1
00:00:00,800 --> 00:00:04,040
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

2
00:00:04,040 --> 00:00:06,920
Speaker 1: my co host Matt Miller. Every business day we bring

3
00:00:06,960 --> 00:00:11,520
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

4
00:00:11,520 --> 00:00:15,560
Speaker 1: with essential market moving news on the Bloomberg Markets Podcast

5
00:00:15,600 --> 00:00:18,439
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

6
00:00:18,480 --> 00:00:22,079
Speaker 1: at Bloomberg dot com Slash Podcast. Lots of stuff to

7
00:00:22,079 --> 00:00:24,960
Speaker 1: get to with Alison Williams. She covers all the banks

8
00:00:24,960 --> 00:00:27,520
Speaker 1: for Bloomberg Intelligence. She's one of the best on wall streets,

9
00:00:27,520 --> 00:00:29,760
Speaker 1: so we love getting some of her time. Allison is

10
00:00:29,800 --> 00:00:31,560
Speaker 1: a million ways week and go here. Let's start really

11
00:00:31,560 --> 00:00:33,760
Speaker 1: easy with the with the easy stuff. I think Bank

12
00:00:33,800 --> 00:00:36,960
Speaker 1: of America. I thought the numbers looked pretty good. What's

13
00:00:37,000 --> 00:00:41,680
Speaker 1: your takeaway? The numbers looked really good, and that interest

14
00:00:41,760 --> 00:00:46,159
Speaker 1: income the story for the quarter was very strong at

15
00:00:46,200 --> 00:00:49,800
Speaker 1: the bank, and there's upside to the fourth quarter. So

16
00:00:49,920 --> 00:00:53,880
Speaker 1: that's that's the good news. The consumer is healthy. Um.

17
00:00:53,920 --> 00:00:55,800
Speaker 1: And so now that we have you know, sort of

18
00:00:55,840 --> 00:01:00,520
Speaker 1: the four biggest diversified banks coming in uh, you know,

19
00:01:00,720 --> 00:01:05,520
Speaker 1: charge offs came in better than expected. That's current credit trends.

20
00:01:05,680 --> 00:01:08,560
Speaker 1: So the banks did set aside um some money for

21
00:01:08,640 --> 00:01:12,320
Speaker 1: the future. But I would say, you know, generally modest

22
00:01:12,440 --> 00:01:16,640
Speaker 1: compared to some concerns. So what I'd read a Brian

23
00:01:16,680 --> 00:01:21,959
Speaker 1: moynihan quote. He says UM spending levels, although the growth

24
00:01:22,040 --> 00:01:26,840
Speaker 1: is slowing, they're still growing, and that a consumer UM

25
00:01:27,000 --> 00:01:32,440
Speaker 1: deposits are still elevated. So the consumer really is healthy. UM.

26
00:01:32,560 --> 00:01:34,560
Speaker 1: We don't have to debate whether that's good or bad

27
00:01:34,600 --> 00:01:36,880
Speaker 1: news for the market. But what does it mean for

28
00:01:37,360 --> 00:01:42,480
Speaker 1: UM the banks? It means that we're probably going to

29
00:01:42,560 --> 00:01:45,560
Speaker 1: have UM again a strong fourth quarter. So I talked

30
00:01:45,560 --> 00:01:47,920
Speaker 1: about the net interest income, so part of that is

31
00:01:48,040 --> 00:01:51,760
Speaker 1: interest rate, and then part of that is that consumers

32
00:01:51,760 --> 00:01:56,040
Speaker 1: are spending UM. You know, the borrowing trends to us,

33
00:01:56,120 --> 00:01:58,440
Speaker 1: We feel like that bears watching because some of the

34
00:01:58,480 --> 00:02:01,160
Speaker 1: borrowings be healthy, but some of that borrowing could also

35
00:02:01,240 --> 00:02:04,880
Speaker 1: just indicate UM that investors are, you know, less able

36
00:02:04,880 --> 00:02:07,560
Speaker 1: to pay things out of their pockets. For the most part,

37
00:02:07,600 --> 00:02:11,160
Speaker 1: these things to focus on UM the higher end consumer,

38
00:02:11,320 --> 00:02:17,400
Speaker 1: which generally is holding well UM, but in general health

39
00:02:17,440 --> 00:02:20,040
Speaker 1: they spending. Credit card spending does tend to be the

40
00:02:20,080 --> 00:02:22,920
Speaker 1: strongest and loan growth best in the fourth quarters. So

41
00:02:23,000 --> 00:02:26,040
Speaker 1: that's all very supportive in your term as we look

42
00:02:26,080 --> 00:02:29,600
Speaker 1: into next year. You know, I'll circle back to my

43
00:02:29,680 --> 00:02:32,720
Speaker 1: mention of the provisions, just the fact that we're seeing

44
00:02:32,760 --> 00:02:36,680
Speaker 1: modest increases, and I think, um Jamie Diamond on Friday

45
00:02:36,720 --> 00:02:40,240
Speaker 1: also helped to put into context. Look, if we see

46
00:02:40,280 --> 00:02:43,000
Speaker 1: a five to six percent an unemployment rate, we're going

47
00:02:43,040 --> 00:02:47,040
Speaker 1: to see you know, provisions building maybe six billion, So

48
00:02:47,160 --> 00:02:51,400
Speaker 1: that's above the one billion or so factored into estimates,

49
00:02:51,440 --> 00:02:55,679
Speaker 1: but certainly um well below the levels that we saw

50
00:02:55,760 --> 00:02:59,120
Speaker 1: during the pandemic. Hey, Alison, what's going on with Goldman Saxon?

51
00:02:59,120 --> 00:03:02,000
Speaker 1: I mean, I've got I think the third re org

52
00:03:02,680 --> 00:03:04,840
Speaker 1: in four years. I mean, you and I have competed

53
00:03:04,840 --> 00:03:07,680
Speaker 1: against Goldman Sacks for decades and I'll speak just myself,

54
00:03:07,760 --> 00:03:12,359
Speaker 1: usually unsuccessfully, sometimes better than the worst, better, better, better

55
00:03:12,360 --> 00:03:14,160
Speaker 1: than others. But what's going on over the Goldman sax

56
00:03:14,240 --> 00:03:19,280
Speaker 1: It seems like a lot of instability there, so definitely

57
00:03:19,360 --> 00:03:21,919
Speaker 1: some management changes. I would say that that would be

58
00:03:22,280 --> 00:03:25,400
Speaker 1: the most impactful thing for me as an analyst. I

59
00:03:25,880 --> 00:03:28,680
Speaker 1: like the changes because it lines up the bank um

60
00:03:28,720 --> 00:03:31,480
Speaker 1: in an easier way to compare them to some of

61
00:03:31,480 --> 00:03:33,920
Speaker 1: their peers. But for the most part, we could do

62
00:03:33,960 --> 00:03:36,040
Speaker 1: that anyway. We had the pieces of the investment bank,

63
00:03:36,080 --> 00:03:38,160
Speaker 1: we had the pieces of the trading. Now they're gonna

64
00:03:38,320 --> 00:03:41,640
Speaker 1: sort of put that together, um, similar to other banks.

65
00:03:41,720 --> 00:03:44,360
Speaker 1: And then you know, breaking up this uh you know,

66
00:03:44,400 --> 00:03:47,520
Speaker 1: the reporting of the way that the consumer unit was reported.

67
00:03:47,520 --> 00:03:50,240
Speaker 1: They had sort of wealth embedded in that unit, so

68
00:03:50,280 --> 00:03:53,640
Speaker 1: maybe pulling that out. I think the most interesting thing

69
00:03:53,720 --> 00:03:56,240
Speaker 1: to me is the breaking out of the transaction bank.

70
00:03:56,680 --> 00:03:59,680
Speaker 1: You know, this is a business that we m have

71
00:04:00,080 --> 00:04:04,360
Speaker 1: felt was a good fit for them. Now, as you said,

72
00:04:04,400 --> 00:04:06,600
Speaker 1: they they've made a lot of changes in the last

73
00:04:06,600 --> 00:04:09,240
Speaker 1: few years, but they really, I think over the long term,

74
00:04:09,280 --> 00:04:11,400
Speaker 1: are the most consistent in terms of who they are.

75
00:04:11,440 --> 00:04:14,720
Speaker 1: They're you know about a global investment banking and trading.

76
00:04:15,080 --> 00:04:17,920
Speaker 1: The transaction banking is something that they hadn't done before.

77
00:04:18,080 --> 00:04:21,080
Speaker 1: Just too explained that for a moment. You know that

78
00:04:21,120 --> 00:04:25,760
Speaker 1: they're basically helping um, you know, companies with their cash management,

79
00:04:26,279 --> 00:04:28,880
Speaker 1: and so that helps to give them a line into trading.

80
00:04:28,920 --> 00:04:30,880
Speaker 1: And that's why we view it as positive. And I

81
00:04:30,880 --> 00:04:33,039
Speaker 1: think the fact that they're gonna be breaking that out

82
00:04:33,040 --> 00:04:36,360
Speaker 1: on a standalone shows that that effort is successful. What's

83
00:04:36,400 --> 00:04:39,760
Speaker 1: trading look like to you, um from here on out?

84
00:04:39,800 --> 00:04:43,680
Speaker 1: Because we've seen such choppy mark, so much volatility, so

85
00:04:43,760 --> 00:04:47,839
Speaker 1: much you know, gloom um is trading a business that

86
00:04:47,880 --> 00:04:51,279
Speaker 1: you want to be in this quarter, next quarter. This

87
00:04:51,440 --> 00:04:54,239
Speaker 1: quarter is probably you know, tends to be the weakest

88
00:04:54,320 --> 00:04:56,760
Speaker 1: quarter of the year. UM, so we would expect to

89
00:04:56,760 --> 00:05:01,200
Speaker 1: see some seasonal moderation. UM could be some upside, as

90
00:05:01,200 --> 00:05:04,520
Speaker 1: you said, from all of the volatility. Where we thought

91
00:05:04,960 --> 00:05:08,159
Speaker 1: this past quarter was in the fixed income trade line.

