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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: And this is a joy. We start strowing with an

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Speaker 2: extended conversation with Tarsten Slock of a poly global management

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Speaker 2: And what's great about him is I can audible four

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Speaker 2: or five ways and I do so off a memoy

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Speaker 2: just put out which goes into my question of animal

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Speaker 2: spirits nominal GDP. And part of that is the demographic

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Speaker 2: overlay over our societies plural Tarsten Slock. China's working age

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Speaker 2: population is declining. America's working age population is growing. Discuss Torston.

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Speaker 2: That's the heart of the matter, isn't it. We've got

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Speaker 2: a lift. They don't.

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Speaker 3: Absolutely, So China is facing three headwinds. Demographics because of

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Speaker 3: the one child policy is beginning to catch up. Is

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Speaker 3: going to be a significant hit wind over the next

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Speaker 3: ten years. The United Nations is forecasting that the working

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Speaker 3: age population today, which is about a billion people, will

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Speaker 3: shrink over the next ten years to nine hundred million.

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Speaker 3: In other words, that's one hundred million people fewer working

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Speaker 3: in factories, working in the service sector. Also one hundred

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Speaker 3: million people fewer paying taxes. That is a significant Japanese

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Speaker 3: style headwind to growth in China over the next several years. Likewise,

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Speaker 3: China is facing some hitwinds from a deflating housing bubble,

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Speaker 3: and of course China is also facing some hitwinds from

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Speaker 3: a trade wall with not only the US, but also

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Speaker 3: with Europe. And that is indeed some very idiosyncratic sources

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Speaker 3: of why China is weaker than the US is at

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Speaker 3: the moment.

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Speaker 4: So Torston, I think over the last twenty or thirty years,

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Speaker 4: hearing what you just said about China weakening, that would

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Speaker 4: be a real, real challenge for the global economy.

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Speaker 5: Is that still the case?

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Speaker 3: That is exactly right, And that's why this has some

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Speaker 3: very important implications. Remember, historically in the last fifteen years,

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Speaker 3: China has accounted for half of all demand for commodities. So,

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Speaker 3: first of all, commodity prices are under pressure simply because

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Speaker 3: growth is slowing down in China. Again hardly for demographic

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Speaker 3: meaning structural reasons, but also for some cyclical reasons that

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Speaker 3: have to do with housing and have to do where

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Speaker 3: the trade walls, both again with US in Europe. So

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Speaker 3: demand for commodities globally looks a lot weaker across the board.

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Speaker 3: And also remember that Germany is a huge exporter to China,

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Speaker 3: so that also means that Europe is unfortunately also hard

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Speaker 3: hit by this idiosyncratic shock of China's slowing down. So

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Speaker 3: it does have some important implications for commodities and the

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Speaker 3: global business side.

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Speaker 2: Turst In going back to your Excel spreadsheets, Deutsche Bank,

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Speaker 2: can you model out of five percent growth in China?

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Speaker 2: Can you model out a solid Pacific rim economy?

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Speaker 3: Well, the challenge is, of course that if growth is

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Speaker 3: gradually slowing in China, then it will have implications not

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Speaker 3: only for of course for commodity exporters, and not only

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Speaker 3: for Germany, but also for the neighboring countries. Let's not

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Speaker 3: forget that a significant part of global trade is intra

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Speaker 3: regional trade flows between China that produces some parts of

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Speaker 3: a good that then is exported to Indonesia, to Vietnam,

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Speaker 3: tou Las and Cambodia and then finally ends up being

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Speaker 3: consumed by a consumer in Europe and in the US.

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Speaker 3: So it does have negative implications also for the rest ofvation.

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Speaker 2: Turst and I want to talk about what we're witnessing

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Speaker 2: right now. Paul and I were talking about this morning, folks.

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Speaker 2: You at three am meeting this morning. Lisa attended, my

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Speaker 2: head is spinning with Trump's second administration news. Do you

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Speaker 2: and Frankly do all of Apollo Global Management see a

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Speaker 2: cohesive plan here that lifts the American economy or is

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Speaker 2: it so ad hoc you can't come up with a theme?

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Speaker 3: Well? I do think for markets there were obviously a

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Speaker 3: lot of executive orders, and trust me, we study them

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Speaker 3: very very carefully because of course, wait, whoa.

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Speaker 2: Whoa, whoa whoa? Has Mark Rowan ever done an executive order? Apollo?

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Speaker 3: Well, the executive orders here, of course for us in

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Speaker 3: markets is all about trying to figure out what are

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Speaker 3: the implications for macro, and I do think there are

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Speaker 3: three areas where things will have implications for macro, and

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Speaker 3: that is tariffs. Of course, it is about immigration, and

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Speaker 3: it's also about potentially lower in corporate taxes for domestic

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Speaker 3: manufacturers to fifteen percent. If you impose tariffs, it's inflationary.

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Speaker 3: If you restrict immigration, or do deportations. It will also

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Speaker 3: be inflationary, in particular in the sexors where the illegal

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Speaker 3: immigrants work. According to Pew, they work in agriculture, in construction,

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Speaker 3: and in services including restaurants. You will see wage inflation

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Speaker 3: in those sexes. If you do serious deportations, and if

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Speaker 3: you do serious restrictions of immigration, so both tariffs and

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Speaker 3: restrictions of immigration, we'll probably have some lift to inflation. And

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Speaker 3: the problem for the FED and for the economy and

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Speaker 3: for markets is that inflation is already around three percent.

