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Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma wits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Very cool deal today in the

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Speaker 1: betting space, DraftKings is going public in a three way

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Speaker 1: deal with gaming technology provider sp Tech and an acquisition

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Speaker 1: fund founded by former Hollywood executive Jeff Saganski that values

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Speaker 1: a new firm about three point three billion dollars. We're

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Speaker 1: very fortunate to today to have Jason Robberts. He is

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Speaker 1: the CEO of draft Kings. He's in a Bloomberg and

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Speaker 1: Director Brooker studio. Jason, thanks so much for joining us.

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Speaker 1: I know it's a busy day. Describe this deal. You're

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Speaker 1: not doing an I p O, you're not being acquired,

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Speaker 1: tell us kind of how this really works. Well, thank

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Speaker 1: you for having me, and happy holidays to everybody. Um So,

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Speaker 1: this is a three way merger of DraftKings sp Tech,

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Speaker 1: which is one of the world's leading technology g risk

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Speaker 1: management and trading operators. Um. They provide services sports books

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Speaker 1: all over the world. Uh. And then a spack company,

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Speaker 1: special purpose acquisition company called Diamond Eagle. The way it

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Speaker 1: works is Diamond Eagle as raised previously four hundred million

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Speaker 1: dollars in cash. And UM. The way they did that

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Speaker 1: as they went around various shareholders and they told them

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Speaker 1: the types of businesses they would be interested in doing

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Speaker 1: a deal with, and number one on their list was

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Speaker 1: a sports betting business. So UM, you know really, Uh,

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Speaker 1: the shareholders hopefully are are excited about this and um,

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Speaker 1: once the deal closes, the company will be renamed DraftKings.

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Speaker 1: It will be publicly traded. And the cash that's there,

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Speaker 1: as well as the pipe that we raised, which is

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Speaker 1: a little over three million dollar pipe is a private investment. Yeah,

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Speaker 1: so the pipe is exactly it's a it's a private

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Speaker 1: investment that go it rolls into the public stock. Um.

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Speaker 1: We had great groups participate, UM like Cap Research, Wellington, Franklin, Templeton.

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Speaker 1: So that'll all roll into the eventual close of the

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Speaker 1: stock ex season closed of the deal, at which point

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Speaker 1: Draft Kings will become a publicly traded stock. Okay, So

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Speaker 1: tell me about the sports betting business today. It's rapidly changing.

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Speaker 1: We're getting states like New Jersey. So I'm seeing all

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Speaker 1: these folks from New York driving through the Lincoln Tunnel

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Speaker 1: placing their bets, I guess, and then driving back. Tell

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Speaker 1: us about what's going on in the sports betting business

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Speaker 1: right now? Uh? Well, right now, there's tremendous momentum around

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Speaker 1: legalization and regulation in the states. Uh. So, just in

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Speaker 1: the last year, several new states have passed legislation, Several

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Speaker 1: new states have launched products draft Kings ourselves, uh launched

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Speaker 1: our online sports book UM last year in New Jersey.

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Speaker 1: But just in the last few months we've launched West Virginia, Indiana, Pennsylvania, UM,

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Speaker 1: New Hampshire will be hopefully coming soon. So a lot

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Speaker 1: of great momentum behind states, you know, quickly adopting this.

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Speaker 1: Now that this Preme Court, Uh, you know, about a

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Speaker 1: year and a half ago lifted the federal band. So

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Speaker 1: why isn't there But there isn't a federal legalization of

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Speaker 1: sports betting? Right? Why isn't there one? There's actually a

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Speaker 1: very interesting legal history. I'm not a lawyer, but I

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Speaker 1: find it fascinating. So there's this law called passa Professional

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Speaker 1: Amateur Sports Protection Act, and it never said sports betting

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Speaker 1: is illegal. That's why you could always go to Vegas

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Speaker 1: and other parts of Nevada and bet on sports. It

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Speaker 1: just said no new states can legalize no new states

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Speaker 1: can add sports betting to uh make it legal. So, um,

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Speaker 1: you know, that stood in place for about twenty five

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Speaker 1: or so years, and um, you know New Jersey tried

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Speaker 1: to legalize sports betting. That law was used to to

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Speaker 1: stop them. Uh, they took it all the way up

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Speaker 1: and eventually one in the Supreme Court with you know, again,

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Speaker 1: I'm not a lawyer, but my understanding was that, you know,

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Speaker 1: the ruling was that the federal government could choose to

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Speaker 1: make anything legal or illegal that they want to, but

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Speaker 1: they couldn't tell the states what to make their own laws. So, um,

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Speaker 1: it was kind of a unique law. I don't think

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Speaker 1: there's anything else out there like it. So not that

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Speaker 1: I you know, from Supreme Court's perspective, I don't think

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Speaker 1: they were very interested in sports betting. I think it

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Speaker 1: was much more of a states versus federal rights question.

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Speaker 1: Tell us about the business now, as more and more

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Speaker 1: states legalized sports betting, like when you like when New

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Speaker 1: Jersey did it. How big of a business has it become?

