve.

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Speaker 4: In twenty eighteen, you had this great March of Return

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Speaker 4: where you had Palestinians protesting daily at the border fence

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Speaker 4: with Gaza, and it had no effect. Many of them

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Speaker 4: were killed. So it's something where the Palestinians living in

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Speaker 4: those areas, The Palestinians living in Gaza, I don't think,

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Speaker 4: have seen any tangible benefits from hamas as a government,

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Speaker 4: and they're certainly not seeing any tangible benefits from Hamas

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Speaker 4: acting as it has been historically is a terrorist organization.

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Speaker 2: Have they any have they did they see any tangible

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Speaker 2: benefits from.

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Speaker 3: The PLO the PLA. Have they seen any.

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Speaker 2: Tangible benefits from help out of Jordan or Egypt? I mean,

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Speaker 2: has anything been helpful to the Palestinians since like nineteen

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Speaker 2: forty eight.

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Speaker 4: I would say there have been periods where things have

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Speaker 4: been better. The period you know, sort of so between

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Speaker 4: nineteen forty eight and nineteen sixty seven, the West Bank

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Speaker 4: in particular belonged to Jordan. Right Jordan annexed it, including

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Speaker 4: East Jerusalem, and Palestinians were made citizens. Now again, Palestinians

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Speaker 4: were many were extremely angry. The King of Jordan gets

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Speaker 4: assassinated for agreeing to sort of work with Israel in

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Speaker 4: nineteen forty eight, and Gaza is occupied by Egypt. But

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Speaker 4: Egypt doesn't want to annex it, It doesn't want to make

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Speaker 4: it part of Egypt. It doesn't want that Palestinian population.

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Speaker 4: That said, during that period you are able to have

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Speaker 4: you know, sort of Palestinian it's beginning to kind of

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Speaker 4: build up a livelihood again. But I want to emphasize

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Speaker 4: they don't have Palestinian sovereignty. They don't have a state.

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Speaker 4: And one of the other things to remember, right, is

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Speaker 4: that the Palestinian population without a state, without a standing army,

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Speaker 4: without even you know, sort of the ability to collect

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Speaker 4: their own taxes. And again this worsens under Israeli occupation.

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Speaker 4: After the War of nineteen sixty seven, you have essentially

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Speaker 4: against sort of their self determination postponed and one of

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Speaker 4: the and they also have sort of very little bargaining

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Speaker 4: power visa viv the Israeli state. The periods in which

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Speaker 4: they are able to get bargaining power are periods in

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Speaker 4: which they make it harder for Israel to continue the

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Speaker 4: situation of having Palestinians without of state and continue to

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Speaker 4: occupy them.

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Speaker 3: Yeah, this is right, Just no, please continue.

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Speaker 1: Just thirty seconds left, professor. Is there anywhere for Palestinians

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Speaker 1: to go in this world?

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Speaker 3: I mean, what do they do?

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Speaker 4: It's so hard? And again it is so many ordinary

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Speaker 4: people who would like to live somewhere in safety with

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Speaker 4: their children. And one of the things I want, I

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Speaker 4: really want to emphasize here is that the future, the

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Speaker 4: future safety of Israel also depends on their being somewhere

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Speaker 4: for Palestinians to go and be safe. They're entwined, and

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Speaker 4: I think the Hamas terrorist attacks are a horrible, horrible,

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Speaker 4: unjustified wake up call for the Israeli government to sort

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Speaker 4: of say, no, look, you cannot keep your population safe

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Speaker 4: with this Palestinian population without statehood.

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Speaker 1: Next to you, all right, professor, thank you some much.

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Speaker 1: We appreciate that. Hillary Kllisman, she's a professor at the

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Speaker 1: University of Colorado at Boulder.

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Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,

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Speaker 5: the iHeartRadio app, and the Bloomberg Business app, or listen

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Speaker 5: on demand wherever you get your podcasts.

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Speaker 1: Matt Miller, Paul Sweeney live here in our Bloomberg Interactive

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Speaker 1: Brokers studio. What's a fixingcome investor to do? Twenty twenty

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Speaker 1: two was just the worst bait maybe of all time

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Speaker 1: for fixing come investing. This year is it's not much better.

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Speaker 1: If you're not this year bad. If you're in high yield,

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Speaker 1: you've had some positive returns, but that's about it. So

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Speaker 1: let's check in with somebody who does this investing stuff

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Speaker 1: for living Mike Green.

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Speaker 3: He's a portfolio.

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Speaker 1: Manager in chief strategist at Simplify Asset Management. Mike, thanks

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Speaker 1: so much for joining us here. How are you guys

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Speaker 1: approaching this market here? I love to get kind of

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Speaker 1: how you entered the year and maybe how you've kind

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Speaker 1: of repositioned, if at all here as we get into

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Speaker 1: the fourth quarter.

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Speaker 6: Well, fortunately at simplfy we run a nonumber of strategies,

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Speaker 6: so we've had everything ranging from our interest rate hedge

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Speaker 6: product prefix, which looks like it's on track for a

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Speaker 6: second year of a row of just being a phenomenal performer.

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Speaker 6: But simply that's just betting against rates, right, it's betting

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Speaker 6: on higher interest rates. It's worked as a fantastic portfolio hedge.

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Speaker 6: In terms of my personal exposure in funds that I

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Speaker 6: directly manage, I have been biased towards bonds and duration,

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Speaker 6: and obviously that's been the wrong call for the year.

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Speaker 6: I think the interesting question is why, in the face

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Speaker 6: of much higher interest rates are we not seeing equity

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Speaker 6: markets respond? And I think the most interesting aspect of

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Speaker 6: it is simply that we're not seeing flexing and demand.

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Speaker 6: We're not seeing that marginal player who can say I

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Speaker 6: think equities are relatively unattractive versus bonds. We hear an

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Speaker 6: awful lot about the very low equity risk premium, but

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Speaker 6: we're not really seeing allocations change in a meaningful way.

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Speaker 6: And that strikes me as one of the most interesting

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Speaker 6: dynamics playing out in markets today. I think it plays

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Speaker 6: into a a bunch of the material and emphasis that

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Speaker 6: I placed on passive investment strategies. Systematic investment strategies for

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Speaker 6: portfolio construction is not really tied to the underlying fundamentals.

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Speaker 6: It's tied to historical return profiles.

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Speaker 2: Yeah, well, it seems like everybody, well, it seems like

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Speaker 2: a lot of big names have been burned.

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Speaker 3: You know.

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Speaker 2: Stephen Major recently came out and said he was wrong

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Speaker 2: on bonds. He pointed out that debts and deficits hadn't

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Speaker 2: mattered in the past, and now they do. Lacy Hunt

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Speaker 2: over at Hoysington Investment Management has said this is one

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Speaker 2: of the toughest years of his career, and he's eighty one,

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Speaker 2: so he's been in the market for a long time.

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Speaker 2: And everybody is like, hey, inflation is coming down. In fact,

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Speaker 2: there has been no decline this large in inflation that

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Speaker 2: hasn't been involved with a recession and its immediate aftermath.

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Speaker 2: So I guess I have two main questions, Mike. One

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Speaker 2: do you think inflation is really solved? Has the FED

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Speaker 2: you know, done it?

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Speaker 3: And two?

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Speaker 2: Are we headed for a recession or is Paul's soft

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Speaker 2: landing scenario going.

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Speaker 3: To play out?

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Speaker 6: So I'm very much in the camp that says that

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Speaker 6: the data is currently misleading us. I agree by the

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Speaker 6: way that the inflatory has played out as many of

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Speaker 6: the transitory infliction as myself included would have argued, we've

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Speaker 6: seen a remarkable deceleration if you go further within the

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Speaker 6: infant data series and you focus on market based measures,

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Speaker 6: and so just very quickly remember that about thirty five

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Speaker 6: percent of the CPI numbers that we see, or what

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Speaker 6: are called imputed measures. Those would include things like owners

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Speaker 6: equivalent rent, very slow moving adjustments that they make. Even

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Speaker 6: those silly things like the cost of banking services is

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Speaker 6: currently very elevated because of the way we define that right,

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Speaker 6: So crazily enough, the cost of banking services is defined

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Speaker 6: by the spread between the risk free rate and the

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Speaker 6: rate that is being paid on deposits. That means that

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Speaker 6: as the FED has raised interest rates, they've dramatically increased

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Speaker 6: the imputed costs of banking services. So those are the

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Speaker 6: factors that are actually currently driving or keeping inflation elevated.

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Speaker 6: If you use the market based measures, the ones that

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Speaker 6: you experience on a year over year basis as you

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Speaker 6: go to the grocery store, those are now running below

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Speaker 6: two percent, below the below Powells targets, and would suggest

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Speaker 6: that that's not the problem at all. I think the

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Speaker 6: clear challenge that we're facing is modestly increased supply. Again,

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Speaker 6: not a crazy increase. I understand people point to higher

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Speaker 6: level of deficits, etc. We haven't seen an unbelievably large

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Speaker 6: increase in the supply of bonds. But the bigger story

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Speaker 6: continues to be the relative challenge of getting people to

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Speaker 6: actually change their allocations and say, should we allocate two

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Speaker 6: equities away? So that's just a structurally very slow process.