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Speaker 3: We're just not quite yet at two. We're more at

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Speaker 3: two than where we were at nine, but we're still

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Speaker 3: not quite at two. So if you now add policies

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Speaker 3: that run the risk of lifting even modestly inflation, it

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Speaker 3: unfortunately it is because the starting point at three percent

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Speaker 3: is just creating all these problems in long rates, and

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Speaker 3: of course also all these problems for the FED.

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Speaker 4: Jamie diamond Is is speaking in Davos as we speak

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Speaker 4: towards it, and he's out there as it relates to tariffs.

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Speaker 4: While tears may cause some inflation, he've used them as

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Speaker 4: an economic weapon.

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Speaker 5: Are they a valid economic weapon?

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Speaker 2: Do you think?

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Speaker 1: Well?

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Speaker 3: I mean, whatever the exact motivation is and whatever the

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Speaker 3: exact outcome will be. It is absolutely clear by definition

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Speaker 3: that if you raise the price of all goods that

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Speaker 3: come from China by sixty percent, and therefore everything that

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Speaker 3: we buy in the supermarket will increase in very round

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Speaker 3: numbers by sixty percent, it will have a direct hit

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Speaker 3: to inflation. So to what degree we get that, and

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Speaker 3: now Trump talked about also that we might get before

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Speaker 3: at the end of next week some tariffs twenty five

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Speaker 3: percent on Canada and Mexico. It all remains to be

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Speaker 3: seen exactly. Betting markets also have a view on whether

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Speaker 3: this is happening or not. We study every aspect of

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Speaker 3: this and we try to exactly make an assessment off

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Speaker 3: what's coming and what might the implications be. But the

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Speaker 3: bottom line is that it will have some implications for inflation.

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Speaker 3: And that's exactly why it rates and the Trump premium

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Speaker 3: have gone up so much, because the implications could potentially

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Speaker 3: be quite serious.

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Speaker 2: Turst and Slack with us with a Polo Global Management.

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Speaker 2: Welcome all of you on your commute this morning. Be

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Speaker 2: careful out there for much of the nation. Nineteen seventy seven,

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Speaker 2: cold good morning to Chicago. Seven above zero on YouTube.

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Speaker 2: Subscribe to Bloomberg Podcast after your commute in your office

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Speaker 2: at your home. YouTube is the best way to get

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Speaker 2: the handsome, tanned, unrested Paul Sweeney, or the tanned and

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Speaker 2: rested Lisa Matteo, or the pasty white puke as well.

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Speaker 2: We continue with slock of Apoll of Global Management Torson.

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Speaker 4: Let's step back here and just think about this US economy.

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Speaker 5: What are the biggest headwinds here?

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Speaker 4: Because it seems like, certainly relative to the rest of

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Speaker 4: the world, the US is doing very well. What are

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Speaker 4: some of the headwinds you see out there for this

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Speaker 4: economy potentially?

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Speaker 3: Yeah, this is very important because if we just spoke

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Speaker 3: about what the headwinds are to the rest of the world, namely,

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Speaker 3: China is slowing down. Europe, on top of China's blowing down,

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Speaker 3: is also experiencing some headwinds from energy transition. There's also

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Speaker 3: some challenges with politics in Europe. We will have a

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Speaker 3: German election in February, where a French election in July.

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Speaker 3: Of course, when they are settled and we'll have some

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Speaker 3: more idea about exactly what direction Europe is going. For

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Speaker 3: the US, it is the case that at the moment,

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Speaker 3: there are actually some very unique tailwinds. First of all,

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Speaker 3: US consumers are not very sensitive to interest rate hikes.

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Speaker 3: We just found out over the last two years that

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Speaker 3: though the FED raise rates because ninety five percent of

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Speaker 3: mortgages are thirty at fixed rate, it really ended up

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Speaker 3: being that the transmission mechanism of monetary policy in the

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Speaker 3: US was quite muted simply because consumers were locked in

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Speaker 3: and their mortgages at very low interest rates. Likewise, the

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Speaker 3: US we now have at data center boom that is

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Speaker 3: adding in round numbers around zero point two percent of

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Speaker 3: GDP growth every year. And finally, we also still have

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Speaker 3: fiscal policy even before Trump coming from the Chipsacked Inflation

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Speaker 3: of Douction Act Infrastructure Act. So the tailwinds to the

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Speaker 3: US outlook are quite unique. So therefore also your question,

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Speaker 3: I see more decoupling where the US is doing well

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Speaker 3: because of some unique sources of growth in the US,

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Speaker 3: and the rest of the world unfortunately continues to do

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Speaker 3: less well because of some unique headwinds that are not

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Speaker 3: headwinds to the US economic outlook.

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Speaker 2: It tursted, it seems like almost a bipolar American economy.

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Speaker 2: It is just so odd here, how I guess we've

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Speaker 2: got a consumption boom. I guess the haves do better

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Speaker 2: and better. Do you see the compendium of statements by

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Speaker 2: the new Trump administration leading to a broad economic growth

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Speaker 2: or does it stay and I'm using this firm not medically,

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Speaker 2: but does it stay barbell or bipolar?