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Speaker 1: It seems like it would be big. I hear stories

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Speaker 1: that's revitalized, you know, some of the casinos down in

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Speaker 1: Atlantic City and so on, just driving traffic like on

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Speaker 1: a Sunday morning to watch football. Absolutely, I mean, I

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Speaker 1: think it's been, you know, by all accounts, a huge

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Speaker 1: success in New Jersey and you know, other states I

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Speaker 1: think are seeing promising early results as well. Everything is

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Speaker 1: kind of up. It's not just sports betting, um, as

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Speaker 1: you mentioned the whole industry. The brick and mortar casinos

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Speaker 1: are up, the lottery is up, everything is up. So

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Speaker 1: I think it's brought a lot of great attention to

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Speaker 1: the state and hopefully we'll see more states follow. Talk

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Speaker 1: to us about the competitive landscape, UM, cousender Draft Kings.

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Speaker 1: You had a competitive fan Duel, I think that was

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Speaker 1: recently acquired. Talked us about the competitive landscape. Who do

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Speaker 1: you guys compete against. Well, FanDuel is definitely our chief competitor. UM,

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Speaker 1: there's several others, mostly UH including FanDuel was bought by

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Speaker 1: an Irish company, so most most of them come from Europe,

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Speaker 1: a few from Australia, but really, you know, it's an

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Speaker 1: interesting industry because, uh, due to obviously not having legal

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Speaker 1: options in much of the US, there weren't really any

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Speaker 1: big companies homegrown here. We're kind of the the only

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Speaker 1: contender for that. Um And you know, obviously we started

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Speaker 1: with fantasy sports, so it's sort of a back uh

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Speaker 1: you know, a little bit of a sideways way to

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Speaker 1: get to hear. But most of the traditional companies in

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Speaker 1: this space, we're built in Europe. A lot of them

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Speaker 1: are in the UK. UM. So you know, I think

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Speaker 1: a lot of our competition, at least in the near term,

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Speaker 1: will be from Europe. And then you know, certainly the

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Speaker 1: brick and mortar casinos are going to compete, but um,

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Speaker 1: I think they view it a lot more as a

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Speaker 1: driver of traffic for the at least the retail side. Uh.

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Speaker 1: And then there's a handful that are very focused online

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Speaker 1: as well. Are you surprised that the professional sports leagues

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Speaker 1: like the NFL have kind of dropped their longstanding you know,

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Speaker 1: just really trying to keep betting away and gambling away. Uh.

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Speaker 1: You know, I'm surprised how quickly and how um you know,

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Speaker 1: it's been all of them, but I'm not surprised this

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Speaker 1: is where things landed. It's you know, every every everyone

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Speaker 1: sort of follows the times, and I think, you know,

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Speaker 1: as years have gone on, sports betting has been something

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Speaker 1: that's been demystified a lot. I think being able to

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Speaker 1: do it online and on mobile actually significantly increases, uh

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Speaker 1: the NFL and other sports league's ability to monitor and

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Speaker 1: protect against integrity issues. I think, you know, having it

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Speaker 1: be trackable on mobile makes a huge difference for that. Uh.

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Speaker 1: And you know, I think they understand that this is

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Speaker 1: what the fan of future wants and it's going to

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Speaker 1: be an important engagement tool for them. And uh, you know,

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Speaker 1: at the end, they're about engaging their fans and that's

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Speaker 1: what makes them great. Yep. It's interesting to what you know.

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Speaker 1: I know, as you've noticed as well, but you know,

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Speaker 1: the Mickey Mouse company that also owns ESPN, now every

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Speaker 1: time they give you us a schedule, it's always the

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Speaker 1: line the over under, and that's something that I just

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Speaker 1: didn't think we'd see, uh, you know, certainly from some

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Speaker 1: of the big mainstream sports like ESPN, but everybody's embracing

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Speaker 1: it's a it's really interesting. Jason Robbins, Uh, CEO of DraftKings,

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Speaker 1: thanks so much for stopping by and now you have

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Speaker 1: a busy data Congratulations on your transaction. Very interesting to

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Speaker 1: see the growth of the sports betting UH in this country.

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Speaker 1: And again there's stories or legion of you know, the

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Speaker 1: folks in the neighboring states to New Jersey driving in

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Speaker 1: placing their bets UH and then heading out. Very interesting.

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Speaker 1: So I have to see how this plays out. Big

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Speaker 1: news at Boeing today management change at the top, the

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Speaker 1: existing CEO out, a new CEO coming from the board

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Speaker 1: of directors takes charge. Here. This stock is up about

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Speaker 1: two on the news. George Ferguson, senior Aerospace, Defense and

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Speaker 1: Airlines analyst with Bloomberg Intelligence, joins us on the phone

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Speaker 1: from b I headquarters in Princeton, New Jersey. So, George,

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Speaker 1: the market seems to like this change. Was it expected

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Speaker 1: or is this kind of a shock? I think this

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Speaker 1: is a bit of a shock, at least the timetable

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Speaker 1: was it. Think we all thought Dennis was under pressure,

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Speaker 1: and but I think a lot of people thought them

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Speaker 1: he would get the Max returned to service before he went.