92
00:05:08,200 --> 00:05:12,640
Speaker 1: We expect that that continues. Equity trading is just sort

93
00:05:12,680 --> 00:05:16,840
Speaker 1: of I think against a tougher comparison from a year ago. UM.

94
00:05:16,920 --> 00:05:18,400
Speaker 1: Keep in mind all those I p s and all

95
00:05:18,400 --> 00:05:22,560
Speaker 1: that activity also led to a lot of UM elevated trading.

96
00:05:23,040 --> 00:05:26,279
Speaker 1: But fixed income I think as as long as we

97
00:05:26,320 --> 00:05:30,200
Speaker 1: continue to see volatility around the interest rates, volatility around currencies,

98
00:05:30,520 --> 00:05:32,920
Speaker 1: you're still going to get a left to that part

99
00:05:33,000 --> 00:05:37,640
Speaker 1: of the income statement. All right. And last Alison credit Swiss,

100
00:05:37,760 --> 00:05:40,240
Speaker 1: my alma mater. We got the head of the investment

101
00:05:40,240 --> 00:05:42,479
Speaker 1: bank saying he's going to leave here. Are they even

102
00:05:42,480 --> 00:05:46,080
Speaker 1: going to have an investment bank going forward? Well, that's

103
00:05:46,120 --> 00:05:49,120
Speaker 1: the question that we'll find out next week. UM it

104
00:05:49,279 --> 00:05:52,400
Speaker 1: should it be so investor, there's a Capital Markets Day

105
00:05:52,440 --> 00:05:55,440
Speaker 1: next week in the analyst day. Yeah. So so the

106
00:05:55,560 --> 00:05:58,440
Speaker 1: basically what they've said is when they report their earnings,

107
00:05:58,480 --> 00:06:01,960
Speaker 1: which is October, and they are also going to give

108
00:06:02,560 --> 00:06:05,599
Speaker 1: UM their strategy. So the big question are, you know,

109
00:06:05,640 --> 00:06:07,640
Speaker 1: what are they going to look like or in the

110
00:06:07,720 --> 00:06:10,880
Speaker 1: future what parts of the investment bank are they keeping?

111
00:06:11,040 --> 00:06:13,039
Speaker 1: You know, there's another story every day. Are they bringing

112
00:06:13,040 --> 00:06:16,400
Speaker 1: back first Boston? Are they going to sell parts of

113
00:06:16,480 --> 00:06:20,640
Speaker 1: their Swiss unit? UM? You know, the Swiss bank UM

114
00:06:20,680 --> 00:06:23,080
Speaker 1: sales are interesting because maybe you can get a bit

115
00:06:23,160 --> 00:06:27,039
Speaker 1: better valuation UM. You know, granted it's a tough market everywhere,

116
00:06:27,160 --> 00:06:30,440
Speaker 1: but securitized product group that we think they're going to

117
00:06:30,560 --> 00:06:33,600
Speaker 1: do something with UM, you know, theirn a tough spot

118
00:06:33,640 --> 00:06:37,000
Speaker 1: just given what evaluations are, and so there's going to

119
00:06:37,080 --> 00:06:40,400
Speaker 1: be changes there. And the question is will they raise capital?

120
00:06:40,560 --> 00:06:43,000
Speaker 1: All right, good stuff, I know I'm gonna I just

121
00:06:43,040 --> 00:06:45,360
Speaker 1: think the day I left it just went downhill from there.

122
00:06:45,400 --> 00:06:47,080
Speaker 1: I mean, I think, I think I think you can

123
00:06:47,120 --> 00:06:49,840
Speaker 1: just plot that on a graph. Alison Williams, senior banks

124
00:06:49,839 --> 00:06:53,719
Speaker 1: analysts for Bloomberg Intelligence, giving us the latest on all

125
00:06:53,760 --> 00:06:55,960
Speaker 1: things Wall Street. Bank of America's a pretty good numbers

126
00:06:56,000 --> 00:07:02,560
Speaker 1: coming out of via a some good stuff there, some big,

127
00:07:02,600 --> 00:07:04,920
Speaker 1: big moves today and I'm just noting. So you got

128
00:07:04,920 --> 00:07:08,039
Speaker 1: the SMP up two points seven percent, the volumes about

129
00:07:08,040 --> 00:07:10,840
Speaker 1: seven percent higher than we've seen over the last thirty

130
00:07:11,040 --> 00:07:12,800
Speaker 1: days at this time. So a little bit of a

131
00:07:12,920 --> 00:07:14,760
Speaker 1: vine kind of backing up this move here. I want

132
00:07:14,760 --> 00:07:17,080
Speaker 1: to check in with somebody it does this stuff for

133
00:07:17,120 --> 00:07:22,760
Speaker 1: a living. Samir Samana, Senior Global market strategist at Wells Fargo. Samir,

134
00:07:22,800 --> 00:07:24,920
Speaker 1: thanks so much for joining us. I mean, we've had

135
00:07:25,000 --> 00:07:27,480
Speaker 1: such a volatility, we've had such a weak market in

136
00:07:27,560 --> 00:07:32,360
Speaker 1: two What do you make of today's trading just for example,

137
00:07:32,400 --> 00:07:34,720
Speaker 1: anything or is it just kind of another you know,

138
00:07:34,760 --> 00:07:38,280
Speaker 1: kind of two percent three percent moving the market. You know,

139
00:07:38,560 --> 00:07:40,520
Speaker 1: I'll kind of pick up where you left off. Really,

140
00:07:40,560 --> 00:07:43,040
Speaker 1: it's a volatility i'd like to see calm down to.

141
00:07:43,280 --> 00:07:45,000
Speaker 1: I don't take anything away from the down day. I

142
00:07:45,000 --> 00:07:48,000
Speaker 1: mean last week was pretty pretty anxious, right with with

143
00:07:48,040 --> 00:07:50,120
Speaker 1: what was going on the UK and with the FED

144
00:07:50,200 --> 00:07:53,360
Speaker 1: and inflation prints. Um. But again, what I'd really like

145
00:07:53,400 --> 00:07:55,360
Speaker 1: to see is for this market to try and find

146
00:07:55,560 --> 00:07:58,000
Speaker 1: kind of a bottom and from that standpoint just maybe

147
00:07:58,000 --> 00:08:00,400
Speaker 1: even trade sideways for a few days. I think these

148
00:08:00,480 --> 00:08:03,360
Speaker 1: you know, constituted three up and down days. I think

149
00:08:03,360 --> 00:08:06,280
Speaker 1: you're continue to spook investors, and I think, really it

150
00:08:06,320 --> 00:08:09,240
Speaker 1: shows me that there's quite a bit of liquidity, quite

151
00:08:09,280 --> 00:08:11,680
Speaker 1: a bit of fragility out there. So I think maybe

152
00:08:11,720 --> 00:08:13,960
Speaker 1: the best course of action for for markets from here,

153
00:08:14,040 --> 00:08:15,920
Speaker 1: given what the FEDS trying to engineer, is just to

154
00:08:15,920 --> 00:08:19,920
Speaker 1: go sideways for a few days. So, uh, is there

155
00:08:19,920 --> 00:08:22,000
Speaker 1: any evidence that we've hit a bottom here or do

156
00:08:22,040 --> 00:08:24,920
Speaker 1: you think we still have a ways to go? I

157
00:08:24,920 --> 00:08:27,120
Speaker 1: think we've got still yet, you know, maybe a little

158
00:08:27,120 --> 00:08:29,200
Speaker 1: bit more probing to do to the downside for know

159
00:08:29,280 --> 00:08:32,360
Speaker 1: other reason. Then again, these balances are very shallow, right.

160
00:08:32,400 --> 00:08:35,120
Speaker 1: The SMP hasn't been above its twenty day moving average

161
00:08:35,160 --> 00:08:37,560
Speaker 1: since the middle of August, so you're now two months

162
00:08:37,840 --> 00:08:39,880
Speaker 1: where you haven't even able to get over a short

163
00:08:39,960 --> 00:08:42,520
Speaker 1: term moving average. I think that tells me that there's

164
00:08:42,559 --> 00:08:44,880
Speaker 1: just not a lot of interest at these levels. Again, Now,

165
00:08:44,880 --> 00:08:48,160
Speaker 1: if you go sideways, you know, just by definition mathematically,

166
00:08:48,160 --> 00:08:50,240
Speaker 1: you start to go through some of these moving averages,

167
00:08:50,280 --> 00:08:52,160
Speaker 1: and so that might start to bring some more people in.

168
00:08:52,559 --> 00:08:54,400
Speaker 1: But when you've got these big moves every day, I

169
00:08:54,400 --> 00:08:57,920
Speaker 1: think a lot of people are just staying away. So, Samir,

170
00:08:57,960 --> 00:09:01,560
Speaker 1: we're kind of getting into the teeth year of earnings

171
00:09:01,559 --> 00:09:05,440
Speaker 1: season here. What are you looking for? What you know

172
00:09:05,520 --> 00:09:07,199
Speaker 1: kind of what do you think you're going to hear

173
00:09:07,200 --> 00:09:09,920
Speaker 1: from a lot of these companies. I think they're gonna

174
00:09:09,960 --> 00:09:12,760
Speaker 1: kitchen sink at this quarter. So you've got a strengthening dollar,

175
00:09:13,040 --> 00:09:15,960
Speaker 1: you've got weakening economic growth, you've got a consumer that's

176
00:09:16,000 --> 00:09:18,600
Speaker 1: on its back foot, you've got the seed continuing to tighten,

177
00:09:18,679 --> 00:09:20,960
Speaker 1: and and you know, cause the curve to to you know,

178
00:09:21,000 --> 00:09:24,480
Speaker 1: stay and we're inverted. Um, all those different things should

179
00:09:24,520 --> 00:09:27,600
Speaker 1: put downward pressure on the earnings outlook. And then I

180
00:09:27,600 --> 00:09:30,080
Speaker 1: think when you think about all the uncertainty and the volatility,

181
00:09:30,160 --> 00:09:32,360
Speaker 1: I think the multiple people are willing to pay for

182
00:09:32,520 --> 00:09:35,440
Speaker 1: those earnings, um, you know, just aren't all that high.

