1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,000 Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best and economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,439 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,840 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,000 --> 00:00:31,680 Speaker 1: We're just going to move on to bonds, and we 8 00:00:31,720 --> 00:00:32,839 Speaker 1: do that with Mark Cambana. 9 00:00:32,920 --> 00:00:35,280 Speaker 2: He is one of our favorites here at Bloomberg Surveillance, 10 00:00:35,320 --> 00:00:38,120 Speaker 2: head of US rates Strategy at Bank of America in 11 00:00:38,159 --> 00:00:41,040 Speaker 2: the hallmark here as he writes with clarity and avoids 12 00:00:41,200 --> 00:00:43,760 Speaker 2: bs and so you lead your note with one of 13 00:00:43,760 --> 00:00:48,240 Speaker 2: the all time jargon words of the moment, resilience. Everybody 14 00:00:48,280 --> 00:00:51,480 Speaker 2: out there, the Boston Red Sox are showing resilience. 15 00:00:51,560 --> 00:00:52,559 Speaker 1: What a bunch of boloney. 16 00:00:52,920 --> 00:00:56,080 Speaker 2: Translate your use of resilience to the real world of 17 00:00:56,120 --> 00:00:56,720 Speaker 2: fixed income. 18 00:00:56,800 --> 00:00:59,200 Speaker 3: Well, I think it's a generous characterization of the Red Sox. 19 00:01:00,360 --> 00:01:03,280 Speaker 3: But what we mean by this is that the economy 20 00:01:03,320 --> 00:01:06,480 Speaker 3: has really shown that it has been relatively insensitive to 21 00:01:06,720 --> 00:01:09,679 Speaker 3: higher interest rates so far. We all thought that we 22 00:01:09,720 --> 00:01:12,520 Speaker 3: would see the unemployment rate tick higher. We thought we 23 00:01:12,560 --> 00:01:15,560 Speaker 3: would see fixed investment drop by more. We thought we 24 00:01:15,560 --> 00:01:19,119 Speaker 3: would see financial conditions tightened more substantially as a result 25 00:01:19,120 --> 00:01:20,840 Speaker 3: of all of the rate hikes that have been delivered 26 00:01:20,840 --> 00:01:23,440 Speaker 3: so far and that are expected either in the future 27 00:01:23,560 --> 00:01:26,560 Speaker 3: or that are expected to remain elevated for a while. 28 00:01:27,000 --> 00:01:29,119 Speaker 3: And what we've seen is that the economy is really 29 00:01:29,160 --> 00:01:32,319 Speaker 3: held in and that has challenged at least some perceptions 30 00:01:32,319 --> 00:01:35,080 Speaker 3: at BAVA about how much we would expect to see 31 00:01:35,080 --> 00:01:39,240 Speaker 3: the economy turn. Our economists just last week changed their 32 00:01:39,280 --> 00:01:42,319 Speaker 3: base case from a recession to a soft landing. Now 33 00:01:42,360 --> 00:01:45,920 Speaker 3: that's a maybe mindor distinction, but nonetheless it implies less 34 00:01:45,920 --> 00:01:48,880 Speaker 3: of upward pressure in the unemployment rate. It implies an 35 00:01:48,880 --> 00:01:52,000 Speaker 3: economy that can continue to grow for longer, and it 36 00:01:52,040 --> 00:01:53,840 Speaker 3: implies that the FED is going to probably have to 37 00:01:53,880 --> 00:01:56,400 Speaker 3: adjust accordingly. And the way that we think that that 38 00:01:56,440 --> 00:02:00,280 Speaker 3: adjustment takes place is not necessarily through a higher overall 39 00:02:00,360 --> 00:02:02,920 Speaker 3: terminal rate, But for a FED that does indeed remain 40 00:02:03,000 --> 00:02:07,000 Speaker 3: higher for longer, and by cutting slower than the market anticipates, 41 00:02:07,240 --> 00:02:09,320 Speaker 3: certainly higher for longer can mean that you hold the 42 00:02:09,400 --> 00:02:11,680 Speaker 3: terminal rate for an extended period of time, or it 43 00:02:11,680 --> 00:02:14,000 Speaker 3: can mean that you maybe cut once a quarter, which 44 00:02:14,000 --> 00:02:16,080 Speaker 3: is now our economist base case, as opposed to the 45 00:02:16,080 --> 00:02:19,640 Speaker 3: almost every meeting rate cut that the market is anticipating 46 00:02:19,800 --> 00:02:20,800 Speaker 3: once it gets started. 47 00:02:20,880 --> 00:02:22,959 Speaker 4: So would you push back against the people one after 48 00:02:23,000 --> 00:02:24,919 Speaker 4: another who've come on this show and said we're buying 49 00:02:24,919 --> 00:02:27,119 Speaker 4: long term bonds because we think it's great to lock 50 00:02:27,160 --> 00:02:29,360 Speaker 4: in four percent yields. It's going down to three and 51 00:02:29,400 --> 00:02:31,680 Speaker 4: a quarter three and a half percent on the tenure. 52 00:02:32,080 --> 00:02:37,480 Speaker 3: So we're still reasonably constructive on duration. We do recommend 53 00:02:37,520 --> 00:02:39,880 Speaker 3: that clients trade the back end of the rates curve 54 00:02:39,960 --> 00:02:43,440 Speaker 3: with a tactical long bias. You've got to respect the range, 55 00:02:43,440 --> 00:02:45,720 Speaker 3: which looks intends to be around three seventy five to 56 00:02:45,720 --> 00:02:49,200 Speaker 3: four to twenty five now. And we think that because 57 00:02:49,240 --> 00:02:51,720 Speaker 3: we just believe that long end rates look somewhat asymmetrically 58 00:02:51,760 --> 00:02:54,040 Speaker 3: skewed to the downside. It's a lot more difficult for 59 00:02:54,120 --> 00:02:56,760 Speaker 3: us to envision tends at five than it is tens 60 00:02:56,760 --> 00:03:00,040 Speaker 3: at three. And with a FED that's cutting slow, No, 61 00:03:00,440 --> 00:03:03,040 Speaker 3: you're not going to maybe see as significant of a 62 00:03:03,080 --> 00:03:05,480 Speaker 3: bond market rally. You're not going to see as rapid 63 00:03:05,520 --> 00:03:08,079 Speaker 3: of a yield decline. But we still think that yields 64 00:03:08,080 --> 00:03:10,320 Speaker 3: will be moving lower in time as the FED does 65 00:03:10,320 --> 00:03:12,880 Speaker 3: indeed move to cuts, but just cutting slower perhaps than 66 00:03:12,880 --> 00:03:13,839 Speaker 3: the market anticipates. 67 00:03:13,919 --> 00:03:16,560 Speaker 4: I want to just ask about the consequences of holding 68 00:03:16,639 --> 00:03:19,680 Speaker 4: rates at this level for a longer period of time. 69 00:03:19,919 --> 00:03:25,000 Speaker 4: Are people adequately understanding how restrictive that becomes as growth 70 00:03:25,040 --> 00:03:27,840 Speaker 4: slows and as companies have to start refinancing. 