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Speaker 1: So I think we're a little bit surprised to see

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Speaker 1: it happened here right at the end of the year,

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Speaker 1: although this is the classic time to make big moves

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Speaker 1: like this. So George the new CEO, David Calhoun, who

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Speaker 1: had served as chairman since October, where we place Muhlenberg

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Speaker 1: as CEO and president on January. Um, what do we

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Speaker 1: know about this new CEO, David Calhoun? Well, I think interestingly,

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Speaker 1: he has been very much on the sidelines and quiet

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Speaker 1: until a few you know, like a month ago, a

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Speaker 1: month and a half ago, when he came forward and

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Speaker 1: started giving interviews, so you could kind of see him

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Speaker 1: at that point warming up in the wings. He comes

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Speaker 1: out a ge comes at a catapill or, he comes

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Speaker 1: out of the investment world. So I think he's got

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Speaker 1: a lot of strong experience. The interviews I've seen with him,

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Speaker 1: he's a he's a pretty good communicator, and I think

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Speaker 1: a lot of what he needs to do here though,

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Speaker 1: is put a fresh face on this and approach the constituencies,

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Speaker 1: you know, with with sort of clarity, um and cooperation.

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Speaker 1: So I think, you know, even just getting a new

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Speaker 1: face here Alps as well. But he looks very well,

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Speaker 1: you know, very well prepared for this. So George, let's

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Speaker 1: try to put his to do list together for January

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Speaker 1: first day. What do you think the first phone call

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Speaker 1: he makes, for the first visit he makes. I think

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Speaker 1: he's going to the f a A. Okay, possible. I

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Speaker 1: think it's set gates to do is just get the

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Speaker 1: MAX back in the air. Get the MAX back in

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Speaker 1: the air, Get the MAX back in the air. So

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Speaker 1: I mean, give us a sense of where we are

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Speaker 1: in the process. Um, you know, my understanding is there

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Speaker 1: is a software fix that has been delivered I think

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Speaker 1: to some extent, maybe tested to some extent. So where

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Speaker 1: are we in the process and what what do you

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Speaker 1: thing is kind of holding things up? I think the

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Speaker 1: I think the ball is um in the f a

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Speaker 1: a's court. But I mean that's probably not the right

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Speaker 1: way to say, given Boeing wants to be involved all

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Speaker 1: along the process. But I think the MAX software is fixed.

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Speaker 1: We hear reports in the field of pilots testing it

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Speaker 1: in simulators and they seem they say it behaves as

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Speaker 1: they would expect. So I think where we are now

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Speaker 1: is we have to the f a A has to

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Speaker 1: approve the changes to that MAX software, to that MCAST software.

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Speaker 1: Anti stall software as well as approve whatever training regime

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Speaker 1: needs to be put in place for this new for

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Speaker 1: this change to the software. And I think that's what

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Speaker 1: we heard from the FA administrator a couple of weeks

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Speaker 1: ago where he said, Hey, it's going to take us

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Speaker 1: to at least mid February UM to finish up our

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Speaker 1: review of the airplane. And I think this is about

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Speaker 1: engaging the f a A A making sure they have everything

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Speaker 1: they need to get that review done, as you know,

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Speaker 1: as as simply as possible. Let's him um, which I

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Speaker 1: know is not a good safe assumption always, but let's

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Speaker 1: assume they do get f a A approval sometime in

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Speaker 1: the first quarter. My senses, planes are scattered all over

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Speaker 1: the country. They're in storage all over the country. I've

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Speaker 1: seen them park and employee parking lots. What's the time

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Speaker 1: frame do you think from approval to really getting this

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Speaker 1: thing in commercial? Uh? You know rotation with the airlines yea,

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Speaker 1: so definitely the scarier thing that the more challenging thing

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Speaker 1: is that the longer the max is delayed in, the

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Speaker 1: longer airplanes sit, the harder it is to get them

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Speaker 1: back into the into the fleets and flying the longer takes,

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Speaker 1: and so you know, we already saw United push everything

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Speaker 1: out to June. Right. The challenge of the airlines too

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Speaker 1: is they have to put a schedule out and then

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Speaker 1: start to sell tickets for the schedule. They don't want

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Speaker 1: to significantly count in an airplane before they know it's

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Speaker 1: going to be ready to fly. So the way we

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Speaker 1: really see it right now is it looks like, um,

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Speaker 1: there'll be at least some flow starting to move to

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Speaker 1: US airlines by by the very beginning of summer flying

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Speaker 1: season right needs to flow to the airline, and the

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Speaker 1: airline needs to get the pilots trained and into the

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Speaker 1: cockpit too, so that it doesn't the airplane doesn't go

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Speaker 1: back into service on day one. We think there's going

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Speaker 1: to be some flow back to the US airlines by summer,

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Speaker 1: but we don't think it's going to be all the

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Speaker 1: airplanes that they originally thought they were going to get delivered.