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Speaker 2: What about I saw a story this morning China or

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Speaker 2: Chinese investors have sold more US holding stocks and bonds

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Speaker 2: than they have in the past four years because they're

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Speaker 2: defending the U on and a lot of countries are

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Speaker 2: defending their currency against a stronger dollar. To foreign investors

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Speaker 2: who are.

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Speaker 3: Huge holders of treasuries. Are they a problem for this market?

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Speaker 6: Well, they're definitely not helping, right, because we would hope

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Speaker 6: to see an increase in demand.

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Speaker 2: Now.

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Speaker 6: The irony, of course, is that their source of supply,

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Speaker 6: the reason that they've accumulated those are the very large

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Speaker 6: trade surpluses that they run with the United States, and

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Speaker 6: then their failure to reinvest in any meaningful way, which

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Speaker 6: historically would have led to their currency appreciating. Now as

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Speaker 6: they face commodity prices, they face a slowing in the

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Speaker 6: Chinese economy, as they face capital flight from within their

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Speaker 6: own economy, You're seeing them effectively have to defend their

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Speaker 6: currencies against the rising US dollar, and you know, yes,

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Speaker 6: they're no longer accumulating in the same manner. But we're

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Speaker 6: not really seeing a wholesale crash, right. The tick type

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Speaker 6: indicators for demand from foreign buyers are muted, but it's

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Speaker 6: not a crash in demand. The other thing that I

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Speaker 6: would just highlight is is that we're seeing this this

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Speaker 6: is not a US story. We're seeing bond sell off

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Speaker 6: on a global basis, and so we hear an awful

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Speaker 6: lot about the unsustainability of US fiscal policy. The simple

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Speaker 6: reality is, I look at a place like France, which

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Speaker 6: is running almost the same deficit to GDP as the

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Speaker 6: United States and doing so on a much more structural basis,

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Speaker 6: and their bonds are actually trading inside the United States.

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Speaker 6: That suggests to me there's a combination of diversification and

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Speaker 6: very slow to respond demand.

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Speaker 1: Hey, Mike, thanks so much for joining us. Always appreciate

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Speaker 1: getting a couple of minutes of your time. That's Mike Green.

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Speaker 1: He's sup portfolio manager and chief strategist at Simplify Asset Management.

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Speaker 1: He's been in the business long time, has seen the

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Speaker 1: various cycles.

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Speaker 3: Here used to run Peter Thiel's money. Yeah, that's kind

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Speaker 3: of cool.

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Speaker 2: Which is a lot of money. And we have an

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Speaker 2: amazing story on the terminal today showing that of the

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Speaker 2: two hundred and seventy one people Peter Teal has bribed

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Speaker 2: to drop out of college, yeah, you know, he pays

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Speaker 2: kids one hundred thousand dollars to drop out of college,

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Speaker 2: eleven have founded billion dollar plus businesses, almost twelve because

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Speaker 2: one guy just sold out with nine hundred and seventy

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Speaker 2: five for here.

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Speaker 3: That's a good return on that investment.

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Speaker 5: You're listening to the tape kets are live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 5: You can also listen live on Amazon Alexa from our

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Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: Here's I think one of the most fascinating stories on

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Speaker 1: the Bloomberg terminal today. A Bloomberg News and Morning Console

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Speaker 1: poll provides one of the most detailed looks yet at

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Speaker 1: how the twenty twenty four presidential race is playing out

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Speaker 1: in the seven swing states that could decide who wins.

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Speaker 1: The title of the reporter on this story, Gregory Courty

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Speaker 1: joins us. He's a White House and political corresponding with

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Speaker 1: Bloomberg News. Gregory, what's the poll telling us here?

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Speaker 7: Well, what this poll does Unlike a lot of the

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Speaker 7: other polls you see out there, which are national polls,

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Speaker 7: this just looks at the seven swing states that are

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Speaker 7: most likely to matter next year, and they are Arizona, Georgia,

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Speaker 7: North Carolina, Pennsylvania, Michigan, Wisconsin, and Nevada. And what we

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Speaker 7: see in this poll is that president former President Trump

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Speaker 7: is up in five of those seven states, Biden is

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Speaker 7: up in only one. President Biden is leading in Nevada,

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Speaker 7: and then Michigan is a dead tie according to our poll.

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Speaker 7: But across these if you look across the swing states,

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Speaker 7: president former president Trump is overperforming what you see in

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Speaker 7: the national polls. And obviously that's a good sign for

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Speaker 7: him because these are the states that are actually going

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Speaker 7: to matter.

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Speaker 1: So we're, you know, thirteen months before the election. If

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Speaker 1: I were the Biden reelection campaign, how would I interpret

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Speaker 1: these numbers? How concerned would I be?

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Speaker 2: Oh?

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Speaker 7: I think they're concerned, and they're very likely seeing similar

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Speaker 7: kinds of things in their own internal polling. But they

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Speaker 7: would also say, look, it's thirteen months before the election.

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Speaker 7: Certainly we've had some economic challenges coming out of the pandemic.

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Speaker 7: Inflation is ebbing somewhat, but people still feel it absolutely.

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Speaker 7: What we see in this poll is it's those kitchen

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Speaker 7: table issues. It's those bread and butter household economics that

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Speaker 7: is really killing the president right now. There's a huge

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Speaker 7: trust deficit people voters in these swing states are trusting

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Speaker 7: former President Trump on the issue of the economy and

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Speaker 7: all the sub issues that we look at the economy,

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Speaker 7: we really delve deep to look at Okay, when you

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Speaker 7: talk about the economy, are you're talking about inflation, are

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Speaker 7: you talking about the stock market? Are you talking about

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Speaker 7: taxes or spending? And across all of those economic issues.

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Speaker 7: President Trump had the advantage in these swing state voters.

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Speaker 7: What President Biden is hoping is that as the economy

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Speaker 7: and if we're able to have that soft landing and

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Speaker 7: avoid the recession, if people are looking up by this

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Speaker 7: time next year more optimistic about where the economy is

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Speaker 7: going and not just where it has been, there is

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Speaker 7: an opportunity for present Biden to be reelected.

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Speaker 2: The problem is, I think pretty clearly inflation, Like, even

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Speaker 2: if inflation got down to zero today, you've still seen

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Speaker 2: prices run up at an unbelievable pace and they're not

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Speaker 2: turning around.

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Speaker 3: Plus wages have not kept up even nearly with inflation.

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Speaker 3: Wages is not going ahead of No, no, no, no

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Speaker 3: no no.

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Speaker 2: I mean, I look obviously very closely at cars, and

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Speaker 2: I just see Hannah was right. Hannah Elliott wrote a

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Speaker 2: story about the Jeep three ninety two two years ago

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Speaker 2: going for seventy four thousand dollars, and she thought that

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Speaker 2: was way too expensive. I wrote about it or I'm

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Speaker 2: looking at it this week and I see it at

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Speaker 2: ninety two to five, So that's a huge jump. It's

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Speaker 2: up twenty three percent. And I guess my question, Gregory,

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Speaker 2: is this a lot of this is very clearly inflation

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Speaker 2: is very clearly being fueled by excess spending, which was

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Speaker 2: understandable during COVID. But we're still running one and a

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Speaker 2: half trillion dollar deficits. And President Biden is like all

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Speaker 2: in favor of spending as much as possible, or at

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Speaker 2: least that's how it appears, right, So how does he

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Speaker 2: turn that narrative around, you know, while we're while we're

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Speaker 2: while we're looking at these huge deficits in debt.

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Speaker 7: Yeah, so what you've seen is and I think you

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Speaker 7: exactly nailed it, right, So even if there's a little

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Speaker 7: bit of disinflation, that's not the same as deflation.

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Speaker 8: Right.

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Speaker 7: So, so people have seen this cumulative inflation over the

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Speaker 7: course of the Biden years. Again, we're coming out of

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Speaker 7: a pandemic. You know, this is a lot of the

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Speaker 7: spending happened, and the tail and the Trump administration, those

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Speaker 7: arguments are falling on deaf years. Republicans have have branded

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Speaker 7: this economy is Bidenomics, right, that all this inflation.

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Speaker 3: That peoples branded this economy is biden.

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Speaker 7: Well, what President Biden has tried to do is rebrand

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Speaker 7: it as this package of social spending and investment in

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Speaker 7: green energy technologies, infrastructure, all of these things. But people

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Speaker 7: are looking the outputs and not the policy inputs, and

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Speaker 7: so I think you're absolutely right, it's the economic indicators.

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Speaker 7: But even more than that, just what people are feeling

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Speaker 7: that that perception, and it's going to take a while

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Speaker 7: to change perceptions because the cumulative inflation during the Biden

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Speaker 7: years is more than sixteen percent. People, it takes a

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Speaker 7: while for people to digest that prices are now stabilizing

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Speaker 7: a little bit. They still are comparing what they're spending

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Speaker 7: now to what they were spending pre pandemic.