183
00:09:35,480 --> 00:09:39,679
Speaker 1: So from that standpoint, we're hopeful that maybe this is cathartic,

184
00:09:39,720 --> 00:09:42,520
Speaker 1: from the standpoint of people finally mark their estimates down

185
00:09:42,960 --> 00:09:45,360
Speaker 1: to where reality is. But to the extent that hope

186
00:09:45,400 --> 00:09:49,680
Speaker 1: springs eternal, that earnings will magically grow in. That tells

187
00:09:49,679 --> 00:09:51,960
Speaker 1: me that that's another reason why we probably haven't seemed

188
00:09:52,000 --> 00:09:55,400
Speaker 1: the loaves one thing that seemed to me a bright

189
00:09:55,440 --> 00:09:57,320
Speaker 1: spot or dark spot depending how you look at it.

190
00:09:57,360 --> 00:10:02,440
Speaker 1: Was Brian moynihan talking about his consumer um okay, arguably

191
00:10:03,440 --> 00:10:08,080
Speaker 1: slightly wealthier than the average consumer, I'm not sure about that,

192
00:10:08,120 --> 00:10:12,360
Speaker 1: but saying that their account levels are still elevated, so

193
00:10:12,800 --> 00:10:16,200
Speaker 1: you know, they haven't spent their stimmies completely, or at

194
00:10:16,280 --> 00:10:18,880
Speaker 1: least they did some smart you know, Bank America customers,

195
00:10:18,920 --> 00:10:20,920
Speaker 1: is something smart with them? What do you think about that?

196
00:10:20,960 --> 00:10:22,720
Speaker 1: The consumers in better shape? It looks like from these

197
00:10:22,760 --> 00:10:25,560
Speaker 1: bank earnings, and we might have thought, no, that's a

198
00:10:25,559 --> 00:10:28,000
Speaker 1: great point. I think the tricky part with this cycle,

199
00:10:28,080 --> 00:10:30,480
Speaker 1: or at least this downturn part of the cycle, is that,

200
00:10:30,559 --> 00:10:32,040
Speaker 1: you know, look, if the FEDS trying to get in

201
00:10:32,040 --> 00:10:34,080
Speaker 1: place under control, and if you're telling me that the

202
00:10:34,080 --> 00:10:36,960
Speaker 1: consumers in better shape, then then we had all hope

203
00:10:37,040 --> 00:10:40,120
Speaker 1: for Unfortunately, that makes the FEDS job harder, right, That

204
00:10:40,360 --> 00:10:45,240
Speaker 1: keeps demand you know, somewhat supported for goods, services, etcetera.

205
00:10:45,440 --> 00:10:47,400
Speaker 1: And I think unfortunately it makes the FEDS job a

206
00:10:47,400 --> 00:10:50,200
Speaker 1: lot harder, which is really the biggest heads for markets

207
00:10:50,280 --> 00:10:54,400
Speaker 1: right now. Alright. Smear Uh as a former equity analyst,

208
00:10:54,480 --> 00:10:58,120
Speaker 1: I am a glass half full type of person by nature.

209
00:10:58,160 --> 00:11:01,760
Speaker 1: So if I'm thinking about kind of identifying, if not

210
00:11:01,840 --> 00:11:04,080
Speaker 1: calling the bottom here to the market at some point

211
00:11:04,200 --> 00:11:07,560
Speaker 1: soon do I do I jump in on the cyclical

212
00:11:07,640 --> 00:11:09,720
Speaker 1: names that would work in a cyclical rebound? Where do

213
00:11:09,760 --> 00:11:11,640
Speaker 1: I go back to what's always worked for me? It

214
00:11:11,679 --> 00:11:16,920
Speaker 1: seems since the Great Financial Crisis, which is just big tech. Yeah,

215
00:11:16,920 --> 00:11:18,679
Speaker 1: so we we've got quite a bit of conviction that

216
00:11:18,800 --> 00:11:21,880
Speaker 1: coming out of this downturn that the leadership will be

217
00:11:21,920 --> 00:11:25,120
Speaker 1: meaningfully different. We're finally going to see value continue to

218
00:11:25,160 --> 00:11:29,319
Speaker 1: outform growth because rates will remain elevated, commodity prices will

219
00:11:29,360 --> 00:11:32,040
Speaker 1: remain elevated. You could even see the dollar, you know,

220
00:11:32,080 --> 00:11:35,200
Speaker 1: at that point kind of resume. It's long, long term downtrend. Again,

221
00:11:35,280 --> 00:11:37,640
Speaker 1: not anytime soon, but you know, over the coming let's

222
00:11:37,679 --> 00:11:40,120
Speaker 1: say to three or five years. So the leadership probably

223
00:11:40,240 --> 00:11:43,560
Speaker 1: is I would argue, you know, your resource you know

224
00:11:43,640 --> 00:11:47,120
Speaker 1: based stocks like energy and materials, I think financials. Once

225
00:11:47,120 --> 00:11:49,600
Speaker 1: the curve starts to steepens, you know, the short end

226
00:11:49,640 --> 00:11:52,960
Speaker 1: comes off. Um, I think you'll see industrials right with

227
00:11:53,000 --> 00:11:55,280
Speaker 1: defense spending, with you know, at some point having to

228
00:11:55,320 --> 00:11:57,560
Speaker 1: redo a lot of the supply chains, you know, that

229
00:11:57,880 --> 00:11:59,520
Speaker 1: area should do well. So I think it will be

230
00:11:59,520 --> 00:12:01,520
Speaker 1: a lot more cyclical. I think a lot a lot

231
00:12:01,559 --> 00:12:05,520
Speaker 1: more value oriented. I think where you've got concentration in

232
00:12:05,600 --> 00:12:09,920
Speaker 1: some of the growthier areas like consumer discretionary, like calm services.

233
00:12:09,960 --> 00:12:12,280
Speaker 1: You know, they'll probably struggle a little bit because a

234
00:12:12,320 --> 00:12:14,480
Speaker 1: lot of these companies traded valuations where it's not like

235
00:12:14,520 --> 00:12:17,400
Speaker 1: they're not making money. If anything, they're huge cash flow generators.

236
00:12:17,520 --> 00:12:19,120
Speaker 1: I think the palm is just gonna take them years

237
00:12:19,120 --> 00:12:22,199
Speaker 1: to go into those multiples. All right, smir great, getting

238
00:12:22,200 --> 00:12:24,040
Speaker 1: you on. I have to have you back as soon

239
00:12:24,080 --> 00:12:27,559
Speaker 1: as possible, smears Amon of their senior global market strategist

240
00:12:27,800 --> 00:12:31,480
Speaker 1: at Wells Fargo, walking us through his view of the markets.

241
00:12:34,840 --> 00:12:36,439
Speaker 1: I want to get to break to our next guest.

242
00:12:37,000 --> 00:12:41,040
Speaker 1: Hans DAWCC of Mitchell Madison Group joins us, and we

243
00:12:41,080 --> 00:12:43,200
Speaker 1: want to talk China a little. A lot of news

244
00:12:43,200 --> 00:12:45,680
Speaker 1: coming out of China over the weekend as the government

245
00:12:46,600 --> 00:12:50,760
Speaker 1: meetings take place, President G. G. Ping Uh getting we'll

246
00:12:50,760 --> 00:12:56,080
Speaker 1: be getting a third term presumably eight unprecedented third five

247
00:12:56,160 --> 00:12:58,920
Speaker 1: year term. Here, Hans, we had a lot of rhetoric

248
00:12:58,960 --> 00:13:02,720
Speaker 1: coming out of China over the weekend. What did you

249
00:13:02,760 --> 00:13:04,120
Speaker 1: take away? What are some of the things that we

250
00:13:04,160 --> 00:13:06,959
Speaker 1: need to be focusing on. Yeah, I think it's it's

251
00:13:06,960 --> 00:13:09,240
Speaker 1: pretty interesting. Thanks for having me. First of all, I

252
00:13:09,280 --> 00:13:12,320
Speaker 1: think what you're seeing in China is really a lot

253
00:13:12,360 --> 00:13:15,680
Speaker 1: of weakness, right, And I think you have um when

254
00:13:15,679 --> 00:13:18,080
Speaker 1: you go back to the basics looking back at what

255
00:13:18,240 --> 00:13:22,120
Speaker 1: really explained explained China's growth in the past was really

256
00:13:22,480 --> 00:13:24,520
Speaker 1: a lot of things that had to do with extremely

257
00:13:24,600 --> 00:13:28,319
Speaker 1: favorable demographics. Right, So the dependency ratio was an all

258
00:13:28,360 --> 00:13:32,040
Speaker 1: time low. It went from you know, back in the eighties,

259
00:13:32,400 --> 00:13:36,560
Speaker 1: it was about and it's going to be about but

260
00:13:36,679 --> 00:13:39,440
Speaker 1: for a very bad reason. Right. The dependency ratio was

261
00:13:39,800 --> 00:13:42,959
Speaker 1: high because I had children, and the dependency ratio is

262
00:13:43,000 --> 00:13:45,920
Speaker 1: going to be very high because they have old people. Right.

263
00:13:46,000 --> 00:13:49,480
Speaker 1: So demographics are always destiny, and you will see a

264
00:13:49,559 --> 00:13:52,959
Speaker 1: very very dangerous pattern in China where they simply are

265
00:13:53,000 --> 00:13:56,480
Speaker 1: going to have lose the economical bigger they're going to

266
00:13:56,559 --> 00:14:00,400
Speaker 1: lose all the innovation, similar to what happened in Japan

267
00:14:00,480 --> 00:14:02,920
Speaker 1: the nineties. So I think that's a big factor, right.

