WEBVTT - Intel Shares Fall on Report Nvidia Halts Production Test 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.080 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:24.080 or watch us live on YouTube as. 0:00:24.000 --> 0:00:26.160 Christina Quino sitting in for Scarlet for I'm Paul Sweeney 0:00:26.160 --> 0:00:28.680 live here on our Bloomberg Interactive Brokers Studio. I always 0:00:28.680 --> 0:00:31.640 love chatting with Kim Farrest, founder and Chief Bestment Officer, 0:00:31.680 --> 0:00:32.320 Bok Partner. 0:00:32.360 --> 0:00:32.879 We love talking to. 0:00:32.920 --> 0:00:37.199 Kim about markets, about technology, AI and maybe I want 0:00:37.200 --> 0:00:39.440 to run this one by Intel. The news on Intel 0:00:39.840 --> 0:00:43.600 shares fell after report said that Nvidia halted a test 0:00:43.640 --> 0:00:47.600 to use Intel's production process to make advanced chips. Kim, 0:00:47.880 --> 0:00:50.239 you mentioned in the notes that your firm is an 0:00:50.280 --> 0:00:52.479 investor in Intel. How do you view this news? Is 0:00:52.520 --> 0:00:54.880 a big news game changer? Don't worry about it kind 0:00:54.880 --> 0:00:55.080 of thing? 0:00:56.200 --> 0:00:56.400 Oh? 0:00:56.480 --> 0:00:59.320 I think you know, as a portfolio manager managing other 0:00:59.360 --> 0:01:02.960 people's mine, you always worry about everything, But on this 0:01:03.240 --> 0:01:06.479 I'm not terribly worried about it. It's a new process 0:01:06.640 --> 0:01:11.760 for Intel. They've been trying hard to compete against Taiwan 0:01:11.880 --> 0:01:16.240 Semi and I think this is a setback for sure, 0:01:16.760 --> 0:01:20.000 but maybe in video really wasn't going to ever use 0:01:20.680 --> 0:01:22.400 Intel's processes. 0:01:22.760 --> 0:01:24.080 We have to think about that. 0:01:24.800 --> 0:01:29.280 And it's good that they tried it against the absolute 0:01:29.319 --> 0:01:32.000 pinnacle of chips at this point, or at least the 0:01:32.040 --> 0:01:35.480 pinnacle of chip makers at this point. So I think 0:01:35.560 --> 0:01:41.880 that the CEO of Intel is someone who actually learns 0:01:42.160 --> 0:01:45.320 and changes, and I believe that this is probably a 0:01:45.319 --> 0:01:49.840 good thing ultimately, as they probably gain Intel probably gained 0:01:49.840 --> 0:01:52.520 a lot of knowledge about what's right and what's wrong 0:01:52.560 --> 0:01:53.520 with the process. 0:01:53.960 --> 0:01:57.400 Yeah, caam, well, very interesting. That seems like really the 0:01:57.600 --> 0:02:01.520 AI trade at this point a lot of discussions around chips, right, 0:02:01.600 --> 0:02:04.240 and the diversification of where these companies are going to 0:02:04.280 --> 0:02:07.200 be getting their chips in Vida no longer perhaps the 0:02:07.240 --> 0:02:10.000 only player in the game. But yeah, what does that 0:02:10.120 --> 0:02:13.040 tell you about where we are in the AI trade cycle? 0:02:13.800 --> 0:02:16.000 Is it a good thing that we are starting to 0:02:16.040 --> 0:02:18.360 see more producers stepping up and saying like, hey, we 0:02:18.360 --> 0:02:20.639 can make these chips too, if you want to take 0:02:20.639 --> 0:02:21.520 a look at our business. 0:02:22.760 --> 0:02:23.160 I do. 0:02:23.280 --> 0:02:26.720 Actually, I think I'm a big fan of capitalism, which 0:02:26.720 --> 0:02:30.280 should be no one not a surprise in anyway. And 0:02:30.400 --> 0:02:33.640 what the very best thing that capitalism does is create 0:02:33.760 --> 0:02:38.160 a competitive environment. And even last year at this time, 0:02:38.320 --> 0:02:40.840 well maybe especially last year at this time, because twenty 0:02:40.880 --> 0:02:44.959 twenty four was the year of Nvidia, I think everybody 0:02:44.960 --> 0:02:47.320 thought it was game over. There was no way for 0:02:47.400 --> 0:02:49.840 any company to be able to compete with them. And 