71 00:03:27,919 --> 00:03:28,680 Speaker 5: Yeah, it's a great question. 72 00:03:28,720 --> 00:03:30,680 Speaker 3: I heard you come on earlier about credit and Torsten 73 00:03:30,720 --> 00:03:34,640 Speaker 3: Slock and what he is saying about underlying fundamentals there. Look, 74 00:03:34,680 --> 00:03:36,680 Speaker 3: we do think that the credit markets are going to 75 00:03:36,720 --> 00:03:40,320 Speaker 3: be okay if the FED ultimately delivers on what's priced 76 00:03:40,360 --> 00:03:44,000 Speaker 3: for cuts in the forwards, because as you have a 77 00:03:44,040 --> 00:03:45,920 Speaker 3: lot of maturities that come do the FED will be 78 00:03:45,920 --> 00:03:48,200 Speaker 3: lowering rates and that's going to soften the blow to 79 00:03:48,240 --> 00:03:50,440 Speaker 3: some extent. The challenge will be if the FED does 80 00:03:50,520 --> 00:03:53,400 Speaker 3: indeed remain higher for longer and if you start to 81 00:03:53,400 --> 00:03:55,960 Speaker 3: see some of those refinancings occur at higher rates and 82 00:03:56,000 --> 00:03:58,760 Speaker 3: see companies begin to adjust how they're going to manage 83 00:03:58,800 --> 00:04:02,880 Speaker 3: that cost factor into their own calculus. But it's a 84 00:04:02,920 --> 00:04:04,400 Speaker 3: part of what I think the FED is looking for. 85 00:04:04,440 --> 00:04:06,920 Speaker 3: They need to slow the economy somewhat, and they need 86 00:04:06,960 --> 00:04:10,640 Speaker 3: to ensure that inflation does indeed remain around two in 87 00:04:10,800 --> 00:04:13,400 Speaker 3: our economist's new profile for growth. They do think that 88 00:04:13,400 --> 00:04:16,680 Speaker 3: inflation just falls slower understandably. Right You're going to be 89 00:04:16,720 --> 00:04:20,839 Speaker 3: averaging two point eight percent next year, almost two to 90 00:04:20,880 --> 00:04:23,839 Speaker 3: two and a half percent in twenty twenty five, and 91 00:04:23,839 --> 00:04:26,960 Speaker 3: the Fed's going to have to move rates slower, allow 92 00:04:27,040 --> 00:04:29,599 Speaker 3: for more restrictive monetary policy over time in order to 93 00:04:29,640 --> 00:04:30,400 Speaker 3: ensure that that's sticks. 94 00:04:30,480 --> 00:04:32,920 Speaker 2: We're tight in time, But the questions too important. Can 95 00:04:32,960 --> 00:04:35,160 Speaker 2: price give way? Is yield moose higher? If I look 96 00:04:35,200 --> 00:04:38,039 Speaker 2: at the Bloomberg Total Return Index, I got a Pennant formation. 97 00:04:38,200 --> 00:04:41,719 Speaker 2: I'm really on support right now? Can price break through 98 00:04:41,760 --> 00:04:43,440 Speaker 2: that price down yield up? 99 00:04:43,760 --> 00:04:45,080 Speaker 3: What we think you need to see is that you 100 00:04:45,120 --> 00:04:49,160 Speaker 3: need to see some type of economic driver for that. 101 00:04:49,520 --> 00:04:51,800 Speaker 3: We know that supply demand in the treasure market is 102 00:04:51,960 --> 00:04:54,880 Speaker 3: really quite daunting right now. You had a surprise from 103 00:04:54,920 --> 00:04:57,840 Speaker 3: the US Treasury on supply last week. The number one 104 00:04:57,880 --> 00:04:59,480 Speaker 3: question that we get right now is who's going to 105 00:04:59,520 --> 00:05:01,600 Speaker 3: buy the b and so what you really need to 106 00:05:01,600 --> 00:05:03,599 Speaker 3: see is that you need to see the economy provide 107 00:05:03,680 --> 00:05:07,400 Speaker 3: cover for investors to justify that long duration bias that 108 00:05:07,440 --> 00:05:10,599 Speaker 3: we've been recommending that they appear to be holding, especially 109 00:05:10,600 --> 00:05:14,599 Speaker 3: on the real money side, and thus far you haven't 110 00:05:14,600 --> 00:05:18,240 Speaker 3: really had it yet. CPI tomorrow should hopefully move us 111 00:05:18,320 --> 00:05:20,960 Speaker 3: in that direction, but you really need to see signs 112 00:05:21,000 --> 00:05:24,000 Speaker 3: of a broader economic moderation, and right now the growth 113 00:05:24,040 --> 00:05:26,440 Speaker 3: data is not providing that because the economy continues to 114 00:05:26,440 --> 00:05:27,000 Speaker 3: re accelerate. 115 00:05:27,120 --> 00:05:30,000 Speaker 5: CPI tomorrow, morning, Mark, this was good as alwise, Mark 116 00:05:30,000 --> 00:05:42,120 Speaker 5: about it. Thank you, sir, of Thanks for America right now. 117 00:05:42,160 --> 00:05:46,560 Speaker 2: If Kathleen bus Johnson joins US chief economist at Nationwide Mutual, 118 00:05:46,640 --> 00:05:49,280 Speaker 2: katy Am, I right that the public here doesn't really 119 00:05:49,360 --> 00:05:52,599 Speaker 2: care about all this microdata analysis. They're looking at the 120 00:05:52,640 --> 00:05:55,599 Speaker 2: one year, the two year, the three year pandemic inflation 121 00:05:56,240 --> 00:05:57,839 Speaker 2: and it's killing them. 122 00:05:58,360 --> 00:06:00,320 Speaker 6: Well, good, good morning. Time'm happy to be with you 123 00:06:00,480 --> 00:06:04,640 Speaker 6: Lisa and Mike this morning. I think that weighs on 124 00:06:04,680 --> 00:06:07,240 Speaker 6: the Fed Reserve, not just ways on consumers, but it 125 00:06:07,320 --> 00:06:10,440 Speaker 6: is something in the back of all the Fed officials, 126 00:06:11,120 --> 00:06:13,360 Speaker 6: you know mind when they think about inflation. Yes, they're 127 00:06:13,400 --> 00:06:15,560 Speaker 6: looking at the most recent print and they're doing the 128 00:06:15,600 --> 00:06:19,600 Speaker 6: three month annualized, six month annualize, but they know that 129 00:06:19,640 --> 00:06:24,200 Speaker 6: this inflation is really attacks on consumers, especially lower income 130 00:06:24,480 --> 00:06:27,960 Speaker 6: and middle income households. So you know, Chairman Pale wants 131 00:06:28,000 --> 00:06:30,160 Speaker 6: to make sure that you know, when he looks back 132 00:06:30,240 --> 00:06:34,280 Speaker 6: and his legacy is assessed, he's not seen as leaving 133 00:06:34,360 --> 00:06:37,080 Speaker 6: with high inflation. He missed right, The Fed thought it 134 00:06:37,080 --> 00:06:40,520 Speaker 6: would be transitory. You don't really want to leave and 135 00:06:40,600 --> 00:06:43,880 Speaker 6: move on and still have high inflation, you know, as 136 00:06:43,920 --> 00:06:45,279 Speaker 6: you ended your tenure. 