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Speaker 1: So we think that if you're a flyer this summer,

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Speaker 1: you may end up paying more than you'd We always

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Speaker 1: pay more than we hope for, but more than you

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Speaker 1: would have had the MAX been back into fleets. And

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Speaker 1: it looks to us like it's starting to slip for

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Speaker 1: getting much of anything back to the European carriers account

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Speaker 1: in the MAX by summer flying seasons. So Europe may

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Speaker 1: have even better fair uh fairs than we expected for

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Speaker 1: this summer, which would which would be a positive for

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Speaker 1: airlines in both the US and in Europe. Yeah, when

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Speaker 1: you say better, you're doing it from the perspective of

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Speaker 1: the airlines, not the consumer. All right, George Ferguson, thanks

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Speaker 1: very much. We appreciate your comments here. George is a

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Speaker 1: senior Airspace, Defense and Airlines ANNALYSOM Bloomberg intellientis joining us

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Speaker 1: on the phone. Uh. He always has great color on

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Speaker 1: the aerospace companies and the airlines that whole supply chain.

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Speaker 1: George covers and gives us a good sense here in

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Speaker 1: Boeing here. Um, probably a change that you know a

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Speaker 1: lot of investors are just judging by the pop in

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Speaker 1: the stock here saying had to be made. You had

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Speaker 1: to get a new face of the company here, particularly

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Speaker 1: as you are dealing with the f A A, which

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Speaker 1: is George Ferguson suggested, it's kind of the critical lynchpin

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Speaker 1: to getting the MAX up in the air. You've got

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Speaker 1: to get the f A A on board. You've got

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Speaker 1: to work closely with the FA and perhaps this new

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Speaker 1: CEO can get that done well. As we've been talking

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Speaker 1: about this morning, nineteen has been a heck of a

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Speaker 1: year for financial markets. Returns really stellar, particularly when you

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Speaker 1: consider the depths. We were back almost a year ago

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Speaker 1: today Christmas Eve last year, when the market was down

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Speaker 1: about of course, the question is now it's what have

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Speaker 1: you done for me lately? So what are we gonna

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Speaker 1: do next year? David Garrety, chief market strategist from Laidlaw

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Speaker 1: and Company, also a partner bat Block. You join us

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Speaker 1: here in a Bloomberg Interactive broker studio. David, So again,

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Speaker 1: twenty nineteen. I think snuck up on some people in

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Speaker 1: terms of the performance, even here in the last you know,

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Speaker 1: several weeks, several months. Uh, the upside is really I

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Speaker 1: think snuck up on some people. How do you think

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Speaker 1: that we should be positioned for next year in terms

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Speaker 1: of maybe our expectations for returns. While in the markets

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Speaker 1: markets people like to focus on the economics. I think

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Speaker 1: is a year of politics, given the U S general election,

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Speaker 1: given obviously the impeachment and trial which is going to

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Speaker 1: be in the offering, Uh, and our expectation is that,

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Speaker 1: you know, the politics and the uncertainties associated with that,

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Speaker 1: coupled with the fact of a you know, perhaps six

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Speaker 1: tenths of a percentage point hit to US GDP growth

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Speaker 1: from the shutdown on the seven thirty seven max, probably

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Speaker 1: give us the first half of the year, which is

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Speaker 1: probably flat to possibly down, And we think that more

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Speaker 1: of the returns for the year are going to be

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Speaker 1: constant rated in the back half of the year, most

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Speaker 1: likely in the form of a relief rally around the

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Speaker 1: US presidential election November. So in this respect, coming out

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Speaker 1: of two thousand nineteen, our advice to investors is to

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Speaker 1: certainly be very very selective. We do think that we're

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Speaker 1: still in an environment here where the long end of

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Speaker 1: the treasury curve is going to come in probably from

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Speaker 1: about the one point nine to level on the tenure

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Speaker 1: maybe to about one and a quarter one and a half.

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Speaker 1: But we don't think necessarily that the Feds in the

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Speaker 1: position yet to cut rates, although I think that that's

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Speaker 1: still going to be something to possibly support the market

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Speaker 1: going into the election to the extent that things slow

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Speaker 1: even if the data and you know, at least and

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Speaker 1: I we argue about this all the time. She rejects

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Speaker 1: to use her word, uh my contention that maybe the

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Speaker 1: data is coming economic data is coming in better than expected,

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Speaker 1: the consumer continues to be strong. We see stabilization in

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Speaker 1: manufacturing and business investment. The trade deal gets cleaned up,

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Speaker 1: there might be an argument to be made that this

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Speaker 1: FED could actually hike in any to that or is

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Speaker 1: it just because it's an election year you're just not

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Speaker 1: going to see that. Well, I mean, I think that's

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Speaker 1: a strange set of dynamics here in terms of how

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Speaker 1: the current administration is doing trade policy, and the focus

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Speaker 1: for trade policy with the current administration wasn't just China.

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Speaker 1: I mean, there's been more of a drum beating with

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Speaker 1: respect to the European Union the EU, and if we

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Speaker 1: look at monetary policy and the EU, they really are

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Speaker 1: sort of the locusts globally with regards to negative interest rates.