0:02:49.960 --> 0:02:52.280 yet here we are looking at a whole slew of 0:02:52.360 --> 0:02:58.120 not only new competition for the training kind of chips, 0:02:58.360 --> 0:03:01.760 but there's we're broadening out. We're understanding that AI may 0:03:01.880 --> 0:03:05.639 not just be asking chat GPT things, but there's other 0:03:05.840 --> 0:03:08.240 uses for it. And guess what we're going to need 0:03:08.280 --> 0:03:11.960 other chips. So vendors are lining up to try to 0:03:12.000 --> 0:03:15.680 figure out how to best serve this market. Again an 0:03:15.760 --> 0:03:17.400 advertisement for capitalism. 0:03:18.080 --> 0:03:22.280 So Kim has the discussion around AI, to what extent 0:03:22.320 --> 0:03:24.960 has it evolved? If it has it all, it feels 0:03:25.000 --> 0:03:28.120 like now we've got to ask some different questions, like 0:03:28.160 --> 0:03:31.560 maybe the return on some investment, like maybe what's it 0:03:31.720 --> 0:03:36.640 really going to do for productivity? Asking some harder questions, 0:03:37.200 --> 0:03:38.360 how do you think where do you think we are 0:03:38.360 --> 0:03:38.920 in that evolution? 0:03:39.920 --> 0:03:42.400 I think we're just beginning to scratch our head and 0:03:42.440 --> 0:03:46.480 it's disappointing to me. I came from software and the 0:03:46.520 --> 0:03:49.200 reason why I sit before you is because I worked 0:03:49.200 --> 0:03:52.600 at AI companies that weren't asking the question how much 0:03:52.680 --> 0:03:56.360 does my solution cost? And what problem am I solving 0:03:56.640 --> 0:03:58.760 and what's the cost of that problem? 0:03:58.960 --> 0:03:59.240 Right? 0:03:59.680 --> 0:04:03.560 So, how technology has to work. Sorry to tell people 0:04:03.920 --> 0:04:08.480 that it has to solve a problem less expensively than 0:04:08.520 --> 0:04:12.120 the problem itself. That's just it. And I don't think 0:04:12.160 --> 0:04:16.839 we're asking that the price of training these large language 0:04:16.839 --> 0:04:21.320 models is incredible, And I'm not sure that investors are 0:04:21.360 --> 0:04:24.080 really asking the questions that need to be asked, like 0:04:24.600 --> 0:04:26.960 who's going to pay for this? And what's the return 0:04:27.080 --> 0:04:29.560 and all of those kind of good things. Will this 0:04:29.760 --> 0:04:33.600 cause a train wreck? Maybe, but I think it again, 0:04:33.880 --> 0:04:36.560 I'm such an optimist. I think it would be a 0:04:36.560 --> 0:04:39.320 good thing because then would narrow down on how we 0:04:39.320 --> 0:04:42.400 can use this technology to actually get a benefit from it, 0:04:42.720 --> 0:04:46.440 not just because it's cool, interesting, or whatever drives people 0:04:46.440 --> 0:04:47.080 to look at tech. 0:04:47.640 --> 0:04:49.400 Yeah, well, game your question of who's going to pay 0:04:49.400 --> 0:04:52.040 for it? That was definitely the question that Marcus we're asking. 0:04:52.320 --> 0:04:54.839 A few weeks ago, if you recall when we did 0:04:54.880 --> 0:04:57.400 get a little bit of that AI bubble worry of 0:04:57.520 --> 0:05:00.159 permeating the markets. Where do you stand on that? Is 0:05:00.200 --> 0:05:03.039 that actually a good worry for markets to have at 0:05:03.040 --> 0:05:05.159 this stage? And who do you think is going to 0:05:05.160 --> 0:05:07.040 be the winners and losers coming out of that? 0:05:07.960 --> 0:05:08.239 Sure? 0:05:08.360 --> 0:05:08.600 I do. 0:05:08.760 --> 0:05:10.520 I think it's a great question. I think it's the 0:05:10.560 --> 0:05:15.080 only question an investor, not a technologist, an investor should ask, 0:05:15.240 --> 0:05:18.480 is you know who benefits and where should I put 0:05:18.480 --> 0:05:21.839 my money? Yes, it is early days, but I'm looking 0:05:21.839 --> 0:05:25.479 at companies that are very much married to the large 0:05:25.560 --> 0:05:28.920 language model. Most of them are private, and you know 0:05:29.000 --> 0:05:31.440 they're talking in their own book over and over again, 0:05:31.520 --> 0:05:35.040 and I think that should serve as a warning to investors. 