137 00:06:45,000 --> 00:06:47,440 Speaker 4: There, Kathy, are you in the camp who believes that 138 00:06:47,480 --> 00:06:49,960 Speaker 4: the CPI report will be really important in order to 139 00:06:50,000 --> 00:06:53,280 Speaker 4: determine whether the Fed hikes or stays put, or are 140 00:06:53,279 --> 00:06:55,560 Speaker 4: you in the camp that probably it will not give 141 00:06:55,640 --> 00:06:57,479 Speaker 4: us a whole lot of information. It might even be 142 00:06:57,520 --> 00:07:00,840 Speaker 4: a head fake for reinflation that we see later this year. 143 00:07:02,320 --> 00:07:05,840 Speaker 6: Yeah, so timing is always difficult. I think for now 144 00:07:05,880 --> 00:07:09,680 Speaker 6: we are in a disinflationary trend, and I do think 145 00:07:10,480 --> 00:07:14,640 Speaker 6: tomorrow's report and the subsequent report after that will be 146 00:07:14,680 --> 00:07:18,480 Speaker 6: important as the Fed convenience in September to decide whether 147 00:07:18,640 --> 00:07:21,640 Speaker 6: you know, to keep you know, raise rates again or 148 00:07:21,680 --> 00:07:25,760 Speaker 6: to be on hold. But you're right when you look out. 149 00:07:26,280 --> 00:07:28,240 Speaker 6: The problem is there's quite a long lag. So we 150 00:07:28,320 --> 00:07:33,720 Speaker 6: look at home prices. They lead the rental inflation by 151 00:07:33,760 --> 00:07:37,160 Speaker 6: about a year and a half in our modeling. So yes, 152 00:07:37,200 --> 00:07:39,360 Speaker 6: eventually could start to turn back up, but it's a 153 00:07:39,400 --> 00:07:43,280 Speaker 6: long time before that. But yeah, we are concerned about that. 154 00:07:44,000 --> 00:07:45,840 Speaker 6: You know, what I'm also concerned about is the fact 155 00:07:45,840 --> 00:07:49,120 Speaker 6: you were talking about this earlier with GDP growth. We 156 00:07:49,200 --> 00:07:52,680 Speaker 6: seem to be accelerating, right we two percent Q one 157 00:07:53,080 --> 00:07:55,480 Speaker 6: to four Q two and now you know at least 158 00:07:55,520 --> 00:07:57,480 Speaker 6: three percent. We're not quite at the four percent they 159 00:07:57,480 --> 00:08:00,080 Speaker 6: Atlanta Fed, as Mike rightly said, that's kind of a 160 00:08:00,080 --> 00:08:05,400 Speaker 6: snapshot of current data. But the economy accelerating or not 161 00:08:05,480 --> 00:08:08,160 Speaker 6: certainly not soling below potential what the Fed wants. I 162 00:08:08,160 --> 00:08:11,320 Speaker 6: think it's tough for to bring down inflation from an 163 00:08:11,360 --> 00:08:12,360 Speaker 6: economic perspective. 164 00:08:12,800 --> 00:08:15,880 Speaker 4: We were talking about wage inflation with respective particularly to 165 00:08:15,920 --> 00:08:19,600 Speaker 4: the union organization and what we saw with ups and 166 00:08:19,640 --> 00:08:21,520 Speaker 4: some of the wages. John wants to get one hundred 167 00:08:21,520 --> 00:08:24,200 Speaker 4: and seventy thousand dollars job driving a truck, as he 168 00:08:24,240 --> 00:08:29,080 Speaker 4: informed us this morning, does that factor into your estimates 169 00:08:29,240 --> 00:08:32,120 Speaker 4: of wage inflation of the dynamic of how much you 170 00:08:32,120 --> 00:08:35,960 Speaker 4: could get an acceleration in the economy as wages continue 171 00:08:36,000 --> 00:08:39,320 Speaker 4: to increase. Is that something that you're looking more closely 172 00:08:39,400 --> 00:08:42,959 Speaker 4: at as you do hear more of these organized labor discussions. 173 00:08:44,440 --> 00:08:48,640 Speaker 6: Yeah, I'm concerned, you know, I'm concerned that not that 174 00:08:49,200 --> 00:08:54,280 Speaker 6: wage growth is the strong wage growth is causing inflation, 175 00:08:54,400 --> 00:08:58,080 Speaker 6: but that it's a barrier to lower inflation. Certainly, it's 176 00:08:58,120 --> 00:09:01,719 Speaker 6: great for workers to get their share of the income PI, 177 00:09:02,640 --> 00:09:04,959 Speaker 6: but it comes at a time where we had these 178 00:09:05,000 --> 00:09:09,960 Speaker 6: inflation pressures, and again it's just a barrier to lowering it. 179 00:09:10,000 --> 00:09:12,240 Speaker 6: So I think it makes it more difficult, keeps the 180 00:09:12,320 --> 00:09:16,240 Speaker 6: Fed more in a hawkish tone or mood, and may 181 00:09:16,280 --> 00:09:17,880 Speaker 6: even lead them to raise rates further. 182 00:09:18,400 --> 00:09:20,400 Speaker 1: Kathy went from rent and housing. 183 00:09:20,440 --> 00:09:22,120 Speaker 2: That's what we talked to, particularly in New York, were 184 00:09:22,120 --> 00:09:24,760 Speaker 2: really focused on at twenty four to seven. What's food 185 00:09:24,800 --> 00:09:27,839 Speaker 2: inflation doing, what's auto inflation doing? 186 00:09:29,360 --> 00:09:33,360 Speaker 6: Yeah, So food and inflation has come down quite nicely 187 00:09:34,040 --> 00:09:37,720 Speaker 6: since the peak, especially right after the Ukraine the outbreak 188 00:09:37,720 --> 00:09:41,960 Speaker 6: of the Ukraine Russia War, and that's encouraging. Now there's 189 00:09:42,000 --> 00:09:46,520 Speaker 6: still concerns, right if there's some kind of blockade and 190 00:09:46,679 --> 00:09:52,080 Speaker 6: what happens with wet prices and just in general there's 191 00:09:52,120 --> 00:09:55,679 Speaker 6: still I think a fragility and uncertainty about you know, 192 00:09:55,760 --> 00:09:59,000 Speaker 6: if there could be disruptions. But in general food inflation 193 00:09:59,040 --> 00:10:03,320 Speaker 6: we should be key, as Mike said earlier, inflation slowing, 194 00:10:03,360 --> 00:10:06,280 Speaker 6: but we're not seeing outright declines. Now the auto sector 195 00:10:06,360 --> 00:10:10,640 Speaker 6: is different. We are seeing used car prices outright decline, 196 00:10:10,640 --> 00:10:16,480 Speaker 6: and that's welcome news for consumers and also for inflation measures. 197 00:10:16,559 --> 00:10:20,000 Speaker 6: But you know, how far that goes is key. You know, 198 00:10:20,040 --> 00:10:23,120 Speaker 6: we may see some outright declines, but we're still seeing 199 00:10:23,120 --> 00:10:26,199 Speaker 6: a supply demand imbalance in the auto sector. Meeting auto 200 00:10:26,200 --> 00:10:29,959 Speaker 6: companies when they do produce and supply comes online, we're 201 00:10:30,000 --> 00:10:34,480 Speaker 6: seeing demand exactly match that. So I think there's still 202 00:10:34,600 --> 00:10:38,480 Speaker 6: upward pressure. Again, resistance in the auto sector, especially for 203 00:10:38,559 --> 00:10:39,559 Speaker 6: new autos. 