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Speaker 3: You're absolutely right. If you look at the linguisy rates

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Speaker 3: on auto loans, the linguisgy rates on credit cards from

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Speaker 3: the New York Fit, it tells you that younger people

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Speaker 3: are falling behind at a pace that is faster than

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Speaker 3: older people. And why is that important? Because when I'm young,

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Speaker 3: I have more debt. I have more debt on my car,

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Speaker 3: more det on my credit card, more that on my

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Speaker 3: student loan. So that's why younger households are falling behind,

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Speaker 3: because they are hot to hit by the FIT raising

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Speaker 3: interest rates. Likewise, you also see savings for low income

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Speaker 3: households are very low, whereas savings for high income houses

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Speaker 3: are very high. So to your question, this bifurcated situation

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Speaker 3: where high end consumers are doing well at lower in

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Speaker 3: consumers are facing hit. When I think that overall this

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Speaker 3: of course economy, if we continue to create jobs, it

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Speaker 3: will benefit everyone. If we do begin to see interest

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Speaker 3: rates go down, we will if everyone including low end

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Speaker 3: consumers who have more debt. So I do expect that

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Speaker 3: a stronger economy is something that will be benefiting everyone

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Speaker 3: across the income distribution.

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Speaker 2: Turist in to tariffs and on the magnitude. Paul Krugman

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Speaker 2: with US recently really discussed the harmlessness of two or

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Speaker 2: three percent tariffs. Where is the slock level where terrffs

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Speaker 2: really begin to affect our culture in our macroeconomics.

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Speaker 3: Well, if you look at the Tax Foundation calculations, they

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Speaker 3: show you that if you do sixty percent on China

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Speaker 3: and twenty five percent on Canada Mexico and ten percent

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Speaker 3: on Europe, you will see the level of terrorists go

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Speaker 3: up in agricate to eighteen percent, which is the same

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Speaker 3: level as we had in the nineteen thirties, which of

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Speaker 3: course was a very bad economic situation. So if you

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Speaker 3: do get tariffs that are going all the way up

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Speaker 3: to the highest levels of everything that has been talked about,

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Speaker 3: then I do worry about what the implications could be

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Speaker 3: because the simplest way that I think about it is

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Speaker 3: that everything that I would buy in stores if that

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Speaker 3: goes up by sixty percent, and if my new car

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Speaker 3: on average would go up by three thousand dollars. If

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Speaker 3: you have broadly speaking, every good that we import goes

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Speaker 3: up in price, it would certainly have the implication that

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Speaker 3: inflation would be going up and demand and therefore sales

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Speaker 3: of goods that are imported would go down. And the

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Speaker 3: economy is just not able to quickly adjust and produce

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Speaker 3: these goods at home. So that would run the risk

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Speaker 3: essentially of creating inflation at the same time, also as

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Speaker 3: a slowdown in GDP. So I do watch and we

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Speaker 3: spent quite some time looking at exactly at what are

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Speaker 3: the indications and what areas is it where tariffs are

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Speaker 3: being talked about Touristan.

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Speaker 4: Talk just about the consumer here right here, it seems

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Speaker 4: like the consumer here in the US has a job,

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Speaker 4: wages are rising, maybe even rising faster than inflation.

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Speaker 5: Talk just about the US consumer.

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Speaker 3: Here absolutely So if you on your Bloomberg screen type

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Speaker 3: red book same store retail sales, this is a weekly

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Speaker 3: data series, you will see that the Weekly Day in

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Speaker 3: which comes out every Tuesday at nine am, is still

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Speaker 3: showing a consumer that's growing, a very solid growth. Growth

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Speaker 3: has been around five six percent literally for the last

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Speaker 3: world months. And this is on a weekly basis that

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Speaker 3: compares Thames doonll sales for retailers this week compared to

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Speaker 3: the same week a year ago. So in aggregate consumption

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Speaker 3: is very strong. Another good boom pack trip. If you

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Speaker 3: time e CFC go, you will see that what does

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Speaker 3: the consensus expect for the consumer for the next six quarters?

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Speaker 3: And the answer Polse to that question is also that

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Speaker 3: we should also expect to see the consumer continue to

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Speaker 3: do well simply because of we still have tailwinds from

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Speaker 3: high rate wage growth and still strong employment.

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Speaker 2: Doctor slock twenty seconds. Is the FED meeting end of

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Speaker 2: January going to be a snooze fest?

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Speaker 3: I think it will have a risk of being as newsfest.

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Speaker 3: They have already signaled and markets uprising in ninety eight

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Speaker 3: percent likelihood that they will do nothing. But the challenge,

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Speaker 3: of course is as usual the press conference. What wile

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Speaker 3: JPOW say all these risks that we're talking about here,

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Speaker 3: it's really complicating the FEDS job very significantly.

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Speaker 2: Turstan, thank you so much. Your notes in the morning

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Speaker 2: and along the day are hugely avaluable to all of

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Speaker 2: us on Team Surveillance. Mister slock with Apollo Global Management.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business Up, or

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Speaker 1: watch us live on YouTube right now.

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Speaker 2: Stuff guilder with us here to get the market open

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Speaker 2: with Robinhood, I don't get much exuberance here. It's just

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Speaker 2: a lift. What do you see it, Robin Hood.

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Speaker 6: We see a lot of enthusiasm for investing in the market,

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Speaker 6: but we continue to also see our customers trade around

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Speaker 6: the volatility of the stocks. So, for example, Tesla was

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Speaker 6: up a lot, you know, in December, and that was

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Speaker 6: the source of funding for other adding to other places

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Speaker 6: that maybe had done had not done so well.

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Speaker 4: How did you kind of, if at all, change kind

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Speaker 4: of your investment out look for twenty twenty five given

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Speaker 4: what happened with the election and kind of what we

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Speaker 4: now know.

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Speaker 2: Did anything really.