0:05:35.560 --> 0:05:40.000 So I think the bubble thing still is out there. 0:05:40.360 --> 0:05:44.760 But ultimately I strongly believe that AI is productive when 0:05:44.839 --> 0:05:50.000 targeted correctly, when asking the right questions, and when delivering solutions. 0:05:50.360 --> 0:05:53.960 But I hate to tell investors this, especially on Christmas, 0:05:53.960 --> 0:05:56.200 because I am an optimist. It's going to take way 0:05:56.240 --> 0:05:58.640 longer than anybody thinks, way longer. 0:05:58.360 --> 0:06:00.840 Way longer. The good things usually waiting for that. They 0:06:00.880 --> 0:06:01.920 say as well. 0:06:02.080 --> 0:06:03.880 Kim Farres, thank you so much, we appreciate it. Kim 0:06:03.920 --> 0:06:07.240 far She's a founder and chief investment officer Bok Capital Partners. 0:06:07.240 --> 0:06:10.479 She's out there in Pittsburgh, one of my favorite towns. 0:06:10.839 --> 0:06:13.120 It's a great town, Pittsburgh. Stay with us. More from 0:06:13.160 --> 0:06:15.120 Bloomberg Intelligence coming up after this. 0:06:18.760 --> 0:06:22.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:22.520 --> 0:06:25.640 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:25.640 --> 0:06:28.960 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:29.000 --> 0:06:32.120 you get your podcasts, or watch us live on YouTube. 0:06:32.640 --> 0:06:35.000 Hi, Christina Quino sitting in for Scarlett film Paul Sweeney 0:06:35.040 --> 0:06:37.400 Live here in our Bloomberg inenrective brokers studio, streaming live 0:06:37.480 --> 0:06:40.160 on YouTube. Well, a federal judge so the Trump administration 0:06:40.279 --> 0:06:43.719 can move ahead with a one hundred thousand dollars fee 0:06:43.760 --> 0:06:47.320 on new h one B visa application, providing setback for 0:06:47.480 --> 0:06:50.240 US technology companies. To get some more color there, were 0:06:50.320 --> 0:06:52.640 joined by Eric Larson. He is a US legal reporter 0:06:53.080 --> 0:06:55.040 for Bloomberg News, joining us live here in a Bloomberg 0:06:55.040 --> 0:06:57.160 inactive broker studio. I mean there's like a handful of 0:06:57.200 --> 0:06:59.360 people in this buildings. Eric's one of them. 0:06:59.600 --> 0:07:00.440 Eric, what's what? 0:07:00.640 --> 0:07:03.359 Just give us the background of this one hundred thousand 0:07:03.360 --> 0:07:04.839 dollars each would be visa thing. 0:07:05.520 --> 0:07:08.520 Sure, so the president put this fee in place, sort 0:07:08.520 --> 0:07:11.880 of surprised everyone with it. One of his many rules 0:07:11.880 --> 0:07:15.240 that he put in place, sort of slowing immigration, targeting immigration, 0:07:15.800 --> 0:07:19.239 saying that individuals who were using these particular visas were 0:07:19.800 --> 0:07:25.480 taking jobs from skilled American workers who could do those 0:07:25.600 --> 0:07:29.520 jobs but get paid more. Essentially, so they accuse these companies, 0:07:29.600 --> 0:07:32.680 these industries of basically profiting. 0:07:32.200 --> 0:07:33.600 From importing cheaper labor. 0:07:34.080 --> 0:07:37.880 And there are several lawsuits were filed and we've got 0:07:37.880 --> 0:07:38.600 our first ruling. 0:07:39.560 --> 0:07:43.320 Yeah, Well, given the popularity of these visas, particularly in 0:07:43.360 --> 0:07:47.000 a tech sector, Eric recom for audience, kind of what's 0:07:47.040 --> 0:07:50.520 been the response from these companies involved and how do 0:07:50.640 --> 0:07:54.040 they envision moving forward with the labor supply. 0:07:54.880 --> 0:07:57.200 Well, I mean, it remains to be seen what will 0:07:57.200 --> 0:07:59.920 actually happen with this one hundred thousand dollars. 