204 00:10:39,640 --> 00:10:42,520 Speaker 2: Remind us as we end this Kathleen mus Johnsick. The 205 00:10:42,640 --> 00:10:46,440 Speaker 2: inflation series that matters to Chairman Powell, which is it? 206 00:10:48,280 --> 00:10:50,760 Speaker 6: So it is core inflation, and I would say it's 207 00:10:50,800 --> 00:10:55,440 Speaker 6: super core inflation. So that's core inflation less the rent 208 00:10:56,559 --> 00:10:59,640 Speaker 6: and the reason being that rental inflation even when we 209 00:10:59,679 --> 00:11:01,960 Speaker 6: model that should come down very short. We think it 210 00:11:02,000 --> 00:11:04,400 Speaker 6: goes from eight percent at the peak to about five 211 00:11:04,440 --> 00:11:06,840 Speaker 6: percent by year end, but that is bigd then they 212 00:11:06,880 --> 00:11:10,679 Speaker 6: want to see what's happening the service prices elsewhere, you know, 213 00:11:10,800 --> 00:11:13,400 Speaker 6: outside of rental Kales, great. 214 00:11:13,160 --> 00:11:15,080 Speaker 1: Brief, Kathy Beson Thick, thank you so much. 215 00:11:19,280 --> 00:11:22,160 Speaker 5: Victoria Fernandez, is whether it's around the table, Chief Market Strategistic, 216 00:11:22,160 --> 00:11:25,040 Speaker 5: Crossmark Global Investments, Victoria, good morning, Good morning. Not going 217 00:11:25,040 --> 00:11:26,920 Speaker 5: to ask you rupert in this morning. Let's talk about 218 00:11:26,920 --> 00:11:28,800 Speaker 5: your price target on the S and P five hundred. 219 00:11:29,080 --> 00:11:30,640 Speaker 5: It's amazing for me that we've seen this day to 220 00:11:30,679 --> 00:11:33,120 Speaker 5: come out of China and typically years ago what we 221 00:11:33,120 --> 00:11:35,080 Speaker 5: would have seen on the morning like this morning through 222 00:11:35,120 --> 00:11:37,640 Speaker 5: this week, it's just an aggressive running in the bond market, 223 00:11:37,760 --> 00:11:41,040 Speaker 5: yields much lower. We'd be talking about China exporting deflation 224 00:11:41,480 --> 00:11:44,000 Speaker 5: to the rest of the world. What's changed, Well. 225 00:11:43,880 --> 00:11:45,240 Speaker 7: I think we have to look under the hood a 226 00:11:45,280 --> 00:11:47,800 Speaker 7: little bit on this China data. Yes, the headline numbers 227 00:11:47,840 --> 00:11:51,320 Speaker 7: are down and we're seeing deflation, there are disinflation, but 228 00:11:51,400 --> 00:11:54,480 Speaker 7: the core number is actually the highest it's been since January. 229 00:11:54,679 --> 00:11:56,840 Speaker 7: It's the food prices in China that brought down that 230 00:11:56,920 --> 00:12:00,000 Speaker 7: headline number. You had port prices up twenty six percent 231 00:12:00,320 --> 00:12:03,760 Speaker 7: in June of last year. They're flat this month, so 232 00:12:04,240 --> 00:12:06,520 Speaker 7: we have to look a little bit more and see 233 00:12:06,559 --> 00:12:09,840 Speaker 7: what is driving it. Typically you would see a response, 234 00:12:09,880 --> 00:12:12,720 Speaker 7: but I think because that underlying core inflation, which is 235 00:12:12,720 --> 00:12:15,640 Speaker 7: the concern here in the US, what is that core 236 00:12:15,640 --> 00:12:18,080 Speaker 7: inflation going to look like? Is that going to remain sticky, 237 00:12:18,360 --> 00:12:21,160 Speaker 7: especially with wages? That's going to be the concern. 238 00:12:21,280 --> 00:12:24,240 Speaker 2: I'm so happy you're here. Cross Mark has such a 239 00:12:24,480 --> 00:12:28,120 Speaker 2: pulse on what people emotionally are doing with their money 240 00:12:28,160 --> 00:12:32,920 Speaker 2: right now, institutional, high high networth and the whole thing. 241 00:12:33,440 --> 00:12:36,880 Speaker 2: What's the fear level out there meeting to meeting at 242 00:12:36,880 --> 00:12:37,520 Speaker 2: cross Mark. 243 00:12:37,600 --> 00:12:40,280 Speaker 7: Yeah, it's gone up definitely over the last quarter. Each 244 00:12:40,320 --> 00:12:42,840 Speaker 7: meeting that we have. People are concerned because we've been 245 00:12:42,920 --> 00:12:45,760 Speaker 7: telling our clients we think there's going to be some 246 00:12:45,840 --> 00:12:48,200 Speaker 7: choppiness here. We think we're going to see a pullback 247 00:12:48,240 --> 00:12:50,040 Speaker 7: in the fourth quarter of this year, so we need 248 00:12:50,080 --> 00:12:52,600 Speaker 7: to be prepared for that. So they're getting a little concerned. 249 00:12:52,800 --> 00:12:54,800 Speaker 7: What we've seen as of late, though, is more people 250 00:12:54,840 --> 00:12:57,680 Speaker 7: wanting to go into the bond market. They see these yields, 251 00:12:57,960 --> 00:13:01,040 Speaker 7: they think that we're probably at peak close to peak 252 00:13:01,360 --> 00:13:03,160 Speaker 7: in bond yields. You know, we were what floor in 253 00:13:03,200 --> 00:13:05,320 Speaker 7: a quarter in October of last year. We think that's 254 00:13:05,320 --> 00:13:07,920 Speaker 7: the peak for the cycle. So if those yields start 255 00:13:07,920 --> 00:13:09,880 Speaker 7: to come down, they want to add some duration in 256 00:13:09,920 --> 00:13:12,360 Speaker 7: their fixed income markets. So we're seeing that there. But 257 00:13:12,400 --> 00:13:14,920 Speaker 7: they like the fact that we're being cautious a little bit. 258 00:13:15,280 --> 00:13:18,560 Speaker 7: In the equity market. We're invested, we're in there, we're 259 00:13:18,559 --> 00:13:21,200 Speaker 7: getting them a good return, but we're being a little 260 00:13:21,200 --> 00:13:22,560 Speaker 7: bit cautious as to where we invest. 261 00:13:22,679 --> 00:13:25,240 Speaker 4: So I just want to go through the chronology of 262 00:13:25,240 --> 00:13:27,720 Speaker 4: this year. It was, I believe a soft landing than 263 00:13:27,760 --> 00:13:30,920 Speaker 4: a no landing. Then it was a hard landing in March. John, 264 00:13:30,960 --> 00:13:34,199 Speaker 4: you've been very good about documenting the different charctershifts. 