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Speaker 5: Change for you guys?

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Speaker 6: Nothing's really changed, Like it's actually been so far working

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Speaker 6: out the way we had called for. You know, I'm

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Speaker 6: a little worried about rates going above, like I said,

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Speaker 6: around the four and a half percent mark with risk

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Speaker 6: to five percent, it got to four point eight. It's

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Speaker 6: kind of back down again. It could go hire them,

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Speaker 6: I mean, it could go higher them five to.

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Speaker 2: Cut to the chase your shop. I mean, remember the

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Speaker 2: spac idiocy or the memes? Is it me me? Now?

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Speaker 2: I don't feel like it is.

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Speaker 6: I don't think it's me me at all?

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Speaker 2: Why? Why is it not?

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Speaker 6: Mean because our levels were it because our customers are

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Speaker 6: investing in companies that have true earnings growth?

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Speaker 5: What's a typical Robin Hood customer?

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Speaker 6: Who was a typical So we actually put all these

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Speaker 6: stats out for Investor Day, so I have some good

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Speaker 6: ones in my head. Now, we're about fifty percent percent millennials,

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Speaker 6: twenty percent Gen X, and then the remaining thirty percent

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Speaker 6: amongst Gen Z and younger.

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Speaker 2: We have so there's like boomer free, boomer free, well

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Speaker 2: Gen X, you know, depends on how old you are.

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Speaker 6: You definitely sixty percent male, forty percent female. You know,

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Speaker 6: we have a mix of income levels, you know, sort

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Speaker 6: of on the younger side, about sixty percent of them

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Speaker 6: are married. You know, it's it's kind of like it's

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Speaker 6: the next generation and beyond.

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Speaker 5: Did they mean divorced, Yes, exactly.

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Speaker 6: Twenty actually twenty percent said they were divorced.

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Speaker 5: Okay, So what are they more on the growth side?

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Speaker 4: Are they overweight? Maybe some of these mags seven's what

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Speaker 4: types of stocks do they?

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Speaker 2: Typic?

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Speaker 5: Do you find them typically investients?

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Speaker 6: Yeah, at the top of us so we have someone

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Speaker 6: called the Robinhood Investor Index, and at the top has

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Speaker 6: been consistently Tesla.

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Speaker 2: Okay.

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Speaker 6: And I do think that there is just a cultural

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Speaker 6: like true belief and Elon and what he does. I

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Speaker 6: think beyond that, then you look at what I call

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Speaker 6: sort of at least for a while, like the utility companies,

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Speaker 6: like Apple's utility company, and it's kind of been showing

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Speaker 6: that to me from a return perspective recently. But then

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Speaker 6: you've got Microsoft at Navidia, and then you've got some

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Speaker 6: you know, belief in electric vehicles. Beyond Tesla, about twenty

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Speaker 6: percent of the index has been invested in various electric vehicles.

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Speaker 6: You are customers are average median age is thirty four,

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Speaker 6: so they do have a longer time horizon to make

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Speaker 6: their investments, and they are believing it. Like Ford has

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Speaker 6: been at the top of that for a while, Disney

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Speaker 6: like you you know, because Ford is trying to get

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Speaker 6: into the ev game and grow their business and then

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Speaker 6: you know, at the bottom, you've got some lots of

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Speaker 6: stuff that come in and out.

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Speaker 2: I want to get to this after we open the market. Yeah,

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Speaker 2: but are you a bull now? Are you a convicted

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Speaker 2: you know in terms of your strategy.

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Speaker 6: I mean my call since like early December when I

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Speaker 6: put together my outlook was sixty five hundred on the

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Speaker 6: S and P. That's at the lower end of the

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Speaker 6: Wall Street estimates. More bullish on midcaps. So far here

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Speaker 6: to date, midcaps have actually been out performing large gaps,

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Speaker 6: although maybe after today that and after earnings that starts

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Speaker 6: to change. I think you can't cant out the count

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Speaker 6: out the large cap techniques. They just have so much

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Speaker 6: clout in this administration and so much power that comes

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Speaker 6: from money.

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Speaker 2: We're Steph Guild of Robinhood and the mag seven. I mean,

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Speaker 2: they just continue to even if they've got a high multiple,

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Speaker 2: they earn into their multiple. Right is that simple?

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Speaker 6: As I said, like before we kind of got to

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Speaker 6: the open, I think there's they just have so much

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Speaker 6: cloud in this administration. They have a lot of cash

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Speaker 6: in their balance sheets. They are dominating the AI innovation

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Speaker 6: like this it's it's hard to see when this could

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Speaker 6: stop other than just we haven't really gotten to the

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Speaker 6: tough stuff when it comes to our deficit and interest rates,

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Speaker 6: and that, back to me, is the headwind. The other

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Speaker 6: headwind is just enter like being able to have enough

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Speaker 6: energy for all the infrastructure that needs to be yep.

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Speaker 4: On the MidCap space. This is a name near and

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Speaker 4: dear to Tom's Hart the gap.

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Speaker 5: Why is a gap screen for you guys?

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Speaker 6: It's I mean, it's it's certainly inexpensive relative to it's

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Speaker 6: certainly relative to its history. It's been an adultrums for

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Speaker 6: a long time. It's at ten point eight times next

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Speaker 6: twelve months earnings, but it's also cheaper than its peers.