268
00:14:02,960 --> 00:14:07,480
Speaker 1: But why I don't understand why does she Jin ping

269
00:14:08,480 --> 00:14:11,240
Speaker 1: Um stick to this COVID zero policy That seems to

270
00:14:11,280 --> 00:14:15,319
Speaker 1: be the main thing that baffles all of US Westerners,

271
00:14:16,160 --> 00:14:19,360
Speaker 1: and I haven't heard a good defense of that yet.

272
00:14:20,520 --> 00:14:22,960
Speaker 1: I don't understand it either. I mean, the the only

273
00:14:23,000 --> 00:14:25,320
Speaker 1: thing I can think of is that they have to

274
00:14:25,360 --> 00:14:28,040
Speaker 1: do that because they don't actually have a good vaccine, right,

275
00:14:28,080 --> 00:14:32,000
Speaker 1: so the Chinese vaccine isn't particularly effective. H But what

276
00:14:32,200 --> 00:14:34,680
Speaker 1: I mean, what happens if then they just let people

277
00:14:34,720 --> 00:14:38,120
Speaker 1: get COVID and the old ones that are so difficult

278
00:14:38,160 --> 00:14:41,040
Speaker 1: to pay for because they don't have enough young ones die?

279
00:14:42,680 --> 00:14:46,600
Speaker 1: I mean, it's it's horrible and callous, but it sets

280
00:14:46,600 --> 00:14:50,120
Speaker 1: the demographic shift straight. Yeah, it could be that. I mean,

281
00:14:50,200 --> 00:14:51,960
Speaker 1: I don't think the thing I think that's stuck on

282
00:14:52,000 --> 00:14:54,960
Speaker 1: this policy, and like with a lot of these you know,

283
00:14:55,440 --> 00:14:59,200
Speaker 1: um sort of semi dictator ships, they are stuck in

284
00:14:59,200 --> 00:15:01,120
Speaker 1: their way and they decided that they're going to do

285
00:15:01,160 --> 00:15:03,000
Speaker 1: that and they want to lose. They can't lose faith

286
00:15:03,400 --> 00:15:05,760
Speaker 1: now they can't. They can't turn around. It's a big mistake.

287
00:15:06,120 --> 00:15:08,600
Speaker 1: I totally agree with you, the huge mistaken I was

288
00:15:08,600 --> 00:15:11,600
Speaker 1: reading some of the reporting over the weekend about this

289
00:15:11,960 --> 00:15:14,840
Speaker 1: China Congress and some of the statements in it. If

290
00:15:14,960 --> 00:15:20,000
Speaker 1: it just feels like China is is, you know, setting

291
00:15:20,000 --> 00:15:23,520
Speaker 1: itself up for a China against the rest of the world.

292
00:15:24,280 --> 00:15:28,000
Speaker 1: Is that you're reading as well. I think that's the possibility.

293
00:15:28,120 --> 00:15:31,640
Speaker 1: I do think that China, for like I said, demographic

294
00:15:31,720 --> 00:15:34,960
Speaker 1: reasons and a lot of discontent in the population. The

295
00:15:35,000 --> 00:15:37,680
Speaker 1: whole China dream thing doesn't seem to be working out

296
00:15:37,720 --> 00:15:41,400
Speaker 1: so well. You know, today they delayed their GDP numbers.

297
00:15:41,440 --> 00:15:43,560
Speaker 1: That can't be a good sign. So I think that's

298
00:15:43,600 --> 00:15:45,840
Speaker 1: just a lot of things going on that are very,

299
00:15:45,920 --> 00:15:49,440
Speaker 1: very negative for China, right. And I think in in

300
00:15:49,680 --> 00:15:54,880
Speaker 1: situations where you have weak countries or declining countries, that's

301
00:15:54,880 --> 00:15:57,440
Speaker 1: when the risk for confrontation is always the greatest. You

302
00:15:57,480 --> 00:16:00,600
Speaker 1: saw that in Russia. We've seen this all over world history.

303
00:16:00,640 --> 00:16:03,800
Speaker 1: I think it's a pretty dangerous situation. Yeah. On the

304
00:16:03,840 --> 00:16:07,600
Speaker 1: other hand, he didn't seem terribly hawkish ari E Taiwan.

305
00:16:07,640 --> 00:16:11,840
Speaker 1: I mean, he was, as I guess, um protective as

306
00:16:11,840 --> 00:16:17,040
Speaker 1: you'd expect, but he seemed to indicate that the question

307
00:16:17,080 --> 00:16:20,520
Speaker 1: is still an open one. Yeah. I think the taiwan

308
00:16:20,640 --> 00:16:22,960
Speaker 1: Is situation is a very long term situation, and I

309
00:16:23,000 --> 00:16:28,800
Speaker 1: think everybody recognizes the tremendous mutual dependency between the West

310
00:16:28,960 --> 00:16:32,560
Speaker 1: and China, right, it would be an absolute catastrophe economically

311
00:16:32,640 --> 00:16:37,200
Speaker 1: for everybody. And the path in China between the regime

312
00:16:37,280 --> 00:16:41,040
Speaker 1: and the population is that there will be growth, right,

313
00:16:41,280 --> 00:16:43,920
Speaker 1: and if there's no growth then they have a trouble.

314
00:16:44,120 --> 00:16:50,200
Speaker 1: The problem is there or is there developing a technology

315
00:16:50,360 --> 00:16:54,720
Speaker 1: cold war between China and the West. Well, certainly the

316
00:16:55,240 --> 00:16:58,680
Speaker 1: West has recognized that they have some power over China, right,

317
00:16:58,760 --> 00:17:02,040
Speaker 1: interesting enough that Trump harvers were never removed. The Chips

318
00:17:02,080 --> 00:17:05,040
Speaker 1: Act is a good thing. The West is beginning to

319
00:17:05,359 --> 00:17:10,120
Speaker 1: throttle technology, advanced technology going into China and China it's

320
00:17:10,160 --> 00:17:13,000
Speaker 1: clearly trying to build you know, their own stuff. But

321
00:17:13,119 --> 00:17:16,159
Speaker 1: you can also see it very interestingly h in the

322
00:17:16,440 --> 00:17:20,520
Speaker 1: the SML, the Dutch chip making equipment company, has record

323
00:17:20,640 --> 00:17:24,000
Speaker 1: orders despite you know, looming recession. Well why is that? Right?

324
00:17:24,560 --> 00:17:28,679
Speaker 1: Clearly the West is preparing to move to production out

325
00:17:28,720 --> 00:17:31,680
Speaker 1: of China and Taiwan in particular. So I think we're

326
00:17:31,720 --> 00:17:37,320
Speaker 1: beginning to play that card. Is UM is China happily

327
00:17:38,640 --> 00:17:41,639
Speaker 1: uh contributing to the formation of a new world order,

328
00:17:41,800 --> 00:17:45,680
Speaker 1: of a new global paradigm with UM the US on

329
00:17:45,680 --> 00:17:52,000
Speaker 1: one side and China allied with Russia and Iran, India

330
00:17:52,280 --> 00:17:55,639
Speaker 1: possibly the Saudis on the other. It seems like an

331
00:17:55,680 --> 00:17:58,359
Speaker 1: odd group, right, So, I think China is obviously trying

332
00:17:58,440 --> 00:18:02,040
Speaker 1: to rival Western liberal democracy, and it seems like we're

333
00:18:02,040 --> 00:18:05,960
Speaker 1: doing our best to appear confused and chaotic. But at

334
00:18:06,000 --> 00:18:09,520
Speaker 1: the at the core bit right, nobody except North Korean

335
00:18:09,560 --> 00:18:13,359
Speaker 1: wants wants to move to China. Culturally, they're not leading,

336
00:18:13,760 --> 00:18:16,760
Speaker 1: they have a lot of issues around the liberalization of

337
00:18:16,800 --> 00:18:21,520
Speaker 1: the economy, they have not good demographics. They're probably facing

338
00:18:21,520 --> 00:18:24,080
Speaker 1: a middle income trap, which is common for those kinds

339
00:18:24,080 --> 00:18:27,359
Speaker 1: of countries. And people have seen what they've done to

340
00:18:27,400 --> 00:18:30,480
Speaker 1: Hong Kong, right, and they don't like it. You look

341
00:18:30,480 --> 00:18:32,320
Speaker 1: at Hong Kong, it's a it's a great example what

342
00:18:32,400 --> 00:18:35,439
Speaker 1: happened under the China Chinese system. Yeah, I mean I

343
00:18:35,440 --> 00:18:36,920
Speaker 1: think you know, early in my career, back in the

344
00:18:36,960 --> 00:18:39,119
Speaker 1: eighties and nineties and two thousands, of Hong Kong was

345
00:18:39,720 --> 00:18:42,359
Speaker 1: just the posting to get if you were wanted to

346
00:18:42,400 --> 00:18:44,240
Speaker 1: be a global banker, because it was really just the

347
00:18:44,800 --> 00:18:48,639
Speaker 1: gateway to Asia. Now, it's just it's such a sad

348
00:18:48,680 --> 00:18:50,400
Speaker 1: shame to see what's happening in Hong Kong. I mean,

349
00:18:50,440 --> 00:18:53,440
Speaker 1: just you know, corporations pulling their people out of Hong Kong,

350
00:18:53,480 --> 00:18:56,160
Speaker 1: and you know, sending in the Singapore and elsewhere. Will

351
00:18:56,200 --> 00:18:59,800
Speaker 1: we see a Do you think we'll see there's the

352
00:19:00,000 --> 00:19:01,440
Speaker 1: reason I think that's going to change? Is there for

353
00:19:01,480 --> 00:19:05,439
Speaker 1: Hong Kong? I don't think so. Yeah, it's interesting. It's

354
00:19:05,480 --> 00:19:07,560
Speaker 1: really said. All right, Hans Dole, thank you so much