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Speaker 2: Yeah, what I'm feeling is I can barely afford like groceries, childcare,

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Speaker 2: and housing at a time when you know, if you

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Speaker 2: want to buy a car, get ready for eight or

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Speaker 2: nine percent interest rates on that. If you want to

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Speaker 2: buy a house, ditto with the mortgage. So it's like

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Speaker 2: and we're still going to say, hey, let's do a

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Speaker 2: one trillion dollar additional spending bill, right, exactly.

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Speaker 3: What so Gregory the president.

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Speaker 1: We had some more news on some of his legal

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Speaker 1: challenges today regarding one of his former aides pleading guilty.

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Speaker 1: He still has a lot of legal challenges ahead of him.

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Speaker 1: That doesn't seem to be hurting him at all, does it.

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Speaker 4: Yeah?

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Speaker 7: I just saw the headline crossing the Bloomberg terminal as

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Speaker 7: I was coming on here. What we saw in this

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Speaker 7: poll was one of the interesting things is one of

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Speaker 7: the questions we asked is what have you seen, read,

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Speaker 7: or heard about these candidates in the past few days

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Speaker 7: or weeks, And it called for an open ended response.

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Speaker 7: We got to see actually what they were hearing, how

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Speaker 7: they were viewing these candidates, and what you heard a

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Speaker 7: lot about President Biden about his age, and what you

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Speaker 7: heard overwhelmingly about President Trump is about his legal troubles. Interestingly,

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Speaker 7: we heard it both from Democrats and Republicans. Trump supporters

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Speaker 7: are talking a lot about his legal troubles. Of course

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Speaker 7: they're doing in a different context. They're saying, all I

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Speaker 7: hear about is President Trump's legal troubles. I wish I

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Speaker 7: would hear less about it. Everybody's fixated on it. This

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Speaker 7: is all sort of a witch hunt. But it's certainly

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Speaker 7: that news is permeating. People are reading it, and they're

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Speaker 7: reading it on a more granular level than I expected.

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Speaker 7: When when the former President Trump is hit with a

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Speaker 7: gag order, people mentioned that gag order. They're they're they're

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Speaker 7: following some of the the micro developments of this. So

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Speaker 7: it really is capturing people's attention. But the partisanship is

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Speaker 7: just so entrenched that it's not moving those numbers, and

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Speaker 7: the economic issues, as we're seeing in this sing state's poll,

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Speaker 7: are dwarfing everything else that people know about these candidates.

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Speaker 2: Doesn't the Democratic Party, doesn't the DNC need to do

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Speaker 2: more to boost Kamala Harris's profile, because if you're worried

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Speaker 2: about President Biden's age, you know, without discussing saying whether

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Speaker 2: or not that's a valid concern, you've got to feel

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Speaker 2: comfortable with the vice president because in that case, you're casting.

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Speaker 3: A vote not just for President Biden.

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Speaker 2: But it's I guess you're saying, if you're worried about

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Speaker 2: his age, it's likely that you must think Kamala Harris

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Speaker 2: could eventually take that spot over.

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Speaker 7: Yeah, we asked this question in this swing state's poll,

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Speaker 7: and a majority of voters said that the vice presidential

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Speaker 7: pick is more important this year than it has been

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Speaker 7: in the past. For Democrats, thirty percent said it was

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Speaker 7: much more important who the vice president is because of

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Speaker 7: the age of these candidates. A little bit less, maybe

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Speaker 7: twenty four percent for Republican voters said the vice presidential

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Speaker 7: pick is more important. Of course, we don't know who

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Speaker 7: President Trump, assuming he's a nominee, we don't know who

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Speaker 7: his running mate will be. It will be almost certainly

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Speaker 7: someone other than Mike Pence, who is vice president his

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Speaker 7: first term. But yes, voters in both parties are more

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Speaker 7: fixated on the vice presidency just because of the age

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Speaker 7: of these two candidates.

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Speaker 1: All right, Gregory, thank you so much for joining us

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Speaker 1: fascinating reporting here today.

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Speaker 3: Gregory Cordey Corti.

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Speaker 1: He is the White House and Politics correspondent with Bloomberg

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Speaker 1: News and Bloomberg News along with Morning Consult, did a

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Speaker 1: pretty deep dive poll focusing on seven swing states that

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Speaker 1: could decide who wins the White House.

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Speaker 5: You're listening to the Team Ken's Are Live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,

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Speaker 5: the iHeartRadio app, and the Bloomberg Business app or listen

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Speaker 5: on demand wherever you get your podcasts.

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Speaker 1: Matt Miller Paul Sweeney live here in on our Bloomberg Interactive

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Speaker 1: Broker Studio or streaming live on YouTube's to go over

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Speaker 1: and check that out. Little roundtable here on some earnings.

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Speaker 1: Dan Ives, senior equity analysts at Whatbush Securities. He joins

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Speaker 1: us live here in his Bloomberg Interactive Broker Studio. I'm

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Speaker 1: not sure if he's going to State College this week.

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Speaker 1: I'm not sure about that or they are They?

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Speaker 9: Yes, Yeah, we'll be going to Columbus Friday.

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Speaker 3: Oh you're going to Columbus. Oh nice, very good.

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Speaker 2: I got a bar for you there. Uh, you go

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Speaker 2: in there, order whatever you want food and drink. If

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Speaker 2: Penn State wins, they will pick up the tab. I'm

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Speaker 2: gonna hook you up all right.

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Speaker 1: Keithan Ron Gonnatin, She's definitely not going to Columbus, Ohio

440
00:24:17,720 --> 00:24:20,800
Speaker 1: because she's a professional. She covers the media sector for

441
00:24:20,840 --> 00:24:23,880
Speaker 1: Bloomberg Intelligence. And we want to talk about Netflix and ESPN,

442
00:24:23,960 --> 00:24:27,400
Speaker 1: Dan Knives, Let's start with you. Tesla Stoka not liking

443
00:24:27,440 --> 00:24:28,760
Speaker 1: what they're hearing from Elon Musk.

444
00:24:28,920 --> 00:24:31,720
Speaker 3: What was your takeaway? From the quarter for Tesla.

445
00:24:31,520 --> 00:24:34,359
Speaker 9: It goes to a disaster conference call, I mean, because it

446
00:24:34,400 --> 00:24:38,320
Speaker 9: was the street wanted to hear about pricing. Have the

447
00:24:38,359 --> 00:24:41,160
Speaker 9: price cuts ended? What does the outlook like going forward?

448
00:24:41,480 --> 00:24:41,639
Speaker 5: You know?

449
00:24:41,680 --> 00:24:44,240
Speaker 9: Instead, this just really must be more of an economist,

450
00:24:44,320 --> 00:24:47,480
Speaker 9: you know, obviously much more somber, and I think investors

451
00:24:47,560 --> 00:24:50,199
Speaker 9: leave with just more questions and answers in terms of

452
00:24:50,200 --> 00:24:52,000
Speaker 9: this price where that you know, we've talked about here

453
00:24:52,080 --> 00:24:54,840
Speaker 9: a lot, you know, how long does it continue? And

454
00:24:54,920 --> 00:24:57,359
Speaker 9: obviously on the cyber truck, that's gonna be a huge

455
00:24:57,480 --> 00:25:00,479
Speaker 9: vehicle relative to demand, but definitely gonna be a uphill

456
00:25:00,520 --> 00:25:01,680
Speaker 9: battle from production per.

457
00:25:01,880 --> 00:25:05,320
Speaker 2: So, I got a million questions after that conference call,

458
00:25:05,640 --> 00:25:07,720
Speaker 2: but my first one is on the cyber truck. He

459
00:25:08,920 --> 00:25:12,840
Speaker 2: contends that this is like a special project and that

460
00:25:12,920 --> 00:25:15,160
Speaker 2: makes it extra difficult to produce.

461
00:25:15,680 --> 00:25:16,720
Speaker 3: Why is that?

462
00:25:16,760 --> 00:25:18,959
Speaker 2: Why isn't it just a normal truck. I mean, this

463
00:25:19,040 --> 00:25:23,040
Speaker 2: could be like an F one fifty competitor. It's so cool,

464
00:25:23,400 --> 00:25:26,800
Speaker 2: everybody wants it, so many people put in pre orders.

465
00:25:27,240 --> 00:25:28,640
Speaker 3: Why is it so hard to make?

466
00:25:29,000 --> 00:25:31,400
Speaker 9: From an engineering perspective, it's very difficult.

467
00:25:31,720 --> 00:25:35,040
Speaker 3: So it's one one are because it's a special shape.

468
00:25:34,680 --> 00:25:37,800
Speaker 9: Because of the sheep because of the materials in there

469
00:25:37,880 --> 00:25:39,399
Speaker 9: as well as what they're trying to do from a

470
00:25:39,440 --> 00:25:44,320
Speaker 9: technology perspective. That's why you talk about getting mass production.