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Speaker 6: I just think that the new CVIOO came in in

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Speaker 6: twenty twenty three, he's had some time to start turning

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Speaker 6: things around. They are paying down debt. They brought in

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Speaker 6: Zach Posen to kind of influence what product they're going

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Speaker 6: to put out. Like it's just you know, and also

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Speaker 6: technically it just crossed over. It's one hundred and fifty

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Speaker 6: day moving average over the last one year, so there's

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Speaker 6: just some tailwinds I think behind it. It is still

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Speaker 6: I'd say a little bit of a show me stock

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Speaker 6: because the company is in the retail sector that is competitive.

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Speaker 6: About sixty percent of its earnings come from Old Navy,

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Speaker 6: so a lot of that will depend on what happens there,

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Speaker 6: which is the lower price consumer space.

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Speaker 4: It's got a nine point three billion dollar market cap

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Speaker 4: and it's over the past twelve months up thirty percent there.

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Speaker 4: So when you think about a name late the gap,

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Speaker 4: is that a call your call? Does that reflect your

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Speaker 4: call in the consumer or is it kind of specific

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Speaker 4: for this story.

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Speaker 6: I think it's both. Like I really think we're in

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Speaker 6: a and I keep saying this all the time in

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Speaker 6: a stock pickers market, like Peter Lynch famously said, the

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Speaker 6: person who picks over the most rocks wins. And I

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Speaker 6: do think we're in that environment because we have higher

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Speaker 6: interest rates are going to staytubborn. Okay, if you look

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Speaker 6: at over the last like thirty years, have FED did

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Speaker 6: a paper forty two percent of earnings growth over that

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Speaker 6: period from nineteen eight nine to twenty twenty nineteen what

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Speaker 6: came from tax cuts and interest rate drops. And so

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Speaker 6: I think we're an environment where like company management decisions

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Speaker 6: and what they're doing with their company, how they're looking

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Speaker 6: to grow it matters more than ever.

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Speaker 2: Thank you, Steff. That's been great stuff cool. Thank you

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Speaker 2: so much with Robin hood this point.

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Speaker 1: This is the Bloomberg Surveillance Podcast in live each weekday

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Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

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00:20:04,720 --> 00:20:07,680
Speaker 1: with the Bloomberg Business app. You can also listen live

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00:20:07,760 --> 00:20:11,359
Speaker 1: on Amazon Alexa from our flagship New York station, Just

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Speaker 1: say Alexa play Bloomberg eleven thirty.

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Speaker 2: Because I like never watch Netflix. I'm like the least

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Speaker 2: qualified person.

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Speaker 5: You're not a squid Game guy.

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Speaker 2: No, no, Lisa, do you watch squid Game? No?

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Speaker 5: I do not my kids. It's more gruesome. Robert Shift,

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Speaker 5: I think, Oh, I think maybe he's got a cameo.

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Speaker 4: Robert Fishman joint just senior research analyst at mof AT.

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Speaker 4: Nathan sent our good friends over there doing some great

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Speaker 4: work on the media, entertainment, telecom business. Hey, Robert, I

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Speaker 4: was just reading your research note from this morning. Like

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Speaker 4: a lot of analysts and a lot of investors, this

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Speaker 4: company continues to surprise on the upside in terms of

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Speaker 4: its subscriber growth.

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Speaker 5: What did they report this quarter?

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Speaker 7: Yeah, good morning, Thank you for having me so remarkably,

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Speaker 7: they reported about nineteen million net subscriber editions last night,

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Speaker 7: which if you take a step back and really try

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Speaker 7: to understand how big of a number that was. At

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Speaker 7: the beginning of the year, we were forecasting the company

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Speaker 7: add it to add in last calendar year about twenty

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Speaker 7: million net editions, and they ended up doing that almost

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Speaker 7: in one quarter, and for the full year, essentially doubled

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Speaker 7: our entire forecast of over forty million for this year.

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Speaker 7: So it's truly remarkable.

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Speaker 2: Why isn't there another Netflix? Don't they have a formula

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Speaker 2: people can copy? Robert Fishman, I don't see it out there.

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Speaker 7: Well, the other media guys are definitely trying, but it's

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Speaker 7: not an easy why tempoint.

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Speaker 2: I don't understand. I mean, if Columbia Records as a

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Speaker 2: hit with Bob Dylan, you go out and find the

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Speaker 2: next Bob Dylan. Why can't they copy Netflix?

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Speaker 7: I mean, Netflix has a lot of advantages, and probably

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Speaker 7: the biggest one is being first, and the size and

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Speaker 7: scale that they've gotten to, especially outside of the US,

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Speaker 7: is nearly impossible to compete. Again, we still think some

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Speaker 7: of the other traditional media guys still have a ways

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Speaker 7: to go, but are at least on the right path.

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Speaker 7: But it's clear that no one is catching up to

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Speaker 7: Netflix at this point.

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Speaker 4: So given that backdrop Robert and the follow up on

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Speaker 4: Tom's question, I kind of, as I look at the landscape,

439
00:22:28,840 --> 00:22:31,320
Speaker 4: I say, all right, Netflix, obviously they are the leader.

440
00:22:31,720 --> 00:22:33,600
Speaker 4: I'm going to give Disney a pass and say they're

441
00:22:33,640 --> 00:22:35,520
Speaker 4: going to have a very They do have a very

442
00:22:35,560 --> 00:22:37,679
Speaker 4: profitable business, and we'll get even more so.

443
00:22:37,680 --> 00:22:40,359
Speaker 5: So they're a player. But after Disney, I don't know

444
00:22:40,840 --> 00:22:41,920
Speaker 5: how this thing shakes out.