265 00:13:34,320 --> 00:13:36,720 Speaker 6: You're tracking it. Now we're in soft landing. 266 00:13:37,320 --> 00:13:38,000 Speaker 5: Do you buy it? 267 00:13:38,200 --> 00:13:40,800 Speaker 4: Are you basically leaning in that there is this idea 268 00:13:41,160 --> 00:13:43,439 Speaker 4: just to you divine a soft landing that we could 269 00:13:43,480 --> 00:13:47,000 Speaker 4: get back down to near two percent inflation without unemployment 270 00:13:47,080 --> 00:13:48,439 Speaker 4: rates really rising all that much. 271 00:13:49,040 --> 00:13:51,120 Speaker 7: I don't think so. I don't think we're going to 272 00:13:51,160 --> 00:13:53,880 Speaker 7: be able to have whatever the magic is, the sparkle 273 00:13:53,960 --> 00:13:56,080 Speaker 7: dusk that's going to make that happen for us. I mean, 274 00:13:56,960 --> 00:13:59,400 Speaker 7: we assume that the Fed people were close to peak 275 00:13:59,400 --> 00:13:59,920 Speaker 7: FED funds. 276 00:14:00,320 --> 00:14:01,000 Speaker 6: Are we there? 277 00:14:01,200 --> 00:14:01,640 Speaker 2: I don't know. 278 00:14:01,679 --> 00:14:04,040 Speaker 7: I wouldn't be surprised to see the fedgo another twenty 279 00:14:04,080 --> 00:14:06,840 Speaker 7: five or fifty basis points. When you look at some 280 00:14:06,960 --> 00:14:09,520 Speaker 7: of the inflation numbers, you look at average hourly earnings 281 00:14:09,520 --> 00:14:12,640 Speaker 7: over the last three months, it's up about five percent 282 00:14:12,679 --> 00:14:14,520 Speaker 7: on an annual basis. If you look at just the 283 00:14:14,559 --> 00:14:18,520 Speaker 7: goods producing sector over the same timeframe, up seven percent. 284 00:14:18,720 --> 00:14:22,600 Speaker 7: We've got the UAW their contract ending in September. If 285 00:14:22,640 --> 00:14:24,560 Speaker 7: we could have wages go even higher than so, I 286 00:14:24,560 --> 00:14:28,320 Speaker 7: think there's some underlying pressure on inflation that's going to 287 00:14:28,360 --> 00:14:30,440 Speaker 7: continue to be there. And you have an economy that 288 00:14:30,600 --> 00:14:33,280 Speaker 7: is doing pretty well because the consumer is there, because 289 00:14:33,280 --> 00:14:36,560 Speaker 7: the labor market is strong. So at some point we're 290 00:14:36,560 --> 00:14:38,440 Speaker 7: going to have to pay the piper for everything that 291 00:14:38,480 --> 00:14:41,480 Speaker 7: we've seen up until now. I think we could start 292 00:14:41,480 --> 00:14:44,360 Speaker 7: to have a consolidation around a forty two hundred to 293 00:14:44,440 --> 00:14:47,440 Speaker 7: forty three hundred on the SMP take us back another 294 00:14:47,520 --> 00:14:50,800 Speaker 7: five percent to us, that's your opportunity to get into 295 00:14:50,840 --> 00:14:51,240 Speaker 7: the market. 296 00:14:51,320 --> 00:14:53,800 Speaker 4: Are you staying away from companies where there as strong 297 00:14:53,960 --> 00:14:58,560 Speaker 4: labor negotiations or a potential risk there for either shutdowns 298 00:14:58,760 --> 00:15:02,400 Speaker 4: or a significant incre in some of their compensation costs. 299 00:15:02,520 --> 00:15:04,960 Speaker 7: Yeah, I wouldn't say we're staying away. We're not pulling 300 00:15:05,000 --> 00:15:07,000 Speaker 7: out of those names completely, but we could be a 301 00:15:07,000 --> 00:15:09,520 Speaker 7: little underweight in those names. And if we start to 302 00:15:09,560 --> 00:15:13,600 Speaker 7: see more pressure ramp up, especially with the auto makers, 303 00:15:13,600 --> 00:15:15,720 Speaker 7: then yes, we could come out of those names to 304 00:15:15,800 --> 00:15:18,320 Speaker 7: avoid some you know, some choppiness. 305 00:15:18,440 --> 00:15:20,720 Speaker 2: Jeah, And I think this is insane. We are down 306 00:15:20,840 --> 00:15:24,080 Speaker 2: six percent standard and pores five hundred from the peak 307 00:15:24,240 --> 00:15:27,640 Speaker 2: of late twenty twenty one. We are down one point 308 00:15:27,720 --> 00:15:31,400 Speaker 2: five percent from the recent peak of days weeks months ago. 309 00:15:32,040 --> 00:15:36,520 Speaker 2: I think it's literally August financial media hysteria going on. 310 00:15:36,800 --> 00:15:38,640 Speaker 2: And I don't mean just TV and radio, I mean 311 00:15:38,680 --> 00:15:40,640 Speaker 2: print in the whole. We got nothing better to do, 312 00:15:40,720 --> 00:15:42,640 Speaker 2: so let's talk about SPX down five. 313 00:15:42,560 --> 00:15:43,200 Speaker 1: Days in a row or what. 314 00:15:43,320 --> 00:15:46,040 Speaker 5: Yeah, that's anyone suggesting this, Cinama, get somewhere, Dan, like. 315 00:15:46,080 --> 00:15:47,480 Speaker 1: I think the tone is out there a lot. 316 00:15:47,520 --> 00:15:50,240 Speaker 5: Oh you think you think this is ready next to the correction. 317 00:15:50,320 --> 00:15:52,200 Speaker 5: You think the comfort to the last week is that negative. 318 00:15:52,240 --> 00:15:52,960 Speaker 5: I haven't found that. 319 00:15:53,120 --> 00:15:55,280 Speaker 2: I don't think at Bloomberg. I think we're just reporting 320 00:15:55,280 --> 00:15:57,400 Speaker 2: the statistics. I mean, pretty group is always. 321 00:15:57,200 --> 00:15:59,840 Speaker 5: Very negative, but you're blaming the media organization. 322 00:16:00,240 --> 00:16:03,480 Speaker 2: No, I'm just saying there's a hysteriaut there among our 323 00:16:03,560 --> 00:16:06,560 Speaker 2: listeners and viewers over OMG, we're not going up two 324 00:16:06,640 --> 00:16:07,440 Speaker 2: percent a week. 325 00:16:07,760 --> 00:16:10,600 Speaker 7: You are seeing some capitulation along that line. 326 00:16:10,720 --> 00:16:13,800 Speaker 1: This you capitulated a negative one per four four. 327 00:16:13,640 --> 00:16:16,240 Speaker 7: Percent because people have been so positive and I don't 328 00:16:16,240 --> 00:16:17,560 Speaker 7: think anything has been. 329 00:16:17,480 --> 00:16:19,480 Speaker 1: Priced in the market off of October. 330 00:16:19,520 --> 00:16:20,400 Speaker 7: That's exactly right. 