355
00:19:07,720 --> 00:19:09,879
Speaker 1: for joining us. Hans Dow he's the CEO of Mitchell

356
00:19:10,480 --> 00:19:18,280
Speaker 1: Madison Tim Craig. Yet he's Director Research, Senior European strategist

357
00:19:18,280 --> 00:19:22,360
Speaker 1: Bloomberg Intelligence. He is one of the co founders any builders,

358
00:19:22,400 --> 00:19:27,119
Speaker 1: of Bloomberg Intelligence. Uh. And he's built our business in

359
00:19:27,160 --> 00:19:29,720
Speaker 1: the US and in Hawkong. We we banished them to

360
00:19:29,760 --> 00:19:31,440
Speaker 1: Hong Kong for four or five years and he built

361
00:19:31,480 --> 00:19:33,040
Speaker 1: that business over there in Hong Kong. And now we

362
00:19:33,080 --> 00:19:35,800
Speaker 1: got like seventy five analysts just covering all of the

363
00:19:36,040 --> 00:19:39,040
Speaker 1: escaped Hong Kong. And now he's in London. And he

364
00:19:39,080 --> 00:19:41,119
Speaker 1: did a prior term in London when he was with

365
00:19:41,200 --> 00:19:44,040
Speaker 1: Goldman Sachs for like twenty years, so he's been around

366
00:19:44,040 --> 00:19:45,399
Speaker 1: the horn. Nobody wants to work with him, so we

367
00:19:45,480 --> 00:19:47,680
Speaker 1: just keep sending him around the world and he does

368
00:19:48,000 --> 00:19:50,639
Speaker 1: make him sound really old. That's right. Tim talked to

369
00:19:50,720 --> 00:19:53,840
Speaker 1: us about the UK you're based in London. What are

370
00:19:53,880 --> 00:19:56,320
Speaker 1: clients saying over there? What are you telling clients about

371
00:19:56,480 --> 00:19:58,199
Speaker 1: kind of how to invest in the UK and Europe.

372
00:19:58,840 --> 00:20:02,920
Speaker 1: So if you read the headlines, I assume in particular

373
00:20:03,080 --> 00:20:05,840
Speaker 1: from here, yes, it must sound like all of Europe

374
00:20:05,840 --> 00:20:09,679
Speaker 1: and in particular the UK is like on fire in

375
00:20:09,680 --> 00:20:12,919
Speaker 1: a bad sort of way. Um, boots on the ground,

376
00:20:13,080 --> 00:20:17,600
Speaker 1: it feels a lot less bad. People are still out there,

377
00:20:17,680 --> 00:20:22,560
Speaker 1: still about They're still doing their daily activity. Um. But

378
00:20:22,720 --> 00:20:28,200
Speaker 1: the politics make for all sorts of big headlines, no doubt.

379
00:20:28,240 --> 00:20:31,119
Speaker 1: The energy crisis is a big deal. This winter is

380
00:20:31,160 --> 00:20:34,800
Speaker 1: going to be hard, um, and it depends on how

381
00:20:34,840 --> 00:20:37,520
Speaker 1: harsh the winter is much different than what you would

382
00:20:37,560 --> 00:20:42,160
Speaker 1: find here. But interesting enough, Um, you've got third quarter

383
00:20:42,200 --> 00:20:44,840
Speaker 1: earnings in the thick of things here right now are

384
00:20:44,960 --> 00:20:47,000
Speaker 1: starts over there over the course of the next week.

385
00:20:47,440 --> 00:20:51,920
Speaker 1: Earnings expectations are flat ish in the US for third

386
00:20:52,000 --> 00:20:58,040
Speaker 1: quarter earnings. Europe, Uh, thank you very much. A drop

387
00:20:58,080 --> 00:21:04,440
Speaker 1: of growth. Growth And if by chance you take energy out,

388
00:21:04,440 --> 00:21:06,800
Speaker 1: because that is a bigger deal in Europe than it

389
00:21:06,880 --> 00:21:12,280
Speaker 1: is here, it's twelve it's still twelve percent positive. Um,

390
00:21:12,320 --> 00:21:14,680
Speaker 1: I think that there is still that's the big question

391
00:21:15,040 --> 00:21:17,960
Speaker 1: is there earnings risk to come, but valuation is cheap.

392
00:21:18,600 --> 00:21:22,400
Speaker 1: Um earnings are been much better supported than what you've

393
00:21:22,400 --> 00:21:25,840
Speaker 1: seen here. It's just a really interesting compare and contrast. Well,

394
00:21:25,880 --> 00:21:30,000
Speaker 1: you do have big commodities companies, big energy companies. There's you,

395
00:21:30,080 --> 00:21:32,560
Speaker 1: as you pointed out here, where what very tech heavy

396
00:21:32,640 --> 00:21:37,280
Speaker 1: in the US UM totally different dynamic and a and

397
00:21:37,400 --> 00:21:39,239
Speaker 1: a and to you always point this out to me,

398
00:21:39,320 --> 00:21:43,320
Speaker 1: I mean the Footsie here to date rolling down six

399
00:21:43,800 --> 00:21:50,440
Speaker 1: whereas the sp So it's the it's the behn in

400
00:21:50,560 --> 00:21:55,760
Speaker 1: terms of if you've got sustained elevated energy prices inflation,

401
00:21:56,280 --> 00:21:59,560
Speaker 1: you want to be in value um, you want to

402
00:21:59,560 --> 00:22:05,600
Speaker 1: be in commodity producers as opposed to commodity buyers. And

403
00:22:05,680 --> 00:22:07,640
Speaker 1: the Footsie happens to have a chunk of that. Well,

404
00:22:07,720 --> 00:22:10,160
Speaker 1: you're only down six percent on the foot See if

405
00:22:10,160 --> 00:22:13,960
Speaker 1: you happened to have pounds previously invested in pounds and

406
00:22:13,960 --> 00:22:17,760
Speaker 1: you're looking at that investment now in pounds because Paul

407
00:22:17,800 --> 00:22:20,360
Speaker 1: Sweeney had had bought the foot see in dollars, you'd

408
00:22:20,400 --> 00:22:22,840
Speaker 1: be down. Let me let me give you a for

409
00:22:22,880 --> 00:22:25,320
Speaker 1: instance on this really quick. You know how currency here

410
00:22:25,359 --> 00:22:28,080
Speaker 1: obviously it's super strong that's a headwind for you for

411
00:22:28,200 --> 00:22:30,560
Speaker 1: US earnings. That's part of the reason why earnings this

412
00:22:30,640 --> 00:22:34,920
Speaker 1: period are so bad. Sand Vic a lot of people

413
00:22:34,960 --> 00:22:36,920
Speaker 1: wouldn't have heard of it, but it's a military school

414
00:22:37,040 --> 00:22:43,040
Speaker 1: right at Sandhurst. UM. Sand Vic is a Swedish machinery company.

415
00:22:43,040 --> 00:22:46,800
Speaker 1: They make machine tools and they're used globally. It's a

416
00:22:46,880 --> 00:22:50,280
Speaker 1: it's a bell whether it's a substantial company UM. They

417
00:22:50,320 --> 00:22:53,560
Speaker 1: reported their earnings today. If anybody should be susceptible to

418
00:22:53,640 --> 00:22:57,919
Speaker 1: global um economic weakness, it's them. They're the canary and

419
00:22:57,960 --> 00:23:02,640
Speaker 1: the proverbial coal mine if you if you look x

420
00:23:03,200 --> 00:23:06,560
Speaker 1: f X X currency no currency issue and a Swedish

421
00:23:06,600 --> 00:23:11,200
Speaker 1: corona has gotten pummeled more so than the pound. Revenue

422
00:23:11,240 --> 00:23:16,160
Speaker 1: was up eight percent um EBIT operating profit up five percent.

423
00:23:16,359 --> 00:23:19,239
Speaker 1: It was a bit of margin compression in there, but

424
00:23:19,600 --> 00:23:26,080
Speaker 1: still at elevated I think record operating margins amazing. Put

425
00:23:26,119 --> 00:23:32,000
Speaker 1: in the currency eight revenue growth more than eight and

426
00:23:32,359 --> 00:23:36,800
Speaker 1: operating earnings up twenty five. That shows you the weak

427
00:23:36,840 --> 00:23:40,040
Speaker 1: currency how it's a benefit in Europe versus it's a

428
00:23:40,160 --> 00:23:43,440
Speaker 1: real headwind here in the US. Are you sensing that

429
00:23:44,119 --> 00:23:46,879
Speaker 1: people have allocated maybe more capital to the UK and

430
00:23:46,960 --> 00:23:51,280
Speaker 1: Europe visa other parts of the world. It's frankly, it's

431
00:23:51,280 --> 00:23:54,159
Speaker 1: hard to tell that if you look at E t

432
00:23:54,320 --> 00:23:56,280
Speaker 1: F flow, for example, as a finger on the pulse

433
00:23:56,320 --> 00:23:59,760
Speaker 1: of this UM, there is no doubt that you can.