445
00:22:41,960 --> 00:22:45,560
Speaker 4: Do you expect to see, for lack of a better word,

446
00:22:45,640 --> 00:22:48,680
Speaker 4: subscale players like a paramount like a Warner Brothers Discovery.

447
00:22:48,680 --> 00:22:53,000
Speaker 5: Do they have to kind of consolidate? Do you think yeah?

448
00:22:53,119 --> 00:22:56,480
Speaker 7: I mean, we definitely think it's inevitable that these other

449
00:22:56,600 --> 00:22:59,760
Speaker 7: streaming platforms that you're talking about need to come to

450
00:22:59,800 --> 00:23:02,679
Speaker 7: Get because the size and scale that they're at today,

451
00:23:03,560 --> 00:23:07,680
Speaker 7: frankly just can't really compete. And what it really comes

452
00:23:07,720 --> 00:23:11,119
Speaker 7: down to again is the US versus the international business.

453
00:23:11,160 --> 00:23:14,480
Speaker 7: And I think what Netflix has proven so well is

454
00:23:14,520 --> 00:23:17,240
Speaker 7: they have the ability or talking about squid games before,

455
00:23:17,560 --> 00:23:21,120
Speaker 7: to bring this content in from around the world and

456
00:23:21,520 --> 00:23:24,800
Speaker 7: most of the traditional media guys are really just focused

457
00:23:24,840 --> 00:23:29,480
Speaker 7: on US content and exporting that outside to the international market.

458
00:23:29,720 --> 00:23:32,560
Speaker 7: But the benefit that Netflix has is creating all this

459
00:23:32,640 --> 00:23:35,400
Speaker 7: content outside of the world, and a lot of it

460
00:23:35,160 --> 00:23:37,600
Speaker 7: is really hitting well in the US as well.

461
00:23:37,680 --> 00:23:40,080
Speaker 2: Robert, your report's just Christine. I don't want to get

462
00:23:40,119 --> 00:23:42,679
Speaker 2: into the numbers because it's too cold outside, but I

463
00:23:42,720 --> 00:23:47,080
Speaker 2: do want to look, Robert Fishman, you're saying, I'm enthusiastic,

464
00:23:47,640 --> 00:23:51,919
Speaker 2: I lift my price target, but I'm neutral until I

465
00:23:52,080 --> 00:23:56,480
Speaker 2: see the ten K filing. What's the ten K filing?

466
00:23:56,760 --> 00:24:00,040
Speaker 2: And why are you waiting to read that?

467
00:24:00,040 --> 00:24:03,280
Speaker 7: It's a very interesting question. So as far as the

468
00:24:03,320 --> 00:24:05,600
Speaker 7: ten K goes, what we like to do is the

469
00:24:05,640 --> 00:24:09,040
Speaker 7: annual report basically from the company. It just gives us

470
00:24:09,600 --> 00:24:13,680
Speaker 7: a time to take a step back, really reassess as

471
00:24:13,680 --> 00:24:16,600
Speaker 7: far as again what just happened this past year, what

472
00:24:16,640 --> 00:24:20,720
Speaker 7: we got right, which in all candor was not a

473
00:24:20,720 --> 00:24:23,960
Speaker 7: whole lot with this company because they continue to blow

474
00:24:24,000 --> 00:24:27,399
Speaker 7: it out out of the park. And so what we

475
00:24:27,560 --> 00:24:30,320
Speaker 7: try to do is really revisit our forecast and try

476
00:24:30,359 --> 00:24:33,200
Speaker 7: to understand how much more upside is there to go

477
00:24:33,800 --> 00:24:35,960
Speaker 7: and try to value the stock appropriately.

478
00:24:36,600 --> 00:24:41,360
Speaker 4: Robert, let's talk about sports here. For most of those companies' existence.

479
00:24:41,400 --> 00:24:44,840
Speaker 4: They've said, we are not going to get into sports business,

480
00:24:44,880 --> 00:24:48,399
Speaker 4: the live sports business. But quite frankly, I'm just waiting

481
00:24:48,440 --> 00:24:50,480
Speaker 4: for the press please to come when they actually have

482
00:24:50,560 --> 00:24:54,400
Speaker 4: an NFL package talk to us about Sports and Netflix.

483
00:24:55,800 --> 00:24:58,959
Speaker 7: Yeah, well, I mean, as you're alluding to, they already

484
00:24:59,000 --> 00:25:03,119
Speaker 7: have NFL games. So as far as NFL package, we

485
00:25:03,640 --> 00:25:07,439
Speaker 7: agree that that is inevitable. The NFL does have some

486
00:25:07,600 --> 00:25:11,240
Speaker 7: time with their current contracts so that there's an outclause

487
00:25:11,960 --> 00:25:15,080
Speaker 7: towards the end of the decade. But as far as

488
00:25:15,480 --> 00:25:18,760
Speaker 7: the current strategy for Netflix and Sports right now is

489
00:25:18,840 --> 00:25:22,160
Speaker 7: big events, and they're clearly doing that very well. That

490
00:25:22,200 --> 00:25:26,119
Speaker 7: they again started out as big as you could imagine

491
00:25:26,560 --> 00:25:30,359
Speaker 7: with the Tyson Paul fight and then went to the

492
00:25:31,480 --> 00:25:35,080
Speaker 7: NFL Christmas Games. They just got the rights to the

493
00:25:35,119 --> 00:25:37,960
Speaker 7: Women's World Cup for starting in twenty twenty seven and

494
00:25:38,080 --> 00:25:42,040
Speaker 7: twenty thirty one, and so they're clearly adding to their portfolio.