0:08:00.360 --> 0:08:01.280 This is one ruling. 0:08:01.360 --> 0:08:04.000 There's a couple of other big lawsuits out there where 0:08:04.000 --> 0:08:06.800 there haven't been rulings yet. So notably, none of those 0:08:06.880 --> 0:08:11.160 lawsuits are filed by the big corporations who use these visas. 0:08:11.400 --> 0:08:13.800 Maybe perhaps they're waiting it out to see what happens 0:08:13.800 --> 0:08:16.360 with the lawsuits, but at any rate. There is another 0:08:16.400 --> 0:08:19.640 big lawsuit filed by a Democratic led states, led by 0:08:19.680 --> 0:08:23.800 California's attorney general. There's another big lawsuit filed by unions 0:08:23.800 --> 0:08:26.800 and a group of nurses, and we haven't gotten any 0:08:26.840 --> 0:08:29.320 rulings on those yet. So theoretically we could get a 0:08:29.400 --> 0:08:31.640 ruling that goes the other way. This could be one 0:08:31.680 --> 0:08:33.679 of the many cases that goes up to the Supreme 0:08:33.720 --> 0:08:34.599 Court eventually. 0:08:35.280 --> 0:08:37.520 What is the reality or what is the data show 0:08:37.600 --> 0:08:43.040 about the need for H one B VISA workers. Is 0:08:43.040 --> 0:08:45.679 there a lack of high tech workers coming out of 0:08:45.720 --> 0:08:48.200 the US, Is there in fact a need for these people? 0:08:48.760 --> 0:08:52.199 Well, it depends who you ask. Each of these lawsuits 0:08:52.240 --> 0:08:55.320 gave a slightly different perspective. The Chamber of Commerce lawsuit, 0:08:55.360 --> 0:08:56.720 which is the one we just had the ruling on 0:08:57.240 --> 0:09:00.920 representing the ideas of businesses. The States are saying that 0:09:01.000 --> 0:09:07.640 this fee harms the states in the capacity of hospitals 0:09:07.720 --> 0:09:12.280 needing H one V VISA employees, teacher like universities, things 0:09:12.320 --> 0:09:15.880 like that. And they're saying that pretty much every part 0:09:15.880 --> 0:09:19.520 of American society somehow uses these visas. 0:09:19.800 --> 0:09:21.080 So it depends on who you ask. 0:09:21.440 --> 0:09:24.439 The government says you can find these skilled workers here 0:09:24.480 --> 0:09:26.200 in the US, you're just going to have to pay 0:09:26.240 --> 0:09:28.679 them more. But that is not at all how these 0:09:28.679 --> 0:09:31.400 plans see it. They say that there's just a huge shortage, 0:09:31.480 --> 0:09:35.720 especially when it comes to hospitals, nurses, and these tech 0:09:35.760 --> 0:09:40.000 companies say that this creates innovation and having more diverse 0:09:40.120 --> 0:09:42.479 views from backgrounds coming in from around the world. 0:09:43.080 --> 0:09:44.920 That are people who are are. 0:09:44.840 --> 0:09:48.760 Deeply you know, steeped in this in the tech sectors. 0:09:48.840 --> 0:09:51.120 It's impossible to really say, you know, both sides are 0:09:51.200 --> 0:09:52.320 pushing pretty hard here. 0:09:53.400 --> 0:09:55.839 Do we have a sense of what's been going on 0:09:55.960 --> 0:09:59.800 in the ground in terms of companies and workers involved 0:09:59.840 --> 0:10:02.640 in in the process currently of trying to obtain an 0:10:02.640 --> 0:10:05.520 age one B. I imagine there's a lot of confusion and 0:10:05.640 --> 0:10:07.000 maybe delays in the process. 0:10:07.080 --> 0:10:09.400 Now, yes, I would think so. 0:10:09.440 --> 0:10:12.280 I've spoken immigration lawyers who say that this is a 0:10:12.400 --> 0:10:16.880 huge problem for them and their clients and expectations of 0:10:16.920 --> 0:10:19.480 people who thought they might be able to use this visa. 0:10:20.440 --> 0:10:22.720 But for now, I mean, this ruling. 