434
00:24:00,040 --> 00:24:02,520
Speaker 1: Let's say, in the UK u K E t F

435
00:24:02,640 --> 00:24:06,600
Speaker 1: buyers UM have been putting money in the market. One

436
00:24:06,680 --> 00:24:12,359
Speaker 1: of the big two US UK US based u K

437
00:24:12,640 --> 00:24:15,080
Speaker 1: E t F s has seen a little bit about flow,

438
00:24:15,400 --> 00:24:17,760
Speaker 1: the other one's been in flow. So you know, I

439
00:24:17,760 --> 00:24:20,840
Speaker 1: think it's a mixed picture globally, but local markets are

440
00:24:20,840 --> 00:24:24,080
Speaker 1: putting money to work. So the bottom line is earnings

441
00:24:24,119 --> 00:24:27,000
Speaker 1: doesn't look so bad right now, but wait till this

442
00:24:27,080 --> 00:24:31,320
Speaker 1: winter when the weather and increased financing costs started to

443
00:24:31,359 --> 00:24:33,640
Speaker 1: hit that that's that's part of it. The other thing

444
00:24:33,640 --> 00:24:35,439
Speaker 1: I would have to say is, you know, you can

445
00:24:35,480 --> 00:24:38,000
Speaker 1: only put so much on the currency. But once there

446
00:24:38,080 --> 00:24:40,960
Speaker 1: is more of a risk on appetite back in global markets,

447
00:24:41,240 --> 00:24:43,959
Speaker 1: the dollar is going to come down, European currencies are

448
00:24:43,960 --> 00:24:46,840
Speaker 1: gonna go up, and that headwind tailwind relationship is going

449
00:24:46,880 --> 00:24:49,400
Speaker 1: to change. Bottom line, we think global markets are well

450
00:24:49,440 --> 00:24:52,679
Speaker 1: priced in for recession. Alright, good stuff. Tim Carrot, Director

451
00:24:52,720 --> 00:24:58,440
Speaker 1: of Research, senior European strategist for Bloomberg Intelligence, the tech

452
00:24:58,480 --> 00:25:01,359
Speaker 1: heavy Nashdack. It's up three point two percent today, So

453
00:25:01,400 --> 00:25:03,000
Speaker 1: I figured it's a decent time to check in with

454
00:25:03,040 --> 00:25:07,159
Speaker 1: men Deep saying he covers all things technology for Bloomberg Intelligence,

455
00:25:07,200 --> 00:25:09,680
Speaker 1: and Man Deep, let's he's phoning it in. By the way,

456
00:25:09,720 --> 00:25:12,560
Speaker 1: I'll just point out to everybody, Um, let's talk about

457
00:25:12,640 --> 00:25:17,200
Speaker 1: roadblocks working in the metaverse. Yeah, I guess whatever, Uh roadblocks?

458
00:25:17,280 --> 00:25:22,000
Speaker 1: What is it? And why is the stock up today? Well,

459
00:25:22,119 --> 00:25:25,560
Speaker 1: so I think Matt alluded to it, and uh, I

460
00:25:25,600 --> 00:25:28,840
Speaker 1: am you know in the Metal Words and the reason

461
00:25:28,960 --> 00:25:32,280
Speaker 1: why this stock is up is you know, this stock

462
00:25:32,800 --> 00:25:36,000
Speaker 1: is a pure play metal words company. There was this

463
00:25:36,040 --> 00:25:40,320
Speaker 1: news today about metal So losing engagement with its Horizon worlds.

464
00:25:40,400 --> 00:25:42,840
Speaker 1: And in the case of Roadblocks, they give you these

465
00:25:42,880 --> 00:25:47,440
Speaker 1: monthly metrics, so essentially their booking's guide is much better

466
00:25:47,480 --> 00:25:51,280
Speaker 1: than what Consensus has baked in for their three Q

467
00:25:51,760 --> 00:25:56,360
Speaker 1: and uh they're guiding to about you know, mid teens

468
00:25:56,440 --> 00:26:01,320
Speaker 1: growth and their engagement continues to be wrong. So net Net,

469
00:26:01,480 --> 00:26:06,040
Speaker 1: I think they were laughing tough comps and what we

470
00:26:06,080 --> 00:26:09,360
Speaker 1: are seeing now is the company clearly has a long

471
00:26:09,480 --> 00:26:12,679
Speaker 1: runway in terms of adding daily active users. Remember this

472
00:26:12,720 --> 00:26:15,520
Speaker 1: platform was all about the nine to thirteen year olds.

473
00:26:15,760 --> 00:26:19,760
Speaker 1: Now they're expanding their base to more, you know, the

474
00:26:19,960 --> 00:26:24,120
Speaker 1: seventeen plus users and more adult users, and uh they

475
00:26:24,119 --> 00:26:26,960
Speaker 1: continue to show both you know, user growth as well

476
00:26:26,960 --> 00:26:30,080
Speaker 1: as engagement growth. So are you a creator man? Are

477
00:26:30,119 --> 00:26:33,359
Speaker 1: you a Roadblocks creator? I am not, but I do

478
00:26:33,480 --> 00:26:37,200
Speaker 1: have the studio installed on my PC and I keep

479
00:26:37,280 --> 00:26:40,879
Speaker 1: looking at the amount of user generated content that comes

480
00:26:40,920 --> 00:26:44,440
Speaker 1: from this platform. It's just, uh, you know, amazing how

481
00:26:44,520 --> 00:26:47,480
Speaker 1: much content gets created. And that is the challenge that

482
00:26:47,560 --> 00:26:50,919
Speaker 1: Meta is facing is even though they have spent so

483
00:26:51,040 --> 00:26:54,679
Speaker 1: much money, they don't have that creative base. That's the

484
00:26:54,720 --> 00:26:58,800
Speaker 1: base they're looking for, which Roadblocks has, and right now

485
00:26:58,960 --> 00:27:03,280
Speaker 1: Meta is struggling to bring those creators to the Horizon worlds. Like,

486
00:27:03,400 --> 00:27:07,440
Speaker 1: think of all the metaversees as wall gardens, so everyone

487
00:27:07,520 --> 00:27:10,680
Speaker 1: is incubating their own wall garden. Obviously, Roadblocks as a

488
00:27:11,960 --> 00:27:15,480
Speaker 1: year old lead compared to you know, Horizon Volts, which

489
00:27:15,560 --> 00:27:18,800
Speaker 1: is fairly new. But that's what Meta needs to really

490
00:27:18,880 --> 00:27:23,199
Speaker 1: drive the adoption. So what does this mean? I guess um,

491
00:27:23,320 --> 00:27:25,760
Speaker 1: the reason for the increase is people are betting on

492
00:27:25,840 --> 00:27:29,600
Speaker 1: the future of the metaverse being I don't want to

493
00:27:29,640 --> 00:27:34,720
Speaker 1: say owned, but um dominated by roadblocks? Is that the case? Well,

494
00:27:34,800 --> 00:27:38,960
Speaker 1: so right now, if I had to pinpoint one platform

495
00:27:39,040 --> 00:27:42,560
Speaker 1: that has the most traction, it's Roadblocks and the second

496
00:27:42,560 --> 00:27:45,840
Speaker 1: one would be Epic Fortnite. Like those are the two

497
00:27:45,920 --> 00:27:49,080
Speaker 1: main uh kind of meta worse place. And then you

498
00:27:49,080 --> 00:27:54,440
Speaker 1: have Unity as a gaming engine. Remember Unity doesn't have uh,

499
00:27:54,480 --> 00:27:57,000
Speaker 1: you know, a meta worse platform. They just provide you

500
00:27:57,040 --> 00:28:00,320
Speaker 1: the gaming engine. But essentially these are the three it

501
00:28:00,400 --> 00:28:02,280
Speaker 1: what does the gaming engine is that like a chip

502
00:28:02,680 --> 00:28:06,480
Speaker 1: or what? No, No gaming engine is just uh, you know,

503
00:28:07,160 --> 00:28:11,960
Speaker 1: a middleware software that any contward us yes, so to

504
00:28:12,119 --> 00:28:15,320
Speaker 1: deploy a new games. So think of you know, Grand

505
00:28:15,359 --> 00:28:18,760
Speaker 1: Theft Auto or what Activision and EA have. Those are

506
00:28:18,840 --> 00:28:21,920
Speaker 1: like the big publishers, but the reason why they've been

507
00:28:21,920 --> 00:28:25,399
Speaker 1: struggling is because of all the user generated content in

508
00:28:25,480 --> 00:28:28,800
Speaker 1: gaming that you know, people have moved away or I

509
00:28:28,840 --> 00:28:31,240
Speaker 1: would say they're not spending as much time on Grand

510
00:28:31,280 --> 00:28:33,399
Speaker 1: Theft Auto as they used to because there's so much

511
00:28:33,440 --> 00:28:36,880
Speaker 1: other type of or red dead, redemption, call of duty.

512
00:28:36,920 --> 00:28:39,600
Speaker 1: I would have thought Fortnite loses out there too because

513
00:28:40,680 --> 00:28:44,840
Speaker 1: um or can you build your own worlds? In Fortnite

514
00:28:44,840 --> 00:28:48,400
Speaker 1: the way you can in Roadblocks, you can. Yes, So

515
00:28:48,480 --> 00:28:51,800
Speaker 1: that's the change that they've made is they have opened

516
00:28:51,880 --> 00:28:57,000
Speaker 1: up the platform for users to again build their own content.

517
00:28:57,160 --> 00:29:00,480
Speaker 1: They give you gaming engine, and so yes, they have

518
00:29:01,200 --> 00:29:04,160
Speaker 1: kind of opened it up for user generated content. All right, Man,

519
00:29:04,200 --> 00:29:09,040
Speaker 1: the Facebook a k A. Meta platforms. What's the current

520
00:29:09,200 --> 00:29:14,880
Speaker 1: market thinking on this company, on this stock, on this transformation, Uh,

521
00:29:14,960 --> 00:29:19,400
Speaker 1: you know, in the early stages. Yeah, So clearly market

522
00:29:19,520 --> 00:29:23,760
Speaker 1: isn't too excited about, you know, the kind of opex

523
00:29:23,800 --> 00:29:27,040
Speaker 1: they are spending on reality labs. And look, I think

524
00:29:27,080 --> 00:29:29,640
Speaker 1: it's a hard thing right now to pinpoint in terms

525
00:29:29,640 --> 00:29:32,920
Speaker 1: of what the company will look like five ten years downline.

526
00:29:32,920 --> 00:29:36,760
Speaker 1: But clearly the engagement is declining in their core apps

527
00:29:36,840 --> 00:29:40,760
Speaker 1: and reality labs isn't really picking up. Although I would say,

528
00:29:40,840 --> 00:29:44,120
Speaker 1: you know, if Apple enters this market, then we are

529
00:29:44,240 --> 00:29:46,760
Speaker 1: will be a big category. We know that the problem

530
00:29:47,240 --> 00:29:51,080
Speaker 1: for Meta or Facebook is nobody trust them right now.