495
00:25:42,080 --> 00:25:45,359
Speaker 7: But they're doing it in a very strategic way where

496
00:25:45,359 --> 00:25:48,560
Speaker 7: they're building out event ties sports content.

497
00:25:48,840 --> 00:25:52,680
Speaker 2: Are they a friend or an enemy or a frenemy

498
00:25:53,080 --> 00:25:55,679
Speaker 2: of the National Football League?

499
00:25:56,840 --> 00:25:58,680
Speaker 7: I think they're going to be a big friend to

500
00:25:59,200 --> 00:26:01,879
Speaker 7: the NFL, and the NFL is going to look to

501
00:26:01,920 --> 00:26:04,879
Speaker 7: continue to bring them in in many different ways to

502
00:26:04,960 --> 00:26:08,760
Speaker 7: reach their audience outside of the US and grow the

503
00:26:09,600 --> 00:26:14,040
Speaker 7: international audience, which is a really critical piece to the

504
00:26:14,200 --> 00:26:16,399
Speaker 7: long term growth of the NFL going forward.

505
00:26:16,840 --> 00:26:18,280
Speaker 2: I mean, I'm looking at trying to get to the

506
00:26:18,280 --> 00:26:20,359
Speaker 2: way to the average cost of capital on this dog.

507
00:26:20,400 --> 00:26:23,040
Speaker 2: I can't get there right now. Looks like the programs

508
00:26:23,080 --> 00:26:26,719
Speaker 2: don't love to see on that I don't know. Absolutely fascinating.

509
00:26:27,040 --> 00:26:30,280
Speaker 2: Robert Fishman, thank you so much. Great summary as well.

510
00:26:36,359 --> 00:26:40,280
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

511
00:26:40,280 --> 00:26:43,280
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

512
00:26:43,320 --> 00:26:46,359
Speaker 1: Auto with the Bloomberg Business app. You can also watch

513
00:26:46,400 --> 00:26:49,359
Speaker 1: us live every weekday on YouTube and always on the

514
00:26:49,400 --> 00:26:50,480
Speaker 1: Bloomberg terminal.

515
00:26:50,880 --> 00:26:52,439
Speaker 2: Your day, you look at the front page is a

516
00:26:52,520 --> 00:26:56,680
Speaker 2: Lisa Mateo moment, Lisa Mateo, what do you have?

517
00:26:57,400 --> 00:26:57,560
Speaker 5: Well?

518
00:26:57,600 --> 00:26:57,760
Speaker 4: List?

519
00:26:57,760 --> 00:27:00,159
Speaker 8: Since I've been so much talk about TikTok, right, who

520
00:27:00,200 --> 00:27:01,719
Speaker 8: was gonna buy it? What's going to happen to it?

521
00:27:02,040 --> 00:27:04,880
Speaker 8: I found a little sidebar story from the Financial Time

522
00:27:05,000 --> 00:27:08,639
Speaker 8: about the workers. Sources are telling them that the workers

523
00:27:08,640 --> 00:27:11,280
Speaker 8: that bite Dance really coated it. From China to Singapore.

524
00:27:11,440 --> 00:27:13,359
Speaker 8: They were told in a memo that they have to

525
00:27:13,359 --> 00:27:16,560
Speaker 8: pay tax to their home country and if they don't

526
00:27:16,600 --> 00:27:18,600
Speaker 8: that they risk kind of losing that ability to cash

527
00:27:18,600 --> 00:27:21,520
Speaker 8: out on the stock options. And stock options make up

528
00:27:21,560 --> 00:27:25,000
Speaker 8: a big chunk of their paycheck. It's about a thousand

529
00:27:25,040 --> 00:27:27,199
Speaker 8: employees or so could be affected by it, but a

530
00:27:27,320 --> 00:27:29,600
Speaker 8: tax difference could be as high as twenty one percentage

531
00:27:29,600 --> 00:27:31,440
Speaker 8: points depending on their individuals side.

532
00:27:31,440 --> 00:27:34,760
Speaker 2: So if they moved to Singapore, does that get around

533
00:27:34,800 --> 00:27:38,000
Speaker 2: our angst about China? Don't I would guess No, I

534
00:27:38,080 --> 00:27:38,479
Speaker 2: don't know.

535
00:27:38,720 --> 00:27:40,679
Speaker 4: I mean it's it's fluid.

536
00:27:41,000 --> 00:27:43,199
Speaker 2: Are you on Lisa? Are you on the red whatever

537
00:27:43,280 --> 00:27:44,240
Speaker 2: the red note?

538
00:27:44,280 --> 00:27:48,280
Speaker 8: No, no, no, the fam is not switched.

539
00:27:48,280 --> 00:27:49,360
Speaker 6: They're still on the TikTok.

540
00:27:49,720 --> 00:27:52,040
Speaker 8: It brought it when it went dark. There was a

541
00:27:52,040 --> 00:27:55,080
Speaker 8: bit of a panic with the children.

542
00:27:55,560 --> 00:27:57,800
Speaker 2: Do your kids hide that they're on TikTok?

543
00:27:58,760 --> 00:28:01,320
Speaker 8: My daughter did for a while because cantal fees.

544
00:28:01,119 --> 00:28:03,600
Speaker 2: On TikTok, like glued to it. And you know, the

545
00:28:03,720 --> 00:28:09,240
Speaker 2: dog takes the phone. It's okay, underneath the food ball next, okay.