331 00:16:20,600 --> 00:16:23,560 Speaker 5: Let's compare multiplese now compared to the start of the year. 332 00:16:23,760 --> 00:16:25,240 Speaker 5: Just how much multiple growth has to been. 333 00:16:25,920 --> 00:16:29,440 Speaker 7: Well, the gains that we've seen in earnings are all 334 00:16:29,560 --> 00:16:32,360 Speaker 7: pe expansions, right, It's not the earnings itself that are 335 00:16:32,400 --> 00:16:34,720 Speaker 7: really driving it. And we're actually in what the third 336 00:16:34,800 --> 00:16:38,440 Speaker 7: month of an earnings recession going on here, So I 337 00:16:38,440 --> 00:16:40,440 Speaker 7: think we have to be very cautious. It's one of 338 00:16:40,440 --> 00:16:43,800 Speaker 7: the things you look at. Valuations are too high, especially 339 00:16:43,800 --> 00:16:46,160 Speaker 7: for the level of inflation that we're at, so we're 340 00:16:46,160 --> 00:16:48,880 Speaker 7: going to have to see something give, and I think 341 00:16:48,920 --> 00:16:49,760 Speaker 7: it's probably going. 342 00:16:49,760 --> 00:16:50,280 Speaker 2: To be pees. 343 00:16:50,360 --> 00:16:50,480 Speaker 8: Well. 344 00:16:50,480 --> 00:16:51,800 Speaker 5: The question we could to ask is where does the 345 00:16:51,880 --> 00:16:54,680 Speaker 5: endings acceleration come from. It's next year West, not coming 346 00:16:54,680 --> 00:16:55,600 Speaker 5: from He's driving that. 347 00:16:55,760 --> 00:16:58,960 Speaker 7: Yeah, I don't know we're not seeing it really and truly. 348 00:16:59,040 --> 00:17:01,200 Speaker 7: Is it going to be more hope? Is that what's 349 00:17:01,240 --> 00:17:03,880 Speaker 7: going to get us there? To me, that's pretty shaky 350 00:17:03,920 --> 00:17:05,399 Speaker 7: ground if that's what you're betting on. 351 00:17:05,640 --> 00:17:08,159 Speaker 4: So what's your top kind of shift heading into the 352 00:17:08,200 --> 00:17:09,360 Speaker 4: last couple of months of the year. 353 00:17:09,760 --> 00:17:12,320 Speaker 7: Well, we've always been cautious this year, and we've talked 354 00:17:12,320 --> 00:17:15,480 Speaker 7: about that story. But adding some cyclicality to your portfolio 355 00:17:15,560 --> 00:17:18,800 Speaker 7: along with some of your more value focused names, I 356 00:17:18,840 --> 00:17:21,399 Speaker 7: think is really smart to have that balanced approach, and 357 00:17:21,480 --> 00:17:23,600 Speaker 7: so I think you need to do that. Have some 358 00:17:23,640 --> 00:17:26,720 Speaker 7: cyclical names. Look at the finance names. Banks have taken 359 00:17:26,760 --> 00:17:28,520 Speaker 7: a hit obviously just because of the headlines over the 360 00:17:28,600 --> 00:17:32,000 Speaker 7: last few days, the downgrades coming out of Moody's and 361 00:17:32,040 --> 00:17:35,720 Speaker 7: then Italy as well, but financial services should do quite well. 362 00:17:35,760 --> 00:17:38,520 Speaker 7: A Visa, a MasterCard, maybe an amor prize names we 363 00:17:38,560 --> 00:17:41,640 Speaker 7: own just for full disclosure, but I think you can 364 00:17:41,760 --> 00:17:47,160 Speaker 7: find pockets. The correlation between stocks is very low right now. 365 00:17:47,240 --> 00:17:49,159 Speaker 7: That tells us it's a stock pickers market. 366 00:17:49,200 --> 00:17:51,119 Speaker 2: I don't care what I want to know. The reason 367 00:17:51,200 --> 00:17:52,959 Speaker 2: we had you up here, Thank you so much for 368 00:17:53,000 --> 00:17:57,160 Speaker 2: coming in. Can you explain Astro's rangers rivalry. I think 369 00:17:57,160 --> 00:18:00,280 Speaker 2: for north people like us. Yeah, it's like a it's 370 00:18:00,320 --> 00:18:02,680 Speaker 2: like literally a foreign country. Is it a big deal 371 00:18:02,760 --> 00:18:04,720 Speaker 2: Astro's Rangers baseball, it's. 372 00:18:04,520 --> 00:18:06,520 Speaker 7: A big deal, but I'd say it's not as big 373 00:18:06,560 --> 00:18:08,640 Speaker 7: a deal now as it used to be. But look 374 00:18:08,720 --> 00:18:12,880 Speaker 7: Houston Dallas, there's a rivalry on everything there. So even 375 00:18:12,920 --> 00:18:14,960 Speaker 7: though we're in the same state, we are world on 376 00:18:15,000 --> 00:18:16,320 Speaker 7: the road trips. 377 00:18:16,040 --> 00:18:19,600 Speaker 2: Labor Day weekends September fifth. Yeah, Astro's Rangers, and I 378 00:18:19,600 --> 00:18:20,600 Speaker 2: think it's in near Dallas. 379 00:18:20,600 --> 00:18:22,160 Speaker 5: Which is the team that chased Arlington. 380 00:18:22,800 --> 00:18:23,720 Speaker 1: Oh, listen to yours. 381 00:18:31,920 --> 00:18:34,200 Speaker 7: It runs the won the World Series twice. 382 00:18:34,280 --> 00:18:36,960 Speaker 5: Yeah, all right, that's the same that chiefs. Okay, Victoria, 383 00:18:37,040 --> 00:18:39,679 Speaker 5: thank you, it's good to see you. I need that Victoria. 384 00:18:39,720 --> 00:18:41,760 Speaker 5: If not is a cross smock club and investments. 385 00:18:51,880 --> 00:18:52,840 Speaker 1: This is too important. 386 00:18:52,840 --> 00:18:56,880 Speaker 2: It's a two hour conversation with Michael Nathan's senior Research Channel's. 387 00:18:56,560 --> 00:18:59,119 Speaker 1: Moffatt Nathanson, expert on Disney. 388 00:18:59,119 --> 00:19:02,159 Speaker 2: Michael, I'm going to go back a few years to 389 00:19:02,240 --> 00:19:04,199 Speaker 2: the summer of two thousand and three where you were 390 00:19:04,200 --> 00:19:07,000 Speaker 2: a young Buck analyst and you were forced to watch 391 00:19:07,040 --> 00:19:10,600 Speaker 2: Finding Nemo Pirates of the Caribbean bringing down the House 392 00:19:10,640 --> 00:19:14,520 Speaker 2: in Freaky Friday all back to back. Disney was riding 393 00:19:14,560 --> 00:19:15,040 Speaker 2: a high. 394 00:19:15,200 --> 00:19:15,800 Speaker 1: It was a. 395 00:19:15,760 --> 00:19:20,640 Speaker 2: Double digit layup, and it's been the mother of all disappointments. 396 00:19:20,960 --> 00:19:24,040 Speaker 2: What does Aiger do today and in the next ninety 397 00:19:24,119 --> 00:19:25,640 Speaker 2: days to write the ship. 398 00:19:27,000 --> 00:19:29,639 Speaker 9: Tom He has a long checklist of things he has 399 00:19:29,680 --> 00:19:30,840 Speaker 9: to fix, right. 400 00:19:30,920 --> 00:19:31,680 Speaker 8: He has to. 401 00:19:33,560 --> 00:19:38,360 Speaker 9: Your content, your content pipeline that you spoke of. It's broken. 402 00:19:38,640 --> 00:19:41,400 Speaker 9: It will not be ninety days and better. It has 403 00:19:41,480 --> 00:19:45,119 Speaker 9: to work on trying to figure out why they misfired 404 00:19:45,200 --> 00:19:49,880 Speaker 9: so much on the film side, maybe changing some leadership there. 