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Speaker 1: And you've seen the Swedish Central Bank the ricks bank

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Speaker 1: pull back within the recent two weeks, moving off of

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Speaker 1: a five year experiment with negative interest rates. You know,

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Speaker 1: obviously we may see this start to replicate itself more

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Speaker 1: broadly across the EU. And much as the EU and

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Speaker 1: our view lad the FED to cut rates in the

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Speaker 1: second half of two thousand nineteen, to the extent that

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Speaker 1: the EU under Christian Legard of the e c B

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Speaker 1: under Christian Leguard decides to raise rates, I think the

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Speaker 1: FED is left in a situation where they have to

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Speaker 1: follow yet and that was that is not discounted. Would

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Speaker 1: you agree? I mean, I don't think it's discounted. But

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Speaker 1: I also think at the same time that the ECB

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Speaker 1: is going to have a difficult time based on the

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Speaker 1: economics of what's going on within the EU around breggsit

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Speaker 1: uh in in having an environment where they could consider

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Speaker 1: actually tightening monetary policy. And maybe it only might be

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Speaker 1: because the US administration says that negative interest rates are

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Speaker 1: a way of basically propping up an unfair trade advantage.

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Speaker 1: But you know, there hasn't been a trade situation where

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Speaker 1: the current administration has not seen an unfair advanta. Exactly

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Speaker 1: do you anticipate a Phase one deal getting signed actually

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Speaker 1: on a piece of paper at some point uh in

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Speaker 1: a near to intermediate term the off rumored but seldom

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Speaker 1: seen UH And our view is possibly not until sometime

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Speaker 1: in But that doesn't mean that certain persons who are

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Speaker 1: running for re election. Won't be running around throwing out

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Speaker 1: tweets and rumors about it, but the substance I think

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Speaker 1: is going to be uh somewhat short. So alright, we're

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Speaker 1: thinking about you know, people a lot have their twenty

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Speaker 1: twenty outlooks and sectors and so on and so forth.

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Speaker 1: It seems to me as if we look back onto

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Speaker 1: have periods where we were the market sing to be,

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Speaker 1: you know, kind of rotating out of the cyclicals, maybe

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Speaker 1: into the more defensive utilities consumer staples. But then it

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Speaker 1: seems like maybe we've kind of rotated back to a

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Speaker 1: little bit more growth, a little bit more risk. What

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Speaker 1: are the sectors that you think people should be focusing

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Speaker 1: on for well, I think, on the one hand, I mean,

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Speaker 1: one of the major themes in terms of this market

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Speaker 1: um from the bottoms back in March of two thousand

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Speaker 1: nine had been tech, tech and more tech, and if

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Speaker 1: you wanted to build wealth, you basically bought large cap

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Speaker 1: us tech um. The question is, as we look at

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Speaker 1: the election process, as we look at how things have evolved,

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Speaker 1: not just on the federal level but also on the

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Speaker 1: state level, and also oversees greater rise in terms of regulation,

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Speaker 1: which is going to impose more in the way of

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Speaker 1: costs UH and possibly have slower revenue growth for these names.

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Speaker 1: So you know, while this clearly has been the major

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Speaker 1: wealth generator over the past, deck aid, the question is

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Speaker 1: can we rely upon tech to continue to provide the

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Speaker 1: same type of returns going into and I would argue

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Speaker 1: it may be time to pull back. Um. Granted, there

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Speaker 1: have been concerns looking at a sector basis as to

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Speaker 1: what's going to happen around healthcare policy, but we may

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Speaker 1: actually end up as we get greater clarity around the

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Speaker 1: political situation to see UM the underlying secular dynamics in

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Speaker 1: terms of demographic profile changes, aging UH driving greater demand

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Speaker 1: in the healthcare sector, and then as a result, healthcare

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Speaker 1: may not be a bad place to consider as things

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Speaker 1: become clearer. Right, So, I guess obviously the issue with

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Speaker 1: healthcare has historically been really over the last several years,

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Speaker 1: but certainly going into this election cycle is just kind

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Speaker 1: of the headline risk. The policy risk that you know,

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Speaker 1: the Elizabeth Warren that you know, the Metacare for All

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Speaker 1: type of thing. Is that something that the valuations they're

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Speaker 1: they're paying you for that risk you're taking anything I

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Speaker 1: think in some respects we've already had some of those

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Speaker 1: risks discounted in the market. But I would say simply

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Speaker 1: if we look at twenty it's a year when technolo ology,

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Speaker 1: where the tech sector goes into the regulatory woodshed and

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Speaker 1: possibly the healthcare sector comes out. It's interesting looking at

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Speaker 1: the ny s C Fang Index up about this year alone,

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Speaker 1: up about forty seven percent on a trailing twelve month basis,

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Speaker 1: And you're right, I think the big issue for a

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Speaker 1: lot of investors is the story is great, the tech

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Speaker 1: story written large is great, but that regulatory risk hasn't

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Speaker 1: really been with the u S tex Stox ever arguably,

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Speaker 1: but maybe it's starting to raise its head. Going to

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Speaker 1: see more federal regulation of some of the tech sector.