471
00:25:44,400 --> 00:25:46,639
Speaker 9: They look, that's essentially why they built out Austin in

472
00:25:46,720 --> 00:25:50,320
Speaker 9: terms of giga. But I do think must caution of course,

473
00:25:50,320 --> 00:25:54,240
Speaker 9: not the demand side, but the production. And to Math's point, look,

474
00:25:54,280 --> 00:25:58,080
Speaker 9: that's always been the issue with Tesla. It's about not

475
00:25:58,200 --> 00:26:02,160
Speaker 9: about the demand story, it's about the production. Ironically, now

476
00:26:02,240 --> 00:26:05,960
Speaker 9: for the first time, demand sort of hit so equalibrium

477
00:26:05,960 --> 00:26:06,959
Speaker 9: when it comes to the supply.

478
00:26:07,240 --> 00:26:10,320
Speaker 1: All right, so we've got Tesla down about eight nine percent.

479
00:26:10,359 --> 00:26:13,000
Speaker 1: On the other side, we got Netflix up fifteen percent.

480
00:26:13,240 --> 00:26:17,080
Speaker 1: Monster quarter, Geitha, What did you hear on the conference

481
00:26:17,080 --> 00:26:18,879
Speaker 1: call last night? What did investors here on the conference

482
00:26:18,920 --> 00:26:20,800
Speaker 1: call last night that got them all hot and lathered

483
00:26:20,840 --> 00:26:21,680
Speaker 1: here for Netflix?

484
00:26:22,560 --> 00:26:22,720
Speaker 6: Yeah?

485
00:26:22,720 --> 00:26:26,280
Speaker 8: Absolutely, I mean it was a blockbuster quarter on all fronts, Paul.

486
00:26:26,400 --> 00:26:29,320
Speaker 8: So absolutely, the beat was it was not just a beat,

487
00:26:29,359 --> 00:26:31,600
Speaker 8: it was the magnitude of the beat and the story.

488
00:26:31,640 --> 00:26:35,560
Speaker 8: The narrative is really clean now, it's getting much much clearer,

489
00:26:36,240 --> 00:26:38,600
Speaker 8: you know, as far as the margin trajectory is concerned.

490
00:26:38,880 --> 00:26:41,240
Speaker 8: They promised about twenty two to twenty three percent margins

491
00:26:41,280 --> 00:26:43,879
Speaker 8: going out in twenty twenty four. They promised, you know,

492
00:26:43,920 --> 00:26:47,439
Speaker 8: subscriber momentum kind of extending into twenty twenty four, so

493
00:26:47,520 --> 00:26:51,800
Speaker 8: really kind of firing on all cylinders, if you will.

494
00:26:50,960 --> 00:26:51,800
Speaker 3: So getha.

495
00:26:51,800 --> 00:26:54,879
Speaker 1: It seems like, I mean, you follow the whole media space,

496
00:26:54,960 --> 00:26:58,240
Speaker 1: It seems like Tesla's really pulling away from everybody else

497
00:26:58,280 --> 00:27:01,399
Speaker 1: in Netflix, right netfls thank you that Netflix is just

498
00:27:01,400 --> 00:27:04,159
Speaker 1: pulling away from all the competitors, maybe including Disney.

499
00:27:05,080 --> 00:27:07,560
Speaker 8: Oh absolutely, there's no doubt about it. We already know

500
00:27:07,600 --> 00:27:10,679
Speaker 8: that Netflix is way ahead of its rivals, not only

501
00:27:10,720 --> 00:27:12,640
Speaker 8: when it comes to subscriber scale, but also in terms

502
00:27:12,680 --> 00:27:15,720
Speaker 8: of profitability. Remember, this is the only company that is

503
00:27:15,760 --> 00:27:19,200
Speaker 8: generating profits today, Paul on its streaming business. The rest

504
00:27:19,200 --> 00:27:21,480
Speaker 8: of the space, this company is going to generate about

505
00:27:21,480 --> 00:27:24,080
Speaker 8: seven eight billion dollars in profits this year. The rest

506
00:27:24,119 --> 00:27:27,159
Speaker 8: of the space, including Disney, Warner Brothers, you know, a paramount,

507
00:27:27,160 --> 00:27:30,680
Speaker 8: all of them collectively will throw out about eight to

508
00:27:30,800 --> 00:27:34,919
Speaker 8: nine billion dollars in streaming losses. So obviously, when it

509
00:27:34,920 --> 00:27:37,440
Speaker 8: comes to profitability, when it comes to operating leverage, there

510
00:27:37,520 --> 00:27:40,199
Speaker 8: is no doubt that Netflix is the clear winner. They

511
00:27:40,240 --> 00:27:43,400
Speaker 8: are the dominant player. But what was the biggest surprise

512
00:27:43,560 --> 00:27:45,919
Speaker 8: was the fact that they're just throwing out tons of

513
00:27:45,920 --> 00:27:47,960
Speaker 8: free cash flow. So this was, you know, a stock

514
00:27:48,040 --> 00:27:50,840
Speaker 8: that we used to kind of almost mock and ridicule

515
00:27:50,920 --> 00:27:52,600
Speaker 8: talking about you know, you know, three and a half

516
00:27:52,600 --> 00:27:55,560
Speaker 8: billion dollars in cash burn this year, They're putting out

517
00:27:55,600 --> 00:27:58,160
Speaker 8: six and a half billion dollars of free cash flow.

518
00:27:58,280 --> 00:28:00,760
Speaker 8: So this is yeah, yeah, this is a freak cash

519
00:28:00,800 --> 00:28:03,760
Speaker 8: flow machine. And not just that, they committed to ten

520
00:28:03,800 --> 00:28:05,840
Speaker 8: billion dollars in buy back. So as you kind of look,

521
00:28:06,160 --> 00:28:09,480
Speaker 8: you know at them shrinking that float, look at EPs growth.

522
00:28:09,520 --> 00:28:11,280
Speaker 8: I mean, it's going to be in the thirty percent

523
00:28:11,359 --> 00:28:13,520
Speaker 8: range for the next few years, and that is really

524
00:28:13,840 --> 00:28:16,800
Speaker 8: huge in kind of this media landscape right now.

525
00:28:16,880 --> 00:28:20,359
Speaker 2: I mean, my takeaway from our stream Time conference last

526
00:28:20,400 --> 00:28:24,360
Speaker 2: week was that Netflix is the boss of everything. I mean,

527
00:28:24,400 --> 00:28:27,120
Speaker 2: if I were buying stocks, I would have loaded up

528
00:28:27,480 --> 00:28:30,879
Speaker 2: after I saw did you watch Harry Styles interviewing Ted Saranda's,

529
00:28:30,880 --> 00:28:33,199
Speaker 2: I mean, Lucas Shaw interviewing Ted Saranda's I.

530
00:28:33,200 --> 00:28:34,280
Speaker 3: Did last week?

531
00:28:34,640 --> 00:28:36,719
Speaker 2: I thought it was that guy came off like an

532
00:28:36,760 --> 00:28:37,720
Speaker 2: absolute boss.

533
00:28:37,880 --> 00:28:39,320
Speaker 3: They're doing everything right.

534
00:28:39,600 --> 00:28:42,200
Speaker 9: They are looking you know, I think the thing here

535
00:28:42,240 --> 00:28:45,280
Speaker 9: it's all not just about content. You think about the competition,

536
00:28:45,400 --> 00:28:48,560
Speaker 9: what was coming from Disney. They've now taken a step back,

537
00:28:48,640 --> 00:28:50,520
Speaker 9: and you look at that conference with that was a

538
00:28:50,600 --> 00:28:53,560
Speaker 9: flex the muscles, especially when you look at free cash flow.

539
00:28:54,280 --> 00:28:57,440
Speaker 9: If you look at Netflix versus Tesla, just to take

540
00:28:57,480 --> 00:29:01,520
Speaker 9: does last night, it's not necessarily the result. It's also

541
00:29:01,640 --> 00:29:04,560
Speaker 9: if you look at the communication the street ones to

542
00:29:04,760 --> 00:29:07,720
Speaker 9: understand what the path looks like in a very uncertain

543
00:29:07,760 --> 00:29:09,960
Speaker 9: quality marketkeetha.

544
00:29:09,120 --> 00:29:10,440
Speaker 3: What's the headwind?

545
00:29:10,600 --> 00:29:16,000
Speaker 2: What's the biggest risk for Ted and Flicks?

546
00:29:16,280 --> 00:29:18,840
Speaker 8: Right now? They seem to be getting everything right. So

547
00:29:18,880 --> 00:29:21,600
Speaker 8: the one concern I think that kind of is still

548
00:29:21,680 --> 00:29:23,640
Speaker 8: kind of lingering a little bit, is this whole revenue

549
00:29:23,640 --> 00:29:25,920
Speaker 8: growth re acceleration. I mean, they've got all the levers

550
00:29:25,960 --> 00:29:28,680
Speaker 8: in place, but ARPU has been under pressure a little bit.