0:10:22.400 --> 0:10:25.800 Makes it pretty clear that this might be the law 0:10:25.800 --> 0:10:28.679 of the land for a while. This was an Obama 0:10:28.720 --> 0:10:32.520 appointed judge who said that the president has this broad 0:10:32.559 --> 0:10:35.800 authority that Congress gave him. In the Immigration and Nationality 0:10:35.840 --> 0:10:40.200 Act gave the president this type of authority when the 0:10:40.240 --> 0:10:43.800 president believes that someone is or a group of people 0:10:43.920 --> 0:10:46.959 are a threat to the economy, that that's in the 0:10:47.600 --> 0:10:51.280 Immigration and Nationality Act. So this Democratic appointed judge who's 0:10:51.320 --> 0:10:53.959 ruled against Trump on other things is saying he has 0:10:54.000 --> 0:10:56.560 this authority. And that's kind of not saying that every 0:10:56.559 --> 0:10:58.640 other judge will rule the same way in these other cases. 0:10:59.040 --> 0:11:01.480 But that is how these individuals are gonna have to 0:11:01.480 --> 0:11:03.959 look at it, these companies in terms of planning for 0:11:04.400 --> 0:11:06.480 the future and as well as workers. 0:11:06.960 --> 0:11:09.120 Yeah, I don't see this just personally. I don't see 0:11:09.120 --> 0:11:11.080 this as a big issue for the big tech companies. 0:11:11.080 --> 0:11:13.080 They can afford it. They can whine, they can afford it. 0:11:13.440 --> 0:11:16.880 But you mentioned healthcare, and I'm thinking I keep hearing 0:11:16.920 --> 0:11:19.560 and reading about nursing shortages and things like that, and 0:11:19.600 --> 0:11:22.280 I would think they try to fill some of the 0:11:22.400 --> 0:11:25.199 shortages with non US workers via the H one B 0:11:25.400 --> 0:11:28.280 visa situation. That could be a problem if you're a 0:11:28.280 --> 0:11:30.360 hospital and now you're saying it where I'm a you know, 0:11:30.360 --> 0:11:32.160 I got to pay more to get my nurses in 0:11:32.240 --> 0:11:33.280 from wherever I get them. 0:11:33.840 --> 0:11:34.960 That would be a child problem. 0:11:35.000 --> 0:11:37.280 I would think absolutely, And that was a highlight of 0:11:37.320 --> 0:11:42.080 the case filed by the nineteen or twenty Democratic attorneys general, 0:11:42.880 --> 0:11:45.080 most of them in the country said that, you know, 0:11:45.120 --> 0:11:47.800 this is a particular problem, and that's how they the 0:11:47.840 --> 0:11:49.680 states in one of the ways they said they have 0:11:49.840 --> 0:11:51.720 standing to sue. You know that they have a right 0:11:51.760 --> 0:11:55.559 to sue, is saying that the threat to the healthcare 0:11:55.640 --> 0:11:59.400 industry in particular makes it a public issue that the 0:11:59.440 --> 0:12:03.640 states have responsibility to sue over essentially saying that they 0:12:03.640 --> 0:12:07.240 need to keep the flow of these skilled healthcare workers 0:12:07.280 --> 0:12:07.679 coming in. 0:12:08.040 --> 0:12:10.319 Is that also for students as well? How do I 0:12:10.320 --> 0:12:11.880 get that student visas are different? 0:12:11.880 --> 0:12:14.840 I guess yeah, that's a different different because that's. 0:12:14.679 --> 0:12:17.559 Also been a challenge for universities all the uncertainty about immigration. 0:12:18.320 --> 0:12:22.840 A lot of their international applicants are down significant because 0:12:23.360 --> 0:12:25.520 those people are unsure about what the policy is going 0:12:25.600 --> 0:12:27.600 to be in the US, and that's hurting the universities 0:12:27.600 --> 0:12:29.160 who depend upon them to some degree. 0:12:29.360 --> 0:12:30.640 Eric, thanks so much, appreciate it. 0:12:30.720 --> 0:12:34.720 Eric Larson, us legal reporter for Bloomberg News, joining us 0:12:34.760 --> 0:12:39.200 in our Bloomberg Interactive Brokers Studio Extra Star today. Eric 0:12:39.240 --> 0:12:41.520 for coming in on Christmas Eve. 0:12:41.720 --> 0:12:44.840 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:48.720 --> 0:12:52.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:52.480 --> 0:12:55.880 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:55.960 --> 0:12:59.040 with the Bloomberg Business App. Listen on demand wherever you 0:12:59.080 --> 0:13:02.560 get your podcasts, or watch us live on YouTube. 