546
00:28:09,280 --> 00:28:12,560
Speaker 8: This is China, right, trying to boost their consumer spending.

547
00:28:12,600 --> 00:28:14,960
Speaker 8: So this is an interesting story about how it's welcoming

548
00:28:15,000 --> 00:28:19,000
Speaker 8: back Hollywood movies. In order to do that, so it's

549
00:28:19,000 --> 00:28:21,480
Speaker 8: allowing foreign films to be screened, old and new ones,

550
00:28:21,680 --> 00:28:24,399
Speaker 8: r rated Hollywood movies, films from other countries like India,

551
00:28:24,480 --> 00:28:28,040
Speaker 8: Japan that weren't allowed there before. But it's a lot

552
00:28:28,119 --> 00:28:31,920
Speaker 8: more and the reason is because when people go to

553
00:28:31,960 --> 00:28:34,000
Speaker 8: the movies, they spend more. And a lot of their

554
00:28:34,000 --> 00:28:36,360
Speaker 8: movie theaters, which I didn't realize in China are located

555
00:28:36,359 --> 00:28:39,600
Speaker 8: in shopping walls, so people go and they just spend, spend.

556
00:28:39,440 --> 00:28:40,480
Speaker 5: By food, that's what they want.

557
00:28:40,840 --> 00:28:42,400
Speaker 4: I'll tell you this is a big, big deal for

558
00:28:42,440 --> 00:28:46,640
Speaker 4: Hollywood because pre pandemic, for big blockbusters, these two three

559
00:28:46,680 --> 00:28:50,960
Speaker 4: hundred million dollars box off, big spending things. It had

560
00:28:50,960 --> 00:28:51,680
Speaker 4: to play well.

561
00:28:51,520 --> 00:28:54,120
Speaker 5: In China in order for it to really successful.

562
00:28:54,600 --> 00:28:56,440
Speaker 4: And then for the last four or five years no,

563
00:28:56,640 --> 00:28:59,400
Speaker 4: for a variety of reasons A the pandemic, B. China

564
00:28:59,480 --> 00:29:02,880
Speaker 4: just cracking down. But now it's opening back up again,

565
00:29:02,920 --> 00:29:05,320
Speaker 4: and that is huge shame for Hollywood because that's the

566
00:29:05,440 --> 00:29:09,520
Speaker 4: second biggest box office outside of North America's China, all right.

567
00:29:09,400 --> 00:29:11,440
Speaker 8: And not airlines that you had a rough twenty twenty

568
00:29:11,440 --> 00:29:13,280
Speaker 8: four as we know, but this is a Wall Street

569
00:29:13,360 --> 00:29:15,760
Speaker 8: Journal scorecard. It has a look into who came out

570
00:29:15,800 --> 00:29:19,800
Speaker 8: on top. So they ranked about nine major US airlines.

571
00:29:20,040 --> 00:29:23,200
Speaker 8: It included things like on time arrivals, flight cancelations, delayed

572
00:29:23,240 --> 00:29:26,760
Speaker 8: baggage handling, all of that. So at the top was Delta.

573
00:29:27,240 --> 00:29:30,120
Speaker 8: It actually stood out in nearly every category. The only

574
00:29:30,160 --> 00:29:32,920
Speaker 8: thing is that they had this data that went through

575
00:29:33,040 --> 00:29:36,240
Speaker 8: only till May, so did include the crowd strikeoutage of

576
00:29:36,320 --> 00:29:40,240
Speaker 8: passenger complaints in there, so that wasn't affected. But it's

577
00:29:40,280 --> 00:29:42,480
Speaker 8: the reason why they say their tickets are often higher

578
00:29:42,520 --> 00:29:46,160
Speaker 8: than other airlines. But it was a close race. Southwest

579
00:29:46,280 --> 00:29:49,720
Speaker 8: just one point behind. Leska Airlines came in third, and

580
00:29:49,800 --> 00:29:53,720
Speaker 8: the worst was actually Frontier Airlines came in last place.

581
00:29:54,000 --> 00:29:56,160
Speaker 5: In my United since smack in the mid in the

582
00:29:56,240 --> 00:29:59,200
Speaker 5: middle of very good, so much.

583
00:29:59,080 --> 00:30:02,480
Speaker 2: Of it to me Year United. You sit on the

584
00:30:02,560 --> 00:30:03,440
Speaker 2: runway at Newark.

585
00:30:03,520 --> 00:30:06,920
Speaker 5: I mean it's Kay's knock on wood.

586
00:30:06,960 --> 00:30:09,120
Speaker 4: It's been better last few times I've flown, so we'll

587
00:30:09,120 --> 00:30:10,040
Speaker 4: see how it goes there.

588
00:30:10,120 --> 00:30:12,760
Speaker 2: Listen to thank you for the news. Greatly appreciate that

589
00:30:12,840 --> 00:30:16,720
Speaker 2: the newspaper study. Thank you, I'm kr for your support.

590
00:30:16,920 --> 00:30:21,760
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

591
00:30:21,880 --> 00:30:26,160
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

592
00:30:26,280 --> 00:30:29,760
Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the

593
00:30:29,840 --> 00:30:33,880
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You

594
00:30:33,920 --> 00:30:37,280
Speaker 1: can also watch us live every weekday on YouTube and

595
00:30:37,480 --> 00:30:39,200
Speaker 1: always on the Bloomberg terminal