551
00:29:28,720 --> 00:29:31,040
Speaker 8: We saw ARPU decline a little bit in the third quarter.

552
00:29:31,080 --> 00:29:32,720
Speaker 3: Average revenue per user, revenue per.

553
00:29:32,720 --> 00:29:36,320
Speaker 8: View, yes, yes, average revenue per user. So that has

554
00:29:36,360 --> 00:29:38,920
Speaker 8: become like the really big metric now to kind of

555
00:29:38,960 --> 00:29:42,200
Speaker 8: gauge the success and the streaming world. They did, of course,

556
00:29:42,280 --> 00:29:44,560
Speaker 8: caution to that. They said it's going to be a

557
00:29:44,600 --> 00:29:47,400
Speaker 8: little bit flat. But then again, we have price increases

558
00:29:47,400 --> 00:29:49,800
Speaker 8: that are going into effect. We have the ad business

559
00:29:49,840 --> 00:29:51,760
Speaker 8: that's going to take off. So as we kind of

560
00:29:51,800 --> 00:29:54,720
Speaker 8: look to twenty twenty four, you know everything is in

561
00:29:54,760 --> 00:29:57,320
Speaker 8: place for that that metric to kind of ramp Upretty

562
00:29:57,320 --> 00:30:00,000
Speaker 8: significantly as well. So right now they're getting everything right.

563
00:30:00,400 --> 00:30:03,600
Speaker 1: Hey Dan, My big question on EV's in general, and

564
00:30:03,640 --> 00:30:04,400
Speaker 1: I just purchased a.

565
00:30:04,440 --> 00:30:06,600
Speaker 3: Movie going back to Tesla. Now you're going back to Tesla.

566
00:30:06,720 --> 00:30:08,719
Speaker 2: It's kind of hard to keep tracked. That's why I'm

567
00:30:08,760 --> 00:30:10,600
Speaker 2: there are two very different companies, I know, but this

568
00:30:10,680 --> 00:30:13,280
Speaker 2: is very They're both ripping stocks.

569
00:30:13,320 --> 00:30:15,240
Speaker 3: People. These are the ones that are most rich.

570
00:30:15,280 --> 00:30:18,440
Speaker 2: Testa is getting killed today right Netflix is up fifteen percent,

571
00:30:19,200 --> 00:30:21,320
Speaker 2: Tesla is down eight point seven.

572
00:30:21,520 --> 00:30:23,880
Speaker 1: But for me, the big issue having just purchased a

573
00:30:23,920 --> 00:30:25,400
Speaker 1: new car BMW X three.

574
00:30:25,480 --> 00:30:27,000
Speaker 3: He loves the X three. We love the X three.

575
00:30:27,040 --> 00:30:28,520
Speaker 1: Although I have like twelve miles on it. I'm just

576
00:30:28,600 --> 00:30:30,120
Speaker 1: walking back and forth to the train every day.

577
00:30:31,360 --> 00:30:32,560
Speaker 3: Is and demand.

578
00:30:33,880 --> 00:30:36,720
Speaker 1: I really have questions about what is the real demand

579
00:30:36,760 --> 00:30:40,360
Speaker 1: out there in America for EV's, Like I'm thinking.

580
00:30:40,160 --> 00:30:42,600
Speaker 2: Beyond the rich, beyond like a second or third car,

581
00:30:42,720 --> 00:30:44,840
Speaker 2: like is you at a political angle here, like I

582
00:30:44,840 --> 00:30:46,920
Speaker 2: think half the country will never buy an EV.

583
00:30:47,360 --> 00:30:50,320
Speaker 9: Look, I mean you're starting to get into a debate

584
00:30:50,520 --> 00:30:53,920
Speaker 9: around with the demand curb books. Like ultimately, price is

585
00:30:53,920 --> 00:30:57,080
Speaker 9: so important if you look go back to traditionally Tesla

586
00:30:57,240 --> 00:31:00,640
Speaker 9: seventy five eighty eighty five thousand, now even with the

587
00:31:00,640 --> 00:31:03,440
Speaker 9: the tax credits thirty five forty thousand depending on when

588
00:31:03,440 --> 00:31:06,760
Speaker 9: state living. But it does also talk about the battle

589
00:31:06,800 --> 00:31:09,720
Speaker 9: from the Beltway and what's happening here even with UAW

590
00:31:09,880 --> 00:31:13,200
Speaker 9: and what's tapping Detroit with jam and Ford. It's all

591
00:31:13,240 --> 00:31:17,200
Speaker 9: price driven. Three percent of automobiles in the US for

592
00:31:17,320 --> 00:31:20,680
Speaker 9: EV's today, so we believe that goes ten to twelve percent.

593
00:31:20,680 --> 00:31:24,280
Speaker 9: There's me massive winners. But it also comes down to price,

594
00:31:24,400 --> 00:31:25,479
Speaker 9: especially in this macro.

595
00:31:25,720 --> 00:31:28,080
Speaker 2: I mean, as long as you know President Biden is

596
00:31:28,080 --> 00:31:30,680
Speaker 2: gonna pay me, He's basically he's gonna borrow money from

597
00:31:30,720 --> 00:31:33,000
Speaker 2: my kids and my grandkids to pay me to buy

598
00:31:33,000 --> 00:31:37,480
Speaker 2: an EV. I'm interested, But I want the cyber truck,

599
00:31:38,040 --> 00:31:39,640
Speaker 2: that's what That's the one I want.

600
00:31:39,680 --> 00:31:42,760
Speaker 9: Exactly, and MILLI vehicle and Miller's gonna have the cyber truck.

601
00:31:42,840 --> 00:31:46,680
Speaker 9: While watching Netflix in full self driving in three four years.

602
00:31:47,000 --> 00:31:49,520
Speaker 3: Hey, Githa, another big day in the world of media.

603
00:31:49,600 --> 00:31:52,200
Speaker 1: Yesterday was, or in the past couple of days, Disney

604
00:31:52,240 --> 00:31:56,520
Speaker 1: for the first time ever released financial results for ESPN,

605
00:31:56,560 --> 00:32:01,280
Speaker 1: and my takeaway was two things. One, their profit margins

606
00:32:01,280 --> 00:32:03,560
Speaker 1: are well, there's still a lot of cash loot, almost

607
00:32:03,560 --> 00:32:06,840
Speaker 1: three billion dollars of EBITA, but it declined big time

608
00:32:06,880 --> 00:32:09,120
Speaker 1: and it's nowhere near the number used to be. What

609
00:32:09,280 --> 00:32:11,600
Speaker 1: is ESPN or what is Walt Disney Company could do

610
00:32:11,680 --> 00:32:12,320
Speaker 1: with ESPN?

611
00:32:13,440 --> 00:32:15,719
Speaker 8: Yeah, that's the big, big question, Paul, And I mean

612
00:32:15,720 --> 00:32:17,160
Speaker 8: one of the reasons that they kind of broke this

613
00:32:17,200 --> 00:32:19,760
Speaker 8: out as a standalone unit was because they really kind

614
00:32:19,760 --> 00:32:22,960
Speaker 8: of wanted to show, you know, potentially future investors if

615
00:32:23,000 --> 00:32:24,600
Speaker 8: they're planning to sell a steak or if they're planning

616
00:32:24,600 --> 00:32:26,600
Speaker 8: to spin it off, you know what the financials kind

617
00:32:26,640 --> 00:32:29,400
Speaker 8: of look like. But obviously, you know, the top line

618
00:32:29,400 --> 00:32:32,240
Speaker 8: actually looks pretty stable at sixteen billion dollars. It's really

619
00:32:32,280 --> 00:32:34,719
Speaker 8: the profit margins, as you rightly pointed out. I mean,

620
00:32:34,720 --> 00:32:37,200
Speaker 8: you look at the traditional cable business, it's about thirty

621
00:32:37,200 --> 00:32:40,000
Speaker 8: thirty five percent margins. You look at ESPN's margins, it's

622
00:32:40,040 --> 00:32:43,680
Speaker 8: fifteen percent this year. So that is a little bit concerning,

623
00:32:43,720 --> 00:32:45,920
Speaker 8: and obviously it is only going to go lower given that,

624
00:32:46,120 --> 00:32:49,680
Speaker 8: you know, sports rights fees are increasing astronomically, so they

625
00:32:49,720 --> 00:32:51,320
Speaker 8: really need to do something with this asset. We know

626
00:32:51,360 --> 00:32:53,200
Speaker 8: that they need to do it fast. The question is

627
00:32:53,240 --> 00:32:54,960
Speaker 8: do they sell it? Do they do they actually sell

628
00:32:55,000 --> 00:32:57,760
Speaker 8: it to Apples? Has kind of been set all and

629
00:32:57,840 --> 00:33:00,440
Speaker 8: you know, or do they you know, spin it out again.