531
00:29:51,160 --> 00:29:55,080
Speaker 1: So VR will involve capturing even more data than they

532
00:29:55,120 --> 00:29:58,440
Speaker 1: capture in their social media apps. And you know, when

533
00:29:58,480 --> 00:30:01,760
Speaker 1: you think about you know, the monetization will work, you know,

534
00:30:01,800 --> 00:30:05,280
Speaker 1: showing ads or some other form wolf uh kind of

535
00:30:05,320 --> 00:30:10,160
Speaker 1: token based monetization. It involves crunching that data, you know,

536
00:30:10,480 --> 00:30:15,360
Speaker 1: basically personalizing stuff, and uh, no one trust them even

537
00:30:15,840 --> 00:30:18,640
Speaker 1: you know when it comes to creators, they're developing all

538
00:30:18,680 --> 00:30:22,400
Speaker 1: these games on roadblocks because they feel that's a better platform.

539
00:30:22,440 --> 00:30:25,480
Speaker 1: Brands their platform, and and that's the challenge, bigger challenge.

540
00:30:25,560 --> 00:30:28,320
Speaker 1: I feel that Meta hats alright, interesting stuff. I'm looking

541
00:30:28,320 --> 00:30:30,160
Speaker 1: at Meta here. I mean, still a three or fifty

542
00:30:30,160 --> 00:30:34,320
Speaker 1: billion market cap company, but stocks down six zero percent,

543
00:30:34,880 --> 00:30:37,120
Speaker 1: so they got some work to do. Uh their Mendeve

544
00:30:37,200 --> 00:30:41,560
Speaker 1: singh Uh. He is a technology analyst for Bloomberg Intelligence.

545
00:30:42,080 --> 00:30:43,680
Speaker 1: I think he's a three day a week guy. Is

546
00:30:43,840 --> 00:30:47,000
Speaker 1: how they get in on this? Well, yeah, he's look,

547
00:30:47,040 --> 00:30:49,280
Speaker 1: you can work, you can work. I know that's what

548
00:30:49,320 --> 00:30:51,000
Speaker 1: they say. But you should have come in today because

549
00:30:51,000 --> 00:30:53,000
Speaker 1: I think we get COVID shots today. You're getting your

550
00:30:53,000 --> 00:30:55,520
Speaker 1: COVID shot today. Next week, I think sometime coming up.

551
00:30:55,560 --> 00:30:56,960
Speaker 1: I don't know, we'll see, but I'm getting it though.

552
00:30:57,000 --> 00:30:58,920
Speaker 1: Why not jab me up? That's but we offer it

553
00:30:59,000 --> 00:31:01,040
Speaker 1: Mondays and Fridays so that people like me and Deep

554
00:31:01,080 --> 00:31:03,080
Speaker 1: come in on Monday or Friday. Let maybe I'll walk

555
00:31:03,080 --> 00:31:08,480
Speaker 1: down and check it out. Matt, you watched the show's succession.

556
00:31:09,880 --> 00:31:13,640
Speaker 1: I do not need to get on that. First of all,

557
00:31:13,760 --> 00:31:16,960
Speaker 1: I do want to, but second of all, it's loosely

558
00:31:17,120 --> 00:31:19,560
Speaker 1: not very I wouldn't even say loosely based, but but

559
00:31:19,640 --> 00:31:22,640
Speaker 1: loosely based on Rupert Murdoc and his faunily and his

560
00:31:22,920 --> 00:31:24,800
Speaker 1: company and all that kind of stuff. And you know,

561
00:31:25,320 --> 00:31:27,800
Speaker 1: recently or not recent bit, but years ago they separated

562
00:31:28,040 --> 00:31:31,480
Speaker 1: the slow growing print business into News Corporation, and then

563
00:31:31,520 --> 00:31:34,200
Speaker 1: they kept the fast growing cable networks and stuff like

564
00:31:34,240 --> 00:31:37,600
Speaker 1: that in Fox. Uh. They sold most of that cable

565
00:31:37,640 --> 00:31:40,480
Speaker 1: stuff to Disney I think, and now they're talking about

566
00:31:40,600 --> 00:31:44,479
Speaker 1: reuniting the two companies together. So other than the investment bankers,

567
00:31:44,480 --> 00:31:47,080
Speaker 1: I'm not not sure who wins here. But let's bring

568
00:31:47,080 --> 00:31:49,600
Speaker 1: in somebody who does this stuff as an expert. Either

569
00:31:49,720 --> 00:31:54,120
Speaker 1: Ranathan Bloomberg Intelligence. She covers all things media, t MT,

570
00:31:54,240 --> 00:31:57,040
Speaker 1: pretty much anything uh she wants. She's got that kind

571
00:31:57,080 --> 00:31:59,240
Speaker 1: of credibility on the streets. So Ethan, what is Rupert

572
00:31:59,280 --> 00:32:02,960
Speaker 1: Murdoc doing these days? Yes, so thanks Paul, thanks for

573
00:32:03,000 --> 00:32:05,800
Speaker 1: having me. So he is trying to again put these

574
00:32:05,840 --> 00:32:09,040
Speaker 1: businesses back together, very similar to what we've seen with

575
00:32:09,320 --> 00:32:13,280
Speaker 1: you know, Viacom, and CBS. Uh now kind of recombined

576
00:32:13,280 --> 00:32:16,400
Speaker 1: into paramount. These two businesses, though they're very very different.

577
00:32:16,440 --> 00:32:19,040
Speaker 1: As you rightly pointed out, Fox is you know, really

578
00:32:19,080 --> 00:32:22,480
Speaker 1: a TV pure play. News scope, on the other hand,

579
00:32:22,600 --> 00:32:26,840
Speaker 1: is really this very interesting mix of different assets. So

580
00:32:26,920 --> 00:32:29,400
Speaker 1: you know, obviously they have dow Jones. They also own

581
00:32:29,600 --> 00:32:32,480
Speaker 1: Fox Style, which is an Australian pay TV operator. They

582
00:32:32,480 --> 00:32:35,000
Speaker 1: have a book publishing business. They of course have all

583
00:32:35,040 --> 00:32:38,600
Speaker 1: of the newspaper businesses, and then most importantly they have

584
00:32:38,720 --> 00:32:42,840
Speaker 1: a big presence in digital real estate. So people really

585
00:32:42,880 --> 00:32:45,640
Speaker 1: at this point not kind of quite able to figure

586
00:32:45,680 --> 00:32:48,640
Speaker 1: out what is going to happen if he does indeed

587
00:32:48,720 --> 00:32:51,800
Speaker 1: put a very very diverse set of assets back together.

588
00:32:51,960 --> 00:32:55,000
Speaker 1: Hang on, did you say digital real estate? Yes? I did.

589
00:32:55,680 --> 00:33:00,840
Speaker 1: What are you talking about the metaverse? Litha doesn't do

590
00:33:00,880 --> 00:33:04,240
Speaker 1: the metaverse? What is that? Is it n f T s?

591
00:33:04,280 --> 00:33:07,040
Speaker 1: He has a bunch of n f T s. No, No,

592
00:33:07,120 --> 00:33:10,120
Speaker 1: it's what it really is, is you know, listings, property

593
00:33:10,200 --> 00:33:13,960
Speaker 1: listings on on websites like like a Move, like a Zillow.

594
00:33:14,720 --> 00:33:16,920
Speaker 1: So he owns actually some News Corp actually owns an

595
00:33:16,920 --> 00:33:19,600
Speaker 1: eight percent stake in move dot Com, as well as

596
00:33:19,600 --> 00:33:22,800
Speaker 1: a sixty percent stake in one of the online or

597
00:33:22,840 --> 00:33:26,320
Speaker 1: the leading online real estate Australian platforms, which is called

598
00:33:26,320 --> 00:33:29,640
Speaker 1: the r A Group. M So it's gonna be it's

599
00:33:29,640 --> 00:33:32,440
Speaker 1: gonna be a tough road ahead for those real estate companies. Yeah,

600
00:33:32,440 --> 00:33:35,080
Speaker 1: I think so. So you know, the stock of Fox

601
00:33:35,440 --> 00:33:38,040
Speaker 1: fox A it's trading down, the stock of News Corps,

602
00:33:38,240 --> 00:33:40,960
Speaker 1: the print assets, it's trading up. That kind of tells

603
00:33:41,000 --> 00:33:45,360
Speaker 1: you what the market thinks here. So is this I mean,

604
00:33:45,440 --> 00:33:48,760
Speaker 1: he controls both companies here, So does this have anything

605
00:33:48,800 --> 00:33:51,959
Speaker 1: to do with the family control in succession? To use

606
00:33:52,000 --> 00:33:56,000
Speaker 1: the term? I think so. I think he's definitely trying to, uh,

607
00:33:56,600 --> 00:33:58,840
Speaker 1: you know, kind of bring the band back together, if

608
00:33:58,840 --> 00:34:03,080
Speaker 1: you will. But it's also kind of an admission that, um,

609
00:34:03,120 --> 00:34:07,040
Speaker 1: you know, maybe the whole lean and mean strategy at

610
00:34:07,120 --> 00:34:09,920
Speaker 1: Fox is not really going to play out in the

611
00:34:10,000 --> 00:34:12,600
Speaker 1: long term. So I think why investors have kind of

612
00:34:12,640 --> 00:34:15,920
Speaker 1: really liked Fox so much is because the narrative is

613
00:34:15,920 --> 00:34:18,480
Speaker 1: so simple, right. They have a very pure news and

614
00:34:18,520 --> 00:34:22,880
Speaker 1: sports focus. They're heavily tied to the PayTV ecosystem, and

615
00:34:22,920 --> 00:34:24,680
Speaker 1: the good thing that investors have kind of liked is

616
00:34:24,680 --> 00:34:26,520
Speaker 1: that they have not been kind of bogged down by

617
00:34:26,520 --> 00:34:28,680
Speaker 1: these billions and billions of dollars that are required to

618
00:34:28,719 --> 00:34:31,799
Speaker 1: fight the streaming wars. But I think in the end

619
00:34:31,880 --> 00:34:34,480
Speaker 1: everybody is kind of realizing that you do need you

620
00:34:34,520 --> 00:34:36,040
Speaker 1: do need to have a presence. First of all, you

621
00:34:36,080 --> 00:34:38,640
Speaker 1: do need to have a digital presence um and then

622
00:34:38,680 --> 00:34:40,840
Speaker 1: you need to build scale in streaming. And so I

623
00:34:40,880 --> 00:34:42,960
Speaker 1: think what you know, Rupert MURDACU is trying to do

624
00:34:43,040 --> 00:34:45,640
Speaker 1: is kind of trying trying to get that digital exposure

625
00:34:45,800 --> 00:34:49,800
Speaker 1: back to Fox, uh, you know, under the combined umbrella.