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Speaker 1: That is the big, I think issue for tech investors.

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Speaker 1: And I think the pressure is is that, as Bloomberg

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Speaker 1: is highlighted in some of its stories, as the federal

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Speaker 1: authorities are moving because they don't necessary they want to

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Speaker 1: get ahead of what's going on a state level, particularly

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Speaker 1: in California. They don't want state regulation to suddenly open

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Speaker 1: up a situation where you have a balkanized regulatory environment.

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Speaker 1: They want to assert Federal Authority real quick energy Well

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Speaker 1: in terms of about a high risk I returned potential.

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Speaker 1: The favorite exogenous shock scenario for any procession has always

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Speaker 1: been a spike in oil prices. And given the dynamics

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Speaker 1: unfolding in the Mid East, we've already had trouble in

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Speaker 1: the straighter horn moves earlier this year with Iran and

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Speaker 1: the Persian Gulf states in Saudi Arabia. UM. I think

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Speaker 1: going into an election sometimes there's nothing better for people

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Speaker 1: to do than to declare a war. But I don't

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Speaker 1: necessarily want to want to call you know, those in

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Speaker 1: the office now as war mongers. But things don't look good, yep,

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Speaker 1: exactly all right? Energy always it's not for the fan

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Speaker 1: of heart, certainly. David Garrety, chief market Strategies for laid

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Speaker 1: Long Company and partner at bt block im us his

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Speaker 1: thoughts on the market after what's been a fantastic year

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Speaker 1: for most asset classes in both equity fixed income, several

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Speaker 1: of the commodities also posting strong gains. A question is

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Speaker 1: how are you position for Another edition of the Star

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Speaker 1: Wars series is out. Star Wars The Rise of Skywalker dropped.

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Speaker 1: I guess last week took in a hundred seventy five

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00:22:09,200 --> 00:22:12,399
Speaker 1: billion dollars and it's opening weekend. That's a big number,

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00:22:12,440 --> 00:22:14,800
Speaker 1: but it's lower than what they had done previously. So

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Speaker 1: the question is what's going on with the Star Wars

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Speaker 1: saga and for the Walt Disney Company to do that.

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Speaker 1: We went out and found a couple of local fanboys

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Speaker 1: that we all know. Eric Baltunas, Senior et F analyst

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Speaker 1: for Bloomberg Intelligence. He joins us here in our Bloomberg

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Speaker 1: Interactive Broker studio and Ira Jersey, Chief US Interest rate

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00:22:31,720 --> 00:22:35,000
Speaker 1: Strategist for Bloomberg Intelligence. He's actually our man on the

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Speaker 1: scene at a local theater getting ready to go in

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Speaker 1: and see the show. So I let's start with you.

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Speaker 1: What are your expectations for the Rise of Skywalker. Yeah, so,

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Speaker 1: just from some people that I've talked to you coming

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Speaker 1: out of the theater here in Gardner, North Carolina, at

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00:22:49,960 --> 00:22:53,080
Speaker 1: Legal Theater, Um, they were they were saying that that,

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00:22:53,119 --> 00:22:55,840
Speaker 1: you know, kids like it, so so people who didn't

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00:22:55,880 --> 00:22:59,080
Speaker 1: grow up in the seventies and eighties on Star Wars

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00:22:59,240 --> 00:23:02,359
Speaker 1: teams to have really enjoyed this show. The parents seem

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00:23:02,440 --> 00:23:04,160
Speaker 1: to be a little bit more sanguine about his thing

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00:23:04,240 --> 00:23:07,000
Speaker 1: is okay. So um, So I think I'm gonna go

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Speaker 1: in with an open mind and hopefully I'll think it's

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Speaker 1: better than than the last film, which Eric and I

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00:23:11,240 --> 00:23:13,919
Speaker 1: I know, neither of us particularly enjoyed. All right, so Eric,

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Speaker 1: let let's let's go to that. This is a long

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Speaker 1: running series. I don't even know how many episodes were

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00:23:18,280 --> 00:23:19,919
Speaker 1: up to yet. There was one to three, then there

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00:23:19,960 --> 00:23:21,600
Speaker 1: was four, three, two. I don't know how they did

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00:23:21,640 --> 00:23:24,359
Speaker 1: it all, but give us a sense of kind of

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00:23:24,640 --> 00:23:29,320
Speaker 1: as a fanboy, how is Star Wars resoning with you? Right?

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Speaker 1: So when I went to see Force Awakens, I liked it.

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00:23:31,400 --> 00:23:34,600
Speaker 1: I liked the new characters Po and Finn and Ray.