630
00:33:00,520 --> 00:33:02,960
Speaker 8: We'll we'll have to wait and watch. Buteah, Definitely.

631
00:33:03,400 --> 00:33:05,040
Speaker 1: I kind of feel like I have to apologize to

632
00:33:05,120 --> 00:33:07,480
Speaker 1: GETHA because the twenty five years I had covered the

633
00:33:07,520 --> 00:33:09,720
Speaker 1: media industry were the golden years.

634
00:33:10,120 --> 00:33:12,120
Speaker 3: Everybody made money.

635
00:33:12,400 --> 00:33:14,840
Speaker 1: What I've left to GETHA is just a hodgepodge. I

636
00:33:14,840 --> 00:33:16,920
Speaker 1: don't know what's going on out there, Githa. What's the

637
00:33:17,720 --> 00:33:20,920
Speaker 1: I mean, can you get any investor out there to

638
00:33:20,920 --> 00:33:23,520
Speaker 1: say I want to overweight media?

639
00:33:24,120 --> 00:33:27,200
Speaker 8: No, not at all. I mean everything is down in

640
00:33:27,240 --> 00:33:29,840
Speaker 8: the dumbs right now, other than of course Netflix. But

641
00:33:29,880 --> 00:33:31,720
Speaker 8: we'll have to wait and watch what happens with Disney.

642
00:33:31,720 --> 00:33:33,720
Speaker 8: I think they have a great collection of assets. They're

643
00:33:33,760 --> 00:33:35,560
Speaker 8: trying to do everything that they can. But Bob Iger

644
00:33:35,600 --> 00:33:37,560
Speaker 8: obviously has a lot of challenges ahead of him.

645
00:33:38,000 --> 00:33:40,800
Speaker 3: All Right, I mean a success or maybe. Yeah, it

646
00:33:40,880 --> 00:33:41,840
Speaker 3: seems like that.

647
00:33:43,360 --> 00:33:46,320
Speaker 2: Is one of his worries, but others are just as pressing.

648
00:33:46,720 --> 00:33:49,400
Speaker 2: I'll be interested to see if the league's come in

649
00:33:49,440 --> 00:33:51,520
Speaker 2: and get a piece of ESPN. Is that still on

650
00:33:51,520 --> 00:33:54,640
Speaker 2: the table, Dan, What do you think could could like

651
00:33:54,680 --> 00:33:59,040
Speaker 2: the NFL and some other professional sports leagues come in

652
00:33:59,040 --> 00:34:00,080
Speaker 2: and take a big chunk of it.

653
00:34:00,160 --> 00:34:03,040
Speaker 9: Look, we believe this is ultimately going to lead Apple

654
00:34:03,320 --> 00:34:07,320
Speaker 9: to acquiring ESPN. Oh you think that's it's Martin. Our

655
00:34:07,480 --> 00:34:11,000
Speaker 9: thesis has been and Laura has talked about so War

656
00:34:11,120 --> 00:34:14,560
Speaker 9: talks about Disney, which you know obviously makes sense there too,

657
00:34:14,600 --> 00:34:18,200
Speaker 9: But we believe it's really about ESPN, the live streaming ASCID.

658
00:34:18,200 --> 00:34:20,759
Speaker 9: If you look at happen with you know, MLS and

659
00:34:20,800 --> 00:34:23,920
Speaker 9: MESSI I think they recognize in terms of cook and

660
00:34:23,960 --> 00:34:26,360
Speaker 9: Creup Patino, even though M and A is obviously not

661
00:34:26,400 --> 00:34:29,160
Speaker 9: their sweet spot, ESPN is a unique asset.

662
00:34:29,440 --> 00:34:31,319
Speaker 3: It'll be a better buy than Beats.

663
00:34:31,560 --> 00:34:33,640
Speaker 9: Right, and that was three and a half billion.

664
00:34:33,800 --> 00:34:35,439
Speaker 3: How much is ESPN gonna cost?

665
00:34:35,520 --> 00:34:38,319
Speaker 9: I mean we think forty to forty five billion is

666
00:34:38,320 --> 00:34:40,799
Speaker 9: probably what would be the price tag. But then when

667
00:34:40,800 --> 00:34:43,759
Speaker 9: you look at Disney, you know, it's this conversation talking

668
00:34:43,760 --> 00:34:46,680
Speaker 9: about some of the parts you sell, and that's why

669
00:34:46,719 --> 00:34:48,720
Speaker 9: there's more more pressure on Eiger in the board.

670
00:34:48,960 --> 00:34:50,799
Speaker 2: What's Disney worth like one hundred and fifty let me

671
00:34:51,000 --> 00:34:54,680
Speaker 2: pull it up here. Yes, Disney is currently in market

672
00:34:54,680 --> 00:34:57,560
Speaker 2: cap terms worth one hundred and fifty three point seven billion.

673
00:34:57,640 --> 00:34:59,000
Speaker 9: We think about third of that value.

674
00:34:59,000 --> 00:35:01,480
Speaker 2: So if they get rid of say they let's say

675
00:35:01,480 --> 00:35:04,759
Speaker 2: they get fifty billion dollars for ESPN, GITA, what is

676
00:35:04,800 --> 00:35:08,600
Speaker 2: Disney then worth If they sell ESPN for fifty billion dollars.

677
00:35:09,200 --> 00:35:11,640
Speaker 8: That is actually a really really high multiple. So you know,

678
00:35:11,640 --> 00:35:13,520
Speaker 8: if you kind of look where cable stocks are trading

679
00:35:13,560 --> 00:35:15,920
Speaker 8: right now, they're trading at about seven and a half times EBITDA.

680
00:35:16,320 --> 00:35:19,040
Speaker 8: At seven and a half times EBITDA, ESPN would be

681
00:35:19,080 --> 00:35:21,520
Speaker 8: worth about anywhere from about twenty two to twenty five billion.

682
00:35:21,640 --> 00:35:24,160
Speaker 8: So it'll be interesting, it'll be interesting if they can

683
00:35:24,160 --> 00:35:26,520
Speaker 8: get that fifty x multiple that that would actually be awesome.

684
00:35:26,960 --> 00:35:28,960
Speaker 8: But again, you have to kind of kind of look

685
00:35:29,000 --> 00:35:32,239
Speaker 8: at at Disney's you know, really bread and butter of

686
00:35:32,239 --> 00:35:34,919
Speaker 8: the business, that is the park's business that is going

687
00:35:34,960 --> 00:35:37,200
Speaker 8: to you know, just a few years ago, parks used

688
00:35:37,200 --> 00:35:39,120
Speaker 8: to bring in only about thirty thirty five percent of

689
00:35:39,160 --> 00:35:42,040
Speaker 8: operating income. This year, it's bringing in about seventy five

690
00:35:42,040 --> 00:35:45,040
Speaker 8: percent of operating income at ten billion dollars. So you know,

691
00:35:45,320 --> 00:35:49,240
Speaker 8: Disney really is Parks right now, and Parks itself should

692
00:35:49,239 --> 00:35:51,160
Speaker 8: be worth I think two hundred billion.

693
00:35:51,320 --> 00:35:53,920
Speaker 3: Nice. I want to I just want to Dan finally

694
00:35:53,920 --> 00:35:54,800
Speaker 3: get back to Tesla.

695
00:35:55,080 --> 00:35:58,880
Speaker 2: In terms of production in the gigafactory, there was a

696
00:35:58,920 --> 00:36:02,120
Speaker 2: lot of talk on the call, yeah, yesterday about whether

697
00:36:02,719 --> 00:36:06,319
Speaker 2: Musk could do a lot of his production in Texas.

698
00:36:06,600 --> 00:36:10,120
Speaker 2: Where are they gonna build the most of their you know,

699
00:36:10,360 --> 00:36:14,319
Speaker 2: expansion or does their expansion not look as fruitful as

700
00:36:14,320 --> 00:36:15,560
Speaker 2: it did you know before this call.

701
00:36:16,000 --> 00:36:19,440
Speaker 9: Expansion is gonna be in Austin, broader Texas as well

702
00:36:19,440 --> 00:36:21,960
Speaker 9: as in China. I mean, they're they're focusing more and

703
00:36:22,000 --> 00:36:25,560
Speaker 9: more away from California obviously their course and away from

704
00:36:26,640 --> 00:36:29,600
Speaker 9: away from mon Yeah, and look and fundamentally just speaks

705
00:36:29,640 --> 00:36:34,640
Speaker 9: to mathematically economically speaking against Texas. Go about the Mexico

706
00:36:34,840 --> 00:36:37,839
Speaker 9: plan that they're gonna, you know, ultimately start to build out.

707
00:36:37,880 --> 00:36:41,760
Speaker 9: But it's really China capacity right now is not the issue.

708
00:36:41,800 --> 00:36:44,640
Speaker 9: It's about the price cuts. Keep cutting prices. That's a

709
00:36:44,640 --> 00:36:45,320
Speaker 9: bad spiral.