626
00:34:49,880 --> 00:34:51,840
Speaker 1: But I'm not sure investors are really kind of buying

627
00:34:51,840 --> 00:34:55,759
Speaker 1: it just yet. So um, I mean, what's the deal

628
00:34:55,840 --> 00:34:59,120
Speaker 1: with Rupert? He was I think already running newspapers back

629
00:34:59,120 --> 00:35:02,000
Speaker 1: when Queen Elizabeth was born. I mean, this guy is

630
00:35:02,800 --> 00:35:06,600
Speaker 1: ninety one years old. Is he still making all of

631
00:35:06,640 --> 00:35:09,440
Speaker 1: these changes himself or is it you know, Lachlan and

632
00:35:09,520 --> 00:35:13,000
Speaker 1: James and the next generation that's doing it. I think

633
00:35:13,000 --> 00:35:16,080
Speaker 1: he is pretty much still very very much in charge.

634
00:35:16,160 --> 00:35:19,640
Speaker 1: But I think if the deal does go through, it

635
00:35:19,719 --> 00:35:22,719
Speaker 1: will be so Lachlan Murdoch right now is CEO of

636
00:35:23,280 --> 00:35:28,760
Speaker 1: Fox corp um And if if the recombination does indeed

637
00:35:28,800 --> 00:35:32,600
Speaker 1: go through, I think it does consolidate power in Lachland's hands.

638
00:35:33,120 --> 00:35:35,759
Speaker 1: All right, let's switch gears a little bit. Githa. Uh,

639
00:35:36,239 --> 00:35:42,080
Speaker 1: Netflix reports, I think earning exam for the close tomorrow. Boy,

640
00:35:42,080 --> 00:35:45,640
Speaker 1: this stock, it's it's down over the last year, although

641
00:35:45,640 --> 00:35:49,400
Speaker 1: it's up pretty significantly off of its low. What's the

642
00:35:49,400 --> 00:35:53,319
Speaker 1: market call on Netflix these days? Yeah, so, you know,

643
00:35:53,360 --> 00:35:57,640
Speaker 1: obviously the sentiment really soured after they reported subscriber losses

644
00:35:57,640 --> 00:36:00,520
Speaker 1: for the very first time I think their history. Um,

645
00:36:00,560 --> 00:36:03,000
Speaker 1: they lost about one point two million subscribers in the

646
00:36:03,040 --> 00:36:05,840
Speaker 1: first half of this year. I don't think the market

647
00:36:05,920 --> 00:36:08,279
Speaker 1: is too much focused on subscriber growth for the third

648
00:36:08,360 --> 00:36:10,799
Speaker 1: quarter itself, I think it's going to be pretty uninspiring.

649
00:36:10,800 --> 00:36:12,960
Speaker 1: Maybe they add about a million subscribers. I think what

650
00:36:13,040 --> 00:36:16,839
Speaker 1: we're really kind of looking for is really how much

651
00:36:16,960 --> 00:36:19,440
Speaker 1: can they boost their subscriber growth. And the big thing

652
00:36:19,480 --> 00:36:23,560
Speaker 1: that they're doing now is they're introducing a new ad

653
00:36:23,600 --> 00:36:27,120
Speaker 1: based tier. And what that does is it really kind

654
00:36:27,160 --> 00:36:30,680
Speaker 1: of makes Netflix accessible to a whole new market because

655
00:36:30,680 --> 00:36:33,520
Speaker 1: they're pricing it very, very attractively. It's a seven dollar

656
00:36:33,640 --> 00:36:37,080
Speaker 1: price point. The usual Netflix subscription typically cost you about

657
00:36:37,120 --> 00:36:39,160
Speaker 1: fifteen and a half dollars, so it's it's less than

658
00:36:39,200 --> 00:36:42,719
Speaker 1: half the cost um. So so the point is how

659
00:36:42,840 --> 00:36:45,760
Speaker 1: much can they really kind of boost the subscriber growth

660
00:36:45,760 --> 00:36:48,440
Speaker 1: with that new ad tier? And I think that's what

661
00:36:48,560 --> 00:36:50,560
Speaker 1: kind of you know, investors are kind of hoping to

662
00:36:50,640 --> 00:36:53,759
Speaker 1: hear when they report tomorrow how much I mean, are

663
00:36:53,840 --> 00:36:56,520
Speaker 1: you expecting because when you say less than half, that

664
00:36:56,600 --> 00:36:58,520
Speaker 1: sounds huge. But if you tell me I only have

665
00:36:58,600 --> 00:37:00,480
Speaker 1: to pay seven dollars a month to get rid of

666
00:37:00,480 --> 00:37:04,160
Speaker 1: the ads, you know, it doesn't seem like a big job.

667
00:37:04,719 --> 00:37:08,359
Speaker 1: So cannibalization is a huge problem, Matt. So you know

668
00:37:08,360 --> 00:37:10,080
Speaker 1: that there is this fear that you know, they are

669
00:37:10,160 --> 00:37:12,880
Speaker 1: kind of diluting the value of that of that Netflix

670
00:37:12,920 --> 00:37:15,279
Speaker 1: product because there might be a huge just kind of

671
00:37:15,280 --> 00:37:19,080
Speaker 1: given the recessionary environment inflationary pressures, we might have a

672
00:37:19,160 --> 00:37:21,800
Speaker 1: huge portion of the subscriber based kind of trading down

673
00:37:22,120 --> 00:37:25,400
Speaker 1: and so you're you're losing subscription revenue. But the upside

674
00:37:25,560 --> 00:37:29,200
Speaker 1: is that just kind of given Netflix is captive audience,

675
00:37:29,280 --> 00:37:32,440
Speaker 1: we know that subscribers typically spend about two two and

676
00:37:32,440 --> 00:37:36,280
Speaker 1: a half hours every day on this platform. The upside

677
00:37:36,320 --> 00:37:38,160
Speaker 1: is that they are going to be able to charge

678
00:37:38,200 --> 00:37:42,680
Speaker 1: advertisers a huge premium so we're looking at rates right

679
00:37:42,719 --> 00:37:45,360
Speaker 1: now that Netflix is charging that's almost three x to

680
00:37:45,480 --> 00:37:48,680
Speaker 1: four x the usual market value. And so the point

681
00:37:48,719 --> 00:37:50,160
Speaker 1: is that they're going to be able to make it

682
00:37:50,239 --> 00:37:52,440
Speaker 1: up the lost subscription revenue. They're going to be able

683
00:37:52,480 --> 00:37:54,960
Speaker 1: to make it up through advertising. So Kith it just

684
00:37:54,960 --> 00:37:58,480
Speaker 1: real quickly, what's the market's call on just streaming in general?

685
00:37:58,520 --> 00:38:01,080
Speaker 1: There was a time there when just adding subscribers was

686
00:38:01,160 --> 00:38:03,440
Speaker 1: all the stock needed to work, Like I'm thinking of Disney.

687
00:38:03,480 --> 00:38:07,440
Speaker 1: But have those days passed? Yeah, that that those have? Unfortunately,

688
00:38:07,520 --> 00:38:11,080
Speaker 1: now it's all down to streaming profitability, and so all

689
00:38:11,120 --> 00:38:13,840
Speaker 1: of these companies, I mean, we're we've moved past, you know,

690
00:38:13,840 --> 00:38:17,440
Speaker 1: that hyper focus on subscribers. We're really looking now at margins.

691
00:38:18,080 --> 00:38:21,080
Speaker 1: We're looking at free cash flow um, and so all

692
00:38:21,120 --> 00:38:24,040
Speaker 1: of these companies are now trying to, uh, you know,

693
00:38:24,120 --> 00:38:28,520
Speaker 1: figure out how to curtail their investments and still kind

694
00:38:28,520 --> 00:38:33,680
Speaker 1: of achieve good profitability metrics. Alright. Keith a great stuff

695
00:38:33,719 --> 00:38:36,480
Speaker 1: as always keither wrong or nothing. She covers all things

696
00:38:36,640 --> 00:38:40,799
Speaker 1: media on a global basis for Bloomberg Intelligence. She's one

697
00:38:40,880 --> 00:38:44,480
Speaker 1: of the founding analysts members of Bloomberg Intelligence, and she's

698
00:38:44,520 --> 00:38:46,560
Speaker 1: been She does a great job, so you can read

699
00:38:46,600 --> 00:38:48,680
Speaker 1: all of her research. If you have a terminal b

700
00:38:49,000 --> 00:38:54,960
Speaker 1: I go. Thanks for listening to the Bloomberg Markets podcast.

701
00:38:55,360 --> 00:38:58,560
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts

702
00:38:58,719 --> 00:39:02,640
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

703
00:39:02,640 --> 00:39:06,680
Speaker 1: on Twitter at Matt miller y three. On Fall Sweeney,

704
00:39:06,680 --> 00:39:09,360
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You

705
00:39:09,360 --> 00:39:11,759
Speaker 1: can always catch us worldwide at Bloomberg Radio