0:13:02.920 --> 0:13:06.240 Chicken with Smasha. She's a vice president Research and Insights 0:13:06.240 --> 0:13:10.280 at Censor Tower. Sema, thanks so much for joining us here. 0:13:11.200 --> 0:13:13.360 What are you seeing out there in I mean it's 0:13:13.440 --> 0:13:15.040 Christmas season here? What are you seeing out there in 0:13:15.080 --> 0:13:15.760 the marketplace? 0:13:18.280 --> 0:13:20.400 I mean I would say, like we're talking about retail, 0:13:20.559 --> 0:13:23.920 I will say that, you know, our figures are slower 0:13:23.920 --> 0:13:26.240 than they were in the prior years in terms of 0:13:26.720 --> 0:13:30.240 monthly active users and in terms of traffic we're seeing 0:13:30.240 --> 0:13:34.160 and some of the mobile apps has definitely been a 0:13:34.160 --> 0:13:36.240 little bit slower. And we're also seeing a sort of 0:13:36.280 --> 0:13:41.080 a skew to value. So if you think of like 0:13:41.160 --> 0:13:42.600 the team Moves of the world as have sort of 0:13:42.600 --> 0:13:46.320 seen a resurgence, but also life Polesale and other value players, 0:13:47.000 --> 0:13:49.800 that's what we're sort of seeing in their retail landscape. 0:13:49.800 --> 0:13:53.120 But I think from a broader step back if we 0:13:53.200 --> 0:13:55.760 just look across categories in the US, I would say 0:13:55.800 --> 0:14:00.640 that there's still this pressure on discretionary sort of expenditure. 0:14:00.760 --> 0:14:03.280 So based on how we look at the mobile app universe, 0:14:03.320 --> 0:14:06.640 if you look at like dating app, subscriber revenue and 0:14:06.760 --> 0:14:10.440 interaction is down, same with streaming as a whole. So 0:14:11.320 --> 0:14:13.080 that's kind of what we're seeing at like a fifty 0:14:13.120 --> 0:14:13.960 thousand fut level. 0:14:14.480 --> 0:14:16.880 I mean, net how is this season going to be 0:14:17.000 --> 0:14:19.200 in terms of the Christmas season? 0:14:19.240 --> 0:14:20.360 And that just a holiday season. 0:14:20.560 --> 0:14:22.920 I mean there's lots of reports out there that the 0:14:22.920 --> 0:14:25.320 consumers stretched and all that type of stuff. 0:14:26.760 --> 0:14:29.560 Yeah, and our data sort of confirms that, both our 0:14:29.600 --> 0:14:31.800 mobile and our web data. And the other thing that 0:14:31.840 --> 0:14:36.120 we saw is when we looked at the advertising spend 0:14:36.200 --> 0:14:39.800 in prior years versus this year, we can already see 0:14:39.800 --> 0:14:42.160 that in this fourth quarter there's been a slow down 0:14:42.240 --> 0:14:45.880 in overall ad spend, which typically means that presumably the 0:14:45.920 --> 0:14:48.240 advertisers think that there'll be a pullback and spending. And 0:14:48.280 --> 0:14:50.880 we've sort of seen that slow down across the metrics 0:14:50.920 --> 0:14:53.600 that we follow and that we sort of used to 0:14:53.720 --> 0:14:56.680 infer how people are spending. What our metric don't take 0:14:56.680 --> 0:15:00.360 into account that would be inflation and anything to do 0:15:00.400 --> 0:15:03.400 specifically with price. So I think when we get the 0:15:03.440 --> 0:15:06.040 retail sales numbers and other sort of comp numbers, we 0:15:06.080 --> 0:15:08.640 should be cognizant to see how much of that was 0:15:08.680 --> 0:15:12.280 price versus traffic, because from our end, the traffic part 0:15:12.320 --> 0:15:13.600 seems to definitely be weaker. 0:15:13.840 --> 0:15:15.320 All right, seem I was throwing for a loop here 0:15:15.320 --> 0:15:17.640 because I know you in the context of talking about retail. 0:15:17.680 --> 0:15:21.640 But yes, so now, okay, so now you've brought your 0:15:21.720 --> 0:15:24.640 remit here and you can talk about I guess some 0:15:24.760 --> 0:15:25.240 of these. 