710
00:36:45,520 --> 00:36:48,000
Speaker 1: Yep, all right, Dan, I've senior analyst web Bush Security

711
00:36:48,080 --> 00:36:50,080
Speaker 1: is covering all that fun stuff and tech and githa

712
00:36:50,120 --> 00:36:50,680
Speaker 1: rang and nothing.

713
00:36:51,080 --> 00:36:51,319
Speaker 4: Uh.

714
00:36:51,360 --> 00:36:54,000
Speaker 1: She is an immedia analyst at Bloomberg Intelligence based down

715
00:36:54,000 --> 00:36:57,800
Speaker 1: in Princeton and Dan heading off to Columbus, Ohio to

716
00:36:57,840 --> 00:37:01,239
Speaker 1: see undefeated the party State of Ohio take on undefeated

717
00:37:01,360 --> 00:37:03,040
Speaker 1: the Ohio State University.

718
00:37:03,160 --> 00:37:04,480
Speaker 3: Ohio State huge.

719
00:37:04,480 --> 00:37:06,719
Speaker 9: And look, I think it's gonna be a battle. It's

720
00:37:06,719 --> 00:37:08,800
Speaker 9: gonna be a great game. I think Penn State comes

721
00:37:08,800 --> 00:37:09,920
Speaker 9: out of the shoe with the W.

722
00:37:10,480 --> 00:37:10,800
Speaker 5: Nice.

723
00:37:11,000 --> 00:37:14,760
Speaker 3: There you go. I mean I have no idea about sports.

724
00:37:14,840 --> 00:37:17,640
Speaker 1: Let's put a public sale on your Ohio State.

725
00:37:17,800 --> 00:37:20,759
Speaker 2: I'm in. I'm in for Ohio State. Let's put twenty

726
00:37:20,760 --> 00:37:21,200
Speaker 2: bucks on it.

727
00:37:21,200 --> 00:37:22,600
Speaker 3: All right, here we go. This is Bloomberg.

728
00:37:22,920 --> 00:37:26,040
Speaker 5: You're listening to the tape Cat's are live program Bloomberg

729
00:37:26,080 --> 00:37:29,719
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

730
00:37:29,760 --> 00:37:32,959
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

731
00:37:33,000 --> 00:37:35,839
Speaker 5: You can also listen live on Amazon Alexa from our

732
00:37:35,840 --> 00:37:40,920
Speaker 5: flagship New York station. Just say Alexa, play Bloomberg eleven thirty.

733
00:37:41,920 --> 00:37:44,799
Speaker 1: It's Thursday, Max So that means we talked to one

734
00:37:44,920 --> 00:37:45,600
Speaker 1: b Roodholts.

735
00:37:46,080 --> 00:37:47,120
Speaker 3: Oh yeah, the big.

736
00:37:47,000 --> 00:37:50,319
Speaker 1: Host masters in business. He's a chairman, chief investment officer

737
00:37:50,360 --> 00:37:52,399
Speaker 1: Wolts Wealth Management. I'll give let you run with this mat.

738
00:37:52,480 --> 00:37:52,799
Speaker 3: I don't know.

739
00:37:52,840 --> 00:37:53,000
Speaker 7: Well.

740
00:37:53,040 --> 00:37:55,240
Speaker 2: I love the I love his blog, The Big Picture,

741
00:37:55,280 --> 00:37:59,719
Speaker 2: which you can see on the web at Ritholts dot com. Oh,

742
00:37:59,760 --> 00:38:03,080
Speaker 2: by the way, kicking off, there's a banner ad Barry

743
00:38:03,640 --> 00:38:06,719
Speaker 2: at the top of your page for the Jeep Wrangler.

744
00:38:06,800 --> 00:38:11,960
Speaker 2: And right now I'm driving a Jeep Wrangler Rubicon three

745
00:38:12,040 --> 00:38:15,480
Speaker 2: ninety two. So basically it's the Jeep Wrangler that everybody

746
00:38:15,520 --> 00:38:19,120
Speaker 2: knows and loves, Like every high school kid wants this car.

747
00:38:19,360 --> 00:38:23,279
Speaker 2: But they've shoehorned in a gigantic six point four liter

748
00:38:23,480 --> 00:38:26,160
Speaker 2: V eight and I'm here to tell you it is

749
00:38:26,360 --> 00:38:29,719
Speaker 2: loud and terrifying and I'm loving every minute of it.

750
00:38:29,760 --> 00:38:34,040
Speaker 2: I had no idea, Barry, you still have to crank

751
00:38:34,080 --> 00:38:36,360
Speaker 2: the steering wheel like three or four rotations before the

752
00:38:36,400 --> 00:38:38,120
Speaker 2: tires find out about it on a Jeep.

753
00:38:38,920 --> 00:38:41,520
Speaker 10: Yeah, I don't think they've changed a whole lot there.

754
00:38:41,640 --> 00:38:44,600
Speaker 10: They just dropped a big engine and off to the races.

755
00:38:44,680 --> 00:38:48,480
Speaker 10: You know, it's a that seems to be a successful formula,

756
00:38:48,640 --> 00:38:50,560
Speaker 10: especially for American autumn.

757
00:38:50,680 --> 00:38:53,080
Speaker 2: I wish somebody would tell the people at Ford, because

758
00:38:54,040 --> 00:38:56,120
Speaker 2: you know, they still they won't make a Bronco as

759
00:38:56,120 --> 00:38:58,239
Speaker 2: anything bigger than the V six in it and this

760
00:38:58,360 --> 00:39:01,239
Speaker 2: three ninety two expensive as it is. And I'll get

761
00:39:01,239 --> 00:39:07,719
Speaker 2: to that, but it's it's electrifying in its intent, exactly

762
00:39:08,080 --> 00:39:12,359
Speaker 2: in its analog nature, like it's such a great fun.

763
00:39:12,800 --> 00:39:14,040
Speaker 3: Piece of gear to drive.

764
00:39:14,080 --> 00:39:15,640
Speaker 2: In fact, I wish you were here because I would

765
00:39:15,640 --> 00:39:17,480
Speaker 2: give you the keys and we take it out right now.

766
00:39:17,520 --> 00:39:19,920
Speaker 3: It's so you have a jeep, right, I.

767
00:39:19,960 --> 00:39:24,399
Speaker 10: Have a twenty thirteen Rubicon, which I use basically that

768
00:39:24,400 --> 00:39:29,640
Speaker 10: that's my post apocalypse vehicle because it's just a hamster

769
00:39:29,719 --> 00:39:33,920
Speaker 10: wheel inside and it goes everywhere. It's pretty much and anywhere.

770
00:39:34,320 --> 00:39:38,400
Speaker 10: It's kind of unstoppable. That's the appeal of those old

771
00:39:38,880 --> 00:39:43,640
Speaker 10: analog cejs are that they're just great fun cars.

772
00:39:43,960 --> 00:39:45,760
Speaker 3: So, but I need to go to the inflation picture

773
00:39:45,800 --> 00:39:47,319
Speaker 3: with that. That's exactly what I wanted to do.

774
00:39:47,480 --> 00:39:49,799
Speaker 1: Let's go, because I mean, I can't get in the

775
00:39:49,880 --> 00:39:53,160
Speaker 1: seat and behind the wheel of almost anything that you'd

776
00:39:53,200 --> 00:39:53,520
Speaker 1: want to.

777
00:39:53,680 --> 00:39:55,680
Speaker 3: Well, I'll tell you the numbers that you're quote.

778
00:39:55,480 --> 00:40:00,400
Speaker 2: Exactly, so you know what, Hannah Elliott from Bloomberg pers suits,

779
00:40:00,520 --> 00:40:03,759
Speaker 2: she drove the same car that I'm driving now two

780
00:40:03,840 --> 00:40:07,080
Speaker 2: years ago, the Jeep Wrangler Rubicon three ninety two.

781
00:40:07,360 --> 00:40:08,239
Speaker 3: And back then she.

782
00:40:08,280 --> 00:40:12,720
Speaker 2: Was like, awesome car, but unbelievably expensive because they wanted

783
00:40:12,800 --> 00:40:16,680
Speaker 2: seventy four thousand dollars for it to start, right, and

784
00:40:16,880 --> 00:40:20,400
Speaker 2: that was twenty twenty one. Fast forward two years, the

785
00:40:20,480 --> 00:40:24,480
Speaker 2: base price ninety two thousand, five hundred dollars. It's gone

786
00:40:24,560 --> 00:40:27,560
Speaker 2: up more than twenty three percent. And to me, this

787
00:40:27,680 --> 00:40:31,680
Speaker 2: ties in to the political story we have on the

788
00:40:31,680 --> 00:40:35,320
Speaker 2: Bloomberg today, the fact that Donald Trump is leading President

789
00:40:35,360 --> 00:40:38,839
Speaker 2: Biden in several key swing states because America just has

790
00:40:38,880 --> 00:40:40,680
Speaker 2: had it up to here with this inflation.