405 00:19:50,240 --> 00:19:54,520 Speaker 9: He has to work on getting ESPN some new partners, 406 00:19:54,640 --> 00:19:57,879 Speaker 9: as you talked about, maybe finding a partner to invest 407 00:19:57,880 --> 00:20:01,080 Speaker 9: in ESPN and potentially getting that off his books. 408 00:20:01,840 --> 00:20:03,520 Speaker 8: He needs to then figure out what to do with 409 00:20:03,520 --> 00:20:04,320 Speaker 8: his cable network. 410 00:20:04,760 --> 00:20:07,960 Speaker 9: Maybe he needs to sell those as well. And he 411 00:20:08,000 --> 00:20:10,720 Speaker 9: has to work with Comcasts to buy in the Hulu 412 00:20:10,880 --> 00:20:14,399 Speaker 9: thirty three percent stake that is coming to him next year. 413 00:20:14,960 --> 00:20:17,760 Speaker 9: And he asked to worry about DeSantis in Florida. His 414 00:20:17,880 --> 00:20:20,960 Speaker 9: checklist is enormous, right, so he is very busy ninety 415 00:20:21,000 --> 00:20:22,960 Speaker 9: days ahead of him and probably in the next two 416 00:20:23,000 --> 00:20:25,159 Speaker 9: years to fix re has to text. 417 00:20:25,040 --> 00:20:27,120 Speaker 5: Might be easier to find the question the following way. 418 00:20:27,280 --> 00:20:28,120 Speaker 5: What isn't for sale? 419 00:20:28,200 --> 00:20:31,800 Speaker 8: Michael, Right, Well, it isn't for Selle John is the 420 00:20:31,840 --> 00:20:32,720 Speaker 8: parks right? 421 00:20:32,880 --> 00:20:36,200 Speaker 9: Like, I think what's happening here is that the Parks 422 00:20:36,440 --> 00:20:40,000 Speaker 9: are taking over leadership of this company, and as long 423 00:20:40,040 --> 00:20:44,120 Speaker 9: as the US economy does not weaken materially, the park 424 00:20:44,200 --> 00:20:47,880 Speaker 9: story should hold pretty well. And our thinking is that 425 00:20:48,040 --> 00:20:51,399 Speaker 9: this company's in transition from what Tom described as an 426 00:20:51,440 --> 00:20:55,439 Speaker 9: ip led company for Parkside company right with streaming attached 427 00:20:55,480 --> 00:20:57,920 Speaker 9: to it. So I think we're in the beginning of 428 00:20:57,960 --> 00:21:01,560 Speaker 9: a real transition of Disney's app set to a more 429 00:21:01,880 --> 00:21:02,639 Speaker 9: targeted company. 430 00:21:02,680 --> 00:21:05,120 Speaker 5: Michael asked how long is this going to take? Because 431 00:21:05,119 --> 00:21:07,880 Speaker 5: as a leadership question embedded in that, how long will 432 00:21:07,880 --> 00:21:08,359 Speaker 5: this take? 433 00:21:10,080 --> 00:21:13,000 Speaker 9: It take the next two years? And that's why he's 434 00:21:13,040 --> 00:21:15,840 Speaker 9: been re extended, right, it's they need to make some 435 00:21:15,960 --> 00:21:17,200 Speaker 9: very tough decisions. 436 00:21:16,760 --> 00:21:18,359 Speaker 8: Which he's hinted about. 437 00:21:19,680 --> 00:21:22,399 Speaker 9: Our point is like, look, we've been negative about a 438 00:21:22,400 --> 00:21:26,000 Speaker 9: linear networks and we started talking to you know, the 439 00:21:26,040 --> 00:21:27,280 Speaker 9: weakness is apparent. 440 00:21:27,359 --> 00:21:30,600 Speaker 8: It's here. He wants to get those businesses office books. 441 00:21:30,960 --> 00:21:31,960 Speaker 8: It's not gonna be easy, it's not. 442 00:21:31,920 --> 00:21:34,720 Speaker 9: Gonna be very ACCREEDO to do that, but he needs 443 00:21:34,960 --> 00:21:37,160 Speaker 9: to get those office books. He needs to change leadership, 444 00:21:37,440 --> 00:21:41,520 Speaker 9: you know, in the content side. To fix streaming. It's 445 00:21:41,560 --> 00:21:42,200 Speaker 9: going to take time. 446 00:21:42,240 --> 00:21:42,800 Speaker 8: It really is. 447 00:21:43,240 --> 00:21:46,280 Speaker 4: When you talk about some of the units for sale. 448 00:21:46,480 --> 00:21:48,720 Speaker 4: I wonder how the deal that was announced yesterday with 449 00:21:48,960 --> 00:21:52,359 Speaker 4: ESPN and Pen Entertainment factors into that this idea that 450 00:21:52,560 --> 00:21:55,240 Speaker 4: ESPN is going to be going into sports betting, which 451 00:21:55,440 --> 00:21:59,280 Speaker 4: isn't completely congruent with the sort of family friendly image 452 00:21:59,320 --> 00:22:01,359 Speaker 4: that the rest of the parks kind of cater to. 453 00:22:01,840 --> 00:22:03,800 Speaker 4: Do you think that this is sort of a predecessor 454 00:22:03,840 --> 00:22:04,520 Speaker 4: to a spinoff. 455 00:22:05,920 --> 00:22:08,480 Speaker 9: I think it is. I think they decided the past 456 00:22:08,480 --> 00:22:12,800 Speaker 9: two years that the US perception on gambling had changed 457 00:22:12,840 --> 00:22:16,960 Speaker 9: and their perception had changed. Visited a deal where ESPN 458 00:22:17,080 --> 00:22:20,080 Speaker 9: gets a billion and a half dollars and some some warrants. 459 00:22:20,760 --> 00:22:23,000 Speaker 9: But I do think it's a processor to finding new 460 00:22:23,040 --> 00:22:27,160 Speaker 9: partnerships and trying to reposition ESPN off of their books 461 00:22:28,160 --> 00:22:32,840 Speaker 9: in partnership with other companies. Right, so the ESPN's troubles 462 00:22:33,720 --> 00:22:36,560 Speaker 9: to me are not easily fixed. Perhaps you can find 463 00:22:36,600 --> 00:22:39,800 Speaker 9: some ancillary businesses like gambling, maybe e commerce. 464 00:22:41,000 --> 00:22:42,720 Speaker 8: You have to build a new streaming business for them. 465 00:22:42,800 --> 00:22:46,440 Speaker 9: So I think you'll see ESPN, you know, spinning off 466 00:22:46,480 --> 00:22:49,840 Speaker 9: of being spun off of Disney, maybe even taken in 467 00:22:49,920 --> 00:22:50,960 Speaker 9: private for the next couple of years. 468 00:22:51,000 --> 00:22:53,439 Speaker 8: So that could be done off stage somewhere. 469 00:22:53,520 --> 00:22:55,440 Speaker 4: When it comes to fixing the content issues on the 470 00:22:55,480 --> 00:22:58,080 Speaker 4: streaming side, how much of the focus is going to 471 00:22:58,119 --> 00:23:03,080 Speaker 4: be on art of intelligence creating content that is less 472 00:23:03,119 --> 00:23:07,200 Speaker 4: dependent on some of the talent, the writers, the actors, 473 00:23:07,240 --> 00:23:10,560 Speaker 4: et cetera, versus just streamlining everything and having a more 474 00:23:10,600 --> 00:23:12,520 Speaker 4: targeted package and then selling off the rest. 475 00:23:13,920 --> 00:23:16,439 Speaker 9: Lisa, That's that's a really good question. I think in 476 00:23:16,480 --> 00:23:20,240 Speaker 9: the near term it's about streamlining. I think they would say, 477 00:23:20,240 --> 00:23:22,640 Speaker 9: and he said this, that they've just made too much content. 