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00:23:34,680 --> 00:23:37,640
Speaker 1: I thought it was great the ending where she goes

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Speaker 1: to give the lightsaber to Luke Skywalker and you see

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Speaker 1: Mark Hamill there and he's very serious and it ends

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Speaker 1: and I was jazz for the next one. And then

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00:23:46,080 --> 00:23:48,040
Speaker 1: to think he just throws it over his shoulder like

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Speaker 1: he doesn't care. And Luke Skywalker has turned into some

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00:23:50,600 --> 00:23:54,840
Speaker 1: like cranky reck loose um. You know, even Mark Hamill said,

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Speaker 1: that's not my Luke Skywalker. So the biggest problem with

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Speaker 1: the last Jedi is they ripped the heart out of

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00:24:00,920 --> 00:24:03,919
Speaker 1: the whole franchise, which is Luke Skywalker and stomped on

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Speaker 1: it right in front of you and then expected you

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Speaker 1: to like it. I mean, that's the biggest problem. Plus

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00:24:08,400 --> 00:24:11,000
Speaker 1: there were all kind of plot holes. They really um

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00:24:11,320 --> 00:24:15,199
Speaker 1: the Ray uh Po and Finn storylines. I thought they

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00:24:15,240 --> 00:24:18,000
Speaker 1: did worse in the Last Jedi. So I thought J. J.

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00:24:18,080 --> 00:24:22,040
Speaker 1: Abrams Abrams was handed a pretty crappy hand from the

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Speaker 1: Last Jedi, and I'm I'm guessing he probably did the

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00:24:24,720 --> 00:24:26,639
Speaker 1: best he could with it, and so I also am

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Speaker 1: looking forward to seeing it. But again, I I'm just

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Speaker 1: a little down on the whole franchise after Last Jedi

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00:24:32,680 --> 00:24:36,439
Speaker 1: ripped the heart out so interesting, So Ira, hopefully your

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Speaker 1: heart wasn't ripped out by the last uh episode. Give

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Speaker 1: us your sense of again, among the fanboys, the passions

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00:24:43,359 --> 00:24:46,879
Speaker 1: run really high here. What is your sense of you

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Speaker 1: know what Disney has done with this franchise? Well, I

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00:24:51,119 --> 00:24:53,840
Speaker 1: think among the frond of the O G Star Wars

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00:24:53,840 --> 00:24:56,000
Speaker 1: folks like Eric and I, I think there is a

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00:24:56,000 --> 00:24:58,720
Speaker 1: lot of disappointment. I think the you know, episode eight,

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Speaker 1: the last that I was disappointing me. I was as

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00:25:01,680 --> 00:25:05,199
Speaker 1: disappointed as anyone um, but I think I think that

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Speaker 1: the thing that Disney is trying to go for, it

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Speaker 1: seems to me, is more of the superhero type of vibe.

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Speaker 1: And and you know that doesn't necessarily work with Star Wars.

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Speaker 1: And if you know, this particular movie I think resonates

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Speaker 1: with maybe younger kids who you know, didn't look up

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Speaker 1: to Luke Skywalker as the epitome of the good guy

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Speaker 1: in their movies. And and you know, he always expected

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Speaker 1: him to stay the day. Um. So I think that

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00:25:29,520 --> 00:25:32,960
Speaker 1: that that might not hurt Disney all that much if

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00:25:33,280 --> 00:25:35,679
Speaker 1: they can get all the merchandizing and um and and

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Speaker 1: a lot of video games. So it it was just in

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Speaker 1: the theater actually getting my seat, talking to someone and

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Speaker 1: and the boy said that he liked the new video games.

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Speaker 1: So maybe it's not the merchandise like the you know,

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Speaker 1: dolls and stuff like that that that you're gonna see

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Speaker 1: this time, but it's going to be things like the

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Speaker 1: video games and those other offshoots and and maybe some

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Speaker 1: of the Disney Plus characters, because the Mandalorian, for example,

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Speaker 1: even among the O G Star Wars people that I've talked,

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Speaker 1: you really enjoy that particular show. Um and uh and

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Speaker 1: so so perhaps it's it's the franchise as a whole

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Speaker 1: isn't gonna be uh, isn't gonna be drawn down. But

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Speaker 1: even if you know, the end of the Skywalker series

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Speaker 1: is a little bit of a dud. So Eric, give

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Speaker 1: us a sense of do you think Disney can successfully

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Speaker 1: from your perspective, you know, kind of make that balance

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Speaker 1: between the hardcore old school Star Wars fan and maybe

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00:26:27,680 --> 00:26:30,159
Speaker 1: the newer fan. Yeah, it probably can be done. I

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Speaker 1: like Ira. I just think the Skywalker, that whole line

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Speaker 1: of movies is just been a little roughed up. The

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Speaker 1: merchandise just I can see it in Walmart. It's on clearance.

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Speaker 1: Nobody wants to buy it. My eight year old, um,

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00:26:42,920 --> 00:26:45,040
Speaker 1: he doesn't really want it. But back when I showed

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Speaker 1: him the original three, he was into it. He wanted

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Speaker 1: a lightsaber, just like every other kid. Um. So I

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Speaker 1: don't know how to get that magic back. I'm sure

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Speaker 1: with a lot of money, they're still gonna make money

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Speaker 1: because they're gonna get a lot of good actors and

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Speaker 1: a lot of special effects. Um. But I would just

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Speaker 1: try something new. I would go to some new area,

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Speaker 1: some new Star Wars, UM Paradigm and UM you know,

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Speaker 1: try to make it work. But the Luke Skywalker UH series,

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Speaker 1: I think was just um brutalized by Rhan Johnson. Yeah,

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Speaker 1: I agree with that, and I think, you know, one

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Speaker 1: of the other big issues that I think that movie

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Speaker 1: had um was was obviously story and plot, like Eric said,

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Speaker 1: but it also came off of one of the best

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Speaker 1: movies in the franchise in my opinion, and Broke One.