0:15:25.160 --> 0:15:26.240 Media deals out there. 0:15:26.640 --> 0:15:28.320 I love to get your thoughts on kind of what's 0:15:28.320 --> 0:15:30.000 happening in Warner Brothers Discovery. 0:15:30.840 --> 0:15:34.600 Yes, absolutely so. As everybody knows, there's two competing bids, 0:15:34.720 --> 0:15:40.600 Netflix versus Paramount Skydance, and from our perspective, the results 0:15:40.640 --> 0:15:43.160 of each merger, if they were passed, are very different, 0:15:43.200 --> 0:15:47.040 and what Warner Brothers brings to each group is very different. Right. 0:15:47.080 --> 0:15:51.120 Netflix is the leader by far, oh nearly fifty percent 0:15:51.160 --> 0:15:54.840 of all monthly active users globally are on Netflix. For Paramount, 0:15:54.880 --> 0:15:57.560 on the other hand, it's only four percent, with HBO 0:15:57.760 --> 0:16:03.200 around ten percent. So if Netflix acquires Warner Brothers it 0:16:03.280 --> 0:16:06.320 becomes even larger and more likely that people will not 0:16:06.400 --> 0:16:08.880 be able to get caught up with them. For paramount, 0:16:09.120 --> 0:16:12.120 the addition of HBO is huge. It jumps them up 0:16:12.160 --> 0:16:16.120 to the same level of active user penetration as Disney 0:16:16.120 --> 0:16:19.120 plus an Amazon Prime. It gives them access to tent 0:16:19.200 --> 0:16:22.600 pole content, you know, like The Game of Thrones, White Lotus. 0:16:22.920 --> 0:16:26.680 It kind of puts them into the higher sphere of 0:16:27.120 --> 0:16:31.240 streamers in terms of content. For Netflix, it gives them 0:16:31.280 --> 0:16:35.360 the opportunity to maybe jumpstart their subscriber growth. Right, it's 0:16:35.360 --> 0:16:38.440 been pretty stagnant to down because they're so large, but 0:16:38.720 --> 0:16:42.600 HBO is really the fastest growing international streamer that we follow, 0:16:42.880 --> 0:16:45.560 So this would be an opportunity for Netflix to pick 0:16:45.640 --> 0:16:50.400 up those users potentially, but also to leverage its content creation. 0:16:51.760 --> 0:16:54.960 You know, Bohemoth that they can make local language content 0:16:55.000 --> 0:16:57.480 and apply that to HBO's content. So I think there's 0:16:57.520 --> 0:17:00.000 a lot of opportunity, but it just to really depends 0:17:00.200 --> 0:17:03.240 on who ends up getting the deal or not what 0:17:03.360 --> 0:17:05.000 it does for each player. 0:17:05.200 --> 0:17:07.760 Yeah, we'll see that. It sounds like we're nowhere close 0:17:07.800 --> 0:17:10.480 to finding who end up getting the deal because you know, 0:17:10.520 --> 0:17:13.000 Warner Brothers leadership very clear they want to push their 0:17:13.040 --> 0:17:16.560 investors to go with Netflix here, but then Larry Ellison 0:17:17.000 --> 0:17:21.840 waiting into this battle in personally guaranteeing some of that 0:17:22.000 --> 0:17:25.000 bid from Paramount. So where do you think these firms 0:17:25.000 --> 0:17:28.040 stand in terms of who's closer to be able to 0:17:28.160 --> 0:17:30.120 finally clinch the deal at the end of the day. 0:17:30.760 --> 0:17:33.399 Well, I think just generally because the Warner Brothers board 0:17:33.480 --> 0:17:38.639 is on board with Netflix, that definitely makes that seem 0:17:38.680 --> 0:17:40.960 like a more likely deal. However, and I think that 0:17:41.040 --> 0:17:44.280 if Paramount wants to get the deal, they have to 0:17:44.320 --> 0:17:47.440 continue to increase their bid. I know that they recently 0:17:48.600 --> 0:17:52.360 offered the same breakup fee as Netflix, but I think 0:17:52.400 --> 0:17:54.760 there might be some other fees that they would have 0:17:54.800 --> 0:17:57.840 to increase the value of that bid in order to 0:17:57.920 --> 0:18:01.040 make it worth their while, you know so? And I 0:18:01.040 --> 0:18:04.200 think it also depends on the value of discovery, which 0:18:04.240 --> 0:18:07.600 I have heard valuations from one dollar to almost four 0:18:07.640 --> 0:18:09.879 dollars per share for that portion of the business for 0:18:09.880 --> 0:18:13.639 the linear TV. So I think it really depends on 0:18:13.760 --> 0:18:15.800 how people view that because the Netflix bid does not 0:18:15.840 --> 0:18:16.280 include that. 0:18:17.119 --> 0:18:18.919 What do you think the regulators are going to say 0:18:18.920 --> 0:18:20.840 about this deal going forward? 