478 00:23:23,119 --> 00:23:27,840 Speaker 9: They've been stretched too thin at Marvel, Lucasfilm Pixar has 479 00:23:28,240 --> 00:23:30,240 Speaker 9: the own issues. But I think in the near term 480 00:23:30,240 --> 00:23:34,360 Speaker 9: it's trying to figure out the optimal set of content choices, 481 00:23:35,080 --> 00:23:37,640 Speaker 9: trying to look at the leadership of some of these verticals. 482 00:23:38,160 --> 00:23:41,320 Speaker 9: Longer term, the AI question is hanging over this entire industry. 483 00:23:42,400 --> 00:23:45,280 Speaker 9: It's a potential risk, right if also in the Barrett's 484 00:23:45,280 --> 00:23:47,719 Speaker 9: and Entry have dropped so much that you know, your 485 00:23:47,800 --> 00:23:49,359 Speaker 9: kids could start making Disney Movies. 486 00:23:49,880 --> 00:23:52,320 Speaker 2: Michael, I got eight ways to go here, eight ways 487 00:23:52,320 --> 00:23:54,240 Speaker 2: to go here. We could do a two hour conversation 488 00:23:54,359 --> 00:23:56,600 Speaker 2: on this. We're thrilled here with us the botto. 489 00:23:56,600 --> 00:23:57,600 Speaker 1: I'm going to go financial. 490 00:23:58,080 --> 00:24:01,800 Speaker 2: I got sixty percent plus dot pharamount, sixty plus debt 491 00:24:01,840 --> 00:24:05,880 Speaker 2: at Warner Brothers Discovery disaster. I've got thirty plus debt 492 00:24:05,880 --> 00:24:11,360 Speaker 2: at Fox. Whatever in Disney's debt lessoncumbered twenty one percent 493 00:24:11,520 --> 00:24:16,640 Speaker 2: on the balance sheet is debt Eiger salvation to merge 494 00:24:16,840 --> 00:24:17,520 Speaker 2: for scale. 495 00:24:19,359 --> 00:24:20,119 Speaker 8: It's a good question. 496 00:24:21,880 --> 00:24:26,639 Speaker 9: I think. I think his salvation is getting cached cash. 497 00:24:26,800 --> 00:24:29,080 Speaker 9: So you know it's Tom he theycsually generate ten billion 498 00:24:29,119 --> 00:24:33,360 Speaker 9: of cash flow a few years ago. Now they generate 499 00:24:33,440 --> 00:24:38,360 Speaker 9: about four billion of cash flow. I think his opportunity 500 00:24:38,400 --> 00:24:41,479 Speaker 9: is really to focus you on the park business and 501 00:24:41,520 --> 00:24:44,680 Speaker 9: fix and streaming. You know givesn't to your point, because 502 00:24:44,720 --> 00:24:47,440 Speaker 9: he owns parks, his balance sheet is not the same 503 00:24:47,520 --> 00:24:50,400 Speaker 9: risk of the other companies you mentioned right that those 504 00:24:50,440 --> 00:24:52,240 Speaker 9: balance sheets are going to be the story the next 505 00:24:52,240 --> 00:24:54,480 Speaker 9: couple of years. I think Disney can work the way 506 00:24:54,480 --> 00:24:57,600 Speaker 9: out of it by focusing on parks and fixing profitability 507 00:24:57,600 --> 00:24:58,120 Speaker 9: on streaming. 508 00:24:58,359 --> 00:24:59,400 Speaker 8: So to your point. 509 00:25:00,080 --> 00:25:02,679 Speaker 9: He has flexibility here, and I do think the story 510 00:25:02,720 --> 00:25:05,480 Speaker 9: is if you look at the value of a resort 511 00:25:05,600 --> 00:25:09,320 Speaker 9: assets where they moved to, Disney stock is cheap. If 512 00:25:09,359 --> 00:25:11,560 Speaker 9: you think about it as a different type of company 513 00:25:12,000 --> 00:25:14,280 Speaker 9: led by resorts and hotels and parks. 514 00:25:14,600 --> 00:25:16,359 Speaker 8: That's what I think Bob's looking at the next a 515 00:25:16,359 --> 00:25:16,800 Speaker 8: couple of years. 516 00:25:16,880 --> 00:25:18,240 Speaker 5: Mike, I've got a squeeze to send. You're in the 517 00:25:18,240 --> 00:25:20,920 Speaker 5: perfect seat to ask this question. It's het in November 518 00:25:20,960 --> 00:25:25,400 Speaker 5: twenty twenty two. Everyone hates Facebook Meta and Mark Zuckerberg. Yep, 519 00:25:25,880 --> 00:25:28,560 Speaker 5: it's now in the summer of twenty twenty three. Everyone 520 00:25:28,600 --> 00:25:31,920 Speaker 5: loves Facebook Meta and still hates Mark Zuckerberg. Is there 521 00:25:31,960 --> 00:25:34,520 Speaker 5: something that the world Disney Company can announce in the 522 00:25:34,600 --> 00:25:37,120 Speaker 5: same way that Zuckerberg did a early November to talk 523 00:25:37,119 --> 00:25:39,399 Speaker 5: about the Year of Efficiency, to turn this name around 524 00:25:39,400 --> 00:25:39,919 Speaker 5: more quickly? 525 00:25:40,800 --> 00:25:41,080 Speaker 8: Yes? 526 00:25:41,160 --> 00:25:43,200 Speaker 9: And John, you remember I was on air with the 527 00:25:43,240 --> 00:25:45,920 Speaker 9: guys defending Facebook and Metal the whole time. 528 00:25:46,080 --> 00:25:48,360 Speaker 5: Right, Well, you've got thirty seconds to tell me now. 529 00:25:48,920 --> 00:25:52,399 Speaker 9: Yes, because the reality is their streaming businesses lose too 530 00:25:52,480 --> 00:25:53,159 Speaker 9: much money. 531 00:25:53,520 --> 00:25:56,640 Speaker 8: Netflix is worth two hundred billion dollars. Disney steaming businesses 532 00:25:56,680 --> 00:25:58,720 Speaker 8: are worth ten billion. Dollars right. 533 00:25:58,920 --> 00:26:02,000 Speaker 9: The focus is a fixing profitability of streaming. You know, 534 00:26:02,080 --> 00:26:06,119 Speaker 9: let parks continue, but fixture and profitability, get those leading numbers. 535 00:26:06,119 --> 00:26:07,960 Speaker 9: Talk your books and people look at this and say, wow, 536 00:26:08,000 --> 00:26:10,080 Speaker 9: this stock is really cheap. So we've been buying Disney. 537 00:26:10,280 --> 00:26:11,639 Speaker 9: I think next twelve months we come back to a 538 00:26:11,680 --> 00:26:13,720 Speaker 9: litmus stocks hire from here because of what. 539 00:26:13,720 --> 00:26:15,840 Speaker 5: You said, Michael, Thank you, sir. That's what you said, 540 00:26:15,880 --> 00:26:18,280 Speaker 5: not what I said. Michael, Thank you. 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