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Speaker 1: Broke One was a super solid movie. It had no

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Speaker 1: loose ends. It you know, introduced the character of Doris

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Speaker 1: Vader in a brand new way that you really always

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Speaker 1: wanted to see. And then you had the and then

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Speaker 1: you had episode eight, the Last Jedi, and it just,

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Speaker 1: you know, compared to Rogue One, it just didn't compare.

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Speaker 1: And I think that that was also a big disappointment

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Speaker 1: because everyone went in, like I went in with these

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00:27:47,720 --> 00:27:51,680
Speaker 1: massive expectations given how great Rogue One was, and then

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00:27:51,760 --> 00:27:53,960
Speaker 1: you know, you see this this really you know, bomb

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00:27:53,960 --> 00:27:56,240
Speaker 1: of a movie and a lot of our opinion, and

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00:27:56,280 --> 00:27:58,160
Speaker 1: then you know, and then Solo, which was a good movie,

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00:27:58,200 --> 00:28:01,399
Speaker 1: followed and it didn't do well, uh in in the theaters,

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Speaker 1: and I think primarily because not because you know, Star

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00:28:04,080 --> 00:28:05,920
Speaker 1: Wars fans would go see a new Star Wars movie

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00:28:05,960 --> 00:28:08,560
Speaker 1: once a month, no problem if they were good movies.

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Speaker 1: And and so Solo I think had a lot of

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00:28:10,440 --> 00:28:14,119
Speaker 1: the backlash from the from episode eight, um, you know,

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Speaker 1: And and that's where I think Disney has to kind of,

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00:28:17,640 --> 00:28:20,119
Speaker 1: you know, rejuvenate itself. And and I think, you know,

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Speaker 1: hopefully this movie, I'm I'm gonna see it in three hours,

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00:28:22,640 --> 00:28:24,879
Speaker 1: I'll know, uh, you know, is this movie kind of

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Speaker 1: worked it and the ending that the Star Wars franchise deserves.

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Speaker 1: All right, Well, maybe we'll chat with you when you're

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Speaker 1: done seeing it. Eric. Just one more point, which is

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Speaker 1: after the Last Jedi, a lot of fans reacted and

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00:28:35,800 --> 00:28:37,600
Speaker 1: Disney kind of came out and said, you guys are

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Speaker 1: just not woke enough. You don't understand where we're going

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Speaker 1: with this. And I didn't like that they insulted the

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00:28:42,720 --> 00:28:45,760
Speaker 1: fans for not liking it. But like Ira said, Rogue

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00:28:45,760 --> 00:28:47,920
Speaker 1: One has a female lead. We all loved it. That

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00:28:48,040 --> 00:28:49,440
Speaker 1: was a great movie. It just has to be a

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00:28:49,440 --> 00:28:51,600
Speaker 1: good movie, and you have to care about the characters

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Speaker 1: and and the storylines have to make sense. That's all.

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Speaker 1: It's not that rocket science, all right, are we had

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Speaker 1: the fanboys, Ira Jersey enjoy the show. I hope you

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Speaker 1: have a good time. We'll look forward to hearing your

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00:29:01,400 --> 00:29:03,960
Speaker 1: review afterwards. Iris the chief US interest rate strategist for

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00:29:04,000 --> 00:29:07,360
Speaker 1: Bloomberg Intelligence, Eric Balchun, a senior et F analyst and

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Speaker 1: Star Wars fanboy, joining us here in our Bloomberg Interactive

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Speaker 1: Broker studio. A couple of numbers here for you, UM

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Speaker 1: hundred seventy five million dollars in box office. That's ahead

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Speaker 1: of Disney's hundred sixty million dollar projection, but it's below

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00:29:19,560 --> 00:29:23,240
Speaker 1: what the consensus was for about a hundred eighty three million,

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Speaker 1: and I guess for a lot of people looking at

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Speaker 1: the series and looking at the franchise from Disney's perspective,

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Speaker 1: it was one of the lower openings of the recent

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Speaker 1: So the question is is there a little bit of

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Speaker 1: Star Wars fatigue sitting in We'll have to see. Thanks

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00:29:36,520 --> 00:29:38,720
Speaker 1: for listening to the Bloomberg P and L podcast. You

591
00:29:38,720 --> 00:29:41,400
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or

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00:29:41,440 --> 00:29:44,760
Speaker 1: whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter

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00:29:44,840 --> 00:29:47,400
Speaker 1: at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter

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00:29:47,520 --> 00:29:50,000
Speaker 1: at Lisa A. Bram woit's one before the podcast. You

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00:29:50,040 --> 00:29:52,560
Speaker 1: can always catch us worldwide on Bloomberg Radio