791
00:40:41,840 --> 00:40:45,560
Speaker 10: Yeah. So, first of all, I'm skeptical of all of

792
00:40:45,600 --> 00:40:49,280
Speaker 10: these surveys. Generally we've spoken about this in the past,

793
00:40:49,840 --> 00:40:52,920
Speaker 10: not just political surveys a year and change before the

794
00:40:52,960 --> 00:40:57,719
Speaker 10: election that are notoriously unreliable, but generally speaking, when you

795
00:40:57,880 --> 00:41:01,920
Speaker 10: ask people, hey, how much you're going to spend on Christmas?

796
00:41:01,960 --> 00:41:04,920
Speaker 10: What do you think is happening with inflation? What is

797
00:41:05,000 --> 00:41:07,719
Speaker 10: what is the state of the economy? Uh, you know,

798
00:41:07,800 --> 00:41:10,480
Speaker 10: I kind of blame the American education system and the

799
00:41:10,600 --> 00:41:14,040
Speaker 10: emphasis on testing. Nobody is willing to say, how the

800
00:41:14,080 --> 00:41:15,759
Speaker 10: hell do I know where inflation is going to be

801
00:41:15,760 --> 00:41:18,719
Speaker 10: a year from now? Instead, Hey, there's no penalties for

802
00:41:18,760 --> 00:41:21,120
Speaker 10: taking a guess, and so they take a guess. So

803
00:41:21,200 --> 00:41:25,680
Speaker 10: we end up with these surveys that are rarely accurate

804
00:41:25,880 --> 00:41:32,279
Speaker 10: and very often tremendously misleading. Just a perfect example, a

805
00:41:32,440 --> 00:41:37,799
Speaker 10: recent survey on inflation said how's inflation, and something like

806
00:41:37,840 --> 00:41:41,640
Speaker 10: two thirds of the respondents said, inflation is going up

807
00:41:41,719 --> 00:41:44,879
Speaker 10: the past quarter. Hey, inflator of the past year. From

808
00:41:44,920 --> 00:41:48,680
Speaker 10: the past year, inflation fell from nine percent down to

809
00:41:48,800 --> 00:41:49,400
Speaker 10: three percent.

810
00:41:49,520 --> 00:41:52,200
Speaker 2: So that's because they look at the cumulative It doesn't

811
00:41:52,239 --> 00:41:54,960
Speaker 2: matter if inflation they don't know. How you know, we

812
00:41:55,000 --> 00:41:57,160
Speaker 2: talk about this, We see the data day in and

813
00:41:57,200 --> 00:42:01,600
Speaker 2: day out, but your average American doesn't care if it's

814
00:42:01,600 --> 00:42:04,760
Speaker 2: still gone up by so much. No, what I'm getting

815
00:42:04,760 --> 00:42:09,120
Speaker 2: as the economic sentiment, right, how you know, Biden can

816
00:42:09,200 --> 00:42:13,200
Speaker 2: be behind five point four percent economic growth in Q three,

817
00:42:13,760 --> 00:42:15,880
Speaker 2: but the fact that prices have gone up by so

818
00:42:16,080 --> 00:42:18,279
Speaker 2: much is what everyone cares about. And it doesn't matter

819
00:42:18,280 --> 00:42:20,879
Speaker 2: if the Fed stops it. They've got to somehow bring

820
00:42:20,920 --> 00:42:23,319
Speaker 2: it back down to where it was. Right, if they

821
00:42:23,320 --> 00:42:25,839
Speaker 2: want to average two percent, That's what Neil Grossman goes

822
00:42:25,840 --> 00:42:27,400
Speaker 2: on about all the time. Right, if they want to

823
00:42:27,440 --> 00:42:30,920
Speaker 2: average two percent, they've got to hold it there for

824
00:42:31,080 --> 00:42:32,520
Speaker 2: like the next four decades.

825
00:42:33,040 --> 00:42:35,600
Speaker 10: I disagree with that assessment. I'll tell you why. So

826
00:42:36,120 --> 00:42:39,600
Speaker 10: we've talked about labor shortage and how wages are going up.

827
00:42:39,640 --> 00:42:42,839
Speaker 10: We've talked about housing prices and how those have gone up,

828
00:42:42,880 --> 00:42:44,640
Speaker 10: and now we're talking about automobiles.

829
00:42:45,239 --> 00:42:46,560
Speaker 3: All three of these.

830
00:42:46,520 --> 00:42:51,960
Speaker 10: Higher priced entities are not rising in price because the

831
00:42:52,120 --> 00:42:56,320
Speaker 10: monetary circumstances are too loose. They're rising in price because

832
00:42:56,360 --> 00:42:59,240
Speaker 10: we have shortages. We didn't build enough houses for fifteen

833
00:42:59,320 --> 00:43:04,160
Speaker 10: years following the financial About is that? So That's exactly

834
00:43:04,200 --> 00:43:08,000
Speaker 10: where I was going. The primary driver of the twenty

835
00:43:08,040 --> 00:43:13,320
Speaker 10: one to twenty two inflationary surge was a massive, massive

836
00:43:13,960 --> 00:43:17,359
Speaker 10: increase in fiscal stimulus starting with Cares Act one. Hey,

837
00:43:17,400 --> 00:43:20,640
Speaker 10: it was ten percent of GDP. That that's a number

838
00:43:20,680 --> 00:43:24,360
Speaker 10: we haven't seen since the Great Depression. Arguably it was

839
00:43:24,400 --> 00:43:29,800
Speaker 10: the greatest fiscal stimulus in American history relative to GDP.

840
00:43:30,000 --> 00:43:31,839
Speaker 10: But it was CARES Act one. It was Kars Act

841
00:43:31,880 --> 00:43:35,719
Speaker 10: two behind that was the Tax Cuts and Job Act,

842
00:43:35,760 --> 00:43:39,320
Speaker 10: which was about three trillion dollars over over ten years.

843
00:43:39,600 --> 00:43:41,640
Speaker 10: Then you have the Chips Act, and you have the

844
00:43:41,680 --> 00:43:45,359
Speaker 10: Infrastructure Bill under this president and Cares Act three under

845
00:43:45,400 --> 00:43:48,280
Speaker 10: this president. So the combination of Trump and Biden.

846
00:43:48,600 --> 00:43:51,239
Speaker 3: The Inflation Reduction Act, by the way, what an ironic name.

847
00:43:51,400 --> 00:43:53,839
Speaker 10: Also right, it's also a ton of money. Now, some

848
00:43:53,880 --> 00:43:56,919
Speaker 10: of these are spread out over ten years. The Infrastructure Act,

849
00:43:56,920 --> 00:43:59,560
Speaker 10: the Chips Act, the Tax Cuts and Jobs Act are

850
00:43:59,560 --> 00:44:02,760
Speaker 10: spread out over a decade. So it's not five percent

851
00:44:02,800 --> 00:44:05,160
Speaker 10: this year, it's half a percent a year for ten years.

852
00:44:05,480 --> 00:44:07,839
Speaker 10: But here's the fascinating thing, and this is what I'm

853
00:44:07,840 --> 00:44:08,680
Speaker 10: so intrigued by.

854
00:44:09,280 --> 00:44:12,240
Speaker 3: When we just ask Teat for twenty seconds.

855
00:44:11,840 --> 00:44:15,040
Speaker 10: Where is cinnamon? I just don't find sentiments. I just

856
00:44:15,040 --> 00:44:18,319
Speaker 10: don't find the economy worse than the financial crisis, the

857
00:44:18,400 --> 00:44:21,719
Speaker 10: dot com implosion, or the eighty seven crash. And that's

858
00:44:21,760 --> 00:44:22,520
Speaker 10: what people are saying.

859
00:44:22,520 --> 00:44:24,600
Speaker 3: It is all right, Barry, thanks so much for joining us.

860
00:44:24,640 --> 00:44:27,960
Speaker 1: We've covered a lot there, everything from GDP to the

861
00:44:28,320 --> 00:44:31,200
Speaker 1: jeep rubicon with the six point something on on the

862
00:44:31,320 --> 00:44:35,240
Speaker 1: displaced engine. Barry Ridholt's Host of Masters in Business Chairman

863
00:44:35,400 --> 00:44:38,800
Speaker 1: and Chief investment Officer Ridtholt's Wealth Management joining us here.

864
00:44:39,880 --> 00:44:42,960
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

865
00:44:43,000 --> 00:44:46,800
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

866
00:44:46,880 --> 00:44:48,360
Speaker 2: podcast platform you prefer.

867
00:44:48,760 --> 00:44:49,560
Speaker 3: I'm Matt Miller.

868
00:44:49,800 --> 00:44:52,719
Speaker 2: I'm on Twitter at Matt Miller nineteen seventy three.

869
00:44:53,160 --> 00:44:55,520
Speaker 3: And I'm Baul Sweeney. I'm on Twitter at pt Sweeney.

870
00:44:55,680 --> 00:44:58,319
Speaker 1: Before the podcast, you can always catch us worldwide at

871
00:44:58,360 --> 00:44:59,360
Speaker 1: Bloomberg Radio