0:18:21.640 --> 0:18:22.080 Yeah? 0:18:22.119 --> 0:18:25.280 So, I mean to be fair, Look, Netflix is so large. 0:18:25.320 --> 0:18:28.000 If they acquired Warner Brothers and they had HBO, they 0:18:28.000 --> 0:18:31.480 would be by far the largest. But in the grand 0:18:31.520 --> 0:18:35.200 scheme of life, like HBO is only ten percent of MAUS, 0:18:35.680 --> 0:18:39.600 Netflix is already almost fifty percent. So it does make 0:18:39.640 --> 0:18:41.720 it a little bit more difficult, I think, for the 0:18:41.800 --> 0:18:44.080 average streamer to try to catch up to them. But 0:18:45.520 --> 0:18:48.359 I don't think it's completely uncompetitive for I mean, but 0:18:48.440 --> 0:18:52.359 I think that it'll be viewed potentially as uncompetitive just 0:18:52.400 --> 0:18:57.200 because if other streamers also start consolidating, there's or fewer 0:18:57.240 --> 0:19:00.439 options for consumers. And we're already seeing pricing issues for 0:19:00.520 --> 0:19:04.560 subscribe for subscriptions both ad supported and non ad supported, 0:19:04.640 --> 0:19:08.119 So I think that will be a concern, you know, 0:19:08.160 --> 0:19:11.160 for regulatory purposes. For Netflix pre paramount, I don't really 0:19:11.200 --> 0:19:15.120 see an, uh, you know, a real regulatory issue given 0:19:15.160 --> 0:19:19.439 that its size is very small, and even with HBO, 0:19:19.600 --> 0:19:22.280 it would just be on par with Disney Plus and 0:19:22.320 --> 0:19:26.160 Amazon Prime, so it seems like it would have less 0:19:26.160 --> 0:19:28.600 of an impact from a regulatory perspective. 0:19:28.960 --> 0:19:29.520 And we'll see that. 0:19:29.560 --> 0:19:31.720 You make an interesting point about kind of how this 0:19:31.800 --> 0:19:35.520 could potentially change the streamer landscape, right and especially when 0:19:35.520 --> 0:19:38.199 it comes to consolidation. Where do you see that going. 0:19:38.400 --> 0:19:40.399 Which other streamers do you think might be prime for 0:19:40.520 --> 0:19:41.880 a similar deal like this? 0:19:43.600 --> 0:19:46.840 Well, you already saw Disney Plus sort of buy out 0:19:46.880 --> 0:19:50.280 the rest of Hulu, So that is one form of consolidation, right, 0:19:50.280 --> 0:19:52.880 they're all own together. I'm not sure if the other 0:19:52.960 --> 0:19:55.560 streamers are are part of some of these larger companies, 0:19:55.560 --> 0:19:59.760 so they are less likely to be acquired. But I 0:19:59.840 --> 0:20:02.560 do think that if we're thinking from a competitive standpoint, 0:20:02.720 --> 0:20:05.119 if you really want to understand this, you have to 0:20:05.119 --> 0:20:07.719 realize that the streamers are not just competing with themselves. 0:20:08.000 --> 0:20:10.639 They're basically competing with anything else that takes time. And 0:20:10.680 --> 0:20:13.199 so we view that as like short form video and 0:20:13.280 --> 0:20:17.959 social media. So if you broaden the landscape to include those, 0:20:18.200 --> 0:20:22.879 neither deal is really anti competitive, right because users have 0:20:22.960 --> 0:20:25.320 so many options on the ways to get content and 0:20:25.359 --> 0:20:28.560 the way that they view content. And I think so 0:20:29.000 --> 0:20:32.320 short form video and streaming, social storry, social media are 0:20:32.480 --> 0:20:37.080 very growing, and you know, competitors that the streamers need 0:20:37.119 --> 0:20:41.320